Tsamis v Victoria (No 8)
[2020] VSC 67
•25 February 2020
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
MAJOR TORTS LIST
S CI 2014 06898
| MARTHA TSAMIS | Plaintiff |
| v | |
| STATE OF VICTORIA | Defendant |
---
JUDGE: | John Dixon J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 24 February 2020 |
DATE OF RULING: | 25 February 2020 |
CASE MAY BE CITED AS: | Tsamis v Victoria (No 8) (Costs) |
MEDIUM NEUTRAL CITATION: | [2020] VSC 67 |
---
DEFAMATION – Costs – Trial by jury – Verdict partially in favour of plaintiff with some imputations justified and some defences rejected – Whether plaintiff to be confined to a partial costs order – Chen v Chan [2009] VSCA 233 considered – Whether costs should be assessed on an indemnity basis - Defamation Act 2005 (Vic) s 40.
---
APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr T Sowden with Mr H Kirimof | Mr Gary Prince |
| For the Defendant | Mr P Hayes QC with Ms R B Sion | Russell Kennedy |
HIS HONOUR:
In this proceeding, a jury found for the plaintiff in a verdict taken on 30 August 2019. On 18 December 2019, judgment was entered that the defendant pay the plaintiff the sum of $90,000. I granted liberty to apply in respect of costs and interest.
The parties agreed that I should allow interest on the judgment sum from 29 December 2014 (the date of issue of the proceedings) until 18 December 2019 (the date of judgment) at a rate of 3% per annum.[1]
[1]Hardy v The Herald & Weekly Times Pty Ltd [2016] VSCA 130, [14].
The remaining issues for determination are the costs reserved on an application made shortly before the commencement of the trial and the costs of the proceeding.
Costs of pre-trial hearing
A number of interlocutory costs orders were made in the proceeding, leaving only one occasion on which costs were reserved.
On 30 July 2019, the plaintiff, having recently received further discovery that the defendant was ordered to provided, applied to vacate the trial date. I refused the application and the trial commenced as scheduled the following Monday, 5 August 2019. Orders were also made requiring the defendant to take further interlocutory steps in preparation for the trial. I reserved costs.
Each party now seeks an order that the costs be paid by the other. This approach seems to be an example of the so-called Rashomon effect, named after Akira Kurosawa’s 1950 film Rashomon.[2] By this observation I mean that the parties are engaging in what sociologists describe as an interpretivist approach to an event (in this case litigation), in which they do not seek an objective truth, but instead unravel the meaning of what has occurred through their version of the truth, as shaped by their understanding and perception of the world. In that way, each party perceived themselves to be successful in the event.
[2]See, eg, W D Roth and J D Mehta, ‘The Rashomon Effect: Combining Positivist and Interpretivist Approaches in the Analysis of Contested Events’ (2002) 31 Sociological Methods & Research 131, cited by Finkelstein J in In the Matter of ACN 005 408 462 Pty Ltd (Formerly Teac Australia Pty Ltd) [2008] FCA 1184, [3].
The origin of this interlocutory dispute is the defendant’s application dated 28 May 2019, seeking leave to file a further amended defence. That was followed by the plaintiff’s application dated 12 June 2019, seeking an order for further and better discovery. It was not then in dispute that the defendant had further reviewed its discovery obligations and additional documents had been produced. The defendant’s further discovery produced a significant number of documents relating to police interaction with persons of interest that the defendant proposed to call as witnesses in support of its defence.
Searching for a true explanation of the event, an explanation which can be explained by an acceptable path of reasoning, I conclude that while the defendant successfully resisted the application to vacate the trial date, it was, from my perspective, a question of management of fair process and allocation of scarce resources by the court and not the real event, which was in substance that the defendant was seeking to avoid consequences from its late discovery on the eve of trial.
Although the plaintiff’s application to vacate the trial date was refused and that refusal occasioned the plaintiff no prejudice, a number of positive orders were made against the defendant, including requiring from it a further affidavit and supplementary answers to interrogatories. It was also granted leave file and serve a further amended defence. Each of these orders either obliged, or granted an indulgence to, the defendant.
The costs reserved by my order of 30 July 2019 shall be paid by the defendant.
Costs of proceeding
The plaintiff sought an order that the defendant pay her costs of the proceeding on an indemnity basis. The defendant submitted that the proper order in the interests of justice was that it pay one third of the plaintiff’s costs of the proceeding, to be assessed on a standard basis.
The general rule is that costs should follow the event and that, absent disqualifying conduct, the successful party should recover its costs even where it has not succeeded on all heads of claim.[3] That said, the court has an absolute and unfettered discretion in relation to costs,[4] and, in appropriate circumstances, may examine the realities of the litigation and attempt to achieve on the matter of costs substantial justice as between the parties.[5]
[3]Ritter v Godfrey [1920] 2 KB 47; Oshlack v Richmond River Council (1998) 193 CLR 72, 97-8, 124.
[4]Supreme Court Act 1986 (Vic) s 24(1).
[5]Spotless Group Limited v Premier Building & Consulting Pty Ltd (rec appt) & Anor [2008] VSCA 115, [14].
As I will shortly note, the defendant seeks an apportionment of costs between the different issues in the proceeding. The different issues were identified as the justification of different imputations alleged. This differential only arose after the jury verdict found for the defendant that four of eight imputations were justified. In its apportionment, the defendant did not identify as distinct issues the defences of fair comment and honest opinion that were rejected by the jury.
The principles that govern whether there should be any apportionment of costs was set out by the Court of Appeal in Chen v Chan.[6] Where there is a multiplicity of issues and mixed success has been enjoyed by the parties, a court may take a pragmatic approach in framing the order for costs, taking into consideration the success of the parties on an issues basis.[7]
[6][2009] VSCA 233, [10].
[7]Ibid.
Generally, if such an order is made, it is reflected in the successful party being awarded a proportion of its costs, but not the full amount. Further, such an order is framed primarily as ‘a matter of impression and evaluation’,[8] rather than with arithmetical precision, following the court’s consideration of the importance of the matters upon which the parties have been successful or unsuccessful, the time occupied and the ambit of the submissions made, as well as any other relevant matter.[9]
[8]Major Engineering Pty Ltd v Helios Electroheat Pty Ltd (No 2) [2006] VSCA 114, [5].
[9]Ibid.
Particular rules applicable in defamation proceedings must also be brought to account. Section 40 of the Defamation Act 2005 (Vic) provides the following:
Costs in defamation proceedings
(1)In awarding costs in defamation proceedings, the court may have regard to—
(a)the way in which the parties to the proceedings conducted their cases (including any misuse of a party's superior financial position to hinder the early resolution of the proceedings); and
(b) any other matters that the court considers relevant.
(2)Without limiting subsection (1), a court must (unless the interests of justice require otherwise)—
(a)if defamation proceedings are successfully brought by a plaintiff and costs in the proceedings are to be awarded to the plaintiff—order costs of and incidental to the proceedings to be assessed on an indemnity basis if the court is satisfied that the defendant unreasonably failed to make a settlement offer or agree to a settlement offer proposed by the plaintiff; or
(b)if defamation proceedings are unsuccessfully brought by a plaintiff and costs in the proceedings are to be awarded to the defendant—order costs of and incidental to the proceedings to be assessed on an indemnity basis if the court is satisfied that the plaintiff unreasonably failed to accept a settlement offer made by the defendant.
(3) In this section—
"settlement offer "means any offer to settle the proceedings made before the proceedings are determined, and includes an offer to make amends (whether made before or after the proceedings are commenced), that was a reasonable offer at the time it was made.
As McClellan CJ at CL explained in Davis v Nationalwide News Pty Ltd,[10] this special costs provision was introduced following a concern that the costs of defamation proceedings might prohibit persons who have a legitimate claim from pursuing relief. The risks in bringing proceedings for defamation might appear unacceptable if the plaintiff would necessarily be left out of pocket at the end of the proceeding, unless costs were assessed on an indemnity basis. The intention of the legislation was to promote a speedy and non-litigious method of resolving disputes and to avoid protracted litigation wherever possible.
[10][2008] NSWSC 946.
In this proceeding, as the plaintiff was successful, s 40(2)(a) of the Act operates and, unless the interests of justice require otherwise, I must order that the costs of and incidental to the proceeding be assessed on an indemnity basis if I am satisfied that the defendant unreasonably failed to make a settlement offer or agree to a settlement offer proposed by the plaintiff.
The defendant primarily submitted that partial recovery was appropriate was because the jury’s verdict only supported the plaintiff’s claim in respect of four out of eight imputations and one of the two publications, namely the interview on radio, did not convey the imputations that were found by the jury to be defamatory. That submission sought to enliven the principles from Chan v Chen.
There are three reasons why the defendant’s application for a partial costs order will be refused. First, the general rule that costs should follow the event even where a party has not succeeded on all aspects of its claim is applicable. I am not persuaded that on an examination of the ‘realities of the case’ a different approach ought to be adopted to attempt to do ‘substantial justice’ between the parties on the matter of costs.
I have not overlooked that the second publication was, on the jury’s findings, justified but in reality the plaintiff continued to trial and obtained a judgment in the proceeding that she be paid damages, because she was defamed. Having regard to the conduct of the trial, the distinction between the two forms of publication is of no great significance.
Secondly, the proceeding is not to be characterised as one of mixed success by the plaintiff as the defendant would have it. The plaintiff succeeded on her cause of action in defamation arising from a single course of conduct by Mr Guerin, albeit in two publications, that raised eight imputations that significantly overlapped each other and the two publications. The proceeding is better characterised as one in which the defendant’s success on its defences was partial or incomplete.
In this context, I bear in mind that by s 8, the Act contemplates a single cause of action for defamation in relation to the publication of defamatory matter about the person, even if more than one defamatory imputation about the person is carried by the matter. I accept that two distinct publications were alleged, but the overlap was, in this context, significant. Further, by s 39, the Act directs that the court may, if it finds for the plaintiff in more than one cause of action, assess damages in a single sum.
The proceeding is better characterised as one in which the plaintiff enjoyed substantial success while the defendant’s success on its defences was partial or incomplete. In that context, the defendant benefitted substantially from an opportunity to argue that the quantum of the plaintiff’s damages ought to be limited, but that is not a good reason to conclude that the realities of the case compel the court to make a partial costs order to effect substantial justice between the parties.
Thirdly, I must have particular regard to s 40 of the Act, which qualifies the general application of the observations of the Court of Appeal in Chan v Chen, because that case was not a proceeding in defamation. Section 40(1) requires that I have regard to the way in which the parties conducted their cases, and I have expressed my assessment in that respect. Section 40 also regulated the basis for taxation and I will refer to how the defendant conducted settlement negotiations in examining the application of s 40 to this proceeding.
The defendant made what it describes as a ‘settlement offer’ that was not accepted by the plaintiff, nor responded to with a counter-offer. The defendant contended that the essence of unreasonable conduct was found in the plaintiff’s failure to make a counter-offer. I reject this contention. The proper focus is on the reasonableness of the defendant’s conduct.
The defendant’s conduct was unreasonable because it did not make a settlement offer of a kind contemplated by s 40 of the Act.
A settlement offer is defined by s 40(3) to mean any offer to settle the proceedings that was a reasonable offer at the time it was made. If the defendant’s settlement offer did not meet that standard, it cannot meet the statutory definition of a settlement offer for the purposes of s 40 and it is unnecessary to consider the defendant’s further contention that the plaintiff acted unreasonably in not responding with a counter-offer.
It ought to have been apparent to the defendant that the plaintiff was likely to have been defamed by some or more of the imputations carried by the publications on which she sued. The defendant appreciated that the plaintiff claimed to have suffered hurt and embarrassment, and in order to avoid the conclusion that the publications had damaged the plaintiff’s reputation, it would be necessary for the defendant to successfully raise a defence to each and every imputation said to be carried by the publications. The defendant failed with its fair comment/honest opinion defences and could only justify four out of eight imputations. On an objective assessment prior to trial, the defences ought to have been characterised as carrying considerable litigation risk, particularly if the defendant failed completely in its defences.
In this context, a reasonable offer as at 9 July 2019 would have included an offer of an apology. The defendant should also have appreciated that the plaintiff could recover a sum for her damage. A separate consideration was whether the plaintiff might recover a significant or a slight sum in damages and that consideration would be influenced by the assessment of the prospects of the defences.
The defendant’s offer on 9 July 2019 included neither an apology nor a sum for compensatory damages. At its highest, the defendant communicated its view that the plaintiff would fail and that the defendant was willing to contribute to assisting the plaintiff with her legal costs by offering an amount substantially less than the defendant would expend on its own legal costs in running its defences. There was never any doubt that the trial would be protracted and expensive because of the factual inquiry required by the defendant on its defences. Offering a plaintiff an opportunity to partially pay her solicitors while otherwise rejecting any entitlement to relief is a well-used strategy that seeks to engage particular interests that strictly lie outside fair consideration of the merits of each party’s position. Such a strategy is more commonly employed by parties with a superior financial position.
Before I come to the particulars of the offer, it is worth recalling what the court said in Davis, bearing in mind that his Honour’s reference to Windsurfing can be read as a reference to Chan v Chen:
A settlement offer is referred to in s 40(3) as an “offer to settle the proceedings”. Because the Act contemplates a single cause of action, even if there is more than one defamatory imputation in a publication, (s 8) and the assessment of damages in a single sum (s 39) where there is one cause of action, the approach in Windsurfing may have limited application. A special costs rules in the Act are directed towards early settlement of the proceedings. If the failure by the defendant to make a reasonable offer means the proceedings continue to trial and the plaintiff obtains a judgment, the fact that he or she fails in relation to some of the pleaded imputations will be of limited relevance.[11]
[11][2008] NSWSC 946, [31].
This reasoning was followed by Harrison J in Mundine v Brown (No 7).[12] Apposite in the present case is Harrison J’s observation, that in the context of defamation proceedings, it is often artificial to attempt to find that any one or some of a number of alleged imputations arising out of the same publication can be said to be a discrete issue for determination. Pertinently, Harrison J observed that the disposition of issues in relation to different imputations does not necessarily throw up dominant or separable issues, rather they are all part and parcel of the litigation as it unfolded.
[12][2011] NSWSC 170.
In the present case, the defendant pressed defences of justification and fair comment in respect of seven of the eight imputations. Different defences can more readily be considered as discrete issues. There was imprecision and overlap in the jury’s verdict on the justification defences, following out of the way the imputations were pleaded by the plaintiff, as I observed in the damages judgment.[13] The implications of the jury’s verdict for the assessment of the proper sum to be awarded in compensatory damages is discussed at length in that judgment. Those observations remain pertinent when considering costs and, in particular, when considering what would be a reasonable offer at the time that it was made.
[13][2019] VSC 826, [120].
Ultimately, the jury’s verdict was that the defendant lost. The principal publication was defamatory and a sum of compensatory damages was awarded. Notwithstanding that the defendant was ultimately found liable to pay damages to the plaintiff, it now submits that the plaintiff should be required to pay its costs related to issues established by the defendant that reduced her damages. In this respect, the defendant appears to seek a double benefit from its expenditure. Be that as it may, the proper question is whether the defendant in July 2019 unreasonably failed to make a settlement offer.
The defendant’s offer to settle the proceedings in July 2019 was not a reasonable offer at the time that it was made principally for two reasons. The offer was an attempt to encourage the plaintiff to pay off her solicitors and withdraw without even an apology.
First, the defendant made no offer towards the plaintiff’s entitlement to compensatory damages. Its offer was limited to making a contribution of $50,000 towards the plaintiff’s legal costs incurred to date, as well as forgoing the defendant’s entitlement to legal costs pursuant to previous interlocutory costs orders. The defendant contended in its submission that this offer was valued at about $100,000. It is unlikely that the plaintiff’s costs were less than that sum, although there was no evidence that would enable any form of assessment.
In substance, the offer did not acknowledge the prospect that the plaintiff might succeed in the proceeding. Rather, it was predicated on the expectation that the defendant would succeed and the plaintiff was being offered an opportunity to avoid a very substantial debt in legal costs to her own practitioners and a likely adverse costs order in favour of the defendant. A reasonable offer to settle the proceeding in the context where s 40(2)(a) applies, required reasoning that a plaintiff who recovered some sum in compensatory damages was also likely to recover costs. It is clear from the language of the defendant’s offer that entitlement to compensatory damages was not considered for the purposes of its monetary offer.
Secondly, the defendant also offered to publish a statement that was, in the following terms:
In early 2014, Victoria Police made certain remarks concerning Inflation Nightclub, which Ms Martha Tsamis has claimed caused her hurt and embarrassment.
It is regretful that these comments have offended Ms Tsamis however Victoria Police did not make the comments with the intention to offend or cause upset, hurt or harm to Ms Tsamis.
Victoria Police acknowledges Ms Tsamis’s efforts to improve security in the nightclub industry and crime prevention in the community.
This statement is not an apology, as the defendant’s counsel acknowledged during argument. As I have already stated, a reasonable offer in July 2019 would include the offer of an apology, not a statement to this effect. The plaintiff acted reasonably in refusing to accept either the statement or the offer of contribution towards her costs.
Consequently, I am satisfied that the defendant failed to make a settlement offer as that term is used in the context of s 40 of the Act. Having regard to the objective assessment of risk to the parties in the litigation, the complex and protracted factual inquiry that the defendant proposed to run before the jury and the cost, including a modest sum for compensatory damages, that might have been paid to terminate the proceeding by compromise, the defendant acted unreasonably by not making a settlement offer that met the statutory definition. As the plaintiff acted reasonably in rejecting it, it is unnecessary to consider whether the plaintiff’s ought to have made a further response to it.
For these reasons, I am satisfied that the defendant unreasonably failed to make a settlement offer within the meaning of s 40 and that a partial costs order is not appropriate in the interests of justice.
By the application of s 40(2)(a), Ms Tsamis is entitled to an order for costs of the proceeding to be assessed on an indemnity basis.
The orders of the court will be that:
(a) the defendant pay the plaintiff’s costs reserved by my order of 30 July 2019; and
(b) the defendant pay the plaintiff’s costs of the proceeding to be assessed on an indemnity basis.
---
3
10
0