Turtur AO v Connor
[2021] SADC 151
•17 December 2021
DISTRICT COURT OF SOUTH AUSTRALIA
(Civil)
TURTUR AO v CONNOR
[2021] SADC 151
Reasons for Decision of her Honour Judge Schammer
17 December 2021
DEFAMATION - ACTIONS FOR DEFAMATION - COSTS
The applicant claimed damages in defamation against the respondent arising from her publication of three Facebook posts on 30 March 2019.
In a judgment delivered on 17 November 2021, I found that the first two Facebook posts were defamatory and had been published by the respondent. The defence of triviality was not made out. Damages were assessed in the sum of $30,000.00. I declined to make any award of aggravated damages.
The applicant seeks an order that the respondent pay his costs of action on an indemnity basis, or in the alternative, on a standard costs basis, to be taxed if not agreed, with the action to be certified fit for senior counsel.
In addition, the applicant seeks payment of pre-judgment interest fixed in the sum of $4,073.97.
The respondent contends that the applicant should pay her costs on an indemnity basis or alternatively, on a standard costs basis, for the period on or after 31 March 2021 and that there should be no order as to costs prior to that date, or in the alternative, that there should be no order as to the costs of the proceedings. The respondent opposes any application to certify the action as fit for senior counsel and submits that no award for interest should be allowed or, if interest is awarded, it should not exceed $900.00.
Neither party filed an offer such as to invoke the cost penalties outlined in r 132.10 of the Uniform Civil Rules 2020.
On 31 March 2021, the respondent's solicitors conveyed an offer to the applicant's solicitors to resolve the claim on the basis that she pay damages in the sum of $30,000 and a 'reasonable contribution' to the applicant's costs (the offer of 31 March 2021).
The respondent requested the applicant's solicitors provide details of the applicant's costs, in order for her to consider a reasonable offer.
The applicant never acceded to that request and did not accept the offer.
In issue is:
1. Whether the offer of 31 March 2021 is a 'settlement offer' pursuant to s 38(3) of the Act.
2. Whether the offer of 31 March 2021 is a Calderbank offer, such that the applicant's failure to accept it was unreasonable.
3. Should the Court, in any event, exercise its discretion as to costs such as to depart from the usual course of ordering that costs follow the event.
Orders:
1. The respondent is to pay the applicant's costs incurred up to and including 7 May 2021, on a standard costs basis, to be taxed if not agreed.
2. The respondent is to pay 40% of the applicant's costs incurred after 7 May 2021, on a standard costs basis, to be taxed if not agreed.
3. I decline to certify the action fit for senior counsel.
4. The respondent is to pay to the applicant pre-judgment interest fixed in the sum of $3,000.00.
Defamation Act 2005 (SA) ss 14, 15, 38; District Court Act 1991 (SA) ss 39, 42, referred to.
Turtur AO v Connor [2021] SADC 127; Macks v Viscariello (No 2) [2018] SASCFC 106; Cornes v The Ten Group Pty Ltd & Ors (No 2) [2012] SASCFC 106; Calderbank v Calderbank [1975] 3 All ER 333; Cornes v The Ten Group Pty Ltd & Ors (No 2) [2011] SASC 141; Lesses v Maras (No 3) [2017] SASCFC 154; Morris v McEwen & Anor [2005] SASC 284; BHP Billiton Ltd v Parker [2012] SASCFC 73; Hazeldene's Chicken Farm Pty Ltd v Victorian WorkCover Authority (No 2) (2005) 13 VR 435; Nominal Defendant v Dighton (No 2) [2012] SASCFC 97; Queen Elizabeth Hospital v Curtis (2008) 102 SASR 534; Mercorella v Ellis, per Debelle J, No S4752, 15 August 1994, unreported; Knight Frank Australia Pty Ltd v Paley Properties Pty Ltd (2014) 120 SASR 532; Davis v Nationwide News Pty Ltd [2008] NSWSC 946; Hockey v Fairfax Media Publications Pty Ltd (No 2) (2015) 237 FCR 127; Hughes v Western Australian Cricket Association (Inc) (1986) 8 ATPR 40-748; Bowen v Alsonto Nominees Pty Ltd [2011] WASCA 39 (S); Firebird Global Master Fund II Ltd v Republic of Nauru & Anor (No 2) [2015] HCA 53; Key Logic Pty Ltd v Blue Groper Investments Pty Ltd [2019] FCA 275; Jones v Sutton (No 2) [2005] NSWCA 203; Beasley v Marshall (No 3) (1986) 41 SASR 321; Australian Securities & Investments Commission v West & Anor [2008] SASC 111; Cerutti and Anor v Crestside Pty Ltd and Anor [2014] QCA 33, considered.
TURTUR AO v CONNOR
[2021] SADC 151[Civil]
Introduction
The applicant claimed damages in defamation against the respondent arising from her publication of three Facebook posts on 30 March 2019.
In a judgment delivered on 17 November 2021 (the judgment), I found that the first two Facebook posts were defamatory and had been published by the respondent. The defence of triviality was not made out. Damages were assessed in the sum of $30,000. I declined to make any award of aggravated damages.[1]
[1] Turtur AO v Connor [2021] SADC 127.
The applicant seeks an order that the respondent pay his costs of action on an indemnity basis, or in the alternative, on a standard costs basis, to be taxed if not agreed, with the action to be certified fit for senior counsel.
In addition, the applicant seeks payment of pre-judgment interest fixed in the sum of $4,073.97.
The respondent contends that the applicant should pay her costs on an indemnity basis or alternatively, on a standard costs basis, for the period on or after 31 March 2021 and that there should be no order as to costs prior to that date, or in the alternative, that there should be no order as to the costs of the proceedings. The respondent opposes any application to certify the action as fit for senior counsel and submits that no award for interest should be allowed or, if interest is awarded, it should not exceed $900.
The Facts
The following facts were not in dispute:
1.By letter dated 27 March 2020 (Concerns Notice), the applicant’s solicitors demanded from the respondent:
(a)the publication of an apology on terms acceptable to the applicant (those terms not identified in the letter) with the same prominence of the post, the subject of the proceedings, on her Facebook page;
(b)the payment of the applicant’s reasonable legal expenses; and
(c)payment of the sum of $75,000 in lieu of damages for damage to his reputation and financial loss that he had and continued to suffer due to the defamatory statements made.[2]
[2] Exhibit RJG1 to the Affidavit of Rebekah Jane Griffith sworn on 2 December 2021.
2.On the same day, namely 27 March 2020, the applicant issued these proceedings.
3.Upon receipt of the Concerns Notice, the respondent apologised to the applicant.[3] The letter of apology did not include an offer to pay any monetary sum to the applicant.
[3] Letter of apology dated 3 April 2020, the full terms of which are set forth in the Judgment at [212].
4.By letter dated 7 April 2020, the applicant’s solicitors responded to the letter of apology with a threat to issue legal proceedings within seven days.[4]
[4] Exhibit RJG2 to the Affidavit of Rebekah Jane Griffith sworn on 2 December 2021.
5.In response, the respondent sent a letter dated 20 April 2020, to the applicant’s solicitors, offering to publish an apology and advising of her intent to vigorously defend any proceedings.[5]
[5] Exhibit P1 tendered on 3 December 2021.
6.The action was served on the respondent on 28 April 2020.
7.By letter dated 29 June 2020, solicitors acting on behalf of the respondent wrote to the applicant’s solicitors conveying an offer of $5,000.[6]
[6] Exhibit RJG3 to the Affidavit of Rebekah Jane Griffith sworn on 2 December 2021.
8.On 2 July 2020, the applicant published an apology on her Facebook page.[7]
[7] The full terms of which are set forth in the Judgment at [217].
9.On 22 September 2020, the action was listed for trial for three days, to commence on 7 June 2021.
10.By letter dated 31 March 2021 (the offer of 31 March 2021), the solicitors for the respondent wrote to the applicant’s solicitors outlining details of an offer of settlement, described as:
(a)She offers to pay damages of $30,000; and
(b)She offers to make a reasonable contribution to your client’s costs – to this end, we invite you to indicate what your client’s costs presently are, so that our client can then consider a reasonable offer.
The letter outlined in detail the basis upon which the offer was conveyed, outlining various deficiencies the respondent’s solicitors perceived in terms of the action and indicating that if liability was able to be established, the likely award of damages would be small. The letter stated:[8]
[8] Exhibit RJG4 to the Affidavit of Rebekah Jane Griffith sworn on 2 December 2021.
This offer will remain open for 14 days. Should it not be accepted and should your client not receive an award of damages significantly exceeding $30,000, this letter will be relied on by our client to seek costs on an elevated basis (including indemnity costs under section 38(2)(b) of the Defamation Act 2005 (SA).
Without prejudice, save as to costs.
11.On 7 April 2021, the solicitors for the applicant wrote to the respondent’s solicitors by way of email.[9] The email stated that the offer conveyed in the letter of 31 March 2021 was not a proper settlement offer, either under the Uniform Civil Rules 2020 (the Rules) or under s 38 of the Defamation Act2005 (the Act) because it was not capable of acceptance by their client. It was submitted that this was so, because the terms of the offer were ‘uncertain and undefinable and unascertainable’, because of a failure to outline precisely what contribution would be made by way of costs.
[9] Exhibit RJG5 to the Affidavit of Rebekah Jane Griffith sworn on 2 December 2021.
The email stated:
Ordinarily if a party wishes to make a settlement offer to another party in litigation involving (a) the payment of a sum of money on account of damages and (b) the payment of the other party’s legal costs the settlement offer will be made in the following terms:
· The defendant offers to pay to the plaintiff the sum of $30,000 plus party/party costs to be taxed, if not agreed.
The applicant’s solicitors invited the respondent to clarify precisely what was ‘meant/intended by her with respect to the Applicant’s legal costs of this Court proceeding in terms of her purported settlement offer’, it requested the offer be kept open for a reasonable time after such clarification was provided and it stated:
Our client reserves all of his rights in relation to the matters raised above and will rely upon this communication, and will provide a copy to the Court, in response to any costs application which your client may seek to make in reliance upon her purported settlement offer.
The email did not provide any details as to what costs the applicant had incurred to that date.
12.By letter dated 15 April 2021, the solicitors for the respondent wrote to the applicant’s solicitors, wherein they disputed that the offer of 31 March 2021 was invalid. The letter stated: [10]
[10] Exhibit RJG6 to the Affidavit of Rebekah Jane Griffith sworn on 2 December 2021.
We repeat our client’s request that your client indicate what his costs presently are. Upon provision of that information, our client can then consider a reasonable offer as to costs.
We are instructed that if the information as to your client’s costs is provided, our client is content to keep her offer (as set out in our letter of 31 March 2021) open until we communicate that it is withdrawn. Prior to withdrawing our client’s offer, we are instructed that our client will provide reasonable notice of her intention to withdraw it.
Without prejudice, save as to costs.
13.By letter dated 6 May 2021, the respondent’s solicitors informed the applicant’s solicitors that the offer of 31 March 2021 would be withdrawn at 4:00pm on Friday 7 May 2021, unless they received the requested information as to the applicant’s costs, prior to that time.[11]
14.The applicant’s solicitors did not provide to the respondent’s solicitors any information as to what costs their client had incurred, such that, it can be presumed, the offer of 31 March 2021 was withdrawn as at 4:00pm on 7 May 2021.
15.A mediation was held before his Honour Judge McEwen on 12 May 2021.
16.On 13 May 2021, the respondent filed an offer to settle all claims between the parties on the basis that she pay to the applicant the sum of $24,500 by way of damages. The offer did not include a component as to costs.
17.On 17 May 2021, the applicant filed a ‘formal offer’, within the meaning of UCR 132.4, to settle all claims as between the parties on the basis that the respondent pay $45,000 in damages and the applicant’s costs on a party/party basis.
18.On 26 May 2021, the solicitors for the respondent wrote to the applicant’s solicitors informing them that a defence of qualified privilege, which had been pleaded in the Defence, would no longer be maintained.[12]
19.The trial in this action commenced on 7 June 2021. On 9 June 2021, the trial was adjourned to facilitate the calling of further evidence from the respondent’s witnesses and for closing addresses. The trial was adjourned to 23 June 2021 for that purpose.
20.When the trial resumed on 23 June 2021, the Court was informed that the parties had reached agreement on the further evidence that would have been called by the respondent. The respondent closed her case. However, rather than the parties them making closing addresses, as had been anticipated, the applicant applied to call ‘evidence in rebuttal’ from a new witness, Leanne Grantham. After obtaining various affidavits to support that application, the applicant was granted leave to re-open his case to call such evidence, and to (again) amend his Statement of Claim. This necessitated a further adjournment of the trial, which ultimately resumed and concluded on 11 August 2021. The costs of and incidental to that adjournment were reserved.
Costs
[11] Exhibit P3.
[12] Exhibit P2 tendered on 3 December 2021.
Act and Rules
Pursuant to s 42 of the District Court Act 1991 (the DCA), costs are in the discretion of the court and may be awarded against any person. The discretion is unfettered but must be exercised judicially.[13]
[13] Macks v Viscariello (No 2) [2018] SASCFC 106 at [5].
Pursuant to UCR 193.1, costs are to be determined on the ‘standard costs basis’ and in accordance with the ‘Higher Courts costs scale’, subject to the cost rules in Chapter 11 Part 2 Division 4. I have considered those relevant cost rules.
As a general rule, costs follow the event.[14] However, pursuant to s 42(2) of the DCA, no order for costs will be made in favour of a plaintiff who has brought an action for defamation in the District Court, that ‘might have been brought’ in the Magistrates Court and where that plaintiff recovers a sum of less than $25,000, unless the Court is of the opinion that it is just in the circumstances of the case that the plaintiff receive the whole or part of their costs of action.
[14] UCR 194.5(2).
The applicant’s claim could have been brought in the Magistrates Court, but he achieved an award of damages in excess of $25,000. Nevertheless, this provision is relevant insofar as the respondent’s filed offer of $24,500 was expressed in terms which did not include any sum for costs.
In exercising its discretion as to costs, the Court may have regard to any factors it considers relevant.[15]
[15] UCR 194.6(1).
Those factors include, but are not limited to, those set out in UCR 194.6(2), namely:
(a)any misconduct or unreasonable conduct of a party in connection with a proceeding;
(b)any breach by a party of overarching obligations, these Rules or an order of the Court;
(c)any breach by a party of the pre-action obligations imposed by Chapter 7 Part 1;
(d)the making or not making of an offer by a party to resolve the proceeding;
(e)the non-acceptance by a party of an offer made by another party to resolve the proceeding;
(f)the value and importance of the relief sought or any relief obtained;
(g)any public interest in the subject matter of the proceeding or public benefit from the prosecution or defence of the proceeding; or
(h)whether costs awarded are to be met by a person or out of a fund.
These factors are to be viewed in the context of the overall object of the Rules, namely, to facilitate the just, efficient, timely, cost-effective and proportionate resolution or determination of the issues in the proceedings. [16]
[16] UCR 1.5.
In addition to the DCA and Rules, importantly s 38 of the Act provides:
38—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.
Section 38 of the Act does not provide any basis upon which costs could be awarded to an unsuccessful defendant, on an indemnity basis.
As outlined by the Full Court in Cornes v The Ten Group Pty Ltd & Ors (No 2) (Cornes No 2):[17]
It is the evident purpose of section 38(2)(a) to broaden the situations in which indemnity costs are awarded to plaintiffs to encompass situations in which a plaintiff falls short of bettering a plaintiff’s offer as well as a situation in which a plaintiff achieves substantially more than a defendant’s offer.
[17] [2012] SASCFC 106 at [14].
Issues to be Determined
Having regard to the damages awarded to the applicant, neither of the filed offers invoke the cost penalties as set forth in UCR 132.10.
The dispute as to costs requires the determination of the following issues:
1.Was the respondent’s offer of 31 March 2021 a ‘settlement offer’ within the meaning of s 38(3) of the Act, and if not, is the applicant entitled to his costs of action on an indemnity basis pursuant to s 38(2)(a) of the Act.
2.Was the respondent’s offer of 31 March 2021, an offer conveyed in accordance with the principles in Calderbank v Calderbank (a Calderbank offer),[18] capable of being accepted by the applicant, such that the applicant’s failure to accept such offer was unreasonable? If so, is the respondent entitled to her costs of action from on or after 31 March 2021, or some other date, on an indemnity basis.
3.Should the Court exercise its discretion to depart from the usual course, namely that costs follow the event? Specifically, to what extent should that discretion be influenced by the conduct of the applicant during the course of the proceedings, any failure by the applicant to comply with his pre-action obligations and/or overarching obligations, the issue of proportionality and the applicant’s failure to establish a claim for aggravated damages, being a significant issue in dispute at trial?
[18] [1975] 3 All ER 333.
Is the respondent’s offer of 31 March 2021 a ‘settlement offer’ under s 38(3) of the Act?
The applicant contends that the offer of 31 March 2021 is not a ‘settlement offer’ as defined under s 38(3), and that as no other ‘settlement offer’ was made by the respondent, at any time, he should be entitled to his costs of action on an indemnity basis.
The applicant contends the offer of 31 March 2021 was incapable of being accepted because of its failure to specify payment by way of a monetary sum for costs, or alternatively, payment of costs as stipulated on a particular basis (for example ‘party/party costs to be agreed or taxed’).
It was submitted that as such, the offer of 31 March 2021 failed to be expressed in clear terms and was therefore not a ‘reasonable offer at the time it was made’, such that it could not be considered in terms of the potential application of s 38(2)(a).
The applicant relied upon the decision of his Honour Justice Peek in Cornes v The Ten Group Pty Ltd & Ors (No 2).[19]
[19] [2011] SASC 141.
In that action, the applicant successfully sued the defendants in defamation, with an award of damages made in the sum of $85,000 plus interest.
Following a settlement conference between the parties, the defendants wrote to the plaintiff, offering to pay the plaintiff an all-inclusive sum of $35,000 (of which $20,000 was for damages and $15,000 for costs), with the offer stipulated to remain open for a period of 14 days only and for the terms of the offer to remain confidential between the parties.
This was the only monetary offer that had been made by the defendants and therefore its reasonableness was critical.
Justice Peek determined that the offer was not reasonable and therefore was not a ‘settlement offer’ within the meaning of s 38 of the Act.
His Honour noted that the damages offer of $20,000 was markedly different from that achieved upon judgment, namely $85,000, with that disparity being even greater when the requirement for a confidentiality condition was attached, noting that one of the purposes in awarding damages in a defamation action is to vindicate a plaintiff’s reputation. As such, His Honour determined the offer was not reasonable, and awarded the plaintiff her costs of action on an indemnity basis.
In considering the applicant’s submissions, it is important to return to the terms of the offer of 31 March 2021.
While the offer was initially expressed as being only open for acceptance for a period of 14 days, the offer conveyed therein in fact remained open until it was withdrawn at 4:00pm on 7 May 2021, being a period of more than five weeks.
The damages sum as offered equalled that as awarded to the applicant, albeit that it did not include any potential additional sum for interest.
The language used by the respondent’s solicitors in the offer, namely ‘to make a reasonable contribution towards’ the applicant’s costs, mirrors that used in s 15(1)(f) of the Act and that used by the applicant in his Concerns Notice.[20]
[20] An offer to make amends ‘must include an offer to pay the expenses reasonably incurred by the aggrieved person before the offer was made and the expenses reasonably incurred by the aggrieved person in considering the offer’.
However, s 15(1)(f) relates specifically to the terms of an ‘offer to make amends’ pursuant to the Act. An offer to make amends cannot be made if 28 days have elapsed since the publisher was given a concerns notice, or the publisher has served a defence in an action brought by the aggrieved person.[21] As such, the offer of 31 March 2021, is not an ‘offer to make amends’.
[21] Section 14(1) of the Act.
In Lesses v Maras (No 3) (Lesses),[22] an offer by a defendant to ‘pay a contribution towards your client’s legal costs’ was considered by the court to be ‘too vague and non-specific to amount to a reasonable offer’. Conversely, a later offer ‘to pay a reasonable contribution towards (the applicant’s) legal costs’, accompanied with a statement ‘that if there was any dispute concerning the costs (the respondent) reserved the right to have those costs taxed’, was construed as being an offer to pay the applicant’s costs to be taxed, if not agreed (and thus reasonable).
[22] [2017] SASCFC 154.
The offer of 31 March 2021 included an offer ‘to make a reasonable contribution towards’ the applicant’s costs, and thus can be distinguished from the earlier, unreasonable, offer in Lesses. Of course, the respondent could have simply couched the offer in different terms, by either specifying a monetary sum for damages, or offering to pay party/party costs to be taxed or agreed.
Notwithstanding this, by its terms, the offer of 31 March 2021 made the respondent’s intentions clear – she intended to include, in her offer, a sum to represent what she considered to be a reasonable sum for the applicant’s costs. That intention was further outlined, and clarified, in the letter of 15 April 2021, which extended the time by which the offer could be accepted and went further insofar as it included an offer to provide sufficient warning of the impending withdrawal of the offer. It can therefore be reasonably inferred that had the applicant in fact provided details of his costs incurred to the respondent’s solicitors, the respondent would have considered that information, and responded accordingly with a monetary offer by way of costs, in addition to damages of $30,000. Whether, or not, such sum would have been acceptable to the applicant remains unknown.
The offer of 31 March 2021 succinctly (and, to an extent, accurately) summarised the risks the applicant faced in continuing with the action and correctly estimated the sum ultimately awarded by way of damages (excluding interest). It made a simple request for the provision of information in order for the respondent to be properly informed in putting a monetary offer as to costs, a request the applicant chose to ignore.
Having regard to all of the circumstances, I am not satisfied that the offer of 31 March 2021 was not a ‘reasonable offer at the time it was made’. I am satisfied that the offer of 31 March 2021 is a ‘settlement offer’ within the meaning of s 38(3) of the Act. It follows that I am not satisfied that the respondent ‘unreasonably failed to make a settlement offer’.
The lowest settlement offer conveyed by the applicant to the respondent was the formal offer, filed in the sum of $45,000 (plus costs). This represents a 50% uplift, excluding interest, on the actual damages awarded at trial.
As such, the Court cannot be satisfied that the respondent’s failure to accept that offer amounted to an unreasonable failure to agree to a settlement offer made by the applicant.
The applicant has not established an entitlement to his costs of action on an indemnity basis pursuant to s 38(2) of the Act.
Is the offer of 31 March 2021 a ‘Calderbank offer’ and was the applicant’s failure to accept it unreasonable?
The offer 31 March 2021 was neither a ‘formal offer’ nor a ‘relevant offer’ within the meaning of the Rules, such that the cost penalties in the Rules are inapplicable.[23]
[23] UCR 132.10 and UCR 132.11.
A respondent’s failure to file a formal offer does not necessarily preclude them from relying on the principles applicable to offers made pursuant to Calderbank v Calderbank.[24]
[24] [1975] 3 All ER 333.
However, any such offer may not necessarily be given the same weight, in the exercise of the discretion as to costs, as the weight that may be given to a formal offer. This is particularly the case where an offer is expressed to be open for a short period of time only or if the offer is framed in terms which are inconsistent with the spirit and intent of the Rules, which require specificity in terms of the wording of formal offers.[25]
[25] Morris v McEwen & Anor [2005] SASC 284 at [71]-[79]; BHP Billiton Ltd v Parker [2012] SASCFC 73 at [270].
The policy rationale of Calderbank offers is to encourage settlement, so as to save the costs incurred by litigants, save the public costs associated with the unnecessary prolongation of litigation and to properly indemnify a party who demonstrated a willingness to resolve the action on a basis later demonstrated to have been reasonable.
The potential consequences of a party failing to better a Calderbank offer are well known and as stated in Dal Pont, Law of Costs are:[26]
The first is that the court allows the offeree costs up to the date of the offer (or shortly thereafter to allow time to consider the offer), but then may order the offeree to pay the offeror’s costs after that date. The second relates to allowing the offeror those costs quantified on an indemnity basis. …
[26] Lexus Nexus Butterworth’s Third Edition at [13.60].
In Hazeldene’s Chicken Farm Pty Ltd v Victorian WorkCover Authority (No 2) (‘Hazeldene’)[27] the court recognised that the mere fact a Calderbank offer had been made did not give rise to a presumption that the party that rejected it should pay the offeror’s costs on an indemnity basis if the offeree receives a less favourable result. Rather, the court indicated that the correct approach was to treat the rejection of a Calderbank offer as a matter to which the Court should have regard when considering whether to order indemnity costs. [28]
[27] (2005) 13 VR 435.
[28] Ibid at [17]-[20].
The Court determined that the critical issue was whether the offeror’s refusal to accept the offer was reasonable, having regard to all of the circumstances. The court described the proper test to be applied of reasonableness as follows:[29]
… We see no justification for a more stringent test such as ‘manifestly’ or ‘plainly’ unreasonable.
Of course, deciding whether conduct is ‘reasonable’ or ‘unreasonable’ will always involve matters of judgment and impression. These are questions about which different judges might properly arrive at different conclusions. As Gleeson CJ said recently, “unreasonableness is a protean concept”. But a test of reasonableness is, we think, entirely appropriate to the exercise of a discretion such as this.
[29] Ibid at [23]-[24].
In the case of Nominal Defendant v Dighton (No 2),[30] the Full Court accepted the matters as identified in Hazeldene as being the appropriate criteria to consider in exercising the discretion as to costs where a Calderbank offer had been made. Those factors are:
1.The stage at which the proceedings were at the time the offer was received.
2.The time allowed to the offeree to consider the offer.
3.The extent of the offer.
4.The prospects of success from the date of the offer.
5.The clarity in which the terms of the offer were expressed.
6.Whether the offer foreshadowed indemnity costs in the event the offeree rejected it.
[30] [2012] SASCFC 97.
The offer of 31 March 2021 was provided approximately six weeks prior to mediation and approximately two and a half months prior to trial. As such, it was made prior to the parties undertaking the costly exercise of preparing the matter for trial, with a view to avoiding those costs being incurred.
As stated, although the offer initially stipulated that it would be open for a period of only 14 days, it was then kept open until it was formally withdrawn on 7 May 2021. It was therefore capable of being accepted for a period of just over five weeks.
The offer outlined the potential risks associated with the continuation of the proceedings and acknowledged the practical reality of any likely assessment of damages, having regard to the nature and extent of the publication, the absence of any evidence to establish the ‘grapevine effect’ or of any actual damage having been sustained to the applicant’s reputation, arising from the fact of publication.
The offer did not expressly refer to the decision in Calderbank v Calderbank. It foreshadowed the respondent seeking costs on an ‘elevated basis’ if the applicant did not achieve an award of damages significantly exceeding $30,000, and referred to a possible claim for indemnity costs, albeit in the context of s 38(2)(b) of the Act, which is inapplicable.
The sum offered of $30,000 by way of damages reflects the award of damages made by this court. It does not include any component for pre-judgment interest, meaning that from a purely monetary perspective, the offer cannot be said to have bettered the judgment ultimately delivered.
As to the question of clarity, as previously stated, the offer did not include a separate monetary sum for costs, nor stipulate that costs would be paid on a party/party basis to be taxed if not agreed, rather the offer included an offer to ‘make a reasonable contribution to the applicant’s costs’.
During submissions, counsel for the respondent conceded that by the use of that terminology, the respondent was not intending to make an offer to fully compensate the applicant for his costs, but that the wording used was designed to replicate that as set forth in the applicant’s Concerns Notice (whereby the applicant had sought payment of his ‘reasonable legal expenses’) and that set forth in s 15(1)(f) of the Act.
I have carefully considered not only the wording used in the offer of 31 March 2021, but the relevant strengths and weaknesses of the parties’ respective cases and the ultimate findings of this court.
Having done so, I am not satisfied that the applicant’s decision to reject the offer was unreasonable, in the sense that the respondent should be entitled to indemnity costs as a consequence. I am not satisfied that such a consequence should ensue as a result of the applicant’s failure to accept an offer which did not include any specific component as to costs or clarity as to the basis upon which costs would be paid. This is notwithstanding the applicant’s failure to respond to the reasonable request made in the letter of offer to provide details of his costs, in order for a further offer, including a certain sum for costs, to be made. Absent such a response, the respondent could have conveyed another letter of offer expressly stating what sum she was prepared to pay as to costs, or the basis upon which costs were to be paid (ie party/party costs to be taxed if not agreed, or some proportion thereof).
I decline to order the applicant pay the respondent’s costs on an indemnity basis, from on or after 31 March 2021.
Matters relevant to the exercise of the discretion
Notwithstanding the above findings, it remains for the Court to consider whether, in this case, there should be any departure from the normal course, that is, that costs follow the event, and that such costs be assessed on a standard costs basis.
The respondent submitted that this was a case, where a combination of circumstances should lead the court to exercise its discretion to make a different costs order and to either award the respondent her costs of action on a standard costs basis from 31 March 2021, or alternatively to make no order as to costs of the action.
The respondent relied on several factors, namely:
1.What was said to be the applicant’s failure to comply with his pre-action obligations.
2.The applicant’s failure to accept the offer of 31 March 2021.
3.The applicant’s failure to take any steps to meaningfully engage in negotiations with the respondent at the time the offer of 31 March 2021 was made, or at any time, consistent with the unreasonable approach taken by the applicant to negotiations throughout the action.
4.The applicant’s limited success on the claims as advanced, namely:
(a)he succeeded only on a variant defamatory meaning to those pleaded with respect to the first post;
(b)he succeeded only on one defamatory meaning as pleaded with respect to the second post;
(c)he failed to establish the third post was defamatory; and
(d)he failed entirely on the claim for aggravated damages.
5.To award the applicant his costs of action on a standard costs basis would result in such costs being out of proportion to the value of the applicant’s claim.
I will address each of these submissions below, noting there is some overlap in the matters advanced.
Pre-action Obligations
Any breach by a party of its pre-action obligations is a factor which may be considered in the exercise of the Court’s discretion as to costs.[31]
[31] UCR 194.6(2)(c).
At the time the action was issued, the District Court Civil Rules 2006 were in operation.
Pursuant to r 33(2), the applicant was required, at least 21 calendar days before commencing an action, to give to the respondent written notice containing or accompanied by:
(a)an offer to settle the applicant’s claim on a basis set out in the notice;
(b)sufficient details of the claim and sufficient supporting material to enable the respondent to assess the reasonableness of the applicant’s offer of settlement and to make an informed response to that offer; and
(c)if the applicant was in possession of expert reports relevant to the claim, copies of those expert reports.
The applicant did not comply with r 33(2). The proceedings in this action were filed on the same day as the date of the Concerns Notice, and therefore before the respondent was given any notice, at all, of the applicant’s concerns arising from the posts.
The Concerns Notice was, as described in my judgment, expressed in language which was verbose and difficult to follow. It sought damages not only for reputational damage, but for ‘financial loss’ in circumstances where there was no evidence of the applicant having ever sustained any such loss.
That being said, it was not until approximately one year after the action was issued and the Concerns Notice served, that the respondent made a reasonable offer to resolve the claim, namely the offer of 31 March 2021.
As outlined by Kourakis J (as his Honour then was) in Queen Elizabeth Hospital v Curtis:[32]
… where it appears that the claim would almost certainly have settled before action, there will be a strong case for denying a plaintiff all of the costs he or she incurs by instituting an action.
[32] (2008) 102 SASR 534 at [152].
It cannot be said that this claim would almost certainly have settled before action had the applicant complied with his pre-action obligations.
Notwithstanding this, the applicant’s failure to comply with such obligations remains a relevant factor in the exercise of the court’s overall discretion as to costs.
Failure to accept offer of 31 March 2021 and conduct generally as to negotiations
Section 38(1) of the Act stipulates that in awarding costs in defamation proceedings, the court may have regard to the way in which the parties to the proceedings conducted their cases.
In addition, UCR 194.6(2)(a) stipulates that in exercising its discretion as to costs, the court may have regard to any ‘misconduct or unreasonable conduct of a party in connection with a proceeding’.
The applicant’s ‘conduct’ complained of by the respondent is what was said to be a failure on the applicant’s part, throughout the duration of the action, to take a reasonable approach to negotiations or to express any willingness to achieve a sensible resolution, nor narrow the issues in dispute.
This, it was said, was evident from the outset, having regard to the tone and content of the Concerns Notice. It was submitted that had the Concerns Notice been couched in more realistic and reasonable terms, the action may have been capable of resolution at an early stage.
The Concerns Notice had demanded an unreasonably high monetary payment in lieu of damages ($75,000) and included a claim for financial loss which was devoid of any merit, noting the proceedings, as filed on the same day, did not include any claim for financial loss.
Further, the Concerns Notice had requested an apology be made on Facebook, in terms acceptable to the applicant., but failed to include those terms. At trial, the applicant gave evidence that the fact the respondent posted the apology on Facebook made him even more angry, albeit this is what he had requested in the Concerns Notice, and notwithstanding his continued failure to outline the terms of any acceptable apology.
Further, immediately upon receipt of the Concerns Notice, the respondent wrote a letter of apology to the applicant. It was submitted that the applicant’s response to that apology, being the letter of 7 April 2020,[33] was written in aggressive terms, repeated the claim that numerous persons of influence in government had been targeted by the respondent, when that assertion was not advanced at trial and that such persons had in fact, read the posts, when no such persons were called to give evidence at trial.
[33] Exhibit RJG2 to the affidavit of Rebekah Jane Griffith sworn on 2 December 2021.
The letter of 7 April 2020 included the following statement:
In terms of any apology you see fit to make or publish that is of course your prerogative to do so...
Much was made at trial of the purported inadequacy of the Facebook apology, including a claim being advanced for aggravated damages, on the basis that this apology was made without recourse to the applicant and had caused reputational damage of itself, by drawing attention to the posts without properly retracting or apologising for their defamatory meaning.
It was submitted that both the Concerns Notice and the letter of 7 April 2020 demonstrated the approach taken by the applicant to the proceedings generally.
The applicant’s unreasonable conduct was said to be further apparent from the manner in which he dealt with the offer of 31 March 2021, insofar as he declined to accede to what was a reasonable request to simply provide the respondent’s solicitors with details of his costs incurred to date, and rather than engage in negotiations at that time, simply ‘stone-walled’ the respondent. It was submitted that even if the applicant treated the offer as an ‘invitation to treat’, a reasonable response would have been to agree to accept the sum of $30,000 by way of damages, but put a counter-proposal as to costs, thus meaningfully contributing to and advancing the negotiations.
It was submitted that had the applicant adopted a reasonable approach to the offer of 31 March 2021, the action would have settled shortly thereafter.
Counsel for the respondent submitted that the applicant’s persistence in pursuing the unsuccessful claim for aggravated damages had meant he pushed on with his claim, rather than engaging properly in the reasonable settlement negotiations being initiated and pursued by the respondent in the first half of 2021.
Counsel for the applicant submitted that it was ‘rank speculation’ that the action may, let alone would, have settled, had the applicant provided his cost details to the respondent upon receiving the offer of 31 March 2021, particularly having regard to the fact that thereafter, the formal offer filed by the respondent was for a lesser sum, of only $24,500. He submitted the offer of 31 March 2021 was incapable of being accepted, given its lack of certainty in terms of the costs component.
Generally speaking, in considering conduct in the context of the issue of costs, the relevant conduct must be connected with, or leading up to, the litigation.[34] Further it must be more than the fact that the relevant evidence of a party was rejected and the conduct must have caused or contributed to the existence, continuation or the extent of the litigation.[35]
[34] Mercorella v Ellis, per Debelle J, No S4752, 15 August 1994, unreported.
[35] Knight Frank Australia Pty Ltd v Paley Properties Pty Ltd (2014) 120 SASR 532 at [53]-[58].
Pursuant to UCR 194.6(2)(b), the court may have regard to any breach by a party of the overarching obligations, in the exercise of its discretion as to costs.
UCR 3.1 outlines the ‘Overarching obligations’ imposed upon a party or a person appearing or required to appear before the court with respect to a proceeding. Those obligations include, inter alia, an obligation to:
(g)use reasonable endeavours to resolve, or alternatively narrow the scope of, a dispute in or the subject of the proceeding by agreement;
(h)use reasonable endeavours to ensure that the time and costs incurred are reasonable and proportionate to-
(i) the importance and value of the subject matter of the proceeding or step in the proceeding; and
(ii) the complexity of the issues in the proceeding or step in the proceeding…
Further, UCR 194.6 expressly includes, as factors relevant to the exercise of the costs discretion, the ‘making or not making of an offer to resolve the proceeding’[36] and ‘the non-acceptance by a party of an offer made by another party to resolve the proceeding’.[37] The inclusion of these factors, in circumstances where the Rules also provide an extensive mechanism and framework for the making of formal offers and cost penalties within that framework, demonstrates the emphasis placed on ensuring the parties use their best endeavours to resolve disputes by way of negotiation, thus reducing the time and cost associated with the unnecessary prolongation of litigation.
[36] UCR 194.6(2)(d).
[37] UCR 194.6(2)(e).
In Lesses,[38] the Full Court observed that in circumstances where an unsuccessful party had made a reasonable offer to resolve a claim, both s 38(1) of the Act, and the general costs discretion, were enlivened. The Full Court stated:[39]
...the court may take into account under subsection 38(1) the parties’ conduct in relation to settlement in circumstances not covered by section 38(2) such as a reasonable offer by a defendant not accepted by a successful plaintiff.
[38] [2017] SASCFC 154 at [52].
[39] [2017] SASCFC 154 at [56].
The Court referred to the observations made by it in Cornes No 2 citing what was said by McLellan CJ in Davis v Nationwide News Pty Ltd, namely that: [40]
…the intent of the legislation was to promote a “speedy and non litigious method of resolving disputes and to avoid protracted litigation wherever possible”.
[40] [2008] NSWSC 946 at [26].
Further, in Lesses, the Full Court stated:[41]
Although the rules in subsection 38(2) do not apply, it remains appropriate under subsection 38(1) and the general costs discretion to consider whether the cost of the litigation should be seen as being caused by one or other of the parties being unwilling to resolve the matter on terms measured by reference to the result of the action.
[41] [2017] SASCFC 154 at [71].
In my judgment I referred to the position adopted by the applicant at the commencement of the action and maintained throughout, as being one which over-emphasised and exaggerated the nature and extent of the possible impact of the defamatory publications. I made observations as to the tone and content of the Concerns Notice, the first notice the respondent had received of the applicant’s concerns, and how that characterised and impacted on the respective positions then adopted by the parties during the litigation.
At the time of judgment, I was unaware of the full content of the Concerns Notice. The terms and tone used in the Concerns Notice, are such that on any reasonable interpretation, it was unlikely to prompt a swift negotiated resolution of the action. Rather, it pitched the potential of the applicant’s claim unreasonably high (indeed more than twice as high than the damages ultimately awarded) and included an unsubstantiated claim for financial loss. The letter of 7 April 2020, written in similarly aggressive terms, reinforced the message that the applicant was not prepared to consider resolution unless and until a significant monetary offer was made to him by the respondent.
The first and only genuinely reasonable offer made by the parties to resolve the claim, was that made by the respondent on 31 March 2021. Thereafter, for a period of more than five weeks, the applicant’s solicitors failed to accede to the simple request made of them by the terms of the offer, namely, to provide details of their client’s costs to date, in order for the respondent to then consider, and make, a monetary offer as to costs. That failure to do so, demonstrates the applicant’s unwillingness to enter into any discussions as at that date with respect to settlement for a sum at or about the level as proposed by the respondent.
The position adopted by the applicant with respect to the offer of 31 March 2021, was indicative of the general position adopted by him in these proceedings, being a position inconsistent with either a readiness or willingness to resolve the action for a reasonable sum or narrow the issues in dispute.
Although the respondent could have simply made an offer to pay a fixed sum, or to pay the applicant’s costs on a standard costs basis, in repeating her request for the applicant to provide his cost details, and extending the time by which the offer was able to be accepted to 7 May 2021, the respondent was actively engaging in the negotiating process.
Whilst one cannot determine what would have occurred, had the applicant provided details of his costs in response to offer of 31 March 2021, the very fact that he took no step to do so, and instead simply responded in the terms as set forth in the email of 7 April 2021, demonstrates a failure to use reasonable endeavours to resolve the claim and a failure to narrow an issue in dispute (namely costs).
There was no response ever made to the offer of 31 March 2021, save for the applicant filing a formal offer for $45,000 plus costs on 17 May 2021. That offer represented 50% more than the damages ultimately awarded.
In my view, the applicant’s approach generally to a negotiated resolution, and his specific failure to actively engage in settlement discussions at the time of the offer of 31 March 2021, are relevant factors to consider in my overall discretion, and pursuant to s 38(1) of the Act, and support a finding that there be some departure from the usual course.
Mixed Success – Issues
The respondent submitted that in addition to only achieving partial success on the issue of whether the posts contained the defamatory meanings as alleged, the applicant had continued with a constantly changing and evolving claim for aggravated damages. The claim for aggravated damages was ultimately unsuccessful, and had wasted significant time and costs, both before and during the trial, being the reason why the trial was adjourned, part-heard, from June until August.
The respondent admitted that the real focus at trial was the claim for aggravated damages being a tenuous claim which ought to have never been pursued. It was submitted that this was evident, both from the changing nature of the applicant’s case in respect of the second basis of the claim for aggravated damages,[42] which necessitated two amendments to the Statement of Claim during the trial and unnecessarily added to the length of the trial in terms of the evidence required to be called.
[42] See Judgment at [29].
It was submitted that absent the claim for aggravated damages, the trial would have likely only lasted one day, with the only required witnesses being the applicant, the applicant’s partner and possibly the respondent. It was submitted that the non-publication witnesses were likely to have been capable of being agreed in their entirety.
In Hockey v Fairfax Media Publications Pty Ltd (No 2),[43] his Honour Justice White considered whether it was appropriate to award a successful plaintiff only a proportion of his costs, and in fact order he pay the defendants a proportion of their costs in defending the action, notwithstanding the plaintiff’s partial success in the action.
[43] (2015) 237 FCR 127.
His Honour outlined the principles enunciated by Toohey J in Hughes v Western Australian Cricket Association (Inc),[44] that litigants who succeed only in part, may be required to bear the expense of litigating those issues on which they were unsuccessful and in addition be ordered to pay the other party’s costs of such issues.[45]
[44] (1986) 8 ATPR 40-748.
[45] (2015) 237 FCR 127 at [84].
His Honour Justice White stated:[46]
[46] Ibid at [85]-[88].
The statements of principle by Toohey J were those in the judgment of Bray CJ in Cretazzo v Lombardi (1975) 13 SASR 4 at 12:
A successful party who has failed on certain issues may well not only be deprived of his own costs of those issues, but ordered in addition to pay his opponent’s costs of them, and in this context “issue” does not mean a precise issue in the technical pleading sense, but any disputed question of fact or, in my view, of law.
Jacobs J, who agreed with the reasons of Bray CJ, cautioned (at 16) against the too ready apportionment of costs according to a plaintiff’s failure on some issues in the trial:
[T]rials occur daily in which the party, who in the end is wholly or substantially successful, nevertheless fails along the way on particular issues of fact or law. The ultimate ends of justice may not be served if a party is dissuaded by the risk of costs from canvassing all issues, however doubtful, which might be material to the decision of the case. There are, of course, many factors affecting the exercise of the discretion as to costs in each case, including in particular, the severability of the issues, and no two cases are alike. I wish merely to lend no encouragement to any suggestions that a party against whom the judgment goes ought nevertheless to anticipate a favourable exercise of the judicial discretion as to costs in respect of issues upon which he may have succeeded, based merely on his success in those particular issues.
The caution to which Jacobs J referred has been recognised in many of the subsequent authorities. In Waters v PC Henderson (Australia) Pty Ltd [1994] NSWCA 338; (1994) 254 ALR 328 at 330-331, Mahoney JA approved a statement in the Supreme Court Rules 1970 (NSW) that an apportionment of costs would not be appropriate unless the issues on which the successful plaintiff failed were “clearly dominant or separable”:
Where the proceedings involve multiple issues the application of the rule that costs follow the event may involve hardship where a party succeeds on some issues and yet fails on others. Particularly is this so where, for example, a defendant succeeds on issues that occupied the bulk of the time taken by the proceedings. Nevertheless unless a particular issue or group of issues is clearly dominant or separable it will ordinarily be appropriate to award the costs of the proceedings to the successful party without attempting to differentiate between those particular issues on which it was successful and those on which it failed.
However, courts are now more ready to apportion the costs awarded to a party who succeeds in only some of the claims he or she brings. This may reflect the increasing factual and legal complexity of modern litigation and the multiplicity of factual and legal issues it entails, and the tendency of applicants to pursue multiple claims involving different factual enquiries in the one proceeding. It may also reflect an encouragement by the courts to applicants to exercise some discrimination in their selection of the claims they litigate. It is to be remembered that the inclusion of multiple causes of action in the one proceeding, even if based on a common substratum of fact, adds to the cost of the pleadings, interlocutory activity, preparation and presentation of the evidence at trial as well as of the trial itself. Nowadays, courts are particularly conscious of their role in attempting to control the cost of litigation.
The applicant rejected any suggestion that the court should approach the issue of costs on the narrow basis as argued by the respondent.
The applicant relied on what was said by the Supreme Court of Western Australia in Bowen v Alsonto Nominees Pty Ltd, namely:[47]
The court may, in the exercise of its discretion, order that a successful party recover only a portion of its costs where that party has been unsuccessful in respect of certain discrete issues. But that should not be done as a matter of course. To embark as a general practice upon an analysis of which party was successful on each issue, or necessarily to deprive a successful party of some portion of its costs if it has lost on a particular issue, would be likely to add further uncertainty and complexity to the outcome of litigation, derogate from the prospect of settlement, and oblige the court to hear lengthy and frequent arguments in relation to costs as an additional burden on its resources and the costs of the parties …
[47] [2011] WASCA 39 (S) at [6].
The applicant also relied on what was said by the High Court of Australia in Firebird Global Master Fund II Ltd v Republic of Nauru & Anor (No 2), namely that there were good reasons not to encourage applications regarding costs on an issue-by-issue basis, involving apportionments based on degrees of difficulty of issues, time taken to argue them and the like.[48]
[48] [2015] HCA 53 at [6].
Similarly, the applicant relied on the observations of Derrington J in in Key Logic Pty Ltd v Blue Groper Investments Pty Ltd, namely:[49]
It is apparent that a judge exercising their discretion to award costs is not to slavishly adhere to the rule that costs follow the event in all cases, but that does not mean that some minute dissection ought to take place of the issues on which the parties respectively succeeded. Such an analysis is not called for and nor is it appropriate: see in the appellate context Firebird Global Master Fund II Ltd v Republic of Nauru (No. 2) (2015) 90 ALJR 270, 271 [6]. A rather more broad brush approach must be adopted.
In the awarding of costs, the Court ought keep in mind that litigation is fluid and dynamic. The nature and scope of all cases vacillate during the course of the proceedings. Issues which appear to have a substantial degree of veracity at the commencement of litigation often diminish in importance whilst those which, at the commencement of the action, seem relatively minor, subsequently assume greater relevance. Indeed, new issues often emerge during the interlocutory stages and assume a centrality of importance. This fluidity is necessarily a function of the interlocutory processes where discovery and the exchange of witness statements clarify or redefine issues. It is a usual aspect of advanced litigation and parties should not suffer detriment merely because arguable issues are advanced in litigation but not successfully.
It must also be kept in mind that many issues in a case might only be fully resolved by the presentation of evidence and the effect of cross-examination. Parties are not required to abandon claims or defences which have some merit to them merely because they are not of the strongest points in their case. However, where there is no reasonable justification for advancing a claim or raising a point of defence, different considerations necessarily apply.
[49] [2019] FCA 275 at [14]-[16].
The issues upon which the respondent had a degree of ‘success’ at trial related to my findings pertaining to the meanings conveyed by the posts, and whether or not they were defamatory, and on the issue of aggravated damages. As to the former, I am not satisfied that the determination of those particular issues was separate and discrete in the sense that it is possible, let alone appropriate, to apportion costs by reference to the time taken on the determination of each of those issues at trial.
The respondent denied any of the posts conveyed any defamatory meaning. Although I found the third post was not defamatory, the time consumed on this issue at trial was modest, and in any event, the evidence led with respect to the third post was incidental to the evidence generally on the topic of the posts, their creation, and their publication.
I do not intend to repeat what I have said in detail in my judgment concerning the case advanced by the applicant for aggravated damages and in particular, the allegations of malice directed as against the respondent. Counsel for the applicant submitted that much of the evidence led on that issue was required in any event, for example, in assessing general damages and in particular, the extent of the publication and its possible impact on the applicant having regard to the potential audience (and who those persons were, in terms of the potential impact on the applicant). I accept those submissions.
Further, having regard to my findings, I am satisfied that many of the issues advanced by the applicant, primarily on the issue of aggravated damages, did require testing on cross-examination.
Although ultimately the claim for aggravated damages was unsuccessful, it is not my view that there was ‘no reasonable justification’ for advancing the claim made for such damages. Indeed, the court rejected aspects of the respondent’s evidence which potentially could have resulted in the court reaching a different overall conclusion.
In such circumstances, I am not satisfied that it is appropriate for the applicant to be ordered to pay the respondent’s costs incurred on a basis which seeks to apportion the time and cost devoted to aggravated damages, from the other aspects litigated. However, I will return to the topic of apportionment generally, below.
Proportionality
The final issue agitated by the respondent was that to order costs follow the event, would result in the costs incurred by the respondent being out of proportion, and likely exceed by a significant sum, the damages ultimately awarded against her.
The value and importance of the relief sought or any relief obtained is a relevant factor to be considered in the exercise of the court’s discretion as to costs.[50]
[50] UCR 194.6(2)(f).
The action was obviously important to the applicant, as it was the mechanism for him to achieve vindication for the defamatory statements published by the respondent.
However, if the application of the usual rule that costs follow the event, means that the amount of the costs that would be recovered by a successful party is disproportionate to the value of the subject of the litigation, that is a relevant factor to take into account in the exercise of the court’s discretion.[51]
[51] Lesses v Maras (No. 3) [2017] SASCFC 154 at [42].
The importance of efficiency and cost-minimisation is reflected in the Object of the Rules.[52]
[52] UCR 1.5.
In Jones v Sutton (No 2) (Jones), the New South Wales Court of Appeal considered the relevance of proportionality in the exercise of the costs discretion. In that case, the court said:[53]
There has been considerable emphasis in the courts in recent years on litigation being conducted justly, quickly and cheaply …
In this case, there is no charge that the appellant failed to comply with the rules in a timely manner. However, the objective of the justice system to resolve disputes in a “just, quick and cheap” manner is not confined to ensuring there has been compliance with the Rules of Court …
The High Court has expressed concern about the cost of litigation in the context of the immunity of barristers from claims in negligence. This concern has also found expression in judgments of this Court and in the Divisions of the Supreme Court in respect of a variety of issues …
In England, the Right Honourable Lord Woolf was appointed by the Lord Chancellor to review the rules and procedures of the Courts in England and Wales with the aim, inter alia, of improving access to justice and reducing the cost of litigation. Lord Woolf’s Access to Justice Report was delivered in July 1996. The unacceptability of costs being disproportionally high to the quantum of a claim was emphasised throughout the Report.
Even though the trial judge found that this was a serious defamation, the reality of this matter is that the appellant was awarded $5,000.00 after 17 days in court (including on the application for leave to appeal and the appeal). …
… Likewise the costs of the proceedings as a whole, given the length of the trial and the engagement of senior and junior counsel, will have been disproportionate to the claim. Massively so. In our opinion, the Court should not facilitate such disproportion by making an order for costs that simply follows the event.
[53] [2005] NSWCA 203 at [48]-[53] citations omitted.
The Court of Appeal in Jones ordered the plaintiff recover costs for only four days of trial, on the basis of junior counsel only, together with reasonable costs for preparation for trial and that otherwise each party was to bear their own costs of action. While there were other factors that influenced the exercise of the discretion and led to that outcome, that case illustrates the relevance of disproportionality when exercising the discretion as to costs.
In this case, the damages awarded of $30,000 are considerably higher than the $5,000 damages awarded in Jones. Nevertheless, the costs of action of each party on a standard costs basis, in particular having regard to the applicant’s engagement of senior counsel, would be significantly greater than the value of the subject matter of the litigation. This needs to be weighed together with other relevant factors in determining an appropriate costs order in this matter.
Other Relevant Matters
In my judgment, I outlined aspects of the respondent’s conduct in the defence of the action.
The only monetary offer made by the respondent to resolve the claim prior to conveying the offer of 31 March 2021, was a nominal offer of $5,000 made on 29 June 2020. The respondent also maintained the defence of qualified privilege until shortly prior to the trial, with her solicitors communicating the fact that defence was to be withdrawn by letter to the applicant’s solicitors dated 26 May 2021.[54]
[54] Exhibit P2.
The respondent refused to concede the issue of publication at trial and maintained the defence of triviality.
Insofar as the applicant’s ‘conduct’ is a factor relevant to the Court’s discretion, similarly the conduct of the respondent is also a relevant matter to be considered.
The trial of this action was adjourned on 23 June 2021 to enable the applicant to call evidence from Ms Grantham. At that time, the costs of and incidental to the adjournment were reserved.
Ms Grantham’s evidence went solely to the issue of aggravated damages.
While I accepted Ms Grantham’s evidence, in combination with the other evidence, it did not cause me to be satisfied on balance as to the applicant’s claimed knowledge of the respondent’s ill will or malice against him.
Ms Grantham’s affidavit addressed the circumstances in which she came forward as a witness, namely after learning of the action through the media reporting of the trial. However, Ms Grantham held the position of General Manager of AME/Events SA from about May 2004 to mid-2008. During the trial the applicant gave evidence that the Tour of Flanders exchange, being a critical aspect of the case in malice against the respondent, had occurred at an AME board meeting. Given the applicant’s changing case as to when and in what circumstances the alleged exchange was said to have occurred, Ms Grantham’s potential relevance as a witness at any trial ought to have been apparent to the applicant prior to trial.
Conclusion – as to costs
Having regard to the matters outlined above, and in the exercise of my discretion as to costs, I am satisfied that it is appropriate to depart from the usual course and to award costs on a basis other than ‘costs follow the event’.
Notwithstanding the applicant’s failure to comply with his pre-action obligations, I am not satisfied that in the absence of such failure, the action would have settled prior to it being commenced.
Both parties assumed diametrically opposed positions as to the likelihood of the action being successful and its potential in terms of damages.
However, when the respondent made the offer of 31 March 2021, this represented a significant change in her stance, and demonstrated a genuine willingness and desire to compromise. Rather than engage with the respondent in that process, being a process commenced sufficiently in advance of trial to potentially save the costs of preparing for trial (in addition, of course, to the costs of any trial), the applicant maintained his stance.
As stated, it was a simple exercise for the applicant to provide details of his costs to the respondent’s solicitors as requested by the offer of 31 March 2021. Alternatively, the applicant could have responded with his own offer. He did neither. Had the applicant properly complied with his overarching obligations, namely, to use his reasonable endeavours to resolve the claim, or to narrow the issues in dispute, at the time of receiving that offer, there remained the possibility of resolution. The manner of his response to the offer of 31 March 2021 effectively stifled that possibility.
The applicant filed a formal offer of $45,000 plus costs after the mediation, and after the respondent filed her offer of $24,500. Having regard to the sums involved, the difference in the applicant’s filed offer and the offer of 31 March 2021, was modest in terms of the damages component.
Having failed to properly engage in the negotiating process in response to the offer of 31 March 2021, despite what was a modest difference in the actual positions of the parties, the action then proceeded to trial, with the applicant represented by senior counsel. The costs incurred as a result have significantly exceeded both the difference in the offers exchanged before trial and the potential of the claim.
In addition, the applicant amended his claim during the trial on two separate occasions, and the applicant’s late application to call Ms Grantham meant that the trial was adjourned part-heard, effectively wasting nearly a day of trial and adding to preparation costs, in terms of the parties being required to revisit the matter, several weeks thereafter.
Having regard to these factors, in the exercise of my discretion, I order that the respondent pay the applicant’s costs on a standard costs basis up to and including 7 May 2021.[55]
[55] Allowing appropriate time for the applicant to have provided his cost details, a response thereafter from the respondent and time for the applicant to consider such response.
However, from thereafter, I consider it appropriate for the applicant’s costs to be reduced, and for the applicant to be entitled to only a portion of the costs he incurred. The ultimate sum awarded, by way of costs, must also reflect the fact that the respondent should not be required to bear any costs of or incidental to the amendment of the Statement of Claim during the trial, and the wasted costs associated with the adjournment of the trial. The costs incurred to tax those costs, if they are not agreed, may themselves be out of proportion and simply add to the overall cost of this matter, such that I have taken those costs into account in arriving at the appropriate apportionment.
Having done so, I order that the respondent is to pay 40% of the applicant’s costs incurred after 7 May 2021, on a standard costs basis.
Senior Counsel
The applicant sought an order that the action be certified fit for senior counsel.
He outlined the relevant test, namely that as stated by King CJ in Beasley v Marshall (No 3):[56]
… as whether a reasonable litigant, at the proper time for the delivery of briefs, would consider it necessary or at least prudent to brief Queen’s Counsel for the adequate presentation of his case.
[56] (1986) 41 SASR 321, 331.
The following factors which may be relevant to the exercise of a discretion to certify the action fit for senior counsel are the difficulty of the case, the complexity of the issues of fact or law and any demands which the case makes for the exercise of special professional skills.[57]
[57] Australian Securities & Investments Commission v West & Anor [2008] SASC 111 at [220].
It was submitted that in this case the trial ran for four full hearing days with multiple witnesses called, resulting in a lengthy judgment, running to some 120 pages. It was submitted the case was of sufficient complexity to justify the engagement of senior counsel in accordance with those principles.
Further, it was submitted that a relevant consideration was the fact that the applicant’s senior counsel did not have a junior present throughout the trial.[58]
[58] However, during the trial, senior counsel had the assistance of two instructing solicitors, with a third potential instructor also occasionally present.
The respondent was represented by junior counsel, who submitted that there was therefore no need for the applicant to engage senior counsel, particularly having regard to the modest sum of damages awarded and that this was a case that could have been brought in the Magistrates Court.
It was submitted that the issues in the case were of no particular difficulty and did not require special professional skills, over and above those of a capable junior counsel, practicing in defamation law.
Further, it was submitted that the only reason the trial ran for four days was because of the failed aggravated damages claim and although the applicant may have considered it necessary to engage senior counsel to endeavour to succeed on that claim, that did not mean he should be entitled to all of those costs, particularly when that aspect of the claim did not succeed.
In my view, this case was not of sufficient complexity to justify the briefing of senior counsel. There were very few witnesses called and the issues were clearly defined.
The applicant’s decision to retain senior counsel may in part have been prompted by his standing within the community and his concern at the publicity the action was likely to and did in fact receive.
However, that decision must also be considered having regard to the quantum of the offer in fact filed by the applicant, and the applicant’s approach to the offer of 31 March 2021. The difference in the parties’ respective positions before trial was modest. The costs incurred to retain senior counsel are likely to have well exceeded that difference.
This was not a case where the respondent had pleaded either the defence of justification or of contextual truth. Had either of those defences been pleaded, having regard to what would therefore have been at stake for the applicant, I am satisfied it would have been necessary or prudent for him to have retained senior counsel.
On 26 May 2021, the applicant was informed that the defence of qualified privilege would no longer be pursued. I am uncertain precisely when the brief was delivered to senior counsel. Even if that defence was maintained, in my view, neither the difficulty of the case, the complexity of the issues of fact and law, nor any demands requiring the exercise of special professional skills, justified the retention of senior counsel.
I decline to certify the action fit for senior counsel.
Interest
Section 39 of the District Court Act 1991 (SA) provides for an award of pre-judgment interest. That section states:
39—Pre-judgment interest
(1)Unless good reason is shown to the contrary, the Court will, on the application of a party in whose favour a monetary judgment has been, or is to be, given include in the judgment an award of interest in accordance with this section.
(2)The interest—
(a) will be calculated at a rate fixed by the Court; and
(b) will be calculated in respect of a period fixed by the Court (which must, however, in the case of a judgment given on a liquidated claim, be the period running from when the liability to pay the amount of the claim fell due to the date of judgment unless the Court otherwise determines); and
(c) is, in accordance with the Court's determination, payable in respect of the whole or part of the amount for which judgment is given.
(3)The Court may, without proceeding to calculate interest under subsection (2), award a lump sum instead of interest.
(4)This section does not—
(a) authorise the award of interest on interest;
(b) authorise the award of interest on exemplary or punitive damages;
(c) affect damages for dishonour of a negotiable instrument;
(d) authorise the award of interest (except by consent) on a sum for which judgment is given by consent;
(e) limit or affect the operation of any other enactment or rule of law providing for the award of interest.
UCR 182.3 addresses the issue of pre-judgment interest and states:
182.3—Pre-judgment interest
(1)The appropriate rate and period for the calculation of interest on pre-judgment monetary amounts is a matter for determination by the Court in each case.
(2)As a guide only, and subject to any contrary statute, the Court may calculate such interest—
(a) at the rate of 5 per cent per annum in respect of a period from the commencement date onwards or if the Court thinks fit any earlier period; or
(b) at another rate prescribed by the Chief Judicial Officer from time to time in respect of a period from not earlier than the first anniversary of the commencement date onwards.
The applicant submitted that in accordance with the usual practice, the court should award pre-judgment interest on the judgment sum, calculated from the date of publication (30 March 2019) until the date of judgment (17 November 2021) at the prescribed rate of 5%. Such a calculation results in the award of a sum of $4,073.97 for interest.[59]
[59] Noting there was no dispute in terms of the mathematics.
The respondent opposed the making of such an order.
The respondent contended that no award of interest should be allowed, or if interest was to be awarded, it should not exceed $900.
The respondent highlighted the delay occasioned by the applicant of a period of one year in notifying the respondent of the claim and in issuing and serving the proceedings and the applicant’s ‘unreasonable approach to settlement from the outset’ as a basis upon which the court should refuse to award interest.
It was submitted the Court should adopt one of two alternative approaches. As to the first approach, it was submitted that had the applicant promptly notified the respondent of his concerns and taken a reasonable approach to settlement, the action could have settled within three to six months of the publication, giving rise to an award of interest of between $225 and $450, calculated at a rate of 3%, applying what was said by the Queensland Court of Appeal in Cerutti and Anor v Crestside Pty Ltd and Anor.[60]
[60] [2014] QCA 33 at [99].
Alternatively, it was submitted it would be appropriate for the Court to award interest only from the date the applicant notified the respondent of the claim, namely March 2020.
The question of the applicant’s delay was canvassed in detail in my judgment and the fact of and response to the offer of 31 March 2021 addressed thoroughly in these Reasons.
In my view, it is appropriate for the Court to make an award of interest, but not for the full period as sought by the applicant. Rather, having regard to the applicant’s delay in taking any action with respect to the matter, I consider it appropriate to allow interest for a period of two years only, at a rate of 5%.
I award a sum of $3,000 for interest.
Orders
1.The respondent is to pay the applicant’s costs incurred up to and including 7 May 2021, on a standard costs basis, to be taxed if not agreed.
2.The respondent is to pay 40% of the applicant’s costs incurred after 7 May 2021, on a standard costs basis, to be taxed if not agreed.
3.I decline to certify the action fit for senior counsel.
4.The respondent is to pay to the applicant pre-judgment interest fixed in the sum of $3,000.
23
1