Wells v Cossari (Costs)
[2020] VCC 1315
•28 August 2020
| IN THE COUNTY COURT OF VICTORIA AT MELBOURNE COMMERCIAL DIVISION | Revised Not Restricted Suitable for Publication |
DEFAMATION LIST
Case No. CI-18-05805
| KIMBERLEY ARTHUR WELLS | Plaintiff |
| v | |
| GIUSEPPE “JOE” COSSARI | Defendant |
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JUDGE: | HIS HONOUR JUDGE MACNAMARA | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | On the papers | |
DATE OF JUDGMENT: | 28 August 2020 | |
CASE MAY BE CITED AS: | Wells v Cossari (Costs) | |
MEDIUM NEUTRAL CITATION: | [2020] VCC 1315 | |
REASONS FOR JUDGMENT
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Subject: Costs of Defamation Trial
Catchwords: Costs following judgment for damages in defamation trial; whether offers of compromise under Order 26 to be treated as settlement offers under section 40 of the Defamation Act 2008; judgment no less favourable than plaintiff’s offer; costs awarded on standard basis and after failure to accept on full indemnity basis; Slip Rule – late application for interest.
Legislation Cited: Order 26 County Court Civil Procedure Rules 2018; section 40
Defamation Act 2008
Cases Cited:Hardie v Herald & Weekly Times Pty Ltd(No 2) [2016] VSCA 130; Tsamis v Victoria (No 8) [2020] VSC 67; Sands & McDougall Wholesale Pty Ltd [in liq] v Commissioner of Taxation [1999] VR 114
Judgment: 1. There be judgment for the plaintiff in the sum of $6,662.47 being
interest to 23 July 2020 upon the plaintiff’s damages award.
2.Subject to Order 3 the defendant must pay the plaintiff’s costs of this
proceeding to be assessed
(a) until 8 June 2019 on the standard basis; and
(b) on and after 9 June 2019 on a full indemnity basis
3.The plaintiff’s entitlement as to costs of and incidental to the
witness Mr Hawwa is to be assessed only on the standard basis.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr M Hoyne | Carbone Lawyers |
| For the Defendant | Mr D Gilbertson QC with Ms S Whiteman | Burch & Co Lawyers |
HIS HONOUR:
1 In this proceeding following trial, I gave judgment to the plaintiff for damages of $140,000 – Wells v Cossari [2020] VCC 988. I reserved an entitlement to the parties to make written submissions “on costs”.
2 When the submissions were filed, they covered the question of costs together with an issue relative to interest on the damages awarded.
3 The parties accepted the general principle as to costs in this Court that they follow the event. Likewise, the “event” was agreed to be a victory on the part of the plaintiff. Therefore, it is common ground that, subject to some arguments advanced on behalf of Mr Cossari relative to the plaintiff’s expert witness, Mr Wells should have an award in his favour for his costs of the proceeding, at least on the standard basis.
4 The question as to what scale should be applied to Mr Wells’ costs is complicated by the parties having exchanged no fewer than six offers of compromise. Mr Wells served the following offers of compromise:
(a)7 June 2019 – offer to settle for $128,000 plus costs on a standard basis;
(b)7 August 2019 – offer to settle for $75,000 plus costs on a standard basis;
(c)7 May 2020 – offer to settle for $60,000 plus costs on a standard basis.
Mr Cossari served the following offers:
(a)16 July 2019 – offer to settle for $50,000 “inclusive of costs”;
(b)19 September 2019 – offer to settle for $40,000 “inclusive of costs”;
(c)12 May 2020 – offer for the parties to “walk away and each bear their own costs”.
5 It will be seen that the judgment obtained by Mr Wells was more favourable than any of these offers. In support of this application, Mr Hoyne, on behalf of Mr Wells, relied on s40 of the Defamation Act 2005 which provides as follows:
“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.”
Or, alternatively, Rule 26.08 of the Court’s Rules which provides:
“Costs consequences of failure to accept
(1)This Rule applies to an offer of compromise which has not been accepted at the time of verdict or judgment.
(2)Where an offer of compromise is made by a plaintiff and not accepted by the defendant, and the plaintiff obtains a judgment on the claim to which the offer relates no less favourable to the plaintiff than the terms of the offer, then, unless the Court otherwise orders, the plaintiff shall be entitled—
(a) if the claim of the plaintiff is for damages for or arising out of death or bodily injury, to an order against the defendant for the plaintiff’s costs in respect of the claim, taxed on an indemnity basis;
(b) in the case of any other claim of the plaintiff, to an order against the defendant for the plaintiff's costs in respect of the claim before 11.00 a.m. on the second business day after the offer was served, taxed on the ordinarily applicable basis and for the plaintiff’s costs thereafter taxed on an indemnity basis.
(3)Where an offer of compromise is made by a defendant and not accepted by the plaintiff, and the plaintiff obtains a judgment on the claim to which the offer relates not more favourable to the plaintiff than the terms of the offer, then, unless the Court otherwise orders—
(a) the plaintiff shall be entitled to an order against the defendant for the plaintiff's costs in respect of the claim before 11.00 a.m. on the second business day after the offer was served, taxed on the ordinarily applicable basis; and
(b) the defendant shall be entitled to an order against the plaintiff for the defendant’s costs in respect of the claim thereafter taxed on the ordinarily applicable basis.
(4)Where an offer of compromise is made by a defendant and the plaintiff unreasonably fails to accept the offer and the claim to which the offer relates is dismissed or judgment on the claim is entered in favour of the defendant, then unless the Court otherwise orders—
(a) the defendant shall be entitled to an order against the plaintiff for the defendant’s costs in respect of the claim until 11.00 a.m. on the second business day after the offer was made, taxed on the ordinarily applicable basis; and
(b) the defendant shall be entitled to an order against the plaintiff in respect of the defendant’s costs after the time referred to in paragraph (a) taxed on an indemnity basis.
(5)Where a plaintiff obtains judgment for the recovery of a debt or damages and—
(a) the amount for which the Court pronounces judgment includes an amount for interest or damages in the nature of interest; or
(b) by or under any Act the Court awards the plaintiff interest or damages in the nature of interest in respect of the judgment amount—
for the purpose of determining the consequences as to costs referred to in paragraphs (2) and (3) the Court shall disregard so much of the amount recovered by or awarded to the plaintiff for interest or damages in the nature of interest as relates to the period after the day the offer of compromise was served.
(6)For the purpose only of paragraph (5), the Court may be informed of the fact that the offer of compromise was served, and of the date of service, but shall not be informed of its terms.
(7)Paragraphs (2), (3) and (4) shall not apply unless the Court is satisfied by the party serving the offer of compromise that that party was at all material times willing and able to carry out that party’s part of what was proposed in the offer.
(8)Where the plaintiff obtains judgment for the recovery of a debt or damages, and the amount of the debt or the damages was not in dispute, but only the question of liability, paragraph (2) shall not apply unless the Court is satisfied that the plaintiff’s offer was of a genuine compromise.”
6 As to the application of s40 of the Defamation Act to these offers of compromise, Mr Gilbertson QC and Ms Whiteman contend that none of the offers made on behalf of Mr Wells―
“was expressed to be pursuant to s40 of the Defamation Act. They were all expressed to be served in accordance with Order 26 of the County Court Civil Procedure Rules 2018. Accordingly, none of the Offers of Compromise was a ‘settlement offer’ within the meaning of s40 of the Defamation Act.”
They continued:
“This is a case where if the plaintiff wished to make it clear that s40 was relied upon, the Offers should have referred expressly to that section.”
They referred to Hardie v Herald & Weekly Times Pty Ltd(No 2) [2016] VSCA 130, [28].
7 Turning, first, to the application of s40 of the Defamation Act, sub-s (3) gives a very wide definition of the phrase “settlement offer”, prescribing no special formality as a requirement that an offer fall within the definition. In Hardie’s case, in a joint judgment dealing with an application for indemnity costs made by a plaintiff in reliance on s40, the Court of Appeal, Ashley, Tate and Beach JJA, said:
“28Section 40 of the Defamation Act 2005 refers to ‘a settlement offer’. While ‘settlement offer’ is defined in sub-s (3), s40 does not provide that a settlement offer must be made with any particular formality; or that any notice needs to be given by the offeror to the offeree that the settlement offer is made in accordance with s40 of the Defamation Act. That said, it may be prudent for a party, wishing to obtain the benefit of the provisions of s40, to make reference to the section in a settlement offer. While such a reference may not be essential, notice that s40 will be relied upon might, in some cases, put beyond doubt a party’s entitlement to the particular order for costs that is sought.
29On the other hand, a party that serves an offer of compromise in accordance with the relevant rules of court, or a Calderbank offer, without adverting to the prospect that reliance will also be placed upon the provisions of s40, is at risk of a court determining that the interests of justice require an order otherwise than in accordance with s40.” [Footnote omitted]
8 Having found that the plaintiff had obtained a judgment “no less favourable” to her than one of her offers of compromise, their Honours awarded indemnity costs from and after the failure to accept the relevant offer, but did not award indemnity costs to the plaintiff for the entire proceeding, as would have been the case had full effect been given to the terms of s40 of the Defamation Act (see [34]). This would seem, as their Honours had observed at [29] of the joint judgment, to have been a determination by the Court “that the interests of justice require[d] an order otherwise than in accordance with s40”. What I take their Honours to have determined is that a party in a litigation proceeding receiving an offer of compromise, either in the form of a Calderbank letter or an offer under Order 26 of the Rules, would understand himself or herself to be at peril of indemnity costs from and after a failure to accept the offer, rather than being at peril of indemnity costs for the entire proceeding. The interests of justice would generally require that an Indemnity Costs Order be made in accordance with the terms of Order 26 of the Rules; that is, prospectively only after the failure to accept the offer, rather than retrospectively as might be the case under s40 of the Defamation Act. Each of the offers made on behalf of Mr Wells is expressed to be in terms of Order 26 of the Rules. Conformably with the Court of Appeal’s decision in Hardie’s case, the consequences of failure to accept those offers must be determined in accordance with the provisions of Order 26, rather than s40 of the Defamation Act. In those circumstances, according to Mr Hoyne, the costs should be awarded on a standard basis until 8 June 2019 and from and after 9 June 2019 on a full indemnity basis. Mr Gilbertson QC and Ms Whiteman contended that since the Court’s judgment was only $12,000 more generous than the 7 June offer, the Court should exercise its power to “otherwise order” under Rule 26.08(2) of the Rules. $12,000 is, in the context of a total award of damages of $140,000, a material sum, not a mere trifle or “de minimis”. Acceptance by Mr Cossari of this offer a year before trial would have “wrapped things up” and saved both parties major expenditure, both monetary and emotional. I am not persuaded that this is a circumstance in which the Court should “otherwise order”.
9 Mr Gilbertson QC and Ms Whiteman made special submissions as to the treatment of the costs relative to an expert witness called by Mr Wells as to the “reach” of the online posters which were the subject of the proceeding. Mr Gilbertson QC cross-examined this witness at length following a two-week adjournment to enable him to produce further materials. Mr Gilbertson QC and Ms Whiteman correctly observed, “the critique [of the expert’s] evidence was generally accepted by the Court (Wells v Cossari [2020] VCC 988 [143])”. They continued, “In the circumstances, the plaintiff should not be awarded his costs of and incidental to the report of [the expert]; instead the defendant should be awarded his costs of and incidental to that report on the standard basis.”.
10 Mr Hoyne relied on the judgment of John Dixon J in Tsamis v Victoria (No 8) [2020] VSC 67 [12] where his Honour said, in the context of s40 of the Defamation Act, that “apportionment orders” should generally not be made based on a plaintiff’s “mixed success”. In my view, there is no occasion for making a Costs Order based on “mixed results” here. Even if what I have already said based on the Court of Appeal’s decision in Hardie, it is to be regarded as rendering s40 of the Defamation Act in its entirety inapplicable to the award of costs in the circumstances (which I am doubtful it does), the relative success of the defendant as to this expert’s evidence does not constitute success on an entire “issue” in the proceeding. Having said that, I believe it would be inappropriate for the Indemnity Costs Order in favour of Mr Wells to extend to the expert’s evidence. Mr Wells should have his costs as to these matters on the standard basis only.
11 I turn, finally, to the issue of interest. The parties were agreed that the 3 per cent interest sought by the plaintiff was appropriate as a rate. As to whether any award of interest should be made at all, Mr Gilbertson QC and Ms Whiteman made no submission.
12 Mr Hoyne relied on the “slip rule” and sought leave to amend his prayer for relief to include the claim for interest.
13 I am doubtful that resort to the “slip rule” is necessary here. The slip rule operates as an exception to the general rule that a Court’s power to grant further relief is terminated when it becomes “functus officio”. Here, as previously noted, the parties reserved the right to make submissions on the question of costs. The Court, therefore, would seem not to have been functus officio, though perhaps it might be argued that the Court was functus officio on all questions other than costs. Whatever may be the correct view, as Mr Hoyne observed, Brooking JA, as a member of the Court of Appeal, in Sands & McDougall Wholesale Pty Ltd [in liq] v Commissioner of Taxation [1999] VR 114, 121 said:
“I should be reluctant to hold that the slip rule may not be invoked in a case in which it is clear that, had the matter been adverted to, the primary judge would have made an award of interest in the exercise of a statutory power merely on the ground that there is room for debate about the rate of interest or the period for which it should be allowed.”
Charles and Chernov JJA agreed. His Honour’s remarks were plainly obiter. They were, however, considered and I believe I should give effect to them. Accordingly, I will award the interest sought.
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