Yu v Cao

This matter concerned an appeal from an order of Walmsley ADCJ in the Supreme Court of New South Wales. The appellant, Mr. Cao, sought leave to appeal against an order made by the primary judge that he pay the costs incurred by the respondent, Ms. Yu, in defamation proceedings, and also the costs for which Ms. Yu was liable to her own solicitors. Ms. Yu had commenced defamation proceedings against Mr. Cao, alleging that an email containing defamatory material had been sent from an email address appearing to be Mr. Cao's. However, at trial, it was established that the email was in fact composed and sent by Mr. Cao's husband, who was not joined as a party to the proceedings.

The central legal issue before the Court of Appeal was whether the primary judge erred in exercising her discretion to order Mr. Cao, a non-party to the original defamation proceedings, to pay Ms. Yu's costs. This involved considering the principles governing the award of costs against a non-party under section 98 of the *Civil Procedure Act 2005* (NSW), and whether the circumstances of the case justified such an order. The court had to determine if Mr. Cao's involvement in the litigation, or his husband's actions, warranted making him liable for Ms. Yu's costs.

The Court of Appeal found that the primary judge had erred in her exercise of discretion. The court reasoned that while Mr. Cao's husband was the author of the defamatory email and an obvious alternative defendant, there was no basis to hold Mr. Cao personally liable for the costs incurred by Ms. Yu. The evidence did not establish that Mr. Cao had published the email or that he was otherwise responsible for the litigation in a way that would justify a non-party costs order against him. The court noted that Ms. Yu had been advised from an early stage that the email was the work of Mr. Cao's husband, and yet chose not to join him as a party.

Consequently, the Court of Appeal allowed the appeal, set aside the orders made by the primary judge, and dismissed the respondent's notice of motion insofar as it sought orders against the appellant. The respondent was ordered to pay the appellant's costs of the application for leave to appeal and of the appeal.