Zuchowski v Howe; Howe v Cavendish Properties and Zuchowski (Cost Ruling)

[2022] VCC 2077

IN THE COUNTY COURT OF VICTORIA

AT Melbourne

COMMON LAW DIVISION

Revised
Not Restricted
Suitable for Publication

Defamation List

BETWEEN:

Case No. CI-20-00493

SAM ZUCHOWSKI	Plaintiff
v
CAMERON HOWE	Defendant

AND BETWEEN:

Case No. CI-20-02216

CAMERON HOWE	Plaintiff
v
CAVENDISH PROPERTIES PTY LTD (ACN 063 802 586)	First Defendant
AMBER ZUCHOWSKI	Second Defendant

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JUDGE:	His Honour Judge Lauritsen
WHERE HELD:	Determined ‘on the papers’
DATE OF HEARING:	N/A
DATE OF RULING:	1 December 2022
CASE MAY BE CITED AS:	Zuchowski v Howe; Howe v Cavendish Properties and Zuchowski (Cost Ruling)
MEDIUM NEUTRAL CITATION:	[2022] VCC 2077

RULING
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Subject:COSTS

Catchwords:          Cost application arising out of judgment handed down in two proceedings on 30 September 2022

Legislation Cited:         Defamation Act 2005 (Vic); County Court Civil Procedure Rules 2018

Cases Cited:Zuchowski v Howe; Howe v Cavendish Properties and Zuchowski [2022] VCC 1604; John Fairfax & Sons Ltd v Palmer (1987) 8 NSWLR 297; Goucher v Hii [2008] VCC 1645

Ruling:  CI-20-00493 – Defendant to pay the Plaintiff’s costs on an indemnity basis

CI-20-02216 – Defendants to pay the Plaintiff’s costs on an ordinary basis

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff in the first proceeding and the Defendants in the second proceeding	Mr J. Castelan	SLK Lawyers
For the Defendant in the first proceeding and the Plaintiff in the second proceeding	Mr T. Sowden	William Mulholland & Co Lawyers

HIS HONOUR:

1On 29 September 2022, I published my reasons in these proceedings. The issues of interest and costs arose. At the request of one of the parties, I allowed written submissions and set out a short timetable. The parties have now filed their written submissions. Additionally, Mr Zuchowski has filed an affidavit of his son, Adam, sworn on 7 October 2022 which attaches a number of documents. 

2Mr Zuchowski seeks against Mr Howe:

(a)   judgment on his claim for $205,000 together with interest of $16.377.53; and

(b)   his costs of the proceeding (including reserved costs) on an indemnity basis, to be taxed by the Costs Court in default of agreement.

3In relation to indemnity costs, Mr Zuchowski relies on s 40(2)(a) of the Defamation Act 2005 (‘the Defamation Act’):

‘(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…’

4Subsection (3) defines the expression “settlement offer”.

5Through his written submission, Mr Howe is silent on the merits of Mr Zuchowski’s claims in relation to interest and costs.  

6On 1 April 2021, Mr Zuchowski made an extremely generous offer to settle his proceeding. In effect, Mr Zuchowski would abandon his claim against Mr Howe without the latter paying any damages or costs and with Mr Howe publishing this apology:

‘In 2019 I was an administrator of the Face book Page for the Carrum Patterson Lakes Forum at (the Facebook Page).

Throughout the course of 2019, a number of posts and statements appeared on the Facebook Page that were defamatory of Sam Zuchowski, a property developer in the Patterson Lakes Marina District (Matters complained of). For the purposes of this apology, the contents of the Matters Complained of need not be repeated. In any event, they were all false.

Although I personally did not author the Matters complained of, I regret that they appeared on the Facebook Page at a time when I was an administrator of that web page. I am sorry that they did.

I sincerely apologise to Sam Zuchowski for the embarrassment, hurt and distress caused to him and his family as a result.

Yours Sincerely,

CAMERON HOWE’

7This is a settlement offer as defined. It was made after the proceeding was instituted, by which time Mr Zuchowski would have incurred significant legal costs. In light of what has happened, it was, to use the words of Mr Zuchowski’s counsel, an extraordinarily generous offer. The offer did not refer to Mr Howe’s claim, which was then on foot and would remain unaffected by its acceptance. Not to accept the offer was unreasonable. Mr Howe does not submit there is any matter relating to the interests of justice which require me to order otherwise. Nor is there anything in the oral evidence of Mr Howe to do otherwise.[1] It is unnecessary to consider whether Mr Howe unreasonably failed to make a settlement offer. I will order Mr Howe pays Mr Zuchowski’s costs on an indemnity basis.  

[1] Transcript at 733, lines 18-24

8In relation to Mr Howe’s proceeding, this proceeding was heard at the same time as Mr Zuchowski’s proceeding although not formally consolidated. Mr Howe obtained an award of $15,000. He seeks his costs on an indemnity basis.

9In seeking indemnity costs, Mr Howe needed to establish whether the scale of costs was that of this Court or the Magistrates’ Court of Victoria. It is brought about by r 63A.24(1) of the County Court Civil Procedure Rules 2018, where a plaintiff recovers (exclusive of costs) an amount not exceeding half of the jurisdictional limit of the Magistrates’ Court in a civil proceeding. The jurisdictional limit of the Magistrates’ Court has been $100,000 since 2005.

10He relies upon passages from John Fairfax & Sons Ltd v Palmer[2] and Goucher v Hii[3]. Both authorities refer to the added expertise in the Supreme and County Courts respectively. In my opinion, the decisive factor is not expertise, but Mr Howe’s claim arose out of the broader events underlying Mr Zuchowski’s claim. To explain the context of Ms Zuchowski’s statements would have necessitated a rehearsal of some of the evidence given in Mr Zuchowski’s claim. It made sense to bring Mr Howe’s proceeding in this Court as it made sense for the parties to allow the proceedings to be heard together. I note the defendants do not seek to have the sub-rule applied here. I will order otherwise and allow Mr Howe’s costs to be assessed on the scale of costs applicable in this Court.

[2] (1987) 8 NSWLR 297

[3] [2008] VCC 1645

11Mr Howe also relies upon s 40(2) of the Defamation Act. He did make a settlement offer in his proceeding. Curiously, in his written submissions, he makes no reference to that offer even though Ms Zuchowski does. On 8 October 2020, he offered to accept $50,000 “all in”. On the material before me, I could not find that $15,000 together with interest and costs to that stage of the proceeding assessed on the ordinary basis would exceed $50,000 “all in”. 

12The defendants to Mr Howe’s proceeding made two settlement offers: one in the form of an offer of compromise, dated 14 October 2020; and the other, on 2 February 2021, as part of an offer to settle both proceedings.  Given my judgment, neither has any effect on the question of costs. The former offered a dismissal of the proceeding with Mr Howe paying the defendants’ costs. The latter was an offer encompassing both proceedings. Seen overall, it was generous. It involved the dismissal of both proceedings, the payment of certain costs, the giving of an apology and an undertaking. It could be seen as the forerunner to the alternative submission on costs in the two written submissions from Mr Zuchowski and the defendants in Mr Howe’s proceeding. Despite its generosity, I would not give it effect because the two proceedings had only one common party in Mr Howe and he is now, and presumably then was, unwilling to yield up the benefits of his success or then potential success in his proceeding.          

13In his two written submissions, Mr Zucowski invited a single order for costs covering both proceedings: 70% of his costs on his proceeding on an indemnity basis and no costs on the Mr Howe’s proceeding. Although this submission has the virtue of simplicity, it would deprive Mr Howe of his costs of his success in his proceeding. Since he does not consent to the making of such an order, I will not make it.  

14I will cause a copy of these reasons to be sent to the respective solicitors and invite them to submit draft final orders giving effect to my substantive judgment and this ruling.

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