AMALGAMATED TELEVISION SERVICES PTY. LTD. v. MARSDEN (NO. 2) [2003] NSWCA 186

Court of Appeal (NSW)|2003-07-09|Before: Beazley JA, Giles JA, Santow JA, Levine J

CITATION : AMALGAMATED TELEVISION SERVICES PTY. LTD. v. MARSDEN (NO. 2) [2003] NSWCA 186 revised - 9/07/2003 HEARING DATE(S) : 08/04/03 JUDGMENT DATE : 9 July 2003

JUDGMENT OF : Beazley JA; Giles JA; Santow JA DECISION : 1. Set aside the order as to the rate of interest, the verdicts for $309,165.25 and $275,698.63 and the orders for costs made on 27 June 2001; 2. Order that there be new trials as to damages; 3. Appeal and cross-appeal otherwise dismissed; 4. Order that the new trials be expedited; 5. Order that the testimony of any witness examined at the trial before Levine J may be read from the notes of the testimony instead of the witness being again examined on that testimony, unless the judge conducting the new trials otherwise orders; 6. Order that the appellant pay 90 per cent of the respondent's costs of the appeal and cross-appeal, with liberty to apply within 28 days of judgment on the new trials for an order that the costs be on an indemnity basis; 7. Order that the appellant pay the respondent's costs of the trial as to liability and that the costs of the trial as to quantum be as ordered by the judge conducting the new trials, with liberty to apply in the Common Law Division within 28 days of judgment in the new trials for an order that the costs as to liability and quantum be on an indemnity basis; 8. So far as leave is necessary, grant leave to the respondent to proceed forthwith to assessment of the costs of the appeal and cross-appeal and the costs of the trial as to liability the suject of the preceding orders.

CATCHWORDS : Damages - compensatory damages - aggravated compensatory damages - exemplary damages - - Whether new trial necessary - which judge would hear new trial - Whether Court can re-open matter - Costs Supreme Court Rules, Pt 52 r 24, Pt 51 r23 LEGISLATION CITED : District Courts Act 1912, s145(3) Supreme Court Act, s101, s40, s51, s75A, s110K, s39 Autodesk Inc v Dyason (No 2) (1993) 176 CLR 300 De L v The Director-General, New South Wales Department of Community Services (No 2) (1997) 190 CLR 207 Broome v Cassell & Co (1972) AC 1027 Uren v John Fairfax & Sons Pty Ltd (1966) 117 CLR 118 Rookes v Barnard [1964] AC 1129 John v MGN Ltd [1996] 2 All ER 35 Hill v Church of Scientology of Toronto (1995) 126 DLR (4th) Whiten v Pilot Insurance Co (2002) 209 DLR (4th) 257 Performance Industries Ltd v Sylvan Lake Golf & Tennis Club Ltd (2002) SCC 19 Taylor v Beere [1982] 1 NZLR 81 Television New Zealand Ltd v Quinn [1996] 3 NZLR 24 XL Petroleum (NSW) Pty Ltd v Caltex Oil (Australia) Pty Ltd (1985) 155 CLR 448 CASES CITED : Harris v Digital Pulse Pty Ltd [2003] NSWCA 10 Backwell v "AAA" (1997) 1 VR 182 Musca v Astle Corp Pty Ltd (1988) 80 ALR 251 The Trustees of the Roman Catholic Church v Hogan (2001) 53 NSWLR 343 Holden v Wyong Shire Council (CA, 9 June 1988, unreported) Lockyear v Macready (1965) 66 SR (NSW) 369 Minister for Immigration and Multi-Cultural Affairs v Wang [2003] HCA 11 Rajski v Wood (1989) 18 NSWLR 512 at 520 Escobar v Spindaleri (1986) 7 NSWLR 50 Northern NSW FM Pty Limited v Australian Broadcasting Tribunal (1990) 26 FCR 39 Steedman v Baulkham Hills Shire Council (1993) 31 NSWLR 562 Smith v New South Wales Bar Association (1992) 176 CLR 256 Idoport v National Australia Bank Limited [2000] NSWSC 1141 PARTIES : Amalgamated Television Services Pty. Ltd. (Appellant) John Robert Marsden (Respondent) FILE NUMBER(S) : CA 40499/01 COUNSEL : T.E.F. Hughes QC/K Rees (Appellant) B.W. Walker SC/M.B.J. Lee (Respondent) SOLICITORS : Malleson Stephen Jaques (Appellant) Marsdens Law Group (Respondent)

LOWER COURT Supreme Court - Common Law Division JURISDICTION : LOWER COURT CL 20223/95; CL 20592/96 FILE NUMBER(S) : LOWER COURT Levine J JUDICIAL OFFICER :

THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40499/01 CL 20223/95 CL 20592/96

BEAZLEY JA GILES JA SANTOW JA

9 July 2003 AMALGAMATED TELEVISION SERVICES PTY LTD V MARSDEN (NO 2)

In giving judgment in the appeal and cross appeal in this matter the Court had held that exemplary damages should have been awarded and assessed the amount of those damages. It had also held that new trials were necessary on the issue of aggravated compensatory damages. As new trials on at least that issue was necessary, the Court did not determine the issue of the insufficiency or excessiveness of the trial judge's awards of compensatory damages. The Court gave the parties the opportunity to put further submissions as to "the nature and extent of the new trial". Various costs issues also remained outstanding for determination.

The parties made further submissions, both orally and in writing.

Whilst there is "no necessary proportionality between the assessment of [exemplary and compensatory damages]", there is significant case law that holds that exemplary damages should only be awarded if, but only if, the sum awarded as compensation is inadequate to punish the defendant. As there was to be a new trial as to damages, including compensatory damages, the Court's assessment of exemplary damages was withdrawn: X L Petroleum (NSW) Pty Ltd v Caltex Oil (Australia) Pty Ltd (1985) 155 CLR 448; Broome v Cassell & Co (1972) AC 1027; De L v The Director-General, New South Wales Department of Community Services (No 2) (1997) 190 CLR 207.

It was a matter for the internal arrangements of the Common Law Division as to who should hear the retrials on damages: Minister for Immigration and Multicultural Affairs v Wang [2003] HCA 11 (considered).

Set aside the order as to the rate of interest, the verdicts for $309,165.25 and $275,698.63 and the orders for costs made on 27 June 2001.

Order that the testimony of any witness examined at the trial before Levine J may be read from the notes of the testimony instead of the witness being again examined on that testimony, unless the judge conducting the new trials otherwise orders.

Order that the appellant pay 90 per cent of the respondent's costs of the appeal and cross-appeal, with liberty to apply within 28 days of judgment on the new trials for an order that the costs be on an indemnity basis.

Order that the appellant pay the respondent's costs of the trial as to liability and that the costs of the trial as to quantum be as ordered by the judge conducting the new trials, with liberty to apply in the Common Law Division within 28 days of judgment in the new trials for an order that the costs as to liability and quantum be on an indemnity basis.

So far as leave is necessary, grant leave to the respondent to proceed forthwith to assessment of the costs of the appeal and cross-appeal and the costs of the trial as to liability the subject of the preceding orders.

IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA40499/01 CL 20223/95 CL 20592/96

BEAZLEY JA GILES JA SANTOW JA

9 July 2003 AMALGAMATED TELEVISION SERVICES PTY LTD v MARSDEN (NO 2) Judgment 1 THE COURT: We published our reasons in the appeal and cross-appeal on 24 December 2002. The appeal in relation to liability was unsuccessful. As to damages, subject to the respondent's submission that the damages were not adequate to meet the high requirement for vindication, and having made no determination that, as submitted by the appellant, damages were manifestly excessive, we found no appealable error in Levine J's assessment of ordinary compensatory damages; but we considered that there was error as to aggravated compensatory damages and in the failure to award exemplary damages in relation to the Witness programme. We said that a new trial was necessary at least on the issue of aggravated compensatory damages, but that we were in a position to remedy the error in failing to award exemplary damages in relation to the Witness programme: this we did by assessing exemplary damages of $200,000. 2 Then considering the nature and extent of the new trial, for the reasons we gave said that it should not be confined to the issue of aggravated compensatory damages but should include ordinary compensatory damages, and that it should not be subject to certain conditions suggested by the respondent, so that we should order a new trial limited to compensatory damages and do no more. We said, however, that the parties should have the opportunity to put further submissions to us as to the nature and extent of the new trial in the respects we had considered. 3 The appeal and the cross-appeal were listed for mention on 14 February 2003 in order to ascertain the parties' positions as to a new trial in relation to compensatory damages and if necessary make arrangements for submissions. Costs remained for determination, and directions were given for the prior exchange of statements of the orders and directions to be made including as to the costs of the appeal and cross-appeal and in relation to any new trial. 4 There was some common ground in the statements exchanged, but a predictable divergence: that is not said critically, since these proceedings are notable for their complexity. As well, each of the appellant and the respondent asked that we take a course going beyond giving effect to our reasons of 24 December 2002. The appellant sought that we re-open our reasons in order to argue that an award of exemplary damages could not appropriately be made until compensatory damages had been re-assessed, and that we should not ourselves have assessed the damages. (It sought to re-open as to another matter also, but later abandoned that matter and we therefore say no more of it.) The respondent sought, further to an order that he should have the costs of the trial, an order that he have leave to proceed forthwith to an assessment of all costs orders we made and an order that $3 million be forthwith payable by the appellant to the respondent on account of those costs. And the respondent sought an order that the whole of the proceedings, and an outstanding appeal as to interlocutory costs, be referred to mediation pursuant to s 110K of the Supreme Court Act 1970. 5 At the mention on 14 February 2003 the appellant submitted that we should not determine either the respondent's application for payment of a sum of money on account of costs or his application for referral to mediation, but should leave or cause those applications to be determined by a single judge of the Court. After hearing submissions, we said that we would address in the first instance whether we would entertain those applications. Directions were given for the exchange of written submissions and 8 April 2003 was appointed for oral submissions. 6 In the statements exchanged the appellant proposed that there be a "new trial as to damages", which no doubt included exemplary damages in the event that we reopened our reasons and withdrew our award of exemplary damages. The respondent proposed that there be a "retrial … limited to the quantification of damages including aggravated damages but excluding any claim for exemplary damages for any conduct of the appellant prior to the date of judgment in the Court below". Neither proposal contemplated some kind of remission to Levine J, although we had flagged in our reasons of 24 December 2002 the possibility of return of the proceedings to His Honour for re-assessment of damages on the evidence at the trial or continuance of Levine J's findings as to damages within the scope of the new trial. Neither the appellant nor the respondent suggested the imposition of other conditions or other exercise of the powers in Pt 51 r 23 of the Rules. The new trial, within whatever its scope was to be, was to start with a clean slate. 7 That changed at the hearing on 8 April 2003, when the respondent frankly acknowledged that he had not appreciated the extent of the opportunity reserved in our reasons of 24 December 2002 to put further submissions as to the nature and extent of the new trial. In a further statement the respondent revised his proposal and reformulated the orders he proposed. The appellant replied to this in a further written submission. 8 In this way there came about the issues with which these reasons are concerned, being -

(a) whether we should re-open our reasons in relation to our award of exemplary damages of $200,000 and, if so, whether our award should stand;

(b) what should be the nature and extent of the new trial in relation to damages;

(d) what order or orders should be made as to the costs of the trial;

(e) whether we should entertain the respondent's application for payment of a sum of money on account of costs; and

(f) whether we should entertain the respondent's application for an order for referral to mediation.

(a) Re-opening our reasons and the award of exemplary damages 9 Where the Court's orders have not been entered, there is power to re-open a judgment and grant a re-hearing. That power must extend to where, as here, the reasons indicate the orders to be made but the orders have not yet been made. The power is to be exercised with great caution, having regard to the importance of the public interest in the finality of litigation. In Autodesk Inc v Dyason (No 2) (1993) 176 CLR 300 Mason CJ said (at 303) that the power is not to be exercised - " … simply because the party seeking a re-hearing has failed to present the argument in all its aspects or as well as it might have been put. What must emerge, in order to enliven the exercise of the jurisdiction, is that the Court has apparently proceeded according to some misapprehension of the facts or the relevant law and that this misapprehension cannot be attributed solely to the neglect or default of the party seeking the re-hearing." 10 In De L v The Director-General, New South Wales Department of Community Services (No 2) (1997) 190 CLR 207 in the joint judgment of Toohey, Gaudron, McHugh, Gummow and Kirby JJ it was said (at 215) - "The power of this Court to reopen its judgments or orders is not in doubt. The Court may do so if it is convinced that, in its earlier consideration of the point, it has proceeded "on a misapprehension as to the facts or the law", where "there is some matter calling for review or where "the interests of justice so require". It has been said repeatedly that a heavy burden is cast upon the applicant for reopening to show that such an exceptional course is required "without fault on his part", ie without the attribution of neglect or default to the party seeking reopening. By such expressions of the power to reopen final orders, courts seek to recognise competing objectives of the law. On the one hand, there is the principle of finality of litigation which reinforces the respect that should be shown to orders, final on their face, addressed to the world at large and upon which conduct may be ordered reliant upon their binding authority. On the other hand, courts recognise that accidents and oversights can sometimes occur which, unrepaired, will occasion an injustice. In the case of a final court of appeal, such as this Court, that injustice may be irremediable, unless the Court itself, acting promptly, is persuaded to reopen its orders so as to afford relief in the exceptional circumstances of the case." (citations omitted) 11 We do not constitute a final court of appeal, but we consider that in these extraordinary proceedings the remedying of any injustice of the kind to which their Honours referred should be in this Court and not left to an appeal, subject to special leave, to the High Court. 12 The nub of the appellant's substantive submission was that it was established law that exemplary damages should be awarded if, but only if, the sum awarded as compensation is inadequate to punish the defendant for his outrageous conduct, to deter him and others from engaging in similar conduct, and to mark the Court's disapproval of such conduct (the "if, but only if", principle). Hence, it was said, exemplary damages could not be awarded unless compensatory damages had first been assessed. 13 In the cross-appeal the respondent sought an order that "the award for damages in each action be increased to an amount to be assessed by the Court of Appeal", and in his submissions the respondent asked that we assess "aggravated and exemplary damages on the basis of the findings made by the trial judge". Both parties put submissions directed to the assessment of compensatory and exemplary damages. However, neither the respondent nor the appellant addressed in their submissions on the cross-appeal the award of exemplary damages in isolation from compensatory damages. The "if, but only if" principle was not mentioned. 14 In our reasons we concluded that the appellant's conduct in relation to the broadcast of the Witness programme amounted to conscious and contumelious disregard of the respondent's rights, calling for curial disapprobation, and brought into play the punitive purpose in damages for defamation. Posing whether we were in a position to remedy the error in failing to award exemplary damages in relation to the Witness programme, we said in para [1511] of our reasons - "The respondent asked that we assess (inter alia) exemplary damages 'on the basis of the findings made by the trial judge' [RS 125], and the appellant put no submission to the contrary. We consider that we can arrive at an amount for exemplary damages, even if the amount for compensatory damages has not been ascertained. Exemplary damages serve a different purpose from compensatory damages, and nothing in what we have said as to compensatory damages removes the basis on which we can address exemplary damages: as Brennan J said in X L Petroleum (NSW) Pty Ltd v Caltex Oil (Australia) Pty Ltd (1985) 155 CLR 448 at 471, 'There is no necessary proportionality between the assessment of the two categories' . We take a serious view of the appellant's conduct. In our opinion there should be exemplary damages of $200,000 in relation to the Witness programme." 15 As to compensatory damages we noted that there were a number of possible outcomes in the appeal and the cross-appeal, and that the submissions were not directed to that which had come about: hence the opportunity to put further submissions as to the nature and extent of the new trial in the respects mentioned. As to damages more widely, there were a number of possible outcomes of which upholding the respondent's entitlement to exemplary damages was one. While there could have been reference to the "if, but only if" principle, we do not think that the appellant's failure to address the award of exemplary damages in isolation from compensatory damages should be regarded as blameworthy so as to exclude the exercise of the power to reopen our reasons. If we did not exercise the power, it could be said with force that we proceeded according to a misapprehension of the relevant law. In all the circumstances, we consider that we should grant leave to reopen our reasons in order to consider the "if, but only if" principle. 16 The rationale for the "if, but only if" principle was explained in Broome v Cassell & Co (1972) AC 1027. While the purpose of exemplary damages is not compensation, but punishment, once the sum for compensatory damages has been fixed - "Then if it has been determined that the case is a proper one for punitive damages the tribunal must turn its attention to the defendant and ask itself whether the sum which it has already fixed as compensatory damages is or is not adequate to serve the second purpose of punishment or deterrence. If they think that that sum is adequate for the second purpose as well as for the first they must not add anything to it. It is sufficient both as compensatory and as punitive damages. But if they think that sum is insufficient as a punishment then they must add to it enough to bring it up to a sum sufficient as punishment. The one thing which they must not do is to fix sums as compensatory and as punitive damages and add them together. They must realise that the compensatory damages are always part of the total punishment." (per Lord Reid at 1089; see also per Lord Hailsham at 1063, Lord Morris at 1095, Lord Wilberforce at 1118 and Lord Diplock at 1121-2) 17 The reasoning proceeds on the basis that compensatory damages have a punitive effect, and so before exemplary damages are awarded it must be determined whether their punitive effect is already sufficient to fulfil the purpose of punishing the defendant. 18 The relationship between compensatory damages and exemplary damages can be seen differently. Damages for defamation are generally not compensatory in the sense of reimbursing in money a loss suffered in money, although where specific economic loss is proved they may be partly compensatory in that sense. Specific economic loss and exemplary damages aside, however, their purpose is to compensate in money for the non-monetary harm done to the plaintiff, as was said by Windeyer J in Uren v John Fairfax & Sons Pty Ltd (1966) 117 CLR 118 at 150 by way of "a solatium rather than a monetary recompense for harm measurable in money." It can be said with some force that what is compensatory is not punitive, because the defendant is not punished by having to pay compensation properly due to the plaintiff. Put another way, to be punitive damages must be more than compensatory, so that it can be said that exemplary damages are necessarily over and above what has been assessed in compensatory damages. Particularly can that be said in the case of ordinary compensatory damages, and while aggravated compensatory damages have a punitive element that is because the solatium calls for infliction of some punishment on the defendant. Fulfilling the purpose of teaching the defendant that defamation does not pay, and of marking curial disapprobation of the defendant's conduct by punishment, is doing something other than compensate the plaintiff. 19 That, however, is not how the relationship between compensatory damages and exemplary damages has been seen, and authority stands to the contrary. The "if, but only if" principle has a very respectable pedigree. Apart from its adoption in Rookes v Barnard [1964] AC 1129 and Broome v Cassell & Co and more recent applications in England, for example John v MGN Ltd [1996] 2 All ER 35 (see generally Gatley on Libel and Slander, 9th ed, para 9.15), it has been adopted by the Supreme Court of Canada in Hill v Church of Scientology of Toronto (1995) 126 DLR (4th) 129 at 186 (and see recently Whiten v Pilot Insurance Co (2002) 209 DLR (4th) 257 at [74] and Performance Industries Ltd v Sylvan Lake Golf & Tennis Club Ltd (2002) SCC 19 at [87]), and in New Zealand in cases such as Taylor v Beere [1982] 1 NZLR 81 at 95 and Television New Zealand Ltd v Quinn [1996] 3 NZLR 24 at 37. 20 In our reasons we referred, without the benefit of submissions on the principle, to the different purposes of compensatory damages and exemplary damages, and to Brennan J's observation in XL Petroleum (NSW) Pty Ltd v Caltex Oil (Australia) Pty Ltd (1985) 155 CLR 448 at 471 that "there is no necessary proportionality between the assessment of the two categories". The respondent emphasised the difference in purposes. He called in aid the recent examination of exemplary damages in Harris v Digital Pulse Pty Ltd [2003] NSWCA 10, in which the punitive as distinct from compensatory nature of exemplary damages led the majority to deny Equity's power to award exemplary damages for breach of fiduciary duties by an employee. Spigelman CJ thought the appellation "damages" inappropriate because "a common law litigant who received an award of [exemplary damages] has not suffered any 'damage' in the relevant respect" (at [2]). Heydon JA likened recognition of such an power in equity to the judicial creation of criminal sanctions (at [343] and following), although Spigelman CJ at [3] preferred not to adopt that characterisation at [3]). 21 The respondent submitted that in Australia there was recognised "the true anomaly of an award entirely detached from any compensatory aspect". This has some resonance with our questioning of the basis of the "if, but only if" principle. But the respondent did not submit that compensatory damages and exemplary damages are wholly divorced, expressly stating that he did not put "that compensatory damages conceptually are irrelevant to a matter of exemplary damages" and accepting that there was a connection "perhaps of mutual relevance to each other" between the two. 22 The difficulty with the respondent's position is that it did not explain how, once a connection of mutual relevance between compensatory and exemplary damages is accepted, it was then possible to fix the latter without regard to the former. If in some cases it is possible to do so, what is the feature that differentiates those cases and places this case in that category? That remained unexplained. This is not a case where a re-trial could only decrease compensatory damages; to the contrary, it is quite possible they could be increased, taking into account injury to feelings. On the "if but only if" principle, that possibility is relevant to any award of exemplary damages. 23 In Backwell v "AAA" (1997) 1 VR 182 Ormiston JA, with whom the other members of the Victorian Court of Appeal agreed, accepted the existence of the "if, but only if" principle after reference, amongst other matters, to the reasons of Brennan J in XL Petroleum (NSW) Pty Ltd v Caltex Oil (Australia) Pty Ltd. His Honour's consideration included, through citation of Musca v Astle Corp Pty Ltd (1988) 80 ALR 251 at 269 per French J, that Brennan J did not "go so far as to say that the quantum of compensatory damages may not be taken into account in assessing exemplary damages". In Harris v Digital Pulse Pty Ltd Heydon JA explained Brennan J's observation (at [254]) - "If exemplary damages are to fulfil their threefold purpose, they must not merely irritate, they must sting. It is the gravity and character of the Defendants' conduct which guides the Court's discretion as to the proper amount to award by way of exemplary damages. That is why there is 'no necessary proportionality' between the amount awarded as compensation for the damage suffered by the plaintiff and the amount of exemplary damages awarded against the defendant: XL Petroleum (NSW) Pty Ltd v Caltex Oil (Australia) Pty Ltd (1985) 155 CLR 448, at 271; Lamb v Cotogno at 9. A minimal amount of damage inflicted on a plaintiff may, if the wrongdoing was outrageous, nevertheless require heavy exemplary damages to be visited upon the defendant." (other citation omitted) 24 There is no decision binding us, on strict rules of precedent, to application of the "if, but only if" principle. We have reservations as to its consistency with the different natures and purposes of compensatory and exemplary damages, perhaps more clearly recognised of recent times. However, we consider that on the present state of the authorities we should give effect to the principle. To its continuing vitality in England, Canada and New Zealand there is added its recent affirmation in the Victorian Court of Appeal, and it has been applied in cases at first instance to which it is unnecessary to refer. With the benefit of the arguments now put to us, the observation of Brennan J in XL Petroleum (NSW) Pty Ltd v Caltex Oil (Australia) Pty Ltd does not clearly stand against it and was not a sufficient basis for what we said in para [1511] of our reasons. As an intermediate court of appeal, we think that we would be departing from our proper role if we were to move the law from its present position, and as has been seen the respondent held back from submitting that compensatory damages and exemplary damages are wholly divorced. 25 We conclude, therefore, that when compensatory damages (including any aggravated damages) remained to be assessed, we should not have awarded the exemplary damages of $200,000 in relation to the Witness programme. 26 We should make clear the extent of our withdrawal. Our holding remains that the Witness programme was broadcast in circumstances entitling the respondent to an award of exemplary damages. Only the actual award of the amount for exemplary damages is withdrawn. Conceivably, of course, the amount of exemplary damages could be nil if it were considered that the compensatory damages as assessed in the new trial were sufficient to inflict a proper punishment on the appellant; or the figure could be something other than the figure of $200,000, that is, more or less, depending upon the amount of the compensatory damages and the view taken of their punitive effect compared to what is required for exemplary damages to fulfil their purpose.

(b) The nature and extent of the new trial 27 There is added to this issue that the new trial must encompass the award of exemplary damages as well as, at the least, the question of aggravated compensatory damages. 28 The appellant's proposal remained, that there be a new trial as to damages, without limitation or conditions. 29 The respondent's revised proposal was - "6. That the proceedings be remitted to Levine J for retrial (of proceedings 20223 of 1995 with respect to imputations (4)(a)(i) and 4(c)(i) and of proceedings 20592 of 1996 with respect to imputations 4(a)(i) and 4(b)(i) ('the retrial') with the retrial limited to: a) the quantification of what aggravated damages, if any, should be ordered to be paid by the appellant to the respondent in addition to the ordinary compensatory damages awarded by Levine J on 27 June 2001; b) any claim for exemplary damages for conduct of the appellant on or after 27 June 2001; and

c) any claim for interest on the ordinary compensatory damages awarded by Levine J on 27 June 2001 and any award of aggravated damages at the retrial. 7. The evidence on the retrial be limited to matters relevant (within the meaning of sec 55 and sec 56 of the Evidence Act ) to: a) the increased hurt to the respondent occasioned by the publication of the imputations and the respondent's response to the appellant's conduct asserted at the retrial to provide a basis for an award of aggravated damages; and

b) conduct of the appellant or its servants or agents on or after 27 June 2001 asserted to provide a basis for an award of exemplary damages (collectively 'the facts in issue'). 8. Evidence on the retrial is to be by way of: a) the relevant testimony of witnesses examined at the first trial being read from the notes of the transcript pursuant to Part 51 rule 23(5)(c); and

b) evidence, if the parties are so advised, of additional witnesses (including but not limited to the respondent) and documents relevant to the facts in issue." 30 It will be seen that the respondent's proposal assumed that our award of exemplary damages would remain. That was under challenge, and the assumption has been falsified. We take it that the respondent would add to the limited issues for retrial the quantification of what exemplary damages should be ordered to be paid by the appellant to the respondent in addition to the compensatory damages ordered to be paid. 31 As we explained in our reasons of 24 December 2002, although the starting-point is a new trial generally on all issues, a new trial is commonly ordered limited to damages. We referred to the consideration in The Trustees of the Roman Catholic Church v Hogan (2001) 53 NSWLR 343 of limitation to a single head of damages. The respondent's proposal added further matters: that there should be remission to Levine J for retrial or the new trial (we do not intend that the word or words used should dictate anything); that the ordinary compensatory damages awarded by His Honour should stand as the base to which any aggravated damages would be added; that there should be assessment of exemplary damages for the conduct of the appellant after 27 June 2001 (that is, after the close of evidence at the trial before His Honour), now that would presumably become that there should be assessment of exemplary damages generally; and that there should be restrictions on the extent and form of the evidence at the new trial. 32 In our reasons we observed that the judgment of Kirby P in Holden v Wyong Shire Council (CA, 9 June 1988, unreported) "suggests potential difficulties" in a return to Levine J for assessment of damages on the evidence in the trial. 33 In Lockyear v Macready (1965) 66 SR (NSW) 369 the court contemplated a new trial on issues left undetermined by the trial judge but necessary for determination. In apparent exercise of the power under s 145(3) of the District Courts Act 1912 to order a new trial "on such terms as it thinks fit", the Court ordered that there be a new trial "to the intent and effect that the hearing be resumed at the point at which the learned trial judge commenced to give his reasons". There does not seem to have been opposition to that course. 34 As this case illustrates, simply returning a case to the trial judge is caught up with that judge then continuing on the evidence already before him. There may not be much point in the same judge starting all over again, but there may be point, as in Lockyear v Macready, in the same judge taking up where he left off in order to determine an outstanding issue which on appeal made necessary for determination. We can make orders relating to the evidence on a new trial pursuant to Pt 51 r 23 of the Supreme Court Rules, although the extent of the power has been little explored. For the present, however, we focus on whether there can or should be remission to Levine J for the new trial. 35 By s75A(10) of the Supreme Court Act, in an appeal we may "make any order or give any direction … which the nature of the case requires". In Holden v Wyong Shire Council Kirby P said of s 75A(10) - "The respondent submitted that the discretion conferred by the closing words of the subsection was at least as wide as the provision in s145(3) of the District Courts Act 1912 upon which the Full Court had relied to make its order in Lockyear. Although in the events stated below it is not necessary finally to determine the question, I see a number of difficulties in the respondent's submission. First, the Supreme Court Act, s51(4) makes particular provision for removal or remission of proceedings from the Court of Appeal to a Division. There it confines remission to cases where proceedings are "pending" before the Court of Appeal and then provides only for remission "to a Division". Once the order of the Court disposing of the appeal is pronounced, the proceedings are no longer "pending". They have been concluded. The purpose of the remission provisions in s51(4) appears to be quite different from the purpose sought to be secured here. Secondly, the power in s75A(10) would appear to be confined to making particular orders relevant to the substance of the appeal. It would not appear to support the exceptional control by the Court of Appeal of the internal listing arrangements of the Court or Division to which a matter, after appeal, is returned. Thirdly, so far as the inherent jurisdiction of the Court or the power under s75A(10) does authorise such disturbance of the internal arrangements of the Common Law Division as the respondent urges, there are good reasons of principle why such disturbance should rarely if ever occur. This Court is established by the Supreme Court Act . Its relationship to the Divisions of the Supreme Court or the courts subject to its authority necessitates an appropriate demarcation of their respective responsibilities. Relevantly, this Court disposes of appeals. Once it has concluded its function, it should not ordinarily interfere in the manner in which, or persons by which, Divisions of the Supreme Court or other courts discharge their functions." 36 His Honour's remarks were obiter. Mahoney JA expressly reserved his opinion, and Priestley JA said nothing on the point. 37 With respect to Kirby P, we do not see that the express power of remission in s51(4) of the Supreme Court Act bears upon the present question. The remission there referred to is not consequential upon a successful appeal, and is concerned with disposition of proceedings before the Court of Appeal by trial in a Division instead of in the Court of Appeal. The use of the word "remission" should not govern in the different context of a new trial. 38 More significant is whether s75A(10) is confined to orders "relevant to the substance of the appeal". Section s75A(10) plainly extends to orders flowing from the disposition of an appeal, and in that sense relevant to its substance; so it can be said that, if it is appropriate for the disposition of the appeal that there be remission to the trial judge, there is power so to order. On the other hand, the particular provision for conditions, directions and orders in Pt 51 r 23 of the Rules when a new trial is ordered may suggest that s 75A(10) does not go so far. 39 One question in the recent decision of Minister for Immigration and Multi-Cultural Affairs v Wang [2003] HCA 11 was, "Did a power in the Federal Court to set aside a decision of the Refugee Review Tribunal and refer the matter to which the decision related to the Tribunal for further consideration subject to such directions as the Court thinks fit extend to directing that a further hearing should be conducted by the Member of the Tribunal who had conducted the original hearing"? Gleeson CJ and Gummow and Hayne JJ reasoned that, if it could be directed that the Tribunal be constituted differently from its original constitution, the power extended to directing the converse. Their Honours expressed no concluded view, it being unnecessary for them to do so since they considered that the power, if it existed, had been erroneously exercised. McHugh J held that the power did not extend so far, considering that that would be inconsistent with the specific power conferred under the relevant legislation on the Principal Member of the Tribunal to determine who should constitute the Tribunal. Kirby J, who dissented in the result, held first, that the power did extend to directing that the Tribunal be constituted by the member who made the original decision, and secondly, that the procedural direction of the Full Federal Court to that effect should not be disturbed. His Honour said that the Principal Member's exercise of his power was subject to a judicial order forming part of the completion by the Federal Court of the determination of the appeal. 40 The present appeal and cross-appeal were from orders of "the Court in a Division", see s101(1)(a) of the Supreme Court Act. While not inappropriately referred to as orders made by Levine J, they were orders of the Court constituted by his Honour (s40(1)), with his Honour exercising the jurisdiction of the Court in its Common Law Division. Unless conditioned in the manner now in question, an order for a new trial made by us will be an order for a trial by the Court in a Division. By s39 of the Supreme Court Act intra-curial arrangements for the transaction of the business of the Division are made by the Chief Justice, the Chief Judge or the Divisional Judges, but not to the exclusion of the inherent power to assign judges to hear particular cases (Rajski v Wood (1989) 18 NSWLR 512 at 520). The arrangements for the transaction of the business of the Division are administrative arrangements (ibid). 41 We do not think that the present question attracts the reasoning of McHugh J in Minister for Immigration and Multi-Cultural Affairs v Wang. The constitution of the Court in a Division is not exclusively sourced and can readily be subject to conformity with a judicial order: Contrast the power of the Principal Member of the Tribunal to determine its constitution. We find it difficult to resist the reasoning in Minister for Immigration and Multi-Cultural Affairs v Wang that, if an order for a new trial can include that it not be before the original trial judge or tribunal member, for example for reasons to do with perception of justice, so also it can be ordered, (as a matter of power) that the new trial be before the original trial judge. Orders that a new trial not be before the original trial judge or tribunal member are not uncommonly made or considered, see for example Escobar v Spindaleri (1986) 7 NSWLR 50 at 58 (where there was seemingly a degree of hostility between counsel for the appellant and the trial judge); Northern NSW FM Pty Limited v Australian Broadcasting Tribunal (1990) 26 FCR 39 at 42 (where a Tribunal's decision was set aside for error and it was thought fairer to the parties that it be heard by a differently constituted tribunal); Steedman v Baulkham Hills Shire Council (1993) 31 NSWLR 562 (where the order was considered but not made); and Smith v New South Wales Bar Association (1992) 176 CLR 256 (where it was said at 269 that there should be remission to a court differently constituted, although different constitution of the court was not part of the formal orders at 275). 42 We are more prepared to accept power to remit to the original trial judge than was Kirby P in Holden v Wyong Shire Council. Like his Honour, however, we do not find it necessary finally to determine the question. 43 As Minister for Immigration and Multi-Cultural Affairs v Wang illustrates, it is an impermissible exercise of discretion to make orders as to the constitution of a tribunal for the purpose, not of saving expense or for other reasons of administrative efficiency, but in order to secure for a party the benefit of such favourable views as had previously been formed by a tribunal member; per Gleeson CJ at [10] and [18-19]; per Gummow and Hayne JJ at [71] and [77-79]. 44 Remission by this Court to Levine J as part of the respondent's proposal would, we think, similarly be an inappropriate exercise of discretion. 45 We explained in our reasons why we thought that a new trial could not be limited so as to exclude ordinary compensatory damages other than injury to feelings. We remain of that view. It follows that we do not think that the new trial should be limited to the quantification of aggravated damages with the ordinary compensatory damages awarded by Levine J standing as the base to which any aggravated damages should be added, as the respondent proposed. The judge conducting the new trial will need to address compensatory damages as a whole, upon all the evidence and without being tied to assessment of the evidence underlying the existing award of ordinary compensatory damages (which was in any event still under unresolved challenge). 46 Once the new trial is opened up by a fresh assessment of compensatory damages as a whole, we do not think that we should order remission to Levine J nor should we preclude the new trial being conducted by Levine J. If it were the only matter for the new trial, arguably there could be a remission to Levine J for his Honour to take up where he had left off in relation to exemplary damages: that is, proceeding from our holding that the Witness programme was broadcast in circumstances entitling the respondent to an award of exemplary damages, determining what the amount of exemplary damages should be. But exemplary damages are not the only matter for the new trial, and the determination of the amount of exemplary damages is affected not only by the prior determination of compensatory damages (on the "if, but only if" principle) but also by the respondent's wish to have exemplary damages for conduct of the appellant on or after 27 June 2001. The advantage of administrative efficiency may remain, were Levine J to conduct the retrial, but the scope of the retrial means that necessarily there may be new evidence called for so reducing some, but not all, of that advantage. However, this and other relevant matters are for the Common Law Division and its internal listing arrangements. 47 Assuming power so to order, therefore, we decline to order that there be remission to Levine J for the new trial. No order should be made that Levine J either should hear the re-trial or not hear the re-trial, that being a matter for the internal arrangements of the Common Law Division and its listing judge. 48 We should say that we do not accept the submission of the appellant that it would be inappropriate or unfair to the parties, or either of them, for Levine J to conduct the new trial. The appellant submitted that Levine J had given judgment on both compensatory and exemplary damages (rejecting the latter) so that "it would generally seem fairer to the parties" that the new trial be heard by a judge other than Levine J. The appellant relied on Smith v New South Wales Bar Association at 269, Northern NSW FM Pty Ltd v Australian Broadcasting Tribunal at 42 and Steedman v Baulkham Hills Shire Council at 576-7. But there is no basis in the present circumstances for any reasonable apprehension of bias, or even concern short of that, which would render it inappropriate for Levine J to conduct the new trial; certainly not circumstances comparable to the two cases cited. 49 The order to be made is that there be a new trial as to damages. We do not accept the appellant's submission that the respondent ought not be permitted on any new trial to give evidence of injury to feelings when this Court found no error in the trial judge's rulings. The respondent on a re-trial is not in that regard to be held to the forensic choice which he earlier made. 50 Nor do we think that, given our reasons for the width of the new trial, there should be restrictions on the extent of the evidence at the new trial. That will be determined by the issues for determination. We consider, however, that it will permissibly contribute to saving inconvenience and expense and contribute to the "just, quick and cheap resolution of the real issues", if we order pursuant to Pt 51 r 23(5)(c) of the Rules that the testimony of any witness examined at the trial before Levine J may be read from the notes of the testimony instead of the witness being again examined on that testimony, unless the judge conducting the new trial otherwise orders. We intend that if the trial judge considers or is persuaded that the witness should give evidence entirely afresh he should be able so to order and that the parties should not be restricted to the evidence given at the trial before Levine J if they wish to call their witness to give further evidence. 51 The assessment of damages in the new trial will include any question of interest. We said in our reasons that the discretion as to interest must be re-exercised in any event. It follows that the ruling made by Levine J with regard to the applicable rate of interest on ordinary compensatory damages can not stand, and although an order setting aside any order for interest may not be necessary for more abundant caution that should be done. It is set aside not because this Court has determined that Levine J erred in his award of interest on compensatory damages, but because reassessment of damages necessarily requires a fresh consideration of interest. We thus do not accept the appellant's submission that this order does not follow from the Court's judgment and should not be made.

(c) Costs of the appeal and cross-appeal 52 The appellant accepted that it should pay the respondent's costs of the appeal, and proposed that there be no order as to the costs of the cross-appeal. The respondent proposed that the appellant pay his costs of the appeal and the cross-appeal on an indemnity basis, alternatively on a party-party basis but with liberty to apply for the costs to be on an indemnity basis in the event that the damages he obtained were not less favourable than the orders of compromise made in 1997. 53 The ground for indemnity costs was the offers of compromise. It can not presently be said, or forecast with certainty, that the respondent will recover damages such that an entitlement to indemnity costs, subject to an order otherwise, is enlivened. We consider that the respondent's position in that respect should be preserved, and accordingly while the costs orders will not be on an indemnity basis they will be subject to the liberty to apply. 54 At the hearing on 8 April 2003 the Court raised whether, to avoid the obvious problems of distinguishing between the costs of the appeal and the costs of the cross-appeal, a global order should be made. We do not think there was real opposition to that course, which in any event we consider is open and should be taken. 55 We do not think that the respondent should have all the costs of the cross-appeal. He did not establish error in relation to injury to feelings or in relation to damages for psychiatric injury (although in the result the new trial will extend to damages for injury to feelings and psychiatric injury), or wholly in relation to exemplary damages. We take a broad-brush approach of necessity. In our view, a proper disposition of costs is that the appellant pay 90 per cent of the respondent's appellate costs. 56 As we have noted, the respondent sought an order that he have leave to proceed forthwith to an assessment of all costs orders we made. The appellant replied that leave was not necessary and the respondent could proceed as he wished. There was no further debate. If leave be necessary, we think that it should be granted.

(d) The costs of the trial 57 The appellant proposed that all questions as to the costs of the trial be deferred until after the new trial and determined by the judge who conducted the new trial. The respondent proposed orders complicated by the questions of remission to Levine J and payment of a sum of money on account of costs, but essentially that the appellant pay his costs of the trial and he have liberty to apply to have the costs on an indemnity basis in the event that the damages awarded in the new trial were not less favourable that the 1997 offers of compromise. 58 There is a range of possible outcomes in the new trial. However, liability has been finally determined, and we consider that we should now order that the respondent have the costs of the trial before Levine J as to liability. It is possible, however theoretical it might be thought, that the respondent will recover less than $75,000, but in our view he had sufficient reason for commencing and continuing his proceedings in this Court (see Pt 52 r 24(2)) of the Rules). The costs of the trial before Levine J as to quantum should be as ordered by the judge conducting the new trial, with the liberty to apply. 59 The position as to leave to proceed to an assessment of costs forthwith is as before.

(e) The application for payment of a sum of money on account of costs 60 The respondent sought an interim order on the ground that he was entitled to and would on an assessment recover costs of no less than $3 million. Both parties proposed to lead evidence going to the amount of the respondent's minimum entitlement. There was conflict in the evidence and dispute over access to and production of documents said to be necessary to coming to a view. 61 The issue is whether we should entertain the application, not whether the order should be made. It is not normal, and can be an inappropriate use of judicial resources and involve complications, for this Court to enter upon factual determinations such as may be required. The appellant submitted that it would also effectively be deprived of its appellate rights in respect of any order which might be made. However, we consider that in the extraordinary circumstances of these proceedings the "just, quick and cheap" resolution of the proceedings calls for us to remain seised of the application. Accordingly, we will entertain it.

(f) The application for an order for referral to mediation 62 In proceedings which have already been of unprecedented length and enormous cost, the overriding purpose of the Rules, to facilitate the "just, quick and cheap resolution of the real issues" must be borne constantly in mind. That overriding purpose is a matter which the Court is not merely entitled to take into account, it is required to do so; Idoport v National Australia Bank Limited [2000] NSWSC 1141 at [45]. Nor is it a stricture which the parties themselves are free to disregard. That is why, in considering the threshold question whether this Court should consider whether or not to order mediation, as sought by the respondent and opposed by the appellant (who submits this should be determined by a single judge), we give weight to the fact that, were an order for mediation not to be made by consent, it would not be just, quick and cheap to remit such a matter to a judge in the Common Law Division. 63 The only basis for doing so put by the appellant is to preserve the prospect, for that is all it could be, of a successful invocation of leave to appeal against an order for mediation or indeed declining so to order. We are familiar with the proceedings, whereas a single judge (unless Levine J) would not be. 64 The appellant's final written submission included that it was prepared to consent to an order for referral to mediation subject to a direction that the respondents provide specified documents and information going to assessment of costs. We do not know the respondent's attitude to the precondition. There has been enough to-ing and fro-ing. We will entertain the application.

General 65 The respondent asked for an order for expedition of the new trial. The appellant did not oppose the order. We will make it. 66 Our attention has been drawn to an error in our reasons of 24 December 2002. In para [120] we referred to McNight being called and his evidence being rejected. The evidence as to McNight's involvement was given by Russell, and was not accepted by the judge. The error is of no consequence, but should be corrected. 67 Another appeal CA40502/99 relating to an interlocutory order for costs has been stood over pending the result of the appeal and cross-appeal. It was last stood over until there was resolved whether there should be a mediation. So that it is not overlooked, we will direct that it be listed for mention on the occasion when the application as to money on account of costs and mediation are listed for hearing. 68 The appellant submitted that the respondent's changed stance at the hearing on 8 April 2003 brought wasted costs of its responding to the respondent's original statement, and that it should have an order for the costs thrown away by reason of the change in stance. We do not think that there was a clear waste of costs warranting such an order, and decline to make it. 69 When these reasons are published, directions will be given with a view to prompt hearing of the applications as to money on account of costs and mediation, including fixing a date; the direction as to proceedings CA 40502/99 will then be given.

Set aside the order as to the rate of interest, the verdicts for $309,165.25 and $275,698.63 and the orders for costs made on 27 June 2001.

Order that the testimony of any witness examined at the trial before Levine J may be read from the notes of the testimony instead of the witness being again examined on that testimony, unless the judge conducting the new trials otherwise orders.

Order that the appellant pay 90 per cent of the respondent's costs of the appeal and cross-appeal, with liberty to apply within 28 days of judgment on the new trials for an order that the costs be on an indemnity basis.

Order that the appellant pay the respondent's costs of the trial as to liability and that the costs of the trial as to quantum be as ordered by the judge conducting the new trials, with liberty to apply in the Common Law Division within 28 days of judgment in the new trials for an order that the costs as to liability and quantum be on an indemnity basis.

So far as leave is necessary, grant leave to the respondent to proceed forthwith to assessment of the costs of the appeal and cross-appeal and the costs of the trial as to quantum the subject of the preceding orders. **********

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