Ashworth aka Otto v Nine Network Australia Pty Ltd

District Court of NSW|2019-06-20

NMFM Property Pty Ltd v Citibank Ltd (No 11) [2001] FCA 480 Oshlack v Richmond River Council (1998) 193 CLR 72 Otto (a.k.a. Ashworth) v Gold Coast Publications Pty Ltd [2017] NSWDC 101 Pelechowski v Registrar, Court of Appeal (1999) 198 CLR 435 Tabbaa v Nine Network Australia Pty Ltd [2019] NSWCA 69 Tabbaa v Nine Network Pty Ltd (No.11) [2018] NSWSC 389 United Telecasters Sydney Ltd v Hardy (1991) 23 NSWLR 323 Wentworth v Rogers [1999] NSWCA 403 White ACT (in liquidation) v G B White & Ors [2004] NSWSC 303 Texts Cited: Kaufman, A. L., "Cardozo", Cambridge, Harvard University Press, 2000, Vol 16, 91 The Hon. David Hunt, AO, "The International Criminal Court - High Hopes, Creative Ambiguity and an Unfortunate Mistrust in International Judges" (2004) 2:1 Journal of International Criminal Justice 56 New South Wales, Hansard, Legislative Assembly, 12 October 2005, p 18518 (Mr Barr MLA) Category: Costs Parties: Plaintiff in proceedings 2016/221796: David Ashworth aka David Otto Defendant in proceedings 2016/221796: Nine Network Australia Pty Ltd (ACN 008 685 407)

Plaintiff in proceedings 2016/338264: David Otto Defendant in proceedings 2016/338264: Dailymail.com Australia Pty Ltd Representation: Counsel: Plaintiff: Mr M K Rollinson Defendants: Mr A T S Dawson SC / Ms L Barnett

Solicitors: Plaintiff: Carters Law Firm Defendants in 2016/221796 and 2016/338258: Macpherson Kelley Defendant in 2016/338264: Mark O'Brien Legal File Number(s): 2016/221796; 2016/338258; 2016/338264 Publication restriction: None

The applications before the court

The defendants in these proceedings were successful in defending claims for defamation brought by the plaintiff (Ashworth aka Otto v Nine Network Australia Pty Ltd (ACN 008 685 407); Otto (aka Ashworth) v Gold Coast Publications Pty Limited; Otto v Dailymail.com Australia Pty Ltd (No. 2) [2019] NSWDC 188).
The defendants have brought an application for indemnity costs on three bases: 1. The plaintiff failed to accept a series of offers made by the defendant in proceedings 2016/221796 and 2016/338264 made between 25 November 2016 and 14 November 2017, and by all defendants between 19 February 2019 and 3 March 2019. 2. An entitlement to indemnity costs for the whole of the proceedings pursuant to s 40 Defamation Act 2005 (NSW) ("the uniform legislation"). 3. The plaintiff's "delinquent conduct" (written submissions, paragraph 3) in bringing and prosecuting the claim amounts to an abuse of process warranting an indemnity costs order: Tabbaa v Nine Network Pty Ltd (No.11) [2018] NSWSC 389; Tabbaa v Nine Network Australia Pty Ltd [2019] NSWCA 69; Chaina v Alvaro Homes Pty Ltd [2008] NSWCA 353.
The plaintiff seeks post-judgment orders in the form of discharge of consent orders 1 - 11 which I made on 20 December 2018 in relation to the conduct of the plaintiff and his female partner, Kittie Lee. These restraining orders were made (by consent) shortly before the trial, pursuant s 46 of the District Court Act 1973 (NSW), which permits the making of ancillary (but not final) orders for injunctive relief in the course of disposing of an action.
These orders were: 1. For the proceedings listed in paragraph 4 below, subject to any order made by the trial judge to the contrary, evidence in one proceeding be evidence in each of the other proceedings. 2. Grant leave to the parties to use the documents produced in response to subpoenas issued in these proceedings for the purposes of the proceedings in 4(b) and (c) below. 3. Grant leave to the parties to use for the purpose of this proceeding, the documents produced in response to any subpoenas issued in the proceedings in 4(b) and (c) below. 4. For the purpose of the above orders, the relevant proceedings are: 1. David Ashworth (aka David Otto) v Nine Network Australia Pty Limited (2016/221796); 2. David Otto (aka David Ashworth) v Gold Coast Publications Pty Limited & Anor (2016/338258); 3. David Otto v Dailymail.com Australia Pty Limited (2016/338264). 1. Until further order, Kittie Lee be restrained from: 1. contacting or attempting to contact the following persons: 1. [Name redacted]; 2. [Name redacted]; 3. [Name redacted]; 4. [Name redacted]; 5. [Name redacted]; 6. [Name redacted]; 7. [Name redacted]; and 8. Any other person who the defendants' solicitors notify Ms Lee in writing that they intend to call as a witness in the Proceedings; 1. contacting or attempting to contact any person who is a friend (including a friend, follower or contact on social media), colleague or associate of any of the persons referred to in paragraph (a) above, concerning these proceedings, 2. doing any thing which is likely to discourage the persons in (a) above from giving evidence at the hearing of the trial of the Proceedings or inhibit their ability to give such evidence. 1. Until further order, the plaintiff be restrained from: 1. contacting or attempting to contact the following persons: 1. [Name redacted]; 2. [Name redacted]; 3. [Name redacted]; 4. [Name redacted]; 5. [Name redacted]; 6. [Name redacted]; 7. [Name redacted]; and 8. Any other person who the defendants' solicitors notify the plaintiff's solicitor in writing that they intend to call as a witness in the Proceedings; 1. contacting or attempting to contact any person who is a friend (including a friend, follower or contact on social media), colleague or associate of any of the persons referred to in paragraph (a) above, concerning these proceedings; 2. doing any thing which is likely to discourage the persons in (a) above from giving evidence at the hearing of the trial of the Proceedings or inhibit their ability to give such evidence. 1. The plaintiff be restrained from procuring, assisting or encouraging any other person to engage in any conduct which would amount to a breach of paragraph 2 of these orders. 2. The plaintiff is to bring these orders to the attention of Kittie Lee by no later than 4:00pm on Thursday 20 December 2018. 3. The plaintiff, through his solicitors, is to provide confirmation of his compliance with paragraph 4 of these orders to the solicitors for the Defendants by no later than 6:00pm on Thursday 20 December 2018. 4. The plaintiff pay the defendants' costs of and incidental to this application. 5. For the purpose of these orders, the term "Proceedings" refers jointly to the following proceedings: David Otto (Aka David Ashworth) v Nine Network Australia Pty Ltd (ACN 008 685 407) (2016/221796); David Ashworth (aka David Otto) v Gold Coast Publications Pty Limited & Anor (2016/338258); and David Ashworth (aka David Otto) v Dailymail.com Australia Pty Limited (2016/338264).
As to the defendants' costs applications, I set out below my reasons for ordering the plaintiff to pay the defendants' costs of the proceedings on an indemnity basis.
As to the plaintiff's application, I set out my reasons for the notation made by consent in relation to the application brought by the plaintiff for the discharge of the orders made pursuant to s 46 of the District Court Act. The plaintiff's application for these orders to be discharged was initially opposed by the defendants. The defendants now agree that this court, a creature of statute with no inherent powers, has no power to make any final injunctive order of this kind. This court's lack of power to grant such relief under s 134 of the District Court Act, the limits on s 46 and the lack of inherent jurisdiction for a statute-based court mean that the orders I made for protection of the witnesses no longer have any jurisdictional basis. The result is that these witnesses must be deprived of the orders which had protected them during the trial.

A brief history of these proceedings

The plaintiff commenced defamation proceedings in 2016 against the defendant in proceedings 2016/221796 (hereafter referred to as "the Nine proceedings"), pleading 17 imputations which can broadly be described as relating to financial and personal dishonesty and conduct amounting to harassment of young women. Later that same year, he commenced proceedings against the Dailymail.com Australia Pty Ltd ("Dailymail"), pleading five imputations of a similar nature (hereafter "the Dailymail proceedings") and, following an application for an extension of time to commence proceedings (Otto (a.k.a. Ashworth) v Gold Coast Publications Pty Ltd [2017] NSWDC 101) in relation to publications in the Gold Coast Bulletin and Courier Mail (hereafter "the News proceedings"), five imputations of a similar nature were pleaded in relation to each of those publications.
The defence of justification was pleaded to all imputations by all defendants. In relation to all but the Nine proceedings, two contextual imputations were pleaded. One of the two contextual imputations, namely that "the plaintiff posted advertisements seeking to engage young women for the purpose of entering into polyamorous relationships with him", was admitted by the plaintiff to be true.
In my judgment, I found that the defence of justification was made out to each of the imputations pleaded by the plaintiff. I made findings in favour of the defendants which had pleaded contextual justification, including an alternative finding that the contextual imputations outweighed the plaintiff's imputations where the defence of justification failed.
I also made alternative findings as to quantum, holding that the plaintiff should be awarded zero damages. I set out, at [378] of my judgment, that three of the four publications sued upon by the plaintiff were not only hopeless, but would result in damages only of the most modest nature by reason of the very limited damages the plaintiff could claim in relation to any part of the cause of action which survived a justification plea. The accuracy and fairness of these accounts required the plaintiff to acknowledge the truth of one of the two contextual imputations. The evidence of the plaintiff's other activities given at trial was significantly more damaging to the plaintiff than the restrained nature of these publications. The broadcast of A Current Affair, the subject of the Nine proceedings, was more robust in its presentation, but nevertheless was the subject of careful investigation, the accuracy of which was confirmed by the evidence given at trial which, as is the case with the other proceedings, revealed events of a more serious nature than had been broadcast.
For the defendants and their witnesses, this litigation came at a price. That financial price was $1.5 million for the defendants' legal costs, incurred in a trial which was set down for six weeks, although able to be concluded in just over half that time due to the efficient conduct of the case by the legal representatives involved. This sum is in addition to unpaid legal costs incurred in earlier proceedings between the plaintiff and Nine Network Australia Pty Ltd in Queensland, for which the plaintiff had been made bankrupt.
The legal costs are the subject of the defendants' application for indemnity costs. There is, however, another kind of cost engendered by litigation of this kind, namely the cost visited on members of the community who are called as witnesses in court proceedings and subject to attacks of the kind made by Ms Lee in social media posts and by telephone, and it was for this reason that the defendants sought the continuation of the orders restraining the plaintiff and Ms Lee from contact with these persons as well as orders for indemnity costs.
This is not a trifling matter. Although Mr Rollinson submitted to the court that there is no likelihood of any further misconduct towards those witnesses, as recently as 28 May 2019, Ms Lee messaged one of the solicitors for the defendants as follows (Exhibit A):
The first issue for consideration is whether an order for indemnity costs should be made by reason of the plaintiff's unreasonable failure to accept a series of Calderbank offers made to him and/or whether indemnity costs should be available by reason of the application of s 40 Defamation Act 2005 (NSW).

The relevant statutory provisions and principles of law

The first relevant provision is the entitlement of a party to seek indemnity costs pursuant to s 98(1)(c) Civil Procedure Act 2005 (NSW) which provides: "98 Courts powers as to costs (1) Subject to rules of court and to this or any other Act: (a) costs are in the discretion of the court, and (b) the court has full power to determine by whom, to whom and to what extent costs are to be paid, and (c) the court may order that costs are to be awarded on the ordinary basis or on an indemnity basis."
The next point to note is the difference between the offer of compromise system set out in r 20.26 Uniform Civil Procedure Rules 2005 (NSW) ("UCPR") and Calderbank offers (Calderbank v Calderbank [1975] 3 All ER 333). Calderbank offers are more commonly used in defamation proceedings because defamation settlements may not simply require a payment of money, but often other orders, such as an apology being published or read in court, the taking down of online material, a requirement to refrain from further publication and/or a request to inform a particular person or body of the settlement. Such requirements may be (and, in these proceedings, are) often just as important as the payment of damages. In addition, given the nature of publication, speed may require a shorter period than 28 days to be given. All of these factors are relevant to the offers here.
The relevant principles are set out in Hazeldene's Chicken Farm Pty Ltd v Victorian WorkCover Authority (No 2) [2005] VSCA 298 at [23]‑[29], namely: 1. the stage of the proceeding at which the offer was received; 2. the time allowed for the offeree to consider the offer; 3. the extent of the compromise offered; 4. the offeree's prospects of success, assessed as at the date of the offer; 5. the clarity with which the terms of the offer were expressed; and 6. whether the offer foreshadowed an application for indemnity costs in the event of the offeree rejecting it.
It must be shown that it was unreasonable for the plaintiff to have refused the offer: Black v Lipovac (1998) 217 ALR 386; [1998] FCA 699 at [218] per Miles, Heerey and Madgwick JJ. Walk-away offers can be acceptable in a Calderbank offer: Barnes v Forty Two International Pty Limited (No 2) [2015] FCAFC 19 at [18].
In addition to the above provisions, s 40 Defamation Act 2005 (NSW) sets out the procedure the court may follow where applications for costs are made: "40 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."
As a general rule, costs follow the event: UCPR r 42.1. However, even before s 40 was enacted costs do not follow the event in defamation actions where the litigation has been conducted in a manner warranting a departure from the usual rule: Jones v Sutton (No 2) [2005] NSWCA 203. Although Jones v Sutton (No 2) predates s 40, the principles discussed in it are apposite, since the injustice in those proceedings which triggered the appropriate costs order in fact resulted in the drafting of the provision which has become s 40 in the uniform legislation around Australia (see Civil Law (Wrongs) Act 2002 (ACT), s 139K; Defamation Act 2005 (NSW), s 40; Defamation Act 2006 (NT), s 37; Defamation Act 2005 (Qld), s 40; Defamation Act 2005 (SA), s 38; Defamation Act 2005 (Tas), s 40; Defamation Act 2005 (Vic), s 40; Defamation Act 2005 (WA), s 40; see also the speeches of Mr D Barr MLA in Hansard of New South Wales, 12 October 2005, p. 18518).
In Jones v Sutton (No 2), a successful plaintiff was denied a large proportion of his costs by reason of the following factors: 1. The conduct of the proceedings was "political" (in the sense of wishing to cause harm to the opponent) and vindictive; 2. The extent of publication was extremely limited; 3. There were adverse credit findings against the plaintiff and his witnesses; 4. The plaintiff did not seek an apology or otherwise seek to resolve the matter amicably; and 5. The lack of proportion between the damages and costs.
The alternative basis to s 40 for seeking an indemnity costs order is that the bringing and/or conduct of these proceedings amount to an abuse of process: Chaina v Alvaro Homes Pty Ltd at [101]-[114].
The circumstances in which an indemnity costs order will be made generally require what has been called "relevant delinquency" by that party as a litigant. In Oshlack v Richmond River Council (1998) 193 CLR 72 at [44], Gummow and Gaudron JJ stated: "[44] It may be true in a general sense that costs orders are not made to punish an unsuccessful party. However, in the particular circumstance of a case involving some relevant delinquency on the part of the unsuccessful party, an order is made not for party and party costs but for costs on a "solicitor and client" basis or on an indemnity basis. The result is more fully or adequately to compensate the successful party to the disadvantage of what otherwise would have been the position of the unsuccessful party in the absence of such delinquency on its part." (Footnotes omitted)
In White ACT (in liquidation) v G B White & Ors [2004] NSWSC 303 at [11] and James v Douglas [2016] NSWCA 178 at [63], the Court of Appeal has explained that this does not necessarily require an ethical or moral shortcoming but rather delinquency or unreasonable conduct as being a relevant factor in relation to the conduct of the case.

The defendants' offers

The defendants individually or jointly made six offers of compromise and Calderbank offers on the following dates: 1. 25 November 2016 - Nine Network Australia; 2. 23 June 2017 - Dailymail; 3. 18 September 2017 - Nine Network Australia; 4. 14 November 2017 - Nine Network Australia; 5. 19 February 2019 - all defendants; 6. 3 March 2019 - all defendants.
The plaintiff did not respond to any of these offers. He did, however, post a copy of the 18 September 2017 offer to the Facebook page "DOv9", which he uses to discuss these proceedings, on 26 December 2017, with the following message (Exhibit C):
The plaintiff's claims of taking his house and stopping his concerts are mischievous. The offer includes taking down the matter complained of and discontinuing the bankruptcy proceedings. Mr Dawson SC pointed out to me that the text of the offer as it appears on social media is inaccurate.
I will consider the six offers made by one or all of the defendants in chronological order,

The offers made in the Nine proceedings and the Dailymail proceedings

The 25 November 2016 offer

On 25 November 2016, Nine Network Australia sent the following offer to the plaintiff's solicitors: 1. Nine Network Australia remove the Second Matter Complained Of from its website. 2. The proceeding be dismissed with no order as to costs. 3. Each party bear its own costs. 4. Nine Network Australia agree not to enforce the costs award from Queensland Supreme Court proceeding 4535/15.
This offer was open for acceptance until 9 December 2016.
Mr Rollinson submits that this offer does not justify an indemnity costs order because it was only open for 14 days, which is asserted to be inadequate in that it was for less than what he described as "the usual 28 day period". Mr Rollinson also submitted that the defences referred to in the letter also mentioned a defence of honest opinion, which is "a stance at variance with its ultimate abandonment of honest opinion" at the trial. He also claimed it was a "walk away" offer.
None of these submissions are meritorious. The offer sets out, in careful detail, the basis upon which the defence of justification is asserted to be certain to succeed. The correspondence does not refer to the defence of honest opinion beyond noting it is to be relied upon at trial. At all relevant times these were proceedings where justification was the principal defence, as the offer makes clear.
The plaintiff was given a reasonable amount of time to consider this offer. There is no "rule of thumb" that any offer of less than 28 days is insufficient time.
Although this offer did not contain any proposal for the payment of damages, it was not a "walk away" offer. Nine Network Australia had already been successful in proceedings brought by the plaintiff in the Supreme Court of Queensland and had not only obtained, but was proposing to enforce in bankruptcy proceedings, a costs order. Not only was this costs order to be foregone, as well as the costs of these proceedings, but the matter complained of was to be removed from the website, which would have been a substantial benefit to the plaintiff since it was by far the most visible of the four publications sued upon.
These were substantial benefits. Even if the plaintiff had won the proceedings, he could not have asked the court for an order for the removal of a publication. There are no provisions to this effect in the Defamation Act 2005 (NSW). (I note in passing that this court's power to order Nine Network Australia to remove the second matter complained of from the internet is a matter which may require statutory amendment.)
Accordingly, Nine Network Australia's first offer contained real concessions and was not a "walk away offer", despite offering no payment of damages.

The 23 June 2017 offer

On 23 June 2017, solicitors acting for Dailymail offered to resolve the Dailymail proceedings on the following basis: 1. The Daily Mail proceeding be discontinued with no order as to costs; and 2. The parties bear their own costs.
This offer was open for acceptance for 14 days. The legal representatives for Dailymail received no substantive response to their 23 June 2017 correspondence.
Mr Rollinson submits that this offer was unreasonable in that it allowed only 14 days for acceptance and did not include an offer to take down the matter complained of from Dailymail's website.
A period of 28 days is not mandated, and 14 days was ample time to consider this generous offer. The claim of inadequacy by reason of failure to offer to take down the matter complained of is specious. It was acknowledged during the trial that the number of viewers who clicked onto this site only just made it into the double figures, and that quite a few of those would have been lawyers conducting these proceedings.
The plaintiff unreasonably refused to accept this offer and indemnity costs should accordingly be awarded.

The 18 September 2017 offer

After its 25 November 2016 offer was not accepted, Nine Network Australia commenced bankruptcy proceedings in the Federal Circuit Court of Australia on 24 August 2017. This arose from the costs of the earlier proceedings between the plaintiff and Nine Network Australia in the Supreme Court of Queensland. Unless the plaintiff paid those costs, it was likely that a sequestration order would be made at the hearing on 27 September 2017 which would have made him bankrupt.
As the text of the 18 September 2017 offer differs from the text posted on the plaintiff's website, I will set it out in full: "Dear Sir GRANT WILLIAMS V DAVID ASHWORTH FEDERAL CIRCUIT COURT FILE NO BRG827/2017 "Bankruptcy Proceeding" DAVID ASHWORTH V NINE NETWORK AUSTRALIA PTY LTD DISTRICT COURT OF NSW PROCEEDING NO. 2016/221796 "Defamation Proceeding" We refer to the above matters and confirm we act for Grant Williams and Nine Network Australia Pty Ltd. As you are aware, the Bankruptcy Proceeding was commenced against your client in the Federal Circuit Court of Australia on 24 August 2017. Unless he pays his debt, a sequestration order will in all likelihood be made at the hearing on 27 September 2017 making him bankrupt. Once this occurs, your client will permanently appear on the National Personal Insolvency Index (NPII). Details displayed on the NPII include your client's name, any aliases (such as "David Otto"), his date of birth and residential address. In addition to the above, while he is an undischarged bankrupt: (a) His assets may be sold by the trustee. (b) His ability to travel overseas will be inhibited. (c) He will be ineligible to be a director of a company. (d) His ability to obtain credit will be severely impacted. The sequestration order will also inevitably impact your client's ability to fund the Defamation Proceeding. We have already set out in previous correspondence the reasons why we say your client's claim for defamation has very little chance of success. Our client has pleaded extensive particulars of truth which clearly and unambiguously establish the truth of the matters in the broadcast. Many of the imputations alleged by your client are justified on the basis of the publication alone. In any event, our client intends to call numerous witnesses referred to in our client's defence to attend to give evidence at trial to establish the truth of the imputations conveyed by the publication including that your client rips off business products, preys on young models, is a compulsive liar and is so dishonest that police should be contacted. We have little doubt that our client will be successful at trial. Accordingly, your client now has the opportunity to exit the proceeding without it becoming ruinous for him. Despite that, in order to prevent the parties from continuing to incur further unnecessary costs in relation to these matters, our clients are willing to entertain a settlement in which both parties walk away from the proceedings. Accordingly, our client is willing to fully and finally settle both the Bankruptcy Proceeding and the Defamation Proceeding on the following terms: (a) Your client discontinues the Defamation Proceeding with no order as to costs. (b) Mr Williams discontinues the Bankruptcy Proceeding with no order as to costs. (c) Mr Williams agrees not to pursue the debt the subject of the Bankruptcy Proceeding. (d) Each party bears its own costs of each of the Bankruptcy Proceeding and the Defamation Proceeding. (e) Your client releases our client. (f) The parties agree to give effect to this settlement by way of a signed settlement agreement. This offer is open for acceptance for 7 days, and will expire at 5pm on Monday, 25 September 2017. Given the strength of the position of our clients in both proceedings, this represents an extensive compromise by our clients, and is a very generous offer. Should your client fail to accept the offer, our clients will have no option but to proceed with the Bankruptcy Proceeding against your client and to pursue a vigorous truth defence in the Defamation Proceeding. Please note, we have sent a copy of this letter to your client directly as it relates to the Bankruptcy Proceeding, in which he is unrepresented."
This letter carefully sets out the strength of the case for the defendant, as well as noting that similar information has been "already set out in previous correspondence".
This was indeed "a very generous offer". The plaintiff was facing bankruptcy and this offer not only took down the publication the subject of his complaint but forgave substantial costs as well as discontinuing legal proceedings. Seven days was ample time to consider such an offer.
I am satisfied the failure to accept this offer should result in an award of indemnity costs.

The 14 November 2017 offer

On 14 November 2017, all defendants sent a Calderbank offer to the plaintiff's solicitor, the terms of which were as follows: 1. Nine Network Australia remove the Second Matter Complained Of from the internet. 2. The Nine proceeding be dismissed with no order as to costs. 3. The sequestration order obtained by Nine Network Australia be set aside prior to the plaintiff being made bankrupt. 4. The bankruptcy proceedings which Nine Network Australia had issued be dismissed with no order as to costs. 5. The creditors related to Nine Network Australia in the bankruptcy proceeding forgive the bankruptcy debt. 6. The parties bear their own costs in the Nine proceeding and the bankruptcy proceeding.
This offer was open for acceptance until 15 November 2017.
Mr Rollinson submitted that this offer was opened for such a brief time that it could not possibly amount to a reasonable Calderbank offer. It remained open only until 11:00am on the following day.
However, the reasons behind the timing are clear from the timeframe of the offer itself. It is made at a time when, if no settlement is achieved, the plaintiff is likely to be made bankrupt the following day and the time of 11:00am had been selected to avoid this entry being automatically made by the court, as the letter explains. This was a "last chance" for the plaintiff.
The plaintiff's unreasonable rejection of this offer should result in an order for indemnity costs.

The 19 February 2019 offer

On 19 February 2019, Nine Network Australia, on behalf of all defendants, sent the plaintiff's solicitors a letter offering to settle all proceedings on the following basis: 1. Nine Network Australia remove the Second Matter Complained Of from the internet. 2. All proceedings be dismissed with no order as to costs. 3. Each party bear its own costs.
This offer was open for acceptance until 22 February 2019.
Trial was imminent. The plaintiff must have been aware of the difficulties he faced at that trial, particularly after the significant enlargement of the particulars of justification in December 2018. The evidence of Mr and Mrs Collyer, which was newly served, was particularly damning.
In holding that this offer was one which should have been accepted, I take into account that, by this stage, the plaintiff was bankrupt, and that there is no offer to set that aside. He would, however, have had the benefit of the removal of the Nine broadcast and of no costs orders against him. Given the obvious hopelessness of the plaintiff's case, this was an offer which he should have accepted, and accordingly should result in an order for indemnity costs.

The 3 March 2019 offer

On 3 March 2019, the defendants in the Nine proceedings, the News proceedings and the Dailymail proceedings made a further offer to settle the three proceedings on the following basis: 1. Nine Network Australia remove the Second Matter Complained Of from the internet. 2. Each of the proceedings be dismissed with no order as to costs. 3. Each party bear its own costs.
The offer, made at the commencement of the trial, was open for acceptance until 4 March 2019.
The plaintiff had had a taste of the unpleasantness of cross-examination by this stage. The material already put to him, such as the photographs of the so-called Country Party Resort, was irrefutably evidence demonstrating the truth of most of the imputations. It should have been obvious to anyone in the plaintiff's camp that the evidence, already damning, was going to get worse, particularly after the "autobiography" he had written was produced in response to the defendants' call for it, as this contained numerous admissions by him.
The plaintiff's failure to accept this offer was foolish in the extreme and should result in an award of indemnity costs.

Abuse of process

In addition to the application for indemnity costs based on the offers set out above, the defendants seek indemnity costs of the whole of the proceedings on the basis of to the plaintiff's "delinquent conduct" (written submissions, paragraph 3), which amounts to an abuse of process.
The relevant principles are set out by Holland J in Degmam Pty Ltd (in liq) v Wright (No 2) [1983] 2 NSWLR 354 at 358 and in Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Ltd (1988) 81 ALR 397 at 401. More recently, decisions such as Chaina v Alvaro Homes Pty Ltd (at [108]) have showed a preparedness to grant indemnity costs orders more readily than was the case in previous decades, by reason of what Basten JA calls "a broader policy directed to limiting the litigation of cases where there are no reasonable prospects of success" (at [111]).
Examples where conduct has been regarded as an abuse of process have included: 1. Wasting the court's time and litigant's money in frivolous or unjustified litigation; 2. Misleading, or lying to, the court in terms of the giving of evidence which is knowingly dishonest: Wentworth v Rogers [1999] NSWCA 403 at [12], [75] and [82]; see also Linjing Fang v Xiaodan Sun & Ors (No. 2) [2014] NSWSC 1194; 3. Where litigation is brought by a party who has "something to hide" and/or who is "hoping it would not be found out" (NMFM Property Pty Ltd v Citibank Ltd (No 11) [2001] FCA 480 at [56]. The court should ensure that the other party is not out of pocket by reason of this dishonesty, which may not necessarily amount to actually lying (NMFM Property Pty Ltd v Citibank Ltd (No 11) at [58], citing Tadgell J in Australian Guarantee Corp Ltd v De Jager [1984] VR 483).
There is a helpful summary of the relevant principles by Black J in In the matter of Indoor Climate Technologies Pty Ltd [2019] NSWSC 356 at [8]: "8. The principles on which an order for indemnity costs may be made are also well established. Section 98(1)(c) of the Civil Procedure Act 2005 (NSW) permits the Court to order costs on an ordinary or indemnity basis. Rule 42.2 of the Uniform Civil Procedure Rules 2005 (NSW) provides that, unless the Court otherwise orders or the rules otherwise provide, costs payable are to be assessed on an ordinary basis. Rule 42.5 of the Uniform Civil Procedure Rules deals with an order for costs on an indemnity basis. Costs are awarded on the ordinary basis unless there are exceptional circumstances: Leichhardt Municipal Council v Green [2004] NSWCA 341. An order for indemnity costs is not made to punish an unsuccessful party for persisting with a case that fails, but to compensate a successful party fully for costs incurred, when the Court takes the view that it was unreasonable for the other party to have subjected the successful party to the expenditure of costs: Hamod v New South Wales [2002] FCAFC 97; (2002) 188 ALR 659 at [20]. Whether an indemnity costs order should be made depends, at least in part, on whether there was a relevant delinquency on the part of the unsuccessful party: Ingot Capital Investments Pty Ltd v Macquarie Equity Capital Markets Ltd (No 7) [2008] NSWSC 199; (2008) 65 ACSR 324 at [24]; Cabport Pty Ltd v Marinchek (No 2) [2013] NSWCA 131 at [6]. That is to be determined by reference to the conduct of the proceedings, not the conduct that is the subject of the substantive dispute."
These principles apply to defamation proceedings just as much as to other causes of action. While s 40 of the Defamation Act 2005 (NSW) assumes the operation of s 98 of the Civil Procedure Act 2005 (NSW) and relevant provisions in the Uniform Civil Procedure Rules 2005 (NSW) such as r 42.1, it should be recalled that it was enacted to ensure that parties did not commence or maintain unmeritorious litigation, including litigation amounting to an abuse of process, and to encourage the making of indemnity costs orders. The interaction of s 40 and the provision of the Civil Procedure Act is explained by the Court of Appeal in Hyndes v Nationwide News Pty Ltd; Nationwide News Pty Ltd v Hyndes [2012] NSWCA 349 at [55]-[56]; see also Nationwide News Pty Ltd v Weatherup [2017] QCA 70 at [70] per Applegarth J.

Were the proceedings an abuse of process?

Mr Dawson SC draws my attention to the following: 1. My findings as to the plaintiff's credit (at [166]-[168] of my judgment: [2019] NSWDC 188); 2. My finding that the plaintiff was not merely liar but a compulsive liar (at [316]); 3. The circumstances in which the plaintiff occupied weeks of the court's time putting the defendants to prove in respect of factual matters raised by his claims, which involved the evidence and cross-examination of young women who were clearly frightened and distressed; 4. The circumstances in which the plaintiff created a fake tax invoice to Channel Nine in order to mislead the Federal Circuit Court in his challenge to the bankruptcy notice, which I considered to be of particular concern (at [123] and [167]); 5. The plaintiff's contemptuous attitude to women displayed in his evidence and to the witnesses in these proceedings in particular, such as his use of the witness box to make scurrilous observations about those witnesses which I decided as being "baseless smears" (at [183]); 6. The continuation of these proceedings by a plaintiff who knew that most if not all of the imputations were true or substantially true, his combative conduct in the witness box, and his conduct of the case, such as to incur liability for the defendants for costs beyond what could have been reasonably expected (Degmam Pty Ltd (in liq) v Wright (No 2) at 358).
Both pursuant to s 98 Civil Procedure Act 2005 (NSW) and s 40(1)(a) Defamation Act 2005 (NSW), each of the above circumstances individually, as well as jointly, would warrant the awarding of costs on an indemnity basis in favour of the defendants for the whole of the proceedings.
Accordingly, I propose to vary order (4) of the orders I made on 16 May 2019 to provide that the costs order made in the defendants' favour for these proceedings be payable on an indemnity basis.

The s 46 orders for protection of witnesses

On 18 June 2019, in his written submissions, Mr Rollinson stated: "The opportunity should be taken to deal with this matter without more formalities. The orders made on 20 December 2018 restrain the plaintiff and Ms Kittie Lee from contacting various of the defendants' intended witnesses at trial, 'until further order'. This was to ensure the fair and smooth running of the coming trial. The occasion for them has now expired. The authority for their making was s. 46, District Court Act, which authorises issue of ancillary injunctions in the course of disposing of an action. The orders in this case were interlocutory, as there was no issue in the action that could call for issue of a final injunction of this type. There is no reason for the orders to remain in force, and they should be revoked."
The plaintiff has seen fit to write to the court directly concerning these issues and has indicated his desire that these orders be discharged. His emails are in conflict with a further email of 22 July 2019 from his solicitors, Carters Law Firm, which indicated that the plaintiff would not pursue any such application and stated that the defendants' notice to produce to the plaintiff and subpoena to Ms Lee (served on 29 July 2019 in relation to material relevant to this application) therefore need not be pressed.
Mr Jankie forwarded a letter to Carters Law Firm on 25 July 2019 in reply: "We refer to your letter of 22 July 2019 and thank you for your confirmation that the plaintiff will not press his foreshadowed applications. However, we do not agree that this obviates the need for the plaintiff and Ms Lee to answer the notice to produce and the subpoena (respectively) served on 29 June 2019, as the material produced may be relevant to the question of the Court's power to continue the restraining orders made on 20 December 2018. As her Honour made plain on the last occasion, she wishes to deal with issue [sic] it now having been raised. Accordingly, we are instructed to press the notice to produce and the subpoena and asked that the documents be produced as soon as possible."
The need for the orders I made on 20 December 2018, set out at the commencement of this judgment, was self-evident at the time. The desirability of those orders being able to continue is considerable. In Attorney-General v Butterworth [1962] 3 All ER 326, Lord Denning stated: "For there can be no greater contempt than to intimidate a witness before he gives his evidence or to victimise him afterwards for having given it. How can we expect a witness to give his evidence freely and frankly, as he ought to do, if he is liable, as soon as the case is over, to be punished for it by those who dislike the evidence he has given? After he has honestly given his evidence, is he to be liable to be dismissed from his employment, or to be expelled from his trade union, or to be deprived of his office, or to be sent to Coventry, simply because of that evidence which he has given? I decline to believe that the law of England permits him to be so treated. If this sort of thing could be done in a single case with impunity, the news of it would soon get round. Witnesses in other cases would be unwilling to come forward to give evidence, or, if they did come forward, they would hesitate to speak the truth, for fear of the consequences." (at 329)
However, the absence of this court's authority to continue orders made pursuant to s 46 District Court Act 1973 (NSW) after the litigation has been concluded is clear: United Telecasters Sydney Ltd v Hardy (1991) 23 NSWLR 323; Pelechowski v Registrar, Court of Appeal (1999) 198 CLR 435. Both these decisions identify the very limited powers of this court and, in the case of Pelechowski v Registrar, Court of Appeal, the limitations of s 46 District Court Act, a provision which was enacted before the development of the Mareva injunction (Mareva Compania Naviera SA v International Bulkcarriers SA [1980] 1 All ER 213). For the reasons explained by the Court of Appeal in this decision, the District Court does not have any jurisdiction either to make fresh orders or to extend orders such as my 20 December 2018 orders after judgment.
There may not be power to continue such orders in this Court, but in my opinion, that does not mean that these orders, unenforceable though they may be, should be expunged from the record. As set out in my orders below, the 20 December 2018 interim orders will remain on the file, in the manner of a lex imperfecta, to serve as an aide-memoire to remind the plaintiff and Ms Lee of the kind of behaviour that they should avoid in the future as well, and not merely in the past.
Any court without power to protect its own processes, orders and witnesses is a court without "the substance of authority", to use the phrase employed by David Hunt AO QC in "The International Criminal Court - High Hopes, Creative Ambiguity and an Unfortunate Mistrust in International Judges" (2004) 2:1 Journal of International Criminal Justice 56. David Hunt's apposite description is in turn taken from Mr Justice Cardozo's warning that "the power to restrict jurisdiction involves the power to destroy it and thus to leave the Court the form of existence only, and not the substance of authority" (Andrew L. Kaufman, "Cardozo", Cambridge, Harvard University Press, 2000, Vol 16, 91).
This court lacks power to protect these witnesses. I note the court also lacks power to make any s 46 order on a final basis. Its equitable jurisdiction is similarly limited (s 134 District Court Act 1973 (NSW)). It is to be hoped this long-recognised lack of jurisdiction will be revisited by appropriate regulation and/or legislation at some stage in the future.

Orders 1. Vary order (4) of my orders dated 16 May 2019 to provide that the costs order made in the defendants' favour for these proceedings is payable on an indemnity basis. 2. The notice to produce served upon the plaintiff on 28 June 2019 be set aside. 3. The subpoena issued to Sharon Lindsey on 28 June 2019 be set aside. 4. The court notes that given the court does not have power to continue orders 5, 6 and 7 made on 20 December 2018 they will have no force upon the conclusion of these proceedings.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 30 August 2019

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