Bennette v Cohen

CATCHWORDS: PROCEDURE - Costs - Departing from the general rule - Order for costs on indemnity basis - Conduct of parties - Where offer of compromise made and rejected before trial - Whether offer constituted genuine compromise - Whether reasonable in circumstances to reject offer - Whether successful party entitled to costs of appeal on indemnity basis in circumstances where offer of compromise made five years before appeal - Judgments and orders - Amending, varying and setting aside - Effect of entering judgment or order - Stay of proceedings - Whether to grant stay of orders pending special leave application

Suitors' Fund Act 1951 LEGISLATION CITED: Supreme Court Rules Uniform Civil Procedure Rules 2005

Bailey v Marinoff [1971] HCA 49; (1971) 125 CLR 529 Bashford v Information Australia (Newsletter) Pty Ltd [2004] HCA 5; (2004) 218 CLR 366 Baresic v Slingshot Holdings Pty Ltd (No 2) [2005] NSWCA 160 Bennette v Cohen [2005] NSWCA 341; (2005) 64 NSWLR 81 Bennette v Cohen [2009] NSWCA 60 Caine v Lumley General Insurance Ltd (No 2) [2008] NSWCA 109 DJL v Central Authority [2000] HCA 17; (2000) 201 CLR 226 Estate of the Late Virgona v De Lautour (No 2) [2007] NSWCA 323 Etttingshausen v Australian Consolidated Press Ltd (1995) 38 NSWLR 404 Fotheringham v Fotheringham (No 2) [1999] NSWCA 21; (1999) 46 NSWLR 194 Hobartville Stud Pty Ltd v Union Insurance Co Ltd (1991) 25 NSWLR 358 CASES CITED: Jennings Construction Ltd v Burgundy Royale Investments Pty Ltd (No 1) [1986] HCA 84; (1986) 161 CLR 681 Kooee Communications Pty Ltd v Primus Telecommunications Pty Ltd (No 2) [2008] NSWCA 85 Leichhardt Municipal Council v Green [2004] NSWCA 341 Meehan v Glazier Holdings Pty Ltd [2002] NSWCA 22; (2002) 54 NSWLR 146 Miller v Nationwide News Pty Ltd [2008] NSWCA 261 Minister for Local Government v South Sydney City Council (No 3) [2002] NSWCA 327 Morgan v Johnson [1998] NSWSC 367; (1998) 44 NSWLR 578 Roads & Traffic Authority of New South Wales v Turner & Anor (No 2) [2008] NSWCA 241 Sibuse Pty Ltd v Shaw (No 2) (1988) 13 NSWLR 125 Tickell v Trifleska Pty Ltd (1991) 25 NSWLR 353 Uniting Church v Takacs (No 2) [2008] NSWCA 172 White v State Bank of New South Wales [2002] NSWCA 408

PARTIES: Jerry Lee Bennette Ian Cohen

COUNSEL: A: B McClintock SC / A Dawson R: E Evatt / R Rasmussen / J Rawlings

SOLICITORS: A: Banki Haddock Fiora, Sydney R: Carters, Auburn

LOWER COURT JURISDICTION: Supreme Court

LOWER COURT MEDIUM NEUTRAL CITATION: Bennette v Cohen [2007] NSWSC 739

IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40508/07 SC 20985/01

IPP JA TOBIAS JA CAMPBELL JA

Tuesday 23 June 2009 JERRY LEE BENNETTE v IAN COHEN (NO 2) Judgment 1 IPP JA: I agree with Tobias JA. 2 TOBIAS JA: On 24 March 2009 Campbell JA on behalf of the Court made the following orders in Bennette v Cohen [2009] NSWCA 60:

(a) Appeal allowed. (b) Set aside the orders made by Harrison J on 10 July 2007. (c) Judgment for the appellant against the respondent in the sum of $15,000. (d) The respondent to pay the appellant's costs of the proceedings at first instance, of the summons for leave to appeal and of the appeal but to have with respect to the latter a certificate under the Suitors' Fund Act 1951, if otherwise qualified. 3 On the application of the appellant, Campbell JA ordered that Order (d) be entered only if no notice of motion seeking to vary that order was filed within 14 days. That period expired at 12.00 midnight on 7 April 2009. The respondent entered the orders the following day, 8 April 2009, as no notice of motion had then been filed by the appellant. 4 On 16 April 2009 consent orders were filed whereby it was ordered that the time in which to file any Notice of Motion on the issue of costs be extended to 22 April 2009. On 21 April 2009 the appellant filed a Notice of Motion in which, relevantly, he sought the following orders: "(1) The respondent pay the appellant's costs of the proceedings at first instance, of the summons for leave to appeal and of the appeal but have with respect to the latter a certificate under the Suitors' Fund Act , 1951 if otherwise qualified.

(2) The respondent to pay the appellant's costs as per Order (1) on the ordinary basis up to 29 January 2004 and on an indemnity basis thereafter." 5 On 24 April 2009 the respondent filed a Notice of Motion in which, relevantly, he sought the following orders: "1. That order (c) made by the Court of Appeal on 24 March 2009 be set aside; 2. That order (d) made by the Court of Appeal on 24 March 2009 and entered on 8 April 2009 be set aside;

3. That there be judgment for the appellant against the respondent in a reduced sum of $10,000 (or such other reduction as the Court may order) to reflect the respondent's successful defence of comment to imputation (c) of the first matter complained of;

4. That subject to an apportionment of costs of two thirds of the appellant's costs to reflect the respondent's successful defence of comment to imputation (c) of the first matter complained of (or such other apportionment as the Court may order), the respondent pay the appellant's costs of the proceedings at first instance, of the summons for leave to appeal and of the appeal, but to have with respect to the latter a certificate under the Suitors Fund Act 1951, if otherwise qualified;

5. There be a stay on orders 3 and 4 pending the later to occur of: a. determination in the appellant's favour of the respondent's application for special leave to appeal to the High Court of Australia no. S85/2009 filed 20 April 2009; or

b. determination of any appeal before the High Court of Australia pursuant to leave granted under the respondent's application for special leave to appeal to the High Court of Australia no. S85/2009 filed 20 April 2009.

6. Such further or other orders as may seem to the Court to be just.

The power of the Court to vary an order once entered 6 The power of the Court to set aside or vary a judgment or order is to be found in r 36.16 of the Uniform Civil Procedure Rules 2005 which, so far as is presently relevant, is in the following terms: "(1) The court may set aside or vary a judgment or order if notice of motion for the setting aside or variation is filed before entry of the judgment or order. (2) … (3) In addition to its powers under sub-rules (1) and (2), the court may set aside or vary any judgment or order except so far as it: (a) determines any claim for relief, or determines any question (whether of fact or law or both) arising on any claim for relief, or (b) … (3A) If notice of motion for the setting aside or variation of a judgment or order is filed within 14 days after the judgment or order is entered, the court may determine the matter, and (if appropriate) set aside or vary the judgment or order under sub-rule (1), as if the judgment or order had not been entered. (3B) … (3C) Despite rule 1.12, the court may not extend the time limited by sub-rule (3A) …" 7 As I have noted, the orders made by this Court on 24 March 2009 were duly entered on 8 April 2009, no notice of motion to vary Order (d) having been filed in the meantime. However, on 21 April 2009 the appellant filed a Notice of Motion seeking a variation of that order to the effect that the appellant's costs referred to in that order be paid on an indemnity basis after 29 January 2004. As that Notice of Motion was filed within 14 days of the entry of the orders, r 36.16(3A) empowers this Court to determine the issue raised by that Notice of Motion as if Order (d) had not been entered. 8 However, the respondent's Notice of Motion was not filed until 24 April 2009, outside the 14 day period referred to in r 36.16(3A) which expired on 22 April 2009. Although, as I have noted, a consent order was filed on 16 April 2009 extending the time for filing of any notice of motion on the issue of costs until that date, such an order was unnecessary in view of the provisions of sub-rule (3A). 9 It follows from the foregoing that the respondent's Notice of Motion filed on 24 April 2009 was filed out of time with the consequence that there is no power in the Court, even if it was otherwise minded to do so, to make the orders referred to in paragraphs (1) to (4) inclusive of that Motion. This lack of power is confirmed by r 36.16(3C) which prohibits the Court from extending the time limited by sub-rule (3A). The question of a stay involves other considerations which fall outside the provisions of r 36.16. 10 Accordingly, the general rule that a court ordinarily has no power to set aside or vary a final judgment or order after it has been entered applies: DJL v Central Authority [2000] HCA 17; (2000) 201 CLR 226 at 245 [38]; Meehan v Glazier Holdings Pty Ltd [2002] NSWCA 22; (2002) 54 NSWLR 146 at 151 [26]. Both of these authorities hold, certain presently irrelevant qualifications apart, that the rule with respect to this Court is that as restated by Barwick CJ in Bailey v Marinoff [1971] HCA 49; (1971) 125 CLR 529 where his Honour said (at 530): "Once an order disposing of a proceeding has been perfected by being drawn up as the record of the court, that proceeding apart from any specific and relevant statutory provision is at an end in that court and is in its substance, in my opinion, beyond recall by that court. It would, in my opinion, not promote the due administration of the law or the promotion of justice for a court to have the power to reinstate a proceeding of which it has finally disposed." 11 That general rule is applicable to the present case. In any event, even if there was power to make those orders, in my view it ought not to be exercised in the present case.

The orders sought by the respondent's Notice of Motion should be refused 12 The respondent submits that Orders (c) and (d) made by this Court on 24 March 2009 should be set aside and that, in relation to Order (c), this Court should order damages in the reduced sum of $10,000 to reflect the respondent's successful defence of comment with respect to imputation (c) conveyed by the first matter complained of and which was upheld by this Court on the appeal at [186] of my judgment with which Ipp and Campbell JJA agreed. It was submitted that the damage to the appellant's reputation caused by imputations (a) and (b) conveyed by both matters complained of was lessened by the impact of the respondent's successful defence of comment with respect to imputation (c). This was because the words "bully" and "thug" were used by the respondent in the context of the appellant's use of defamation litigation to silence his critics. 13 It was further submitted that all three imputations conveyed by the first matter complained of must be understood in the context in which they appear therein. In that context, imputation (c) was said to be a more specific incidence of bullying, particularly the reference to "slap suits" and the appellant's use of litigation to achieve his ends. In addition, in the first matter complained of the respondent specifically referred to this aspect of the appellant's combative reputation so that any injury to his feelings by the words spoken by the respondent and constituting imputations (a) and (b) would be slight. 14 It was further submitted that the second matter complained of covered similar ground to the first matter complained of in that imputations (a) and (b) were common to both. Whatever wrong was done to the appellant's reputation by the publication of those imputations, the respondent's successful defence of imputation (c) mitigated that wrong as a consequence whereof the award of damages made by the primary judge should be reduced. 15 The appellant originally sought leave to appeal against the primary judge's finding with respect to damages which was refused. The respondent did not seek leave to cross-appeal against that award. In these circumstances it hardly lies in the mouth of the respondent to now complain about his Honour's award of damages in an attempt, by the back door as it were, to appeal against the award on the basis that he has been partly successful on the appeal. 16 In any event, having re-read the primary judge's findings on the issue of damages, it is clear that in the circumstances which he related, he proposed to have only modest regard to the injury to the appellant's feelings in his assessment of those damages. He thus considered that the injury to the appellant's reputation was slight and that as a vindication to the public because he was injured in his reputation and as a consolation to him for the wrong done and for his hurt feelings, an award of $15,000 was appropriate. 17 In my view there is much to be said for the proposition that to the extent to which the appellant sustained hurt feelings as a consequence of the defamatory imputations found to have been conveyed by both matters complained of, imputations (a) and (b) carried more weight than imputation (c). There is nothing in the primary judge's reasons on the issue of damages which would indicate that his award of damages would have been any different had the appellant succeeded before him on imputations (a) and (b) but failed on imputation (c). 18 Accordingly, for the foregoing reasons I would reject the respondent's application that damages assessed by the primary judge and made the subject of Order (c) be reduced to reflect his successful defence of comment with respect to imputation (c) conveyed by the first matter complained of. 19 I would also reject the respondent's application that Order (d) made by this Court with respect to the costs of the trial should be varied to reflect the respondent's successful defence of imputation (c). There is nothing to suggest that the hearing before the primary judge was in any way lengthened as a consequence of the respondent's success on the defence of comment with respect to imputation (c) or which would otherwise justify any reduction, let alone a reduction by one third, of the appellant's costs to be paid by the respondent as a consequence of the former's success on the appeal. Accordingly, the respondent's application to vary Order (d) should be rejected.

The orders sought by the appellant's Notice of Motion for indemnity costs should be granted in part 20 I come now to the appellant's Notice of Motion that Order (c) be varied so that the costs both at first instance and in this Court be paid on an indemnity basis after 29 January 2004. 21 The foundation for the application is that on 29 January 2004 the appellant's solicitor served upon the respondent's solicitor an Offer of Compromise (the Offer) in accordance with Division 1 Part 22 of the Supreme Court Rules. The offer was in the following terms: "The plaintiff offers, in accordance with Division 1 of Part 22 of the Supreme Court Rules , to compromise his claim in these proceedings on the following basis: (a) the defendant pay the plaintiff $4,500 in damages; and (b) the defendant pay the plaintiff's costs as agreed or assessed. This offer remains open to be accepted for a period of 28 days from the date of service (Part 22 rule 3(3))."

The Offer was not accepted. 22 The effect of the replacement of the Supreme Court Rules by the Uniform Civil Procedure Rules 2005 from 15 August 2005 (after the Offer was made but before trial) with respect to Offers of Compromise was explained by McColl JA, with whom Mason P and McClellan CJ at CL agreed, in Caine v Lumley General Insurance Ltd (No 2) [2008] NSWCA 109 at [19]-[22], which it is unnecessary to repeat. Relevantly, her Honour held that an Offer of Compromise made under the relevant part of the Supreme Court Rules before their repeal, was to be considered in terms of those rules notwithstanding that repeal. 23 The appellant submits that, having obtained judgment for an award of damages that substantially exceeded that the subject of the Offer, the ordinary operation of Part 52A r 22(4) of the Supreme Court Rules entitled him to his costs of the proceedings on an ordinary basis up to the date of the Offer and on an indemnity basis thereafter. 24 Part 52A r 22(4) relevantly provides: "Where an offer is made by a plaintiff and not accepted by the defendant, and the plaintiff obtains an order or judgment on the claim to which the offer relates no less favourable to the plaintiff that the terms of the offer, then, unless the Court otherwise orders, the plaintiff shall … be entitled to an order against the defendant for the plaintiff's costs in respect of the claim from the day on which the offer was made, assessed on an indemnity basis in addition to his costs incurred before and on that day, assessed on a party and party basis." 25 The respondent submits that in the circumstances of the present case the Court should "otherwise order" thus depriving the appellant of his prima facie entitlement to indemnity costs under the rule. The relevant rationale for the rules relating to offers of compromise were authoritatively stated by Mason P, with whom Sheller JA agreed, in Morgan v Johnson [1998] NSWSC 367; (1998) 44 NSWLR 578 at 581-582 when the learned President stated the following propositions (omitting citations): "(1) The purpose of the rule is to encourage the proper compromise of litigation, in the private interests of individual litigants and the public interest of the prompt and economical disposal of litigation: Maitland Hospital ; Hillier . (2) The aim is to oblige the offeree to give serious thought to the risk involved in non-acceptance: Maitland Hospital . (3) The prima facie consequence of non-acceptance will be that the rule will be enforced against the non-accepting party: NSW Insurance Ministerial Corporation v Reeve ; Hillier . This is because, from the time of non-acceptance 'notionally the real cause and occasion of the litigation is the attitude adopted by [the party] which has rejected the compromise': Maitland Hospital ; see also Hillier . (4) Lying behind the rule is the common knowledge that 'litigation is inescapably chancy': Maitland Hospital . For this reason, the ordinary provision is expected to apply in the ordinary case: ibid NSW Insurance Ministerial Corporation v Reeve . As Clarke JA expressed it in Houatchanthara : 'The rule lays down the general principle that should be applied, and the order provided for in that rule should only be departed from for proper reasons which, in general, only arise in an exceptional case. It is clear that if the rule operates, the plaintiff will be significantly disadvantaged, but that disadvantage flows naturally from the risks of litigation. The idea behind the rule is to encourage settlement or compromise of proceedings, and more specifically, to encourage litigants to give serious consideration to the settlement of proceedings. Where an offer is made by a defendant to a plaintiff, the latter is put on notice that unless he or she accepts that offer, there is a significant risk that the order provided for by the rule may follow. In declining to accept the offer, the plaintiff undertakes the risk and the consequences that flow naturally from that risk.' (5) The discretion to displace the rule is a judicial one, requiring the private and public purposes of the rule to be borne in mind: Maitland Hospital . Reasons must be given for 'otherwise ordering': Hillier ; Quach ." 26 This Court has applied these principles on many occasions since they were first articulated. Thus in Caine, McColl JA stated (at [34]) the principles articulated in Morgan and then continued (at [35]) (omitting citations): "The onus is on the respondent to demonstrate why the Court should not order the respondent to pay the appellants' costs on an indemnity basis. In particular, the respondent must establish that it had given serious thought to the risks involved in not accepting the offer, had assessed the appellants' case properly and in the context of the relevant rules and the achievement of their purpose as outlined in Morgan . Generally, exceptional circumstances are required to justify such an order denying the appellants' entitlement: South Eastern Sydney Area Health Service v King ." 27 This Court has otherwise ordered in cases where it is clear that an offer has been made with no real element of compromise in it and which is designed merely to trigger the costs sanctions of the rules. Thus an offer by a plaintiff demanding the full amount claimed has been held not to be an offer of compromise attracting costs penalties: Tickell v Trifleska Pty Ltd (1991) 25 NSWLR 353 where at 355 Rogers CJ Comm D said that the test as to whether an offer represented a bona fide compromise was "… whether in the totality of the circumstances, the offer by the plaintiff represented an element of compromise or whether it was merely, yet another, formally stated demand for payment designed simply to trigger the entitlement to the payment of costs on an indemnity basis." 28 This approach was followed by Giles J, as his Honour then was, in Hobartville Stud Pty Ltd v Union Insurance Co Ltd (1991) 25 NSWLR 358 at 368 where his Honour said: "The answer to the plaintiff's questions is, in my view, that the scheme for offers of compromise and their cost consequences was intended to promote compromise - what Gleeson CJ in Baltic Shipping Co v Dillon 'The Mikhail Lermontov' (1991) 22 NSWLR 1 at 9 called the '…particular policy of the law to encourage resolution of litigation by settlement …'. Compromise connotes that a party gives something away. A plaintiff with a strong case, or a plaintiff with a firm belief in the strength of its case, is perfectly entitled to discount his claim by only a dollar, but it does not in any real sense give anything away, and I do not think that it can claim to have placed itself in a more favourable position in relation to costs unless it does so."

See also Leichhardt Municipal Council v Green [2004] NSWCA 341 at [23]-[24] per Santow JA, Bryson JA and Stein AJA agreeing; Baresic v Slingshot Holdings Pty Ltd (No 2) [2005] NSWCA 160 at [13] per Beazley JA, Mason P and Bryson JA agreeing. 29 In Uniting Church v Takacs (No 2) [2008] NSWCA 172, Hodgson JA, with whom McColl JA agreed, dealt with the issue of whether an offer by a defendant for a nominal amount was a genuine offer of compromise. His Honour held that the offer was one that invited substantial capitulation by the plaintiff and that it had the appearance more of a procedural move to trigger costs consequences than of a genuine attempt to reach a negotiated settlement. 30 Although dissenting, Basten JA referred at [22] to Leichhardt Municipal Council and Baresic as authorities for the proposition that an offer may fail to comply with the rules where it was not a genuine offer of compromise because it contains "no real element of compromise". At [23] his Honour noted that there was also "some suggestion in the cases that an offer may not qualify if the offer is not a bona fide offer, apparently because the court can discern that the offeror's purpose was merely to invoke the rule and not to compromise its position." 31 After referring to Tickell and Hobartville Stud as well as Leichhardt Municipal Council, his Honour then continued (at [24]): "Why an offer which is ' merely advanced to enliven the costs sanctions under the Rules' is otherwise than a valid offer, given that it can have no other purpose, is unclear: cf Baresic at [14], following Leichhardt Municipal Council. Further, it seems unlikely that these authorities intended that there be some inquiry into the motives of the party making the offer. … The real question, as it appears, is whether the Court can discern in the amount of the offer a failure to compromise." (Emphasis in original) 32 The respondent submitted that he did not act unreasonably in rejecting the Offer on the basis that first, it was not a genuine compromise and, second, it was reasonable in the circumstances for the respondent to reject it. 33 With respect to the first of these matters, the respondent submitted that the offer to accept damages in the sum of $4,500 and/or both vindication and consolation of the injury allegedly done to the appellant's reputation verged on the trivial, if not the nominal. This was particularly so as the Offer did not require any retraction or apology by the respondent that might otherwise explain why the appellant did not require the respondent to pay a more substantial sum in damages. Accordingly, it was an offer of compromise for a trivial amount designed to attract an order for indemnity costs, rather than being a genuine compromise. 34 In my opinion these submissions should be rejected. It is true that the amount of damages which the appellant was prepared to accept was, to say the least, modest, although, in accordance with the Rules, the Offer also sought an order that the respondent pay the appellant's costs as agreed or assessed. 35 Furthermore, the Offer was made after the appellant had filed his Further Amended Statement of Claim dated 5 September 2003 and well before the hearing before Hulme J and a jury, which extended over six days prior to the jury's determination on 30 August 2004. In that Statement of Claim the appellant pleaded 11 imputations defamatory of him alleged to have been conveyed by the first matter complained of, namely: "(a) The plaintiff is a vexatious litigant. (b) The plaintiff has abused court process by commencing legal proceedings which have no basis. (c) The plaintiff has done illegal work which severely damaged the environment. (d) The plaintiff is a thug. (e) The plaintiff is a bully. (f) The plaintiff has abused court process by commencing legal proceedings just for the purpose of intimidation. (g) The plaintiff issued a demand for about $750,000 when he knew that amount was falsely stated. (h) The plaintiff is a paranoid psychotic. (i) The plaintiff has improperly manipulated the system by bringing defamation proceedings just for the purpose of stifling public protest. (j) The plaintiff has commenced legal proceedings for improper purposes. (k) The plaintiff has been knowingly involved in government corruption." 36 As a s 7A jury trial was required to determine whether the matter complained of conveyed those imputations, the respondent had not at that stage filed a Defence. It may also be noted that in his Further Amended Statement of Claim the appellant claimed aggravated damages. 37 As Hodgson JA pointed out in Takacs at [13], it is possible and appropriate for a court to reach a view as to whether there is justification for ordering otherwise on the basis of its own assessment of the characterisation and merits of the offer and its refusal, without receiving evidence as to the motivations and understandings of the parties. On this basis it might be said that rather than the appellant making an offer which, in effect, required capitulation by the respondent, in the present case he made an offer which was bordering on his own capitulation. 38 In the circumstances, I do not consider that the Offer was other than a genuine offer of compromise and one the acceptance of which should, at least prima facie, have been highly attractive to the respondent particularly as it did not require any retraction or apology by him. It may well be that the appellant considered that even if the jury found some or all of the imputations which he had pleaded, nonetheless the quantum of damages he would ultimately receive might well be modest given the past history of his behaviour as was ultimately found by the primary judge and which therefore resulted in what can only be described as in fact a modest assessment by his Honour of damages. 39 In the foregoing circumstances, in my view there can be no doubt that the Offer contained a high degree of compromise on the appellant's part. As such, it was a genuine offer which, if accepted, would have brought the proceedings to an end at a relatively early stage and well before substantial costs were incurred with respect to what proved to be a lengthy trial before a jury and then a judge. In this context it must be remembered that the passages from the judgment in Tickell approved in Hobartville Stud were made in the context of offers that did not contain any element of compromise by the offeror. Thus in Tickell the plaintiff made an offer to settle for the whole amount claimed with interest. In Hobartville Stud the summons claimed $500,000 and the first offer of compromise was for that sum and the second offer of compromise was for $1 less than that sum. It is hardly surprising that in those circumstances it was held that they were not bona fide offers of compromise. 40 The present case bears no relationship to those to which I have referred. There is no reason to believe that the Offer was other than genuine in the sense that it truly contained a substantial element of compromise on the appellant's part. 41 I should add that I would respectfully agree with the observation of Basten JA in Takacs that it is unclear why an offer which is "merely advanced to enliven the costs sanctions under the Rules" is otherwise than a valid offer given that it can have no other purpose. The real question, as his Honour points out, is whether the Court can discern in the amount of the offer a failure to compromise. No such failure is discernable in the present case. I would therefore reject the respondent's submission that the Offer was not a genuine compromise. 42 The respondent further submitted that it was reasonable for him to reject the Offer. I have already referred to the fact that the Further Amended Statement of Claim allegedly conveyed 11 defamatory imputations. At the s 7A hearing before Hulme J and a jury, the latter found the first matter complained of conveyed imputations (c), (d), (e) and (i). However, it found that imputations (d), (e) and (i) were defamatory of the appellant but not imputation (c). 43 The appellant appealed to this Court against the jury's finding that imputation (c) was not defamatory of him. That appeal was dismissed on 24 October 2005: Bennette v Cohen [2005] NSWCA 341; (2005) 64 NSWLR 81. 44 The respondent filed his Defence on 12 December 2005. The trial before Harrison J commenced on 14 May 2007 and concluded on 1 June 2007, his Honour delivering judgment on 10 July 2007. 45 The respondent submitted that although the appellant served the Offer well before the commencement of the s 7A hearing, he did not serve any further offer of compromise either after that hearing or after the dismissal of the appellant's appeal by this Court on 24 October 2005. 46 The respondent submitted that the appellant's case was significantly changed after the Offer was served and thus rejection of that offer in the absence of any further offer was not unreasonable. It was further submitted that the respondent was entitled to maintain the judgment of this Court on the first appeal and also the judgment of Harrison J in his favour at first instance. This last-mentioned matter may be relevant to the costs of the appeal but in my view has no relevance to the costs of the s 7A trial or the trial before the primary judge. 47 The respondent also submitted that it was reasonable for him to reject an offer of compromise served in a defamation proceeding well before a s 7A jury trial where first, neither party knew whether any of the imputations pleaded in the Further Amended Statement of Claim would survive that trial and, if so, which imputations; second, the respondent was successful on the first appeal and at first instance; and third, the Offer was served more than five years before the outcome of this Court's judgment on the appeal determined on 24 March 2009. 48 Of those three factors in my view only the first is of any relevance to the present issue. But it does not assist the respondent. On the contrary, it assists the appellant. One can surmise that it was the fact that neither party knew whether any of the pleaded imputations would survive a s 7A trial that prompted the appellant's offer of compromise. Given the explicit content of the matters complained of, it would be difficult to imagine that imputations (d) and (e) would not be found by a jury to have been conveyed by the matters complained of and to have been defamatory of the appellant. The other nine imputations might be considered to have been more problematic. 49 In these circumstances, and given that at the time the Offer was made, substantial costs necessarily associated with a s 7A jury trial and, if that trial was determined in favour of the appellant, a further trial before a judge to determine the respondent's defence, were foreseeable to both parties, there is nothing in the respondent's submissions that demonstrates that he acted reasonably in rejecting the Offer at the time it was made. Acceptance of the Offer would have achieved the public and private interest objectives of offers of compromise referred to by Mason P in Morgan: see [25] above. 50 For the foregoing reasons in my opinion the appellant is entitled to indemnity costs of the trials at first instance as and from 29 January 2004: see Caine at [22]. 51 The appellant also seeks indemnity costs in respect of the appeal to this Court from the decision of the primary judge and in which he substantially succeeded. It was submitted that a pre-trial offer of compromise such as that made by the appellant in the present case usually entitled the offeror, if he obtained a more favourable judgment, to the benefit of the costs outcome provided for in Part 52A r 22(4) both in respect of the costs at first instance and the costs on appeal. Reliance was placed upon the decision of this Court in Etttingshausen v Australian Consolidated Press Ltd (1995) 38 NSWLR 404 at 410 per Gleeson CJ and Priestley JA. 52 However, in the absence of any offer of compromise between the date of the judgment at first instance and the hearing of an appeal from that judgment, a pre-trial offer of compromise, although a relevant consideration in the exercise by a Court of its general costs discretion, is in no way determinative. This Court (Hodgson and Tobias JJA and Handley AJA) in a joint judgment in Roads & Traffic Authority of New South Wales v Turner & Anor (No 2) [2008] NSWCA 241 made clear that Ettingshausen only stood for the proposition that a pre-trial offer of compromise was highly relevant to the costs at first instance whether they be the costs of the original trial or any new trial ordered on appeal. But the Court stated that there was no general rule that a pre-trial offer of compromise automatically affects the order for costs to be made in this Court when an appeal succeeds and the plaintiff recovers substantially more than his offer: Fotheringham v Fotheringham (No 2) [1999] NSWCA 21; (1999) 46 NSWLR 194. However such a pre-trial offer is still a relevant consideration but not, of itself, a determinative one. 53 In Kooee Communications Pty Ltd v Primus Telecommunications Pty Ltd (No 2) [2008] NSWCA 85 myself and Giles JA, in a joint judgment, made clear (at [3]) that the continuing effect ascribed in Ettingshausen to a pre-trial offer of compromise was in respect of the costs of the trial rather than the costs of the appeal. 54 Further, in Estate of the Late Virgona v De Lautour (No 2) [2007] NSWCA 323, Ipp JA, with whom Hodgson JA and Young CJ in Eq (as he then was) agreed, stated (at [10]) that an offer made before trial "can have costs consequences for an appeal …, but only as an element in the Court's general discretion." 55 In the present case, I consider that it is relevant that the Offer was made some five years before the present appeal was heard and that no further offer of compromise was made between the date of the judgment of the primary judge and the date of the hearing of the appeal. In these circumstances I would not accept the appellant's submission that the costs of the appeal should be on an indemnity basis. It follows that the respondent should pay the appellant's costs of the summons for leave to appeal and of the appeal on the ordinary basis.

The respondent seeks a stay of Orders (e) and (d) 56 On 20 April 2009 the respondent filed in the Sydney Registry of the High Court an Application for Special Leave to Appeal. The grounds of that application were that the Court erred in the following respects: "(a) In ruling that the subject matter of an occasion of common law qualified privilege must, as a matter of public policy, be in the general interests of the whole community and bear on the general welfare of society. (b) Erred in finding that the communications in question were made to the general public, notwithstanding that the respective audiences to those communications had paid to attend for a particular, advertised purpose. (c) Erred in treating the applicant's statements as volunteered, and as therefore needing to meet additional requirements for protection if otherwise made on an occasion of qualified privilege. (d) In finding that a volunteered statement is privileged only if there is a pressing need to protect the interests of the Defendant or a third party or where the Defendant has a duty to make the statement. (e) Erred in failing to find that all, or a sufficient proportion, of those present had an interest in the communications as would give rise to respective occasions of qualified privilege. (f) In finding that there was no special or any relevant relationship existing between the Applicant and Mr Mackay that entitled the Applicant to protect any relevant interest of Mr Mackay." 57 Each of the grounds referred to raises issues with respect to the defence of common law qualified privilege. It is to be noted that special leave to appeal is not sought with respect to the findings of this Court on the respondent's defence of comment. 58 It is not in contest that the Court has the power to grant a stay of its orders pending the hearing of the respondent's application for special leave: Jennings Construction Ltd v Burgundy Royale Investments Pty Ltd (No 1) [1986] HCA 84; (1986) 161 CLR 681 at 684 per Brennan J. 59 Where the application for a stay is made to the High Court itself, the relevant principles applicable to the grant of such a stay were stated by Brennan J in Jennings in the following terms (at 685): "In exercising the extraordinary jurisdiction to stay, the following factors are material to exercise of this Court's discretion. In each case when the court is satisfied a stay is required to preserve the subject matter of the litigation, it is relevant consider: first, whether there is a substantial prospect that special leave to appeal will be granted; second, whether the applicant has failed to take whatever steps are necessary to seek a stay from the court in which the matter is pending; third, whether the grant of a stay will cause loss to the respondent; and fourth, where the balance of convenience lies." 60 In Minister for Local Government v South Sydney City Council (No 3) [2002] NSWCA 327, Spigelman CJ, after referring to Jennings, observed "11. These cases are also authority for the proposition that an intermediate court of appeal should not be diffident in granting a stay or an injunction, in an appropriate case, notwithstanding the difficulty that may sometimes be occasioned for a member of an intermediate court of appeal in making an assessment of the prospects of a grant of special leave in a particular case. 12. It appears on the authorities that there are a number of elements that often arise in these matters. It is always material to look at the prospects of success, relevantly in this case, the prospects of a grant of special leave. …" 61 At [13] the Chief Justice also referred to the various verbal formulations that have been adopted in the authorities as relevant to the granting of a stay such as "preserving the subject matter of the litigation" and whether there is a "real risk that it is not possible for a successful appellant to be restored substantially to his, her or its former position". The latter consideration is of relevance in the present case. 62 The Chief Justice then concluded in these terms (at [14]): "All of these formulations relate to the effect of not granting a stay or an injunction on the rights, obligations or interests of the putative appellant. The effect on the interests or rights or obligations of an appellant will vary across the spectrum. No doubt such variation may explain the different terminology in which the courts have approached this issue …" 63 More recently McColl JA reviewed the authorities in Miller v Nationwide News Pty Ltd [2008] NSWCA 261. After referring to what Spigelman CJ had said in South Sydney, her Honour referred to the decision of this Court (Hope and Priestley JJA, Kirby P dissenting as to the result but not as to the principles) in Sibuse Pty Ltd v Shaw (No 2) (1988) 13 NSWLR 125, observing that there the Court held that a stay would be granted pending an application for special leave to appeal to the High Court only if it was "appropriate". Her Honour observed (at [23]) that Sibuse had been seen as applying a less stringent standard for this Court in considering an application for a stay pending a special leave application than that which the High Court itself applies, where the jurisdiction to stay is only exercised prior to a grant of special leave in exceptional circumstances. 64 In this context her Honour also referred to White v State Bank of New South Wales [2002] NSWCA 408 where Giles JA (at [6]) observed that this Court's approach to an application for a stay pending an application for special leave had not as yet adopted the stringency which had become evident in recent times in the High Court's own decisions on such applications. 65 In Miller, McColl JA noted (at [25]) that the Sibuse line of authority did not appear to have been referred to by the Chief Justice in South Sydney. However, she considered that both streams of authority joined on the relevance of the prospects of success of an application for special leave as well as considerations relating to whether, if a stay were not granted and special leave was granted, the appeal would otherwise be rendered nugatory. 66 The respondent submitted that a stay should be granted upon the basis that he had reasonably arguable grounds of appeal. Further, it was contended that the appellant's likely legal costs would exceed the sum of $800,000 although it was noted that he had not yet drawn up a bill of costs so that it would be likely that there would be a delay in either agreeing upon or assessing those costs. However, whether those costs were to be borne by the appellant or the respondent would depend upon the outcome of the respondent's application for special leave and, if leave was granted, on the outcome of the appeal itself. It was submitted that it was appropriate to await the outcome of that process and that the appellant would be not be prejudiced thereby. 67 As the Chief Justice noted in South Sydney, there is difficulty in this Court making an assessment of the prospects of a grant of special leave. Although in its application for special leave the respondent asserted that Ipp and Campbell JJA constituted a majority and that I published a minority judgment, that is not so. It is true that Ipp JA expressed in his own words his reasons for coming to the same conclusion as did I with respect to the respondent's defence of common law qualified privilege and that Campbell JA agreed with the reasons of Ipp JA rather than with mine. However, the differences in our reasoning with respect to that defence involved, in my respectful view, matters of emphasis rather than principle and, in any event, the outcome was the same. The defence failed. 68 Furthermore, the defence of qualified privilege was the subject of detailed analysis by the High Court some five years ago in Bashford v Information Australia (Newsletter) Pty Ltd [2004] HCA 5; (2004) 218 CLR 366 which both Ipp JA and myself applied to the present case. 69 In the foregoing circumstances I would not consider that the respondent's prospects of obtaining special leave to appeal rise above the arguable. In all probability, it will be necessary for him to persuade the High Court that the reasoning of both Ipp JA and myself on the issue of qualified privilege was erroneous and constituted an unprincipled departure from what the High Court had said in Bashford. 70 Of greater significance in my view is whether, to choose what I would regard as the most appropriate verbal formulation relevant to the present case, there is a real risk that it is not possible for the respondent if successful to be restored substantially to his former position in the event that a stay is not granted. As the respondent's submissions recognise, there will be a considerable delay before there is any agreement to or assessment of the appellant's costs which the respondent has been ordered to pay. 71 Thus if he chooses, the appellant will need to draw up a bill of costs and that will take some considerable time given the length and complexity of the litigation to date. The chance of that occurring before the High Court hears the respondent's application for special leave I would regard as remote. In any event, the costs of drawing up any bill of costs would be borne initially by the appellant and will be irrecoverable from the respondent if the latter is successful on his application for special leave and, if special leave is granted, on the appeal. Accordingly, the appellant rather than the respondent will, as a practical matter, be at risk as to those costs until the outcome of the application for special leave is known. 72 It follows that the only order of this Court which would involve the respondent paying money to the appellant if a stay is not granted, is that the respondent pay the appellant damages in the sum of $15,000. There is no suggestion by the respondent that if that amount is paid and the respondent is ultimately successful in the High Court, the appellant will be unable to repay it. 73 In the foregoing circumstances, I am of the opinion that whatever the prospects of the respondent being successful in his application for special leave to appeal, they are not such as to outweigh the other considerations to which I have referred. In particular, no question arises as to "preserving the subject matter of the litigation"; nor has it been demonstrated or even submitted that there is a real risk that the appellant will be unable to repay the sum of $15,000 in the event that the respondent is successful before the High Court. 74 For the foregoing reasons, in my opinion this is not an appropriate case that would justify the granting of a stay of the orders made by this Court on 24 March 2009 pending the hearing of the respondent's application to the High Court for special leave to appeal.

Conclusion 75 I would summarise my determination of the issues raised by the parties in their respective Notices of Motion as follows:

(a) the appellant is entitled to indemnity costs as and from 29 January 2004 in respect of the proceedings at first instance, but not with respect to the summons for leave to appeal or the appeal;

(b) the respondent is not entitled to any reduction in the award of damages or any apportionment of the costs at first instance or on appeal as a consequence of his successful defence of comment with respect to imputation (c) conveyed by the first matter complained of;

(c) the respondent is not entitled to a stay of Orders (c) and (d) made by this Court on 24 March 2009 pending his application for special leave to appeal to the High Court. 76 To give effect to the foregoing I would therefore propose the following orders:

(1) As to the appellant's Notice of Motion filed on 21 April 2009: (a) Order (d) made by this Court on 24 March 2009 be rescinded and in lieu thereof the following orders be made: "(i) The respondent to pay the appellant's costs of the proceedings at first instance on the ordinary basis up to and including 28 January 2004 and on an indemnity basis thereafter; (ii) The respondent to pay the appellant's costs of the summons for leave to appeal and of the appeal on the ordinary basis but to have with respect to the latter a certificate under the Suitor's Fund Act , 1951 if otherwise qualified." (b) The respondent to pay the appellant's costs of the Notice of Motion filed by the appellant on 21 April 2009.

(2) As to the respondent's Notice of Motion filed on 24 April 2009: (a) Order that the Notice of Motion filed by the respondent on 24 April 2009 be dismissed with costs. 77 CAMPBELL JA: I agree with Tobias JA.

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