Defteros v Google Inc & Anor

2 Google Australia now applies for its costs of the proceeding on an indemnity basis, pursuant to s 40(2)(b) of the Defamation Act 2005, based on an offer of settlement that it made to the plaintiff prior to the hearing of the application.

3 Section 40 relevantly provides:

(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) -

...

(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.

4 To recover indemnity costs, the defendant must establish four matters:

(a) the plaintiff must have been unsuccessful in a defamation proceeding;

(b) costs in the proceeding are to be awarded to the defendant;

(c) the defendant made a settlement offer, as defined, to the plaintiff; and

(d) the plaintiff unreasonably failed to accept that settlement offer.

If these elements are satisfied, an entitlement to an order for indemnity costs arises, unless the plaintiff is able to satisfy the court that the interests of justice require otherwise.

5 Google Australia succeeded on its application for summary judgment in a defamation proceeding and, as the plaintiff correctly conceded, costs follow the event. Accordingly, the first two matters were not in issue.

6 On 15 February 2017, Google Australia wrote to the plaintiff offering to consent to the discontinuance of the proceeding, with the parties to walk away each bearing their own costs. At that time, Google Australia had incurred costs in considering the claim being made against it, preparing a summons and supporting affidavit and in correspondence with the plaintiff. Google Australia also stated that unless the plaintiff discontinued the proceeding against it, it would seek indemnity costs if successful on its application. The offer remained open until 24 February 2017.

7 The offer was not accepted and the matter proceeded to hearing. The plaintiff took no issue with these factual matters. A settlement offer that involved compromise by Google Australia of its entitlements was made and refused and the third matter was established.

8 The key question was whether it was not unreasonable for the plaintiff to have rejected Google Australia's offer. On this final matter Google Australia bears the onus to establish that the plaintiff acted unreasonably.

9 In Hazeldene's Chicken Farm Pty Ltd v Victorian Workcover Authority No 2,[2] the Court of Appeal stated that a court considering a submission that the rejection of a Calderbank offer was unreasonable should ordinarily have regard at least to the following matters:[3]

(a) the stage of the proceeding at which the offer was received;

(b) the time allowed to the offeree to consider the offer;

(d) the offeree's prospects of success, assessed as at the date of the offer;

(e) the clarity with which the terms of the offer were expressed;

(f) whether the offer foreshadowed an application for an indemnity costs in the event of the offeree's rejecting it.

10 The plaintiff first submitted that the Google Australia's settlement letter failed to properly explain the basis on which his opposition to its application for summary judgment was bound to fail. He submitted that the threshold for 'unreasonable' ought be higher than what occurred in the circumstances. There was, he submitted, some novelty in the arguments raised at the hearing, which were different from those raised on earlier applications and that the plaintiff's position was supported in Victoria by Trkuja v Google (No 2).[4]

11 Google Australia submitted that it had clearly, and in advance of the hearing, explained to the plaintiff why his claim against it had no real prospect of success. The basis for the summary dismissal, as found by the court, had by and large already been traversed in correspondence with the plaintiff and in the first affidavit relied on by Google Australia that was served prior to the offer.

12 I do not accept that Google Australia ought to have gone further than it did in identifying the baseless nature of the plaintiff's claim against it. The plaintiff had been put on notice, well before the offer expired, of the contentions he would need to meet on this application, including by reference to the specific cases that would be relied upon by Google Australia. There is no requirement, in these circumstances, for one party to comprehensively articulate why the claim of the other is hopeless.[5] It is not the function of a solicitor's correspondence to foreshadow and rehearse every argument that may be put by Counsel at the hearing of the matter. The substance of Google Australia's contentions were sufficiently clear for a reasonable assessment of the prospects of success on the application. I am satisfied that the plaintiff rejected those submissions, persuaded, to his detriment, that his arguments had a better prospect of success.

13 Further, the plaintiff is not an unrepresented litigant who might not have had appropriate advice as to the prospects of his claim, but he is himself a solicitor, with the assistance of experienced counsel and employees in his law firm. That is a matter that weighs against the plaintiff's claim that he was reasonable to reject Google Australia's offer to discontinue its application.

14 Finally, the plaintiff's reliance on Trkuja v Google (No 2) was misplaced. Beach J ordered that the plaintiff provide further particulars of what would be said to be the alleged accessorial liability, but as I made clear in the principal reasons,[6] the grounds on which his Honour considered that further particulars of accessorial liability might have been provided in that case were not open on the material before me while the case at trial on those particulars failed.

15 In the circumstances, and taking into account the matters identified above, the plaintiff unreasonably rejected Google Australia's offer made on 15 February 2017. I will order that the plaintiff pay the second defendant's costs of the proceeding on an indemnity basis.

[1] Defteros v Google Inc LLC & Anor [2017] VSC 158.

[2] Hazeldene's Chicken Farm Pty Ltd v Victorian Workcover Authority No. 2 [2005] VSCA 298; (2005) 13 VR 435.

[4] [2010] VSC 490.

[5] See Hazeldene's Chicken Farm Pty Ltd v Victorian Workcover Authority No. 2 [2005] VSCA 298; (2005) 13 VR 435, 442 [26]-[27], citing the decision of Redlich J (as he then was) in Aljade and MKIC v OCBC [2004] VSC 351.