Eppinga v Kalil & Anor

District Court of NSW|2022-11-30|Before: Fairfax Publications P

de News Pty Ltd (No 7) [2019] FCA 496 Saraceni v Mentha [2013] WASC 95 TW and Associates Pty Limited & Ors v Ireland & Ors [2000] NSWSC 1185 Walter v Buckeridge [2013] WASC 313 Walter v Buckeridge (No 4) [2011] WASC 313 Wollongong City Council v Papadopoulos [2019] NSWCA 178 Zollo v The Commissioner for Consumer Affairs [2020] SASCFC 118 Category: Costs Parties: Mahmoud Kalil (First Plaintiff) Kylie Eather (Second Plaintiff) Ellie Rose Eppinga (First Defendant) Lisa Milham (Second Defendant) Representation: Solicitors: Rostron Carlyle Rojas Lawyers (First and Second Plaintiffs) L.C. Muriniti & Associates (First and Second Defendants) File Number(s): 2019/00045573 Publication restriction: Nil

The costs orders before the court

This is an application for costs of proceedings for defamation (2019/45573) which were discontinued by the plaintiffs on 4 December 2020 during the course of a lengthy and ultimately unsuccessful application for a costs order against the solicitors for the defendants to those proceedings. Ms Eppinga, who was one of the defendants in those proceedings, is also the cross-claimant in a cross-claim for defamation listed for hearing in early 2023. The parties have agreed that the costs of the claim brought by Dr Kalil and Ms Eather should be determined separately from the trial of her cross-claim..

How these costs applications came before the court

The plaintiffs commenced proceedings for defamation in the Defamation List and a timetable for pleadings was entered into. Conformably with that timetable, the defendants filed and served a defence and, in the case of Ms Eppinga, a cross-claim. Two weeks later, when the proceedings were next before the court for directions, Mr Goldsmith, on behalf of the plaintiffs, sought a hearing date for a challenge to the defence, including a challenge to the particulars of justification. He foreshadowed that an important part of that application was that the costs of the application should be borne by the solicitors for the defendants and not by the defendants.
The interlocutory application to challenge the pleadings set out in the defence was referred to Wass SC DCJ and heard by her Honour over a series of ten hearing dates. The particulars arguments were themselves relatively brief; the real question was whether the costs should be paid by the solicitors for the defendants personally. On 24 July 2020, Wass SC DCJ made costs orders against the solicitors for the defendants personally: Kalil v Eppinga [2020] NSWDC 407. The applicants served a notice of intention to appeal on 17 August 2020. Leave to appeal was granted (Muriniti v Kalil [2021] NSWCA 81) and the appeal allowed: Muriniti v Kalil [2022] NSWCA 109 (hereafter "Muriniti" or "the Muriniti appeal").
As Mr Muriniti and Mr Newell were acting for themselves in this lengthy application, both at first instance and on appeal, they are not entitled to seek the costs of representing themselves, including any portion of the costs of the discontinued proceedings which relate to the costs application personally: Bell Lawyers Pty Ltd v Pentelow (2019) 269 CLR 333; [2019] HCA 29. They were, however, acting for their clients as well as themselves, and any costs order for work done for their clients in the proceedings before this court would, by reason of the discontinuance, fall for consideration in relation to the discontinuance.
In Muriniti, Brereton JA noted at [41] the specific order made when leave to discontinue was granted: "Leave to discontinue the Plaintiffs' defamation claim was granted on 3 December 2020, "on the express basis that all costs issues are to remain on foot pending the hearing of the proceedings in the Court of Appeal". A notice of discontinuance was filed on 4 December 2020. The question of costs consequent on the discontinuance remains outstanding, although, prima facie, it would seem very likely that the Plaintiffs would be required to pay the Defendants' costs." (Emphasis added.)
The costs application consequent on the discontinuance is the application now before the court. While I am mindful of Brereton JA's observation that it would seem "very likely" that the plaintiffs would be required to pay the defendants' costs, I have listened carefully to the submissions of both parties and exercised my discretion according to those submissions. It is conceded by the parties, however, that the observations of Brereton JA set out above are observations to which weight should be given.

The plaintiffs' defamation proceedings

Dr Kalil, a veterinarian, and Ms Eather, a veterinary nurse, commenced proceedings 2019/455573 for publication by Ms Eppinga and another person of Facebook posts about conditions at the veterinary clinic in which they both worked. Dr Kalil and Ms Eather brought an application to strike out, inter alia, all the particulars of the defence of justification to Mr Kalil and Ms Eather's defamation claim. The application to strike out the particulars was lengthy and, in the final analysis, unsuccessful, in that, despite strenuous attempts by the plaintiffs to challenge the particulars, sufficient particulars of the defence of justification survived for the defence to have proceeded had the plaintiffs not discontinued the action.
At the same time as filing a defence, Ms Eppinga, the first defendant, brought a cross-claim for defamation for a publication by Mr and Mrs Kalil on 3 February 2019. It was only a matter of two weeks later, as Leeming JA noted in Muriniti at [5], that Mr Goldsmith, on behalf of the plaintiffs, threatened to seek special costs orders, namely orders that Mr Muriniti and Mr Newell pay, personally, the costs of and occasioned by the application. That application dominated the proceedings from that time onwards up until the proceedings were discontinued.

The parties' submissions

This should be a straightforward case of plaintiffs having discontinued proceedings in circumstances where the principles set out in UCPR r 42.19, subject to my discretionary powers, apply. Unfortunately, that is not how the parties have approached this application.
The parties have supplied written submissions which range over a wide area and contain significant criticisms of each other. These submissions have, in the case of the defendants, included the lengthy history of the proceedings before Wass SC DCJ as set out in the White Books in the Court of Appeal. The parties have not, however, included any reference to UCPR r 42.19, or consideration of other judgments where costs of discontinuance have been made on an indemnity basis, or the principles of indemnity costs generally.
Instead, the submissions from both parties raise issues of little relevance to a determination of costs conformably with UCPR r 42.19. For example, one of the matters in dispute is whether the costs orders made by Wass SC DCJ were costs orders against the defendants as well as their solicitors. The parties now accept that this is not the case. Another issue raised is the question of Anshun estoppel (Port of Melbourne Authority v Anshun Pty Ltd (1980) 147 CLR 35; [1980] HCA 41). Assertions that these principles applied were raised by the defendants in their submissions in reply. The argument appears to be that the plaintiffs cannot now claim costs from the defendants because they previously claimed these costs from the plaintiffs' solicitors and are now estopped from claiming those costs from the plaintiffs. This claim resulted in further submissions from Mr Goldsmith on 28 November 2022 to which the plaintiffs also take exception, on the basis that no leave was granted for such submissions to be provided.
The defendants are entitled to complain about the service of such material without leave; it is a practice which has been criticised by the Court of Appeal in a number of recent decisions (see the authorities referred to in Wollongong City Council v Papadopoulos [2019] NSWCA 178 at [49]). The appropriate course to take, in my view, would be either to seek permission to address this issue in writing or alternatively to hand up a short written submission on the day of the hearing of this application, and this is the course I adopted.
In practical terms, however, and in answer to this argument, no issue of estoppel can arise. A perpetual stay was granted in Anshun because the issue was not raised in earlier litigation and it should have been. The costs argument the plaintiffs brought against the solicitors for the defendants was based on their asserted incompetence and misconduct, not upon the merits of the case. The issue before the court now is, as Brereton JA noted at [41], who should pay the costs of these proceedings by reason of the discontinuance. That is not the same question.
This is but one of a series of arguments each of the parties put before me which are more akin to Parthian shots than to arguments of substance. The question of how courts should deal with an array of arguments on increasingly tenuous grounds is explained in Massoud v Nationwide News Pty Ltd; Massoud v Fox Sports Australia Pty Ltd [2022] NSWCA 150 and in Khalil v Ball as liquidator of Diamondwish Pty Ltd (in liq) and related matters [2022] NSWCA 161 at [35], in terms of what the latter judgment referred to as "judicial economy". While I am prepared to make the brief observations set out above about the Anshun argument, I do not propose to go down the rabbit hole of dealing with all of the alternative arguments the parties put to me about why they should or should not be able to seek or to resist costs.
Mr Goldsmith submits that his client has been successful in having four of the defences struck out. He acknowledges that the court was critical of the objections taken by the plaintiffs to the defence, but notes Brereton JA's observation at [86] that "the objections, even if technically correct, were in large part unnecessary for the plaintiffs, in the context of a small claim of this kind, to understand in substance the case they had to meet and, in that sense, disproportionate". He seizes (submissions, paragraph 26) upon the reference to "technically correct" as being an endorsement by Brereton JA of the objections taken, adding that "these words (namely the other comments made by Brereton JA in the extracts from his Honour's judgment as set out below) are not sufficient to discourage this Court from following the usual order, being that a party amending, or seeking to amend, should be ordered to pay the opposing party's costs".
As is set out in more detail below, I consider that Mr Goldsmith has misread Brereton JA's observations at [86]. His Honour is not saying that the objections were correct at all. What was being said was that "even if" the objections had been acceptable in a technical way, they would still be pedantic and disproportionate. That does not mean that the objections taken were generally correct, technically correct, and/or should have been raised in the first place.
Brereton JA gave some specific examples of objections to particulars that he saw as pedantic or unnecessary, such as the request for further and better particulars of the "filthy" cloth (at [83]). Mr Goldsmith, however, does not point me to any particulars of justification that were obviously wrong; he makes the generalised claim that the whole of the particulars were struck out, and deservedly so. That is a factor which I have taken into account when dealing with his submissions that his clients were largely successful in their opposition to the particulars of justification.

The relevant principles of law

Where a party discontinues proceedings, or the proceedings are dismissed, Uniform Civil Procedure Rules 2005 (NSW) ("UCPR") rr 42.19 and 42.20 provide as follows: "42.19 Proceedings discontinued (cf SCR Part 52A, rule 21; DCR Part 39A, rule 24; LCR Part 31A, rule 19) (1) This rule applies to proceedings that are discontinued by the plaintiff, as referred to in rule 12.1. (2) Unless the court orders otherwise or the notice referred to in rule 12.1(2) otherwise provides, the plaintiff must pay such of the defendant's costs as, at the date on which the notice of discontinuance was filed, had been incurred by the defendant in relation to each claim in respect of which the proceedings have been discontinued. (3) Despite subrule (2), the defendant's costs in an appeal to the District Court under section 91 of the Children and Young Persons (Care and Protection) Act 1998 are not payable by the plaintiff unless the court finds there are special circumstances to justify an order for their payment by the plaintiff."
This provision applies to any discontinuance in this court. It is unfortunate that neither Mr Goldsmith nor Mr Newell referred to this provision at all. Mr Goldsmith's submissions refer only to UCPR r 42.7, which he says is the correct rule because there were no costs orders made in the District Court against either of the parties. UCPR r 42.7 does not, however, overtake or devalue UCPR r 42.19 concerning matters that have been discontinued.
Although Mr Goldsmith did not identify UCPR r 42.20 in terms, he appears to be relying upon this rule as the basis for the costs orders to follow when a defence is struck out. This rule provides: "42.20 Dismissal of proceedings etc (cf SCR Part 40, rule 8) (1) If the court makes an order for the dismissal of proceedings, either generally or in relation to a particular cause of action or in relation to the whole or part of any claim, then, unless the court orders otherwise, the plaintiff must pay the defendant's costs of the proceedings to the extent to which they have been dismissed. (2) If the court makes an order striking out a defence, either generally or in relation to a particular cause of action or in relation to the whole or part of any claim, then, unless the court orders otherwise, the defendant must pay the plaintiff's costs of the proceedings in relation to those matters in respect of which the defence has been struck out."
However, while four of the defendants' defences were struck out, at all relevant times leave to replead was given and the fifth draft of the defence remained on foot at the time of discontinuance. In other words, the defence was still alive and UCPR r 42.20 does not apply.
Where a plaintiff discontinues, conformably with UCPR r 42.19, the defendant will be entitled to costs unless the court, after hearing from the parties, otherwise orders: Australiawide Airlines Ltd v Aspirion Pty Ltd [2006] NSWCA 365; Foukkare v Angreb Pty Ltd [2006] NSWCA 335 at [68]. The wording of the rule is that of a default provision and does not create a presumption, but the rule places an onus on the discontinuing party to make an application for the court to order otherwise. The court does, however, still exercise its discretion: Fordyce v Fordham & Anor [2006] NSWCA 274.
The exercise of that discretion requires a sound reason for doing so: Ralph Lauren 57 Pty Ltd v Byron Shire Council [2014] NSWCA 107 at [21]-[29]. As a general rule, however, the discretion to depart from the rule will not be exercised where there has been an abandonment of the claim: Re Minister for Immigration and Ethnic Affairs: Ex parte Lai Qin (1997) 186 CLR 622 at 624.
It is not uncommon for an affidavit to be provided to explain to the court the reasons for continuance. While such information is not determinative, it is nevertheless material that may be relied upon: Fordyce v Fordham & Anor at [84] (parties ordered to pay their own costs); Walter v Buckeridge (No 4) [2011] WASC 313 (application for parties to pay their own costs refused).
In the present case, I have no affidavit or explanation whatsoever from Ms Eather. There is an affidavit from Dr Kalil (Exhibit A) blaming the costs and delays of the defendants in relation to their repeated failure to draft the defence properly which has prevented the proceedings from progressing in a substantial way, adding that he was "deeply concerned by the conduct" of the defendants' legal representatives (at paragraph 14), claiming that they had acted in a similar way in other proceedings against other parties and asserting he was "financially intimidated" (paragraph 16) to the point of discontinuing these proceedings. Dr Kalil was not cross-examined on his affidavit. That does not mean, however, that I should accept its contents uncritically, and I propose to read his explanation in light of Brereton JA's judgment.
Where a party who has discontinued seeks costs in its favour, there must be persuasive reasons for doing so.

Discontinuance of defamation proceedings

There are special provisions for costs in defamation proceedings in certain circumstance, as set out in s 40 of the Defamation Act 2005 (NSW). These provisions may be applicable to proceedings which have ended in a final resolution between the parties other than by way of settlement. In Defteros v Google Inc LLC & Anor (Costs) [2017] 189, John Dixon J applied this provision to proceedings which were summarily dismissed, holding that the refusal of the settlement offer from Google was unreasonable and that indemnity costs should be ordered. The parties made no reference to these principles in their submissions.
I have not taken s 40 into account, for the following reasons. First, as noted above, the parties did not refer to it. Second, no offers were made. Third, it is arguable that s 40 only applies to a trial on the merits (which would include summary dismissal, but not a discontinuance). Fourth, s 40 has been construed as not applying in the Federal Court (apparently on the basis that this trammels the judge's discretion in some impermissible way), or on appeal, and it is generally not referred to in proceedings ending other than in a full trial in any event.
In these circumstances, discontinuance of defamation proceedings proceeds on much the same basis as discontinuance of proceedings generally. The general principles underlying the Civil Procedure Act are aimed at discouraging disproportionate conduct of litigation (Korolak v Bauer Media Pty Ltd (No. 2) [2016] NSWDC 115 at [22] - [31]). The lack of proportionality in the conduct of these proceedings by the plaintiffs is one of the defendants' main complaints (relying upon the description of the challenge to particulars as a whole, by Brereton JA at [86], as "disproportionate").
The courts are, in addition, aware of the potential for abuse of process in unjustified defamation actions and have been prepared on some occasions (admittedly rarely) to make orders for indemnity costs against a party who has commenced proceedings with the intention of not proceeding (Packer v Meagher [1984] 3 NSWLR 486 at 500) or has flouted case management rules (Palmer v Gold Coast Newspapers Pty Ltd [2013] QSC 352). Generally speaking, there needs to be a flavour of abuse of process or other wrongdoing before such an order will be made.

Were the plaintiffs' complaints about the defence in proceedings 2019/45573 warranted?

What did the defendants' solicitors do to warrant a costs order against them personally? As Brereton JA noted at [53]: "In summary, the "serious neglect and serious misconduct" was said to be in the preparation of the first four iterations of the draft amended defence. Aside from annexing the objections which had been taken to the 1st and 4th drafts, it was said that provision of four drafts, two of which were abandoned and two of which were rejected by the Court, "is not consistent with the competence reasonably expected of ordinary members of the profession and/or Mr Muriniti and Mr Newell were seriously incompetent in the preparation of them". In addition, it was said that costs had been incurred without reasonable cause relating to the need to consider and address the various drafts…"
Brereton JA set out the history of the five draft defences as follows: 1. Murinitis served their proposed amended defence ("first draft") and cross-claim on 15 August 2019. On 29 August 2019, Goldsmiths served written submissions containing objections to the first draft amended defence; no objection was taken to the proposed amended crossclaim. On 5 September 2019, the application for leave to amend was heard by Wass DCJ. The hearing occupied between one and two hours. Mr Newell, who appeared as advocate, conceded many of the objections. Leave to file the first draft amended defence was refused; directions were made for the service of a further proposed amended defence, and objections thereto; and the application was adjourned to 3 October 2019. 2. On 20 September 2019, Murinitis served a second draft amended defence ("second draft"). On the same date, Mr Goldsmith swore an affidavit in support of the plaintiffs' application that the solicitor for the defendants, pay the plaintiffs' costs of the application to file an amended defence. 3. On 26 September 2019, Goldsmiths served objections to the second draft. A third draft amended defence ("third draft") was served the same day. The application for leave to amend was heard on 4 December 2019 in relation to a "fourth draft". The hearing occupied about 4 hours. In the course of the hearing, Mr Newell again conceded a number of the objections. Leave to amend was refused, but with leave to replead. It was at this stage that the application for a costs order against the solicitors for the defendants commenced. 4. On 18 March 2020, Murinitis served a fifth draft amended defence ("fifth draft"). The hearing resumed on 20 March 2020. In the course of the hearing, Mr Goldsmith announced that, subject to some unspecified undertakings and exclusions (which were never articulated), there would be no objection to the Defendants having leave to file a defence in the form of the fifth draft. Directions were made for the respondents to provide particulars of the personal costs order application, which was the substantial issue thereafter. 5. On 30 July 2020, Goldsmiths queried whether the defendants pressed their application for leave to file the fifth draft, foreshadowed that they would ask that it be relisted for directions to enable it to be determined, and foreshadowed that a further personal costs order would be sought in respect of the costs of such application. However, no objection to the fifth draft was indicated, and this was in circumstances where they had previously indicated that leave to file such a defence would not be opposed. On 31 July 2020, Mr Goldsmith indicated that the costs covered by the personal costs order were $164,517 and that he was instructed to proceed to assessment. On the same day, Murinitis reminded Goldsmiths that they were awaiting Goldsmiths' indication of what were the "undertakings" to which their non-objection to the fifth draft was expressed to be subject.
Brereton JA summarised the bases of the challenges to the pleading at [50(4)]: "The Basis of This Application ([14]-[15]). Her Honour summarised the basis of the application, and Murinitis' response, as follows: "[14] In point form, the Plaintiffs' position is that Mr Muriniti and Mr Newell both exhibited serious incompetence, based on the following: (1) Neither Mr Muriniti nor Mr Newell has any experience in conducting Defamation cases; (2) Notwithstanding that, both have persevered in providing inadequate Amended Defences, despite "endless" education by the Court as to how to plead matters; (3) Fundamental, wholesale and basic deficiencies were exhibited, for example to plead the facts. Such deficiencies were as a result of a demonstrated lack of knowledge and experience on the part of Mr Muriniti and Mr Newell; (4) Mr Muriniti persevered in engaging Mr Newell against very clear evidence that Mr Newell does not know how to address in a proper way a Defamation case; and where (5) Such perseverance was, from the Plaintiffs' perspective, expensive, time consuming, and frustrating, against a background where both Mr Muriniti and Mr Newell, have engaged in conduct that is substantially the same as that which has led to the making of personal cost orders against them in the past, showing a tendency to expend costs without due regard to any obligation to the Court or to their opponent, and in breach of s 56 of the CPA. [15] In response, Mr Newell submitted that serious incompetence cannot be established simply by pointing to four attempts at a pleading and complaints within the various drafts. He said that it was a much higher benchmark standard that called for serious incompetence and that no cases have been put forward of a comparable nature to this one to found the application."
Brereton JA then summarised how Wass SC DCJ had dealt with each of the five drafts (at [50(15)]: "The Proposed Amended Defences ([233] - [371]): (a) Work on the Pleading Prior to the First Argument on 5 September ([233] - [253]). An account is provided of the attendances and time spent by Mr Muriniti and Mr Newell in connection with preparation of the initial defence and then the first amended defence; (b) Deficiencies in the First Proposed Amended Defence Exposed by the 5 September Hearing ([254] - 285]). There is an account of the hearing on 5 September 2019, including reference to matters conceded in the course of that hearing to be deficient in the pleading. Her Honour expressed the view that the proposed amended defence "was entirely deficient"; [33] (c) The Defendants Attempt a Second and Third Proposed Amended Defence ([286] - [301]). An account is provided of the attendances and time spent in preparing further iterations of the amended defence; (d) The Hearing on 4 December 2019 - Objections to the Fourth Proposed Amended Defence ([302] - [361]). There is an account of the hearing on 4 December 2019, again including reference to matters conceded in the course of that hearing to be deficient in the pleading, to submissions which were not understandable, and to Mr Newell's lack of preparation and wasting of the Court's time; (e) Preparation for the Fifth Proposed Amended Defence ([362] - [371]). The attendances and time spent in preparing the fifth and final iteration of the amended defence, and that it was belatedly served on 18 March 2020, three months after it was due, are set out."
Brereton JA next noted the explanations proffered for the concessions about the poor quality of pleadings (at [50(15) and (16)]: "(15) The Position Taken By Mr Newell in Submissions in the Course of the Personal Costs Application Regarding the Proposed Pleadings ([372]-[376]). Reference is made to Mr Newell's attempt to justify parts of the earlier pleadings, deficiencies in which he had previously conceded. Her Honour observed that although there might only have been two arguments concerning leave to amend before the Court, the other iterations of the draft amended pleadings also caused the Plaintiffs to incur costs; (16) The Position Taken By Mr Muriniti Regarding the Proposed Pleadings in the Course of the Personal Costs Application ([377]-[398]). Reference is made to Mr Muriniti's acceptance that the first draft was "problematic", his assertion that Mr Goldsmith kept "moving the goalposts" with new objections, his acceptance that he and Mr Newell had minimal experience in defamation but took on the defendants on a "compassionate basis" (about which he was questioned by her Honour, suggesting that they ought to have been referred to the pro bono scheme), his failure to seek assistance from any defamation barrister, and to a suggestion by her Honour that "an inexperienced defamation lawyer whilst wanting to do the best by a client is not necessarily fulfilling his obligations to the Court."
Brereton JA made a telling observation at [80]: "It is to be borne in mind that, although there were five versions of the draft amended pleading, only two contested applications for leave to amend were dealt, one of which, on 5 September 2019, concerning the first draft of 15 August 2019, occupied about 90 minutes, and the other, on 4 December 2019, concerning the fourth draft of 2 October 2019, about four hours. The second draft of 20 September 2019 was quickly superseded by the third draft of 26 September 2019, and in turn by the fourth draft of 2 October 2019; the three versions reflected a process of evolution over a period of less than two weeks. Ultimately, the fifth draft of 18 March 2020 was uncontested, although at times that position was said to be subject to conditions, which were never specified. It is also to be borne in mind that no objection was ever articulated to the cross-claim."
Having made this finding about the degree to which the defence amendments played a role in the application for costs against the solicitors, Brereton JA then considered the degree to which the particulars objected to had in fact been deficient: "[83] I have reviewed each iteration of the defence, and the transcript of the hearings before her Honour on 5 September 2019 and 4 December 2019. The earlier drafts were far from perfect, at least from a technical defamation lawyer's perspective. But from the first draft, the Plaintiffs - or at least their lawyers - could have been under no serious misapprehension as to the substance of the defence. Many of the objections which prevailed at the hearing on 4 December 2019 were highly technical, if not pedantic. For example, complaints that the Plaintiffs could not know what to make of an allegation that the first defendant was given a cleaning cloth that was "filthy", in the absence of an articulation of the relevant professional standard; that a cat was left with nothing but newspaper and litter in its cage and was distressed, in the absence of further particulars of the cat's distress; or that two boarding dogs did not have a water bowl, in the absence of detail as to when and for how long and whether surgery was imminent; have an air of unreality. Likewise, an objection that a pleading that certain matters complained of were an expression of opinion of the first defendant failed to plead that they were her "honest" opinion. [84] Some of Mr Newell's "concessions" in the course of the hearing on 4 December 2019 were plainly to the effect that further argument could be avoided if the pleading were amplified by further particulars, and savour of cooperative compromise rather than of concession. That such matters were "conceded" in the context and atmosphere of the hearing, especially once it was established that there would to any extent have to be a further pleading, despite having been pressed in written submissions, is not evidence of serious incompetence. [85] To the extent that the objections were technically correct, the defects identified, taken as a whole, did not in my opinion manifest "serious incompetence" as referred to in s 99 such as to warrant a personal costs order. [86] Moreover, the objections, even if technically correct, were in large part unnecessary for the Plaintiffs, in the context of a small claim of this kind, to understand in substance the case they had to meet, and in that sense disproportionate. That is an additional reason for concluding that, as a matter of discretion, it was and is not appropriate to make a personal costs order." (Emphasis added.)
Brereton JA did not make any formal determination of the degree of error involved, but his Honour's description of some of the objections as pedantic, technical, unnecessary and the subject of concessions made by Mr Newell in the spirit of compromise rather than in recognition of the validity of the complaints, paints a vivid and accurate picture of complaints of little real merit, a view that I accept and agree with. This is, first, because this was a small claim where there was no need for such technicality. Second, many of the complaints were of the nit-picking variety and were unpersuasive for this reason; the observations made in the highlighted section above are matters which I consider would cause a court to take the view that many if not most of these particulars did not require strike out at all. Nor do I consider Mr Newell's concessions makes these objections valid. Reading the material set out in the White Book, he seems to have been trying to negotiate some kind of compromise. At times he sounds browbeaten by the sheer length and combative nature of the application (which was, it should be recalled, for a costs order against him personally).
The real problem is that this was always a difficult case, for Dr Kalil at least, who would have known (as Brereton JA observed) from the first what the claim against him was. As is set out in Eppinga v Kalil & Anor, he had a history of disciplinary proceedings and criminal charges going back more than forty years, the effect of which, whether part of a defence of justification or not (see s 42 of the Defamation Act 2005 (NSW) as to criminal convictions and see Zollo v The Commissioner for Consumer Affairs [2020] SASCFC 118 as to disciplinary proceedings), could have significant impact in relation to both liability and quantum issues. In addition, Ms Eppinga had brought a cross-claim against both Dr Kalil and his wife the pleading for which was never challenged.
In practical terms, the challenges made by the plaintiffs to the particulars were largely pointless in that they were at best technical in nature. The practice of taking "technical" points in defamation actions is conduct which has been widely criticised as "trial by interlocutory ordeal" (Kirby J in Favell v Queensland Newspapers Pty Ltd (2005) 219 CLR 165; [2005] HCA 52 at [22]); Buckeridge v Walter [2006] WASCA 22 at [4] (Steytler P) and [23] (Pullin JA)).
As a general rule, objections of the kind taken by Mr Goldsmith would meet with limited success, and should have done so here. In Gray v John Fairfax Publications Pty Ltd [2007] WASC 274 at [28], Newnes J warned "that excessive refinement of pleading issues is to be discouraged and courts should discourage, or minimise, the impediment to a fair trial presented by the process of 'trial by interlocutory ordeal', which is especially prevalent in defamation proceedings".
The course taken by Mr Goldsmith in raising these highly technical complaints, behind the challenge to the manner of particularisation of justification, seems to have been motivated by a hope to achieve a strike-out of the whole defence of justification. However, an order striking out the defence of justification as inadequately particularised would only be made in compelling circumstances. In Fogarty v Nationwide News Pty Ltd [2013] WASC 477, Kenneth Martin J states: "[14] There was no dispute between the parties as to applicable principles of law underlying this strikeout application insofar as a challenge grounded on arguments that the pleaded defence does not disclose an arguable defence (ie, basis for the plea of justification or substantial truth) is to be evaluated. A relatively low interlocutory threshold arising out of principles well established in cases such as General Steel Industry Inc v Cmr of Railways (NSW) [1964] HCA 69; (1964) 112 CLR 125 applies. In other words, the plaintiff needs to make out an overwhelming case on this application that the particulars of truth as pleaded by the defendants are essentially untenable as regards a justification defence concerning this imputation."
Similar warnings were given in Saraceni v Mentha [2013] WASC 95 at [50]; Heytsbury Holdings Pty Ltd v City of Subiaco (1998) 19 WAR 440 at 448-449 and Kingsfield Holdings Pty Ltd v Sullivan Commercial Pty Ltd [2013] WASC 347 at [40].)
As a result, applications to strike out an entire set of particulars and/or a defence of justification are rare and their prospects of success even rarer: MacDonald v Australian Broadcasting Corporation [2014] NSWSC 1472. I am mindful of the more generous approach taken to applications to strike out particulars of justification in Rush v Nationwide News Pty Ltd (No 7) [2019] FCA 496 and in Australian Broadcasting Corporation v Chau Chak Wing [2019] FCAFC 125, but these cases turn on their facts.
In addition, although the whole of the particulars were struck out, there were effectively only two hearings of comparatively short compass in relation to deficiencies in the defence. While it took five drafts to arrive at a pleading satisfactory to all concerned, this is not an uncommon feature of defamation proceedings.
The order generally made when a pleading has to be amended is that the party amending must pay the costs thrown away by reason of the amendment. However, the circumstances in which those amendments were agreed to and ordered should be taken into account. Brereton JA sets out at [89] - [103] factors relied upon by Mr Muriniti and Mr Newell in relation to their claim that the whole application for personal costs against them was an abuse of process, and I consider these factors should also be taken into account.
There is an additional factor to consider, namely that even a successful party who would generally be entitled to costs may lose that entitlement if he or she discontinues. If I have erred in my finding that Dr Kalil and Ms Eather's complaints about the defence particulars were pedantic and unnecessary, the circumstances in which the proceedings were discontinued would not necessarily preserve their rights to costs. Assuming that they were largely successful in the litigation (as opposed to my finding that their objections were largely unmeritorious), what costs would they be entitled to for discontinuing?

What happens where a largely successful plaintiff discontinues?

Like the curate's egg, partial success in defamation proceedings does not mean that an order for each party to pay its own costs, or for the other party to pay the discontinuing party's costs, will follow if those proceedings are subsequently abandoned. In Walter v Buckeridge [2013] WASC 313, the plaintiff, unhappy with the slow progress which saw his defamation proceedings still not ready to take a hearing date after seven years, wrote to the court saying he wished to discontinue the proceedings because, despite winning the three interlocutory appeals brought by the defendant, the case "no longer carries any valuable or beneficial purpose for me" (at [2]). There could be no doubt of Mr Walter's success as at that date; unlike the plaintiffs in these proceedings, Mr Walter could point to a series of judgments at first instance and appeal where he had enjoyed not only success but costs orders.
However, in deciding to discontinue the proceedings, Mr Walter put himself in a position where the court had to consider the position of both parties, and not just Mr Walter's success. Le Miere J explained the reason why as follows: "[21] The plaintiff has, in effect, argued that the delay in the actions coming to trial has been caused by the manner in which the defendant has conducted the litigation. The defendant has taken many pleading points. The defendant has taken four appeals. However, there has been no finding that any of the applications, or appeals, brought by the defendant were frivolous, vexatious or otherwise improper. Furthermore, a review of the chronology of the actions discloses that there have been times during the proceedings when the plaintiff could have prosecuted the actions more expeditiously. [22] There has been no determination that the defendants infringed any right of the plaintiff by publishing the material complained of. The defendants have succeeded in resisting the plaintiff's claims in the sense that no relief has been granted in favour of the plaintiff against the defendants. The defendants were willing to proceed to trial. The plaintiff has chosen not to proceed to trial for the reasons I have set out earlier. It is not appropriate that the defendants should bear their costs of defending the proceedings."
Another factor of relevance is that, where there is a discontinuance, the Court will take into account whether the discontinuing plaintiff acted reasonably, in terms of commencing and continuing the proceedings. In Australian Securities and Investments Commission v Diploma Group Limited (No 3) [2017] FCA 891, McKerracher J stated at [18]: "Essentially, ASIC argues that it acted reasonably so should not be obliged to pay costs. There is no suggestion that ASIC did not act reasonably. But, unless the litigation is rendered futile by external events, such as a settlement, or the objective of the litigation being achieved in other ways, the discontinuing party is almost always liable for costs. This case is no different. The premise on which the case was based against the fifteenth defendant was either incorrect or not established as being correct. That is sufficient for the usual costs consequence."
In the present case, the plaintiffs have not acted reasonably either in the commencement or continuation of the defamation claim, and the observation by McKerracher J that in such circumstances the discontinuing party is almost always liable for costs is an apt one. A party who acts in such a fashion cannot point to what is asserted (without there being an actual costs order) as being a matter in which the discontinuing party should be seen as the victor and awarded costs. Costs on a hearing reflect which party, in reality, has won (Roache v News Group Newspapers [1998] EMLR 161) and there is much to be said for leaving costs in such circumstances to the ultimate victor, for the reasons expressed in Cretazzo v Lombardi [1975] 13 SASR 1 at 11 (per Bray CJ) and 16 (per Jacobs J). When determining the costs of a discontinuing party, these same principles should apply.
Mr Goldsmith did not address his alternate submission that there be no order for costs in relation to the challenges to the defences. In light of the degree of overlap between the issues of concern identified by Brereton JA, I do not consider that it is appropriate to carve out these costs, whether the plaintiffs were successful or not.

Conclusions concerning costs on the discontinuance

In Fordyce v Fordham & Anor, Santow JA observed: "I would wish to add this observation on one aspect of the reasons on UCPR 42.19 and 42.20. I consider the fact of discontinuance is likely to be a factor of some weight in exercising the discretion to determine whether the discontinuing party should be ordered to pay the other party's costs. While it is true the Court may otherwise order, the onus remains on the discontinuing party to justify such an order by reference to the circumstances said to justify exception to the normal cost outcome in such event. That the Court retains a discretion to accommodate such circumstances does not alter their character as being by way of exception nor the consequence in terms of onus. That said, the discretion remains to otherwise order."
While this was a stronger view than that expressed by his fellow judges, it is a view which is increasingly widely shared, as the observations of McKerracher J in the Federal Court demonstrate.
The matters raised by the plaintiffs are insufficient to satisfy me that I should exercise the discretion necessary to avoid the usual costs consequences of discontinuance. The plaintiffs should pay the whole of the defendants' costs of the discontinued defamation proceedings. It is not necessary for me to identify those costs in this judgment. That is a matter for the parties and the costs assessor if they cannot agree.

Should costs be awarded on an indemnity basis?

The criterion for the award of indemnity costs is set out by Woodward J in Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397. The award of such costs is reserved to cases where there is some conduct by the party against whom the order is made which justifies some form of sanction because of its unreasonableness or impropriety.
Section 98 of the Civil Procedure Act 2005 (NSW) provides: "98 Courts powers as to costs (cf Act No 52 1970, section 76; SCR Part 52A, rules 5, 6, 7 and 8; Act No 9 1973, section 148B; Act No 11 1970, section 34) (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. (2) Subject to rules of court and to this or any other Act, a party to proceedings may not recover costs from any other party otherwise than pursuant to an order of the court. (3) An order as to costs may be made by the court at any stage of the proceedings or after the conclusion of the proceedings. (4) In particular, at any time before costs are referred for assessment, the court may make an order to the effect that the party to whom costs are to be paid is to be entitled to - (a) costs up to, or from, a specified stage of the proceedings, or (b) a specified proportion of the assessed costs, or (c) a specified gross sum instead of assessed costs, or (d) such proportion of the assessed costs as does not exceed a specified amount. (5) The powers of the court under this section apply in relation to a married woman, whether as party, tutor, relator or otherwise, and this section has effect in addition to, and despite anything in, the Married Persons (Equality of Status) Act 1996. (6) In this section, costs include - (a) the costs of the administration of any estate or trust, and (b) in the case of an appeal to the court, the costs of the proceedings giving rise to the appeal, and (c) in the case of proceedings transferred or removed into the court, the costs of the proceedings before they were transferred or removed."
UCPR r 42.5 provides: "42.5 Indemnity costs (cf SCR Part 52A, rule 37) If the court determines that costs are to be paid on an indemnity basis - (a) in the case of costs payable out of property held or controlled by a person who is a party to the proceedings - (i) in the capacity of trustee, executor, administrator or legal representative of a deceased estate, or (ii) in any other fiduciary capacity, all costs (other than those that have been incurred in breach of the person's duty in that capacity) are to be allowed, and (b) in any other case, all costs (other than those that appear to have been unreasonably incurred or appear to be of an unreasonable amount) are to be allowed."
The circumstances in which indemnity costs orders will be made in defamation proceedings were considered in Packer v Meagher [1984] 3 NSWLR 486 by Hunt J; see also TW and Associates Pty Limited & Ors v Ireland & Ors [2000] NSWSC 1185. Indemnity costs were refused in Rivkin v John Fairfax Publications P/L [2004] NSWSC 671 where the plaintiff suddenly discontinued defamation proceedings without explanation after a series of controversial jury trials on defamatory meaning. These cases, which predate the Civil Procedure Act, are of limited assistance and largely turn on their own facts.
The principal basis upon which the defendants bring this application is that the manner of conduct of the litigation has amounted to an abuse of process and that where a party conducts litigation as an abuse of process, indemnity costs are appropriate.
Brereton JA did not make a finding of abuse of process, but listed matters of concern in relation to the personal costs application which have some relevance to the conduct of the proceedings generally. Only some of these are relevant to the issue of costs in the discontinued proceedings. These are as follows: 1. The circumstances in which the claim for costs against the practitioners was made within two weeks of the defence and cross-claim being served. Brereton JA noted at [89]: "There was no need to threaten such an application at that stage, which begs the question why it was raised so prematurely, and thereafter pressed so persistently and ardently." As Brereton JA notes, the plaintiffs knew from the first what the defendants' case was about, and knew that they were facing a cross-claim to which no objection could be taken. 2. There were attacks on the entitlement of Mr Newell and Mr Muriniti to remain on the record. These included, as Brereton JA notes at [91], the claims that Mr Newell was holding himself out as a barrister, as well as claims that Mr Newell and Mr Muriniti would drag the case out if they were allowed to remain on the record. There were also threats to seek an injunction to prevent them from continuing to act (at [36] and [99]) and "tendency evidence" in relation to other cases they had appeared in. The target was, in my view, to separate the defendants from their legal advisers. Brereton JA states at [94]: "Plainly, Mr Goldsmith recognised the potential impact of such an order on the Defendants' confidence in their solicitors". 3. In addition, there was "the discontinuance of the substantive proceedings, when Murinitis continued to act after the wasted costs order was made, such that the proceedings resulted in no benefit for anyone but Goldsmiths" (at [100]).
I would add to these factors the manner in which the application was conducted by the plaintiffs over a period of almost a year, on a series of ten hearing days, which is contrary to the principles set out in s 56 of the Civil Procedure Act 2005 (NSW). The issue in question was a simple matter of particulars of justification, not a change in the law raising issues of legal complexity or some other compelling reason.
Indemnity costs may be awarded where a party has abandoned a claim: Lahoud v Lahoud [2006] NSWSC 126. Alternatively, an order for costs may be softened where there is an explanation of change in circumstances. Where a party belatedly realises the merit of the opposing claim, abandoning a claim may be reasonable, and it is not uncommon to see affidavits explaining the reasons for not going on with the case (a step Mr Walters took when he discontinued his defamation claim). That is not the case here. As Brereton JA noted, the plaintiffs were aware of the nature of the defence of justification from the first, despite any infelicities of expression in the particulars, so there would be no belated recognition of the real issues, the most significant of which is, in my view, the impact of Dr Kalil's lengthy history of disciplinary and criminal proceedings in relation to his conduct as a veterinarian.
Indemnity costs should not be awarded as a punishment. However, such an order may be made where there has been misconduct in connection with the conduct of the proceedings: Oshlack v Richmond River Council (1998) 193 CLR 72. The manner in which this litigation was conducted by the plaintiffs, almost from its inception, was wholly out of proportion to the issues in the case and amounted to a relentless attack upon the legal representatives of the defendants for the purpose of making the defendants lose confidence in them. As a result of this sustained attack, the proceedings were not able to be readied for trial and effectively went nowhere up until the time of discontinuance.
For the above reasons, I am satisfied that the costs should be awarded on an indemnity basis, including the costs of this application.

Order: 1. The plaintiffs are to pay the costs of the defendants for the proceedings 2019/00045573 to the date of discontinuance and in relation to the parties' applications in relation to costs, such costs to be paid on an indemnity basis.

Amendments 05 December 2022 - 05/12/2022 - in paragraph [13] "This should be" 05/12/2022 - in paragraph [67] "Alternatively, an order" 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: 05 December 2022

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