Giles v Jeffrey [2016] VSCA 314

Court of Appeal (Vic)|2016-12-14|Before: Santamaria JA, Kyrou JA

Jeffrey v Giles [No 2] [2016] VSC 2; Jeffrey v Giles [No 3] [2016] VSC 78 (McDonald J)

PRACTICE AND PROCEDURE - Unsuccessful defendant in defamation proceeding applied for relief under s 29 of Civil Procedure Act 2010 for alleged breaches by successful plaintiffs of overarching obligations in that Act, including in their capacity as lay witnesses - Whether Act applies to a party in capacity as lay witness - Whether party can be liable for breaches of overarching obligations by party's lawyer - Circumstances in which relief may be refused in interests of justice without detailed consideration of merits of alleged breaches of overarching obligations - Application under s 29 sought to contest matters that were, or should have been, raised during hearing of defamation proceeding - Alleged breaches of overarching obligations not shown to have caused any loss - Application for leave to appeal refused.

PRACTICE AND PROCEDURE - Conduct of parties to civil proceeding - Overarching obligations in ss 18, 21, 22, 23, 24 and 29 of Civil Procedure Act 2010 - Procedure for dealing with alleged breaches of overarching obligations informed by procedural fairness and nature and gravity of alleged breaches - Yara Australia Pty Ltd v Oswal [2013] VSCA 337; (2013) 41 VR 302 considered.

COSTS - Indemnity costs - Rejection of offer of compromise in defamation proceeding - Defamation Act 2005 s 40(2)(a).

COSTS - Indemnity costs - Conduct of hearing of application under s 29 of Civil Procedure Act 2010 by self-represented applicant - Re-agitation of issues dealt with in defamation proceeding - Indemnity costs order warranted.

EVIDENCE - Fresh evidence - Facts known to applicant at time of trial - Application for leave to adduce fresh evidence refused.

1 This application for leave to appeal primarily concerns a decision of a judge of the Trial Division which dismissed the applicant's summons seeking relief against the respondents pursuant to s 29 of the Civil Procedure Act 2010 ('CPA') based on their alleged breaches of some of the overarching obligations under the CPA. The application graphically demonstrates how inappropriate use of the s 29 procedure, which is designed to further the purposes of the CPA, can seriously undermine those purposes.

2 Part 2.3 of the CPA imposes a number of overarching obligations on parties to civil proceedings and their lawyers, including an obligation to act honestly (s 17) and an obligation to have a proper basis for claims made in a civil proceeding (s 18). Section 29(1) of the CPA provides that '[i]f a court is satisfied that, on the balance of probabilities, a person has contravened any overarching obligation, the court may make any order it considers appropriate in the interests of justice'. The section goes on to provide examples of the types of orders that a court can make, including an order that the contravenor pay the legal costs of any person 'arising from the contravention' and an order that the contravenor 'compensate any person for any ... loss which was materially contributed to by the contravention'.

3 The genesis of the dispute between the parties was the respondents' proposal to operate a quarry, through their company Casacir Pty Ltd ('Casacir'), on land adjoining land owned by one of the applicant's family companies, Shapher Pty Ltd ('Shapher'), at Neerim North ('Shapher land').

4 In 2008, the applicant and others applied to the Victorian Civil and Administrative Tribunal ('VCAT') for review of a decision by the Baw Baw Shire Council ('Council') to grant a planning permit for the operation of the proposed quarry ('first VCAT proceeding'). On 19 January 2009, VCAT dismissed the first VCAT proceeding.[1] In September 2009, another of the applicant's family companies, Country Endeavours Pty Ltd ('Country Endeavours'), which operated a farm business on the Shapher land, commenced an enforcement proceeding at VCAT against the Council, Casacir and the respondents alleging contraventions of various conditions in the planning permit ('second VCAT proceeding'). The first respondent ('Jeffrey') gave evidence in the second VCAT proceeding but the second respondent ('Curnow') did not do so. On 7 February 2011, VCAT dismissed the second VCAT proceeding.[2]

5 In June 2011, the applicant established a website with the web address www.quarryfight.com.au ('Website'). From August 2011, the Website made adverse statements about Casacir, the respondents and the quarry, including that each of the respondents deliberately lied on oath in the second VCAT proceeding.

6 On 7 December 2011, the respondents commenced a proceeding in the Trial Division against the applicant alleging, among other causes of action, that the Website contained defamatory statements ('defamation proceeding').[3] The applicant was legally represented until 15 March 2013 and after that date she represented herself. Following a seven day trial in which both respondents gave evidence, Pagone J reserved judgment on 18 April 2013.

7 On 17 May 2013 - six days before Pagone J published his judgment - the applicant filed a summons against the respondents pursuant to s 29 of the CPA ('s 29 summons' or 's 29 application') seeking compensation and costs on the basis that the respondents' conduct of the defamation proceeding involved breaches of some of their overarching obligations under the CPA. The alleged breaches included that the respondents deliberately lied on oath in the defamation proceeding.

8 On 23 May 2013, Pagone J found that the applicant had defamed the respondents and awarded damages of $12,000 to Jeffrey and $8,000 to Curnow.[4] Pagone J declined to deal with the s 29 summons and the brief hearing that took place when he published his judgment did not afford the parties an opportunity to fully argue costs issues or to deal with the respondents' entitlement to interest pursuant to s 60(1) of the Supreme Court Act 1986. He made a costs order on the standard basis in favour of the respondents other than in relation to their claim for aggravated damages. The costs order was of an interim nature because it made provision for amendment depending on the outcome of the s 29 application.[5]

9 The applicant applied for leave to appeal against Pagone J's interim costs order and the respondents appealed against the quantum of damages.[6] The applicant was represented at the hearing of that application and appeal by counsel who appeared pro bono. On 24 April 2015, this Court upheld the respondents' appeal and substituted damages awards of $75,000 and $65,000 in favour of Jeffrey and Curnow, respectively.[7] By majority, the Court refused to grant leave to appeal to the applicant.[8] However, the Court referred to the judge hearing the s 29 summons the issues of whether Pagone J's interim costs order should be amended and whether the respondents were entitled to interest.[9]

10 On 31 May 2013, the applicant filed a further summons against the respondents pursuant to r 46.04(1) of the Supreme Court (General Civil Procedure) Rules 2005 ('2005 Rules') which, in effect, sought to replace Pagone J's interim costs order with orders that the respondents pay part of her costs of the defamation proceeding ('costs summons'). She also filed an affidavit in support of that summons. The costs summons and the s 29 summons (collectively 'Summonses') and the issues of costs and interest that were referred by the Court of Appeal were heard by McDonald J ('CPA proceeding'). The applicant represented herself in the CPA proceeding.

11 On 5 February 2016, McDonald J determined: that Pagone J's costs order should be amended to require the applicant to pay the respondents' costs of the defamation proceeding (other than in relation to their claim for aggravated damages) on an indemnity basis; that the applicant should pay the respondents interest; and that no relief should be granted to the applicant pursuant to the Summonses.[10] On 11 March 2016, McDonald J determined that the applicant should pay the respondents' costs of the CPA proceeding on an indemnity basis.[11] McDonald J's order dated 11 March 2016 gave effect to these determinations.[12]

12 McDonald J was highly critical of the applicant's allegations that the respondents had breached some of their overarching obligations under the CPA. His adverse observations included the following:

Many of the matters which [the applicant] relies upon in support of her s 29 application could have been raised in the proceedings before Pagone J. It is contrary to the interests of justice and antithetical to the overarching purpose of the [CPA] for an application under s 29 to be the vehicle for agitating matters which could have been ventilated at trial.[13]

13 The applicant has now applied to this Court for leave to appeal against McDonald J's order dated 11 March 2016. She has represented herself. Her application relies on 16 grounds of appeal, most of which have numerous subparagraphs containing what purport to be sub-grounds or particulars. The subparagraphs are repetitive and difficult to follow. They include allegations that McDonald J misunderstood and failed to give effect to the relevant provisions of the CPA and that his factual findings are contrary to the evidence that was before him.

14 Prior to the hearing of the application for leave to appeal, the applicant filed an application for leave to adduce fresh evidence. The application was supported by a 42 page affidavit and 42 exhibits consisting of a total of around 584 pages. Much of the purported 'fresh evidence' consisted of expanded assertions on matters which the applicant had already agitated before McDonald J. The application also sought orders compelling the respondents to appear in this Court to be cross-examined.

15 At the conclusion of submissions on the application for leave to adduce fresh evidence on 11 October 2016, we ruled that the application be refused and indicated that our reasons for the ruling would be set out in the reasons dealing with the substantive application for leave to appeal. The reasons for the ruling are set out at [207]-[210] below.

16 For the reasons that follow the application for leave to appeal will be refused.

Events preceding the commencement of the defamation proceeding

17 Since approximately 2003, Shapher has owned the Shapher land and Country Endeavours has operated a farm business on that land. Initially there were residential facilities within a shed on the Shapher land. In around 2007, a house was built on the Shapher land.

18 Adjacent to the Shapher land was land which, prior to 1995 was used as a quarry, and after that time was used for grazing ('quarry land').

19 The respondents owned Casacir, which was in the business of operating quarries. They were both directors of Casacir and Jeffrey had day to day management responsibility for its quarry business. Curnow also operated a separate road building and stabilisation business through a group of companies called the Stabil-Lime Group.

20 In 2006, Casacir purchased the quarry land and in December 2007 it applied to the Council for a planning permit to operate a quarry on that land. As we have already stated, the Council granted the application for a planning permit which was upheld by VCAT on 19 January 2009.[14]

21 Casacir commenced work on the quarry in August 2009. As we have already stated, in September 2009, Country Endeavours commenced the second VCAT proceeding which was dismissed by VCAT on 7 February 2011.[15]

22 In the period from 16 August 2006 until 26 July 2010, the following written communications took place relating to the possible purchase of the Shapher land by Casacir:

(a) On 16 August 2006, the applicant sent a letter to the respondents outlining a number of problems that the quarry would cause, and foreshadowing that she had 'no choice but to fight the opening of [the] quarry' including at VCAT if necessary. As an alternative to that course, she offered to sell them the Shapher land for $800,000.

(b) On 22 March 2007, Rigby Cooke, solicitors for Shapher at the time, sent a letter to the respondents offering to sell the Shapher land to them for $850,000.

(c) On 14 April 2007, the applicant sent an email to Jeffrey in which she reiterated the offer contained in the letter from Rigby Cooke. The applicant stated in the email that if the offer was ignored, the offer would become $950,000 or $1,050,000 'plus costs'.

(d) On 2 February 2010, Moores Legal wrote to the respondents' solicitors on behalf of Shapher with an offer to sell the Shapher land for a total of $1,201,684, made up of a sale price of $1,028,940 plus fees and expenses.

(e) On 26 July 2010, the applicant sent a letter (which was incorrectly dated 26 August 2010) to the respondents' solicitors making the same offer as was set out in the letter from Moores Legal.

23 During that period of time, the following reports on the value of the Shapher land were obtained:

(a) The respondents obtained a report dated 14 February 2007 from Pilgrim & Butt Real Estate which estimated the selling price of the Shapher land as between $310,000 and $325,000.

(b) The applicant obtained a report dated 31 July 2009 from CJA Lee Property Valuers and Consultants which estimated the market value of the Shapher land as $600,000.

(c) The applicant obtained a report dated 15 February 2010 from Hay Property Group which assessed the market value of the Shapher land as $840,000 prior to the quarry commencing operation and $680,000 after the quarry commenced operation.

24 Further communications relating to the possible sale of the Shapher land to Casacir took place in February and March 2011, following the dismissal of the second VCAT proceeding, between the parties' lawyers and between the applicant and the respondents' solicitors.[16]

25 As we have already stated, on 10 June 2011, the applicant established the Website.[17] The adverse statements on the Website which were the focus of the defamation proceeding ('impugned statements') were as follows:

(a) 'In relation to the enforcement hearing, I [the applicant] was appalled that David [Jeffrey] had sworn to facts that were obviously untrue and provably so, and that he knew were untrue.

I was even more shocked to see that he took the oath, with his hand on the bible - and then provided information that was not true. I can only assume from this that swearing on the bible meant very little to him.'

(b) 'David [Jeffrey] then had to agree that there were no plants planted on the northern boundary or around the dam - proving he committed perjury at the tribunal.'

(c) 'Further, in David Jeffrey's affidavit dated 6 September, he himself said that "Up until early January 2010 [a drill] did not have the 'acoustic cover' fitted. There was no cover available in Australia from the manufacturer" (in spite of stating at the 2008 tribunal hearing that there was one in Australia and that they had made arrangements to use it!).'

(d) 'I contend, however, that it is Casacir, David [Jeffrey] and Tom [Curnow] that seem to have interpreted things how they want to interpret them ... Some examples of such "interpretations" from experience appear to be that:

they don't actually have to have the required 2 community meetings a year if they don't want to, and that the information provided at those meetings does not have to actually be accurate, factual and truthful if they would rather provide inaccurate, fictional and/or deceptive information that makes it sound as if they had actually done what they were supposed to do;
they can provide provably inaccurate sworn information to the tribunal, (which in effect deceives the tribunal) if they want to.'

(e) 'Isn't it interesting that someone can so clearly swear to things that are not so and apparently feel justified and no compunction in doing so ...

Went out to the site again today and still nothing seems to have changed: still no plantings in some of the locations David [Jeffrey] swore there were plantings ... many posts still cannot be seen from the one next to it (in spite of David [Jeffrey] having sworn that they could be seen from the next one) ... but Casacir seems to have no qualms about the continued failure to comply with sworn testimony and conditions and undertakings!'

(f) 'Casacir (and therefore David Jeffrey & Tom Curnow) did not comply - again - this time with the Order ... How pathetic, and again, interpreting things how they wanted.'

(g) '... the site was unsecured - as is normal practice, in spite of what David Jeffrey swore in his affidavits and under oath. Not only were a number of gates unlocked, but the one to the direct north of the quarry entrance was standing wide open!'[18]

26 On 19 August 2011, the solicitors for the respondents wrote to the applicant alleging that the Website contained defamatory assertions without identifying the parts of the Website which were said to contain those assertions. The letter requested that the applicant undertake: to remove all defamatory material from the Website; not to defame the respondents in the future; and to post a written notice on the Website retracting each of the defamatory assertions identified in the letter ('letter of demand dated 19 August 2011').

27 The applicant did not send to the solicitors a response to the letter of demand dated 19 August 2011. Instead, on 23 August 2011, she published on the Website the letter of demand together with a response to it.

28 As we have already stated, the defamation proceeding was commenced on 7 December 2011.[19] Casacir and the respondents were the plaintiffs and the applicant was the defendant in that proceeding. The statement of claim pleaded two causes of action on behalf of Casacir and the respondents, namely, misleading or deceptive conduct ('misleading conduct claim') and injurious falsehood ('injurious falsehood claim'). Each of the respondents, but not Casacir, also pleaded defamation.

29 The key allegations in the final version of the statement of claim[20] in relation to defamation were that in their natural and ordinary meaning, the impugned statements on the Website were defamatory of the respondents in that they were meant and were understood to mean that Jeffrey had:

(b) taken an oath on the Bible at VCAT and thereafter provided information to VCAT which was not true;

(d) given false evidence at VCAT in relation to plantings on the quarry land, the location of marker posts and about the quarry site being left secured when closed for the day;

(e) misled VCAT in 2010, by telling a lie in his affidavit, namely that a drill used at the quarry did not have an acoustic cover fitted, as there was no cover available within Australia from the manufacturer;

(f) falsely swore to a number of facts and felt no compunction in doing so;

(g) provided inaccurate, fictional and/or deceptive information at community meetings;

(h) provided provably incorrect sworn information to VCAT which deceived VCAT; and

(i) interpreted VCAT orders how they wanted to interpret them rather than how they should be interpreted.

30 The key allegations in the original statement of claim[21] in relation to the injurious falsehood claim were that the Website contained statements to the effect set out at [29] above in relation to the respondents (and similar statements in relation to Casacir) which were false, could have been readily verified by the applicant taking reasonable and proper steps to establish the truth, were actuated by malice, calculated to cause pecuniary damage and in fact caused the respondents and Casacir pecuniary loss.

31 The key allegations in the original statement of claim in relation to the misleading conduct claim were that the statements on the Website to the effect set out at [29] above in relation to the respondents (and similar statements in relation to Casacir) constituted representations made by the applicant in trade or commerce which were misleading or deceptive or likely to mislead or deceive. Accordingly, the respondents alleged that the applicant had contravened s 18 of the Australian C[22]sumer Law.22

32 In the final version of the statement of claim, the respondents sought the following relief:

A permanent mandatory injunction requiring the defendant to remove the published materials from the internet.

An interlocutory injunction requiring the defendant to remove the published materials from the internet.

Interest pursuant to Statute.
Costs.
Such further or other orders as this Honourable Court deems fit.

33 In support of the claim for aggravated damages, the final version of the statement of claim alleged that the applicant made the impugned statements on the Website in circumstances demonstrating: lack of good faith; the existence of a collateral or anterior purpose; and unjustified and unreasonable conduct. This was said to be demonstrated by the volume of the defamatory material, the frequent and continued publication of that material, and the general nature and tenor of the applicant's publications, as well as by her motive to cause ongoing injury to the quarry operation in an attempt to pressure Casacir to acquire the Shapher land at an inflated price.

34 On 1 February 2012, the applicant's then solicitors wrote to the respondents' solicitors stating that the statement of claim was embarrassing and ought be struck out because, among other things, the alleged defamatory publications had not been identified with any precision and the defamatory matter complained of did not appear on the face of the statement of claim itself.

35 In response, under cover of a letter dated 20 February 2012, the respondents' solicitors sent a folder of documents to the applicant's solicitors. The folder contained approximately 300 pages that had been downloaded from the Website and had the 'relevant parts' highlighted and tabbed. The letter stated that the corresponding paragraph of the statement of claim had been written next to each relevant part in the folder.

36 The impugned statements were deleted from the Website in February 2012 following receipt of the letter dated 20 February 2012 and the folder from the respondents' solicitors. The entire Website was removed on 15 November 2012.

37 In the period from 15 December 2011 until 3 April 2013, the applicant was served with six amended versions of the statement of claim. However, only three amended versions were filed, a version dated 2 March 2012 was filed on 5 March 2012, a version dated 23 November 2012 was filed on 26 November 2012, and a version dated 25 March 2013 was filed on 27 March 2013 and then again on 3 April 2013.

38 The applicant filed only one defence, dated 23 March 2012, while she was legally represented. In the defence, she admitted that the impugned statements had been published on the Website but denied that they were defamatory. However, she did not plead the defence of truth.[23] The applicant denied the injurious falsehood and misleading conduct claims and alleged that the respondents had failed to plead sufficient material facts to disclose causes of action known to the law, and that the respondents did not suffer any loss or, alternatively, they failed to mitigate any loss they had suffered.

39 The amendment that was made to the statement of claim dated 23 November 2012 removed Casacir as a plaintiff and also deleted the misleading conduct and injurious falsehood claims. These steps were taken pursuant to leave granted in an order made by Beach J on 23 November 2012 ('Beach J's order'). Beach J's order required Casacir to pay to the applicant her costs of defending its claims and otherwise reserved costs. On 7 April 2014, those costs were assessed by the Costs Court by consent in the amount of $10,000.

40 On 28 November 2012, the applicant served an offer of compromise in which she offered to pay to the respondents a total of $40,000 in settlement of the defamation proceeding. The respondents did not accept this offer.

41 On 14 March 2013, the applicant filed a notice under r 40.10 of the 2005 Rules which enabled her to lead evidence in the defamation proceeding about the character of the respondents ('r 40.10 notice').[24]

42 On 15 March 2013, the respondents served an offer of compromise in which they offered to settle the defamation proceeding for a total of $40,000 plus costs. The applicant did not accept this offer.

43 The defamation proceeding was heard by Pagone J on 10, 11, 12, 15, 16, 17 and 18 April 2013. Mediation took place for part of the day on 11 and 15 April 2013. The respondents and the applicant gave evidence.

44 Jeffrey's evidence included the following:[25]

(a) His family had a longstanding good name in the region as a 'family [that] were good to do business with, [and were] honest, [and] reliable'.[26]

(b) He was concerned about the impact upon others of assertions that might reflect upon him being a fit and proper person to manage the quarry business, including the impact upon people like his bank manager if the words were to have come to his attention.

(c) People had approached him about the Website, including members of his local community and others involved in the quarry business.

(d) His feelings were hurt by the assertions that he was a liar and he was distressed, embarrassed and humiliated by the impugned statements.

(e) He was a man of strong religious beliefs who placed great importance upon the giving of an oath on the Bible and he felt that to allege that he had perjured himself was to question his belief and faith.

(f) He was ashamed of, and offended by, what had been written about him and found it biting that he was effectively being labelled 'a crook'.[27]

(g) The impugned statements had had a profound impact upon him; he considered that being accused of lying under oath, lying against his family values, his personal values and his family's beliefs was like being accused of murder or a heinous crime.

(h) The defamatory statements had a physical impact on him; he had put on weight, he was taking blood pressure tablets and he was not sleeping well.

45 Curnow's evidence included the following:[28]

(a) His businesses through various companies had built up a reputation over many years of integrity upon which people could rely.

(b) He was offended by the impugned statements and felt disgusted and angry, particularly because of the allegation that he had provided provably incorrect information under oath and had deceived VCAT, when he had not given any evidence before VCAT.

(c) He was concerned that there would be damage to his reputation, especially because people in his industry valued his word. The possibility that employees and customers might read the impugned statements was a 'major concern'[29] for him.

46 At the conclusion of her submissions in the defamation proceeding, the applicant read out a short apology to the respondents.[30]

48 On 17 May 2013, the applicant filed her s 29 summons. The summons sought orders that the respondents: pay some or all of the legal costs or other costs or expenses of the applicant arising from contraventions of the overarching obligations; compensate the applicant for any financial loss or other loss which was materially contributed to by the contravention of the overarching obligations (including penalty interest); and take steps which are reasonably necessary to remedy any contravention of the overarching obligations by them or their legal representatives. The applicant also filed an 'Application for Orders Under Section 29 of the [CPA]'('Application Document') and an affidavit in support.

49 Pagone J published his judgment in the defamation proceeding on 23 May 2013. The applicant and senior counsel for the respondents appeared for the taking of judgment. Pagone J said that he had read the s 29 summons, looked at the first page of the Application Document and not read the affidavit in support. He said that he would not deal with the s 29 summons because the parties should first read the judgment and consider whether the materials filed in connection with the s 29 summons needed amendment.

50 The key findings in Pagone J's judgment for present purposes were as follows:

(a) The impugned statements were defamatory ('defamatory statements').[31]

(b) The defamatory statements were only one of the causes of the injury to the respondents.[32]

(c) The respondents had not established the grounds upon which they relied in support of their claim for aggravated damages, including that the applicant had attempted to pressure Casacir to acquire the Shapher land at an inflated price.[33]

51 On 23 May 2013, Pagone J made the following order ('Pagone J's order') without considering the respondents' entitlement to interest or the parties' offers of compromise:[34]

The Defendant is to pay damages in the amount of $12,000 to Mr David Jeffrey and damages in the amount of $8000 to Mr Thomas Curnow.
The Defendant is to pay the costs of the Plaintiffs other than those costs referable only to the issue of aggravated damages unless there be some further or other order made in connection with or pursuant to the summons and application filed 17 May 2013 under s 29 of the [CPA].
The summons and application of the Defendant filed 17 May 2013 are referred to Associate Justice Daly for hearing at 10.00 am on 4 June 2013.

52 As we have already stated, the applicant filed the costs summons on 31 May 2013.[35] The costs summons sought orders that the respondents: pay the applicant's costs thrown away by reason of the respondents discontinuing their injurious falsehood and misleading conduct claims; pay on an indemnity basis costs of the defamation proceeding incurred by the applicant from the day after she served her offer of compromise dated 28 November 2012 for $40,000; pay to the applicant interest on any costs awarded in her favour; and be precluded from applying for costs in relation to their injurious falsehood or misleading conduct claims. An affidavit was filed in support of the costs summons.

53 As we have already stated, on 24 April 2015, this Court: upheld an appeal by the respondents in respect of the quantum of damages awarded by Pagone J and substituted damages of $75,000 in favour of Jeffrey and damages of $65,000 in favour of Curnow; and, by majority, dismissed the applicant's application for leave to appeal against Pagone J's interim costs order.[36] On 24 April 2015, the Court made the following order ('Court of Appeal's order'):

Paragraph 1 of the orders made by the Honourable Justice Pagone on 23 May 2013 is set aside and in lieu thereof the [applicant] pay damages in the sum of $75,000 to [Jeffrey] and damages in the sum of $65,000 to [Curnow].
The question of costs below and the question of the interest payable on the awards of damages be referred to the judge hearing the application pursuant to s 29 of the [CPA].
The [applicant] pay the [respondents'] costs of the appeal.
Reserve liberty to apply as to any application for indemnity costs.

54 The Court of Appeal made the following relevant findings:

(a) The awards of damages were so low as to be 'manifestly inadequate'[37] and even bordering on 'derisory', especially given 'the serious nature of the imputations, the mode of publication, and the persistence with which [the applicant] engaged in the defamation'.[38]

(b) Pagone J erred by imposing a requirement that an award of damages be made to provide compensation only for harm for which the defamatory statements were the sole cause.[39]

(c) Pagone J was correct to conclude that an award of aggravated damages was not justified, but the behaviour of the applicant upon which the respondents relied in support of their claim for aggravated damages ought to be taken into account by the Court of Appeal in awarding compensatory damages.[40]

(d) Pagone J did not give the parties a proper opportunity to address the question of whether interest should be awarded to the respondents and, accordingly, that question should be argued and determined in the CPA proceeding.[41]

(e) Paragraph 2 of Pagone J's order was only an interim order on costs such that matters relevant to costs should be revisited on the hearing of the s 29 application.[42]

Issues for determination in the CPA proceeding

55 In the meantime, pursuant to directions made by Daly AsJ on 4 June 2013 in relation to the Summonses, the applicant filed an amended version of her affidavit in support of the costs summons, a summary in the CPA proceeding ('Summary Document') and an affidavit in support of the Summary Document. At a directions hearing held on 8 May 2015, McDonald J gave leave to the applicant to file 'any further affidavit in support of her application for orders under s 29'.

56 On 28 May 2015, the applicant filed 10 further affidavits in support of her s 29 application. The affidavits addressed a number of issues, which were described in the titles of eight of the affidavits as: 'the real reason for the plaintiffs' action', 'the plaintiffs' misleading and deceptive conduct', 'plaintiffs' legal team's responsibilities and their breaches', 'the plaintiffs having unnecessarily incurred costs', 'the plaintiffs' claims in relation to Casacir, injurious falsehood and misleading and deceptive conduct', 'the excessive number of the plaintiffs' statements of claim', 'the plaintiffs' claims that [the applicant] threatened, blackmailed and/or used extortion to try to force them to buy the Shapher property' and 'the plaintiffs' failures to discover documents and the falsity of documents'. It appears that the title of one of the two remaining affidavits was 'truth of website'.[43] The documents before this Court do not disclose the title of the remaining affidavit.

57 In total, the applicant filed 13 affidavits in support of the Summonses. Those affidavits exhibited documents running to many hundreds of pages.

58 The respondents did not swear any affidavit in response to the applicant's affidavits. Their solicitor swore an affidavit which mainly dealt with the procedural history of the defamation proceeding. The solicitor stated that the affidavit did not respond to the applicant's allegations which had been 'the subject of judicial determination' or that sought to 're-litigate' issues. The solicitor also swore an affidavit in support of the respondents' submissions as to the costs of the CPA proceeding.

59 On 30 May 2013, the respondents served on the applicant a Calderbank[44] offer whereby they offered to bear their own costs of the s 29 summons if the applicant consented to the summons being dismissed. The offer was expressed to be open for acceptance until 4pm on 31 May 2013.

60 As a result of the Court of Appeal's order and the Summonses, the following issues required resolution in the CPA proceeding:

(a) Whether the respondents had breached their overarching obligations.

(b) Whether the applicant was entitled to any relief pursuant to her Summonses, including an order for costs thrown away by reason of the respondents discontinuing their injurious falsehood and misleading conduct claims.

(d) Whether any party should be awarded interest in relation to the defamation proceeding.

(e) Who should pay the costs of the CPA proceeding and on what basis.

61 In relation to the costs of the defamation proceeding, the respondents sought a variation of Pagone J's interim costs order based principally on s 40(2)(a) of the Defamation Act 2005 which relevantly provides:

a court must (unless the interests of justice require otherwise) ... if defamation proceedings are successfully brought by a plaintiff and costs in the proceedings are to be awarded to the plaintiff - order costs of and incidental to the proceedings to be assessed on an indemnity basis if the court is satisfied that the defendant unreasonably failed to make a settlement offer or agree to a settlement offer proposed by the plaintiff ...

62 The CPA proceeding was heard by McDonald J on 26 October 2015. The applicant represented herself. The parties relied on their affidavits and no deponent was cross-examined.

63 In his substantive judgment published on 5 February 2016, McDonald J first considered the s 29 application and decided to dismiss it.[45] He then discussed the other issues requiring resolution in the CPA proceeding.

64 In relation to the s 29 application, McDonald J made a number of general observations before turning to the specific allegations in the applicant's affidavits. He said the following about the court's power under s 29 of the CPA and the appropriateness of exercising it in this case:

The exercise of the power conferred by s 29 of the [CPA] is conditional upon the Court considering it 'appropriate in the interests of justice' to do so. If, contrary to the reasons set out below, I had considered there to be any merit in any of the grounds advanced by [the applicant], I would in any event have refrained from making any orders under s 29. The desirability of finality in litigation is a significant discretionary consideration which weighs against making any orders under s 29 in the circumstances of the present case. Many of the matters which [the applicant] relies upon in support of her s 29 application could have been raised in the proceedings before Pagone J. It is contrary to the interests of justice and antithetical to the overarching purpose of the [CPA] for an application under s 29 to be the vehicle for agitating matters which could have been ventilated at trial.[46]

65 McDonald J observed that the applicant was entitled to have her s 29 application heard and determined, but in a way that took into account 'the necessity for judicial resources to be deployed efficiently and in a manner which does not adversely impact upon the legitimate interests of other litigants.'[47] In that context, McDonald J stated that he had endeavoured to act consistently with the overarching purpose of the CPA and to give due weight to the statement of the Court of Appeal in Slaveska v Victoria[48] about the importance of preventing the 'arduous re-agitation of claims associated with incidents examined at great length in previous proceedings'.[49] McDonald J also obtained guidance from the following statement by the Court of Appeal in Yara Australia Pty Ltd v Oswal:[50]

[W]e would not wish it to be thought that a judicial officer at first instance must undertake a substantial inquiry when considering whether there has been a contravention of the [CPA]. As the sanction for a breach will usually lie in an appropriate costs order, a judge may at the conclusion of the reasons for judgment immediately invite oral submissions as to why there should not be a finding that the [CPA] was contravened. The judge may in a relatively brief way deal with that issue in providing succinct reasons for a finding that there has been a breach of the [CPA] and how that finding affects the orders for costs that are to be pronounced.[51]

66 McDonald J also observed that the applicant had filed a number of affidavits in support of her s 29 application which were used as 'a vehicle to repeat disparaging statements against the plaintiffs.'[52]

67 In relation to the affidavit titled 'truth of website', McDonald J stated that, notwithstanding that the applicant did not plead the defence of truth in the defamation proceeding, as part of her s 29 application in the CPA proceeding, she invited the Court 'to make findings that the statements found to have defamed the [respondents] were truthful.'[53] McDonald J described that invitation as follows:

It is difficult to conceive of a more blatant abuse of the processes prescribed by s 29 of the [CPA]. Doubtless, [the applicant] perceives it to be in her interests to re-run her case on a basis other than that which was pleaded. However, it is plainly not in the interests of justice for her to be allowed to do so.[54]

68 McDonald J made the following findings in relation to the matters raised in the applicant's other affidavits:

(a) The applicant had made serious allegations of misconduct against the respondents which were subject to the Briginshaw v Briginshaw[55] standard of proof. The applicant had failed to discharge that onus in relation to her allegations that 'the [respondents] gave deliberately false evidence or engaged in misleading conduct contrary to their obligations under the [CPA]'.[56]

(b) Most of the matters upon which the applicant relied had been 'ventilated' during the defamation proceeding and it was 'not in the interests of justice to permit [the applicant] to re-agitate those matters via her s 29 application'.[57]

(c) The respondents' legal representatives had not breached any of their overarching obligations.[58] Contrary to the applicant's claims, the defamation proceeding was conducted by the respondents' legal representatives with 'commendable efficiency'.[59] There was no evidence to support the applicant's contention that the respondents' senior counsel had been misleading, untruthful or dishonest in relation to the number of versions of the statement of claim[60] or whether or not the respondents had received a full copy of the Hay Property Group report,[61] nor had there been anything inappropriate about the submissions made from the Bar table.[62] In any event, the applicant had not established any nexus between the conduct she complained of and any loss or prejudice sustained by her.[63]

(d) The applicant had not been prejudiced by reason of there being multiple versions of the statement of claim. Their contents only necessitated one defence being filed by her.[64] The filing of multiple versions, while not desirable, did not constitute a breach by the respondents of their overarching obligations.[65] Further, the removal of the injurious falsehood and misleading conduct claims was consistent with the respondents' overarching obligations under ss 23 and 24 of the CPA to narrow the issues in dispute and to ensure that costs are reasonable and proportionate.[66]

(e) The fact that the respondents' claim for aggravated damages was rejected did not mean that it was brought without any proper legal or factual foundation.[67] The matters which the applicant had alleged against the respondents in relation to their claim for aggravated damages could have been used by her to cross-examine the respondents in the defamation proceeding. It was not in the interests of justice to permit the applicant to re-agitate those matters in the CPA proceeding. In any event, the matters did not establish that the respondents breached their overarching obligations.[68]

(f) The applicant had failed to establish that the sum of $10,000, which was paid to her to compensate her for the preparation of her defence to the injurious falsehood and misleading conduct claims brought by Casacir, did not also compensate her for the costs of defending those claims brought by the respondents. This was because, as the applicant's defence did not distinguish between Casacir's claims and the claims of the respondents, there was no evidence that any additional costs were incurred in defending the respondents' claims.[69]

69 In relation to the costs of the defamation proceeding, McDonald J decided that the respondents were entitled to be paid their costs on an indemnity basis pursuant to s 40(2)(a) of the Defamation Act 2005. This was because the applicant acted unreasonably in not accepting the respondents' offer of compromise to settle the proceeding for a total of $40,000 plus costs, which was significantly less than the total damages of $140,000 plus costs awarded by the Court of Appeal.[70]

70 In relation to interest, McDonald J decided that the respondents had a prima facie entitlement to an award of interest pursuant to s 60(1) of the Supreme Court Act 1986 calculated by reference to the date of commencement of the defamation proceeding until the Court of Appeal's judgment, with adjustments for payments made by the applicant during that period. He found that the applicant had not demonstrated why that prima facie entitlement should not apply.[71]

71 McDonald J concluded that the applicant had not demonstrated that there was any nexus between the conduct of which she complained and any loss or prejudice which she had sustained.[72]

72 McDonald J gave the parties an opportunity to file written submissions in relation to the costs of the CPA proceeding and subsequently published his judgment in relation to those costs on 11 March 2016. In his costs decision, McDonald J made the following relevant findings:

(a) There were special circumstances warranting the making of an indemnity costs order against the applicant. Those special circumstances were reflected in the findings in the substantive judgment that: the applicant had sought to argue that the defamatory statements were true when she had not pleaded the defence of truth in the defamation proceeding; the applicant sought to re-agitate matters which were, or could have been, raised in the defamation proceeding even though McDonald J had informed her that the CPA proceeding could not be used for this purpose; and the CPA proceeding was used by the applicant as 'a vehicle to repeat defamatory allegations against the [respondents]' and to make a number of very serious allegations against the respondent's legal representatives which were 'entirely without merit'.[73]

(b) Independently of those special circumstances, the applicant's failure to accept the respondents' Calderbank offer of 30 May 2013 - whereby the respondents offered to bear their own costs of the s 29 summons if the applicant consented to its dismissal[74] - was unreasonable and justified an indemnity costs order.[75]

(c) As the issues other than the s 29 application occupied only a small amount of time in the CPA proceeding, it was appropriate for the applicant to pay the respondents' costs of all issues in that proceeding.[76]

73 On 11 March 2016, McDonald J made the following order ('McDonald J's order'):

Paragraph [2] of [Pagone J's order] is set aside, and in lieu thereof the defendant is ordered to pay the plaintiffs' costs of the proceeding before Pagone J, including reserved costs, on an indemnity basis, save only for those costs directly referable to the issue of aggravated damages.
The defendant is to pay interest to the first plaintiff in the sum of $8,260.32 and to the second plaintiff in the sum of $7,158.94.
The defendant is to pay the plaintiffs' costs, including any reserved costs, of:

(a) the [s 29] summons dated 17 May 2013;

(b) the [costs] summons dated 31 May 2013;

(c) the plaintiffs' application for interest on the $140,000 damages awarded by the Court of Appeal; and

(d) the plaintiffs' application to vary paragraph [2] of [Pagone J's order],

on an indemnity basis.

74 The applicant seeks leave to appeal against the whole of McDonald J's order except for the words 'save only for those costs directly referable to the issue of aggravated damages' in para 1 of that order.

75 As we have already stated, the applicant relies on 16 proposed grounds of appeal (Grounds 6.1 to 6.16), most of which have numerous subparagraphs containing sub-grounds or particulars.[77] In total, there are 66 subparagraphs. Many of them are repetitive, difficult to follow and do not articulate proper grounds of appeal.

76 We have carefully considered the whole of the applicant's application for leave to appeal and her written case. By doing so, we have been able to distil a number of specific errors which McDonald J is said to have made and some general complaints about the hearing of the CPA proceeding and its outcome. The specific errors contended for are listed at [77] below, with a reference to the relevant ground of appeal or particular of a ground of appeal. The general complaints are listed at [201] below. Not all of the particulars of the grounds of appeal are specifically mentioned at [77] and [201] below. This is because, as we have already mentioned, some of the particulars are repetitive, difficult to follow or do not raise any issue which would provide a proper basis for impugning McDonald J's order.

77 The alleged specific errors we have been able to distil are as follows:

(a) McDonald J erred in applying the principles in Briginshaw v Briginshaw[78] ('Briginshaw principles') in relation to her false evidence and misleading conduct allegations against the respondents because s 29 of the CPA only requires proof on the balance of probabilities (Ground 6.6(f)).

(b) McDonald J erred in stating that, even if the applicant's allegations against the respondents had merit, he would not have granted her any relief under s 29 of the CPA because it would not be in the interests of justice to do so (Grounds 6.4, 6.5(h), 6.6(g)).

(c) McDonald J erred in failing to take into account the respondents' failure to accept the applicant's $40,000 offer of compromise in ordering her to pay the respondents' costs of the defamation proceeding on an indemnity basis (Grounds 6.4(l), 6.10(a)).

(d) McDonald J: misunderstood and failed to take seriously the s 29 application; misunderstood the provisions of the CPA; asked himself the wrong questions in relation to the provisions of the CPA; failed to treat the overarching obligations as mandatory requirements binding upon the respondents; failed to give effect to the provisions of the CPA; and failed to perform his duty to further the overarching purpose in s 7 of the CPA.[79] Examples of these alleged errors by McDonald J were said to include that he:

(i) erroneously determined that he had the responsibility to stop the litigation 'at that point';

(ii) erroneously stated that many of the matters in the s 29 application should have been raised in the defamation proceeding;

(iii) erroneously found that, in the CPA proceeding, the applicant was seeking to re-agitate the issues in the defamation proceeding and the truth of the contents of the Website[80] when in fact she was only complaining about the respondents' conduct in the defamation proceeding;

(e) In making the orders that he made and in failing to make the orders sought by the applicant, McDonald J failed to give any or any sufficient weight to a number of matters including:

(i) the respondents' dishonest conduct and false testimony, including in relation to their reasons for taking action against the applicant;

(ii) the respondents' breaches of their overarching obligations including by deliberately lying on oath in the defamation proceeding and misleading and deceiving the Trial Division and the Court of Appeal;

(iii) the respondents' instructions to their lawyers to breach the lawyers' overarching obligations, including by making dishonest submissions and relying on dishonest documentation;

(iv) the respondents' unnecessary delays and wasting of time;

(v) the costs incurred by the applicant in resisting the injurious falsehood and misleading conduct claims prior to the abandonment of those claims;

(vi) the costs incurred by the applicant in reviewing a folder of 300 pages provided to her by the respondents in circumstances where only seven pages contained any statements that were relevant to the defamation proceeding;

(vii) the costs incurred by the applicant in considering the seven iterations of the statement of claim that the respondents served on her;

(viii) the respondents' false claim for aggravated damages based on the applicant's alleged motive in securing a sale of the Shapher land;

(ix) the respondents' breaches of their discovery obligations and their concealment of documents; and

(x) the fact that the respondents never denied that they lied and the fact that they still deny that they did anything wrong.

(Grounds 6.4, 6.7(a), 6.10(b)-(f) and (j), 6.11, 6.12, 6.16).

(f) McDonald J erred in finding that the respondents had not deliberately lied on oath in the defamation proceeding in circumstances where they did in fact lie on oath and have never denied lying on oath and engaging in misleading and deceptive conduct (Grounds 6.6(h), 6.12(a)).

(g) McDonald J erred in law by failing to award costs to the applicant in respect of reserved costs, particularly in relation to the costs of the directions hearing held on 23 November 2012 (Ground 6.10(g)).

(h) McDonald J erred in finding that there were special circumstances that justified an order that the applicant pay the respondents' costs of the CPA proceeding on an indemnity basis (para 8 of the applicant's written case).

(i) McDonald J erred in awarding interest to the respondents (para 9 of the applicant's written case).

78 It is to be noted that the application for leave to appeal has not sought to impugn McDonald J's conclusion that even if the respondents had breached an overarching obligation, she had not established that she had suffered any loss or prejudice as a result of any such breach.[81]

79 The orders the applicant seeks in her application for leave to appeal include that the respondents and their lawyers be orally examined under r 64.36(3)(a) of the Supreme Court (General Civil Procedure) Rules 2015 ('2015 Rules') and that there be a trial on the facts in accordance with r 64.37 of those Rules.

80 We will discuss the alleged specific errors in turn and will then consider the applicant's general complaints. Before doing so, however, we will deal with three preliminary issues which we raised with the parties. Those issues were as follows:

(a) Whether the overarching obligations in the CPA apply to a party in his or her capacity as a witness.

(b) Whether relief under s 29 of the CPA can be granted against a party to a civil proceeding in respect of an independent breach of an overarching obligation by that party's lawyers.

Preliminary issue: Applicability of CPA to a party acting as a witness

81 The question of whether the overarching obligations in the CPA apply to a party in his or her capacity as a witness has arisen in the present case because the applicant's grounds of appeal include contentions that McDonald J erred by not finding that the respondents lied on oath in the defamation proceeding.

82 Section 1(1) of the CPA provides that the main purposes of the CPA are:

...

(c) to provide for an overarching purpose in relation to the conduct of civil proceedings to facilitate the just, efficient, timely and cost-effective resolution of the real issues in dispute;

(d) to amend various Acts in relation to the conduct of civil proceedings to reflect the new procedures.

10 Application of overarching obligations - participants

(1) The overarching obligations apply to -

(a) any person who is a party;

(b) any legal practitioner or other representative acting for or on behalf of a party;

...

(2) Subject to subsection (3), the overarching obligations do not apply to any witness in a civil proceeding.

(3) The overarching obligations (other than the overarching obligations specified in sections 18, 19, 22 and 26) apply to any expert witness in a civil proceeding.

...

84 Section 11 of the CPA provides that the overarching obligations apply in respect of 'the conduct of any aspect of a civil proceeding', including interlocutory applications, appeals and appropriate dispute resolution undertaken in relation to a civil proceeding.

85 The headings to ss 17-26 of the CPA describe the overarching obligations in those sections as follows:

Overarching obligation to act honestly (s 17).
Overarching obligation - requirement of proper basis (s 18).
Overarching obligation to only take steps to resolve or determine dispute (s 19).
Overarching obligation to cooperate in the conduct of civil proceeding (s 20).
Overarching obligation not to mislead or deceive (s 21).
Overarching obligation to use reasonable endeavours to resolve dispute (s 22).
Overarching obligation to narrow the issues in dispute (s 23).
Overarching obligation to ensure costs are reasonable and proportionate (s 24).
Overarching obligation to minimise delay (s 25).
Overarching obligation to disclose existence of documents (s 26).

86 The interrelationship between s 10(1)(a) and s 10(2) of the CPA is unclear. The phrase 'a party' in s 10(1)(a) is unqualified and is wide enough to include a party in his or her capacity as a witness. This suggests that the overarching obligations apply to a party when giving evidence in a civil proceeding in which he or she is a party. However, the phrase 'any witness' in s 10(2) does not contain any exception in relation to a witness who is also a party. The only exception in s 10(2), when read together with s 10(3), is 'any expert witness'. These provisions suggest that the overarching obligations do not apply to a party when that party acts in his or her capacity as a witness.

87 The applicant submitted that a party who is also a witness must comply with the overarching obligations in the CPA and the witness's oath. She submitted that the fact that a party is giving evidence in the witness box under oath does not mean that he or she is excused from complying with his or her overarching obligations. According to the applicant, a party giving evidence wears two hats - one as a party and one as a witness - and the overarching obligations continue to apply to the party while in the witness box.

88 The respondents submitted that the overarching obligations do not apply to a party in his or her capacity as a witness giving evidence and that to construe them as such would be contrary to the structure of s 10 and the text of sub-s 2. According to the respondents, as sub-s 2 is expressed to be subject only to the exception for expert witnesses and otherwise provides that the overarching obligations 'do not apply' to 'any witness', each of paras (a)-(d) in s 10(1) are intended to be qualified by sub-s (2).

89 The respondents contended that their preferred construction is reinforced by consideration of the nature and purpose of the overarching obligations and the background to their enactment in the CPA. In this context the respondents referred to a report of the Victorian Law Reform Commission[82] which recommended that the overarching obligations should not apply to witnesses who do not give evidence as experts. The respondents submitted that underlying that recommendation was the common law immunity from exposure to civil liability that is afforded to witnesses in respect of the evidence they give. If the overarching obligations were applied to witnesses, the effect was said to be to deprive witnesses of their immunity, contrary to the principle of legality. The common law immunity and the principle of legality are discussed at [105]-[106] below.

90 The respondents also submitted that many of the overarching obligations in the CPA have no practical application to a party in his or her capacity as a witness, such as those contained in ss 18-20 and ss 22-24.[83] As for the obligations that could have such practical application, the respondents submitted that extending their application to a party in his or her capacity as a witness would not further the purpose and objects of the CPA.

91 It is our preliminary view that the overarching obligations in the CPA do not apply to a party when that party is acting in his or her capacity as a witness. However, as we discuss at [109] below, it is not necessary for us to reach a concluded view on this issue.

92 We have formed our preliminary view for the following reasons.

93 There is a conflict between s 10(1)(a) and s 10(2) of the CPA when they are read literally and in isolation. The phrase 'any person who is a party' literally includes a party in his or her capacity as a witness because he or she does not cease to be a party when giving evidence. The phrase 'any witness in a civil proceeding' literally includes a party when giving evidence, as that party is a witness at the time that he or she gives evidence. The question is how the conflicting provisions are to be reconciled in a manner that is faithful to the text of those provisions, the context provided by s 10 and the other provisions of the CPA and the purposes of the CPA.

94 In our opinion, the best way to reconcile s 10(1)(a) and s 10(2) of the CPA is to recognise that a party may have two capacities, namely, as a party and as a witness, and to keep those capacities separate for the purposes of the overarching obligations. On this basis, s 10(1)(a) should be interpreted as referring to a party acting in his or her capacity as a party and s 10(2) should be interpreted as referring to a person acting in his or her capacity as a witness irrespective of whether that person is a party.

95 Our preferred interpretation is consistent with the context of s 10 of the CPA and that Act as a whole. Subsection (2) is expressed to be subject to sub-s (3) which provides that most of the overarching obligations apply to an expert witness. The express exception to the phrase 'any witness' in respect of an expert witness clearly indicates that no other witness is subject to the overarching obligations.

96 Further, the wording of the overarching obligations in ss 18-19 and ss 22-26 of the CPA indicates that those overarching obligations are incapable of applying to a witness. This is so for the following reasons:

(a) Section 18 refers to the making of 'any claim or ... a response to any claim in a civil proceeding'. A witness does not make such a claim or response.

(b) Section 19 refers to the taking of 'any step in connection with any claim or response to any claim in a civil proceeding'. A witness does not take any such steps.

(c) Section 22 refers to the 'use [of] reasonable endeavours to resolve a dispute'. This is not part of the role of a witness.

(d) Section 23 refers to the 'use [of] reasonable endeavours to ... resolve by agreement any issues in dispute ... and ... narrow the scope of the remaining issues in dispute'. This is not part of the role of a witness.

At a glance

Court

Decision date

Before

Source

Judgment (478 paragraphs)

Parties

Legislation Cited (7)

Cases Cited (10)