Haddon v Forsyth

The evidence 6In the substantive proceedings, Mr Haddon was represented by solicitors and senior and junior counsel. On the costs application he appeared unrepresented. 7Initially, the only material put before me showing the course of negotiations was a series of offers made after the commencement of the litigation (the statement of claim was filed on 4 February 2009, almost 12 months after the publications). However, Mr Haddon referred to, and put before me, some evidence of attempts by him to achieve a resolution of his complaints shortly after publication and well prior to the filing of his statement of claim, and, ultimately, I was provided with additional material with respect to the communications that took place after the publications and before the statement of claim was filed. An issue arose as to the relevance of that material. I will return to that.

Defamation Act , s 40(2)(b) 8Following Mr Haddon's reference to his attempts to negotiate a solution prior to the commencement of proceedings, a chain of email correspondence, pre dating the filing of the statement of claim, was provided to me on behalf of the defendants. Given the way such correspondence is conducted, and is printed, it is not always easy to follow the sequence. It would have been helpful had it been provided in chronological order, and limited to those communications relevant to the attempts to negotiate a settlement. What follows is my understanding of the discussions that took place (by email) prior to 4 February 2009, when the statement of claim was filed. 9In the consideration of the negotiations, the correspondence and the arguments, it will be necessary to refer to some features of and evidence from the substantive proceedings. I do not propose to restate what is in the lengthy principal judgment; at times, in what follows, I will assume a knowledge of the relevant facts and circumstances there stated at length, and of the individuals involved. It will be necessary to read these reasons in conjunction with the principal judgment. 10The email correspondence to which I was referred for the purposes of the application commenced on 31 March 2008. It will be obvious that there had been some oral communication prior to the generation of those email communications. On 31 March 2008 Mr Haddon wrote to Bishop Forsyth in the following terms: "Here then is my offer: I will quit the church and keep silent as to why, in return for the letter below [the email of 15 February] being withdrawn in writing and a public apology made. Public apology means an announcement in church to an agreed script explaining I was banned from ministry on theological grounds only and that rumours or accusations that it resulted from misconduct are untrue." 11On 2 April, apparently after discussions with Mr Steele and the officeholders of St Aiden's Church, Bishop Forsyth replied, saying that he had their agreement that they "would like to meet your conditions, if possible." This included withdrawal, in writing, of the 15 February email, and a statement read out in church, a suggested text of which he attached. 12On 21 April 2008 Mr Haddon wrote to Bishop Forsyth and referred to a conversation they had previously had, in which he had offered to leave St Aiden's in return for "an apology/retraction" in various proposed forms. He added, for clarification, that that settlement would be "full and final", and he would undertake not to pursue any remedy "in the secular system". Bishop Forsyth replied on the same day by promising "get back to you". 13The correspondence shows that Bishop Forsyth passed on the offer to Mr Steele and the officeholders of St Aiden's. 14In a long letter to Bishop Forsyth (also signed by the Wardens of St Aiden's Church), Mr Steele gave a (negative) response, and an explanation for that response. Importantly, the signatories declined to withdraw the 15 February email, saying that they stood by its contents and the conditions of Mr Haddon's conduct they required therein stated. They considered a statement made in church to be inappropriate, as well as a statement proposed to be contained in the church e-Newsletter. On the same date Bishop Forsyth passed this on to Mr Haddon, inviting careful attention to the explanation given, and to the possibility of resolution if Mr Haddon were able to give a written undertaking to abide by the terms of the 15 February letter. 15On 2 May Mr Haddon wrote another long letter to Bishop Forsyth, concluding that: "Legal action is therefore the only way forward for me." and inviting Bishop Forsyth to "instruct" Mr Steele to comply with his proposed terms. 16There followed some discussion, which it is unnecessary here to detail, about the existence or otherwise of rumours that Mr Haddon claimed were circulating within the church. 17The correspondence concluded on 19 May with, in effect, an impasse. 18Counsel for the defendants argued that, by reason of the definition of "settlement offer" in s 40(3) of the Defamation Act , those negotiations which pre-date the commencement of proceedings are not relevant to s 40(2)(b). That, it was argued, emerges from the words "offer to settle the proceedings "; and it would appear to be so from the express inclusion, in relation to an offer of amends, of an offer made before, as well as after, the proceedings are commenced. Section 40(2)(b) obliges the court to order that the costs of the proceedings be assessed on an indemnity basis if the stated circumstances - the first of which is that a plaintiff has unsuccessfully brought defamation proceedings, and the second (and more important) of which is that the plaintiff unreasonably failed to accept a settlement offer made by the defendant - arise. The first leaves no room for consideration of negotiations that pre-date the commencement of the proceedings. Four matters, however, qualify that stark position. First, sub-s (2) is expressed not to limit sub-s (1); second, sub-s (1)(a) permits the court to take into account, additionally to the circumstances mentioned in sub-s (2)(b), the way in which the parties conducted "their cases " (as distinct from "the proceedings"); third, sub-s (1)(b) permits the court to have regard to any other matters it considers relevant; fourth, sub-s (2) itself permits the court not to make the order, even if both sub-s (2)(b) circumstances are otherwise established, if satisfied that the interests of justice require otherwise. 19I am satisfied that, in considering the question of costs under s 40(2)(b), the court may take into account negotiations that took place prior to the commencements of proceedings. I propose to do so. 20I turn now to the negotiations that took place after proceedings had been commenced. On 14 May 2009, the solicitors representing the defendants wrote in the following terms: "In a further effort to de-escalate this dispute, our clients have instructed us to propose:

1. we defer filing the Defence, for say one week.
2. we provide you with the form of Defence that has been prepared, which has for the same reasons of de-escalation, been edited to obliterate the names of complainants. That document is enclosed.
3. we provide your client with an opportunity for reflection before the Defence is filed with the Court." Included with the letter was an Offer of Compromise. The offer was: "1. Verdicts for each Defendant.
4. Each party to pay his own costs." The offer was expressed to be made in accordance with UCPR Pt 20 Div 4, and to be open until 5.00pm on 11 June 2009. 21On 30 October 2009, Mr Haddon gave notice of an Offer of Compromise in the following terms: "1. Verdict and judgment for the Plaintiff in the sum of $24,000.
5. Defendants to pay the Plaintiff's costs as agreed or assessed." 22On 5 November 2009, on behalf of the defendants, a further Offer of Compromise was made, in the following terms: "1. Proceedings be dismissed.
6. Defendants to pay the plaintiff the sum of $20,000.00 contribution towards the plaintiff's legal costs.
7. Otherwise each party is to pay his own costs with all previous costs orders vacated." 23Finally, on 17 March 2010, just days before the hearing was due to commence, on behalf of the defendants a further offer, this time without prejudice, was made. This included a proposed statement (without apology), which would be available to the parties to use, but with restrictions on any further statements to be made by any party; discontinuance by Mr Haddon of the proceedings, with a bar on any further proceedings arising out of "the same circumstances", and no order as to costs. It will be seen that this proposal did not include any monetary payment. Mr Haddon did not accept it, as he had not accepted either of the earlier offers. 24The primary position taken on behalf of the defendants was that the evidence disclosed that Mr Haddon "unreasonably failed to accept a settlement offer" made by them and that, accordingly, pursuant to s 40(2)(b), the Court must (unless the interests of justice require otherwise) order that the costs (which must follow the event) be ordered to be assessed on an indemnity basis. Alternatively, it was submitted on behalf of the defendants that the UCPR concerning offers of compromise ought to be applied, with the result that the court would order that costs be assessed on an indemnity basis as and from the relevant date following the making of the offers to which I have referred above. 25Mr Haddon argued that the pre-commencement correspondence demonstrates, on the part of the defendants, an unreasonable refusal to engage in negotiation that potentially could have obviated the need to commence proceedings. 26On behalf of the defendants it was again submitted that the pre-commencement negotiations are irrelevant. 27For reasons given above, I reject that as a global proposition: the parenthesised words in s 40(2) ("unless the interests of justice require otherwise") provide ample basis for the Court to examine the whole course of discussion and negotiation and conduct between and by the parties. 28I do not reject the evidence of pre-commencement correspondence as irrelevant. However, I also do not find that those negotiations indicate, on the part of the defendants, unreasonable conduct such as to bear upon the costs to which they otherwise would be entitled. Nor do they impact on the unreasonableness or otherwise of Mr Haddon's conduct in failing to accept subsequent settlement offers (properly so called) made on behalf of the defendants. In my opinion, the response to Mr Haddon's proposals given to Bishop Forsyth by Mr Steele on 23 April 2008 adequately explains the defendants' declining to agree to Mr Haddon's proposals. The pre-commencement discussions are, in my opinion, neutral. 29For the purposes of s 40(2)(b), I have to determine whether it was unreasonable for Mr Haddon to refuse to accept any or all of the settlement offers made by the defendants after the commencement of the proceedings. 30The mere fact that a plaintiff is unsuccessful in proceedings is insufficient to justify an award of indemnity costs. Failure in the proceedings is a necessary, but not sufficient, condition for such an award. If that were not so, the suffix to s 40(2)(b) would be redundant. The central fact that must also be established is that a settlement offer was unreasonably not accepted. Just what constitutes unreasonableness is not spelled out in the legislation. It is not every refusal of a settlement offer that is unreasonable. 31Of some significance is the first offer communicated on behalf of the defendants, as early as 14 May, just weeks after the Statement of Claim was filed. The defendants' solicitors provided Mr Haddon with the draft Defence, in order that he be informed of the issues that would be litigated if the matter proceeded; and they offered to allow time for consideration and reflection. In my opinion, this was a very reasonable approach for the defendants to take. Does that mean that it was unreasonable for Mr Haddon to decline to accept the attached offer of compromise? Of itself, perhaps not. But it is a relevant circumstance. The draft Defence must have given him considerable information about the issues that would be raised, particularly in respect of the justification defence; this gave him the opportunity to reflect upon the circumstances that led to the emails of 15 February (2008). The content of the offer is to be borne in mind. It was that Mr Haddon agree to a verdict for the defendants, and that each party pay his own costs. I discuss below the extent to which this was truly an "offer of a compromise" for the purposes of UCPR 42.15A. There is no doubt that, for the purposes of s 40(2)(b), it was "a settlement offer". 32The next offer of compromise made on behalf of the defendants included their offer to make a significant contribution towards to Mr Haddon's costs, to that date, of $20,000. The outcome of the proceedings establishes that it would have been in Mr Haddon's best interests to have accepted that offer. But that does not demonstrate that his failure to do so was unreasonable. 33Following the hearing of this application, and following the provision, on behalf of the defendants, of the correspondence pre-dating the commencement of proceedings, Mr Haddon also filed a lengthy supplementary submission. As I have mentioned, he is now unrepresented, and much of what is contained within that lengthy (18 typed pages) is of an evidentiary nature. Some of it is repetitive of what has already been put into evidence, and some of it, if not all, appears to be (factually) uncontroversial. Some of it is new material. 34In part, Mr Haddon sought to canvass an amount of material going to the dispute between himself and St Aiden's Church. I cannot take this into account: I must confine myself to the reasonableness or otherwise of his failure to accept the various offers of settlement. 35Mr Haddon's supplementary written submissions focus upon a number of aspects, some of which bear little relation to the question of costs. These could be summarised as: (i)the reasonableness of his conduct preceding the commencement of proceedings, which he characterised as attempts on his part to leave the Church with dignity and without loss of face either by himself or by the defendants or other participants; (ii)a number of propositions put on behalf of the defendants, in their written submissions, with which he took issue; (iii)a question, based upon s 40(1)(a), whether the defendants misused their superior financial position to hinder the early resolution of the proceedings. 36In my opinion the matters raised under the first head have, if any, only the most marginal relevance to the present question. The present question is whether he has been shown to have unreasonably failed to accept a settlement offer, and, if so, whether other considerations dictate that the interests of justice require other than an order that the costs be assessed on an indemnity basis. Nor do I consider that the matters of detail by which he responded to the defendants' written submissions advance the consideration of those questions. 37It is, however, necessary to say more about the last matter, the assertion that the defendants misused their superior financial position to hinder the early resolution of the proceedings. To start with, I note that that is a composite concept: it is not any misuse of a party's superior financial position that is relevant - it is the misuse of such a financial position in the way stated in the section, that is, to hinder the early resolution of the proceedings. The second thing to note is that the defence parties to the proceedings were Mr Steele and Mr Batten. There is no reason to conclude that either occupied a superior financial position to Mr Haddon. However, it is not to be overlooked that, up to a very late stage in the proceedings, Bishop Forsyth was named as the first defendant. Moreover, Mr Haddon asserts, and having regard to what I was able to observe during the course of the trial (including the regular attendance of Bishop Forsyth), it is reasonable to accept, that the defence was funded by the Church of England. Mr Haddon then referred to what he called "well publicised investment losses post 2008" on the part of the Church of England, a matter which is unproved, and, in any event, immaterial, and which I disregard. 38Mr Haddon then referred to the quantum of the costs claimed that he said had been served upon him, and put: "That they misused their superior financial position is partly in evidence from the size of their costs claim made on me. Assuming their party party costs claim of over $537,000 represents 70% of total legal costs, that total is therefore over $767,000. The sum is so wildly excessive it suggests they deliberately spent far more than necessary to exhaust my funds and force me to discontinue the case ." (italics added) 39I reject this contention. There is no basis in the evidence to conclude that the Church of England, or any of the named defendants, deliberately incurred excessive costs in order to exhaust Mr Haddon's funds. Indeed, that would require the active involvement of the defendants' solicitors, in breach of their obligations under the Legal Profession Act 2004. Mr Haddon then argued that the decision by the defendants to brief senior (as well as junior) counsel forced him to take a similar tactical decision. He asserted then that the defendants requested mediation, with no intention of taking mediation seriously, and that he accepted the invitation, thus incurring further costs. He supported his claim that the defendants did not intend to take the mediation seriously by asserting that they failed to produce "a position paper". There is no evidence on which I could make any finding about these claims. 40In a later submission, to which I will refer below, the solicitor for the defendants denied any intention of claiming any more than the amount stated in their assessment of costs provided to him - $537,255.69. 41Mr Haddon next claimed that the defendants misused their superior financial position by opposing an application made by him to transfer the proceedings to the District Court. Again, this was unsupported by evidence. I have therefore searched the Court file. There is an extempore judgment by Nicholas J ( Haddon v Forsyth & Ors (NSWSC, 10 August 2009, unreported)), which confirms that Mr Haddon made such an application, and that the defendants (successfully) opposed it. In the judgment Nicholas J recounted the procedural history of the proceedings; since his Honour referred to an affidavit of the solicitor representing the defendants sworn on 10 July 2009, it can be deduced that the application was made by Mr Haddon at some time shortly before that date. Nicholas J refused the application. The principal reasons were the history that he had recounted (including many interlocutory skirmishes and procedures); that all interlocutory steps had been taken in this Court; the timing of the application; and that it was this Court that was Mr Haddon's original jurisdiction of choice. Essentially, however, Nicholas J held that no material to justify the making of the order had been put before him. 42I do not think the stance taken on this application on behalf of the defendants is indicative of the misuse of a superior financial position to hinder the early resolution of the proceedings. The defendants were entitled to maintain their position that this was their preferred Court for the hearing. By that time, much of the preliminary work had been done and the costs incurred. There is no reason to think that transfer to the District Court at that time (or, indeed, at any time) would have substantially reduced the costs. More to the point, there is no reason to think that the proceedings remaining in this Court significantly added to Mr Haddon's financial burden such as to hinder early resolution. Moreover, at that time, Bishop Forsyth was a party, the first defendant, and, as Nicholas J observed, there were potentially complex questions of law concerning his vicarious liability (presumably as representative or nominee of the Church of England) for the alleged tortious conduct of Mr Steele and Mr Batten. I therefore I do not see the defendants' opposition to Mr Haddon's application to transfer as a relevant consideration in respect of the costs question. 43Mr Haddon also referred to voluminous interrogatories administered on behalf of the defendants, requiring the commitment of a good deal of time by his counsel, and subsequent further requests arising from his answers. He said that almost none of the particulars they produced were used in the trial. 44I cannot conclude from that that this was a misuse of the defendants' superior financial position, particularly for the purpose stated in s 40(1)(a). Information obtained from interrogatories may well be used in ways other than by production at trial. I am unable to say that the administration of interrogatories (again, assuming that the facts are as asserted by Mr Haddon) represented the misuse of superior financial position. 45Mr Haddon then complained that the defendants misused their superior financial position by having given notice of a significant number of witnesses who, in the end, were not called. Again, assuming that it is the fact, that does not suggest to me the misuse of a superior financial position, and certainly not misuse for the purpose of hindering the early resolution of the proceedings. 46There is one final matter raised by Mr Haddon under this general heading that I must record. Under the sub-heading "My legal team switches sides", Mr Haddon claimed that the firm of solicitors which, throughout the proceedings, represented the defendants, had originally taken instructions from, and advised, him, to the point of drafting a "concerns notice" for the purpose of activating Pt 3 Div 1 of the Defamation Act . He claims that the solicitor with whom he had been dealing then telephoned him and advised that the firm had received instructions from "the Anglican Church", and would therefore cease acting for him. 47There was objective material to support most of these assertions. Mr Haddon attached to his written submissions copies of email correspondence between him and two members of the firm. These contained some detail concerning his position in respect of the emails on which he ultimately sued, and some tactical considerations. It is a matter of record that the firm did represent the defendants in the proceedings. The only "fact" that is not objectively confirmed is the timing of the firm's taking instructions from "the Anglican Church" (or from the defendants). However, Mr Haddon states that, having twice experienced outlining his case to firms of solicitors he proposed to instruct, and having twice been later informed that the firms had a conflict of interest by reason of having previously represented the Church of England, he had, on instructing the third firm, taken the precaution of confirming that no such conflict existed. 48The facts asserted were troubling. In saying that, I have difficulty in seeing how this set of circumstances (on the assumption that the circumstances are as stated by Mr Haddon) has any bearing on the question of costs, including what Mr Haddon asserts to be the misuse of the defendants' superior financial position. Indeed, there is no evidence on which to base a conclusion that either the Church of England, or Bishop Forsyth, or either of the defendants, was aware that the solicitors they instructed had already taken instructions from Mr Haddon. 49Nevertheless, a tangential issue did arise, and it is one that, especially considering Mr Haddon's now unrepresented status, I could not ignore. 50Accordingly, I invited from the defendants' solicitors a response to that part of Mr Haddon's written submissions, drawing particular attention to the relevant paragraphs. A response was received. Although the emailed response shows that it was copied to Mr Haddon, he has not sought to contradict it. The response satisfies me that, despite appearances, nothing untoward occurred. Ten days before the solicitor who handled the matter on behalf of the defendants received instructions, the firm by which he was employed and another firm merged. Mr Haddon later gave instruction to solicitors in the other firm. Although the pre-existing involvement with the defendants ought to have shown up in "a conflict search" of the computerised records of the merged firm, that did not occur, possibly because of difficulties in merging the computer records of the two firms. 51The solicitor handling the proceedings on behalf of the defendants stated that he had no dealings with the solicitors who had advised Mr Haddon. Those solicitors told Mr Haddon of their inability to act for him as soon as they learned of the firm's conflict. 52It is relevant to this issue, which I now consider to be tangential, that Mr Haddon was, in the proceedings, represented by a reputable and competent firm of solicitors, and by experienced senior and junior counsel. Mr Haddon is not nave about professional and commercial matters, and it is reasonable to assume that if he then perceived any disadvantage to himself in the defendants' being represented by a firm of solicitors he had previously retained, he would have drawn that to the attention of this subsequent legal representative and they would have taken any action they deemed appropriate. 53This issue caused something of a distraction. I am satisfied that it raises no matters relevant to the questions posed by s 40(2)(b). 54I return to the principal issue: was it unreasonable for Mr Haddon to refuse any or all of the offers of settlement? In my opinion, the only basis upon which he could be said to have been unreasonable was that the proceedings were unsuccessful. That is insufficient. I will not order, under s 40(2)(b), that the costs he must pay be assessed on an indemnity basis.

UCPR Pt 20 Div 4 55The position is different with respect to UCPR 42.15A. There a defendant is "entitled" (unless the court otherwise orders) to an order that costs be assessed on an indemnity basis from the beginning of the day after an offer of compromise was made. No considerations of unreasonableness of refusal arise. 56The first offer said to be an offer of compromise was made on 14 May 2009. It is relevant to consider the extent (if any) to which the offer truly represented an offer of compromise . In this offer, the defendants proposed verdicts for each defendant, suggesting that there was little, if any, element of compromise involved. The proposal that each party pay his own costs to that date, perhaps, represented some, limited, degree of compromise, since a verdict for a defendant would ordinarily be expected to be accompanied by an order for costs. There is no evidence what costs had been incurred at that stage, although a Defence had been drafted, and this, no doubt, (having regard to the issues raised and particularised) involved conferral with a large number of witnesses. I accept, therefore, that this offer did incorporate an element of compromise; however, I do propose to order otherwise than that costs be assessed on an indemnity basis from the day after this offer was made. In coming to this decision, I do take into account the course of discussion that preceded the commencement of proceedings, and the (at one stage) near finalisation of an agreement that did not involve litigation or the payment of money. 57The second offer, however, in which the defendants offered to make to Mr Haddon a payment of $20,000 (even if characterised as a contribution to costs) cannot be dismissed. In my opinion, it represented a real effort on the part of the defendants to effect a resolution, and a real compromise. There is no reason why the defendants should not have the order to which the rule prima facie entitles them. 58There is one other matter to which I should make reference. In his supplementary written submissions, Mr Haddon alluded to the possibility of an order that each party bear his own costs. In this event, he suggested, he would have to give consideration to abandoning an appeal he has already set in train. This is a submission that, if made be a legal practitioner, would certainly raise eyebrows as a suggested inducement to a judge to act otherwise than on correct principle. (It is, of course, a perfectly legitimate basis on which to attempt to negotiate with a successful party.) I mention the submission, not to make any criticism of Mr Haddon, but merely to state clearly that it has played no part in the conclusion to which I have come. 59I order that the plaintiff pay the defendants' costs assessed on the ordinary basis up to 6 November 2009, and thereafter on an indemnity basis.

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: 08 July 2011