Hardie v H&WT & Anor

Court of Appeal (Vic)|2016-06-06|Before: Ashley JA, Tate JA, Beach JA

PRACTICE AND PROCEDURE - Interest - Interest on defamation damages - Damages in the nature of interest - Rate of interest - Period over which interest to be paid - Entitlement to interest until judgment - Interest from the commencement of the proceeding - Effect when good cause is shown to the contrary - No entitlement to interest for any period before the commencement of the proceeding - Clarke v Foodland Stores Pty Ltd [1993] VicRp 81; [1993] 2 VR 382 applied - Supreme Court Act 1986, s 60.

PRACTICE AND PROCEDURE - Costs - Costs of proceeding up to and including trial - Indemnity costs - Offers of compromise - Calderbank offers - Settlement offers - Whether defendants unreasonably failed to agree to settlement offers proposed by the plaintiff - Supreme Court (General Civil Procedure) Rules 2015, rr 26.02 and 26.08 - Defamation Act 2005, s 40.

1 On 24 July 2015, the trial judge entered judgment for the plaintiff against the defendants in the sum of $90,000. On 13 May 2016, this Court allowed the plaintiff's appeal, set aside the judgment obtained at first instance and, in lieu thereof, ordered that there be judgment for the appellant against the respondents in the sum of $150,000, and against the second respondent in a further sum of $100,000. While the Court made orders as to the costs of the appeal (and the costs of a cross-appeal), the questions of the quantum of interest on damages and costs of the proceeding up to and including the trial were reserved.

2 Pursuant to orders made at the time we published reasons for judgment,[1] the parties have filed written submissions on the outstanding issues of interest and costs.

3 On the issue of interest, the appellant has sought orders that:

(a) the first respondent pay interest in respect of the award of damages of $150,000 at a rate of 4 per cent per annum over a period of 3 years - $18,000;[2] and

(b) the second respondent pay interest in respect of the award of damages of $100,000 at a rate of 4 per cent per annum over a period of 3 years - $12,000.

4 On the other hand, the respondents have asserted that at the conclusion of the trial 'the parties agreed that interest should be allowed at the rate of three per cent and an order for interest was made accordingly'. Following on from this, the

4 respondents submitted that the appellant should not now be able to contend for a higher interest rate. In their written submissions, the respondents conceded that interest should be allowed on the sum of $250,000 'at the previously agreed rate of three per cent for the period of three years' - $22,500.

5 The amount ordered by the trial judge in respect of interest on 24 July 2015 was $6,568. This sum was ordered in respect of the period from the date on which the articles were first published (16 May 2013)[3] until the date of the judge's order (24 July 2015) - 2 years, 2 months and 8 days (2.189 years). The interest on $90,000 at 3 per cent per annum for 2.189 years is $5,910.30. Immediately one sees that, contrary to the respondents' submissions, interest at trial was awarded at a higher rate than 3 per cent. Indeed, it was awarded at trial at the rate of 3.33 per cent per annum starting 6 months and 2 days before the writ was filed.

6 The appellant's entitlement to interest is governed by s 60 of the Supreme Court Act 1986. That section gives the appellant an entitlement to interest from the date of the commencement of her proceeding (in this case, 18 November 2013). The appellant has no other entitlement to interest. As was said by the plurality[4] in Victorian Workcover Authority v Esso Australia Ltd:[5]

At common law, in the absence of statutory provisions, where the plaintiff made a money claim for a debt or for damages, interest from the date when the cause of action accrued could be recovered only under an expressed or implied contractual provision or, in some instances, by the general custom of merchants or the custom of a particular trade or business.[6]

7 After it was pointed out to the parties that s 60 of the Supreme Court Act did not permit the appellant to recover damages for the period prior to the commencement of her proceeding, the respondents submitted that there should be a reduction in the figures for interest that they had conceded so as to give the appellant interest at the rate of 3 per cent per annum from the date when the writ was filed. On the other hand, the appellant continued to maintain a claim for interest from the date her cause of action accrued (or, more precisely, the date when the articles were first published).

8 Section 60 of the Supreme Court Act provides that the Court 'must, unless good cause is shown to the contrary' give damages in the nature of interest from the commencement of the proceeding to the date of judgment. The appellant submitted that the circumstances of this case established 'good cause ... to the contrary', and that interest could therefore be awarded from the date the appellant's causes of action accrued. That submission is misconceived.

9 Section 60 of the Supreme Court Act 1986 is the successor of s 79A of the Supreme Court Act 1958. Section 79A(1) provided:

The judge upon application shall in all actions for the recovery of debt or damages give damages in the nature of interest at such rate not exceeding 8 per centum as he thinks fit from the commencement of the action until the entry of judgment unless good cause is shown to the contrary over and above the debt or damages awarded by the court or jury.

10 In a ruling given at first instance in East v Breen,[7] Newton J, after considering the terms of s 79A of the Supreme Court Act 1958, held that there was no power to allow interest from any earlier date than the date of the issue of the writ.[8]

11 In Marsh v Ruby,[9] Gowans J said in relation to ss 78, 79 and 79A of the Supreme Court Act 1958:

The context of each of the new sections in which the clause is used, and the expression 'to the contrary' point, in my opinion, to the conclusion that it was the intention to limit the discretion of the court in deciding whether to treat the section as applying so as to require the granting of interest or as not applying so as not to require it. In the absence of 'good cause to the contrary' interest is required to be allowed in accordance with the section. If there is 'good cause to the contrary' it is not required to be allowed. 'To the contrary' means 'for not allowing it'.[10]

12 In Clarke v Foodland Stores,[11] the Appeal Division had to consider the use of the expression 'good cause ... to the contrary' in s 58 of the Supreme Court Act 1986. For present purposes, the structure and terms of s 58 are relevantly identical to the structure and terms of s 60. In Clarke, the Court said:

Accordingly, we think that, once good cause has been shown to the contrary, the court should not only be regarded as free of the injunction to allow interest according to the terms of s 58(1) (so that in a proper case interest may be refused altogether); the court should also be regarded as authorised, by implication, to allow interest otherwise than in accordance with those terms.

This does not mean, however, that the court is then wholly at large; for the court cannot by virtue only of s 58 allow interest on terms more onerous to the defendant than those spelled out in the section. Although logically that course might be thought to be open once good cause against allowing interest according to its terms had been shown, that is not how the section has thus far been interpreted in practice; nor do we think that it should be. Such discretion as is conferred upon the court once good cause has been shown has been regarded (and, we think, rightly regarded) as empowering the court to relieve against injustice to the defendant - 'alleviating the defendant in a proper case', as Gowans J put it in Marsh v Ruby.

...

Thus, when good cause is shown, the court may refuse to award interest at all or may, if it sees fit, award interest on terms which are less, but not more, onerous than those laid down by the section. As the court always has a discretion as to the rate (subject only to the maximum imposed by s 58), this means, in effect, that once good cause is shown, the court may allow interest to the plaintiff for a lesser period than that marked out by the section - as, indeed, was done in David Leahey's Case. And it follows, we think, that 'good cause to the contrary' means no more and no less than good reason, according to the justice of the case, for not allowing interest at all or, if interest is to be allowed, then for not allowing interest for the whole of the period marked out by the section.[12]

13 Similarly, the expression 'good cause ... to the contrary' as found in s 60 does not permit a court to allow interest on terms more favourable to a plaintiff than those spelled out in that section. That said, and in any event, we are not persuaded that there is any basis upon which the respondents should be ordered to pay interest for any period prior to the commencement of the appellant's proceeding.

14 In determining the appropriate rate of interest, it is to be remembered that, in assessing the appellant's damages on 13 May of this year, this Court assessed damages in accordance with the value of money as at the time of the award.[13] Notwithstanding what may or may not have been agreed at trial, in our view the appropriate interest rate over the period during which interest is claimable is 3 per cent per annum. Accordingly, we will make orders that:

(a) the first respondent pay interest in respect of the award of damages of $150,000 at a rate of 3 per cent per annum over the period from 18 November 2013 to 13 May 2016 (2.485 years) - $11,182; and

(b) the second respondent pay the interest in respect of the award of damages of $100,000 at a rate of 3 per cent per annum over the same period - $7,455.

15 The respondents have submitted that the appellant should only be entitled to one-third of her costs of the trial, to be taxed on the standard basis because although the appellant succeeded as to two-thirds of her claim this occupied less than two-thirds of the total costs and preparation for trial whereas the respondents were successful in establishing a defence to the remaining one-third of the claim in circumstances in which this occupied more than one-third of the total costs and preparation for trial. On the other hand, the appellant submitted that, as she had now obtained a result more favourable than the terms of a number of offers made by her (and to which we will refer below), she should have the whole of the costs of the trial on an indemnity basis. We will deal first with the respondents' apportionment argument, and then with the consequences (if any) of the various offers to which reference has been made in the parties' written submissions.

16 The respondents submitted that there should be an apportionment of the costs of the trial in this case because, while the appellant was ultimately successful in obtaining significant damages, the appellant failed on a number of issues - most notably, in respect of imputation (a) which the respondents successfully justified at trial.

17 While there are many cases where, due to parties enjoying mixed success on different issues, an apportionment of costs is appropriate, in our view this is not such a case. The real substance of the appellant's case was to be found in the imputations upon which she succeeded. The appellant, having succeeded on those imputations, has enjoyed substantial success in this proceeding. Defamation cases often involve mixed success in relation to different imputations and arguments. This is no more than the product of the fact that the law of defamation is one of the more complex areas of law with which an individual might have to engage. Given the complexities involved in the present case (as identified in the trial judge's reasons and in our reasons for judgment), we are not persuaded that it is appropriate to apportion costs in the present case.[14] Moreover, we are not persuaded that the appellant's lack of success on the issues identified by the respondents was productive of such additional cost and expense as to justify any reduction of the appellant's costs.

18 On 19 June 2014, the appellant made a Calderbank offer[15] offering to accept $200,000 plus costs to date in an amount of $49,058. The offer also required the respondents to undertake not to publish 'the defamatory matter complained of or similar matter ... or to allow any third party to do so'. Additionally, the respondents were required, as a term of the offer, to publish a written retraction and apology in terms to be agreed.

19 On 23 December 2014, the respondents made an offer of compromise in the sum of $101,000.

20 On 20 March 2015, the respondents made another offer of compromise. In this offer of compromise, the respondents offered to pay the sum of $105,000 plus costs.

21 On 26 March 2015, the appellant made a second Calderbank offer, this time in the sum of $150,000 plus costs of $88,000. In her second Calderbank offer, the appellant again required the respondents to undertake not to publish 'the defamatory matter complained of or similar matter ... or to allow any third party to do so'. Again, a term of the offer was the publication by the respondents of a written retraction and apology.

22 On 28 April 2015, the appellant served an offer of compromise 'of $125,000 plus costs of $75,000'.[16]

23 On 12 May 2015, the respondents made an offer to settle in the amount of $80,000 inclusive of costs. As part of that offer, the respondents offered to 'remove the first and second matter complained of' and 'to provide an undertaking ... not to republish the matter complained of'.

24 On 22 May 2015, the appellant made a further Calderbank offer in the sum of $106,000 plus costs to be agreed or taxed in default of agreement. Again, this Calderbank offer required the respondents to remove the articles from relevant websites, and to provide an undertaking of the type sought in the appellant's earlier Calderbank offers. This offer was expressed to remain open until 4:00 pm on Monday 25 May 2015. The trial was at that time due to commence on 25 May 2015.[17]

25 The appellant's principal position is that she should have her costs of the whole of the proceeding below on an indemnity basis. In making that submission, the appellant relied upon s 40 of the Defamation Act 2005. Section 40(2)(a) of the Defamation Act provides that a court must, unless the interests of justice require otherwise, order costs in favour of a successful plaintiff 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'. In this case, the appellant submitted that the respondents had unreasonably failed to agree to the various settlement offers proposed by the appellant and set out above.

26 The respondents submitted that this Court should reject the appellant's arguments in respect of s 40 of the Defamation Act. First, the respondents submitted it was not unreasonable of them to reject each of the appellant's settlement offers.

27 Secondly, the respondents submitted that each of the appellant's settlement offers were served either as a Calderbank offer or as an offer of compromise. Such offers have consequences only in relation to costs incurred after they have been made - not in respect of the whole costs of the proceeding (or more particularly, costs incurred before the relevant offer was made). Specifically, the respondents noted that each of the appellant's Calderbank offers provided that, in the event the offer was rejected by the respondents, the appellant would seek indemnity costs from the time of the offer. The respondents submitted that the appellant should not now be able to claim indemnity costs for the whole of the proceeding. There is some force in this submission. The question is whether, if there was an unreasonable failure to accept one of the appellant's offers, 'the interests of justice require otherwise' in the sense those words are used in s 40(2) of the Defamation Act.[18]

28 Section 40 of the Defamation Act 2005 refers to 'a settlement offer'. While 'settlement offer' is defined in sub-s (3),[19] s 40 does not provide that a settlement offer must be made with any particular formality; or that any notice needs to be given by the offeror to the offeree that the settlement offer is made in accordance with s 40 of the Defamation Act.[20] That said, it may be prudent for a party, wishing to obtain the benefit of the provisions of s 40, to make reference to the section in a settlement offer. While such a reference may not be essential, notice that s 40 will be relied upon might, in some cases, put beyond doubt a party's entitlement to the particular order for costs that is sought.

29 On the other hand, a party that serves an offer of compromise in accordance with the relevant rules of court, or a Calderbank offer,[21] without adverting to the prospect that reliance will also be placed upon the provisions of s 40, is at risk of a court determining that the interests of justice require an order otherwise than in accordance with s 40.

30 An additional matter that needs to be considered is how one performs the comparison between what the appellant has now achieved by judgment and what she sought in her various offers. For example, how does one value the terms of the appellant's offers that required the respondents to publish written retractions and apologies and/or to undertake not to allow any third party to publish similar defamatory matter about the appellant? This comparison is made more difficult by the fact that the appellant's Calderbank offers required the respondents to withdraw, apologise for, and not republish or allow a third party to publish, an imputation that the respondents successfully justified at trial.

31 Having examined each of the offers made by the parties in the proceeding below, we have concluded that the appellant's offer of compromise of 28 April 2015 is the offer to which effect should be given. Plainly, the appellant has obtained a judgment to which the offer relates that is no less favourable to the appellant than the terms of the offer ($125,000 plus costs of $75,000). The appellant's damages ordered by this Court exceed the total amount sought by the appellant in this offer of compromise.

32 In their written submissions, the respondents contended that the appellant's application for indemnity costs was founded exclusively on s 40 of the Defamation Act 2005 and that the appellant 'does not seek to rely upon the Calderbank principles or Order 26 of the Rules of Court'. We reject that contention. While the appellant's primary submission was based upon s 40, we do not consider it to be a reasonable interpretation of the appellant's submissions that she has abandoned such entitlements that she might have under Order 26 or in accordance with the principles in Calderbank. Indeed, so much was made plain in argument when we delivered our primary reasons for judgment.

33 For the sake of completeness, we should say that we do not accept the appellant's submissions that the respondents' failure to accept any of the appellant's offers was unreasonable. That said, the consequences of the respondents' failure to accept the 28 April offer of compromise do not depend on whether the failure to accept the offer was unreasonable. Giving effect to this offer of compromise, the appellant is entitled to her costs of the proceeding below, to be taxed on the standard basis up to 11:00 am on 30 April 2015, and thereafter to be taxed on an indemnity basis.[22]

34 The first respondent will be ordered to pay damages in the nature of interest in the sum of $11,182 in respect of the period from 18 November 2013 to 13 May 2016. The second respondent will be ordered to pay damages in the nature of interest in the sum of $7,455 in respect of the same period (18 November 2013 to 13 May 2016). The respondents will be ordered to pay the appellant's costs of the proceeding below to be taxed on a standard basis up to 11:00 am on 30 April 2015, and thereafter to be taxed on an indemnity basis.

[1] Hardie v The Herald & Weekly Times Pty Ltd [2016] VSCA 103.

[2] It is not immediately apparent why the appellant has not sought this order against both respondents.

[3] The figure for interest was agreed between the parties. It does not appear that the judge was told that interest had been calculated, not from the commencement of the proceeding but from the date the articles were first published.

[4] Gleeson CJ, Gummow, Hayne and Callinan JJ.

[6] Ibid 531 [23]. See further, City Mutual Life Assurance Society Ltd v Giannarelli [1977] VicRp 53; [1977] VR 463, 465.

[11] [1993] VicRp 81; [1993] 2 VR 382 (Fullagar, Marks and J D Phillips JJ) ('Clarke').

[13] Cf MBP (SA) Pty Ltd v Gogic [1991] HCA 3; (1991) 171 CLR 657, 663.

[14] See Hardie v The Herald & Weekly Times Pty Ltd [2015] VSC 364 and [2016] VSCA 103.

[15] Calderbank v Calderbank [1976] Fam Law 93; [1975] 3 WLR 586.

[16] Prior to 1 September 2013, the Supreme Court (General Civil Procedure) Rules 2005 did not permit an offer of compromise to deal with costs. However, r 26.02 was amended on 1 September 2013 to require an offer of compromise to state either that the offer is inclusive of costs, or that costs are to be paid or received as the case may be: see r 26.02(4).

[17] The trial in fact commenced on 28 May 2015.

[18] See Cornes v The Ten Group Pty Ltd (No 2) (2012) 114 SASR 106, 110 [20]-[23].

[19] Section 40(3) provides that in s 40:

'Settlement offer means any offer to settle the proceedings made before the proceedings are determined, and includes an offer to make amends (whether made before or after the proceedings are commenced), that was a reasonable offer at the time it was made.'

[20] As to the operation of s 40 of the Defamation Act 2005, s 40 of the Defamation Act 2005 (NSW) and its predecessor provision s 48A of the Defamation Act 1974 (NSW), see Davis v Nationwide News Pty Ltd [2008] NSWSC 946, [25]-[30] (McClellan CJ at CL); Channel Seven Sydney Pty Ltd v Mahommed (No 2) [2011] NSWCA 6; (2011) 80 NSWLR 210, 218-219 [41]-[46] (McColl JA, with whom Spigelman CJ, Beazley JA (as her Honour then was), McClellan CJ at CL and Bergin CJ in Eq agreed); McMahon v John Fairfax Publications Pty Ltd (No 8) [2014] NSWSC 673, [14]-[18] (McCallum J); and Hockey v Fairfax Media Publications Pty Ltd (No 2) [2015] FCA 750, [49]-[50] (White J).

[21] In which (following the usual practice) it is asserted that a claim will be made for indemnity costs from the date of the offer or shortly thereafter.

[22] Rule 26.08(1)(b) of the Supreme Court (General Civil Procedure) Rules 2015.

Court (General Civil Procedure) Rules 2015

Court (General Civil Procedure) Rules 2005

At a glance

Court

Decision date

Before

Source

Judgment (66 paragraphs)

Parties

Legislation Cited (4)

Cases Cited (4)