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[2025] NSWSC 1186
General information, not legal advice.
Supreme Court of NSW
2025-10-10
Rothman J
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Source: NSW Caselaw (www.caselaw.nsw.gov.au). Converted to plain text by ZoeLaw. Not the official version.
Medium Neutral Citation: Harvey v Henderson (No 3) [2025] NSWSC 1186
Hearing dates: On the papers
Date of orders: 10 October 2025
Decision date: 10 October 2025
Jurisdiction: Common Law
Before: Rothman J
Decision: (1) The Court vacates orders (3), (5) and (6) of the orders that issued on 12 June 2025, as amended, and makes the following orders in lieu:
(3) The defendants, jointly and severally, shall pay interest at the rate of 3% per annum on $65,000 from 1 July 2020 to 12 June 2025 (date of judgment) in the sum of $9,659.18.
(5) The defendants, jointly and severally, shall pay the plaintiff’s costs of and incidental to these proceedings on an indemnity basis.
Catchwords: COSTS — party/party — indemnity basis — defamation proceedings — where defendants did not accept two settlement offers — where defendants failed to make settlement offer in reply — indemnity costs awarded
Legislation Cited: Civil Procedure Act 2005 (NSW), s 98
Defamation Act 2005 (NSW), s 40
Legal Profession Uniform Law (NSW)
Uniform Civil Procedure Rules, rr 14.14, 42.1, 42.2, 42.14
Cases Cited: Harvey v Henderson [2025] NSWSC 601
Oshlack v Richmond River Council (1998) 193 CLR 72; [1998] HCA 11
Category: Costs
Parties: Laurae Harvey (Plaintiff)
Gary Henderson (Defendant)
Representation: Counsel:
R Rasmussen / A M Cheema (Plaintiff)
Solicitors:
Kalantzis Lawyers (Plaintiff)
Carroll Lawyers (Defendant)
File Number(s): 2020/348051
Publication restriction: N/A
HIS HONOUR: The Court is required to deal with an application for indemnity costs. On 12 June 2025, the Court as presently constituted, issued judgment for the plaintiff (“the Principal Judgment”), [1] in which the Court ordered the defendants to pay damages, interest and costs. It also restrained the defendants from publishing on the internet or anywhere else material that repeated the imputations found to be defamatory.
The orders that issued with the Principal Judgment granted leave to make any application for any special order as to costs and to file a short minute of order reflecting the judgment and orders otherwise issued.
On 26 June 2025, the plaintiff filed the application for orders that costs be paid on an indemnity basis and filed a short minute of order in accordance with the directions.
On or about 17 July 2025, on request, the Court made orders extending the time for the filing of submissions by the defendants on the question of costs. The extension of time permitted the defendants to file any submissions they sought on the application for indemnity costs by 5pm, 2 September 2025. Further, it directed that any reply to such submissions be filed by the plaintiff by 5pm, 9 September 2025.
On 9 September 2025, the plaintiff communicated with the Court to the effect that the defendants had filed no submissions in reply to the application for indemnity costs made by the plaintiff in accordance with the extended timetable or at all. Further, no objection had or has been taken to the plaintiff’s calculation of interest or the terms of the short minute of order filed with the submission on costs on 12 June 2025.
The short minute of order varies the terms of orders (3) and (5) of the orders issued with the Principal Judgment. Those orders related to the calculation of interest and the payment of costs.
This Court, being a Court of general jurisdiction with jurisdiction in both equity and common law has an inherent jurisdiction to order costs. Over and above the inherent jurisdiction of the Court, costs may be awarded under s 98 of the Civil P**rocedure Act 2005 (NSW).
It is unnecessary to repeat or extract the provision. It is sufficient to note the well-rehearsed principles that the awarding of costs is a matter within the discretion of the Court; the Court has full power to determine by whom and on what basis such costs should be paid; costs are a means of compensating the successful party (and in exceptional circumstances an unsuccessful party) on the costs of enforcing or defending their rights; and costs are intended to be compensatory and not punitive.
The usual order for costs is that costs follow the event. The successful party, is, ordinarily, entitled to its costs. [2] At common law, there was no inherent jurisdiction to award costs; it was a jurisdiction founded in equity and is otherwise statutory. [3]
Ordinarily, costs are awarded on the ordinary basis and are assessed on such a basis. [4]
When assessing costs on an ordinary basis, bearing in mind that costs are compensatory and not punitive, an assessor determines what is “fair and reasonable” for each of the items of work charged, assuming that each of the items of work is, itself, reasonably undertaken. In so doing, the assessor applies the Legal Profession Uniform Law (NSW).
The ordinary basis, which is referred to as party/party basis, is overwhelmingly the basis upon which costs are assessed. However, it is open to a party, as was the case in these proceedings, to apply for costs to be assessed on a different basis.
If the Court were to order that costs be paid on an indemnity basis, such costs that have been unreasonably incurred or are of an unreasonable amount are not to be allowed, but otherwise all costs are payable.
The discretion to order costs must be exercised judicially. [5] Leaving aside for present purposes costs ordered as a consequence of a judgment that issued that was less than an offer of compromise, there must be some special or unusual circumstance that gives rise to the order for indemnity costs, often some kind of “relevant delinquency”. [6]
Relevant delinquency, in the sense used in the cases dealing with the principle, does not refer to some moral delinquency or the conduct that gave rise to the proceedings. Rather, it refers to the manner in which the proceedings were conducted. That may well include the unreasonable rejection of an offer of settlement, even if not a formal offer of compromise.
In defamation proceedings, the provisions of s 40 of the Defamation Act 2005 (NSW) apply to the awarding of costs. The provisions of s 40 of the Defamation Act permit the Court to take into account the manner in which the parties to the proceedings have conducted their cases or any other matters that the Court considers relevant.
In circumstances such as the present, where the plaintiff has successfully brought the defamation proceedings, costs are to be awarded of and incidental to the proceedings on an indemnity basis if the Court were satisfied that the defendants unreasonably refused an offer of settlement or failed to make a settlement offer. There is no evidence before the Court that the defendants made any offer of settlement.
In this proceeding, the plaintiff made two offers to resolve the proceedings. The first, a Calderbank Letter of 26 May 2022, and the second an Offer of Compromise, pursuant to the rules, of 15 June 2022.
The judgment that issued on 12 June 2025 well exceeded the terms of the Calderbank Offer of 26 May 2022. The Calderbank Letter was sent approximately eight months after the Amended Statement of Claim was filed and served. The defendants had filed a defence of truth and qualified privilege.
There can be no real dispute that at the time that the Calderbank Letter issued and was received, the defendants were aware of the nature of the case they were required to meet and had considered the manner in which they would meet it. The Calderbank Letter was, to say the least, reasonable.
It proposed an end of the proceedings with the payment of costs as agreed or assessed on an ordinary basis. It proposed the end of the proceedings without any payment of damages, but with restrictions in relation to future publications and future allegations. Those restrictions ultimately were ordered as a result of the judgment of the Court of 12 June 2025.
The Offer of Compromise was made in accordance with the UCPR. It is an Offer of Compromise that complies with the rules.
Each of the Calderbank Letter and the Offer of Compromise were made well before the substantive proceedings commenced. Again, the terms of the Offer of Compromise, if accepted, would have resulted in a settlement of the proceedings that was not as generous to the plaintiff as that ordered in the Principal Judgment.
Pursuant to the provisions of UCPR r 42.14, in the case of Offer of Compromise, which was rejected by the defendants, or, to quote the rule, not accepted by the defendants, and which resulted in judgment no less favourable to the plaintiff than the terms of the offer, the plaintiff is entitled to an order on an indemnity basis at least from 22 June 2022. The effect of the rule is, in my view, modified by the provisions of s 40(2)(a) of the Defamation Act.
It was unreasonable for the defendants not to accept the Offer of Compromise of 22 June 2022. Further, it was unreasonable for the defendants not to accept the proposal, being a settlement offer that was contained in the Calderbank Letter. Over and above the foregoing, it was unreasonable for the defendants not to make a settlement offer themselves in response to the offers made in May and June 2022.
In my view, pursuant to the provisions of UCPR r 42.14, the Court should exercise its discretion to order costs on an indemnity basis where there has been an offer that was not accepted, and the proceedings resulted in judgment that was no less favourable. The UCPR permits indemnity costs to be ordered on a “commercial” basis in that, in such circumstances, the ordering of indemnity costs should be the ordinary course unless good reason is shown to depart from the provisions of the order.
Bearing in mind the provisions of s 40(2)(a) of the Defamation Act, the two offers of settlement of the proceedings, and the failure of the defendants to make any offer in response to the plaintiff’s offers, the application for indemnity costs should be granted for the entire proceedings.
The Court makes the following orders:
The Court vacates orders (3), (5) and (6) of the orders that issued on 12 June 2025, as amended, and makes the following orders in lieu:
(3) The defendants, jointly and severally, shall pay interest at the rate of 3% per annum on $65,000 from 1 July 2020 to 12 June 2025 (date of judgment) in the sum of $9,659.18.
(5) The defendants, jointly and severally, shall pay the plaintiff’s costs of and incidental to these proceedings on an indemnity basis.
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Harvey v Henderson [2025] NSWSC 601.
Uniform Civil Procedure Rules (hereinafter “UCPR”), r 42.1.
Oshlack v Richmond River Council (1998) 193 CLR 72; [1998] HCA 11 at [63].
UCPR, r 42.2.
Oshlack, supra.
Ibid.
Include counsel to cover page
Change to dollar amount in order (3). Deletion of order (2).
Harvey
Henderson
(1998) 193 CLR 72