Hennessy v Lynch

However, during the course of the litigation, the defendant served three offers of compromise upon the plaintiff. Two of these three offers were for sums substantially in excess of the total damages awarded. In addition, the defendant made an offer at an informal settlement conference. The plaintiff made two offers of compromise for sums substantially in excess of the damages awarded.

The history of these offers is as follows: (a) 20 June 2006

Approximately a month after proceedings were commenced the defendant served an offer of compromise for $2,000 plus costs.

After the s.7A jury trial, the defendant served an offer of compromise in the sum of $20,000 plus costs as agreed or assessed.

According to a letter dated 23 August 2007 at about this time there was an informal discussion as to settlement in the course of which the defendant offered to settle the plaintiff's claim for the sum of $70,000 inclusive of costs. According to the letter from Higgins & Higgins of 23 August 2007, the plaintiff's legal representatives advised that they had no instructions to respond to that offer. This led to the third offer of compromise of 23 August 2007, which was a response to the plaintiff's offer of compromise of 12 July 2007.

The plaintiff on 12 July 2007 offered to settle for $50,000 plus costs by way of offer of compromise.

The defendant offered to settle by way of an offer of compromise for $33,500 plus costs.

The plaintiff offered to settle for $65,000 plus costs, in a without prejudice letter.

The proceedings commenced on the following Monday, 27 August 2007.

I note that after the proceedings were concluded the plaintiff made an offer of settlement of $10,000 plus costs. The defendant responded to this in a letter of 3 September 2007 offering to accept the sum of $10,000, to pay the plaintiff's costs up to 20 April 2007 on a party/party basis but for the plaintiff to pay the defendant's costs from 21 April 2007 on an indemnity basis.

Each of the parties agreed that this offer of settlement, which occurred after the hearing was over, could not be relied upon as being an offer of compromise in accordance with the Rules. Mr Campbell SC submitted, however, that it was part of the whole chain of reasonable conduct by the defendant that this offer was made. In other words, the defendant had offered to pay the plaintiff's costs up to 20 April 2007 on a party/party basis (subject to the costs orders already made in favour of the defendant remaining), and it was submitted that the defendant's failure to accept this offer was a matter relevant to the exercise of discretion pursuant to s.48A.

Application of these principles to the facts in this case

The defendant in these proceedings clearly complied with his obligation under s.48A to make offers of compromise. He made three offers, one immediately after the litigation was commenced and two before the trial. They were all substantial offers and, in the case of the second and third offers, far exceeded the damages awarded. There was no reply to these offers, although a counter-offer was made in the days before the trial on liability.

The provisions of s.48A are not intended to undercut the Offer of Compromise provisions in the Uniform Civil Procedure Rules; they are intended to reinforce them. There is no inconsistency between the provisions. Accordingly, the plaintiff must pay the defendant's costs on an indemnity basis from the date of the April offer, which exceeds the sum I awarded to the plaintiff.

This brings me to the question of the costs order I should make in relation to the balance of these proceedings. The plaintiff asks me to make no order as to costs or, if I am disposed to make a costs order, not to allow the costs of Senior Counsel, for the reasons set out by the Court of Appeal in Jones v Sutton (No. 2). The plaintiff draws my attention to the similarity between the two cases, in that in each case there were oral publications to one person where no issue of legal difficulty arose.

With great respect to the Court of Appeal in Jones v Sutton (No. 2), I do not understand their reasons for excluding Senior Counsel's fees from any part of the trial of an action which, in addition to being a complex s.7A jury trial concerning republication issues, was the first post-1995 trial on the defence of unlikelihood of harm before a judge. The large number of appeals from perverse verdicts in s.7A trials (which were described in Parliament as "an abomination" during the Second Reading speech of the Defamation Act 2005 on 13 September 2005) is another sound reason why it is appropriate to retain an experienced Senior Counsel for these actions.

I was the trial judge in the judgment appealed from in Jones v Sutton (No. 2), and I noted that if I had awarded the $5,000 damages I assessed, I would not have awarded costs on common law principles, by reason of the very small size of the verdict. The Court of Appeal in Jones v Sutton (No. 2) does not refer to this finding, preferring instead to deprive the plaintiff of selected costs on other grounds. The issue of proportionality as to the costs of the action and the damages awarded is of central importance, not only in defamation proceedings but for all civil litigation: s.60 Civil Procedure Act 2005.

It is my view that the Court of Appeal's decision in Jones v Sutton (No. 2) can be distinguished for two reasons. The first is that the damages award in Jones v Sutton is very close to nominal damages; the award to Mr Hennessy in these proceedings is three times as large. The second is that the publications in Jones v Sutton (No. 2) were made in the course of such extraordinary hatred and hostility that Mr Hennessy and Mr Lynch would seem almost friendly by comparison. In Jones v Sutton I did not accept any of the witnesses called by the plaintiff as to hurt to feelings, including the plaintiff, and these findings were referred to by the Court of Appeal as significant on costs. No similar finding was made here.

As to whether the defendant should have waived a s.7A trial, the defendant was sued over first three, and then four, publications he made long ago when he was angry and (in relation to the last three) affected by alcohol. In my view it was appropriate for him to await the s.7A jury finding before making a substantial offer. He discharged his obligations under s.48A(2) by making an offer early in the litigation, and by making further offers of very substantial sums after the s.7A hearing. The delay between the dates of publication and the commencement of proceedings are also relevant.

In Arian v Nguyen [2001] NSWCA 5 at 37 Ipp A-JA noted that an order that a successful party pay some part of the unsuccessful opponent's costs requires "strong justification" and that an order to pay all the costs would only be made in "exceptional circumstances". The justification in the present circumstances for any variation would be the factors set out in s.48A, on the facts in this case.

It would be a crushing blow to impose upon any plaintiff who had been defamed a number of times (and awarded damages) the burden of paying his own costs in addition to the order I must make against him for his failure to accept the offer of compromise. Accordingly I am not prepared to make any order other than that the costs follow the event.

However, the event in question is that the plaintiff succeeded in three claims for defamation but failed on one.

In Morosi v Mirror Newspapers Ltd [1977] 2 NSWLR 749 the plaintiff succeeded in six out of nine actions for a series of publications of a similar nature, recovering a total of $17,000 in jury verdicts. The costs were reduced on appeal to two thirds of the general costs of these actions, including a sustained attack on the plaintiff's reputation. It is my view that I should be guided by the principles enunciated by the Court of Appeal in Morosi and award the plaintiff a proportion of his costs representing his success in the litigation.

Mr Connell submitted that the third publication, on which the plaintiff failed, took up very little time, but in my view, on the facts in this case, each of these publications was equally important. Accordingly I propose to order the defendant to pay three-quarters of the plaintiff's costs up to the date of the offer of compromise filed in these proceedings.

Orders

1. Vary order 6 of the orders of 13 December 2007 and order the defendant pay three quarters of the plaintiff's costs up until the final date for acceptance of the defendant's Offer of Compromise dated 20 April 2007 and that the plaintiff pay the defendant's costs thereafter on an indemnity basis.

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