Consideration of the costs discretion
82 Mr Hockey's alternative submission that he should recover the whole of his costs in the proceedings against the SMH and The Age on a party/party basis and that there should be no order for costs in respect of the proceedings against The Canberra Times is unrealistic. He did not point to any rational basis on which he should be relieved from paying the costs of The Canberra Times and the submission failed to have regard to his failure on the substantive part of his respective claims against the SMH and The Age.
83 On the other hand, the respondents' submission that Mr Hockey should pay 60% of the costs of the SMH and The Age in defending the proceedings against them, despite his partial success in those proceedings, would involve the Court making costs orders of an unusual kind.
84 Before providing reasons for those conclusions, it is appropriate to refer to matters of principle bearing on costs apportionments and the liability of partially successful applicants. Earlier, I referred to the principles stated by Toohey J in Hughes v Western Australian Cricket Association (Inc) that litigants who succeed only in part may be required to bear the expense of litigating the portion upon which they have failed and that a successful party who has failed on certain issues may not only be deprived of the costs of those issues but in addition ordered to pay the other party's costs of them. These are the principles which the respondents seek to be applied in their favour in the present case.
85 The statement of principles by Toohey J were those in the judgment of Bray CJ in Cretazzo v Lombardi (1975) 13 SASR 4 at 12:
A successful party who has failed on certain issues may well not only be deprived of his own costs of those issues, but ordered in addition to pay his opponent's costs of them, and in this context "issue" does not mean a precise issue in the technical pleading sense, but any disputed question of fact or, in my view, of law.
86 Jacobs J, who agreed with the reasons of Bray CJ, cautioned (at 16) against the too ready apportionment of costs according to a plaintiff's failure on some issues in the trial:
[T]rials occur daily in which the party, who in the end is wholly or substantially successful, nevertheless fails along the way on particular issues of fact or law. The ultimate ends of justice may not be served if a party is dissuaded by the risk of costs from canvassing all issues, however doubtful, which might be material to the decision of the case. There are, of course, many factors affecting the exercise of the discretion as to costs in each case, including in particular, the severability of the issues, and no two cases are alike. I wish merely to lend no encouragement to any suggestions that a party against whom the judgment goes ought nevertheless to anticipate a favourable exercise of the judicial discretion as to costs in respect of issues upon which he may have succeeded, based merely on his success in those particular issues.
87 The caution to which Jacobs J referred has been recognised in many of the subsequent authorities. In Waters v PC Henderson (Australia) Pty Ltd [1994] NSWCA 338; (1994) 254 ALR 328 at 330-1, Mahoney JA approved a statement in the Supreme Court Rules 1970 (NSW) that an apportionment of costs would not be appropriate unless the issues on which the successful plaintiff failed were "clearly dominant or separable":
Where the proceedings involve multiple issues the application of the rule that costs follow the event may involve hardship where a party succeeds on some issues and yet fails on others. Particularly is this so where, for example, a defendant succeeds on issues that occupied the bulk of the time taken by the proceedings. Nevertheless unless a particular issue or group of issues is clearly dominant or separable it will ordinarily be appropriate to award the costs of the proceedings to the successful party without attempting to differentiate between those particular issues on which it was successful and those on which it failed.
88 However, courts are now more ready to apportion the costs awarded to a party who succeeds in only some of the claims he or she brings. This may reflect the increasing factual and legal complexity of modern litigation and the multiplicity of factual and legal issues it entails, and the tendency of applicants to pursue multiple claims involving different factual enquiries in the one proceeding. It may also reflect an encouragement by the courts to applicants to exercise some discrimination in their selection of the claims they litigate. It is to be remembered that the inclusion of multiple causes of action in the one proceeding, even if based on a common substratum of fact, adds to the costs of the pleadings, interlocutory activity, preparation and presentation of the evidence at trial as well as of the trial itself. Nowadays, courts are particularly conscious of their role in attempting to control the cost of litigation.
89 An example of the Court's recognition of the fairness in having regard on the question of costs to an applicant's failure on certain issues is seen in the joint judgment of Finkelstein and Gordon JJ in Bowen Investments Pty Ltd v Tabcorp Holdings Ltd (No 2) [2008] FCAFC 107:
[3] We think there is force in the argument that the appellant should not benefit from the usual rule that costs follow the event. For many years the traditional rule has been that the winner (once the winner is properly identified) is entitled to recover his costs of the trial. It sometimes happens that there is a departure from the traditional rule and the costs order takes account of the success of the parties on particular issues. But to date the award of costs on an issue by issue basis has only been accepted in limited cases and then only when the circumstances are exceptional.
[4] This approach is, if we may be permitted to say so, quite unfair. Its effect is that a winner is entitled to all of his costs even if he raises a plethora of issues on which he is unsuccessful. ...
[5] We do not believe there is any need to wait for a change in the Federal Court Rules to adopt an issue by issue approach here. Costs are in the court's discretion. Fairness should dictate how that discretion is to be exercised. So, if an issue by issue approach will produce a result that is fairer than the traditional rule, it should be applied. It is not suggested that such an approach requires a precise arithmetical apportionment of the costs as between the winner and loser of discrete issues. No doubt the assessment will often be rough and ready. But it will have the virtues of both fairness and reasonableness, which are often lacking in the application of the traditional rule.
90 Similarly, in Dodds Family Investments Pty Ltd (formerly Solar Tint Pty Ltd) v Lane Industries Pty Ltd (1993) 26 IPR 261 at 272, Gummow, French and Hill JJ said:
Generally speaking, and notwithstanding the considerations referred to by Toohey J and the other authorities mentioned above, the demands of the community for greater economy and efficiency in the conduct of litigation may properly be reflected in a qualification of the presumption that a successful party is entitled to all its costs.
The Court in Dodds endorsed the statement of Wilcox J in Commissioner of Australian Federal Police v Razzi (No 2) (1991) 101 ALR 425 at 430 as follows:
But I do not think that courts should be reluctant to recognise the existence of exceptional cases. In these days of extensive court delays and high legal costs the courts should use all proper means to encourage parties to consider carefully what matters they will put in issue in their litigation. If parties come to realise that they will not necessarily recover the whole of their costs, even though they have unsuccessfully raised a discrete issue, they are likely better to consider whether the raising of that issue is a justifiable course to take.
91 The Court of Appeal in New South Wales adopted a similar approach in James v Surf Road Nominees Pty Ltd (No 2) [2005] NSWCA 296:
[34] Where a matter involves multiple issues and the question before the court is whether it should make some other order as to costs other than the order that costs follow the event, a distinction is commonly drawn between cases which involve clearly discrete issues for determination, and those in which all issues are inseparable, or at least sufficiently linked, with respect to the overall disposition of a particular matter. In Permanent Trustee Aust Ltd v FAI General Insurance Co Ltd (unreported, NSWSC, 3 June 1998), Hodgson CJ in Eq noted that the obvious examples of a matter involving discrete issues is one where a plaintiff makes separate claims for different relief, or a claim by a plaintiff and a cross-claim by a defendant. Another example is where a respondent is successful in having an appeal against an earlier decision dismissed, but for reasons other than those raised in the respondent's Notice of Contention. This is not to say that so-called "discrete issues", for the purposes of apportioning costs, only exist in cases where there are separate claims made within a single matter. As Toohey J stated in the passage quoted at [33] above, it can relate to "any disputed question of fact or law" before a court on which a party fails, notwithstanding that they are otherwise successful in terms of the ultimate outcome of the matter.
92 These are the principles to be applied in the present case.
93 It is convenient to consider first the respondents' submission that a costs order should be made in favour of the SMH and The Age. The respondents submitted that such an order was appropriate because the "reality" of the matter was that they had won:
This case was not about tweets. This case was not about a poster. This case was about a major front page article that raised proper and legitimate questions about the way political funds are raised in the Australian system. It was a case about whether Fairfax was entitled to raise those matters in the interests of the health of the polity and in a way that descended in to a very detailed analysis of the North Sydney Forum and the Treasurer's association with it. This case was about that article and we won on that.
94 The respondents referred to two cases in which a successful plaintiff in defamation proceedings had been ordered to pay the costs of the unsuccessful defendant. The first was Thiess v TCN Channel Nine Pty Ltd (No 5) [1994] 1 Qd R 156 in which Channel Nine had appealed against an order that it pay the partially successful plaintiff two-thirds of his costs. That appeal was upheld and the Full Court substituted an order that the plaintiff pay one-third of Channel Nine's costs. The Court noted at 208 that there were three discrete areas of dispute at trial and that the plaintiff had succeeded on the third, had been wholly unsuccessful on the second, and had been largely unsuccessful on the first. It also noted that the first and second of these matters were the "real core" of the litigation. In those circumstances, the Court considered that the trial Judge's order as to costs favoured the plaintiff unduly. It continued (at 209):
A more realistic reflection of the outcome of the litigation would be to require each party to pay the costs of the other to the extent of the latter's success in the action. Approached in this way, we think it a fair assessment of the relative victories of each party to say that the plaintiff succeeded as to one-third of his claims for defamation, whereas the defendant was successful in establishing a defence to the remaining two-thirds. The net result of such an approach would be to oblige the plaintiff to pay one-third of the costs of the defendant TCN 9. Approximate though this may be, it seems to us to be preferable to the alternative of apportioning costs according to the success of either party in relation to particular issues, which would produce a process of taxation that seems to be almost universally deplored.
Thiess accordingly is a case in which a partially successful plaintiff was required to pay part of the unsuccessful defendant's defence because the defendant's success exceeded that of the plaintiff.
95 However, Thiess can be distinguished from the present case because the real issues there were the defendants' pleas of justification to the multiple defamatory imputations alleged by the plaintiff and, accordingly, a division of the costs by reference to each imputation and the corresponding defence, was more readily available than is the case presently.
96 Next, the respondents referred to Morosi v Mirror Newspapers Ltd [1977] 2 NSWLR 749. That case concerned an appeal from a single judgment in nine defamation actions which had been consolidated and heard together. The defendant had succeeded on a number of issues and succeeded altogether in three of the actions. The Full Court held that the plaintiff should have two-thirds of the general costs of the consolidated action and the defendant those costs solely referrable to the actions in which it had succeeded. On my assessment, Morosi provides only limited assistance to the respondents presently as the only costs order made in favour of the successful defendant related to the particular actions on which it had succeeded in any event.
97 The respondents also referred to Ahmadi v Fairfax Media Publications Pty Ltd (No 2) [2010] NSWSC 1191 in which Rothman J at [14] appeared to leave open the possibility that an order that a partly successful plaintiff pay the costs of substantially successful defendant may be appropriate.
98 In support of their submission that they had had substantial success in the trial, the respondents compared the number of publications on which Mr Hockey had sued (15) with the number on which he succeeded (3). That meant that they had succeeded with respect to 80% of the publications sued on.
99 I accept Mr Hockey's submission that this is not an appropriate measure by which to assess relative success and failure. That is because the articles on which he had sued in the various publications had been the same so that there was in substance a single failure. However, this distinction is of only limited assistance to Mr Hockey because the three publications upon which he succeeded were also essentially the same, so that in substance he succeeded on only one matter. On this basis, the appropriate comparison would be between the relatively terse statements in the SMH poster and the two tweets of The Age, on the one hand, and the substantial articles, on the other. That difference by itself suggests that the greater focus at trial would have been on the articles rather than on those publications on which Mr Hockey succeeded.
100 However, one does not need to resort to analyses of that kind to be satisfied that the principal focus at trial, and the parties' work which preceded it, was directed to the articles. A review of the transcript of Mr Hockey's opening submissions at trial, the evidence at trial and of the closing submissions evidences that that was so. Similarly, Mr Hockey's affidavit containing his evidence in chief indicates that it was the articles about which he was principally concerned. I accept the respondents' submission that the articles were the real core of the trial.
101 Although Mr Hockey's claims with respect to the articles failed wholly, the evidence and submissions concerning them were not wholly discrete from the claims on which he succeeded. This makes an approach of the kind adopted in Thiess for which the respondents contended inappropriate. It is more realistic to recognise that Mr Hockey had some success on matters having a common substratum of fact and law. Accordingly, I am not satisfied that this is a case in which an order should be made that Mr Hockey pay some of the respondents' costs. Instead, his lack of success on significant matters should be reflected in a reduction of costs to which he is entitled.
102 Mr Hockey submitted that, had he sued only on the SMH poster and the two tweets of The Age, the evidence at trial may have been less, but not materially so. He submitted in this respect that the evidence which concerned the publications by The Canberra Times only was limited and that much of the other evidence bearing upon the respondents' defence of qualified privilege and his plea of malice would have been necessary in any event. That is because the respondents relied upon the same matters in all three actions for the defence of qualified privilege and, further, because much of that evidence also related to the plea of malice.
103 I do not consider that his submission should be accepted. The submission assumes, as its premise, that had Mr Hockey sued only on those publications on which he succeeded, the trial would have had much the same shape and content as it in fact had and that each party would have adopted the same or similar resources and energies to the prosecution and defence of the claims concerning the SMH poster and the two tweets of The Age as they did to the articles. I doubt the validity of that premise. In fact, it seems inherently implausible. It is much more likely that, had Mr Hockey pursued only a confined claim, the resources expended in pursuing and defending that claim would have been more focused and confined and that the trial itself would have been more confined. It is improbable that a trial concerning only the SMH poster and the two tweets of The Age would have occupied seven days. Put slightly differently, it was the ambit of the claims made by Mr Hockey which defined, and extended, the battleground of the parties' contest.
104 Mr Hockey submitted that there had been four principal issues in the trial: defamatory meaning, qualified privilege, malice, and damages. He contended that relatively little of the evidence had been directed to the first, and that most of the evidence had been directed to the second and third issues. He then contended that the pleaded matters on which the respondents relied for their defences of qualified privilege in relation to the SMH poster and the two tweets of The Age were substantially the same as those pleaded in relation to the Nicholls and Kenny articles. This had the consequence, he submitted, that the evidence led at trial on both sides would still have been necessary even had he confined his claims to the SMH poster and The Age tweets.
105 This analysis has the appearance of a retrospective justification for what occurred at the trial. I am not willing to accept it. It is obvious that had Mr Hockey confined his claims to those on which he succeeded, it would not have been necessary for him or the respondents to have led all the evidence they did at trial. Further, the submission overlooks that the costs of the trial itself, while no doubt significant, are a portion only of the costs which he caused the respondents to incur by pursuing the claims on which he failed. The costs of the respondents in pleading to his claims and preparing for the trial in respect of those issues are not to be underestimated.
106 The two tweets of The Age were the subject of only minimal discrete submissions at the trial. Mr Hockey's reliance on those tweets appeared to be in the nature of a "tack on" to his principal claims. That impression is confirmed by the fact that they were added by amendment on 3 November 2014.
107 The SMH poster received more attention at trial than the tweets but still only minimally compared with the articles which were at the forefront of Mr Hockey's claims. Mr Hockey's reliance now on the work which would have been necessitated had he sued only on the poster and the two tweets is suggestive of the tail wagging the dog.
108 Another difficulty with Mr Hockey's analysis based on his identification of the four issues is that it overlooks significant issues within those broad headings upon which he failed. Significant factual issues of this kind included Mr Hockey's claim that the access which he provided to NSF members was not privileged and Mr Hockey's relationship with the NSF. Significant legal issues included the relevance of the evidence concerning the NSF, as Mr Hockey's objections to that evidence on grounds of relevance failed. Reference may also be made in this respect to the inappropriate submissions of Mr Hockey's counsel concerning the conduct of the respondents' counsel to which I referred at [511]-[513] of the principal judgment. In some respects this may seem a relatively minor matter in the overall sweep of the trial but assumes significance given that the trial had to proceed in to a further day for a short time because counsel had not been able to complete his submissions on the previous afternoon.
109 Mr Hockey submitted that he had succeeded on the issue of malice, this being one of the factual issues at the trial. He submitted that the finding of improper purpose was akin to a finding of fraud and, accordingly, a serious finding so that his success on the issue should be reflected in the costs order.
110 These submissions of Mr Hockey overstated the findings in the principal judgment. On the hypothesis that it was necessary to address the issue, I found that only Mr Goodsir, the Editor in Chief of the SMH, had been actuated by an improper purpose. Mr Hockey is correct in contending that that was a significant finding in his favour.
111 However, I consider that Mr Hockey's case of malice actually counts against him on the question of costs or, at the very least, neutralises the significance of the finding in his favour. That is because Mr Hockey did not confine his case on malice to Mr Goodsir. His pleading in each proceeding was to the effect that each of Mr Goodsir, Mr Holden and Mr Kenny had been actuated by malice. By the time of trial, Mr Hockey had had the affidavits containing the evidence in chief of the respondents' witnesses for some three months. Despite their foreshadowed evidence, counsel for Mr Hockey did not retreat from the allegation of malice when opening the case at trial. On the contrary, the allegations were repeated and enlarged upon, as the following passages in the opening indicate:
[A]t the end of the case your Honour will be satisfied that it was an act of petty spite on the part of Messrs Goodsir, the Editor of the Herald, Mr Holden, the Editor of The Age, and Mr Kenny.
...
Mr Goodsir of the Herald and Mr Holden of The Age and Mr Kenny resented and deeply resented being caught out in that false statement and being forced to apologise. That was what motivated, on our case, the publication that happened on 5 May [which] is set out in the Statement of Claim.
...
Now, your Honour, it is clear from these communications - and this will be our case - that Mr Kenny, Mr Holden and Mr Goodsir formed an intention on 21 March 2014 to exact revenge on Mr Hockey for what they perceived to be a perverse and unreasonable response to the 21 March article.
112 As I noted at [387] of the principal judgment, the initial final submissions of Mr Hockey claimed in addition that Mr Cubby had been actuated by malice.
113 Despite the pleading and despite the opening, ultimately Mr Hockey pursued (subject to one qualification) the plea of malice only in respect of Mr Goodsir. It was not pursued at all in relation to Mr Kenny or Mr Cubby, or for that matter Mr Nicholls. Only one question was asked of Mr Holden on the topic, and that was not sufficient to put the case on which counsel had opened. The evidence indicated, and I made the finding at [438], that none of Mr Holden, Mr Nicholls, Mr Kenny or Mr Cubby had been actuated by malice.
114 The significance of these matters on the question of costs is that, having made the serious allegations which he did about the improper purpose of these employees of the respondents (see Rothermere v Times Newspapers Ltd [1973] 1 All ER 1013 at 1018) and not succeeded, Mr Hockey should not have the costs of the vindication to which they were entitled.
115 Mr Hockey referred to an analysis carried out by a solicitor at JWS of the transcript of the proceedings at trial which was said to show that the discrete references at the trial to the defamatory meaning of the publications other than the SMH poster and the two tweets of The Age comprised only 6.23% of the total number of lines in the transcript. The inference was that the remaining time at trial had concerned, whether in whole or in part, the publications and issues on which Mr Hockey succeeded. In my opinion, this analysis is superficial and unhelpful. The assumptions adopted by the solicitor in making the analysis have not been stated; it pays no regard to the costs incurred by the respondents before trial in addressing the claims of Mr Hockey on which he failed; and it ignores the fact that, on any reasonable view, the principal focus at the trial was on Mr Hockey's allegations concerning the publication of the Nicholls and Kenny articles.
116 In my opinion, analyses of the kind carried out by the solicitor should not be encouraged: they constitute an undue expense; are of relatively little assistance in an exercise which is inherently evaluative in nature; and are liable to produce, as it has in this case, a distorted impression.