Mr Gooding's claim for costs
17 Mr Gooding sought costs on an indemnity basis for the entire proceeding payable by the applicants, alternatively, by Mr Rockefeller. In this respect, Mr Gooding relied upon s 43 of the FCA Act and s 40 of the Defamation Act 2005 (NSW).
18 If costs were not to be granted on an indemnity basis for the entire proceeding, Mr Gooding sought costs on an indemnity basis from 21 February 2019 and on a party / party basis up to that time.
19 Section 40 of the Defamation Act relevantly provides:
40 Costs in defamation proceedings
(1) In awarding costs in defamation proceedings, the court may have regard to -
(a) the way in which the parties to the proceedings conducted their cases (including any misuse of a party's superior financial position to hinder the early resolution of the proceedings), and
(b) any other matters that the court considers relevant.
(2) Without limiting subsection (1), a court must (unless the interests of justice require otherwise) -
(a) if defamation proceedings are successfully brought by a plaintiff and costs in the proceedings are to be awarded to the plaintiff - order costs of and incidental to the proceedings to be assessed 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, or
(b) if defamation proceedings are unsuccessfully brought by a plaintiff and costs in the proceedings are to be awarded to the defendant - order costs of and incidental to the proceedings to be assessed on an indemnity basis if the court is satisfied that the plaintiff unreasonably failed to accept a settlement offer made by the defendant.
(3) In this section -
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 One purpose of s 40(2) is to encourage parties to defamation proceedings to take a reasonable approach to settlement: Davis v Nationwide News Pty Ltd [2008] NSWSC 946 at [27] (McClellan CJ at CL); Hanson-Young v Leyonhjelm (No 5) [2020] FCA 34 at [40] (White J).
21 Mr Gooding's first offer was made by letter dated 22 February 2017, before the proceedings were commenced. This letter set out in detail some of the perceived difficulties with the applicants' proposed proceedings. At the beginning, the letter stated:
We note that we have not yet been able to take full instructions in regards to the matters raised in your letter and SOC for the same reasons stated in our letter dated 20 February 2017 (such letter having noted that we expect to be in a position to provide a substantive response by next Tuesday, 28 February 2017). However, as your email response on the same day requested that we respond substantively by midday today, we are writing this letter, in response to your letter and SOC, based on the instructions that we presently hold. On that basis our response below should not be taken to be our client's final position on the matters stated herein.
22 At the end of the letter there was a settlement offer in the following terms:
4. Proposal
In light of the above matters, we note that if your clients intend to commence proceedings in Australia against our client on the basis as set out in the SOC, our present instructions are that our client will vehemently defend those proceedings.
Despite the above, and to avoid the incurring of unnecessary legal costs of having to conduct proceedings that deal with the same issue(s) in both Australia and the US, our client proposes, on a no admissions basis, to remove the relevant Facebook post complained of in the SOC if your clients agree to release him of the claims in connection with the Article and the relevant Facebook post complained of in the SOC.
In the event that your client does not accept the above proposal and proceeds to commence proceedings against our client, we note that our client reserves his rights in full and will seek appropriate costs orders against your client, including costs on an indemnity basis.
23 The applicants' solicitor responded on 23 February 2017, which included:
We note that your letter states that it should not be taken as your client's final position. This is an unsatisfactory response by your client and a clear attempt to further delay this matter.
Your client's proposal to remove the offending post from Facebook is not an adequate resolution of the harm and damage done by your client. Mr Gooding has defamed Mr Rockefeller, causing significant damage to his reputation and loss. Simply removing the post does not rectify that loss and damage.
As previously indicated, in order to resolve this matter, our client requires that Mr Gooding:
(a) remove the offending Facebook post;
(b) publish an apology to him on the same Facebook page; and
(c) undertake to not again make statements which carry the defamatory imputations.
If you client was to do these things Mr Rockefeller would release him from the claim for damages arising out of the Facebook post.
24 On 28 February 2017, Mr Gooding's solicitors wrote to the applicants' solicitors noting that the Facebook post had been taken down. This elicited a response from the applicants' solicitors by letter dated 6 March 2017, which included:
We note that your client has on a without admissions basis removed the offending post from Facebook. However, your client has not:
1. Given any undertaking that the offending material will not be reinstated or otherwise republished; or
2. Taken any steps or given any undertakings that seek to remedy the very serious damage which has been done to our client's reputation.
25 On 2 October 2018, Mr Gooding's solicitors wrote a letter to the applicants' solicitors providing a schedule which identified the costs which Mr Gooding had incurred and estimated Mr Gooding's future costs, including the costs associated with the anticipated eight day hearing. This indicated that Mr Gooding had incurred approximately $163,000 in costs by 30 August 2018 and that a further $205,000 were anticipated to be incurred.
26 On 14 February 2019, the applicants offered to settle the proceedings on various terms, including that Mr Gooding pay $50,000 in settlement of all disputes relating to the Australian proceedings, inclusive of all costs. The terms included that Mr Gooding undertake that he would not:
(i) represent that he is the owner of all rights, including copyright, in the stage play entitled "Thank You For Being A Friend" (TYFBAF) or make representations to similar effect;
(ii) represent that Mr Rockefeller stole the stage play or make representations to similar effect;
(iii) further publish the matter complained of, as defined in the Second Further Amended Statement of Claim (SFASOC) and shown at Annexure A of the SFASOC, of and concerning Mr Rockefeller; and/or
(iv) further publish any other matter giving rise to the imputations (or similar imputations not differing in substance) as set out at paragraph 16 of the SFASOC, each of which concerns Mr Rockefeller.
27 This offer was open for acceptance until 21 February 2019. The trial was to commence on 5 March 2019.
28 The applicants' offer was rejected by Mr Gooding by letter from his solicitors dated 18 February 2019. By that letter, Mr Gooding made a second offer to resolve the proceedings. This was on the basis, amongst other things, that the applicants pay $235,000 on account of his costs. The terms of the offer also included that Mr Gooding would undertake that he would not:
a. Represent that he is the owner of all rights, including copyright, in the stage play entitled Thank You For Being A Friend' (TYFBAF), or make representations to a. similar effect;
b. Represent that Mr Rockefeller stole the stage play TYFBAF, or make representations to that effect;
c. Further publish the matter complained of, as defined in the Second Further Amended Statement of Claim (SFASOC) and shown at Annexure A of the SFASOC, of and concerning Mr Rockefeller; and
d. Publish any material that gives rise to the imputations as set out in paragraph 16 of the SFASOC;
29 This offer was expressed to be open until 25 February 2019. The applicants' solicitor requested, on 18 February 2019, further detail of Mr Gooding's legal expenses and Mr Gooding's solicitor wrote indicating that the expenses incurred were $323,057.21. Further detail as to the breakdown of costs and disbursements was provided by Mr Gooding's solicitor by email on 19 February 2019.
30 Mr Gooding's offer that the applicants pay $235,000 on account of his costs was rejected by letter dated 20 February 2019. The applicants' letter rejecting that offer proposed settlement, amongst other things, on the basis that the proceedings be dismissed with no order as to costs.
31 Mr Gooding rejected the applicants offer and, by letter dated 21 February 2019, offered to settle on the basis, amongst other things, that the applicants pay $175,000 on account of Mr Gooding's costs. The offer remained open for acceptance until 9.00 am on 25 February 2019. It was not accepted.
32 In my view, the rejection of the first offer was not unreasonable. First, it was not clear that the offer was one which was to be regarded as based on full instructions; the letter expressly stated that what appeared in the letter "should not be taken to be our client's final position on the matters" because the solicitors had "not yet been able to take full instructions". Secondly, in responding to the offer, the applicants' solicitor noted that the respondent's letter stated it should not be taken as Mr Gooding's final position, stated that that was "unsatisfactory", and indicated that Mr Rockefeller would release Mr Gooding from a claim for damages arising out of the Facebook post if Mr Gooding removed the post, published an apology on the same Facebook page and undertook not to make statements which carried the defamatory imputations. Later correspondence from Mr Gooding's solicitors provided no clarification regarding the first offer, and did not specify whether full instructions had been provided in relation to this offer.
33 Mr Gooding's second offer was a response to the applicants' attempts to resolve the proceedings. The applicants offered to settle the matter on 14 February 2019, offering to accept various undertakings and a $50,000 payment to the applicants. I infer that the amount of $50,000 would not have covered the applicants' costs. Mr Gooding's counter-offer, sent to the applicants on 18 February 2019, was to offer certain undertakings and accept $235,000 for his costs. This represented, I infer, a recovery by Mr Gooding of party / party costs. In my view, the applicants did not "unreasonably fail to accept a settlement offer" within the meaning of s 40(2)(b) of the Defamation Act. I reach that conclusion principally because the offer was one which involved little, if anything, in the way of compromise on Mr Gooding's part. It represented, it would seem, capitulation by the applicants and recovery of party / party costs by Mr Gooding.
34 Mr Gooding's third offer, dated 21 February 2019, was to provide certain undertakings and accept $175,000 in respect of costs. The third offer involved an element of genuine compromise. It was not unreasonable for Mr Gooding to take the view that he had a strong case and that he would be prepared to settle by offering undertakings in return for recovery of only part of the costs he had actually incurred, rather than litigate with the possibility of recovering more costs.
35 The critical question raised by s 40(2)(b) of the Defamation Act is whether the applicants' failure to accept the offer was unreasonable. The applicants had the benefit of the material in respect of costs which had been provided by Mr Gooding to that point in time and advice from their legal advisers. The applicants should have appreciated that Mr Gooding's offer likely represented a substantial discount on the amount of costs that Mr Gooding was likely to recover. The applicants knew it represented a very substantial discount on the costs in fact incurred by Mr Gooding. The applicants knew the underlying facts relevant to the defence of truth. The applicants knew that significant further costs would be incurred in conducting the hearing. However, there are degrees of unreasonableness and the failure to accept the offer is at the lower end of the spectrum. In my view, the failure to accept the offer was not sufficiently unreasonable to warrant an order for indemnity costs when balanced against other considerations to which regard may be had under s 40 of the Defamation Act and s 43 of the FCA Act.
36 Taking into account all of the circumstances, including the time at which the third offer was made and the low degree of compromise it reflected, the fact that no clear and definite final offer had been made by Mr Gooding early in the proceedings and that he did not respond to the applicants indication that a reasonable early settlement might be achieved, I conclude that Mr Gooding's costs should be paid on a party / party basis by the applicants, including the costs associated with this application.
37 Mr Gooding did not apply for costs to be assessed on a lump sum basis.
I certify that the preceding thirty-seven (37) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Thawley.