Kazal v Fairfax Media Publications Pty Limited

Supreme Court of NSW|2015-09-28|Before: Adamson J

Solicitors: Somerset Ryckmans (Plaintiff) Banki Haddock Fiora (Defendants) File Number(s): 2014/82498

Introduction

Oscar Kazal, the plaintiff, commenced proceedings by statement of claim filed on 18 March 2014, against four defendants: Fairfax Media Publications Pty Ltd (Fairfax); Fairfax Digital Australia and New Zealand Pty Ltd (Fairfax Digital); Linton Besser; and Kate McClymont. Fairfax Media is the publisher of print newspapers. Fairfax Digital is the publisher of the on-line versions of the newspapers. The third and fourth defendants are journalists.
Since 18 March 2014, the plaintiff has, in response to objections from the defendants, and otherwise, served various iterations of further draft pleadings. Ultimately, on 11 September 2015 I heard and determined the plaintiff's application for leave to amend his then current draft pleading: Kazal v Fairfax Media Publications Pty Ltd [2015] NSWSC 1336. At the conclusion of the hearing on 11 September 2015 of the plaintiff's application for leave to amend his statement of claim, the parties asked me to reserve the question of costs in order that all costs associated with the various iterations of the statement of claim to that date could be determined at once. The parties have agreed that the question ought be determined by me on the papers. Affidavits and written submissions prepared by the respective solicitors have been filed for that purpose.

The evidence

The plaintiff relied on the following: 1. an affidavit of Philip Beattie (the defendant's solicitor) sworn 10 December 2014; 2. Correspondence between the solicitors between August 2014 and 23 October 2014; 3. Correspondence between the solicitors and the associate to McCallum J (between February 2015 and July 2015) regarding the fixture on 5 February 2015 and attempts to obtain another fixture, which culminated in the parties being informed that they would have to approach the list clerk for a date; 4. An email dated 18 September 2015 in which the plaintiff's solicitors notified the defendants' solicitors of the costs orders they proposed (which correspond to the orders set out above).
The defendants relied on an affidavit of Philip Beattie sworn 21 September 2015.

The facts

The plaintiff identified, in the statement of claim, eight matters complained of as follows: No. of matter Date of publication Publisher complained of 1 On and from 2 September 2010 Fairfax Digital 2 On and from 2 September 2010 Fairfax Digital 3 On and from 3 September 2010 Fairfax Digital 4 On and from 4 September 2010 Fairfax Digital 5 19 March 2013 Fairfax 6 On and from 19 March 2013 Fairfax Digital 7 4 May 2013 Fairfax 8 On and from 4 May 2013 Fairfax Digital

On 5 May 2014 the defendants' solicitors wrote to the plaintiff's solicitors setting out their objections to the statement of claim. On 22 July 2014 the plaintiff's solicitors responded by foreshadowing a further draft pleading to address the concerns raised.
On 12 August 2014 the plaintiff served a proposed amended statement of claim (the First Draft). The First Draft incorporated substantial amendments to the pleading. Among other amendments, it added a further matter complained of, the ninth, which was said to give rise to 24 imputations. The ninth matter complained of was an alleged "composite" publication said to be comprised of six separate articles published by Fairfax Digital, and in respect of which a further 14 articles were relied on for identification purposes.
On 29 August 2014 the matter was listed for directions in the Defamation List. It was agreed that the defendants would provide their objections by the end of September 2014 and, on that basis, the matter was listed for argument on 7 November 2014 in the usual Defamation List.
On 21 October 2014 discussions between senior counsel ensued with a view to agreement being reached on a time estimate. Mr Blackburn SC, who appeared for the defendants, considered at that time that the argument would take more than two hours and could not therefore be accommodated within the Defamation List and would require a special fixture.
By a ten-page letter dated 23 October 2014 the defendants' solicitors: 1. notified the plaintiff's solicitors of alleged defects in the First Draft; 2. set out why they alleged that the proceedings amounted to an abuse of process, including on the basis that the plaintiff had already brought proceedings in this Court (by statement of claim filed on 20 October 2010) on the basis of other similar publications (published in early September 2010) in respect of which similar imputations were alleged (the 2010 Proceedings) which had been resolved in late 2012; 3. alleged that the eighth matter complained of was statute-barred as it appeared in the Good Weekend section of the Sydney Morning Herald on 16 March 2013; 4. alleged that inadequate particulars had been provided.
On 24 October 2014, when the matter was listed in the Defamation List, the defendants sought a special fixture for the argument about the draft pleading. It was listed as a special fixture on Wednesday 17 December 2014 with an estimate of one day. The parties were directed to exchange evidence and written submissions by 21 November 2014 and any evidence and submissions in reply by 5 December 2014. Costs were reserved.
Subsequently, by letter dated 6 November 2014, the defendants' solicitors confirmed that they required particulars in accordance with Uniform Civil Procedure Rules 2005 (NSW) (UCPR), r 15.9(a), (b) and (d).
By letter dated 1 December 2014 the plaintiff's solicitors, in substance, rejected the defendants' solicitors' contentions in the letter of 23 October 2014 and refused to provide further particulars. By a further letter of the same date they refused to provide the particulars requested in the defendants' solicitors' letter dated 6 November 2014.
Notwithstanding the directions made on 24 October 2014 for the exchange of evidence and submissions by 21 November 2014, neither party served evidence or submissions until Wednesday 10 December 2014, a week before the matter was to be heard. On 11 December 2014 the plaintiff's solicitors foreshadowed an application to vacate the hearing on the basis that they needed more time to address the defendants' submissions, which were lengthy. On 12 December 2014 McCallum J refused to vacate the hearing date.
However, by reason of the events at Martin Place on 15 and 16 December 2014 the hearing on 17 December 2014 was vacated. Senior counsel were consulted about available dates, following which they were informed that a new hearing date of 5 February 2015 had been allocated. However, according to the plaintiff's solicitors' written submissions on the costs application, the plaintiff's senior counsel omitted to notify his solicitors of the new date; nor was it logged on Justice Link. For whatever reason, they did not become aware of the new date (5 February 2015) until 4 February 2015. Accordingly, McCallum J vacated the new date and reserved costs. The plaintiff sought an order that this episode be carved out of the general costs order, on the basis that neither he nor his solicitors were responsible for the vacation of either the hearing on 17 December 2014 or the hearing on 5 February 2015.
On 24 April 2015 the plaintiff served the second proposed amended statement of claim (the Second Draft). The Second Draft reduced the number of matters complained of from eight to four, of which one was a 2010 article and three were 2013 articles. The plaintiff's solicitors said, in part: "Without conceding the correctness of the defendants' objections, the current iteration of the pleading attempts to simplify the plaintiff's case and endeavours to address, and otherwise avoid, some of the difficulties raised by the defendants in respect of the previous pleading. In particular, there is no longer any "single publication" issue and some of the Matters Complained Of which were likely to be the subject of an attack by the defendants' in relation to the previous Kazal proceedings have been removed."
By letter dated 10 June 2015 the defendants' solicitors set out their objections to the Second Draft. By letter dated 4 September 2015 the plaintiff's solicitors responded with a further draft (the Third Draft). The Third Draft was the operative draft which was the subject of submissions at the hearing before me on 11 September 2015.
By letter dated 7 September 2015 the plaintiff's solicitors proposed the following costs orders by way of an open offer: 1. The plaintiff to pay the Defendants' costs in relation to the preparation of the written submissions dated 10 December 2014 and the Affidavit of Phillip Beattie sworn 10 December 2014; 2. Each party to otherwise bear their own costs associated with the plaintiff's application to amend the Statement of Claim and the Defendants' objections, up to and including 4 September 2015, such costs to include the re-listing and Court appearances on 24 October 2014 and 12 December 2014, as well as the vacation of the hearing dates on 7 November 2014, 17 December 2014 and 5 February 2015.

Consideration

The general rule is that an amending party is obliged to pay the other party's costs thrown away by reason of the amendment. On this basis the plaintiff would be obliged to pay the defendants' costs thrown away of the statement of claim, the First Draft, the Second Draft and so much of the Third Draft that did not survive the hearing on 11 September 2015. The questions for determination are: whether there should be any exceptions to a costs order on that basis in the present case; and whether the plaintiff ought be ordered to pay the costs thrown away by the First Draft forthwith.

Whether there should be a carve-out from the general costs order

The October 2014 episode

As to whether there should be a carve-out from the order that the plaintiff pay the defendants' costs thrown away, the plaintiff submitted that the defendants should pay the plaintiff's costs of the re-listing of the matter on 24 October 2014 (including correspondence of 23 October 2014 and 3 October 2014 and the vacation of the hearing date on 7 November 2014); and that each party should bear his or their own costs in relation to the Court appearance on 12 December 2014 and the vacation of the hearing dates on 17 December 2014 and 5 February 2015.
The basis of the plaintiff's submission that there should be a carve-out for the October 2014 matters was that the defendants had failed to provide their objections by the end of September 2014 as agreed. The defendants ultimately provided their objections at 11.23pm on 23 October 2014 (the night before the matter was to come before McCallum J). The complexity of the issues raised by the Second Draft led to the matter being removed from the Defamation List on 7 November 2014 and listed for hearing on 17 December 2014.
Although the defendants had agreed to provide their objections to the First Draft by the end of September 2014, and did not provide them until three weeks later, their lateness did not disrupt the hearing of the matter. Moreover, there were discussions between senior counsel on 21 October 2014 regarding the length of the matter and the need for a special fixture. These discussions occurred prior to the plaintiff's solicitors obtaining a date for mention before McCallum J on 24 October 2014.
Having regard to the number and extent of objections, it was plain that the argument could not reasonably be expected to be accommodated within the usual Friday's Defamation List. Accordingly, even had the defendants provided their submissions on 30 September 2014 as agreed, the matter would still have had to be specially fixed. The defendants' letter of 23 October 2014, although directed to the plaintiff's solicitors, and addressed to them, amounted to a recitation of the objections that would be made by way of submission at the eventual hearing of the plaintiff's application for leave to amend the statement of claim. It set out in an apparently comprehensive way the propositions that would be relied upon, the authorities in support and the detail of the submissions that would be put. The defendants' solicitors also noted that objections to various imputations were pressed, but contended that such objections would become academic if their other, more fundamental, challenges were upheld.
The administration of justice depends on practitioners communicating about such matters as the estimated length of hearings in a co-operative way. The orderly distribution of this Court's resources can occur only with such co-operation. The precipitate listing of matters without proper consultation with the opposing party is to be avoided.
In these circumstances, I am not satisfied that the defendants should bear any of the plaintiff's costs of this episode. Nor would it, in my view, be appropriate for the plaintiff not to be liable for the defendants' costs of these interchanges.

The plaintiff's application on 10 December 2014 to vacate the hearing on 17 December 2014

The second episode in respect of which the plaintiff seeks a carve-out from the general costs order against the plaintiff is that which occurred in December 2014. Both parties were in breach of the directions to exchange submissions and evidence by 21 November 2014. However, the plaintiff was on notice, by reason of the defendants' solicitors' letter of 23 October 2014, of the bases on which the defendants objected to the First Draft. Moreover, the plaintiff's did not respond to the defendants' solicitors' letter of 23 October 2014 until 1 December 2014 when his solicitors both refused to provide the particulars which had been sought by the defendants in the interim and rejected the matters set out in the letter. Indeed, the penultimate paragraph of the plaintiff's solicitors' letter of 1 December 2014, begins with the words, "Having now had time to review your letter of 23 October 2014 . . ."
Given that the hearing was not to take place until 17 December 2014, and that the plaintiff took over six weeks to respond to the letter that set out the defendants' substantive objections I do not regard the plaintiff's complaints about the defendants not having served submissions in accordance with the directions as improving his position on costs. It is desirable that issues between parties can be resolved before a hearing, in order that only those matters which cannot be resolved are required to be determined by the Court.
In addition, McCallum J refused to vacate the date of 17 December 2014 when the matter came before her Honour (on the plaintiff's application) on 12 December 2014, on the basis (according to the plaintiff's written submissions) that, the application for an adjournment (if it was still required) could be made by senior counsel on 17 December 20014. In these circumstances, the costs of that date ought, in my view, be borne by the plaintiff.

The vacation of the hearing on 17 December 2014

The vacation of the hearing on 17 December 2014 is in a different category since it was occasioned by reason of the Martin Place siege and cannot be regarded as attributable to the conduct of either party. It is appropriate that each party bear his or their own costs of the vacation of the hearing date on that day.

The vacation of the hearing on 5 February 2014

The vacation of the hearing date of 5 February 2015 occurred as it appears that senior counsel for the plaintiff, when he was informed by the Court of the adjourned date, inadvertently omitted to inform his junior or solicitors. Thus the date was vacated by reason of a matter within the plaintiff's camp. There is no basis to except these costs from the general order.

The costs of the hearing on 11 September 2015

The plaintiff submitted that there should be no order as to the costs of 11 September 2015 by reason of the fact that the defendants did not notify the plaintiff of their position vis-à-vis the Third Draft, which had been provided on 4 September 2015 (a week before the hearing). He submitted that, if the defendants had provided their response, it would not have been necessary to have senior counsel, junior counsel and a solicitor present at the hearing, since it is likely that matters could have been largely resolved by correspondence.
I reject this submission. I do not have any confidence that the matter could have been resolved by correspondence. Notwithstanding the estimate of one day given for the hearing on 11 September 2015, the hearing concluded within about two hours. The reason for its eventual brevity was, largely, the co-operative approach of senior counsel and the brevity with which each addressed the issues in contention. The defendants did not, in my view, unreasonably oppose the version propounded at the hearing. As a result of the defendants' objections, Mr McClintock SC, who appeared on behalf of the plaintiff, made various concessions, including on several occasions that a particular imputation ought be struck out with leave to replead. On the other hand, Mr Blackburn did not succeed in having any imputations struck out, although this was, in large measure, because of the concessions made by Mr McClintock and leave being granted to replead.
While the matter could have been conducted by solicitors or junior counsel, it was not unreasonable for senior counsel to be briefed, particularly as my impression was, as set out above, that it was their experience and authority which led to the matter being ventilated in such an (ultimately) efficient way. Where silk appear, it is reasonable, and in many cases highly desirable, that they have junior counsel to assist them.
The point, which might be regarded as petty, was also made by the plaintiff in his written submissions on costs that the defendants' junior counsel was absent for some time during the hearing because he was collecting a document (a written outline) from senior counsel's chambers which had inadvertently been left there. I do not regard this as a significant matter that should affect the costs order in any way.
In these circumstances, where it was the plaintiff who sought the indulgence by way of leave being granted to file a further amended statement of claim, I consider that the plaintiff ought pay the defendants' costs of the hearing on 11 September 2015. I am not persuaded that there ought be any carve-out to reflect the modicum of success that the plaintiff enjoyed on particular points on that day in the course of argument.

Whether the costs relating to the First Draft ought be ordered to be paid forthwith

The plaintiff persisted with the First Draft until the service of the Second Draft notwithstanding the defendants' detailed outline of their objections to it which were first contained in their letter dated 23 October 2014 and repeated and elaborated in written submissions for the hearing which was to take place on 17 December 2014. The plaintiff subsequently abandoned the First Draft and propounded a pleading which was very different in substance from that First Draft and which, in large measure, overcame the defendants' objections. I accept the defendants' submission that the plaintiff's refusal to accept the force of the defendants' objections to the First Draft, particularly in light of his subsequent capitulation, can only be regarded as unreasonable.
The Court's power to order that costs be payable forthwith is provided for in UCPR, r 42.7(2), which provides: 42.7 Interlocutory applications and reserved costs (1) Unless the court orders otherwise, the costs of any application or other step in any proceedings, including: (a) costs that are reserved, and (b) costs in respect of any such application or step in respect of which no order as to costs is made, are to be paid and otherwise dealt with in the same way as the general costs of the proceedings. (2) Unless the court orders otherwise, costs referred to in subrule (1) do not become payable until the conclusion of the proceedings.
In Fiduciary Ltd v Morningstar Research Pty Ltd [2002] NSWSC 432; 55 NSWLR 1, Barrett J ,at 4-5, identified the relevant factors that were relevant to the Court's power to make an order that costs be payable forthwith, by reference to Pt 52A, r 9(1) of the Supreme Court Rules 1970 (NSW) (the statutory predecessor to UCPR 42.7) as follows: 1. Where the application or aspect in respect of which the costs order is made represents the determination of a separately identifiable matter or the completion of a discrete part; 2. Where the conduct of the party against which the costs order has been made was unreasonable; 3. Where there is likely to be a significant time period before the proceedings are finally determined.
I am persuaded that each of these factors has been established in the present case. First, the First Draft has been substantially abandoned. The Second and Third Drafts bear little resemblance to it. Importantly, to a large extent, the subsequent drafts omit tracts of the First Draft to which the defendants took exception. The chapter of the proceedings in which the First Draft was pressed is well and truly over.
Secondly, the plaintiff's conduct in maintaining the First Draft long after he had learned of the defendants' detailed objections to it (which were set out in the letter dated 23 October 2014) reflected, in my view, an unreasonable refusal to accept the force of the defendants' submissions. Although the plaintiff ultimately accepted the force of the objections, his failure to do so within a reasonable time of their being pointed out to him was both parlous and wholly unreasonable. The costs of the proposed hearings on 17 December 2014 and 5 February 2015 could have been avoided had the plaintiff come to grips with the deficiencies in the First Draft earlier.
Thirdly, the proceedings are still at an early stage. The plaintiff has leave to provide a draft amended statement of claim following the hearing on 11 September 2015. The time has not yet arrived when the defendant is obliged to file a defence. The final determination of the proceedings is probably some time away.
The plaintiff submitted that his solicitors carefully considered the matters raised in the affidavit of Mr Beattie sworn 10 December 2014 (which was the purpose of its being relied on by the plaintiff in the costs application) and decided to "simplify" the proceedings by taking account of the complexity that it would add to the proceedings by relying on so many page views of the online version of the publication. The plaintiff contended that this prudent approach was what ultimately led to the substantial narrowing of the issues at the hearing on 11 September 2015.
While the plaintiff is not to be disparaged for streamlining the pleading after consideration of Mr Beattie's affidavit, nor is he thereby to be absolved from his earlier intransigence. Moreover, the plaintiff, as the progenitor of these proceedings, ought to have considered the matters that were ultimately raised by the defendants in their letter of 23 October 2014, at least before serving the First Draft. Even if the plaintiff's legal representatives did not appreciate the force of the opposition to the First Draft when it was forwarded, they were provided with ample detail of the objections in the letter of 23 October 2014. These ought to have made the plaintiffs' solicitors reconsider their position; instead, they persisted in propounding a pleading which they later accepted ought be radically altered.
Although it is exceptional for an order to be made that costs be payable forthwith, I consider it to be appropriate to make such an order in the present case, with respect to the costs associated with the First Draft.

Orders

For the foregoing reasons, I make the following orders: 1. The plaintiff to pay the defendants' wasted costs in addressing the Statement of Claim filed 18 March 2014; 2. Subject to order (3), the plaintiff to pay the defendants' wasted costs in addressing the proposed Amended Statement of Claim served 12 August 2014, payable forthwith; 3. Each party to bear his or their own costs of the vacation of the hearing date on 17 December 2015 by reason of the Martin Place siege; 4. The plaintiff to pay the defendants' wasted costs in addressing the proposed Amended Statement of Claim served 24 April 2015; 5. The Plaintiff to pay the Defendants' costs of and occasioned by his application to amend the Statement of Claim and the hearing before me on 11 September 2015, including the costs of the costs' application determined by me on the papers.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 28 September 2015

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