D NETWORK TEN'S COSTS
31 Mr Helvadjian during his helpful written submissions indicated that although Mr Lehrmann did not advocate for a particular order, it "may be appropriate" to recognise the success the respondents have enjoyed in the litigation but, having regard to the failure of the qualified privilege defences, temper that success by ordering the applicant pay only a proportion of the respondents' costs on an ordinary basis. Having noted this, Mr Lehrmann accepts that it is open for the Court, in the light of authority such as Roberts-Smith v Fairfax Media Publications Pty Limited (No 45) [2023] FCA 1474, to order that Mr Lehrmann pay the costs of the respondents on an indemnity basis.
32 Network Ten accepts it is relevant to have regard to all its conduct up until the date of judgment but asserts there is an insufficient basis upon which it would be an appropriate exercise of discretion to deprive Network Ten of an order for costs. Further, Dr Collins stressed that notwithstanding the Court concluded that certain comments made by Network Ten's spokesman immediately following the delivery of judgment mischaracterised what the Court had found, any such post-judgment conduct was an irrelevant consideration when it comes to awarding costs. Although I am not convinced any post-judgment conduct could always be irrelevant to costs, for present purposes I do not consider any mischaracterisations of my judgment are material to the exercise of the present costs discretion and I accept it must be put to one side.
33 When one returns to the relevant conduct, Network Ten makes three main points.
34 First, reliance upon the outcome and findings made as to the statutory qualified privilege defence ought be treated with caution in circumstances where Section J of the judgment was entirely counterfactual, in that it had "as its point of departure, the notion that the respondents cannot prove that Mr Lehrmann raped Ms Higgins and, consequently, the substantial truth defence is not made out" (at J [760], [922]).
35 Secondly, despite some "strong indications of the unreliability of their main source", the Project team was correct to believe Ms Higgins' core allegation as to the rape. Indeed, Network Ten rely on the fact that I came to the same conclusion as Network Ten as to the credibility of Ms Higgins' description of the critical incident, despite "all my reservations as to the credibility and reliability of Ms Higgins", principally because her evidence of not being fully aware when the sexual act commenced and not giving consent "struck me forcefully as being credible and as having the ring of truth".
36 Thirdly, the findings themselves do not amount to a failure by Network Ten to comply with the overarching purpose. The pleading and prosecution of the separate statutory qualified privilege defence was not doomed to fail, and it was not the dominant issue in the proceeding.
37 All these points have some merit. Having said that, while it is correct that particularised aspects of the conduct examined in relation to the s 30 defence were not found to be improper or mala fide (such as to justify aggravated damages), one cannot ignore the fact that the relevant conduct of Network Ten relating to the publication of the Project programme was far from reasonable and the statutory qualified privilege case, while not hopeless, was weak.
38 I raised with Dr Collins whether the appropriate exercise of discretion (leaving aside the basis upon which any costs would be paid) would be to make an order for costs, but only costs relating to the conduct of the substantial truth defence.
39 In response, Network Ten submitted there must be exceptional circumstances to warrant depriving a successful party of an order for the whole of its costs. The mere fact that the successful party has been unsuccessful on some issues will ordinarily not be sufficient to displace the ordinary rule. Network Ten pointed to the recent summary by Stewart J in Siemens WLL v BIC Contracting LLC (costs) [2024] FCA 201 (at [9]), as follows:
The court may depart from the general rule and exercise its discretion to apportion costs on an issue by issue basis where there are special circumstances to warrant a departure (Firebird Global Master Fund II Ltd v Republic of Nauru (No 2) [2015] HCA 53; 90 ALJR 270 at [6]), such as where there has been disentitling conduct of the successful party, where the raising of the unsuccessful issue was not justified, or it was so unreasonable that it is fair and just to make the order apportioning costs (Findex Group Ltd v McKay (No 3) [2020] FCA 259 at [9]), or where the particular issue was clearly dominant and separable (Bostik Australia Pty ltd v Liddiard (No 2) [2009] NSWCA 204 at [38]).
(Emphasis added)
40 Reference was also made to Les Laboratoires Servier v Apotex Pty Ltd [2016] FCAFC 27; (2016) 247 FCR 61 (at 132 [303]), where the Full Court (Bennett, Besanko and Beach JJ) explained:
… the Courts have been slow to order a successful party to pay the costs where it has been unsuccessful on some issues. In Mok v Minister for Immigration, Local Government and Ethnic Affairs (No 2) (1993) 47 FCR 81, Keely J was of the view (at 84) that, without attempting to fetter the discretion, this power ought to be exercised only where the Court, on a consideration of all the circumstances, has concluded that the raising of an issue by the applicant on which it has failed was so unreasonable that it is fair and just to make the order.
(Emphasis added)
41 Without discounting the accuracy of these expressions of principle, it is important not to be too prescriptive about the exercise of a broad discretion, particularly by reference to cases decided prior to the introduction of Pt VB of the FCA Act and absent the present need to have regard to facilitating the promotion of the overarching purpose in the exercise of the discretion: s 37M(3). In the present case, and while having regard to the principles summarised above, the relevant issue material to my discretion is better expressed as being: whether the persistence in advancing the statutory qualified privilege defence was consistent with the overarching purpose obligations and whether the issues it raised were sufficiently clear and severable from the other issues?
42 The evidence on the cross-claims makes clear that the solicitors knew, from the outset, that the statutory qualified privilege defence faced formidable challenges (with a solicitor for Thomson Geer recording in a file note as early as 8 February 2023) that (Ex X1 (at 1071)):
[Qualified privilege] is something we don't need to run … It's something that often isn't successful … Court's impose a very high standard of perfection. Reasonable … John Garnaut. Wing … Timeframe for a response wasn't long enough. Should have spoken to this person as well. Etc.
43 With some reluctance, however, and despite my reservations as to whether the persistence of the respondents in pursuing the statutory qualified privilege defence did facilitate the efficient and cost effective resolution of the case, I have concluded the issues in the statutory qualified privilege defence were not sufficiently severable from other aspects of the case such as to make it appropriate to deprive Network Ten of its costs of this aspect of the proceeding entirely. This is because many of the same matters canvassed relating to the conduct in publishing the Project programme were also in play because of Mr Lehrmann's decision to particularise reckless indifference to the truth of the imputations as amounting to improper conduct for the purposes of aggravated damages. In my counterfactual analysis, I found against Mr Lehrmann on this contention as to aggravated damages, and it was necessary to have regard to the conduct of the respondents in making this determination.
44 There is one qualification to this general statement. In explaining it, it is worth repeating the view I expressed in Transport Workers' Union of Australia v Qantas Airways Limited [2021] FCA 873; (2021) 308 IR 244 (at 253-254 [24]-[27]):
[24] … I raised with the parties my preference that evidence in chief in relation to controversial facts be led orally. In doing so, I had in mind both the terms of the Practice Note and the sort of considerations thoughtfully discussed by the Hon Justice A Emmett writing extra-judicially in his article, 'Practical Litigation in the Federal Court of Australia: Affidavits' (2000) 20 Australian Bar Review 28, where that very highly experienced judge observed (at 28):
Where an assessment of credit is required, a judge will have a much better prospect of assessing a witness who gives evidence in chief orally rather than being exposed to cross-examination immediately upon entering the witness box.
[25] Qantas expressed a "strong preference" for affidavits … and senior counsel of the Union perceived some advantages in written evidence in chief, despite my indication … that:
I'm always conscious of what Lord Buckmaster said - and this is no [reflection on] any party, but it's a famous quote that used to be repeated constantly by the Honourable T.E.F. Hughes AO QC, and that is that the truth comes out of affidavits like water from a leaky well, whereas people come along and tell their story in the witness box, there might be a better chance of the account being given in a more spontaneous way, and it may save a lot of money and cost and time.
[26] This aphorism was one I had mentioned in Lloyd v Belconnen Lakeview Pty Ltd [2019] FCA 2177; (2019) 377 ALR 234 (at 269 [110]-[113]), where I also repeated the comment made by Lord Woolf MR contained in the Access to Justice Report, Final Report (HMSO), 1996 (at [55]) that:
Witness statements have ceased to be the authentic account of the lay witness; instead they have become an elaborate, costly branch of legal drafting.
[27] In citing my observations in Lloyd v Belconnen with apparent approval in Queensland v Masson [2020] HCA 28; (2020) 94 ALJR 785, Nettle and Gordon JJ observed (at 810 [112]) (footnotes omitted):
The oft unspoken reality that lay witness statements are liable to be workshopped, amended and settled by lawyers, the risk that lay and, therefore, understandably deferential witnesses do not quibble with many of the changes made by lawyers in the process - because the changes do not appear to many lay witnesses necessarily to alter the meaning of what they intended to convey - and the danger that, when such changes are later subjected to a curial analysis of the kind undertaken in this matter, they are found to be productive of a different meaning from that which the witness intended, means that the approach of basing decisions on the ipsissima verba of civil litigation lay witness statements is highly problematic. It is the oral evidence of the witness, and usually, therefore, the trial judge's assessment of it, that is of paramount importance.
45 As I explained in the judgment, this was a case where the extensive contemporaneous record demonstrates the large gulf between the carefully drafted respondents' affidavits and the true position as to the immediate and unquestioning belief in Ms Higgins' account by Mr Llewellyn and Ms Wilkinson (and as to the Project team's lack of interest in examining the account properly or obtaining contrary accounts). Significant costs in preparing the affidavits by both respondents were wasted. Given my time over again, I would have been best assisted by hearing any such evidence orally. In making this comment I am cognisant that several deponents were not cross-examined but, as I explained in the judgment, my findings as to what occurred were not only unassisted by this material, but the real approach taken was obscured. The true position only emerged from a review of the extensive transcripts and other contemporaneous records. The picture revealed stands in contrast to numerous representations made in the affidavits.
46 Although I accept parts of the affidavits relevant to the statutory qualified privilege defence were material to other issues, a relatively rough and ready approach is warranted. The quantification process will be simplified by disallowing the costs associated with these affidavits (while still allowing for an overall fair result as to what ought to be recoverable against Mr Lehrmann).
47 Having determined that subject to this exception it is appropriate that Mr Lehrmann pay Network Ten's costs, it is necessary to address whether those costs should be paid, wholly or partly, on an indemnity basis.
48 Network Ten submits it follows from the findings made in the judgment that, at the time of commencing the proceeding, Mr Lehrmann knew he had raped Ms Higgins. He knew that proof of the rape would be sufficient to establish the substantial truth of the imputations and would lead to the dismissal of the proceeding. It is not an answer to say that Mr Lehrmann considered he had some prospects of success by persuading the Court to accept facts known by him to be false: Roberts-Smith (No 45) (at [21] per Besanko J). Network Ten asserts that Mr Lehrmann gambled on the respondents not being able to discharge their burden of proof in respect of a matter that, in view of the outcome, he must have known to be true.
49 It follows, it is submitted, that Mr Lehrmann engaged in an abuse of the Court's processes, ran a case based on falsities, and put Network Ten to the cost of defending a baseless proceeding. Given the subject matter and the success of the substantial truth defence, the seriousness of such conduct cannot be overstated and is of such a character as to justify an award of indemnity costs.
50 I substantially accept the submissions of Network Ten but would describe the unreasonable conduct of Mr Lehrmann, justifying an award of indemnity costs, somewhat differently.
51 Even in final submissions (see Applicant's Closing Submissions dated 28 February 2023 (ACS) (at [382A])), Mr Lehrmann persisted in the assertion the evidence could not "sustain a positive finding that any sexual activity took place". This was Mr Lehrmann's primary case. Having said this, when it came to the "question of consent", in respect of which argument was joined in final submissions (see ACS [382A-F]), it was accepted by Mr Lehrmann that if sex did take place, the "bare fact of rape [as imputed by the Project programme] ... might be committed simply by being recklessly indifferent to whether or not there was consent" (ACS [386]), but that (ACS [382F]):
… whilst there is a relatively confined period in which any sexual activity might have occurred, there is no cogent and reliable evidence as to Mr Lehrmann's state of mind at the time of any such sexual activity in relation to his knowledge, belief or advertence as to Ms Higgins' level of inebriation and ability to consent sufficient to permit the requisite finding of fact necessary to establish that rape or sexual intercourse without consent on the basis of intoxication occurred.
52 What I found (at J [590]-[591]), is that Mr Lehrmann "may well" have turned his mind to consent and been aware Ms Higgins was unconscious when sexual intercourse commenced (but that I was not positively satisfied that Mr Lehrmann had a state of mind of actual cognitive awareness that Ms Higgins did not consent to having sex). In accepting the critical part of Ms Higgins' evidence that she was not fully aware when sexual intercourse commenced and did not thereafter give her consent, I found (at J [601]) Mr Lehrmann was so intent upon gratification to be indifferent to Ms Higgins' consent, and hence went ahead with sexual intercourse without caring, one way or another, whether she consented. As anticipated in the ACS, this finding of reckless indifference as to whether there was consent, was sufficient to make out the substantial truth of the fact of rape as that concept was understood by the ordinary reasonable viewer of the Project programme.
53 But it is noteworthy that I also rejected (at J [606]-[608]) two other scenarios potentially available on the evidence that ranked "higher on the likelihood range" than others (being that "consensual sex occurred, or Mr Lehrmann was not reckless while having non-consensual sex").
54 In accordance with the fact-finding principles and cautions explained in the judgment, I rejected all other scenarios as individually and collectively less likely than what I found took place (based upon my demeanour-based credit finding accepting the critical part of Ms Higgins' evidence). But even leaving aside what I found happened, in any non-fanciful (albeit unlikely) scenario, Mr Lehrmann had sexual intercourse with Ms Higgins and yet ran a primary case premised upon the fanciful and knowingly false premise that in the early hours of 23 March 2019, he was preoccupied with noting up details as to French submarine contracts.
55 As I said (at J [1071]), Mr Lehrmann defended the criminal charge on a false basis, lied to police, and then allowed that lie to go uncorrected before the jury. He wrongly instructed his senior counsel to cross-examine a complainant of sexual assault, in two legal proceedings, including, relevantly for present purposes, this case, on a knowingly false premise.
56 Indeed, this was misconduct in the running of his case of such a character, that even if I had not reached the level of satisfaction that Mr Lehrmann raped Ms Higgins (and Mr Lehrmann was therefore entitled to judgment of $20,000), in the counterfactual explained in the judgment, I would have declined to award costs in Mr Lehrmann's favour. This would have been the appropriate exercise of discretion in those circumstances given Mr Lehrmann had acted in serious breach of his obligations under Pt VB of the FCA Act in advancing a case he knew was false and which occasioned much delay, inefficiency, and increased cost.
57 In the end, it comes down to the order for costs that best does overall justice in the circumstances. On balance, the appropriate exercise of discretion is to make an award that Network Ten recover its costs against Mr Lehrmann on an indemnity basis except for costs incurred in relation to the statutory qualified privilege defence, which will be recoverable (save for costs of the affidavits to which I have referred), on an ordinary or party-party basis.
58 For completeness, I should mention two further matters.
59 First, when it comes to the conduct of the proceeding, Network Ten also relies on s 40(1)(a) of the Defamation Act 2005 (NSW). This provision provides that the Court may have regard to the way in which the parties conducted their case. I have previously expressed doubts as to whether this provision is picked up in federal jurisdiction but, in any event, the issue as to its applicability does not require resolution, given the same principles promoted by this state statutory provision necessarily inform the discretion to be exercised pursuant to s 43 of the FCA Act. If s 40(1)(a) was applicable, my discretion (and the discretion I would have exercised in the counterfactual) would not have been different.
60 Secondly, there is the Calderbank letter. Having regard to the factors outlined above (at [30]), Mr Lehrmann's decision to reject the offer, made at a relatively early stage in the proceeding, in circumstances where he knew that he was prosecuting the proceeding on the basis of a falsehood, amounts to conduct which has been described as a "very significant consideration" in assessing the reasonableness of the refusal of a Calderbank offer: Roberts-Smith (No 45) (at [29]). Hence, even if I was not otherwise satisfied of the appropriateness of a partial indemnity award from the commencement of the proceeding, I would have been satisfied that Mr Lehrmann's rejection of the offer was unreasonable and, consistently with ordinary Calderbank principles, would have entitled the respondents to an award of indemnity costs from the date of the offer, being 31 August 2023 (but again, in the exercise of my discretion, I would have limited the extent of the indemnity award).