LVMH Watch & Jewellery Australia Pty Limited v Michael Lassanah & Ors

Judgment 1GILES JA: I agree with Bergin CJ in Eq. 2CAMPBELL JA: I agree with Bergin CJ in Eq. 3BERGIN CJ in Eq: On 28 November 2011, the Court allowed the appeal in relation to the defences of statutory and common law qualified privilege to the defamation action brought against the Police by the Respondents, set aside the verdict and judgments entered in favour of the Respondents on the defamation action and entered a verdict and judgment in favour of the Police on the defamation action: LVMH Watch & Jewellery Australia Pty Limited v Michael Lassanah & Ors [2011] NSWCA 370 (the Judgment). A differently constituted Court refused the application of the Appellant and the Police for leave to appeal from the District Court judgment in respect of the false imprisonment action and reserved to this Court the question of whether leave should be granted to the Appellant to appeal from the order against it for contribution and/or indemnity in favour of the Police in respect of the liability of the Police for false imprisonment and defamation. This Court refused that leave for the reasons given in paragraph [165] of the Judgment. The Judgment should be read in conjunction with these reasons and the terminology used in the Judgment is adopted in these reasons. Outcome of the litigation 4The outcome of the litigation after the Appeal can be summarised as follows: The Appellant The Appellant was unsuccessful at trial in respect of the false imprisonment claim brought against it by the Respondents. It was also unsuccessful at trial in respect of the Cross-Claim brought against it by the Police for contribution and indemnity in respect of the false imprisonment action and the defamation action. The Appellant obtained leave to appeal in respect of the defences of qualified privilege to the defamation claim but was otherwise unsuccessful in seeking leave to appeal from the judgment against it on the false imprisonment claim and the judgment against it for contribution and indemnity brought by the Police in respect of the liability of the Police on the false imprisonment claim. The Appellant was successful on the Appeal in respect of its liability to the Police for the judgment on the defamation claim. The Respondents The Respondents were successful at trial in their action against the Police and the Appellant for false imprisonment and in resisting leave to appeal from the judgment. They were successful at trial in their defamation action against the Police. The Respondents were unsuccessful in the Appeal in relation to their defamation action against the Police. The Police The Police were unsuccessful at trial in respect of the false imprisonment action and were unsuccessful in seeking leave to appeal from that judgment. The Police were also unsuccessful at trial in respect of the defamation action. The Police were successful at trial in the claim for indemnity and contribution against the Appellant in respect of their liability in the false imprisonment action and the defamation action. The Police were also successful in resisting a grant of leave in respect of the order for compensation and indemnity against the Appellant in respect of both the judgment on the false imprisonment claim and the judgment on the defamation claim. The Police were successful on the Cross-Appeal in respect of the judgment in the defamation action. 5The Court granted liberty to the parties to file an agreed costs order, or if they were unable to so agree, to file and serve short written submissions in respect of the cost orders they are seeking. The Court ordered that if the parties could not agree on a costs order the question of costs would be dealt with on the papers. The parties filed their written submissions on 7 December 2011. Costs ordered by the Trial Judge 6On 30 September 2010 the Trial Judge relevantly ordered that the Appellant was to indemnify the Police for the costs of the proceedings (Order 7); that the Appellant was to pay the costs of the Police of the Cross-Claim for contribution and indemnity (Order 9); and that the Appellant and the Police were to pay the Respondents' costs of the proceedings (Order 8): Lassanah v State of New South Wales (No. 3) [2010] NSWDC 241. On 10 December 2010 the Trial Judge relevantly ordered that the Police pay the Respondents' costs of the defamation claim on an indemnity basis including the application for costs (Order 1); the Police pay the Respondents' costs of the wrongful arrest and false imprisonment claim on a party/party basis until the end of the trial and the costs of the preparation and presentation of the Respondents' written and oral submissions on an indemnity basis (Order 2); and varied Order 7 made on 30 September 2010 by ordering that the indemnity did not include the costs of the Police in defending the proceedings brought against them by the Respondents (Order 4): Lassanah v State of New South Wales (No. 4) [2010] NSWDC 284. The Appellant's submissions 7The Appellant submitted that because it had settled the original proceedings for defamation against it before the trial, its liability for damages for defamation could only flow through the Cross-Claim brought against it by the Police. The Appellant submitted that it should be noted that the Police did not initiate the Appeal, but brought a Cross-Appeal after commencement of the Appeal by the Appellant. 8The Appellant submitted that it was wholly successful in its appeal and should be entitled to its costs from the Police, the cross-claimant at trial. It submitted that there are no special circumstances that would warrant a departure from the usual order that costs follow the event: Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72 at 97; Separovich v Ferrao (No 2) [2011] NSWCA 346 at [13]-[16]. It was submitted that the fact that leave was refused in respect of all matters other than the defences of qualified privilege does not justify the apportionment of costs. 9The Appellant also submitted that the Respondents should pay the costs of the Police of the Cross-Appeal. 10The Appellant submitted that Orders 7 (as varied), 8 and 9 made by the Trial Judge on 30 September 2010 and Orders 1 and 4 made by the Trial Judge on 10 December 2010 be set aside and that the following orders be made in respect of the costs of the trial: (1)The Appellant indemnify the Police for the party/party costs of the Respondents in respect of the claim for false imprisonment and the costs of the Police of that part of its Cross-Claim but not the costs of the Police in defending the claim for false imprisonment. (2)The Respondents pay the costs of the Police in respect of the claim for defamation. (3)The Police pay the costs of the Appellant in respect of the Cross-Claim for contribution and indemnity in respect of the defamation claim. Respondents' submissions 11The Respondents submitted that there should be no order as to costs in respect of the Summons Seeking Leave to Appeal because the Appellant failed to obtain leave to appeal from the judgment on the false imprisonment claim. The Respondents submitted that they should not have been parties to the Appeal (as opposed to the Cross-Appeal) and that the only reason they were joined as parties to the Appeal was because leave was sought to appeal from the judgment on the false imprisonment claim. 12They submitted that the Appellant is not entitled to a costs order directly against them or indirectly through the Police. However they conceded that they should pay the costs of the Police of the Appeal but not any costs payable by the Police to the Appellant. 13It was submitted that the Appellant and the Police should pay 90% of the Respondents' costs of the trial on the basis that 90% of the trial went to the issue of false imprisonment while only 10% of the time related to the defamation action. 14The Respondents also made application for certificates under the Suitors' Fund Act 1951. Police submissions 15The Police submitted that the Appellant should pay its costs of the application for leave to appeal on the issue of false imprisonment and contribution and indemnity because the Appellant failed to obtain leave to appeal in respect of both of those grounds. It was submitted that otherwise there should be no orders as to costs in the Appeal as between the Appellant and the Police as the Appellant only succeeded because the conduct of the police officers was defensible on the ground of statutory and common law qualified privilege. 16The Police submitted that the Respondents should pay the costs of the Police of the Appeal. It was also submitted that the Respondents should pay the Appellant's costs of the Appeal but that the Respondents should have a Certificate under s 6 of Suitors' Fund Act 1951 in respect of those costs orders. 17It was submitted that Order 8 made by the Trial Judge on 30 September 2010 and Order 1 made the Trial Judge on 10 December 2010 should be set aside and that the Appellant and the Police should be ordered to pay the Respondents' costs relating to the false imprisonment claim at trial and the Respondents should pay the costs of the Police of the defamation claim at trial. 18In support of these submissions the Police relied upon Furber v Stacey [2005] NSWCA 242. That was a case in which the Court discussed the principles to be applied to costs orders in defamation proceedings involving third party claims. The Police submitted that this decision is authority for the proposition that where a defendant succeeds in a defamation action but is unsuccessful in a cross-claim against a third party, the plaintiff should pay the costs of the defendant and the defendant/cross-claimant should pay the costs of the cross-defendant, subject to the making of further orders to achieve a just result: at [30]-[34] per Hodgson JA and [108]-[115] and [119] per Einstein J. 19It was submitted that it would be unjust for the Police not to have the costs of the Cross-Claim against the Appellant for contribution and indemnity in respect of the defamation claim particularly in the circumstance of the Appellant having secured a costs order in its favour in relation to the false imprisonment claim. This order was the adjustment made by the Trial Judge in Order 4 on 10 December 2010 that the indemnity did not include the costs of the Police in defending the proceedings. The Police submitted that in all the circumstances, costs in the District Court should not be changed and that the Appellant should pay the costs of the Cross-Claim because its conduct caused the litigation. 20Alternatively, it was submitted that Order 9 made by the Trial Judge on 30 September 2010 should be set aside and orders should be made that: (1) the Respondents pay the Appellant's costs in respect of the Cross-Claim brought by the Police for contribution and indemnity in respect of the claim for defamation and; (2) the Appellant pay the costs of the Police of the Cross-Claim for contribution and indemnity in respect of the false imprisonment claim. Consideration 21I agree with the submissions made by the Police that the conduct of the Appellant's employees was the cause of the Respondents being detained and gave rise to the events that grounded the defamation claim. During the course of the Appeal the Court raised with the parties the small amount of the verdicts in the District Court in respect of the defamation action ($15,000 and $20,000) and suggested that the parties should attempt to resolve their differences without further litigation. The Appellant submitted that notwithstanding the small amounts involved it was important to its international reputation to proceed with the Appeal (tr 21). That submission needs to be assessed in the light of the fact that the Appellant settled its defamation case with the Respondents prior to trial and made an apology to the Respondents in open Court during the trial. It continued to resist the Police application for 100% contribution for the liability of the Police to the Respondents and failed at trial and also failed to obtain leave to appeal in respect of that order for contribution and indemnity. 22It is true that because the Appellant had settled the defamation claim brought against it by the Respondents it was only held liable in relation to the defamation claim by reason of the Cross-Claim brought against it by the Police for contribution and indemnity. The Respondents' submission that they should not have been parties to the Appellant's Appeal may be technically correct. However there was no point raised in relation to such joinder until the costs submissions were filed and there was no application for an order that they be removed as parties to the Appeal. They were clearly appropriate parties to the Cross-Appeal brought by the Police that involved the same issues for determination as those on the Appeal. 23The Respondents were partially successful in resisting the applications by the Appellant and the Police for leave to appeal. However they were unsuccessful on the Cross-Appeal. There are no circumstances that warrant a departure from the usual order that costs should follow the event of the success of the Police on the Cross-Appeal. However I am satisfied that the circumstances warrant the granting of an indemnity certificate to the Respondents under s 6 of the Suitors' Fund Act in respect of the Cross-Appeal. 24The Appellant's Appeal was in respect of its liability to the Police but was dependent upon establishing that the Police were not liable to the Respondents in respect of the defamation action. Its application for leave to argue about the percentage of the contribution and indemnity ordered by the Trial Judge was continued until it was determined part way through the first day of the hearing of the Appeal when leave was refused. I am satisfied that the Appellant is entitled to a costs order in its favour on the Appeal, such costs to be paid by the Respondents. I am satisfied that the circumstances warrant a grant of an indemnity certificate under s 6 of the Suitors' Fund Act to the Respondents in respect of the Appeal. 25Although the Respondents contended that only 10% of the time of the trial was taken up with the defamation claim, there was no analysis of the trial in support of such a contention. It is difficult to ascertain with any precision an apportionment of the time taken at trial in respect of any particular aspect of the claims made by the Respondents against the Appellant and the Police and the claims by the Police against the Appellant. The Appellant settled its defamation claim before trial with the consequence that the Respondents proceeded with the false imprisonment case against both the Appellant and the Police but the defamation case was against the Police alone.There was also a claim for wrongful arrest that the Trial Judge held was not made out that would have also taken up time at the trial. 26I am of the view that it is appropriate to apportion the costs of the trial to reflect that fact that the defamation case was only one of the cases to be determined in the trial. On a review of the transcript and the judgment of the Trial Judge I am satisfied that it is appropriate to apportion the time taken in respect of the defamation claim in the proceedings at first instance to 35% of the total time of the trial. That percentage is the appropriate measure for the costs orders in relation to the trial. All parties had a measure of success at the various stages of this litigation. However the Appellant and the Police were both successful on appeal. In all the circumstances I am satisfied that the costs order in relation to the trial in the District Court should reflect and accommodate the percentage reduction to which I have just referred and that the Appellant and the Police should pay 65% of the Respondents' costs of the District Court proceedings on a party/party basis. The Appellant should indemnify the Police for that costs liability. 27The appropriate costs order in respect of the Applications for Leave to Appeal is that there be no order as to costs. Orders 28I propose the following orders: (1) All costs orders made by the Trial Judge are set aside. (2) The Appellant and the Police are to pay 65% of the Respondents' costs of the District Court proceedings. (3) The Appellant is to indemnify the Police in respect of the 65% of the Respondents' costs of the District Court proceedings the Police have been ordered to pay. (4) Otherwise there be no order as to costs of the proceedings in the District Court. (5) There be no order as to costs in respect of the Summons for Leave to Appeal. (6) The Respondents are to pay the costs of the Police of the Cross-Appeal. (7) The Respondents are entitled to a Certificate under s 6 of the Suitors' Fund Act 1951 in respect of the Cross-Appeal. (8) The Respondents are to pay the costs of the Appellant and the Police of the Appeal. (9) The Respondents are entitled to a Certificate under s 6 of the Suitors' Fund Act 1951 in respect of the Appeal.