(1996) 41 NSWLR 176
Darwin v Norman [2020] NSWSC 357
Gagner Pty Ltd trading as Indochine Cafe v Canturi Corporation Pty Ltd [2009] NSWCA 413
262 ALR 691
77 ATR 157
[1929] VLR 215
Source
Original judgment source is linked above.
Catchwords
(1996) 41 NSWLR 176
Darwin v Norman [2020] NSWSC 357
Gagner Pty Ltd trading as Indochine Cafe v Canturi Corporation Pty Ltd [2009] NSWCA 413262 ALR 69177 ATR 157[1929] VLR 215(1928) 41 CLR 254
Triggell v Pheeney [1951] HCA 23(1951) 82 CLR 497
Zoef v Nationwide News Pty Ltd (2016) 92 NSWLR 570
Judgment (3 paragraphs)
[1]
The application for a gross sum costs order
Section 98(4) of the Civil Procedure Act 2005 (NSW) authorises the court to make an order to the effect that the party to whom costs are to be paid is to be entitled to "a specified gross sum instead of assessed costs". There is a two-tiered process involved.
The first issue is whether the proceedings are appropriate for the award of a gross sum costs order. Having regard to the history of s 40 and its special applicability to small awards, the defendant's failure to participate in this litigation and to the provisions of s 60 and 98 of the Civil Procedure Act, I consider this to be such a case.
The second issue is whether the court can be satisfied it has sufficient information about quantum. Mr Odgers' affidavit sets out total costs of $48,598.39 with an alternative of $39,056.91 for party/party costs. As I propose to award costs on an indemnity basis, the higher of these sums would be the sum relevant to the application.
An application for indemnity costs does not mean that 100% of the costs will be awarded. Analysis of costs which may fall outside the scope of the indemnity costs claimed should still be made: Hancock v Rinehart (Lump sum costs) [2015] NSWSC 1640.
Mr Odgers' helpful affidavit sets out all the necessary material, including:
1. The Costs Agreement;
2. Memoranda of fees and evidence of payment;
3. A comprehensive breakdown of the work performed, and by whom; and
4. Information about disbursements.
Mr Odgers informed me that there is no claim for interest on costs.
All of the items contain GST. As to the issue of GST, I note Penson v Titan National Pty Ltd (no 3) [2015] NSWCA 121 at [25], where Campbell AJA explains that, if a lawyer's memorandum of costs and disbursements includes an item for GST, and the client is entitled to an input tax credit for GST paid, and if a costs order requires the opposite party to pay the amount of the clients costs, the amount payable under the costs order does not include GST (see also Gagner Pty Ltd trading as Indochine Cafe v Canturi Corporation Pty Ltd [2009] NSWCA 413; 262 ALR 691; 77 ATR 157; 236 FLR 401). Some adjustment may accordingly need to be made.
In addition, it is common practice for the court to take into account that some portion of the costs may be disallowed on assessment and to deduct a certain percentage. Where ordered costs are assessed, this deduction may be quite large; in Bobb v Wombat Securities Pty Ltd & Ors (No 2) [2013] NSWSC 863, Beech-Jones J deducted 70%. Where the costs are assessed on an indemnity basis, however, the percentage will be much smaller. I propose to deduct 5% to allow for items that may fall outside the costs regime.
As there is some adjustment to be done to the sum to be awarded as a gross sum costs order, I propose to make an order for indemnity costs to be assessed on the gross sum basis, but to grant liberty to the plaintiff to bring in Short Minutes of Order reflecting the final sum in question.
[2]
Concluding remarks and orders
I thank Mr de Meyrick for his submissions and his assistance to the court.
1. Judgment for the plaintiff for $20,600.
2. Pursuant to s 40 of the Defamation Act 2005 (NSW), the defendant is to pay the plaintiff's costs of the proceedings on an indemnity basis.
3. Pursuant to s 98(4)(c) of the Civil Procedure Act 2005 (NSW), the plaintiff's costs are to be paid in the form of a gross sum costs order.
4. The plaintiff is to have liberty to bring in Short Minutes of Order reflecting the sum to be awarded after the deductions referred to in the judgment are calculated.
[3]
Amendments
15 September 2020 - Catchword
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: 15 September 2020
The procedure for entry of judgment, assessment of damages and conducting an ex parte hearing
The fact that the defendant has not engaged in the litigation does not absolve the plaintiff or the court from their respective obligations to accord procedural fairness at all stages of the litigation.
The entry of judgment for a plaintiff in defamation proceedings where no defence has been filed does not occur in the same way as a default judgment, for the reasons explained by Hunt J in Altarama Ltd v Forsyth & Ors [1981] 1 NSWLR 188 (see also Nickolopoulos & Ors v Greek Herald Pty Ltd [2002] NSWSC 808. The reluctance of courts to enter default judgment in defamation actions predates specialist lists and the uniform legislation: Mark French v Triple M Melbourne Pty Ltd [2005] VSC 36 at [18] - [21]. In the present case, the defendant was afforded a series of opportunities to file a defence, the last of which was accompanied by a self-executing order, conformably with the procedure set out by Hunt J in Altarama Ltd v Forsyth & Ors. The defendant's failure to comply with these orders has resulted in the entry of summary judgment.
The plaintiff's compliance with his obligations to notify the defendant of these proceedings and these orders is the subject of affidavit evidence from Ms Mootea (Exhibit F). I am satisfied, from this material, that the defendant is aware of these proceedings as well as of the assessment hearing date.
In hearing the case, I was guided by the provisions of Uniform Civil Procedure Rules ("UCPR") r 29.7 and by the observations of Barrett J in Satz v ACN 069 808 957 Pty Ltd [2010] NSWSC 365 (as applied by Hallen J in Alesco Corporation Limited ACN 008 666 064 v Te Maari [2015] NSWSC 469 at [37]), in terms of satisfying myself as to the plaintiff's discharge of his own obligations as well as ensuring that those parts of the plaintiff's claim for which the plaintiff bears the onus of proof have been discharged. I do not consider, however, that my obligations to the defendant extend to putting the plaintiff through a procedure for the determination of defamatory meaning (cf Oskouie v Maddox [2019] NSWSC 428 at [21] - [29]) as rulings on meaning are not obligatory in defamation actions.
The principles and statutory provisions applicable for the award of damages
In determining the amount of damages to be awarded, I am required to ensure that there is an appropriate and rational relationship between the harm sustained by the plaintiff and the amount of damages awarded: s 34 of the Defamation Act 2005 (NSW).
The maximum amount of damages that may be awarded for non-economic loss is gazetted as from 26 June 2020 to be $421,000 (see s 35 of the Defamation Act 2005 (NSW)).
In Carson v John Fairfax & Sons Ltd [1993] HCA 31; (1993) 178 CLR 44, Mason CJ, Deane, Dawson and Gaudron JJ (at 60) explain the purposes of an award of general damages for defamation as follows:
"The three purposes no doubt overlap considerably in reality and ensure that "the amount of a verdict is the product of a mixture of inextricable considerations". The three purposes are consolation for the personal distress and hurt caused to the appellant by the publication, reparation for the harm done to the appellant's personal and (if relevant) business reputation and vindication of the appellant's reputation. The first two purposes are frequently considered together and constitute consolation for the wrong done to the appellant. Vindication looks to the attitude of others to the appellant: the sum awarded must be at least the minimum necessary to signal to the public the vindication of the appellant's reputation."
The assessment of damages must be informed by a consideration of the circumstances of the publication and the imputations it conveyed. However, after a decade of comparative judicial harmony as to how damages are to be assessed, there is now a considerable debate as to how the maxims of the High Court as well as the provisions of the uniform legislation are to be translated into a sum suitable to recompense the plaintiff.
Conflicting views on assessment methods and quantum
In KSMC Holdings t/as Hubba Bubba Childcare on Haig v Bowden [2020] NSWCA 28 at [143] ("KSMC Holdings), Payne JA, citing Murray v Raynor [2019] NSWCA 274 at [292] - [295], stated that "there is an issue in this State about the fundamental approach to damages in defamation cases". Importantly for the assessment process here, that "issue" is not merely whether the impact of aggravated damages on the cap is to lift it (Bauer Media Pty Ltd v Wilson (No 2) (2018) 56 VR 674; [2018] VSCA 154, ("Bauer")), but as to what are seen to be unduly high awards of damages generally.
These views have either been merely noted by first instance courts in other jurisdictions (see Wagner v Nine Network Australia Pty Ltd [2019] QSC 284 at [245], published very shortly afterwards) or not referred to at all (see most recently Rothman J's preference for the approach taken in Nationwide News Pty Limited v Rush [2020] FCAFC 115 in Cosco v Hutley (No.2) [2020] NSWSC 893, where no reference is made to the concerns expressed in KSMC Holdings).
The difficulty lies in determining what these appellate concerns mean in terms of assessment. The New South Wales Court of Appeal is not the only appellate court to stop short of holding that Bauer was wrongly decided. In Poniatowska v Channel Seven Sydney Pty Ltd (No. 2) [2020] SASCFC 5, where Kourakis CJ notes (at [86]) that the proposed legislative reforms would result in a hard cap (at [86]), but preferred to express no view (at [90]-[91]), as no aggravated damages were to be awarded. The Full Court of the Federal Court, in Nationwide News Pty Limited v Rush [2020] FCAFC 115, accepted that the result of Bauer was "anomalous outcomes" (at [451]) but declined to consider the issue as discussed in these judgments, adding that these "do not affect our conclusion" (at [468]). (Somewhat inconsistently, in the same court, Bromwich J at first instance both endorsed and applied KSMC Holdings and Rayner: Hayson v The Age Company Pty Ltd [2020] FCA 361 at [88].) Many judgments which award aggravated damages simply do not refer to it: Brose v Baluskas & Ors [2020] QDC 15; Darwin v Norman [2020] NSWSC 357, Smith v Jones [2020] NSWDC 262 and Goldberg v Voigt [2020] NSWDC 174 (this was also the position taken by the first instance judge in KSMC Holdings).
However, in Aldridge v Johnston [2020] SASCFC 31, the court affirms that the Court of Appeal's interpretation of the damages provisions in Bauer is correct, which means the Bauer interpretation of the cap is the safest way forward for a first instance judge.
The other damages issue identified by Payne JA in KSMC Holdings is the complaint that damages awards in New South Wales are too high, regardless of the impact on aggravated damages of Bauer. This issue is not so easily disposed of.
The amount to award on the facts in these proceedings
The facts in this case are very similar to Murray v Raynor, in terms of the nature of the allegations and the extent of publication. In Murray v Raynor, the defendant accused the plaintiff of obsessively harassing her about her open mailbox in an apartment complex and made allegations of serious and criminal misconduct (she challenged the plaintiff as to whether his obsessions had led him to "stage" the two robberies of the residents' mailboxes which occurred in the building in which they resided). Like the plaintiff in these proceedings, Mr Raynor was the president of the strata committee and, like the plaintiff in these proceedings, there were subsequent proceedings (in that case, in the NCAT, although those proceedings were not for the purpose of vindicating Mr Raynor but for the purpose of obtaining compliance from Ms Murray). The extent of publication (in terms of identity and number) is almost identical.
Mr de Meyrick submitted that the Court of Appeal in Murray v Raynor set aside the judgment because the court set aside the findings of damage to reputation at first instance and instead held that there was no evidence "of any damage to the respondent's reputation" (at [96]) and no need for a damages award to vindicate that reputation. However, damage to reputation is presumed, especially from allegations as serious as an obsessive campaign which included the likelihood of staging robberies in the building to which the recipients of the matter complained of had been victims. It is preferable to regard Payne JA's observations on this topic as being restricted to the facts of that case.
In the present case, there is evidence that some of the tenants did not accept that the plaintiff was exonerated by the investigation. That is often the case in any defamation action where a serious allegation is made, which is why the presumption of damage to reputation is made. In a speech to the Parliament of New South Wales on 13 November 2008, the Hon Justice Michael Kirby AC CMG referred to this by citing the famous statement by Mr Neville Wran AC, CNZM, QC that "the mud will stick". I note there is evidence of actual damage to reputation, but that such evidence is not strictly necessary.
The law places a high value on a person's reputation, especially where that person's work and life depend upon their honesty, integrity and judgment: Crampton v Nugawela [1996] NSWSC 651; (1996) 41 NSWLR 176 at 195D per Mahoney A-CJ. The plaintiff was not himself a solicitor but carried out duties as directed by his employers at G & S Law Group. It was because of the high standards required by his employer that the claim against the plaintiff had to be investigated.
Should aggravated damages be awarded?
The plaintiff claims that his damages are aggravated by the defendant's knowledge of the falsity of the imputations and failure to apologise or retract the allegation.
As to the first of these, some care should be exercised. Section 36 of the uniform legislation provides that the publisher's state of mind at the time of publication must be disregarded, except to the extent that it affects the harm sustained by the plaintiff.
As to the second, mere failure to apologise is not a factor in itself; the question is whether the failure to apologise prolonged and intensified the hurt experienced by a plaintiff: The Herald And Weekly Times Ltd v McGregor [1928] HCA 36; [1929] VLR 215; (1928) 41 CLR 254 at [263] per Knox CJ, Gavan Duffy and Starke JJ. Absent this feature, it may be more appropriate as part of the general damages claim: Clark v Ainsworth (1996) 40 NSWLR 463. In general terms, it should form part of a course of conduct lacking in bona fides or otherwise be improper or unreasonable: Triggell v Pheeney [1951] HCA 23; (1951) 82 CLR 497.
The plaintiff also relies upon other correspondence from the defendant to demonstrate that these publications were part of a campaign to damage the plaintiff's reputation and cause him to lose his role as the President and Chair of the Strata Committee.
The correspondence relied upon demonstrates that the defendant was unpleasant to everyone. He bestowed opprobrious nicknames on the committee members, accused them of misconduct and incompetence on a regular basis, and was generally unpleasant and difficult to deal with. There is no evidence of his singling out the plaintiff for the specific purpose of having him sacked; the defendant's way of dealing with others appears to have been to address them in rude and bullying terms. This particular is not made out.
Interest and costs
The plaintiff leaves the question of interest on the judgment to the court but asks for a gross sum costs order.
The principles for interest awards are summarised in Amalgamated Television Services Pty Ltd v Marsden [2002] NSWCA 419 at [1540]ff. Interest rates on defamation awards tend to vary to take into account how the hurt decreases over time. Given the relatively short period since publication, the hurt is arguably still considerable, so I propose to award 3% from the date of publication (30 August 2019). This is a period of one year and 10 days so I will award interest for one year only, which is $600.
The total amount awarded for damages and interest is thus $20,600.
Costs
Costs must clearly follow the event. The first question is whether those costs should be assessed on an indemnity basis, as sought by the plaintiff.
Costs orders in defamation actions must take into account the provisions of s 40 of the Defamation Act 2005 (NSW), which provides:
Costs in defamation proceedings
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.
As to s 40(3), in the present case, a Concerns Notice was sent, and that alone would satisfy this provision.
Sending a Concerns Notice is arguably no longer necessary, as the New South Wales Court of Appeal has held on two occasions (Mohareb v Booth [2020] NSWCA 49 at [11] - [13]; Zoef v Nationwide News Pty Ltd (2016) 92 NSWLR 570; [2016] NSWCA 283) that merely filing and serving a statement of claim for defamation, without more, is enough to amount to an offer of amends, which triggers this costs penalty for all defendants (interestingly, however, the Court in both cases did not refer to s 40(3) and only awarded costs on the ordinary basis in both actions). As a Concerns Notice was in fact sent in these proceedings, I do not need to refer to this alternate basis for indemnity costs any further.
Although not referred to in any of the conflicting judgments dealing with the cap as referred to above, one of the legislative purposes of s 40 was in fact to provide a balance for general damages being capped and for the likely modesty of defamation judgments. In other words, in cases such as the present, where the damages are modest, there is all the more reason why those damages should not be swallowed up by the gap between ordinary and indemnity costs.
It is unclear, from Payne JA's commentary, what judgments are referred to other than the judgments under appeal. It is worth noting, however, that this complaint has been made about judgments in New South Wales for a very long time by judges in other jurisdictions. This "issue" of high awards was recently adverted to by the first instance judge in Brose v Baluskas & Ors at [339], who notes appellate observations that defamation damages awards in New South Wales have historically been much higher than in other jurisdictions: Cerutti & Anor v Crestside Pty Ltd & Anor [2014] QCA 33; [2016] 1 Qd R 89 at [49]. I note there are examples of very high awards of damages in ex parte proceedings: Oskouie v Maddox [2019] NSWSC 428.
Faced with a maze of conflicting commentary (or lack thereof) in relation to the correct approach to quantum, I have adopted the approach taken by Campbell J in Balzola v Passas [2020] NSWSC 896 to the correct assessment of damages where there is a brief but acrimonious dispute giving rise to allegations of criminal conduct (in that case, allegations of domestic violence). I invited Mr de Meyrick to address this decision as well as Payne JA's observations in KSMC Holdings Pty Ltd and thank him for his additional written submissions.
Having noted these obstacles in the path of assessment of damages, I now apply the relevant principles to the facts of the case.
Mr de Meyrick next submitted that, while the extent of publication is limited, this is a significant "hurt feelings case" and that this is a significant factor.
The need to provide consolation for the personal distress caused to Mr Matthews is a significant part of my assessment. When determining the amount of damages necessary to provide consolation for personal distress and hurt, the court must have regard to the subjective response of the plaintiff to the publication in question: Rogers v Nationwide News Pty Ltd [2003] HCA 52; (2003) 216 CLR 327 at [81] per Hayne J (Gleeson CJ and Gummow J agreeing).
For the reasons explained by Campbell JA in Balzola v Passas, the context in which the matters complained of were published is also of relevance. The first two matters complained of were emails, sent an hour apart, addressed to persons who knew the plaintiff well enough to make their own assessment and many of whom independently knew the true facts. (I note that the third publication, an email addressed to the plaintiff which simply said "Clive, you are a pig", was copied to three other persons, but the affidavits do not refer to it in any detail; in terms of assessment of damages, its role is minimal.)
The limited extent of publication, the overlap in content and timing of the first and second matters complained of, the lack of evidence about the third matter complained of and the context of the publications (namely disputes about the strata committee and owners' corporation activities, which appear to have occurred regularly) are all suggestive of damages within a very small compass.
However, that is not to trivialise the hurt to the plaintiff. In Balzola v Passas at [253], Campbell JA prefaced his award of $10,000 by saying:
"In fixing the amount I am about to award, I do not mean to trivialise the matter or to award merely nominal damages, imposing a Pyrrhic victory on Mr Balzola. However, I do not assess this case as sounding loudly in damages."
The same is the case here. Taking into account as best I can the Court of Appeal's generalised concerns about the size of damages in New South Wales, the appropriate sum to award is $20,000.
The mandatory language of s 40 means that a successful defamation plaintiff must be awarded their costs on an indemnity basis if the Court is satisfied that the defendant unreasonably failed to make a settlement offer (as occurred here) unless the interests of justice require otherwise: Jensen v Nationwide News Pty Ltd [No 13] [2019] WASC 451.
The present case is a good example of the dangers of not being prepared to apologise where an apology is clearly warranted. The terms of the Notice of Concerns are both reasonable and moderate. Costs should be awarded on an indemnity basis.