North Coast Children's Home Inc. trading as Child & Adolescent Specialist Programs & Accommodation (CASPA) v Martin

Costs 11The plaintiffs seek an order that the defendant pay each of the plaintiff's costs of these proceedings from 14 March 2014 on an indemnity basis pursuant to s 40(1) Defamation Act 2005 (NSW) and specifically pursuant to s 40(2)(a). 12Section 40 Defamation Act 2005 (NSW) 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." 13The entitlement for the plaintiffs to be awarded costs of these proceedings on a party/party basis arises from the principle that costs should follow the event. The "event" for the purpose of r 42.1 Uniform Civil Procedure Rules 2005 (NSW) is the assessment of damages following the entry of judgment on 14 March 2014, which was an event completely in favour of the plaintiffs. The sole question for determination is whether the award for such costs should be made on an indemnity basis from 14 March 2014, the dates selected by the plaintiffs. 14There are no formal offers made by the plaintiffs under the Uniform Civil Procedure Rules. The plaintiff identified three reasons why an order for indemnity costs should be made for that part of the proceedings which postdate the entry of judgment. 15The first is that it is not necessary for a party to make an offer of compromise or Calderbank offer in defamation proceedings, as the relevant principles are set out in s 40 of the Act. Under s 40, the court may take into account a wide range of issues, and the consideration of those issues would take precedence over an offer of compromise (and, by inference, over the failure to make such an offer). For example, a party who had made an offer of compromise which failed to comply with the UCPR could nevertheless rely upon it as an "offer" for the purposes of s 40. 16The second reason is that, prior to commencement of proceedings, the plaintiffs did request that the defendant stop publishing the matters complained of and sought retractions. It is put that it is implicit in those letters that if the defendant had done so the proceedings would not have been commenced (see the affidavit of Todd Yourell, Exhibit E, at annexures C and E). In my view, such an offer needs to be more than implicit, and I do not accept this submission. 17Thirdly, the defendant failed to make an offer following the establishment of liability. In Gacic v John Fairfax Publications Pty Ltd (No 2), supra, Hall J noted that, once the Court of Appeal had set aside the orders of Harrison J and entered verdicts for the plaintiffs in Gacic, the "proceedings" thereafter assumed a different and limited character (at [88] - [89]). Liability was no longer an issue, in that only damages remained to be determined, as was the case in the proceedings before me here. 18In making an order for indemnity costs, Hall J observed at [90]-[93]: "[90] The rationale or legislative purpose behind s 48A, it has been observed, is "to encourage the early settlement of defamation proceedings": Cornes v The Ten Group Pty Ltd, supra, at [13]. Giving effect to that legislative purpose would require the making of a settlement offer. That is of particular importance in a case such as the present where there had been a first trial that miscarried, followed by appeal proceedings in the Court of Appeal, an unsuccessful application for special leave to the High Court by the defendants and then a final hearing on damages. [91] The evident purpose of s 48A(2) could only be served if a "genuine offer" (s 48A(3)) was made by the defendants in an attempt to avoid a second first instance hearing. [92] No settlement offer was however made by the defendants once liability had been determined by the Court of Appeal in favour of the plaintiffs. In relation to the proceedings it cannot, in my opinion, be said that the defendants made a "genuine offer" of settlement. [93] I am satisfied that the defendants unreasonably failed to make a settlement offer within the terms of s 48A(2)(a) in the circumstances of the proceedings, in particular, as they stood in the period between the date of the orders made by the Court of Appeal including entry of verdicts in the plaintiffs' favour and the date of final determination by the judgment I delivered on 19 December 2013." 19In the present proceedings, the defendant was advised of the judgments entered against him and served with affidavits on behalf of the plaintiffs (see annexure AA of Mr Ware's affidavit, Exhibit A). On 24 June 2014, the defendant was served with the plaintiffs' written submissions identifying specifically the damages sums sought by the plaintiffs. That was the time for the defendant to make such an offer; judgment had been entered against him, as was the case in Gacic v John Fairfax Publications Pty Ltd (No 2), supra, and the failure of the defendant to do so should result in an indemnity costs order for the same reason as occurred in Gacic v John Fairfax Publications Pty Ltd (No 2), supra. Where the court is satisfied that a defendant has unreasonably failed to make a settlement offer, an order should be made for indemnity costs unless the interest of justice require otherwise: McMahon v John Fairfax Publications Pty Ltd (No 8) [2014] NSWSC 673 at [6]-[10]. Accordingly, I propose to make an award for the costs of the proceedings to be payable by the defendant on an indemnity basis from the date that judgment was entered in these proceedings, namely 14 March 2014.

Orders 20I make orders as follows: (1)Orders for judgment for the plaintiffs of 8 August 2014 varied as follows: (a)As to the first plaintiff, order pre-judgment interest in the amount of $1,015, resulting in judgment for the first plaintiff for the sum of $51,015. (b)As to the second plaintiff, order pre-judgment interest in the amount of $2,030, resulting in judgment for the second plaintiff for the sum of $102,030. (c)As to the third plaintiff, order pre-judgment interest in the amount of $2,030, resulting in judgment for the third plaintiff for the sum of $102,030. (2)The defendant to pay the plaintiffs' costs of and incidental to these proceedings from the commencement of proceedings until 14 March 2014 on the ordinary basis and from 14 March 2014 (including this application for costs and interest) on an indemnity basis.

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: 03 September 2014