Plaintiffs v Defendant

Supreme Court of Victoria|2016-03-11|Before: McDONALD J

COSTS ― Application by plaintiffs for indemnity costs ― Defendant engaged in unreasonable and inappropriate conduct ― Special circumstances warranting an order that defendant pay plaintiffs' costs on an indemnity basis ― Civil Procedure Act 2010, s 29; Supreme Court (General Civil Procedure) Rules 2015, r 46.04(1).

(i) the defendant's application for orders pursuant to s 29 of the Civil Procedure Act 2010 ('the Act') and r 46.04(1) of the Supreme Court (General Civil Procedure) Rules 2015;

(ii) the plaintiffs' application for a variation of [2] of the orders of Pagone J on 23 May 2013 such that their costs of the defamation proceedings, including reserved costs, be paid on an indemnity basis; and

(iii) the plaintiffs' application for an order for interest at the rate of 3.5% on the damages of $140,000 awarded by the Court of Appeal from the commencement of the proceeding on 7 December 2011 until the date of the Court of Appeal's judgment on 24 April 2015.[1]

2 In the principal judgment the Court dismissed the defendant's application and granted the orders sought by the plaintiffs. This judgment deals with the issue of the costs of the defendant's s 29 application. I have concluded that the plaintiffs are entitled to an order that the defendant pay their costs on an indemnity basis.

3 Special circumstances must exist before a court will award costs on an indemnity basis.[2] Simply instituting or maintaining a proceeding which has little or no prospect of success will not warrant the making of an indemnity costs order. Rather, such orders are generally reserved for cases where the losing party has 'engaged in unmeritorious or deliberate improper conduct such as would warrant the court showing its disapproval and at the same time preventing the respondents being left out of pocket'.[3]

4 I have concluded that there are special circumstances which warrant the making of an indemnity costs order against the defendant. In the principal judgment the Court made a number of findings which both individually and collectively support this conclusion:

(i) Having elected not to put in issue the truth of the alleged defamatory publications in the proceedings before Pagone J, by means of her s 29 application, the defendant sought to do precisely that. Put simply, via her s 29 application the defendant sought to rerun her defence to the plaintiffs' defamation claim on a basis different from that pleaded by her defence. Those pleadings reflected the advice given to the defendant by her counsel which she had accepted.[4]

(ii) Many of the matters relied upon by the defendant in support of her s 29 application were, or could have been, raised in the proceedings before Pagone J. These matters are set out in the principal judgment.[5] Further, the defendant sought to maintain these matters in circumstances where the Court had expressly placed her on notice that her s 29 application could not properly be used as a vehicle to raise matters which could have been pursued in the proceedings before Pagone J. On 8 May 2015, the following exchange took place between the Court and the defendant:

HIS HONOUR: There was a trial, it was run, it was determined.

MS GILES: Yes.

HIS HONOUR: I have no capacity to be revisiting questions of fact which are the subject of a judicial determination.

MS GILES: Yes, I understand that.

HIS HONOUR: It is as simple as that.

MS GILES: Okay.

HIS HONOUR: Do you understand that?

MS GILES: I do understand that, Your Honour.

HIS HONOUR: I am putting you squarely on notice.

MS GILES: Yes.

HIS HONOUR: Please do not waste the court's time, which is very precious, by trying to rerun the case.

MS GILES: No, I have no intention of trying to rerun the case.

HIS HONOUR: All right. I have read your affidavit and I must say I am concerned, from reading your affidavit, that in significant measure that is precisely what you are endeavouring to do. I am giving you fair warning you will not be permitted to do that.

MS GILES: Okay, right.

HIS HONOUR: You will be permitted to put before the court material which you contend supports the conclusion that you incurred costs and expense as a result of a breach of someone's overarching obligation.[6]

This exchange pre-dated the filing of a further 10 affidavits by the defendant. As set out in the principal judgment, much of the material contained therein sought to re-agitate matters which were or could have been dealt with in the proceedings before Pagone J. Plainly, the defendant ignored the direction which she was given on 8 May 2015.

(iii) The defendant used the s 29 application as a vehicle to repeat defamatory allegations against the plaintiffs, including allegations that they had acted dishonestly and deliberately lied on oath. Further, an affidavit in support of the application contended that the publications on her website, found by the Court of Appeal to constitute serious defamation of the plaintiffs 'were in fact, innocuous'.[7]

(iv) The defendant used her s 29 application to make a number of very serious allegations against the plaintiffs' legal representatives.[8] These allegations were entirely without merit.

5 In their written submissions in support of their application for an indemnity costs order, the plaintiffs sought to rely upon a written offer made to the defendant on 30 May 2013 to dispose of the s 29 application on the following basis:

...

However, in order to resolve this matter once and for all, our clients are prepared to make the following offer, which is open for acceptance only until 4 pm on 31 May 2013:

(1) You consent to orders to be made by Daly AsJ that your summons filed 17 May 2013 be dismissed with no order as to costs; and

(2) The plaintiffs are prepared to bear their own costs to date in respect of the summons.

In the event that this offer is rejected, and the summons is ultimately unsuccessful, then the plaintiffs will rely upon this letter in seeking an order that you pay their costs of and incidental to the summons on an indemnity basis. In this respect, we refer you to authorities including Calderbank v Calderbank [1975] 3 All ER 333 and Hazeldene's Chicken Farm Pty Ltd v Victorian Workcover Authority (No 2) (2005) 13 VR 435.[9]

6 Having regard to the matters set out earlier in this judgment, irrespective of the defendant's failure to accept the offer of 30 May 2013, there are ample grounds to justify the making of an indemnity costs order. Nevertheless, independently of those matters, the defendant's failure to accept the offer of 30 May 2013 justifies an indemnity costs order.

7 In her written submissions, the defendant submitted that as the plaintiffs' letter was not marked 'without prejudice' it failed to meet one of the primary requirements of a 'proper Calderbank offer'.[10] The defendant also submitted that the period of 24 hours within which to accept the offer was an unreasonably short time for her consideration of such an important matter.[11]

8 Contrary to the defendant's submission, the fact that the 30 May 2013 letter was not marked 'without prejudice' does not affect its validity as an offer of settlement. The failure to include a reference to the offer being without prejudice, simply meant that it was an open offer.[12] Plainly, the offer could have been accepted at any time within the prescribed 24 hour period. Further, I reject the defendant's contention that the 24 hour period was an unreasonably short period of time for her to accept the offer. The offer was made one week after Pagone J delivered judgment. The parties were fully acquainted with the subject matter of the litigation. The defendant made no request for any additional time to consider the plaintiffs' offer. Indeed, the defendant acknowledged in her written submissions that at the time the offer was received she was 'in possession of all necessary knowledge and information and had all the relevant proof relating to the issues in the application at the time the offer was made. The defendant was very sure that, if the issues were properly investigated and taken into consideration, her application would be successful. This was another reason that the defendant did not accept the offer'.[13] Plainly, within the relatively short period of time available to accept the offer, the defendant was capable of coming to a clear view that she would not do so. Had the defendant been offered a longer period of time to consider the offer, it would have made no difference to her decision not to accept it.

9 The extent of the compromise offered by the plaintiffs was limited to the plaintiffs bearing their own costs in respect of the defendant's summons for the period 17 May to 31 May 2015. However, this was a consequence of the plaintiffs having acted quickly upon receipt of the defendant's summons to make an offer to bring the proceedings to an end.

10 At the time the offer was made the defendant's prospects of success were poor. Any offer to resolve the matter which did not impose any financial detriment upon the defendant constituted a reasonable offer which should have been accepted. The offer was couched in clear terms and placed the defendant squarely on notice that the plaintiffs would rely upon its contents in support of an application for indemnity costs. The defendant's failure to accept the offer was unreasonable. Independently of the matters set out earlier in this judgment, her failure to accept the offer justifies an order that she pay the plaintiffs' costs on an indemnity basis.

11 The defendant's s 29 application was the primary issue canvassed in the parties affidavits and written submissions filed prior to the hearing on 26 October 2015. The issues relating to the variation to [2] of Pagone J's order of 23 May 2013 and the plaintiffs' application for interest on the Court of Appeal's judgment of $140,000, occupied a small amount of time relative to the consideration of the s 29 application. So much is plain from the significant volume of affidavits filed by the defendant in support of her s 29 application. In these circumstances, having determined that the defendant should pay the plaintiffs' costs on an indemnity basis, I do not consider that it is appropriate to 'carve out' a proportion of the costs referable to issues other than the s 29 application. Accordingly, the Court shall order that the defendant pay the plaintiffs' costs on an indemnity basis in respect of all matters which were the subject of the proceedings on 8 May and 26 October 2015 as recorded in the principal judgment.

(i) Paragraph [2] of the orders made by Pagone J on 23 May 2013 is set aside, and in lieu thereof the defendant is ordered to pay the plaintiffs' costs of the proceeding before Pagone J, including reserved costs, on an indemnity basis, save only for those costs directly referable to the issue of aggravated damages.

(ii) The defendant is to pay interest to the first plaintiff in the sum of $8,260.32 and to the second plaintiff in the sum of $7,158.94.

(iii) The defendant is to pay the plaintiffs' costs of:

(d) the plaintiffs' application to vary [2] of the orders made by Pagone J on 23 May 2013,

[1] David Jeffrey & Anor v Virigina Giles (No 2) [2016] VSC 2.

[2] Ugly Tribe Co Pty Ltd v Sikola [2001] VSC 189, [7]; Legal Services Commissioner v Bone [2014] QCA 179, [71].

[3] Yara Australia Pty Ltd v Oswal (2013) 41 VR 302, [57].

[4] David Jeffrey & Anor v Virginia Giles (No 2) [2016] VSC 2, [10].

[5] Ibid, See for example [28]-[30].

[6] Transcript of Proceedings, David Jeffrey & Anor v Virginia Giles (No.2) (Supreme Court of Victoria, S CI 2011 6654, McDonald J, 8 May 2015) T9 L14 - T10 L7.

[7] David Jeffrey & Anor v Virginia Giles (No 2) [2016] VSC 2, [25].

[8] Exhibit D7: Affidavit of Virginia Giles in relation to the "plaintiffs' legal team's responsibilities and their breaches" dated 18 May 2015.

[9] Affidavit of Kenneth Smith dated 12 February 2016, "KES-1" (emphasis in original).

[10] Defendant's submissions as to costs of her s 29 application dated 19 February 2016, [16].

[12] Zealley v Liquorland (Australia) Pty Ltd & Anor (Costs Ruling) [2015] VSC 133, [20].

[13] Defendant's submissions as to costs of her s 29 application dated 19 February 2016, [18].

Court (General Civil Procedure) Rules 2015

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