Wagstaff v Keramianakis & Anor

"…the present situation has been brought about by arguments raised by counsel on all sides and on which I have made a decision. It seems to me that the question of the costs thrown away should be reserved for later adjudication in the light of the decision of the Court of Appeal and in the light of the subsequent conduct and decisions in the case as it proceeds."

18 Mr A Henskens, counsel for the first and second opponents, next submitted that if Cooper DCJ would permit the s 7A hearing to continue, they would "abandon their republication claim and would seek to amend their statement of claim to rely upon the newspaper article against Dr Wagstaff solely on the question of damages" (the "damages republication case"): Transcript, 18 May 2004 at 21. His Honour refused that application, saying:

"In other words, he would be seeking to claim damages by reason of the first defendant's publication of the matter to Ms Stone as published in the newspaper by the second defendant. That would not be a separate cause of action, but merely a head of damages. It being a head of damage, it falls within the terms of subs (4)(b) of s 7A, which vests in the Court and not the jury the jurisdiction to determine the amount of damages, if any, that should be awarded to the plaintiff, and all unresolved issues of fact relating to the determination of that amount…The proposed or suggested amendment referred to by the plaintiff, whilst ingenious, is not necessarily going to overcome the legal problem. There is no doubt that the law relating to defamation is a minefield beset with all sorts of problems, and I think that the proposal raised by the plaintiff will not necessarily overcome those problems and could still give rise to questions of appeal."

19 Accordingly, his Honour adhered to the course he had earlier indicated, and terminated the s 7A hearing. He again reserved the costs thrown away, such costs to be determined "by a judge at a later stage."

The first appeal hearing 20 When the matter came before this Court the first and second opponents sought to rely upon a Notice of Contention or, if necessary, a Cross Appeal to advance the proposition that Cooper DCJ's decision that issues relating to republication were not matters for the jury should be affirmed because they had elected to abandon the cause of action republication case and sought only to rely upon a damages republication case. 21 The Court raised with Mr B Connell, who then appeared for the claimant, that there would be no utility in this Court considering the cause of action republication case when the first and second opponents sought only to raise the damages republication case - albeit that they had not yet formally sought leave in the District Court to pursue that course.

22 In the course of that hearing Mr Henskens, who appeared with Mr A Maroya for the first and second opponents, sought to defend the fact that they had not sought leave in the District Court to amend the Statement of Claim in the manner foreshadowed to Cooper DCJ. He drew the Court's attention to correspondence which revealed that on 26 May 2004 the first and second opponents' solicitors had forwarded a proposed Third Further Amended Ordinary Statement of Claim (the "TFASC") embodying the reformulation of their republication case to the solicitors for the claimant and the third opponent respectively, asking them to endorse their consent to the amended pleading so that it may be filed. They also said that in the light of their reformulated case the claimant's foreshadowed application for leave to appeal was unnecessary and, indeed, was unnecessary at the time the trial was aborted having regard to their then indication that they would abandon republication as a cause of action and rely upon it as going to damages only. The letter advised the recipients that it would be relied upon in support of an indemnity costs application for the costs thrown away of the s 7A hearing and of any costs incurred in relation to the foreshadowed Court of Appeal proceedings. The penultimate paragraph advised that if the recipients did not consent to the proposed amended Statement of Claim this would be brought to the attention of the Court of Appeal whose leave would be sought to file the TFASC. 23 The claimant's solicitors did not consent to the amended pleading. The third opponents did, subject relevantly to the first and second opponents agreeing to pay its costs thrown away by reason of the amendment. 24 The suggestion that this Court would give leave to the filing of the TFASC was clearly misconceived as emerged during the course of the first appeal hearing. Undaunted Mr Henskens sought to contend that the Court could consider whether the first and second opponents could rely upon the damages republication case on the existing state of the pleadings, notwithstanding that they did not plead such a case. This, too, was misconceived. The Court hears appeals from decisions said to be tainted by reviewable error. No decision had been made on the damages republication case incorporated in the draft TFASC. 25 It was in those circumstances that the Court determined that the claimant's application should be adjourned so that the first and second opponents could seek leave in the District Court to file the proposed TFASC.

The amendment application 26 The first and second opponents duly sought leave to amend their Statement of Claim to plead the damages republication case, an application the claimant opposed. Rein DCJ described the claimant's opposition to the amendment (at [15]) as having been "detailed in lengthy submissions which canvassed fundamental issues esoteric to the law of defamation and pleading". The application proceeded over two days in March and May 2005. His Honour delivered a carefully considered judgment allowing the amendment, subject to one question of repleading, which he described as a minor point. The first and second opponents were ordered to pay any costs thrown away by reason of the amendment, but the claimant was ordered to pay the costs of the motion. 27 It is unnecessary to deal with Rein DCJ's judgment in detail. It is sufficient to note that his Honour identified twelve issues raised by the claimant. Of apparent relevance to the second appeal hearing were three issues (numbers (8), (9) and (10)) which went to whether a damages republication case was available as a matter of law. His Honour considered numerous authorities on this proposition and concluded (at [42]) that for the purposes of the amendment application, they demonstrated that the damages republication case was "at the very least arguable". 28 Mr Connell, who appeared for the claimant on the amendment application, had also submitted the amendment should not be allowed because it deprived the claimant of a jury trial, a submission his Honour described as "somewhat surprising … in the light of the fact that this Court had already decided that cause of action republication (as the pleadings were then cast) was not a jury matter", a matter he noted was on appeal. 29 Although his Honour was of the view (properly in my opinion) that the question of what should go to the jury on a s 7A trial was not relevant to whether the amendment should be allowed, his Honour nevertheless considered that matter in some detail. He discussed Griffith & Ors v ABC & Ors and decided (at [69]) that, although not binding upon him, it was correctly decided and that, even if he had any doubts about its correctness, was a decision he ought to follow both as a matter of comity and because it was given by a judge with extensive experience sitting in a specialist jurisdiction. 30 His Honour concluded at [71] that if cause of action republication was not a jury matter under s 7A, then damages republication was not either, a matter he noted Mr Connell conceded.

The second appeal hearing 31 As I have earlier noted the night before the second appeal hearing Mr McClintock forwarded a proposed Draft Amended Summons for Leave to Appeal from, among other orders, Rein DCJ's orders "relating to jury trial in respect of republication and granting leave to amend". No written submissions were filed in support of that application, Mr McClintock being of the view that the submissions filed for the purposes of the first appeal hearing sufficiently embraced the legal issues. He did not, apparently, consider the claimant should identify the errors he proposed to contend had been committed by Rein DCJ in permitting the amendment. He did not submit a draft of the Notice of Appeal the claimant would have sought to rely upon had leave to appeal in the form of the Draft Amended Summons been granted.

32 The debate at the second appeal hearing as to whether the claimant should be allowed to persist with its original application for leave to appeal from Cooper DCJ's orders and granted leave to amend its original Summons for Leave to Appeal was extensive but can, I think, be fairly summarised in the following manner. 33 The original Summons for Leave to Appeal was based on the proposition that Cooper DCJ had erred in determining that a judge, not a jury, should determine the cause of action republication case. That decision was arguably otiose because the first and second opponents no longer relied upon the cause of action republication case. The claimant sought, nevertheless, to pursue his application for leave to appeal from Cooper DCJ's determination, as far as I could discern, on the basis that that determination would be germane if he was successful in having the TFASC set aside. 34 The claimant contended that leave should be given to challenge Rein DCJ's decision because if the availability of a damages republication case was not determined as a matter of law by this Court at this stage, he might suffer prejudice. 35 The nature of the prejudice was not clearly articulated. At its highest it appeared to amount to the proposition that the claimant would be deprived of the opportunity to address the jury on the question whether the Wagstaff interview carried the pleaded imputations. I do not understand that to be the case. Paragraphs 5, 9 and 11 of the TFASC appear to rely upon the Wagstaff interview alone (i.e. independently of its repetition in The Daily Liberal) as having conveyed defamatory imputations. The claimant will have the opportunity to address the s 7A jury on whether those imputations were carried and, if they are, whether they were defamatory.

36 The second basis upon which Mr McClintock sought to advance his injustice case was that, if the question of the availability of a damages republication case as a matter of law was not decided at this stage, it would have to be determined on an appeal from the ultimate trial if the claimant was unsuccessful. This bald submission concealed rather than exposed the real position. Any decision on damages in this case has still to await the outcome of the s 7A trial, and the substantive hearing on whatever defences are raised. Experience tells that the unsuccessful party or parties will contend that appellate error has arisen at any, or all, stages of the proceedings. The claimant did not advance any good reason why this interlocutory decision should be afforded the benefit of an interlocutory appeal any more than, potentially, all of those other matters. He can challenge any interlocutory order in an appeal from the final decision, if that order affected the final result: Gerlach v Clifton Bricks Pty Ltd [2002] HCA 22; (2002) 209 CLR 478 at [6] - [7] per Gaudron, McHugh and Hayne JJ. 37 The first and second opponents opposed the claimant being given leave to file the Draft Amended Summons for Leave to Appeal on the basis that it was out of time, there was no proposed draft Notice of Appeal or any summary of argument to identify the matters in Rein DCJ's judgment which would be challenged, that the amendment application related to matters of practice and procedure which ought not ordinarily attract appellate intervention. They said, further, that persisting with the original Summons would be a futile exercise having regard to the TFASC. 38 Finally, the first and second opponents objected to the claimant's proposed Amended Summons for Leave to Appeal on the basis that the amendment of the Statement of Claim related to a matter of practice and procedure which, in order to attract leave to appeal would have to have been demonstrably wrong and also cause injustice to the party seeking leave. 39 The third opponents did not oppose the claimant's application for leave to amend the Summons, submitting that the point of principle concerning republication, whether as a cause of action or going to damages only, was still relevant and was sufficiently before the Court either because of the original Summons for Leave to Appeal, the Notice of Contention or the mooted challenge to the amendment application.

Consideration 40 The application for leave to amend the Summons for Leave to Appeal sought to challenge a decision relating to a matter of practice and procedure. It serves well, in this context, to repeat Sir Frederick Jordan's statement in In Re the Will of F. B. Gilbert (decd.) (1946) SR (NSW) 318 at 323: " …there is a material difference between an exercise of discretion on a point of practice or procedure and an exercise of discretion which determines substantive rights. In the former class of case, if a tight rein were not kept upon interference with the orders of Judges of first instance, the result would be disastrous to the proper administration of justice. The disposal of cases could be delayed interminably, and costs heaped up indefinitely, if a litigant with a long purse or a litigious disposition could, at will, in effect transfer all exercises of discretion in interlocutory applications from a Judge in Chambers to a Court of Appeal." 41 All members of the Court quoted Sir Frederick's statement with approval in Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc [1981] HCA 39; (1981) 148 CLR 170 (at 177 in the joint judgment, and at 180 by Murphy J). The joint judgment emphasised that "appellate courts exercise particular caution in reviewing decisions pertaining to practice and procedure". While the Court was not prepared to lay down exhaustive criteria concerning the circumstances in which such a review might be undertaken the joint judgment did say (at 177) "that the question of injustice flowing from the order appealed from will generally be a relevant and necessary consideration."

42 As I have already explained, Mr McClintock could not, in my view, identify any injustice, let alone any substantial injustice the claimant might suffer if the case proceeds in accordance with the TFASC. In my view the claimant has not demonstrated any injustice flowing from Rein DCJ's granting of the amendment application which would have warranted this Court entertaining an appeal on a matter of practice and procedure. 43 Once the first and second opponents were given leave to amend their pleadings so that they only relied on a damages republication case, the application for leave to appeal from Cooper DCJ's judgment served no purpose. It no longer related to a real issue to be tried between the parties. It was, accordingly, futile.

Costs 44 I note that the parties consented to the Court determining the costs of the first appeal hearing although the Bench was differently constituted. 45 The costs applications flowing from the outcome of the two appeal hearings, as well as the terminated s 7A hearing, were intricate. 46 Mr McClintock submitted that as between the claimant and the first and second opponents, Cooper DCJ's order that the costs of the trial be reserved should not be disturbed, that the first and second opponents should pay the claimant's costs of the first appeal hearing and that each party should pay his own costs of the second appeal hearing. As between the claimant and the third opponent he submitted each party should pay his and its own costs. 47 Mr Henskens sought an order that the claimant be ordered to pay the first and second opponents' costs of the first and second appeal hearings on an indemnity basis and that the claimant and the third opponent should be ordered to pay the costs thrown away by reason of the terminated s 7A hearing. He did not expressly make any submission about the third opponent's costs of the two appeal hearings but it was implicit in his primary submission as I apprehend it, that they, too, should be borne by the claimant. 48 The third opponent sought an order for costs in its favour either directly against the claimant or, alternatively, against the first and second opponents excepting that, in relation to the second alternative, a Bullock order might be appropriate. 49 The parties' oral submissions addressed the issue of costs extensively. They were also given leave, at the conclusion of the hearing, to file written submissions on the question of the power of the Court to interfere with Cooper DCJ's costs order. The opponents took advantage of that leave. The claimant did not. 50 I will deal with the parties' submissions in relation to, respectively, the terminated s 7A trial, the first appeal hearing and the second appeal hearing.

The s 7A hearing: costs 51 Mr McClintock submitted that as the first and second opponents had not sought to appeal against Cooper DCJ's costs order in relation to the first trial, this Court had no power to deal with that costs order - even in circumstances where the third paragraph of the claimant's Summons for Leave to Appeal sought to challenge that costs order. Next, he submitted that, in any event, Cooper DCJ's costs order was clearly correct, that this Court should not interfere with it as a matter of discretion and that the question of the costs of the first trial should be determined at the end of the trial. Finally he contended that Rein DCJ's order that the first and second opponents pay the costs thrown away by the amended pleadings would arguably cover the costs of the aborted trial because the amendment had rendered that trial "completely nugatory". 52 As to the power point, the first and second opponents argued that s 98 of the Civil Procedure Act 2005 enabled the Court to make such order for the whole or any part of the costs of an appeal as it considered just and that that power enabled it to deal with the costs of the terminated hearing, even though it had refused leave to appeal. 53 They next submitted that the Court should order the claimant to pay their costs thrown away by reason of the s 7A trial terminating, while acknowledging the general rule that where an order is made for a new trial, an appellate court will allow the costs of the first trial to abide the outcome of the second: see Steffen v Ruban [1966] 2 NSWR 622; Brittain v The Commonwealth of Australia (No 2) [2004] NSWCA 427. They submitted it was appropriate to depart from the general rule because, in substance, it was the claimant 's conduct in persuading Cooper DCJ to terminate the s 7A in order that the interlocutory appeal could be pursued, a course the third opponent supported, which was the real reason the costs of that trial were wasted. 54 The third opponent joined in Mr McClintock's submission that there being no application by the first and second opponents for leave to appeal against the costs order of the s 7A hearing, this Court had no power to review that order.

Decision 55 In my opinion, this Court, not being seized of an appeal from Cooper DCJ's decisions, cannot interfere with his costs order. Even if the Court had the power, in my view there would be no reason to depart from the general rule that costs of the first trial should abide the outcome of the second.

The appeal hearings: costs 56 Mr McClintock submitted that the only reason the application for leave to appeal did not proceed at the first appeal hearing was because the first and second opponents had decided to await that application before they pursued their amendment application in the District Court. He drew attention to an exchange during the first appeal hearing where, in response to a submission by Mr Henskens that the claimant had pursued an application which was misconceived, the Court expressed the view that there was no misconception as long as the pleadings had not been amended. Accordingly Mr McClintock submitted that the first appeal hearing went off because of the conduct of the first and second opponents and they should pay the costs of it. 57 The third opponent joined in the last submission contending that the first and second opponents were the cause of that wasted hearing day. 58 As to the costs of the first appeal hearing, the first and second opponents relied on their solicitors' letter of 26 May 2004 annexing the form of the proposed TFASC which put the claimant on notice that an application for leave to appeal was unnecessary and that he proceeded at his own risk as to an order for indemnity costs of any such application. 59 They also relied upon the fact that following the filing of the Summons for Leave to Appeal, they had written to the claimant's solicitors on 9 June 2004, noting that the matter was before the District Court the following Friday on which occasion they would, in the ordinary event, have sought leave to file the proposed TFASC. The letter noted that it appeared from the claimant's written submissions in the leave application which had, by that stage, been received, that the claimant proposed to contend that republication could not be relied upon as going to damages only. In such circumstances, the letter suggested, the most cost effective course would appear to be to await the Court of Appeal's determination on that issue. They sought the claimant's agreement to stand the matter over in the District Court to be relisted after the determination of the leave application and, if appropriate, any appeal. The claimant's solicitors had responded to that suggestion by asserting that the application to amend had been dealt with by Cooper DCJ on 18 May 2004 and that if the first and second opponents wished to make another amendment application, it was a matter for them but that such application would be opposed. 60 By letter dated 23 June 2004 to the claimant's solicitors, the first and second opponents relevantly said they assumed the question whether a damages republication case was open to them could be determined in the Court of Appeal. Notwithstanding there was no judgment or order dealing with their entitlement to rely upon such a case, they had informed Rein DCJ on 11 June 2004 that their amendment application should await the determination of proceedings in the Court of Appeal. 61 In the circumstances, Mr Henskens submitted that the first and second opponents had done everything they could to avoid the application for leave to appeal, had tried to amend their pleadings to remove the cause of action republication issue, had served an amended pleading raising the damages republication case before the Summons seeking Leave to Appeal was filed and, when they had succumbed to a view that practical considerations warranted deferring any amendment application pending determination of the Summons for Leave to Appeal, the claimant had neither opposed that position, nor suggested it was wrong. 62 In the final analysis the first and second opponents' submission was that the costs incurred by the Summons for leave to appeal were due to the claimant's conduct, "to some degree aided and abetted" by the third opponent, in circumstances where the application for leave had questionable prospects of success from the outset.

63 As to the second appeal hearing the first and second opponents' submission that the claimant should bear those costs was, as I understand it, based on the proposition that that day was wasted because the claimant sought to pursue the original leave application which, once the amendment was made, was futile and, to the extent the claimant had sought to convert that application into an application for leave to appeal from the amendment order, had failed because this Court had rejected its application to amend the Summons for Leave to Appeal, and, accordingly, costs should follow the event. 64 Mr McClintock submitted it would be unjust for the Court to order the claimant to pay the first and second opponents' costs on the second appeal hearing because they could have, but had not, sought to strike out the Summons for Leave to Appeal by challenging its competence: cf Supreme Court Rules 1970 Pt 51 r 25, although he accepted that that rule only deals with appeals, rather than applications for leave to appeal. 65 Next, he argued, that the point which had led to the claimant being unable to proceed had been because of the position taken by the Court rather than the first and second opponents. This is not strictly correct. The first and second opponents had not had an opportunity to address the application for leave to amend the Summons for Leave to Appeal before the Court raised with the claimant its views as to the likely outcome of that application. It appeared tolerably plain that the first and second opponents proposed to submit that that application should be refused both because it was out of time as well as because it related to a matter of practice and procedure. 66 Mr McClintock next submitted, somewhat ingenuously I thought, that had the first and second opponents foreshadowed that they might oppose the application for leave to appeal upon the basis adumbrated by the Court, he might have been better prepared to deal with it. He could not, however, say that had the point been taken in submissions filed in accordance with the June 2005 timetable, the claimant would have bowed to the inevitable and would not have pursued either the original Summons nor sought to have filed an amended Summons. At best, he said, he would have put on further submissions although he did not indicate how they might have extended beyond what he advanced at the second appeal hearing. 67 The third opponent submitted that either the claimant or the first and second opponents should pay its costs of the second appeal hearing because, in relation to the claimant, costs should follow the event and, in relation to the first and second opponents, the outcome of the application was a consequence of its changed position so that the costs of the second appeal hearing were costs thrown away by the successful amendment application. Decision 68 Before I turn to the appropriate costs order for the first and second appeal hearings, I should make some other observations. 69 The price the first and second opponents paid for amending their pleadings was to suffer an order that they pay the claimant's costs thrown away by the amendment. Insofar as the third opponent is concerned, they agreed to the same costs outcome. It may be, as was submitted by both Mr McClintock and Mr Wheelhouse, that the costs thrown away order/agreement extend to some of the costs of the appeal hearings. Any costs orders should be compatible with that order/agreement. 70 The second observation relates to the third opponent's participation in the appeal hearings. The claimant joined the third opponent because, no doubt, it was affected by the relief sought in the Summons seeking Leave to Appeal, at least insofar as an order was sought varying Cooper DCJ's costs order: Supreme Court Rules 1970 Pt 51 r 9. Mr McClintock suggested that, nevertheless, the third opponent could have entered a submitting appearance, consenting to such orders as the Court might make save as to the costs of the appeal, in the event leave had been granted. 71 The third opponent's attempt to participate in the proceedings went beyond questions of costs. In the first appeal hearing Mr Wheelhouse orally sought to support the claimant's position by submitting that, on a proper analysis of the facts, the first and second opponents' case against the claimant was not, in truth, one of republication but original publication: see Webb v Bloch (1928) 41 CLR 331. In his written submissions Mr Wheelhouse had also supported the claimant's position insofar as it concerned the jury's role in a cause of action republication case. 72 At the second appeal hearing when the question of costs was debated, Mr Wheelhouse took a third stance, arguing that, on the basis of John Zunter v John Fairfax Publications Pty Ltd [2005] NSWSC 119; (2005) 62 NSWLR 594, the third opponent had available to it a cross claim against the first and second opponents pursuant to the Law Reform (Miscellaneous Provisions) Act 1946 and that the question whether or not the jury should determine whether the imputations were carried by the words attributed to the claimant was material to how that right was ultimately exercised. When taxed with the proposition that the Zunter point was academic in the absence of any cross claim actually filed by the third opponent, Mr Wheelhouse said his client had been awaiting the outcome of this appeal. This had an element of circularity having regard to the outcome of the first appeal hearing which indicates, in my view, that this aspect of the third opponent's participation is irrelevant. 73 Finally Mr Wheelhouse advanced a "strength in numbers" argument: it was in the third opponent's interest to support the claimant because resolution of the question raised by the Summons for Leave to Appeal would have led to the trial being conducted more efficiently. 74 In my view the third opponent was entitled to participate in the proceedings not for the reasons Mr Wheelhouse advances but because it had, at least, an interest in advancing arguments concerning the costs of the aborted trial. 75 The third matter I should deal with is the first and second opponents' submission that notwithstanding the fact the first appeal hearing went off so that they could seek leave to amend their pleadings in the District Court, they are entitled to an indemnity costs order because of the correspondence between their solicitors and those acting for the claimant and the third opponent in May-June 2004. In my view that correspondence, to the extent that it sought to preserve a right to seek indemnity costs was based on the same misconception which led to the first appeal hearing not proceeding: that the first and second opponents' damages republication case could be considered by this Court even though the pleadings had not been amended. 76 This leads into my conclusion concerning the costs of the first appeal hearing. That hearing did not continue because of the first and second opponents' failure to bring their amendment application in the District Court prior to its commencement. The appropriate order is that they pay the costs of the first appeal hearing, save to the extent that those costs are already covered by the costs thrown away order/agreement. 77 The converse is true of the second appeal hearing. The claimant failed on both counts in that hearing because its first Summons for Leave to Appeal was otiose and its attempt to file a draft Amended Summons for Leave to Appeal was rejected. The appropriate costs order for that hearing is that the claimant pay the opponents' costs of the second appeal hearing save to the extent that those costs are covered by the costs thrown away order/agreement.

Orders 78 As I have said, on 18 October 2005 the Court ordered that the Summons for Leave to Appeal be dismissed and refused the claimant's application for leave to amend that Summons in accordance with the Draft Amended Summons for Leave to Appeal. The only outstanding question was the matter of costs as to which, by reason of the foregoing, I propose the following orders:

(1) First and second opponents to pay the claimant's and third opponent's costs of the first appeal hearing, save to the extent that those costs are already covered by the costs thrown away order/agreement.

(2) Claimant to pay the opponents' costs of the second appeal hearing save to the extent that those costs are covered by the costs thrown away order/agreement. 79 BROWNIE AJA: I agree with McColl JA.

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