Zoef v Nationwide News Pty Ltd

Court of Appeal (NSW)|2017-01-27|Before: Ward JA, Gleeson JA, Payne JA

dovski v Crnojlovic (No 2) [2008] NSWCA 281 Nicol v Allyacht Spars Pty Ltd (1988) 165 CLR 306; [1988] HCA 48 Raybos Australia Pty Ltd v Tectran Corporation Ltd (1988) 77 ALR 190 Roberts v Prendergast [2013] QCA 89 Roads and Traffic Authority of NSW v Palmer (No 2) [2005] NSWCA 140 Trkulja v Yahoo! Inc LLC (No 2) [2012] VSC 217 Zoef v Nationwide News Pty Ltd [2016] NSWCA 283 Category: Consequential orders (other than Costs) Parties: Atanas (Tony) Zoef (Appellant) Nationwide News Pty Ltd (Respondent) Representation: Counsel: C A Evatt/ R Rasmussen/ I Kirgiz (Appellant) D R Sibtain/ L Barnett (Respondent)

Solicitors: Beazley Boorman Lawyers (Appellant) News Corp Australia (Respondent) File Number(s): 2015/308249 Decision under appeal Court or tribunal: District Court of New South Wales Jurisdiction: Civil Citation: [2015] NSWDC 232 Date of Decision: 16 October 2015 Before: Levy SC DCJ File Number(s): 2013/370050

Judgment

WARD JA: I agree with Gleeson JA.
GLEESON JA: On 18 October 2016, the Court allowed this appeal: Zoef v Nationwide News Pty Ltd [2016] NSWCA 283 (the principal judgment). It arose in the following circumstances.
The appellant, Mr Tony Zoef, brought proceedings in the District Court against the respondent publisher, claiming damages for defamation in respect of an article published in The Daily Telegraph on 22 August 2013. At trial, the sole basis on which Mr Zoef's claim was dismissed was the respondent's defence under s 18 of the Defamation Act 2005 (NSW) (Defamation Act) that Mr Zoef (as plaintiff) had failed unreasonably to accept the respondent's offer of amends. This Court upheld Mr Zoef's challenge to the respondent's reliance on that defence.
The Court made the following orders on 18 October 2016: (1) Appeal allowed. (2) Set aside orders 1 and 2 made by Levy DCJ on 16 October 2015, and in place, order: (a) Judgment for the plaintiff against the defendant in the sum of $150,000; (b) Defendant to pay the plaintiff's costs of the proceedings on the ordinary basis. (3) Respondent to pay the appellant's costs of the appeal.
The judgment in favour of Mr Zoef for $150,000 represented the amount of damages which had been contingently assessed by the primary judge on 16 October 2015 after he upheld the respondent's defence under s 18 of the Defamation Act.

Application to vary the judgment of this Court

By notice of motion filed 4 November 2016, Mr Zoef seeks orders varying the judgment of this Court. He initially relied upon Uniform Civil Procedure Rules 2005 (NSW) (UCPR), r 36.16 then later, on s 14 of the Civil Procedure Act 2005 (NSW) (Civil Procedure Act). After the Court invited further submissions from the parties, Mr Zoef also relied upon the slip rule: UCPR r 36.17. Three variations are sought.
The first relates to the date the judgment is to take effect. Mr Zoef seeks an order that the judgment take effect from 16 October 2015 (being the date the District Court contingently assessed damages of $150,000).
The second concerns whether a special costs order should be made with respect to both the trial and the appeal. Mr Zoef relies upon s 40 of the Defamation Act, the terms of which are set out at [51] below.
The third relates to the inclusion of pre-judgment interest on the award of $150,000 pursuant to s 100 of the Civil Procedure Act. This variation was not sought in Mr Zoef's notice of motion. It was first raised in Mr Zoef's further written submissions dated 16 November 2016. Mr Zoef seeks pre-judgment interest from 22 August 2013 (being the date of publication of the defamatory article).
The respondent opposed the relief sought by Mr Zoef.

The power of the Court to vary an order once entered

It is not in dispute that this Court's order was entered on 18 October 2016 upon the reasons for decision being delivered and the orders being entered into the Court's computerised record system: UCPR r 36.11(2A).
The power of the Court to set aside or vary a judgment or order is found in UCPR r 36.16 which relevantly provides: Further power to set aside or vary judgment or order (1) The court may set aside or vary a judgment or order if notice of motion for the setting aside or variation is filed before entry of the judgment or order. (2) The court may set aside or vary a judgment or order after it has been entered if: (a) it is a default judgment (other than a default judgment given in open court), or (b) it has been given or made in the absence of a party, whether or not the absent party had notice of the relevant hearing or of the application for the judgment or order, or …. (3) In addition to its powers under subrules (1) and (2), the court may set aside or vary any judgment or order except so far as it: (a) determines any claim for relief, or determines any question (whether of fact or law or both) arising on any claim for relief, or …. (3A) If notice of motion for the setting aside or variation of a judgment or order is filed within 14 days after the judgment or order is entered, the court may determine the matter, and (if appropriate) set aside or vary the judgment or order under subrule (1), as if the judgment or order had not been entered. …. (3C) Despite rule 1.12, the court may not extend the time limited by subrule (3A) or (3B). (4) Nothing in this rule affects any other power of the court to set aside or vary a judgment or order.
Variation of a judgment or order can also occur under the "slip rule", now found in UCPR r 36.17 which provides: Correction of judgment or order ("slip rule") If there is a clerical mistake, or an error arising from an accidental slip or omission, in a judgment or order, or in a certificate, the court, on the application of any party or of its own motion, may, at any time, correct the mistake or error.
Section 14 of the Civil Procedure Act provides that "[i]n relation to particular civil proceedings, the court may, by order, dispense with any requirements of the rules of court if satisfied that it is appropriate to do so in the circumstances of the case".

Mr Zoef's application based on UCPR r 36.16

Mr Zoef's notice of motion and initial submissions did not identify which subrule of r 36.16 was relied upon. Plainly neither subrule (1) nor (2) was engaged in the present case. Nor was it suggested that the general power in subrule (3) was engaged. Although it has been said that the precise scope of subrule (3) is unclear (see the discussion in Bartlett v Australia & New Zealand Banking Group (No 2) [2016] NSWCA 142 at [21]-[22]), that is not a matter which needs to be considered here.
In his reply submissions, Mr Zoef accepted that his notice of motion was filed after the 14-day period specified in subrule (3A). He sought to avoid the consequence of subrule (3C), which prohibits the court relying upon UCPR r 1.12 to extend the time limited by subrule (3A), by seeking an order under s 14 of the Civil Procedure Act dispensing with the requirements of the rules as to the time for filing his notice of motion.
An affidavit sworn 12 November 2016 by Mr Zoef's solicitor explained the non-compliance with r 36.16(3A) as an oversight within the solicitor's office. The solicitor said that the notice of motion, affidavit and submissions dated 26 October 2016 were ready for filing on "Friday 27 October 2016". (This date is obviously an error. It seems that the solicitor intended to refer to Friday 28 October 2016.) The solicitor deposed: "I believe I had asked my office manager to file them first thing Monday morning", that is, on 31 October 2016. That did not occur. The solicitor said he was on holidays in Melbourne from 5.00 pm Friday 28 October to Wednesday 4 November 2016. Upon his return to the office on 4 November 2016 the solicitor discovered that the documents had not been filed and immediately arranged for the motion and supporting documents to be filed that day.
Three observations should be made concerning that explanation. First, there was no evidence from the solicitor's office manager explaining whether the failure to file the documents was a result of inadvertence or otherwise.
Secondly, it may be inferred that the solicitor did not check with his office manager on Monday 31 October 2016 (or indeed on Tuesday 1 November 2016) that the documents had been filed in accordance with the solicitor's direction the previous Friday. That could have been easily achieved by the solicitor by either a short telephone call or an email to his office manager on 31 October 2016.
Thirdly, no explanation was provided by the solicitor for the omission of the claim for pre-judgment interest in Mr Zoef's notice of motion. Nor did Mr Zoef seek leave to file an amended notice of motion including a claim for pre-judgment interest.

Exceptions to the finality of judgments and orders

The general rule stated in Bailey v Marinoff (1971) 125 CLR 529; [1971] HCA 49 at 530 by Barwick CJ on an appeal from this Court is that: Once an order disposing of a proceeding has been perfected by being drawn up as the record of a court, that proceeding apart from any specific and relevant statutory provision is at an end in that court and is in its substance, in my opinion, beyond recall by that court. It would, in my opinion, not promote the due administration of the law or the promotion of justice for a court to have a power to reinstate a proceeding of which it has finally disposed.
It is well accepted that, subject to limited exceptions, such as in relation to fraud, the principle of finality continues to operate: Deputy Commissioner of Taxation v Meredith (No 2) (2008) 75 NSWLR 462; [2008] NSWCA 133 (Deputy Commissioner of Taxation v Meredith) at [7] (Basten JA, Ipp JA agreeing).
The 14-day window afforded by UCPR r 36.16(3A) creates an exception to the principle that ordinarily a court has no power to set aside a final judgment after it has been entered: see Malouf v Prince (No 2) [2010] NSWCA 51 (Malouf v Prince) at [11] (McColl and Macfarlan JJA and Nicholas J) and the cases there cited. Importantly, subrule (3C) prohibits the Court from extending (under UCPR r 1.12) the time limited by subrule (3A): Bennette v Cohen (No 2) [2009] NSWCA 162 (Bennette v Cohen) at [6]-[11]; Malouf v Prince at [11]-[17].
In Deputy Commissioner of Taxation v Meredith, Basten JA explained the purpose of these rules (at [15]): The clear purpose of the rules set out above is to allow a window of 14 days after entry of judgment, in courts where entry takes place automatically and largely contemporaneously with the delivery of judgment. The removal of the power to extend the 14-day period makes it sufficiently clear that the intention is that the period is not variable, but reflects the need for judgments and orders to be final and certain as to their operation.
The position is different where an oral application has been made within the 14-day period specified by subrule (3A). In Hancock v Arnold; Dodd v Arnold (No. 2) [2009] NSWCA 19 (Hancock v Arnold) the Court (Ipp, McColl and Basten JJA) exercised the power conferred by s 14 of the Civil Procedure Act to dispense with the need for filing a notice of motion in circumstances where a timely oral application has been made. That is not the present case.
The Court refrained, in Hancock v Arnold (at [11]), from expressing any view as to whether the power conferred by s 14 of the Civil Procedure Act could otherwise permit dispensation with the requirement as to time in subrule (3A), despite the terms of subrule (3C).
In Jeffrey & Katauskas Pty Ltd v SST Consulting Pty Ltd (2009) 239 CLR 75; [2009] HCA 43, the plurality (French CJ, Gummow, Hayne and Crennan JJ) observed (at [23]) that s 14 of the Civil Procedure Act is arguably limited in its application "to rules imposing some duty on parties and [did] not extend it to a rule imposing limitations on the power of the court to order costs". It was accepted by this Court in Malouf v Prince (at [20]) that UCPR r 36.16(3A) plainly falls into the former category insofar as it requires the applicant for an order to file a notice of motion within the 14-day period.
It is unnecessary to express any concluded view as to whether the s 14 power can be relied upon by Mr Zoef. Even if the Court were to dispense with that requirement, it would be necessary to consider the application for variation of this Court's judgment in accordance with the general rule in Bailey v Marinoff referred to above: Malouf v Prince at [23]. Mr Zoef did not attempt to bring his application within any exception to the general rule in Bailey v Marinoff. Furthermore, for the following additional reasons, it is not appropriate to dispense with the requirement as to time in UCPR r 36.16(3A).
First, the circumstances warranting the exercise of the s 14 power where the rules expressly prohibit extending the time limited by subrule (3A), may be considered to be relatively circumscribed. That follows from the terms of subrule (3C) and the clear purpose of those rules: see Deputy Commissioner of Taxation v Meredith at [24].
Secondly, an oversight within Mr Zoef's solicitor's office does not warrant dispensing with the requirement as to time in subrule (3A).
Thirdly and in any event, in relation to the claim for pre-judgment interest from 22 August 2013, the affidavit by Mr Zoef's solicitor contained no explanation for the omission of this claim in Mr Zoef's notice of motion. It can be inferred from Mr Zoef's further submissions dated 16 November 2016 that this may have been due to an oversight by his counsel. However, that is not a sufficient basis to dispense with the requirement that any application to vary or set aside the judgment be made by a notice of motion filed within the 14-day period.
It should be accepted, as the respondent contended, that none of the sources of power in UCPR r 36.16 is enlivened in the present case. I would add that even if s 14 affords the power for which Mr Zoef contends, for the reasons given below, the merits do not favour the variations sought relating to a special costs order in relation to the costs of the appeal or the award of prejudgment interest.

Slip rule - UCPR r 36.17

The relief sought in Mr Zoef's notice of appeal included: …. (3) verdict for the appellant in the amount of $150,000. (4) an order that the respondent pay the appellant's costs of the trial on an indemnity basis. (5) …. (6) an order that the verdict and judgment be backdated to 16 October 2015.
At the hearing of the appeal no reference was made in Mr Zoef's written or oral submissions to the relief sought in pars 4 or 6 of the notice of appeal. It seems that those matters were overlooked by counsel for Mr Zoef. The Court did not deal with these claims for relief in its principal judgment.
The slip rule has been held to permit applications for variations of orders where the mistake or error requiring the change lay in a party's failure to advert to a matter at the time of the hearing. In Roads and Traffic Authority of NSW v Palmer (No 2) [2005] NSWCA 140 at [24], Giles JA (Spigelman CA and Handley JA agreeing) referred with approval to the following statement by Toohey J in Raybos Australia Pty Ltd v Tectran Corporation Ltd (1988) 77 ALR 190 at 191: In many cases the slip rule or its equivalent is invoked when, through error or oversight, a judgment or order fails to express correctly the intention of the court at the time when the judgment or order was announced. But it is clear that this power of correction extends to cases where a matter, through inadvertence, was not dealt with at the hearing. In that case the purpose of correction is not to give expression to the intention of the court at the time the judgment or order was pronounced …
Giles JA continued at [25] as follows: Applications under a slip rule have been entertained to vary orders by inclusion of interest in a judgment (L Shaddock & Associates Pty Ltd v Parramatta City Council (No 2) (1982) 151 CLR 590; Gould v Vaggelas (1983) 157 CLR 271), ordering repayment of the judgment sum (The Commonwealth of Australia v McCormack (1984) 155 CLR 273; Production Spray Painting & Panel Beating Pty Ltd v Newnham (No 2) (1991) 27 NSWLR 659) and making an order for costs (Raybos Australia Pty Ltd v Tectran Corporation Pty Ltd). This has been so "regardless of whether the order has been drawn up, passed and entered" (L Shaddock & Associates Pty Ltd v Parramatta City Council (No 2) at 595; see also Production Spray Painting & Panel Beating Pty Ltd v Newnham (No 2) at 661).
To similar effect are the observations of the Full Federal Court in Elyard Corporation Pty Ltd v DDB Needham Sydney Pty Ltd (1995) 61 FCR 385 at 391 where Lockhart J (Black CJ agreeing) said: It is well settled that the application of the slip rule is not confined to giving effect to the intention of the judge at the time when the Court's order was made, or judgment given. It extends to the intention which the Court would have had, but for the failure that caused the accidental slip or omission: Symes v Commonwealth of Australia (1987) 89 FLR 356. The rule also extends to permit the correction of an order or decree where the omission results from the inadvertence of a party's legal representative: Fritz v Hobson at 561-562; Chessum and Sons v Gordon [1901] 1 KB [sic] 694; Tak Ming Co Ltd at 304; Shaddock per Mason ACJ, Wilson and Deane JJ at 594-5; and Gould v Vaggelas at 274-275.

(i) Back-dating the date of judgment

UCPR r 36.4 provides that, generally speaking, a judgment or order takes effect on the date on which it is given or made: UCPR r 36.4(1). This is qualified by subrule (3) which provides: Despite subrules (1)… the court may order that a judgment or order is to take effect as of a date earlier or later than the date fixed by those subrules.
Where a plaintiff obtains an entitlement to an award of damages, or to an increased award of damages, as a result of an appeal court judgment, it is necessary to determine when that entitlement took effect: Najdovski v Crnojlovic (No 2) [2008] NSWCA 281 (Najdovski v Crnojlovic) at [5] (Basten JA, Allsop P and Windeyer J agreeing). There, Basten JA canvassed two possibilities. One is that the judgment takes effect from the date on which it is delivered by the appeal court. The other is that the judgment of the appeal court is back-dated. With respect to the first possibility, Basten JA said that it will usually be appropriate to include an amount by way of pre-judgment interest to cover the period during which the successful appellant has been deprived of the damages since the trial judgment, but that is done by exercise of the power to award pre-judgment interest: Nicol v Allyacht Spars Pty Ltd (1988) 165 CLR 306; [1988] HCA 48 at 312. With respect to the later possibility, Basten JA said (at [5]): If the effect of the judgment is back-dated … [an award of pre-judgment interest] will not be appropriate, but the plaintiff will be entitled to post-judgment interest until the relevant amount is paid.
The authorities reveal competing approaches to the exercise of the power to back-date a judgment. In McKensey v Hewitt (2004) 61 NSWLR 54; [2004] NSWSC 636 at [40]-[43], Young CJ in Eq said that the power to back-date a judgment has been interpreted as authorising the Court to do so only on some good ground, that is, where there is something exceptional in the facts. That case concerned Part 40 r 3 of the Supreme Court Rules 1970 (NSW) (SCR), the predecessor of UCPR r 36.4(3).
The view of Young CJ in Eq reflects the approach in cases such as Borthwick v Elderslie Steamship Co (No 2) [1905] 2 KB 516 (Borthwick). There, the plaintiff failed at first instance in his claim for damages but succeeded on appeal to the English Court of Appeal. After noting (at 519) that judgment of the Court of Appeal "is not ipso facto antedated by reason that it is substituted for the judgment in the Court below", Collins MR observed that the power to antedate ought only be used on good grounds being shown.
In Borthwick, there had been no delay attributable to one of the parties, and no contumacy or unreasonable act of the defendants such that they ought to be treated as in default by reason of the postponement of the question of their liability, as if it arose from their own action. Accordingly, it was concluded that no case had been established for back-dating the judgment of the Court of Appeal in order that the successful plaintiff could get interest for the time that elapsed between the trial and that judgment.
A more flexible approach can be seen in GIO of NSW v Healey (No 2) (1991) 22 NSWLR 380; [1991] NSWCA 103 (GIO v Healey) at 387, where Kirby P held that the power to order a judgment take effect earlier than from the date on which it would ordinarily take effect provided "an important degree of flexibility to the Court", allowed it "to do what is just in the particular case where the usual position … would produce unfairness" and allowed "the Court to avoid rigidity and to accommodate the general rule of the necessity of the case."
Similarly, in Harmer v Hare (No 2) [2012] NSWCA 58 (Harmer v Hare) the Court (Beazley and Whealy JJA and Sackville AJA) accepted (at [36]) that the discretion conferred by UCPR r 36.4(3) is primarily, though not exclusively, concerned with instances where there has been delay between the adjudication of the claims in the proceedings and the formal pronouncement or order. Whilst acknowledging that the power to back-date a judgment is not confined to this situation, the Court observed (at [36]) that the circumstances warranting its exercise in other situations may be said to be relatively circumscribed.
The approach to UCPR r 36.4(3) favoured in GIO v Healey and Harmer v Hare was referred to with approval in Gacic v John Fairfax Publications Pty Ltd [2015] NSWCA 99 at [145]-[146] (McColl JA, Macfarlan and Barrett JJA agreeing).

Exercise of power

Mr Zoef submitted that since his damages had been contingently assessed by the District Court and he had been kept out of his money for over a year, it was appropriate that this Court back-date its judgment. The respondent submitted that the delay between the dismissal of Mr Zoef's claim by the District Court (on 16 October 2015) and the making of final orders by this Court (on 18 October 2016) was not exceptional and does not justify the antedating of this Court's judgment.
The power to back-date a judgment is a discretionary power. Whilst the delay of one year is not exceptional, it is nonetheless a lengthy period of time and there is good reason here to back-date the judgment of this Court. At trial, Mr Zoef had sought pre-judgment interest in his statement of claim; however, no claim for pre-judgment interest was included in his notice of appeal. Instead, Mr Zoef sought an award of damages of $150,000 (as assessed by the primary judge) and an order that this Court back-date its judgment to take effect on 16 October 2015. The claim for pre-judgment interest, belatedly advanced by Mr Zoef after the judgment of this Court was delivered, should be rejected for the reasons given below. It would be an injustice, however, having refused to vary the judgment to award pre-judgment interest, not to back-date the judgment of this Court to the date damages were contingently assessed by the primary judge. This is not a case where the damages were unascertained until the decision of the appeal court.
The respondent complains that the effect of back-dating the judgment of this Court is that interest after judgment pursuant to s 101 of the Civil Procedure Act, would run from an earlier date than the date of delivery of this Court's decision. However, that would have been the case but for the error of the primary judge, now corrected on appeal, in upholding the defence of reasonable offer of amends under s 18 of the Defamation Act. The effect of that error is that Mr Zoef was deprived, during the period since 16 October 2015, of the damages to which he was entitled.
The judgment in favour of Mr Zoef for $150,000 should take effect on 16 October 2015. Mr Zoef will be entitled to interest after judgment in accordance with s 101 of the Civil Procedure Act. The quantum of interest in accordance with that section is a matter upon which the parties can be expected to agree. Any dispute, which is not anticipated, would need to be determined in debt recovery proceedings: Najdovski v Crnojlovic (No 2) at [6].

(ii) The trial: indemnity costs application

Mr Zoef, having succeeded on appeal, relies upon s 40 of the Defamation Act for an order that the costs at trial be assessed on an indemnity basis for the whole of the proceedings, or alternatively after 25 May 2015. As indicated, a claim for indemnity costs in respect of the trial was sought in the notice of appeal.
Section 40 of the Defamation Act provides: 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.
The effect of s 40 of the Defamation Act is that where a plaintiff is successful in defamation proceedings, a court must (unless the interests of justice require otherwise) order costs on an indemnity basis if it is satisfied that the defendant unreasonably failed to make a settlement offer or unreasonably failed to accept a settlement offer proposed by the plaintiff.
Here Mr Zoef relies upon both limbs.
Turning to the first limb. The first question raised by s 40(2)(a) is whether Mr Zoef has established that the respondent did not make a "settlement offer" before the conclusion of the proceeding. Assuming an affirmative answer to that question, the second question is whether the respondent "unreasonably failed" to make such an offer to Mr Zoef: Trkulja v Yahoo! Inc LLC (No 2) [2012] VSC 217 at [12] (Kaye J).
As to the first question, the respondent relies upon the offers to settle the proceedings in the form of the offers of amends on 16 January 2014 and 27 March 2014. It was not suggested that the test of a "reasonable offer" in s 40(2)(a) is other than objective. The terms of the respondent's offers of amends and the response by Mr Zoef are set out at [25]-[32] of the principal judgment.
In summary, by its offer of amends on 16 January 2014, the respondent offered to publish a clarification and pay Mr Zoef's reasonable expenses incurred before the date of the offer and incurred in considering the offer, as agreed or assessed. Mr Zoef's solicitors replied on 23 January 2014, accepting the offer "subject to clarification and some minor qualifications". These related to the prominence to be given to the proposed apology and "some reasonable" amount of compensation. The respondent withdrew its offer of amends on 27 March 2014 and made a renewed offer to make amends, the terms of which included an apology to be published in the "For the Record" section of The Daily Telegraph in the usual style and font, and compensation of $20,000 together with payment of Mr Zoef's reasonable expenses incurred before the date of the offer and incurred in considering the renewed offer.
In the principal judgment at [66]-[78], the conclusion was reached that the offer of amends of 27 March 2014 was not reasonable for the purposes of the defence under s 18 of the Defamation Act.
The respondent seeks to avoid the application of that conclusion for the purposes of s 40 of the Defamation Act. The respondent submitted that the test in s 40 is whether the defendant "unreasonably failed to make a settlement offer" not "failed to make a reasonable settlement offer". But this submission ignored the definition of "settlement offer" in s 40(3).
To qualify as a "settlement offer" for the purposes of s 40, the offer to settle the proceedings must answer the description of a "reasonable offer at the time it was made". If the offer of amends is not a reasonable offer, then it is not a "settlement offer" for the purposes of s 40: Holt v TCN Channel Nine Pty Ltd (No 2) (2013) 82 NSWLR 293; [2012] NSWSC 968 at [50] (Adamson J).
Other than the construction argument (which should be rejected), the respondent did not seek to argue that its offers of amends were reasonable offers. For the reasons given in the principal judgment, the offer of amends of 27 March 2014 was not a "reasonable offer at the time it was made" for the purposes of s 40(3). The same reasoning applies to the respondent's earlier offer of amends of 16 January 2014. As mentioned, that offer was in similar terms to the later offer, except that it did not include the details of the intended publication of the proposed apology or offer of $20,000 compensation.
That leaves the respondent in the position of not having made any settlement offer at all. As I have said, the question which then arises is whether the respondent (as defendant) "unreasonably failed" to make a settlement offer to Mr Zoef. An assessment of unreasonableness in this context is assisted by an understanding of the evident purposes of s 40(2) of the Defamation Act. These are described in Davis v Nationwide News Pty Ltd [2008] NSWSC 946 (Davis v Nationwide News) by McClellan CJ at CL at [26]-[27]. His Honour regarded s 40(2) as: [27] … oblig[ing] parties to defamation proceedings to take a reasonable approach to negotiations for the settlement of those proceedings. A party who unreasonably fails to make or accept a settlement offer may be ordered to pay costs on an indemnity basis. The amount of the offer is relevant for the purpose of assessing the reasonableness of a party's conduct. The section contemplates that an order for costs on an indemnity basis may be made even if a party making an offer does not do better in the proceedings than the offer which he or she has made ...
The respondent did not direct any submissions to this second question. In particular, the respondent did not suggest that there was any reason why it was reasonable for the respondent not to have made a settlement offer at all, if its offers of amends did not answer the description of a "settlement offer" in s 40(3). Nor was any argument advanced by the respondent that the interests of justice required a costs order at trial other than a special costs order.
In determining whether the respondent unreasonably failed to make a settlement offer to Mr Zoef, it is necessary to have regard to the issues which were in contention between the parties. The first and main issue was whether Mr Zoef was identified in the matter complained of. The respondent took the position that the article was not about Mr Zoef but about another person, namely his son. The second issue was whether Mr Zoef had failed unreasonably to accept the respondent's offer of amends of 27 March 2014, with the consequence that the respondent could rely upon the defence under s 18 of the Defamation Act.
It can be accepted that it was reasonable for the respondent in the proceedings below to put those matters in issue. However, it does not follow that the agitation of those issues, and the lack of their resolution until trial, made it reasonable for the respondent not to have made any offer of settlement to Mr Zoef before the conclusion of the proceeding: see Trkulja v Yahoo! Inc LLC (No 2) at [25]. The respondent did not contend in this Court that Mr Zoef's claim for damages was not reasonably arguable. Nor did the respondent contend that it was unaware of the matters on which Mr Zoef succeeded at trial on the question of identification. Mr Zoef's prospects of success in the proceedings below can be considered to have been sufficiently strong to warrant the respondent making a settlement offer. The respondent unreasonably failed to do so, since its offers of amends were not reasonable offers. In all of the circumstances, I am satisfied that Mr Zoef is entitled to a special costs order in respect of the trial.
In light of the above conclusion it is not necessary to address Mr Zoef's alternative argument relying upon the second limb of s 40(2)(a). Nonetheless, I will briefly state my reasons for rejecting this argument.
Viewed objectively, the purported acceptance by Mr Zoef's solicitors on 25 May 2015 of the respondent's offer of amends dated 27 March 2014 did not constitute an offer of settlement by Mr Zoef, that is, a counter-offer. It was common ground on the appeal that Mr Zoef's purported acceptance was of no legal effect. Mr Zoef cannot now seek to rely upon his purported acceptance of the respondent's withdrawn offer as, in effect, a settlement offer proposed by him for the purpose of s 40(2)(a) of the Defamation Act.

(iii) The appeal: indemnity costs application

Mr Zoef's submissions assumed that the costs regime in s 40 of the Defamation Act applies to an appeal. Although the respondent did not take issue with that approach, in my view, it is incorrect.
Section 40 makes specific provision for the award of costs in defamation proceedings. It does not, in its terms, apply to appeals: Roberts v Prendergast [2013] QCA 89 at [31] (Gotterson JA). So much is clear from the language of s 40(2) which concerns costs of "defamation proceedings" brought where there is an unreasonable failure to make or accept a settlement offer by the "defendant" or "plaintiff" respectively. Read in context, those references do not include the appellant and the respondent to an appeal. The expression "defamation proceedings" as used in s 40 does not include an appeal.
That this is a correct construction of s 40 of the Defamation Act seems to have been assumed both by the parties and this Court in Channel Seven Sydney Pty Ltd v Mahommed (No 2) (2011) 80 NSWLR 210; [2011] NSWCA 6 at [48] (McColl JA, Spigelman CJ, Beazley JA, McClellan CJ at CL and Bergin CJ in Eq agreeing). There, when dealing with the respondent's claim for indemnity costs in relation to the costs of the appeal, no reliance was placed on, nor reference made to s 40 of the Defamation Act (or its predecessor provision, s 48A of the Defamation Act 1974 (NSW)).
Mr Zoef did not contend that there was any other basis upon which he was entitled to indemnity costs in relation to the costs of the appeal. It was not suggested that there were any special or unusual circumstances of the appeal which would justify departure from the ordinary rule.
It is not necessary to determine whether the slip rule applies to Mr Zoef's claim for indemnity costs in relation to the costs of the appeal. Even if the rule was available (which may be doubted in the circumstances of the present case), Mr Zoef has not established an entitlement to indemnity costs in relation to the costs of the appeal. The respondent did not act unreasonably in seeking to uphold the success at trial of its defence under s 18 of the Defamation Act.

(iv) Pre-judgment interest on damages

As already indicated, the claim for pre-judgment interest under the Civil Procedure Act, s 100 was first sought in Mr Zoef's further written submissions dated 16 November 2016. Section 100 relevantly provides: Interest up to judgment (1) In proceedings for the recovery of money (including any debt or damages or the value of any goods), the court may include interest in the amount for which judgment is given, the interest to be calculated at such rate as the court thinks fit: (a) on the whole or any part of the money, and (b) for the whole or any part of the period from the time the cause of action arose until the time the judgment takes effect.
Mr Zoef submitted that the appropriate rate of pre-judgment interest is 3%. Reference was made to George Jamoo v Nationwide News Pty Ltd [2004] NSWSC 126; Davis v Nationwide News Pty Ltd and Haertsch v Channel Nine Pty Ltd [2010] NSWSC 182.
On the assumption that the judgment is antedated to 16 October 2015, the claim for pre-judgment interest at 3% amounts to $9,688 (being 112 weeks at $86.50 per week).
Mr Zoef's claim for the inclusion of pre-judgment interest should be rejected for the following reasons.
First, no claim for pre-judgment interest was made in the notice of appeal, nor has Mr Zoef sought leave to file an amended notice of appeal seeking such relief.
Secondly, it has not been suggested that the omission of a claim for pre-judgment interest in the notice of appeal was a result of inadvertence by Mr Zoef's legal representatives.
Thirdly and importantly, that the judgment of this Court did not include pre-judgment interest was not a consequence of a "clerical mistake or error arising from an accidental slip or omission". The judgment of this Court for $150,000 reflected the accepted position by both parties in this Court as to the quantification of damages if Mr Zoef was successful on appeal. Mr Zoef should be held to that position: Harmer v Hare at [38].

Conclusion and orders

Mr Zoef has succeeded, in part, on his notice of motion. Adopting a 'broad-brush' approach to costs, it is appropriate that he recover a substantial proportion of his costs of the motion. That outcome would be reflected by an order that the respondent pay 80% of Mr Zoef's costs of the motion.
I propose the following orders: (1) In addition to the orders made by this Court on 18 October 2016, the Court makes the following further order: "(4) The judgment in order 2(a) shall take effect on 16 October 2015". (2) Vary order 2(b) made by this Court on 18 October 2016 by deleting the word "ordinary" and inserting the word "indemnity" so that the order reads: "Defendant to pay the plaintiff's costs of the proceedings on an indemnity basis." (3) Otherwise dismiss Mr Zoef's notice of motion filed 4 November 2016. (4) The respondent to pay 80% of Mr Zoef's costs of the notice of motion.
PAYNE JA: I agree with the reasons of Gleeson JA and the orders his Honour proposes.

Amendments 31 January 2017 - "Texts Cited": removal of reference to Furzer Crestani Handbook 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: 31 January 2017

Defamation Act 1974(NSW)

Uniform Civil Procedure Rules 2005(NSW)r 36.16(3A), rr 1.12, 36.4,36.11, 36.16, 36.17

Civil Procedure Act 2005(NSW)s 14, ss 14, 100, 101

Defamation Act 2005(NSW)s 40, ss 18, 40, 48A

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