MATTHEW RICHARD SLATER In Person - v JEFFERY MALCOLM SMITH via AVL [2024] SASC 29

Applicant: MATTHEW RICHARD SLATER In Person - Counsel: MR M SLATER First Respondent: JEFFERY MALCOLM SMITH via AVL Solicitor: WOTTON & KEARNEY - Counsel: MR T BESANKO Second Respondent: ECOSOL PTY LTD In Person Solicitor: WOTTON & KEARNEY - Counsel: MR T BESANKO Cross Applicant: JEFFERY MALCOLM SMITH via AVL - Counsel: MR J SMITH Cross Respondent: MATTHEW RICHARD SLATER In Person - Counsel: MR M SLATER Hearing Date/s: 14/09/2023, 27/11/2023, 16/02/2024 File No/s: AMCCI-19-4466 B SUPREME COURT OF SOUTH AUSTRALIA (Civil) DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment. The onus remains on any person using material in the judgment 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 in which it was generated. SLATER v ECOSOL PTY LTD (NO 2) [2024] SASC 29 Judgment of the Honourable Justice Blue 6 March 2024 DEFAMATION - ACTIONS FOR DEFAMATION - COSTS DEFAMATION - ACTIONS FOR DEFAMATION - COSTS - INDEMNITY COSTS DEFAMATION - ACTIONS FOR DEFAMATION - COSTS - GENERAL RULE - COSTS FOLLOW THE EVENT - COSTS OF ACTION Applications for costs. A defamation action by the applicant Mathew Slater against Ecosol Pty Ltd and a cross action by Jeffery Smith against Mr Slater were dismissed: Slater v Ecosol Pty Ltd [2023] SASC 99. Ecosol Pty Ltd and Mr Smith seek an order that Mr Slater pay their costs of Mr Slater’s action on an indemnity basis from the date of Calderbank offers made by them on the ground that Mr Slater unreasonably rejected the offers. Mr Slater seeks an order that Mr Smith pay his costs of Mr Smith’s action on an indemnity basis on the ground that the action was an abuse of process. Alternatively he seeks an order that Mr Smith pay his costs of the action on an indemnity basis from the date of Calderbank offers made by him on the ground that Mr Smith unreasonably rejected the offers. In the alternative he seeks an order that Mr Smith pay his costs of the action on the ordinary basis when the action was in the District Court of New South Wales and on the standard basis, that is in accordance with the scale applicable in the Magistrates Court, since the action has been in the Supreme Court. Held: -- 1 of 50 -- 1 Discussion of costs principles when Calderbank offer not accepted (at [93]-[117]). 2 It was not unreasonable for Mr Slater not to accept the 7 July 2021 offer and the discretion to order indemnity costs should not be exercised (at [136]). 3 It was not unreasonable for Mr Slater not to accept the 17 August 2021 offer and the discretion to order indemnity costs should not be exercised (at [200]-[201], [204]). 4 It was not unreasonable for Mr Slater not to accept the 22 July 2021 offer and the discretion to order indemnity costs should not be exercised (at [206]). 5 It was not unreasonable for Mr Slater not to accept the 23 March 2022 offer and the discretion to order indemnity costs should not be exercised (at [213]). 6 A single costs order should be made in favour of Ecosol Pty Ltd and Mr Smith that Mr Slater pay the costs of Mr Slater’s action on the Magistrates Court costs scale (at [234], [245]). 7 Those costs should not be reduced due to the concurrent hearing of Mr Smith’s action or mixed success on trial or interlocutory issues (at [227]). 8 It should be ordered that Mr Slater pay the costs of his action of Ecosol Pty Ltd and Mr Smith in accordance with the Magistrates Court costs (at [245]). 9 It was not unreasonable for Mr Smith not to accept the 9 April 2020 offer and the discretion to order indemnity costs should not be exercised (at [266]). 10 It was not unreasonable for Mr Smith not to accept the 22 April 2020 offer and the discretion to order indemnity costs should not be exercised (at [269]). 11 It was not unreasonable for Mr Smith not to accept the 13 August 2020 offer and the discretion to order indemnity costs should not be exercised (at [273]). 12 Mr Smith’s cross action was not an abuse of process and Mr Slater is not entitled to damages against Mr Smith (at [284], [287]-[289]). 13 It should be ordered that Mr Smith pay the costs of his action of Mr Slater in accordance with the ordinary basis applicable in the District Court of New South Wales up to the date of transfer and thereafter in accordance with the Magistrates Court costs scale (at [300]). Defamation Act 2005 (SA) s 38(2)(b) ; Uniform Civil Procedure Rules 2005 (NSW) rr 20.26, 42.13, 42.15, 42.15A,42.35; Defamation Act 2005 (NSW) s 40; Magistrates Court (Civil) Rules 2013 (SA) rr 106(1)-(2); Uniform Civil Rules 2020 (SA) rr 132.4, 132.10, 132.11, 141.3, 194.5, 193.2(1), Schedule 6 rr 1, 5(1)-(2); Jurisdiction of Courts (Cross Vesting) Act 1987 (NSW) s 12; Supreme Court Act 1935 (SA) s 40; Magistrates Court Act 1991 (SA) s 37(1); Civil Procedure Act 2005 (NSW) s 3; Legal Profession Uniform Law Application Act 2014 (NSW) s 76; Legal Profession Uniform Law 2014 (NSW) s 172(1), referred to. Alexander v Australian Community Pharmacy Authority (No 3) [2010] FCA 506; Anderson Group Pty Ltd v Tynan Motors Pty Ltd [No 2] [2006] NSWCA 120; Baillieu Knight Frank (NSW) Pty Ltd v Ted Many Real Estate Pty Ltd (1992) 30 NSWLR 359; Bell Lawyers Pty Ltd v Pentelow [2019] HCA 29, (2019) 269 CLR 333; Calderbank v Calderbank [1975] 3 All ER 333; Chaina v Alvaro Homes Pty Ltd [2008] NSWCA 353; Chief Commissioner of State Revenue v E Group Security Pty Ltd (No 3) [2023] NSWCA 63; Commonwealth v Gretton [2008] NSWCA 117; Cretazzo v Lombardi (1975) 13 SASR 4; Crump v Equine Nutrition Systems Pty Ltd (No 2) [2007] NSWSC 25; Dean v Stockland Property Management Pty Ltd (No 2) [2010] NSWCA 141; Donald Campbell & Co v Pollak [1927] AC 732; Evans Shire Council v Richardson (No 2) [2006] NSWCA 61; FAI General Insurance Company Ltd v Burns (1996) ANZ Insurance Cases 77,213 (61-384); Ford Motor Co of Australia Ltd v Lo Presti [2009] WASCA 115; Ghunaim v Bart (No 2) [2006] NSWCA 82; Grynberg v Muller [2002] NSWSC 350; Hazeldene’s Chicken Farm Pty Ltd v Victorian WorkCover Authority (No 2) (2005) 13 VR 435; Herning v GWS Machinery Pty Ltd [No 2] [2005] NSWCA 375; Holt v Bunney (No 2) [2020] SASCFC 120 ; Jones v Bradley (No 2) [2003] NSWCA 258; Jones v Sutton -- 2 of 50 -- (No 2) [2005] NSWCA 203; Latoudis v Casey (1990) 170 CLR 534; Leichardt Municipal Council v Green [2004] NSWCA 341; London Scottish Benefit Society v Chorley (1884)13 QBD 872; Magenta Nominees Pty Ltd v Richard Ellis (Western Australia) Pty Ltd Unreported Federal Court of Australia 29 August 1995; Malkinson v Trim [2002] EWCA Civ 1273, [2003] 2 All ER 356; Moloney v Hayward (No 2) [2023] SASC 36; Morris v McEwen [2005] SASC 284, (2002) 92 SASR 281 ; Nominal Defendant v Dighton (No 2) [2012] SASCFC 97; Ofria v Cameron (No 2) [2008] NSWCA 242 ; Peter Bodum A/S v DKSH Australia Pty Ltd [2010] FCA 456; Phantom Precision Engineering Pty Ltd v Luscombe (No 2) [2021] SASC 103; Preston v Preston [1982] 1 All ER 41; Rapuano v Karydis-Frisnan [2013] SASCFC 93; Rouse v Shepherd (No 2) (1994) 35 NSWLR 277; Sim Development Pty Ltd v Greenvale Property Group Pty Ltd (No 2) [2017] VSC 456; Stipanov v Mier (No 2) [2006] VSC 424; Unioil International Pty Ltd v Deloitte Touche Tohmatsu (a Firm) (No 2) (1997) 18 WAR 190, considered. -- 3 of 50 -- -- 4 of 50 -- SLATER v ECOSOL PTY LTD (NO 2) [2024] SASC 29 1 BLUE J: I previously delivered reasons for judgment for dismissing a defamation action (the Slater action) by Mathew Slater against Ecosol Pty Ltd (Ecosol) and a cross action (the Smith action) by Jeffery Smith against Mr Slater.1 2 Ecosol and Mr Smith seek an order that Mr Slater pay their costs of the Slater action on an indemnity basis from the date of Calderbank offers2 made by them on the ground that Mr Slater unreasonably rejected the offers. They rely principally on “common law” principles applicable to Calderbank offers and in the alternative on section 38(2)(b) of the Defamation Act 2005 (SA). In the alternative they seek an order that Mr Slater pay their costs of action on the standard basis, that is in accordance with the scale applicable in the Magistrates Court. 3 Mr Slater seeks an order that Mr Smith pay his costs of the Smith action on an indemnity basis on the ground that the Smith action was an abuse of process. Alternatively he seeks an order that Mr Smith pay his costs of the Smith action on an indemnity basis from the date of Calderbank offers made by him on the ground that Mr Smith unreasonably rejected the offers. He relies on rule 42.15 of the Uniform Civil Procedure Rules 2005 (NSW), in the alternative on common law principles and in the alternative on section 38 of the Defamation Act 2005 (SA) and/or section 40 of the Defamation Act 2005 (NSW). In the alternative Mr Slater seeks an order that Mr Smith pay his costs of the Smith action on the ordinary basis when the action was in the District Court of New South Wales and on the standard basis, that is in accordance with the scale applicable in the Magistrates Court, since the action has been in the Supreme Court. Background 4 On 23 October 2019 Mr Smith instituted the Smith action in the District Court of New South Wales against Mr Slater for defamation claiming damages of $40,000. Mr Smith was initially self-represented. Mr Slater was also initially self- represented. 5 On 11 November 2019 Mr Slater instituted the Slater action in the Magistrates Court of South Australia against Ecosol and Mr Smith for defamation claiming damages of $45,000. Mr Slater was at all times self-represented in that action. 6 The Slater action was governed initially by the Magistrates Court (Civil) Rules 2013 (SA) (the Magistrates Court Rules). 7 On 25 November 2019 Ecosol and Mr Smith, who were self-represented, filed a defence in the Slater action. 1 Slater v Ecosol Pty Ltd [2023] SASC 99. 2 Calderbank v Calderbank [1975] 3 All ER 333. -- 5 of 50 -- [2024] SASC 29 Blue J 2 8 In January 2020 Mr Slater engaged Gretsas & Associates to perform legal work in the background in respect of the Slater action and the Smith action. Gretsas & Associates never acted as solicitors on the record for Mr Slater in the Slater action but later (in July and August 2020) acted as solicitors on the record for Mr Slater in the Smith action. 9 On 7 January 2020 the first directions hearing was conducted in the Slater action in the Magistrates Court. 10 In February 2020 Mr Smith engaged FM Legal as solicitors to represent him in the Smith action. They briefed Roger Rasmussen as counsel and filed a notice of appointment of solicitor. 11 On 16 March 2020 Gretsas & Associates issued their first invoice to Mr Slater for legal work in relation to the Slater and Smith actions. They subsequently issued invoices dated 2 April 2020, 3 June 2020, 6 August 2020, 7 December 2020, 8 February 2021, 8 April 2021 and 29 September 2021. 12 On 8 April 2020 Ecosol (by its chairman Mr Smith) sent a Calderbank letter to Mr Slater offering to settle the Slater action on the basis that it be discontinued by Mr Slater with Mr Slater paying $2,000 towards Ecosol’s costs. It, and subsequent settlement offers made by the parties in 2020, did not contain a confidentiality term.3 13 On 9 April 2020 Mr Slater sent a Calderbank letter to Mr Smith offering to settle the Smith action on the basis that it be withdrawn by Mr Smith with Mr Slater paying $1,500 towards Mr Smith’s costs (the first Slater offer). The offer was expressed to be open for 21 days. 14 On 15 April 2020 Ecosol (by its chairman Mr Smith) sent a Calderbank letter to Mr Slater offering to settle the Slater action on the basis that it be discontinued by Mr Slater with Mr Slater paying $2,000 towards Mr Smith’s costs. 15 On 22 April 2020 Mr Smith sent a Calderbank letter to Mr Slater offering to settle the Smith action on the basis that it be discontinued by Mr Smith with Mr Slater paying $7,500 towards Mr Smith’s costs. The offer was expressed to be open for two days. 16 On 22 April 2020 Mr Slater sent a Calderbank letter to Mr Smith offering to settle the Smith action on the basis that it be withdrawn by Mr Smith with Mr Slater paying $2,500 towards Mr Smith’s costs (the second Slater offer). The offer was also expressed to be open for two days. 3 As appears below, offers made in 2021 and 2022 by the solicitors for Ecosol and Mr Smith in the Slater action included terms providing for discontinuance of the Smith action and confidentiality. -- 6 of 50 -- [2024] SASC 29 Blue J 3 17 On 24 April 2020 Mr Smith sent a Calderbank letter to Mr Slater rejecting his offer of 22 April 2020 and re-offering to settle the Smith action on the same terms as his 22 April 2020 offer. The offer was expressed to be open for three days. 18 On 12 May 2020 Barry Nilsson Lawyers (also called BN Law) filed in the Slater action a notice of acting for Ecosol and Mr Smith. 19 On 18 May 2020 the Uniform Civil Rules 2020 (SA) (the Uniform Rules) were enacted. They replaced, amongst others, the Magistrates Court Rules. Thereafter the Slater action was governed by the Uniform Rules. 20 Ecosol held a directors and officers liability insurance policy (the Policy) which provided coverage in respect of the Slater action. It insured directors up to a monetary limit in respect of loss arising from a wrongful act (including defamation). It insured Ecosol on the same terms, except that loss arising from defamation was excluded other than defence costs up to a smaller monetary limit. 21 Costs incurred by Ecosol and Mr Smith in the Slater action with Barry Nilsson Lawyers and counsel briefed by them were met by the insurer pursuant to the Policy. 22 On 4 June 2020 FM Legal on behalf of Mr Smith sent a formal rules Offer of Compromise and a Calderbank letter to Mr Slater offering to settle the Smith action on the basis that Mr Slater pay $15,000 plus costs of the action on the ordinary basis. The offer was expressed to be open for 28 days. 23 On 19 June 2020 Barry Nilsson Lawyers filed in the Slater action an amended defence. 24 On 20 July 2020 Gretsas & Associates filed in the Smith action notice of appointment of solicitor stating that they now acted as solicitors for Mr Slater. They briefed Richard Potter as their barrister. 25 On 28 July 2020 Mr Slater amended the amount of his claim to $60,000. 26 On 29 July 2020 Mr Slater sent a Calderbank letter to Barry Nilsson Lawyers offering to settle the Slater action on the basis that Ecosol and Mr Smith pay him $20,000 plus costs on the ordinary basis. The offer was expressed to be open for 28 days. 27 On 13 August 2020, Mr Slater sent an email to FM Legal offering to settle the Smith action on the basis that it be withdrawn by Mr Smith with Mr Smith paying $4,500 towards Mr Slater’s costs (the third Slater offer). The offer was expressed to be a formal rules Offer of Compromise and in the alternative a Calderbank offer. It was expressed to be open for 28 days. 28 On 13 August 2020, in response to a request for clarification by Barry Nilsson Lawyers in relation to his 29 July offer, Mr Slater sent an email to them saying that -- 7 of 50 -- [2024] SASC 29 Blue J 4 he believed that his costs (being advice and legal work performed by Gretsas & Associates in the background) would be in the realm of $3,000 and offering to agree their quantum at $3,000. 29 In the second half of August 2020 Gretsas & Associates ceased to act for Mr Slater in the Smith action and Mr Slater became self-represented again. 30 On 27 August 2020 FM Legal on behalf of Mr Smith sent a formal rules Offer of Compromise and a Calderbank letter to Mr Slater offering to settle the Smith action on the basis that it be dismissed with no order as to costs. The offer was expressed to be open for 28 days. 31 On 27 August 2020, Mr Slater sent an email to FM Legal implicitly rejecting their offer. He said that he was more than happy for the matter to continue on and to be held by the Court to be a baseless or trivial claim. He said that the claim had now cost him approximately $11,000 in legal fees. He urged Mr Smith to accept his 13 August 2020 offer. 32 On 12 November 2020 FM Legal filed in the District Court of New South Wales a notice that they ceased to act as solicitors for Mr Smith. Thereafter, Mr Smith was self-represented in the Smith action until January 2022. 33 On 7 December 2020 Mr Slater instituted a proceeding in the Supreme Court of New South Wales seeking transfer of the Smith action to this Court. 34 On 22 January 2021 in the Slater action Magistrate Hodder heard, and dismissed, applications by Mr Slater for further and better discovery, an extension of time to provide an expert report and a stay of the action pending determination of the Smith action. Magistrate Hodder listed the action for trial commencing on 19 July 2021. 35 On 12 February 2021 Mr Slater filed in this Court a notice of appeal against Magistrate Hodder’s orders. 36 On 1 April 2021, on the hearing of the appeal, I made orders by consent. The orders included transfer of the Slater action into this Court and hearing of that action concurrently with the Smith action if the Smith action should be transferred to this Court. The trial listing in the Magistrates Court was vacated in light of the transfer and the matter was relisted for trial in this Court commencing on 27 September 2021. 37 The orders included an order that there be no order as to the costs of the appeal. They also included the following order: The costs of the transferred Magistrates Court action, and of the transferred New South Wales action if the transfer order is made, are to be determined on the scale and in a manner as if the actions had proceeded in the Magistrates Court. -- 8 of 50 -- [2024] SASC 29 Blue J 5 38 On 23 April 2021 I conducted the first directions hearing in this Court in the Slater action. 39 On 17 June 2021 Hamill J in the New South Wales Supreme Court made an order transferring the Smith action to this Court. Hamill J ordered that Mr Smith pay Mr Slater’s costs of the hearing on 16 and 17 June 2021 limited to filing fees, other court fees and travel expenses. 40 On 30 June 2021 Mr Smith instituted the Smith action in this Court by filing a transfer order made by Hamill J. Thereafter, directions hearings were heard concurrently in the Slater action and the Smith action. 41 On 7 July 2021 Barry Nilsson Lawyers in the Slater action sent a Calderbank letter to Mr Slater (the first Ecosol offer). They made an offer open for 21 days to settle the Slater action on the basis that: • they pay $20,000 to Mr Slater in full settlement of the Slater claim and any other claim or potential claim he may have against Ecosol or Mr Smith; • the Slater claim be discontinued with no order as to costs; • the Smith claim be discontinued with no order as to costs; • Mr Slater sell his and his trust fund’s shares in Ecosol for $7,714.08; • the settlement be strictly confidential and subject to full releases, confidentiality provisions and non-disparaging clauses. 42 On 7 July 2021 Mr Slater sent a Calderbank email to Barry Nilsson Lawyers. He declined the offer and provided a substantive response, including that he had incurred substantial legal costs in defending the Smith action in the New South Wales District Court and in both actions in South Australia. He made a counter offer that he would accept $52,500 to settle both actions on a confidential basis. 43 On 22 July 2021 Barry Nilsson Lawyers sent a Calderbank letter to Mr Slater (the second Ecosol offer). They made an offer open for 21 days to settle the Slater action on the same basis as in their 7 July 2021 letter except that the amount offered was $10,000, reference to any other claim made by Mr Slater was omitted and reference to sale of his Ecosol shares was omitted. 44 On 22 July 2021 Mr Slater sent an email to Barry Nilsson Lawyers. He rejected the offer. 45 On 29 July 2021 there was a directions hearing at which the trial listing commencing on 27 September was vacated and the matter was relisted for trial in this Court commencing on 7 March 2022. -- 9 of 50 -- [2024] SASC 29 Blue J 6 46 On 9 August 2021 Mr Slater sent an email to Barry Nilsson Lawyers. He said that he would not accept any settlement offer that required confidentiality. He reopened his 7 July Calderbank offer and modified it so as not to include a confidentiality term but to include a non-disparagement term. 47 On 17 August 2021 Barry Nilsson Lawyers sent a Calderbank letter to Mr Slater (the third Ecosol offer). They made an offer open for 21 days to settle the Slater action on the same basis as in their 22 July 2021 letter except that the amount offered was $20,000. 48 On 26 August 2021 Mr Slater amended his claim to increase the amount claimed from $60,000 to $80,000. 49 On 27 August 2021 I made an order consolidating the Slater action and the Smith action on the basis that the Smith action be treated as a cross action in the proceeding comprising the Slater action. I also ordered that Mr Slater file and serve a written witness statement (in both actions) by 15 December 2021 (later extended to 10 January 2022) and Mr Smith file and serve a written witness statement (in both actions) by 4 February 2022 (later extended to 16 February 2022). 50 On 10 September 2021 Mr Slater sent an email to Barry Nilsson Lawyers. He requested their standard precedent no disparage and confidentiality agreement so that he could examine them before he made offers. He also enquired whether it was their client’s position that they would not negotiate settlement on a stand-alone basis for each claim. 51 On 15 September 2021 Barry Nilsson Lawyers sent a responding email but they did not address the two questions summarised in the previous paragraph. On 16 September 2021 Mr Slater sent a responding email saying that Barry Nilsson Lawyers had not addressed issues raised by him. 52 On 28 September 2021 Mr Slater filed and served two formal offers under the Uniform Rules. The offers were essentially the same except that the first offered to accept $22,000 and was expressed to be non-confidential, whereas the second offered to accept $79,000 and included an agreement for confidentiality. Mr Slater effectively placed a premium of $57,000 on confidentiality. 53 On 29 September 2021 Gretsas & Associates issued their last invoice to Mr Slater for legal work in relation to the Slater and Smith actions. The last legal work that Mr Slater contends was performed in connection with the Smith action was on 14 June 2021. 54 On 10 January 2022 Mr Slater filed his witness statement (in the form of an affidavit). 55 On 18 January 2022 Barry Nilsson Lawyers filed and served a notice of acting on behalf of Mr Smith in the Smith action. Barry Nilsson Lawyers were instructed by the insurer to act for Mr Smith in the Smith action for the pragmatic -- 10 of 50 -- [2024] SASC 29 Blue J 7 reason that there was a very high degree of overlap between representing Mr Smith in the Slater action and the Smith action. 56 On 16 February 2022 Ecosol and Mr Smith filed Mr Smith’s witness statement (in the form of an affidavit). 57 On 7 March 2022 the trial of the actions commenced. Between 7 and 17 March 2022 I heard Mr Slater’s case. I adjourned the trial to 8 August 2022 to hear Ecosol’s and Mr Smith’s case. I ordered that Ecosol and Mr Smith file and serve written witness statements from witnesses other than Mr Smith by 27 May 2022 (later extended to 24 June 2022). 58 On 23 March 2022 Barry Nilsson Lawyers sent a Calderbank letter to Mr Slater (the fourth Ecosol offer) offering to settle the Slater action and the Smith action on the basis that both be discontinued with no order as to costs. 59 On 23 March 2022 Mr Slater sent an email rejecting the offer. 60 On 17 May 2022 Mr Slater sent a Calderbank email to Barry Nilsson Lawyers. He offered to discontinue the Slater action with the parties bearing their own costs. 61 On 20 May 2022 Mr Slater sent an email to Barry Nilsson Lawyers suspending his 17 May offer until he had knowledge of the extent of publication of the alleged defamatory publications. 62 In June 2022 Barry Nilsson Lawyers ceased to act as solicitors for Ecosol in the Slater action. They still acted for Mr Smith. 63 At that stage, Ecosol and Mr Smith had incurred defence costs of $500,000. Although Mr Smith was insured against loss resulting from defamation, Ecosol was only insured in respect of defence costs up to a monetary limit. On the basis of a 50/50 allocation of defence costs, Ecosol had reached the limit of its indemnity and was no longer entitled to legal representation funded by the insurer. Consequently, Barry Nilsson Lawyers were instructed to cease representing Ecosol. 64 On 6 June 2022 Ecosol filed a notice of acting on its own behalf. 65 On 8 June 2022 at a directions hearing, counsel who had been appearing for Ecosol announced that he now appeared only for Mr Smith in both actions. Mr Smith was given leave to represent Ecosol. 66 Between 20 and 24 June 2022 Ecosol and Mr Smith filed written witness statements by Mr Charlton, Mr Bishop and Mr Macklin. 67 On 8 July 2022 Mr Slater filed an interlocutory application seeking leave to discontinue his action against Mr Smith only. -- 11 of 50 -- [2024] SASC 29 Blue J 8 68 On 13 July 2022 I granted leave to Mr Slater to discontinue his action against Mr Smith, reserving the question of costs of the action against Mr Smith. Counsel who had been appearing for Mr Smith announced that, upon and in consequence of a discontinuance being filed, he would cease to appear as counsel for Mr Smith in the Smith action and Mr Smith would become self-represented. 69 On 13 July 2022 Mr Slater discontinued his action against Mr Smith. 70 On 15 July 2022 Mr Smith filed a notice of acting on his own behalf. Thereafter, Mr Smith represented Ecosol in the Slater action and was self- represented in the Smith action. 71 Between 8 and 19 August 2022 the trial resumed. I heard Ecosol’s defence case, Mr Smith’s case against Mr Slater and Mr Slater’s defence/rebuttal case. I adjourned the trial to 16 December 2022 to hear closing addresses. Costs hearing 72 On the costs hearing, I received affidavits affirmed by Mr Slater on 25 July 2023, 21 August 2023, 5 September 2023, 8 September 2023 and 4 October 2023. I received a spreadsheet, prepared initially by Mr Slater setting out costs and disbursements that he claimed he incurred in the New South Wales District Court, New South Wales Supreme Court, Slater action and Smith action, together with responses by Mr Smith (the Slater spreadsheet). 73 I received affidavits by Mr Smith affirmed on 31 July 2023 and 1 September 2023. I received emails from Mr Smith sent on 27 November 2023 and 14 December 2023 which contained tables setting out costs incurred by him in the New South Wales Supreme Court and attaching supporting invoices. I received an email from Mr Smith sent on 6 February 2024 which in turn attached an email from FM Legal to Mr Smith in response to his request for all invoices which in turn attached costs invoices from FM Legal and Mr Rasmussen. I also heard brief oral evidence from Mr Smith in relation to those invoices. Costs principles 74 The relevant principles in relation to costs are not in dispute. What is in dispute is their application. 75 Costs are in the discretion of the Court under section 40 of the Supreme Court Act 1935 (SA) and under subsection 37(1) of the Magistrates Court Act 1991 (SA). As observed above, this proceeding is to be determined from the time that each action was transferred into this Court as if it had proceeded in the Magistrates Court. -- 12 of 50 -- [2024] SASC 29 Blue J 9 76 The discretion is unfettered but must be exercised judicially.4 77 Subject to the exercise of such discretion, the ordinary position is that, as a presumptive general rule or starting point: • costs follow the event;5 and • costs are assessed in accordance with the court scale where applicable.6 78 While the circumstances in which a court will depart from either starting point are not closed or limited, certain criteria and relevant factors have been identified in the decided cases. 79 Each of these principles is reflected in the Uniform Rules.7 Rule 194.5 identifies certain general principles, which are subject to the overriding costs discretion, and which include the general principle that costs follow the event. Rule 193.2(1) and Schedule 6 subrules 5(1) and 5(2) provide that the ordinary position in the Magistrates Court is that costs are payable by reference to the relevant Magistrates Court costs scale.8 80 Rule 194.6 identifies non-exhaustively certain potentially relevant factors, including non-acceptance by a party of an offer made by another party to resolve the proceeding. Ordinary position quantum Magistrates Court 81 In a case (such as the present) of an unliquidated claim in which the respondent is successful, the Magistrates Court costs scales over the relevant period have contained consistent core provisions in respect of the principal components9 of pre-trial costs. Those core provisions are relevantly as follows: Item 2 Filing a … defence … (solicitor and counsel), including: … attending the first directions hearing or hearing (as applicable). 5% of quantum. Item 3 Any and all activity after the first directions hearing or hearing (solicitor and counsel) until: 14% of quantum. 4 Cretazzo v Lombardi (1975) 13 SASR 4 at 11 per Bray CJ (with whom Zelling and Jacobs JJ agreed); Holt v Bunney (No 2) [2020] SASCFC 120 at [9] per Kourakis CJ, Nicholson and Hughes JJ. 5 Donald Campbell & Co v Pollak [1927] AC 732 at 812 per Viscount Cave LC (with whom Viscount Dunedin, Lord Phillimore and Lord Carson agreed); Latoudis v Casey (1990) 170 CLR 534 at 542-544 per Mason CJ, 557 per Dawson J (with whom Brennan J agreed) and 569 per McHugh J. 6 Chaina v Alvaro Homes Pty Ltd [2008] NSWCA 353 at [113] per Basten JA (with whom Giles JA and Young CJ in Eq agreed); Moloney v Hayward (No 2) [2023] SASC 36 at [56] per McMillan AJ. 7 Holt v Bunney (No 2) [2020] SASC 120 at [9] per Kourarkis CJ, Nicholson and Hughes JJ. 8 See previously Magistrates Court (Civil) Rules 2013 (SA) rule 106(1)(d) and Third Schedule Costs Scale. 9 There are some other limited costs components. I ignore disbursements for present purposes. -- 13 of 50 -- [2024] SASC 29 Blue J 10 if the action is to proceed to trial—the last hearing before trial, whether a directions hearing, hearing or pre-trial conference … Item 4 All aspects not otherwise specified of, and incidental to, preparing for trial (solicitor and counsel), including: proofing witnesses; advice on evidence and law; and delivering brief to counsel. 8% of quantum. 82 In such a case, “quantum” is defined to be the quantum of damages claimed by the applicant. Accordingly, in such a case which proceeds to trial, the ordinary position is that the core pre-trial costs recoverable by a successful respondent are 27 per cent of the amount claimed. In addition, item 9 provides $160 ($150 before 18 May 2020) for any other attendance when the costs are not within any other item (solicitor and counsel), which might apply for example to a separately listed argument as opposed to an ordinary directions hearing. 83 The Magistrates Court costs scales since 18 May 2020 have also contained consistent core provisions in respect of the principal component of trial costs. That component (item 7) is: Attendance as counsel at trial, including fee on brief. The following applies: (a) the first day—the greater of the following: (i) $1,410; or (ii) 4% of quantum; or (b) subsequent days—the greater of the following: (i) $1,060; or (ii) 3% of quantum. 84 The effect is that the first day’s attendance is four per cent of quantum subject to a floor of $1,410 and subsequent days’ attendances are three per cent of quantum subject to a floor of $1,060. Before 18 May 2020, the percentages were three per cent and two and a half per cent respectively. For example, in a case where the applicant claims $40,000 and the trial proceeds over five days, the core recoverable costs are 43 per cent of the amount claimed being $17,200. 85 There is no scale amount for attendance of a solicitor where the solicitor does not act as counsel. In addition, there is an item providing for $110 ($100 before 18 May 2020) for arranging for attendance of a witness at trial. 86 The rationale of the scale is that the costs recoverable by a successful party from an unsuccessful party should be proportionate to the amount in dispute and should be fixed, certain and (subject to the exercise of discretion) predictable. The scale in this respect differs from the scale applicable in the higher courts, where the ordinary position is that the amount recoverable depends on the extent of the work reasonably undertaken (in terms of hours or pages). -- 14 of 50 -- [2024] SASC 29 Blue J 11 87 Of course, the Magistrates Court has a general discretion to depart from the Magistrates Court costs scale if in the Court’s opinion the specific circumstances of a case require it. District Court of New South Wales 88 The position in the District Court of New South Wales is different to the position in either the Magistrates Court or the Supreme Court of South Australia. There is no court-prescribed scale of costs. Costs are not fixed by the Court but are assessed by costs assessors. 89 Rule 42 of the Uniform Civil Procedure Rules 2005 (NSW) provides: 42.2 General rule as to assessment of costs Unless the court orders otherwise or these rules otherwise provide, costs payable to a person under an order of the court or these rules are to be assessed on the ordinary basis. 90 The “ordinary basis” is defined by section 3 of the Civil Procedure Act 2005 (NSW) as follows: “ordinary basis”, in relation to the assessment of legal costs that a court has ordered to be paid, means the basis of assessing costs in accordance with Division 3 of Part 7 of the Legal Profession Uniform Law Application Act 2014. 91 In turn, section 76 of the Legal Profession Uniform Law Application Act 2014 (NSW) provides: 76 Criteria for costs assessments of ordered costs (1) In conducting an assessment of ordered costs, the costs assessor must determine what is a fair and reasonable amount of costs for the work concerned. (2) In considering what is a fair and reasonable amount of costs for the work concerned, the costs assessor may have regard to the factors in section 172(1) and (2) of the Legal Profession Uniform Law (NSW) (as if that section also applies to ordered costs and so applies with any necessary modifications). 92 In turn, subsection 172(1) of the Legal Profession Uniform Law 2014 (NSW) provides: 172 Legal costs must be fair and reasonable (1) A law practice must, in charging legal costs, charge costs that are no more than fair and reasonable in all the circumstances and that in particular are— (a) proportionately and reasonably incurred; and (b) proportionate and reasonable in amount. -- 15 of 50 -- [2024] SASC 29 Blue J 12 Departing from ordinary position: informal offers 93 Without the discretion being fettered or the categories being closed, there are several established circumstances in which a court may depart from the ordinary or starting position that costs follow the event and costs are on the relevant court scale (a special costs order). 94 One such circumstance is when it is established that one party unreasonably rejected an informal compromise offer by the other party to resolve the action under which the offeree would have been better off than under the court’s judgment following trial. 95 Several observations apply in respect of this circumstance. 96 First, there are effectively five elements to this established circumstance (or more accurately set of circumstances): 1 the party seeking the special costs order made an informal offer to the other party; 2 the offer was an offer to resolve the action; 3 the offer involves genuine compromise;10 4 the offeree would have been better off accepting the offer compared to the position under the court’s judgment;11 and 5 it was unreasonable for the offeree not to accept the offer.12 97 Secondly, this circumstance remains subject to the overall discretion of the court which is subject only to the requirement that it be judicially exercised.13 Accordingly, the mere fact that the elements identified above are satisfied does not necessarily entail that the court will make a special costs order departing from the ordinary position. It is necessary to consider all relevant circumstances before so departing. 98 Thirdly, as a corollary of the second observation, the mere fact that one of these elements is not satisfied does not necessarily preclude the court making a special costs order departing from the ordinary position. It is necessary to consider all of the relevant circumstances. However, the fact, and where relevant the extent, 10 See Anderson Group Pty Ltd v Tynan Motors Pty Ltd [No 2] [2006] NSWCA 120 at [8] per Basten JA (with whom Santow JA and Young CJ in Eq agreed) and cases there cited. 11 Jones v Bradley (No 2) [2003] NSWCA 258 at [6]-[8] per Meagher, Beazley and Santow JJA. 12 See Ford Motor Co of Australia Ltd v Lo Presti [2009] WASCA 115 at [16] per Buss JA (with whom Wheeler JA agreed) and cases there cited. 13 Jones v Bradley (No 2) [2003] NSWCA 258 at [8] per Meagher, Beazley and Santow JJA; Phantom Precision Engineering Pty Ltd v Luscombe (No 2) [2021] SASC 103 at [22] per Lovell J. -- 16 of 50 -- [2024] SASC 29 Blue J 13 of non-satisfaction of an element will usually be highly important if not critical to the exercise of the costs discretion. 99 Fourthly, the onus of proof and persuasion is on the party seeking a special costs order.14 Informal offer 100 The offer must be capable of acceptance so as to give rise to an agreement for the performance of terms and/or the entry of a consent judgment. 101 I use the term “informal offer” to distinguish a formal offer under rule 132.4 of the Uniform Rules. In the latter case, rule 132.10 of the Uniform Rules sets out prima facie costs consequences of non-acceptance of a formal offer which amounts to a “relevant offer” as defined and the judgment of the Court is less favourable to the offeree than under the offer; and rule 132.11 applies to formal offers which are not relevant offers as defined. 102 When the offeror relies on non-acceptance of an informal offer where the offeror was precluded by the Rules from making a formal offer, that fact may be a relevant factor to the exercise of the costs discretion.15 When the offeror could have made a formal offer but chose instead to make an informal offer, that fact may (depending on the circumstances) be a relevant factor to the exercise of the costs discretion.16 Offer to resolve action 103 The offer must be to resolve the action. An offer to resolve an issue in or part only of an action might give rise to different costs considerations but this does not arise in the present case. 104 If the offer contains terms relating to matters extraneous to the action, that is likely to be a factor relevant to the exercise of the discretion.17 14 Evans Shire Council v Richardson (No 2) [2006] NSWCA 61 at [26] per Giles, Ipp and Tobias JJA; Commonwealth v Gretton [2008] NSWCA 117 at [46], [74] per Beazley JA (with whom Mason P agreed); Ghunaim v Bart (No 2) [2006] NSWCA 82 at [25] per McColl JA (with whom Giles and Ipp JA agreed); Ford Motor Co of Australia Ltd v Lo Presti [2009] WASCA 115 at [21] per Buss JA (with whom Wheeler JA agreed). 15 Morris v McEwen [2005] SASC 284, (2002) 92 SASR 281 at [75] per White J (with whom Debelle J agreed); Moloney v Hayward (No 2) [2023] SASC 36 at [41] per McMillan J; Chief Commissioner of State Revenue v E Group Security Pty Ltd (No 3) [2023] NSWCA 63 at [2] per Brereton JA (with whom Simpson AJA agreed). 16 Morris v McEwen (2002) 92 SASR 281 at [74]-[75] per White J (with whom Debelle J agreed); Moloney v Hayward (No 2) [2023] SASC 36 at [41] per McMillan J; Chief Commissioner of State Revenue v E Group Security Pty Ltd (No 3) [2023] NSWCA 63 at [2] per Brereton JA (with whom Simpson AJA agreed). 17 Rapuano v Karydis-Frisnan [2013] SASCFC 93 at [49]-[52] per Peek J (with whom Vanstone and David JJ agreed). -- 17 of 50 -- [2024] SASC 29 Blue J 14 Genuine compromise 105 The offer must involve genuine compromise.18 If the offer involves a complete capitulation by the offeree, its non-acceptance would not be capable of giving rise to a special costs order.19 This is assessed objectively but as at the time of the offer. 106 If the offer involves genuine compromise, the extent of the compromise may be a relevant factor in determining whether a special costs order should be made.20 In Alexander v Australian Community Pharmacy Authority (No 3)21 Bromberg J said: …[T]he extent of the compromise involved is a relevant consideration in determining whether the rejection of the compromise offer was unreasonable. … To give weight to the extent of the compromise offered is in keeping with the underlying policy of encouraging settlement. Borderline offers of compromise ought not be given the same potency as generous offers which are far more likely to encourage settlement.22 107 In most cases, it will be relatively easy to determine and measure the prospective position of the offeror if successful in the action and compare that with the prospective position of the offeror under the offer to determine whether there is compromise and its extent. However, in some cases, this will be difficult. If the relief sought is to be or may be assessed in non-monetary or qualitative terms, it may be difficult to assess the nature or extent of the relief if the applicant is successful. If the relief sought is to be assessed in purely monetary terms such as a damages claim, there may be uncertainty about the quantum that would be awarded if the applicant is successful. Offeree better off 108 The terms of the offer must ordinarily be such that the offeree would have been better off accepting it compared to the position under the court’s judgment.23 If not, it is unlikely to give rise to the exercise of the discretion to make a special costs order (although if the positions are very close, this may not be fatal to the discretion to make a special costs order). 109 In most cases, it will be relatively easy to determine and measure the position of the offeror under the judgment in the action and compare that with the position of the offeror under the offer. However, in some cases, this will be difficult. If the 18 Herning v GWS Machinery Pty Ltd [No 2] [2005] NSWCA 375 at [4] per Handley, Beazley and Basten JJA; Leichardt Municipal Council v Green [2004] NSWCA 341 at [56] per Santow JA (with whom Bryson JA and Stein AJA agreed); Anderson Group Pty Ltd v Tynan Motors Pty Ltd (No 2) [2006] NSWCA 120 at [8] per Basten JA (with whom Santow JA and Young CJ in Eq agreed). 19 Anderson Group Pty Ltd v Tynan Motors Pty Ltd (No 2) [2006] NSWCA 120 at [8] per Basten JA (with whom Santow JA and Young CJ in Eq agreed). 20 Peter Bodum A/S v DKSH Australia Pty Ltd [2010] FCA 456 at [8] per Middleton J; Alexander v Australian Community Pharmacy Authority (No 3) [2010] FCA 506 at [32] per Bromberg J. 21 [2010] FCA 506. 22 At [32]. 23 Jones v Bradley (No 2) [2003] NSWCA 258 at [6]-[8] per Meagher, Beazley and Santow JJA. -- 18 of 50 -- [2024] SASC 29 Blue J 15 relief sought is to be or may be assessed wholly or partly in non-monetary or qualitative terms, it may be difficult to make the comparison. 110 At one extreme, some cases involve purely financial claims that are measured, and can only be measured, in purely monetary terms. An example is a simple claim by a bank against a customer for payment of a loan. 111 At the opposite extreme, some cases involve purely non-financial claims that cannot be measured in monetary terms. An example is a claim for specific performance of a contract to perform a service that has no monetary value (or no monetary value that can be assessed or even estimated). 112 Between these two extremes are hybrid cases that involve both financial and non-financial claims. An example is a defamation claim (such as the present case) in which the applicant seeks vindication and restoration of reputation as well as monetary compensation. Unreasonable not to accept offer 113 It must have been unreasonable for the offeree not to accept the offer. This is a critical element. The discretion to make a special costs order on the ground of non-acceptance of an offer will not be exercised without establishment of this element.24 114 The assessment of reasonableness is objective, but it is assessed as at the time of non-acceptance and by reference to matters known or which ought to have been known by the offeree at that time. It is not assessed with the benefit of hindsight.25 115 It is necessary to consider all relevant circumstances in assessing such reasonableness.26 Without being exhaustive, relevant circumstances27 include: 24 Jones v Bradley (No 2) [2003] NSWCA 258 at [7]-[9] per Meagher, Beazley and Santow JJA; Herning v GWS Machinery Pty Ltd [No 2] [2005] NSWCA 375 at [4] per Handley, Beazley and Basten JJA; Hazeldene’s Chicken Farm Pty Ltd v Victorian WorkCover Authority (No 2) (2005) 13 VR 435 at [23] per Warren CJ, Maxwell P and Harper AJA; Ofria v Cameron (No 2) [2008] NSWCA 242 at [20] per Beazley, Ipp JJA and Handley AJA; Ghunaim v Bart (No 2) [2006] NSWCA 82 at [23] per McColl JA (with whom Giles and Ipp JA agreed); Ford Motor Co of Australia Ltd v Lo Presti [2009] WASCA 115 at [16] per Buss JA (with whom Wheeler JA agreed). 25 Grynberg v Muller [2002] NSWSC 350 at [48] per Hamilton J; Stipanov v Mier (No 2) [2006] VSC 424 at [12] per Hollingworth J; Crump v Equine Nutrition Systems Pty Ltd (No 2) [2007] NSWSC 25 at [45] per Hoeben J; Phantom Precision Engineering Pty Ltd v Luscombe (No 2) [2021] SASE 103 at [22] per Lovell J. 26 Jones v Bradley (No 2) [2003] NSWCA 258 at [7]-[9] per Meagher, Beazley and Santow JJA; Leichardt Municipal Council v Green [2004] NSWCA 341 at [46] per Santow JA (with whom Bryson JA and Stein AJA agreed); Hazeldene’s Chicken Farm Pty Ltd v Victorian WorkCover Authority (No 2) (2005) 13 VR 435 at [23] per Warren CJ, Maxwell P and Harper AJA; Ford Motor Co of Australia Ltd v Lo Presti [2009] WASCA 115 at [17] per Buss JA (with whom Wheeler JA agreed). 27 See generally Hazeldene’s Chicken Farm Pty Ltd v Victorian WorkCover Authority (No 2) [2005] VSCA 298, (2005) 13 VR 435 at [25]-[27] per Warren CJ, Maxwell P and Harper AJA; Ford Motor Co of Australia Ltd v Lo Presti [2009] WASCA 115 at [19] per Buss JA (with whom Wheeler JA agreed); Nominal Defendant v Dighton (No 2) [2012] SASCFC 97 at [8] per Sulan, Anderson and David JJ. -- 19 of 50 -- [2024] SASC 29 Blue J 16 • the offeree’s prospective prospects of success in respect of liability and quantum; • the extent of compromise involved; • the stage in the action when the offer is made; • the time for which the offer is open; • the clarity of the offer; • whether the offer could have been made as a formal offer;28 • whether the offer explained the rationale for the offer including explaining why the offeree’s case was untenable or weak or problematic; • whether the offer foreshadowed a special costs order being sought. 116 The mere fact that the offeree would have been better off accepting the offer does not in itself establish unreasonableness.29 117 Unreasonableness must be established on clear grounds.30 Defamation Act 118 Section 38 of the Defamation Act 2005 (SA) (the Defamation Act)31 provides: 38—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)— 28 See [102] above. 29 Jones v Bradley (No 2) [2003] NSWCA 258 at [7]-[9] per Meagher, Beazley and Santow JJA; Leichardt Municipal Council v Green [2004] NSWCA 341 at [56] per Santow JA (with whom Bryson JA and Stein AJA agreed); Ford Motor Co of Australia Ltd v Lo Presti [2009] WASCA 115 at [18] and [31] per Buss JA (with whom Wheeler JA agreed) and cases there cited. 30 Leichardt Municipal Council v Green [2004] NSWCA 341 at [47] per Santow JA (with whom Bryson JA and Stein AJA agreed); Chaina v Alvaro Homes Pty Ltd [2008] NSWCA 353 at [113] per Basten JA (with whom Giles JA and Young CJ in Eq agreed); Ford Motor Co of Australia Ltd v Lo Presti [2009] WASCA 115 at [19] per Buss JA (with whom Wheeler JA agreed); Dean v Stockland Property Management Pty Ltd (No 2) [2010] NSWCA 141 at [43] per Giles JA, Handley AJA and Whealey J. 31 Section 40 of the Defamation Act 2005 (NSW) is in the same terms. -- 20 of 50 -- [2024] SASC 29 Blue J 17 (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. Discontinuance 119 Rule 141.3 of the Uniform Rules relevantly provides: 141.3—Discontinuance without consent or leave (1) Subject to rule 141.1(1), an applicant may discontinue a claim at any time before it is either entered or listed for trial by filing a notice of discontinuance in the prescribed form. (2) If an applicant discontinues a claim under this rule, the applicant is liable to pay the costs of a respondent against whom the claim is discontinued up to the date of service of the notice of discontinuance on the standard costs basis and any interested party named in the claim must bear their own costs. 120 Subrule 141.3(2) does not apply to the discontinuance by Mr Slater because his discontinuance was made after the Slater action was listed for trial and in any event was made pursuant to leave granted under rule 141.4. 121 However, subrule 141.3(2) reflects a more general costs principle that ordinarily, if a party abandons an action, that party ought to pay their opponent’s costs of the action on the standard basis, subject to the overriding discretion of the court to order otherwise (including to order costs on an indemnity or other basis). Background legal advice 122 In London Scottish Benefit Society v Chorley32 the England and Wales Court of Appeal held that a self-represented lay litigant could not recover as costs for the value of their time spent in litigation but a self-represented solicitor could do so. In the course of stating these principles, the Court referred to the fact that a self- represented lay litigant can recover under the indemnity principle money paid to a 32 (1884) 13 QBD 872. -- 21 of 50 -- [2024] SASC 29 Blue J 18 solicitor to assist them in the conduct of the litigation. Brett MR (with whom Bowen LJ and Fry LJ agreed) said: When an ordinary litigant appears in person, he is paid only for costs out of pocket. He cannot himself take every step, and very often employs a solicitor to assist him: the remuneration to the solicitor is money paid out of pocket. He has to pay the fees of the court, that is money paid out of pocket; but for loss of time the law will not indemnify him.33 123 In Malkinson v Trim34 the England and Wales Court of Appeal affirmed the entitlement of a self-represented lay litigant to recover money paid to a solicitor to assist them in the conduct of the litigation. Chadwick LJ (with whom Potter LJ and Wall J agreed) said: …[A]pplication of those two principles [the indemnity principle] leads to the conclusion that a person can recover the cost of employing a solicitor to assist him in litigation.35 124 In Bell Lawyers Pty Ltd v Pentelow36 the High Court held that a self- represented litigant who is a solicitor cannot recover recompense for the value of their time spent in litigation and to that extent overruled the decision in London Scottish Benefit Society v Chorley. However, the High Court made no suggestion that a self-represented lay litigant cannot recover money paid to a solicitor to assist them in the conduct of the litigation. In the course of their reasons for judgment, Kiefel CJ, Bell, Keane and Gordon JJ quoted a passage from the judgment of Brett LJ which included the passage reproduced at [122] above without any suggestion that it does not represent the law. 125 Ecosol and Mr Smith in the Slater action do not contend that, as a matter of principle, a self-represented lay litigant cannot recover money paid to a solicitor to assist them in the conduct of the litigation. Although Mr Smith in the Smith action opposes recovery by Mr Slater of costs paid to Gretsas & Associates for background legal work because that firm was not on record as solicitors for Mr Slater, he does not contend that the statements of law reproduced above are incorrect. The Slater action Indemnity costs claim 126 The starting point is that ordinarily costs follow the event and costs are assessed in accordance with the Magistrates Court costs scale. The starting point therefore is that Mr Slater pay Ecosol and Mr Smith’s costs of the Slater action on the Magistrates Court costs scale. 127 Ecosol and Mr Smith rely alternatively on the first to fourth Ecosol offers as justifying an indemnity costs order against Mr Slater operating from the time of 33 At 875. 34 [2002] EWCA Civ 1273, [2003] 2 All ER 356. 35 At [11]. 36 [2019] HCA 29, (2019) 269 CLR 333. -- 22 of 50 -- [2024] SASC 29 Blue J 19 making the offers. They rely principally on “common law” principles in relation to Calderbank offers. In the alternative, they rely on section 38 of the Defamation Act. First Ecosol offer 128 The first Ecosol offer was made on 7 July 2021. Its terms included: • payment of $20,000 to Mr Slater in full settlement of the Slater claim and any other claim or potential claim he may have against Ecosol or Mr Smith; • sale by Mr Slater of his and his trust fund’s shares in Ecosol for $7,714.08; • discontinuance of both the Slater action and the Smith action with no order as to costs; • the settlement be strictly confidential and subject to confidentiality provisions; • the settlement be subject to full releases; • the settlement be subject to non-disparagement clauses. 129 The terms of the offer were very different to an offer to consent to judgment in the Slater action for $20,000 inclusive of costs (a simple judgment offer) or to pay $20,000 inclusive of costs in settlement of the Slater action in return for a discontinuance of the Slater action (a simple contract offer). 130 The terms of the offer included terms extraneous to the Slater action: • a release by Mr Slater of any other potential claim against Ecosol or Mr Smith; • sale of the Slater shares in Ecosol; • discontinuance of the Smith action with no order as to costs; and • an obligation not to disparage the opposite party(ies) in future. 131 They also included an obligation to keep the terms of the settlement confidential. 132 The mere fact that the offer included a term providing for the sale of Mr Slater’s shares does not automatically, in and of itself, preclude the making of a special costs order by reason of Mr Slater’s non-acceptance. However, it does impact the better off analysis and the unreasonable non-acceptance analysis. 133 In relation to the sale of the Slater shares, Mr Slater had demonstrated a very high, if not all-consuming, interest in his shares in Ecosol. He had no obligation to -- 23 of 50 -- [2024] SASC 29 Blue J 20 sell them for any price. Ecosol and Mr Smith did not adduce evidence of the monetary value of those shares. This renders it impossible to undertake the better off analysis. In addition, the inclusion of this extraneous condition is an additional reason, further to the reasons given below in respect of the third offer, why it was not unreasonable for Mr Slater to reject the offer. 134 The inclusion of the term relating to release of any other potential claim against Ecosol or Mr Smith also does not automatically, in and of itself, preclude the making of a special costs order by reason of Mr Slater’s non-acceptance. However, it does impact the better off analysis and the unreasonable non- acceptance analysis. 135 Again Mr Slater had demonstrated a very high interest in what he regarded as egregious conduct by Ecosol and Mr Smith. He had no obligation to release them from any other claims. It is impossible to assess the value of such a release. This renders it impossible to undertake the better off analysis. In addition, the inclusion of this extraneous condition is an additional reason, further to the reasons given below in respect of the third offer, why it was not unreasonable for Mr Slater to have rejected the offer. 136 Even without those two extraneous provisions, I would have concluded (for the reasons given below in relation to the third Ecosol offer) that the non- acceptance of the first Ecosol offer should not give rise to a special costs order. Third Ecosol offer 137 The second and third Ecosol offers were in the same terms except that the second offer involved payment of $10,000 whereas the third offer involved payment of $20,000. For convenience, I address the third offer before addressing the second offer. 138 The third Ecosol offer was made on 17 August 2021. Its terms included: • payment of $20,000 to Mr Slater in full settlement of the Slater claim and the Smith claim; • discontinuance of both the Slater action and the Smith action with no order as to costs; • the settlement be strictly confidential and subject to confidentiality provisions; • the settlement be subject to full releases; • the settlement be subject to non-disparaging clauses. -- 24 of 50 -- [2024] SASC 29 Blue J 21 Offeree better off 139 Ecosol and Mr Smith contend that Mr Slater would have been better off financially if he had accepted the offer compared to the result of the Court’s judgment. 140 Mr Slater accepts that, if the offer had been confined to settlement of the Slater action alone, he would have been better off financially accepting the offer because he would have received $20,000 under the offer compared to nil under the judgment. However, he contends that, in a financial sense, that benefit is offset by the value of his costs claim against Mr Smith in the Smith action as at August 2021. 141 It is necessary to make a prospective assessment, as at August 2021, of the value of Mr Slater’s costs claim against Mr Smith in the Smith action. I do so on the basis of evidence adduced at the costs hearing being evidence relating to circumstances existing as at August 2021. I stress that I am not making an objective assessment of the amount of Mr Slater’s entitlements under existing costs orders37 or under a prospective costs order that I might make on the determination of the current costs applications. The quantification of any costs entitlements of Mr Slater will be undertaken by a taxation officer, as described below, and not by me. 142 In the New South Wales Supreme Court, Hamill J had ordered on 17 June 2021 that Mr Smith pay Mr Slater’s costs of the hearing on 16 and 17 June 2021 limited to court fees and travel expenses. The Slater costs spreadsheet includes a filing fee of $1,12338 and trial/hearing fees totalling $3,134 for the two-day hearing. Mr Smith rejects those claims because Mr Slater did not produce proof of payment. However, Mr Slater identified those amounts as the relevant fees payable according to the New South Wales Supreme Court scale of fees and said that he cannot now locate proof of payment. I infer that payment of the fees must have been made because the Court would not have accepted the notice of motion without payment of the filing fee and would not have listed the matter for hearing without payment of the hearing fee. I accept for the purposes of this costs determination that these amounts were incurred and were recoverable by Mr Slater from Mr Smith as at August 2021. The total assessed for present purposes is $4,257. 143 Mr Slater also claims an entitlement to amounts totalling $373 for travel, $147 for accommodation and $139 for sustenance in respect of his attendance at the hearing before Hamill J on 16 and 17 June 2021. Mr Smith rejects the travel amounts other than the first payment to Jetstar but I “allow” those amounts. Mr Smith rejects the sustenance amounts but I allow those amounts as part of or incidental to travel. The total allowed is $659. Mr Slater also claims a transcript fee of $226 but this was not apparently incurred until 13 August 2021 and Mr 37 Mr Slater and Mr Smith both expressed a willingness to accept my determination of the quantum of costs under the order made by Hamill J in the New South Wales Supreme Court. However, I do not have jurisdiction or power to do so. Nevertheless, Mr Slater and Mr Smith may choose to agree quantum in the amount that I have assessed for present purposes. 38 All dollar costs figures rounded to the nearest whole dollar, unless otherwise shown. -- 25 of 50 -- [2024] SASC 29 Blue J 22 Slater has not demonstrated that it was necessary for the New South Wales Supreme Court proceeding (as opposed to the ongoing substantive actions). Mr Slater also claims photocopying but that is outside the scope of the costs order made by Hamill J. The total assessed for present purposes is $659. 144 Mr Slater also claims amounts totalling $3,005 being costs incurred with Gretsas & Associates relating wholly or partly to the New South Wales Supreme Court proceeding. However, the costs order made by Hamill J was limited to court fees and travel expenses. Accordingly there is no basis on which Mr Slater could have recovered these costs from Mr Smith. Although Mr Slater put arguments to the contrary, I reject them. 145 The total assessed for present purposes in respect of the New South Wales Supreme Court proceeding is $4,916. 146 In respect of the New South Wales District Court, Mr Slater claims costs totalling $7,513 incurred with Gretsas & Associates, including barrister fees paid to Mr Potter, while Gretsas & Associates were on record as solicitors for Mr Slater in the Smith action in the District Court. Mr Smith accepts most of these amounts. 147 Mr Smith in his response to the Slater spreadsheet rejected the claims for fees incurred with Mr Potter on the ground that Mr Potter did not appear at court. I understand that he ultimately abandoned that contention. In any event, I accept those amounts for present purposes. The mere fact that Mr Potter did not appear in court does not render the fees irrecoverable or unreasonable. 148 Mr Smith in his response to the Slater spreadsheet rejected two other items charged by Gretsas & Associates on the ground that the invoice does not refer to New South Wales. In relation to the first item (28 July 2020), I understand that Mr Smith ultimately abandoned that contention. In any event, it is apparent from the description that it relates to the District Court action. In relation to the second item (4 August 2020), I infer from the surrounding entries that it relates to the District Court action. 149 No issue is raised by the parties concerning Mr Gretsas’ hourly rate, which appears reasonable in the context of litigation in the New South Wales District Court. The total assessed for present purposes incurred with Gretsas & Associates while they were on record as solicitors is $7,513. 150 In respect of the New South Wales District Court, Mr Slater claims costs totalling $6,061 incurred with Gretsas & Associates when they were not on record as solicitors for Mr Slater but were providing background advice and legal services in relation to the Smith action. In general terms, the invoices from Gretsas & Associates described the work done identifying it as relating to the District Court action and on its face the work appears to have been reasonable to undertake. In some cases the item described work identified as being partly in relation to the Smith action and partly in relation to the Slater action and I accept the -- 26 of 50 -- [2024] SASC 29 Blue J 23 apportionment by Mr Slater in the spreadsheet. I generally accept for present purposes the items claimed in the spreadsheet subject to the following qualifications. 151 I am not satisfied that the items claimed or partially claimed of $70.13 for 10-12 March 2020 in the March 2020 Gretsas & Associates invoice, $140.25 for 1 February 2021 and $233.71 for 2 February 2021 in the February 2021 Gretsas & Associates invoice or $46.74 for 14 June 2021 in the September 2021 Gretsas & Associates invoice related to the Smith action in the District Court. Those items total $491. 152 I accept for present purposes a total of $5,570 incurred with Gretsas & Associates when they were not on record as solicitors. 153 The total accepted for present purposes in respect of the District Court is $13,083. 154 In this Court, Mr Slater claims costs totalling $6,122 incurred in respect of the appeal against Magistrate Hodder’s orders instituted by him in February 2021. This comprises the filing fee of $2,702 and costs incurred with Gretsas & Associates totalling $3,420. However, on 1 April 2021 I made orders by consent determining the appeal. The orders included an order that there be no order as to the costs of the appeal. 155 Mr Slater contends that the order was not that each party bear their own costs but only that there be no order as to costs, leaving open to either party to seek a costs order later. He contends that there is a substantive difference between an order that there be no order as to costs and an order that each party bear their own costs. I reject that contention. The objective purpose and effect of the order that there be no order as to costs was that each party was to bear their own costs. 156 Mr Slater contends that there are grounds on which my 1 April costs order should be revisited and Mr Smith in his capacity as applicant in the Smith action should be ordered to pay Mr Slater’s costs of that appeal. He contends that, if Mr Smith had instituted the Smith action in South Australia in the first place, there would have been no need for Mr Slater to institute the appeal. 157 I reject Mr Slater’s contention that my 1 April costs order should be revisited. The orders made by consent involved compromise by both parties and the term as to costs was an essential element agreed by both parties. There is no basis to revisit the costs order. The appeal related solely to the Slater action and not to the Smith action. There is no basis to order that Mr Smith in his capacity as applicant in the Smith action pay Mr Slater’s costs of that appeal. 158 In the Magistrates Court and this Court up to 30 July 2021, Mr Slater set out in his spreadsheet costs totalling $6,445 incurred with Gretsas & Associates when they were not on record as solicitors for Mr Slater but were providing background advice and legal services in relation to the Slater action. He also included as -- 27 of 50 -- [2024] SASC 29 Blue J 24 disbursements the filing fee for instituting the Slater action (which was $450) and half of the witness fees paid to Mr Walton, Mr John and Lucent in July and September 2022 (totalling $1,150). The total of these amounts is $8,045. 159 My understanding is that ultimately Mr Slater does not contend that these costs should be taken into account for the purpose of comparing his position under the offer with his position under the judgment. However, if the position is otherwise, my ruling is that they should not be taken into account for that purpose. 160 In relation to the Gretsas & Associates’ costs incurred while the Slater action was in the Magistrates Court (up to March 2021), those costs related to the Slater action and not to the Smith action. They are not recoverable from Mr Smith in the Smith action. The same applies to the Gretsas & Associates’ costs incurred while the Slater action was in this Court (between April and July 2021). The same applies to the filing fee. 161 In relation to the witness fees, they were not incurred until March 2022 when Mr Walton, Mr John and Lucent responded to subpoenas issued by Mr Slater to produce documents and/or give evidence. They are irrelevant to the position as at August 2021. 162 Mr Slater included in his spreadsheet $5,000 being an estimated amount of a potential liability he might have in relation to the costs incurred by Ecosol in paying Mr Charlton to compile the documents referred to in the Charlton Listing (as defined in my 24 November 2021 reasons for judgment39) pursuant to my order for discovery made on 24 November 2021. Leaving aside other answers advanced by Ecosol and Mr Smith to this inclusion, it postdates the August 2021 offer and is therefore irrelevant for present purposes. 163 In summary, I accept for present purposes that, as at 17 August 2021, Mr Slater stood to recover $4,916 pursuant to the costs order made by Hamill J and potentially stood to recover $13,083 if successful in the Smith action in respect of costs incurred while the action was in the District Court of New South Wales. The total of these amounts is $17,999. 164 Although I made an order on 1 April 2021 that costs in the Smith action if a transfer order should subsequently be made were to be determined on the scale and in the manner as if it had proceeded in the Magistrates Court, that order only had prospective effect. It did not affect the costs incurred while the action was in the New South Wales District Court. 165 Ecosol and Mr Smith contend that there should be offset against the total of $17,999 the costs as at the date of the offer recoverable in the Slater action by Ecosol and Mr Smith from Mr Slater on the assumption that they would be successful in the Slater action. 39 Slater v Smith [2021] SASC 135. -- 28 of 50 -- [2024] SASC 29 Blue J 25 166 Usually when the comparison is made between the position of the offeree under the offer compared to under the judgment, the offeror’s legal costs as at the date of the offer are not taken into account. There are probably several reasons for this. 167 First, as the issue is as to who should bear the costs of the action and/or on what scale, it may appear incongruous that the costs themselves are taken into account in deciding that question. 168 Secondly, at the time of the offer, there will usually be no certainty as to who will succeed and/or to what extent and hence no certainty about whether the offeror will ultimately recover costs. 169 Thirdly, at the time of the offer, the quantum of costs that the offeror would recover if ultimately successful will often be quite uncertain. 170 Fourthly, in Calderbank letters, offerors do not usually foreshadow that their costs to date will be taken into account on a subsequent costs application, nor do they usually quantify their costs to date or provide a detailed calculation. Even if costs were to be taken into account on the issue of better off, in those circumstances they might not be taken into account on the issue of unreasonable non-acceptance. 171 This is not to say that costs incurred by the offeror at the date of the offer should never be taken into account on the issue of better off (or unreasonable non- acceptance) but each case will need to be considered on its own circumstances. 172 Ecosol and Mr Smith do not attempt to quantify the costs liability that Mr Slater potentially had to them as at the date of the offer on the Magistrates Court costs scale (or any other basis). Given the nature of the Magistrates Court costs scale, objectively assessing the amount of that liability in the present case is complex and problematic. 173 The Magistrates Court costs scale is expressed in terms of stages reached in the action. In the present case, it is difficult to determine the stage that the Slater action had reached as at 17 August 2021. 174 The stage represented by item 2 ends at the first directions hearing, which occurred before Ecosol and Mr Smith were legally represented. 175 The stage represented by item 3 ends at the last hearing before trial. This had not occurred as at 17 August 2021 and at that point the trial had been relisted to commence on 7 March 2022. Due to the evolving nature of the action and different trial listings, it would have been difficult to determine as at 17 August 2021 whether the stage represented by item 3 had ended and if not what proportion of the work covered by item 3 had been undertaken by that date. -- 29 of 50 -- [2024] SASC 29 Blue J 26 176 Conversely, it would have been difficult to determine as at 17 August 2021 whether the stage represented by item 4 had started and if so what proportion of the work covered by item 4 had been undertaken by that date. 177 Ecosol and Mr Smith did not adduce evidence on the costs hearing as to the work undertaken as at 17 August 2021 by reference to item 3 or item 4 or otherwise. I am simply not in a position on the evidence adduced to quantify Mr Slater’s costs liability as at 17 August 2021 if judgment had been entered against him with costs on that date. 178 The total of $17,999 referred to at [163] above is less than the amount of $20,000 offered by Ecosol and Mr Smith. In a purely financial sense therefore (and ignoring costs in the Slater action), Mr Slater would have been marginally better off accepting the offer than has transpired as a result of the Court’s judgment. 179 However, there were several terms of the offer which would have had a non- financial effect on Mr Slater. First, he was required to consent to discontinuance of the Smith action with no order as to costs. If Ecosol and Mr Smith had offered to settle the Slater action in return for payment of $20,000 without this additional term and Mr Slater had accepted the offer, the Slater action (in which Mr Slater’s opposite parties were represented by solicitors and counsel) would have been at an end and the Smith action (in which Mr Slater’s opposite party was self- represented) would have continued. Mr Slater could have sought vindication (which clearly was important to him) via determination of the issues in the Smith action without being exposed to the substantial legal costs involved in his opponent(s) being legally represented. 180 Secondly, it was a term of the offer that Mr Slater keep the settlement strictly confidential and that the settlement be subject to confidentiality provisions. This would have precluded Mr Slater informing other persons that he had been paid by Ecosol and Mr Smith. By contrast, if the matter proceeded to trial, Mr Slater stood to be vindicated to the extent that (as I have held) most of the alleged imputations arose and were defamatory and defences of justification were not established. 181 Compared to a settlement required to be confidential, objectively assessed proceeding to trial had substantial non-financial value to Mr Slater. Further, Mr Slater demonstrated by his actions that subjectively a requirement of confidentiality was detrimental to him. In his email to Barry Nilsson Lawyers sent on 9 August 2021 (before the third Ecosol offer), Mr Slater had said that he would not accept any settlement offer that required confidentiality. In his Calderbank offer dated 29 July 2020, Mr Slater had offered to accept $20,000 (being the same amount as the third Ecosol offer) plus costs (which he later offered to quantify at $3,000) without a confidentiality term. In his email to FM Legal sent on 27 August 2020, Mr Slater had rejected an offer of judgment dismissing the Smith action and bearing his own costs, saying that he was more than happy for the matter to continue on and to be held by the Court to be a baseless or trivial claim. -- 30 of 50 -- [2024] SASC 29 Blue J 27 182 Having regard collectively to the three matters above, I am not satisfied that Mr Slater would have been better off in a combined financial and non-financial sense if he had accepted the offer compared to the result of the Court’s judgment. 183 Even if I took into account a potential liability of Mr Slater to Ecosol and Mr Smith to pay their costs in the Slater action as at 17 August 2021 and assessed the quantum of that liability at several thousand dollars, I still would not be satisfied that Mr Slater would have been better off in a combined financial and non-financial sense if he had accepted the offer compared to the result of the Court’s judgment. Unreasonable not to accept offer 184 Ecosol and Mr Smith must establish that it was unreasonable for Mr Slater not to accept the third Ecosol offer. 185 In relation to prospects of success, assessed as at August 2021 it was reasonable for Mr Slater to form the view that he was likely to be successful (as it transpired he was) in the Slater action in establishing his own case (subject to defences) in respect of most of the imputations arising and their being defamatory. The onus would lie on Ecosol and Mr Smith to prove the defences of justification and qualified privilege. It was reasonable for Mr Slater to form the view that he was likely to be successful (as it transpired he was) on the justification defences. 186 This leaves the qualified privilege defences. Mr Slater ought to have appreciated that it was very likely that Ecosol and Mr Smith would establish that the publications were made on privileged occasions and that, to defeat the common law defence, he would need to establish malice. 187 In relation to malice, it is important to have regard to the stage reached in the action. At that point, Mr Slater did not have witness statements of Mr Smith, Mr Macklin, Mr Bishop or Mr Charlton. He did not have full discovery from Ecosol and Mr Smith and they made discovery of substantial additional documents after August 2021. For the reasons given in my primary judgment, Mr Slater had reason to suspect that the directors had not been acting in Ecosol’s best interests. Ultimately, the reason that I rejected Mr Slater’s malice case was that I accepted the evidence given by Mr Smith, Mr Macklin, Mr Bishop and Mr Charlton. It cannot be said as at August 2021 that Mr Slater ought to have appreciated that he would fail on the issue of malice or that his prospects on that issue were poor. 188 In relation to quantum, Ecosol and Mr Smith contend that it was unlikely that, if Mr Slater had succeeded on liability, quantum would have been assessed at an amount in excess of $20,000. I accept that, on the evidence ultimately adduced at trial from other shareholders, it is likely that quantum would have been assessed at no more than $20,000. However, as at August 2021 Mr Slater did not know what evidence the other shareholders would give. Objectively assessed, one would expect that the opinion of Mr Slater of the other shareholders would have been affected by the defamatory publications and there would have been a component -- 31 of 50 -- [2024] SASC 29 Blue J 28 of damages for loss of reputation. Objectively assessed, it was reasonable for Mr Slater to form the view that damages would exceed $20,000. 189 In assessing whether Mr Slater acted unreasonably in not accepting the offer, it is important to take into account the matters referred to in the previous section. The term in relation to discontinuance of the Smith action would have precluded Mr Slater recovering from Mr Smith approximately $18,000 and precluded him from seeking vindication in the Smith action. The term in relation to confidentiality would have precluded him disclosing the terms of the settlement. 190 I observe in passing that by August 2021 Mr Slater had manifested an unwillingness to consent to discontinuance of the Smith action or to agree to confidentiality. It was open to Ecosol and Mr Smith in the Slater action to drop these requirements but they did not do so. 191 In relation to the term as to confidentiality, Ecosol and Mr Smith cite two decisions. The first is the decision of Sifris J in Sim Development Pty Ltd v Greenvale Property Group Pty Ltd (No 2).40 This was an ordinary commercial dispute between contracting parties. Greenvale offered to pay $270,000 on the basis that a settlement agreement include a confidentiality clause. Sim rejected the offer and counter offered to accept $430,000 indicating that, if the amount were agreed, it was willing to consider a settlement agreement containing a confidentiality clause. Sifris J found that the sticking point was the amount of money and not confidentiality. The inclusion in Greenvale’s offer of the reference to confidentiality therefore did not preclude a special costs order being made. 192 The facts of each case must be considered. The decision in Sim Development was made by reference to a confidentiality term not being in issue. In the present case, it is clear from the communications between the parties that it was in issue. Moreover, Sim Development was an ordinary commercial dispute between contracting parties. The present case is one of defamation in which vindication is important for any applicant. The decision in Sim Development does not assist Ecosol and Mr Smith. 193 Ecosol and Mr Smith also cite the decision of a Full Court of the Federal Court in Magenta Nominees Pty Ltd v Richard Ellis (Western Australia) Pty Ltd.41 Magenta made claims for misrepresentation in relation to a commercial land transaction. Richard Ellis made an offer to pay $90,000 plus costs in settlement of the claim. The offer was conditional on execution of a deed containing a confidentiality requirement. The primary judge took into account the offer in making costs orders. The Full Court dismissed an appeal against the costs orders. Although Magenta argued that the offer should have been disregarded due to the inclusion of the conditions, there was no suggestion that the confidentiality 40 [2017] VSC 456. 41 Unreported Federal Court of Australia 29 August 1995 Spender, French and Lee JJ. -- 32 of 50 -- [2024] SASC 29 Blue J 29 requirement was a sticking point. This decision does not assist Ecosol and Mr Smith for the same reasons as in respect of Sim Development. 194 The offer also included a term requiring full releases. This term was ambiguous. It might have been construed as requiring releases not only of the subject matter of the two actions but in respect of any other conduct by the parties. Alternatively, it might have been construed as requiring releases only of the subject matter of two actions. It was open to Ecosol and Mr Smith to have made plain the scope of the releases proposed in the offer. On 10 September 2021 Mr Slater requested Barry Nilsson’s precedent settlement agreement but they did not address that request in their response of 15 September 2021. The lack of clarity as to this term of the offer is a factor to be taken into account. 195 I observe that the offer also included a term requiring non-disparagement in future. Although this was extraneous to the proceeding, Mr Slater had indicated on 9 August 2021 that he was not concerned by this term. 196 There are two other matters which ought to be taken into account in assessing unreasonableness. First, as observed above, it is a fundamental aspect of the Magistrates Court costs scale that costs are proportionate to the amount in dispute. In an action in the Supreme or District Courts, whether assessed on the standard basis or an indemnity basis, costs are based on the amount of work done by the successful party rather than the amount in dispute and indemnity costs are unlikely to be more than double standard costs. In an action in the Magistrates Court, there is the potential (as in the present case) for indemnity costs to be an order of magnitude greater than standard costs and entirely disproportionate to the amount in dispute. This does not preclude exercise of the discretion to order indemnity costs in the Magistrates Court, and indeed the Court could make a special costs order greater than standard costs and less than indemnity costs. Nevertheless, the overall policy embedded in the Magistrates Court costs scale is a factor to be taken into account. 197 Secondly, having regard to the issues in the Slater action, there was mixed success, albeit Ecosol and Mr Smith were successful overall and the action was dismissed. As observed above, Mr Slater was largely successful on the issues of imputations arising, imputations being defamatory and justification. There was no substantial contest that qualified privilege arose and the real issue in relation to it was malice (on which Mr Slater failed). Substantial costs were incurred by Ecosol and Mr Smith on issues (including in particular justification) on which they failed. 198 Similarly, there was mixed success on interlocutory issues (principally pleadings and discovery) determined before trial. Substantial costs were incurred by Ecosol and Mr Smith on interlocutory issues on which they failed. 199 If the matter had proceeded in accordance with Supreme Court costs scale, it is likely that this mixed success would have been reflected in a mixed costs order. When a court orders indemnity costs by reason of non-acceptance of an informal -- 33 of 50 -- [2024] SASC 29 Blue J 30 offer, a mixed costs order is not usually made. If indemnity costs are ordered in favour of Ecosol and Mr Smith, they would recover substantial costs in respect of work undertaken on issues on which they failed. 200 Neither of these two additional issues are conclusive or necessarily determinative. However, weighing them with all other factors, I am not satisfied that it was unreasonable for Mr Slater to reject the third Ecosol offer. Ignoring these two additional issues, I am nevertheless not satisfied that it was unreasonable for Mr Slater to reject the third Ecosol offer. 201 As observed at [165] above, Ecosol and Mr Smith contend that, in assessing whether Mr Slater would have been better off accepting their offer compared to the result of the court’s judgment, Mr Slater’s potential costs liability to them as at 17 August 2021 in the event that his action were dismissed should be taken into account. As observed above, objectively assessed it is difficult to determine the quantum of that potential costs liability if relevant. It would have been extremely difficult for Mr Slater to have done so as at August 2021. Even taking this potential cost liability into account, I am not satisfied that it was unreasonable for Mr Slater to reject the third Ecosol offer. 202 I observe that Mr Slater contends that the fact that he had incurred costs, referred to at [158] above at the time that he did not accept the Ecosol offers is a factor to be taken into account in assessing reasonableness in the same manner as Mr Smith contends, as summarised at [251] and following below, that the fact that he had incurred costs when he did not accept the Slater offers. In view of my conclusion above, it is not necessary to consider this contention. Holistic assessment 203 I take into account the other factors summarised above commonly identified as being relevant factors. The third Ecosol offer was an informal offer. It involved genuine compromise. It was open for a reasonable time. It could have been made as a formal offer but there was no specific detriment to Mr Slater by reason of its not being made as a formal offer. It explained its rationale but it did not identify common law qualified privilege (as opposed to statutory qualified privilege) as a defence, being the defence on which Ecosol and Mr Smith ultimately succeeded. It foreshadowed a special costs order being sought. 204 By reason of the matters addressed under the previous two headings, including the inclusion of extraneous terms, it is not appropriate to exercise the discretion to order that Ecosol and Mr Smith recover costs on an indemnity basis or any basis other than in accordance with the Magistrates Court costs scale by reason of Mr Slater’s non-acceptance of the third Ecosol offer. Second Ecosol offer 205 The second Ecosol offer was in the same terms as the third Ecosol offer except that it involved payment of $10,000 rather than $20,000. -- 34 of 50 -- [2024] SASC 29 Blue J 31 206 Given my conclusion in respect of the third Ecosol offer, it is not appropriate to exercise the discretion to order that Ecosol and Mr Smith recover costs on an indemnity basis or any basis other than in accordance with the Magistrates Court costs scale by reason of Mr Slater’s non-acceptance of the second Ecosol offer. Fourth Ecosol offer 207 The fourth Ecosol offer was made on 23 March 2022. Its terms included: • discontinuance of both the Slater action and the Smith action with no order as to costs; • the settlement be subject to confidentiality provisions; • the settlement be subject to full mutual releases including a clause pursuant to which Mr Slater released Ecosol and its directors and officers from any potential claim the basis of which arose prior to 30 November 2018; • the settlement be subject to a non-disparagement provision. 208 The inclusion of the term relating to release of any other potential claim against Ecosol or its directors the basis of which arose prior to 30 November 2018 (the date of settlement of sale of Ecosol’s business) does not automatically, in and of itself, preclude the making of a special costs order by reason of Mr Slater’s non- acceptance. However, it does impact the better off analysis and the unreasonable non-acceptance analysis. 209 Mr Slater had demonstrated a very high interest in what he regarded as egregious conduct by Ecosol and Mr Smith. He had no obligation to release them from any other claims. It is impossible to assess the value of such a release. This renders it impossible to undertake the better off analysis. In addition, the inclusion of this extraneous condition is an additional reason, further to the reasons given above in respect of the third offer, why it was not unreasonable for Mr Slater to have rejected the offer. 210 Even without that extraneous provision, I would have concluded, largely for the reasons given above in relation to the third Ecosol offer, that the non- acceptance of the fourth Ecosol offer should not give rise to a special costs order. On the one hand, Mr Slater was by March 2022 in possession of Mr Smith’s witness statement. On the other hand, he did not yet have the evidence of Mr Macklin, Mr Bishop or Mr Charlton and the amount payable to Mr Slater under the offer was reduced from $20,000 to nil (although Mr Slater’s costs exposure on the Magistrates Court costs scale had obviously increased given that the trial had commenced and was part heard). -- 35 of 50 -- [2024] SASC 29 Blue J 32 Section 38 of the Defamation Act 211 In the alternative to their reliance on “common law” principles, Ecosol and Mr Smith rely on section 38(2)(b) of the Defamation Act, which relevantly provides: … a court must (unless the interests of justice require otherwise)— … (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. 212 The requirement that the plaintiff unreasonably failed to accept a settlement offer made by the defendant is the same as that element of the “common law” principle. For the reasons given above, I am not satisfied that this prerequisite for the application of section 38(2)(b) is established. Conclusion 213 The non-acceptance by Mr Slater of the Ecosol offers should not give rise to a special costs order. Magistrate Court costs scale 214 As observed above, subject to the exercise of the costs discretion, the ordinary position is that costs follow the event and costs are on the Magistrates Court costs scale. 215 The starting point therefore is that Mr Slater pay the costs of action of Ecosol and Mr Smith in the Slater action on the Magistrates Court costs scale. 216 Mr Slater makes various contentions why the discretion should be otherwise exercised. 217 Mr Slater points to the fact that he was successful on some of the issues in the action. I accept that fact and, if costs were to be assessed in accordance with the Supreme Court costs scale, it might have justified a special costs order reflecting mixed success. However, as observed above, the Magistrates Court costs scale takes a very different approach. Ordinarily it may be expected that it will be rare for the Magistrates Court to make a special costs order by reason of the unsuccessful party overall having succeeded on discrete issues. 218 In the present case, the costs actually incurred by Ecosol and Mr Smith in defence of the Slater action excluding costs that might be attributed to issues on which they were unsuccessful would substantially exceed costs on the Magistrates Court costs scale. It is not appropriate to make a special costs order by reason of mixed success on issues. -- 36 of 50 -- [2024] SASC 29 Blue J 33 219 Mr Slater points to the fact that he made numerous interlocutory applications relating primarily to pleadings issues and discovery issues on which he contends he was largely successful. My holistic assessment is that there was mixed success on these interlocutory applications and Ecosol and Mr Smith were at least as successful as Mr Slater on them. For similar reasons to those in respect of Mr Slater’s first contention, it is not appropriate to make a special costs order by reason of the result of those interlocutory applications. 220 Mr Slater contends that Ecosol and Mr Smith breached their discovery obligations, as evidenced by the fact that they made at least 12 rounds of discovery. He contends that they acted in breach of the overarching obligations referred to in the Uniform Rules. Although it is expected that complete discovery be made by both parties at the outset, the reality is that for various reasons it is not uncommon for discovery to be made on an iterative basis as each party better understands the issues and the relevance of additional categories of documents. I am not satisfied that Ecosol and Mr Smith breached their discovery obligations in such a manner as should be reflected in a costs order when that costs order is to be made in accordance with the Magistrates Court costs scale. 221 Mr Slater also refers to the fact that Ecosol and Smith filed six versions of the defence. Again, although it is expected that a party will file a comprehensive and final pleading at the outset, the reality is that for numerous reasons it is not uncommon for pleadings to be amended and indeed it is uncommon for them not to be amended over the course of an action. Again, I am not satisfied that Ecosol and Mr Smith breached their pleading obligations in a manner that should be reflected in a costs order when that costs order is to be made in accordance with the Magistrates Court costs scale. 222 Mr Slater contends that Ecosol and Mr Smith engaged in a deliberate strategy to drive up costs. There is no basis on which I could make such a finding. My observations below concerning Mr Slater’s contention that Mr Smith engaged in an abuse of process in instituting the Smith action apply equally to this contention. 223 Mr Slater points to the fact that there was a high degree of overlap between the issues raised in the Slater action and the issues raised in the Smith action. He contends that this should be reflected in a special costs order reducing the costs ordered in favour of Ecosol and Mr Smith in the Slater action or requiring Mr Smith in his capacity as applicant in the Smith action to contribute towards any costs order against Mr Slater in the Slater action. He contends that costs incurred by Ecosol and Mr Smith should be prorated on the basis that 70 to 80 per cent, or at least 50 per cent, are allocated to Smith action issues and the balance to Slater action issues. 224 Mr Slater contends in particular that, during the first trial period when Mr Slater’s witnesses were called, the majority of the court time was spent on his defence of the Smith action. I reject that contention. The majority of the time during that period was spent on cross-examination of Mr Slater. In general terms, -- 37 of 50 -- [2024] SASC 29 Blue J 34 that cross-examination was equally relevant to the Slater action (specifically the justification defences) as it was to the Smith action (specifically malice). Conversely, during the second trial period when the Ecosol/Smith witnesses were called, in general terms the time spent was equally relevant to the Smith action as it was to the Slater action. 225 I accept that there was a very high degree of overlap between the issues raised in the two actions. The principal matters addressed in the evidence were the respective justification defences and the respective malice replies. To a large degree, evidence relating to Ecosol’s justification defence was also relevant to Mr Slater’s malice reply. To a large degree, evidence relating to Mr Slater’s justification defence was also relevant to Mr Smith’s malice reply. Further, it was necessary to consider the intertwined series of communications from Mr Slater to shareholders and from Mr Smith to shareholders that are the subject of the respective defamatory imputation cases of the parties because each communication bore on subsequent communications. 226 I accept also that there is no reason to regard one action as having primacy over the other action and the fact that the Smith action was constituted as a cross action in the Slater proceeding was happenstance. 227 However, I reject Mr Slater’s contentions about reducing the costs of action recoverable by Ecosol and Mr Smith in the Slater action by reference to the existence of the Smith action. Ecosol and Mr Smith were only represented by solicitors and counsel by reason of the Slater action. If the Slater action had not been brought or continued, both parties would have been self-represented in the Smith action. 228 Further, the overwhelming majority of time spent at trial while Ecosol and Mr Smith were represented in the Slater action would have been equally spent if there had been no Smith action. The only significant evidence that would not have been adduced was the evidence from other shareholders about the impact upon them of Mr Slater’s letters to shareholders and Mr Smith’s evidence of the effect of Mr Slater’s publications on him. Otherwise virtually all of the evidence, documentary and oral, that was adduced would still have been adduced if the Slater action had proceeded alone. 229 Further, the definition of quantum in rule 1 in conjunction with the Magistrates Court costs scale in rule 5 of Schedule 6 to the Uniform Rules is such that the Magistrates Court costs scale applies severally to an action and cross action. For example, if an applicant recovers from a respondent $60,000 in an action and the respondent recovers from the applicant $40,000 in a cross action, each party is entitled (subject to the overriding discretion of the Court to otherwise order) to recover the costs of the action and cross action against the other respectively by reference to the quantum of the successful claim. -- 38 of 50 -- [2024] SASC 29 Blue J 35 230 The former Magistrates Court Rules expressly provided by rule 106(2) that, “[w]here there is a counterclaim the costs on the claim and counterclaim must be separately calculated and applied”. This approach is now embodied in the structure of the Magistrates Court costs scale and definition of quantum in the Uniform Rules rather than being explicit. 231 One of the alternative orders proposed by Mr Slater is that there be no order as to the costs of any party in either action from 18 January 2022 (when Barry Nilsson Lawyers commenced to act for Mr Smith in the Smith action). Another alternative order proposed by him is that he pay in the Slater action only defence costs attributable to the Slater action (excluding costs attributable to the Smith action and apportioning costs attributable to both actions). Another order proposed by him is that Mr Smith be held liable for any costs attributed to the Smith action. 232 There is no reason to depart from the ordinary position in this case. Ecosol and Mr Smith are entitled to recover the costs of the Slater action by reference to the amount claimed by Mr Slater having regard to the fact that they would not have been legally represented in the proceeding but for the existence of the Slater action. 233 There is no basis on which to order that Mr Smith in his capacity as applicant on the Smith action contribute towards any costs order against Mr Slater, or to the costs incurred, in the Slater action. 234 In conclusion, Mr Slater should pay Ecosol’s and Mr Smith’s costs of the Slater action on the Magistrates Court costs scale. 235 As observed above, the major cost items in the Magistrates Court scale are based on a percentage of “quantum” as defined by rule 1 of Schedule 6 to the Uniform Rules. The quantum of Mr Slater’s claim changed over time. It was initially $45,000. On 28 July 2020 Mr Slater amended the claim to $60,000. On 26 August 2021 Mr Slater amended the claim to $80,000. 236 Mr Slater contends that “quantum” for the purpose of the items in the Magistrates Court costs scale should be the quantum applicable at the time of the work comprising the item in question. The definition of quantum in rule 1(1)(b) of Schedule 6 to the Uniform Rules does not explicitly identify the time at which the total claimed value is to be ascertained. I accept that the starting position is that “quantum” for this purpose is the quantum of the claim when the work the subject of the item is undertaken. Discontinuance against Mr Smith 237 Mr Slater discontinued the Slater action against Mr Smith on 13 July 2022 pursuant to the leave granted which reserved the question of costs. 238 Mr Smith seeks an order to the extent necessary that Mr Slater pay his costs of the action on the standard basis. -- 39 of 50 -- [2024] SASC 29 Blue J 36 239 As observed above, Ecosol and Mr Smith were jointly represented as respondents in the Slater action. There was no issue between them that Ecosol was liable for any defamatory publications authored by Mr Smith. The costs of representation were the same regardless of whether the action was against Ecosol alone or Mr Smith alone or both. 240 For the reasons given above, Ecosol and Mr Smith are not entitled to a special costs order. They are entitled to an order for the payment of standard costs. In these circumstances, it is not necessary to make any special order by reason of the discontinuance as it will be encompassed by the order foreshadowed at [234] above. 241 Mr Smith in the Smith action contends that an order should be made that Mr Slater pay Mr Smith’s costs in the Slater action on an indemnity basis because Mr Slater commenced the action for an ulterior motive being ill will towards Mr Smith. In the alternative, Mr Smith contends that Mr Slater brought the Slater action against him wilfully disregarding known facts. 242 Mr Smith in the Smith action does not have standing to make this application or advance these contentions because they could only be made in the Slater action, where Mr Smith is represented jointly with Ecosol by solicitors and counsel. In any event I reject Mr Smith’s contentions on the merits. I effectively rejected an ulterior purpose advance against Mr Slater in my primary reasons for judgment. There is no basis on which I could find that Mr Slater brought the Slater action for an ulterior motive. 243 In relation to wilfully disregarding known facts, Mr Smith contends that Mr Slater prosecuted the Slater action against him (as well as against Ecosol) knowing that the impugned letters were sent to Mr Smith in his capacity as chairman of Ecosol and further after Mr Bishop provided to the Magistrates Court a letter dated 10 April 2020 in which Ecosol accepted full responsibility for the letters authored by Mr Smith. However, if Mr Slater had not discontinued his action against Mr Smith and if the defence of qualified privilege had not succeeded, both Ecosol and Mr Smith would have been liable for defaming Mr Slater. 244 Mr Smith also contends that a separate costs order should be made in the Slater action that Mr Slater pay his costs of action up to the date of discontinuance and that Mr Slater pay Ecosol’s costs of action up to the date of judgment. It is not clear whether, if costs are to be ordered on the Magistrates Court costs scale, Mr Smith contends that the full amount under the costs scale should be payable by Mr Slater to each of Mr Smith and Ecosol or whether say 50 per cent of the amount under the costs scale should be payable to each of them. However, as they were jointly represented, the issues as between them and Mr Slater were identical and they incurred costs jointly, it is not appropriate to make separate costs orders. There should be a single order that Mr Slater pay the joint costs of the Slater action of Ecosol and Mr Smith. -- 40 of 50 -- [2024] SASC 29 Blue J 37 Conclusion 245 An order should be made that Mr Slater pay the costs of the Slater action of Ecosol and Mr Smith in accordance with the Magistrates Court costs scale. Smith action Indemnity costs claim 246 The starting point is that ordinarily costs follow the event and are assessed in accordance with the relevant court’s costs scale. 247 The starting point therefore is that Mr Smith pay Mr Slater’s costs of the Smith action while it was in the District Court of New South Wales on the ordinary basis and while it was in the Magistrates Court on the Magistrates Court costs scale. 248 Mr Slater relies alternatively on the first to third Slater offers as justifying an indemnity costs order against Mr Smith. First Slater offer 249 The first Slater offer was made on 9 April 2020. Its terms were: • payment of $1,500 to Mr Smith towards his costs of the Smith action; and • withdrawal by Mr Smith of the Smith action. 250 Mr Slater contends that acceptance of the offer would have produced a better result for Mr Smith than the judgment by way of dismissal of his claim following trial. Mr Slater contends that it was unreasonable for Mr Smith not to accept the offer. 251 In turn, Mr Smith contends that he had already incurred costs in the Smith action well exceeding $1,500 and this entailed that it was not unreasonable for him to reject the offer. 252 Dealing first with Mr Smith’s contention, Mr Smith ultimately gave oral evidence that, as at 9 April 2020, he had incurred the following costs totalling $5,801 in the Smith action: • District Court invoice for filing fee $693 • Process Servers invoice for service fee $142 • FM Legal invoice 356 16.4.20 (fees to 27.3.20) $2,216 • R Rasmussen invoice 18.2.20 $2,250 • R Rasmussen invoice 26.3.20 $500 -- 41 of 50 -- [2024] SASC 29 Blue J 38 253 Mr Smith had earlier in his affidavit affirmed on 1 September 2023 exhibited these invoices together with the narrative of an FM Legal invoice for $2,739. In his email dated 27 November 2023, he had attached the front page of FM Legal invoice 354 dated 15 April 2020 for $2,739, which is consistent with the narrative exhibited to his affidavit. In the table contained in that email, he included FM Legal invoice 354 but not invoice 356. 254 In his email dated 14 December 2023 Mr Smith included in the table contained in the email both FM Legal invoice 354 and FM Legal invoice 356. 255 In the FM Legal email dated 29 November 2023, FM Legal included invoice 356 but not invoice 354. In the FM Legal trust account statement exhibited to Mr Smith’s 1 September 2023 affidavit, payment of invoice 356 is shown but there is no reference to invoice 354 or its payment. 256 During his oral evidence, Mr Smith accepted that the work the subject of invoice 354 duplicates the work the subject of invoice 356. 257 I find that invoice 356 was issued by FM legal in substitution for invoice 354. 258 Mr Slater contends that Mr Smith knowingly gave false evidence in respect of invoice 354 and may have forged it. I reject those contentions. I accept that Mr Smith initially believed at the time when he gave oral evidence that invoice 354 and invoice 356 were cumulative rather than alternative invoices and overlooked the fact that the narrative for both invoices was essentially the same. 259 Mr Slater contends that Mr Smith’s evidence and conduct in this respect reflects adversely on his credit. However, no issue of Mr Smith’s credit otherwise arises on the costs application. 260 I find that as at 9 April 2020 (and as at 22 April 2020) Mr Smith had incurred costs in respect of the Smith action totalling $5,801. 261 However, rule 42.35 of the Uniform Civil Procedure Rules 2005 (NSW) provides: 42.35 Costs order not to be made in proceedings in District Court unless Court satisfied proceedings in appropriate court (1) This rule applies if— (a) in proceedings in the District Court, a plaintiff has obtained a judgment against the defendant or, if more than one defendant, against all the defendants, in an amount of less than $40,000, and (b) the plaintiff would, apart from this rule, be entitled to an order for costs against the defendant or defendants. -- 42 of 50 -- [2024] SASC 29 Blue J 39 (2) An order for costs may be made, but will not ordinarily be made, unless the District Court is satisfied the commencement and continuation of the proceedings in the District Court, rather than the Local Court, was warranted. 262 Assessed prospectively as at April 2020, it was very unlikely that, if he were to succeed on liability, Mr Smith’s damages would have been assessed at $40,000 or more. On the same basis, it was very unlikely that the Court would be satisfied that continuation of the Smith action in the District Court was warranted. Accordingly, the fact that Mr Smith had incurred costs did not entail that it was not unreasonable for him to reject the first Slater offer. 263 Mr Smith contends that he was not aware of the existence or effect of rule 42.35 and, in assessing reasonableness, its effect should not be taken into account. I accept that a degree of leeway may be afforded to a self-represented litigant in assessing reasonableness. However, for the purposes of the assessment, Mr Smith ought to have enquired about the basic costs rules that applied to the Smith action in the New South Wales District Court 264 Turning to Mr Slater’s contention, the amount offered by Mr Slater was small, being less than 10 per cent of the likely award of damages if Mr Smith were successful on liability. 265 Assessed objectively, for essentially the same reasons as in respect of Mr Slater, at that early stage of the action it could not be said that Mr Smith ought to have appreciated that he would fail on the issue of malice or that his prospects on that issue were poor. For the same reasons as in respect to Mr Slater, proceeding to trial and judgment would have given to Mr Smith a degree of vindication (even though ultimately unsuccessful on the issue of malice) which he would not have achieved had he accepted the offer and discontinued his action. 266 It was not unreasonable for Mr Smith not to accept the first Slater offer. Second Slater offer 267 The second Slater offer was made on 22 April 2020. Its terms were: • payment of $2,500 to Mr Smith towards his costs of the Smith action; and • withdrawal by Mr Smith of the Smith action. 268 The considerations in respect of the second Slater offer are essentially the same as in respect of the first offer. The increase in the amount offered by $1,000 does not make a material difference to the analysis. 269 It was not unreasonable for Mr Smith not to accept the second Slater offer. Third Slater offer 270 The third Slater offer was made on 13 August 2020. Its terms were: -- 43 of 50 -- [2024] SASC 29 Blue J 40 • payment of $4,500 by Mr Smith to Mr Slater towards his costs of the Smith action; and • withdrawal by Mr Smith of the Smith action. 271 In comparison with the first Slater offer, this offer involved payment by Mr Smith towards costs to Mr Slater rather than payment by Mr Slater to Mr Smith. From the perspective of Mr Smith, it was $6,000 less than the first Slater offer. 272 Although Mr Slater had incurred additional legal costs exceeding $6,000 in the intervening period, the considerations whether it was unreasonable for Mr Smith to reject the third Slater offer are essentially the same as in respect of the first offer. 273 It was not unreasonable for Mr Smith not to accept the third Slater offer. Uniform Civil Procedure Rules 274 Mr Slater contends that his offers comprised “offers of compromise” within the meaning of the Uniform Civil Procedure Rules 2005 (NSW) and he is prima facie entitled (subject to exercise of the discretion against him) to indemnity costs pursuant to rule 42.15. I reject that contention. 275 Rules 42.13, 42.15, 42.15A and 20.26 of the Uniform Civil Procedure Rules 2005 (NSW) relevantly provide: 42.13 Application This Division applies to proceedings in respect of which an offer of compromise (the “offer”) is made under rule 20.26 with respect to a plaintiff’s claim (the “claim”). … 42.15 Where offer not accepted and judgment no more favourable to plaintiff (1) This rule applies if the offer is made by the defendant, but not accepted by the plaintiff, and the plaintiff obtains an order or judgment on the claim no more favourable to the plaintiff than the terms of the offer. … 42.15A Where offer not accepted and judgment no less favourable to defendant (1) This rule applies if the offer is made by the defendant, but not accepted by the plaintiff, and the defendant obtains an order or judgment on the claim no less favourable to the defendant than the terms of the offer. (2) Unless the court orders otherwise— (a) the defendant is entitled to an order against the plaintiff for the defendant’s costs in respect of the claim, to be assessed on the ordinary basis, up to the -- 44 of 50 -- [2024] SASC 29 Blue J 41 time from which the defendant becomes entitled to costs under paragraph (b), and (b) the defendant is entitled to an order against the plaintiff for the defendant’s costs in respect of the claim, assessed on an indemnity basis— (i) if the offer was made before the first day of the trial, as from the beginning of the day following the day on which the offer was made, and (ii) if the offer was made on or after the first day of the trial, as from 11 am on the day following the day on which the offer was made. … 20.26 Making of offer (1) In any proceedings, any party may, by notice in writing, make an offer to any other party to compromise any claim in the proceedings, either in whole or in part, on specified terms. (2) An offer under this rule— (a) must identify— (i) the claim or part of the claim to which it relates, and (ii) the proposed orders for disposal of the claim or part of the claim, including, if a monetary judgment is proposed, the amount of that monetary judgment, and … (c) must not include an amount for costs and must not be expressed to be inclusive of costs, and (d) must bear a statement to the effect that the offer is made in accordance with these rules, and … (3) An offer under this rule may propose— (a) a judgment in favour of the defendant— (i) with no order as to costs, or (ii) despite subrule (2)(c), with a term of the offer that the defendant will pay to the plaintiff a specified sum in respect of the plaintiff’s costs, or (b) that the costs as agreed or assessed up to the time the offer was made will be paid by the offeror, or … -- 45 of 50 -- [2024] SASC 29 Blue J 42 276 The relevant rule is rule 42.15A and not rule 42.15. However, by reason of rule 42.13, both rules only apply to an offer of compromise that complies with rule 20.26. 277 The first Slater offer and the second Slater offer were, as Mr Slater accepts, not expressed to be made in accordance with rule 20.26 or the Rules more generally. On the contrary they were expressed to be Calderbank offers. By reason of rule 42.13, rule 42.15A therefore did not apply to them. In addition, on its face, rule 20.26 appears to contemplate disposition by judgment rather than by discontinuance, although it is not necessary to decide this question. 278 The third Slater offer was expressed to be an offer of compromise. However, it included an amount for costs in contravention of rule 20.26(2)(c) not falling within the exception in rule 20.26(3)(a)(i). By reason of rule 42.13, rule 42.15A therefore did not apply to it. 279 In any event, even if the Slater offers had amounted to offers of compromise within the meaning of rule 20.26, I would have ordered otherwise essentially for the reasons given above. Sections 38/40 of the Defamation Acts 280 In the alternative to his reliance on “common law” principles, Mr Slater relies on section 38(2)(b) of the Defamation Act and/or section 40(2)(b) of the Defamation Act 2005 (NSW). Those sections are in identical terms and mandate (unless the interests of justice require otherwise) an indemnity costs order when judgment is granted and costs are to be awarded in favour of the respondent if the court is satisfied that the applicant unreasonably failed to accept a settlement offer made by the respondent. 281 The requirement that the applicant unreasonably failed to accept a settlement offer made by the respondent is the same as that element of the “common law” principle. For the reasons given above, I am not satisfied that this prerequisite for the application of the provisions is satisfied. Abuse of process 282 Mr Slater contends that institution and prosecution by Mr Smith of the Smith action in New South Wales was an abuse of process. He contends that this justifies an award of indemnity costs.42 283 Mr Slater contends that the institution of the action was an abuse of process because Mr Bishop instituted a defamation action in South Australia on 22 October 42 Citing Baillieu Knight Frank (NSW) Pty Ltd v Ted Many Real Estate Pty Ltd (1992) 30 NSWLR 359 at 362 per Powell J; Rouse v Shepherd (No 2) (1994) 35 NSWLR 277; Preston v Preston [1982] 1 All ER 41 at 58-59 per Ormrod LJ; Unioil International Pty Ltd v Deloitte Touche Tohmatsu (a Firm) (No 2) (1997) 18 WAR 190 per Ipp J; FAI General Insurance Company Ltd v Burns (1996) ANZ Insurance Cases 77,213 (61-384) per Mahoney P, Priestley JA, Rolfe JA; Jones v Sutton (No 2) [2005] NSWCA 203 at [64] per Beazley, Santow JJA and Stein AJA. -- 46 of 50 -- [2024] SASC 29 Blue J 43 2019 and Mr Smith instituted a defamation action in New South Wales on 23 October 2019. He contends that this was an abuse of process because Mr Smith and Mr Bishop conspired to cause him stress and inconvenience by instituting two virtually identical actions at the same time in two different jurisdictions and disparate hierarchy levels. He contends that it was an abuse of process because Mr Smith, by instituting the Smith action in a different jurisdiction, forced Mr Slater to incur unnecessary costs. He contends that to have a multiplicity of proceedings is vexatious and an abuse of process. 284 I reject these contentions. There is no evidential basis on which I could be satisfied that Mr Smith instituted the Smith action in New South Wales for an improper purpose or that he and Mr Bishop conspired to cause stress and inconvenience to Mr Slater. Mr Smith resides, and at all material times resided, in New South Wales. The fact that he instituted his action in New South Wales is not evidence of an improper purpose or a conspiracy. I accept that it would have been preferable for Mr Smith to have instituted the action in South Australia and I agree unreservedly with the reasons of Hamill J for transferring the Smith action to South Australia but this does not give rise to an inference of impropriety. 285 Institution of a multiplicity of proceedings by the same person may, depending on the circumstances, be an abuse of process. However, the mere fact that two different applicants institute proceedings against the same respondent with overlapping or even identical subject matters is not an abuse of process. Damages against Mr Smith 286 Mr Slater contends that an order should be made that Mr Smith pay by way of damages his costs incurred on the appeal against Magistrate Hodder’s orders, in the New South Wales Supreme Court and any liability Mr Slater may have to Ecosol and Mr Smith in the Slater action as a result of the existence of the Smith action. 287 If Mr Slater had wished to claim damages against Mr Smith, he would need to have pleaded such a claim in an action. He did not do so in the Slater action, nor did he bring a counterclaim in the Smith action seeking such damages. He cannot do so now that the two actions have been determined and the only issues that remain are costs. 288 In any event, Mr Slater has not identified a cause of action by reason of which he might be entitled to such damages. Nor has he proved the elements of any such cause of action. 289 To the extent that Mr Slater seeks a Bullock order or Sanderson order in the Slater action as against Mr Smith in respect of costs awarded against him, there is no basis to make such an order. -- 47 of 50 -- [2024] SASC 29 Blue J 44 Conclusion 290 The non-acceptance by Mr Smith of the Slater offers and other matters relied on by Mr Slater should not give rise to a special costs order. Pre-transfer costs 291 Costs incurred while the Smith action was in the District Court of New South Wales should be determined in the manner applicable to an action in the District Court of New South Wales. The fact that the action was subsequently transferred to South Australia and costs thereafter are to be determined in accordance with the Magistrates Court costs scale does not entail that that scale should be applied retrospectively to costs incurred before the transfer. 292 The transfer of the action pursuant to the Jurisdiction of Courts (Cross Vesting) Acts transfers both the jurisdiction to determine the action substantively and the jurisdiction to make costs orders in respect of the action from its institution in the originating state. Section 12 of the Jurisdiction of Courts (Cross Vesting) Act 1987 (NSW) provides: 12 Orders as to costs Where a proceeding is transferred or removed to a court, that court may make an order as to costs that relate to the conduct of the proceeding before the transfer or removal if those costs have not already been dealt with by another court. 293 In the present case, an order should be made that Mr Smith pay Mr Slater’s costs of the Smith action up to the date of transfer on the ordinary basis applicable to actions in the District Court of New South Wales. It will be a matter for the taxing officer to determine the quantum of those costs. Post-transfer costs 294 Costs incurred after the Smith action was transferred to this Court are to be determined in the manner applicable to an action in the Magistrates Court in accordance with my 1 April 2021 order. 295 Mr Slater was not represented by a law firm after the transfer date, nor did Gretsas & Associates charge him for any legal work performed in relation to the Smith action after the transfer date. In those circumstances, the only amounts potentially recoverable by Mr Slater from Mr Smith are disbursements. 296 There is a complicating factor in relation to any claim for disbursements by Mr Slater against Mr Smith in that after the transfer date the Smith action and the Slater action progressed together and there was a very high degree of overlap between the issues in the two actions. This means that any disbursements claimed by Mr Slater (such as witness fees) will need to be analysed to determine whether they related to the Smith action or the Slater action or both and, where they related indivisibly to both actions, what approach should be taken. This will be a matter for the taxing officer. -- 48 of 50 -- [2024] SASC 29 Blue J 45 Costs of NSW Supreme Court proceeding 297 Mr Smith contends that Mr Slater should be deprived of the benefit of the costs order made by Hamill J because the transfer order was made on the basis of commitments given by Mr Slater to conduct the combined proceeding in South Australia expeditiously (including obtaining any expert report by 6 August 2021). Mr Smith contends that Mr Slater acted in contravention of those commitments when he sought to delay the trial date that had been listed for 27 September 2021 and the date for filing an expert report. 298 The New South Wales proceeding was completed in June 2021. I have no jurisdiction or power to make orders in or in respect of that proceeding. The position is the same in respect of Mr Slater’s contention that the costs order should be varied to increase the costs ordered in his favour. 299 In any event, even if I had power, I would not alter the orders. First, it was inevitable that the trial date listed for September 2021 be delayed given events that occurred after it was listed. Although Mr Slater sought an extension of time in which to obtain an expert report, he did not obtain one. Secondly, even if Mr Slater contravened the commitments in a blameworthy fashion, it would not warrant revisiting the costs order. Conclusion 300 An order should be made that Mr Smith pay the costs of the Smith action of Mr Slater: (a) in respect of the period when the action was in the District Court of New South Wales, in accordance with the ordinary basis applicable in that Court; and (b) thereafter, as if the action had proceeded from the date of transfer in the Magistrates Court. Offset of costs 301 Mr Slater and Mr Smith each contend that any costs orders against Mr Smith to the benefit of Mr Slater should be offset against any costs orders against Mr Slater to the benefit of Mr Smith. 302 However, the costs orders are not between the same parties. The costs order against Mr Slater is in favour of Ecosol jointly with Mr Smith. The costs order in favour of Mr Slater is against Mr Smith alone. No offset is possible in the absence of consent from Ecosol. Conclusion 303 The successful party(ies) in each action is/are not entitled to a special costs order by reason of non-acceptance of informal offers made by them or otherwise. -- 49 of 50 -- [2024] SASC 29 Blue J 46 304 Mr Slater is to pay the costs of the Slater action of Ecosol and Mr Smith in accordance with the Magistrates Court costs scale. 305 Mr Smith is to pay the costs of the Smith action of Mr Slater in accordance with the ordinary basis applicable in the District Court of New South Wales up to the date of transfer and thereafter as if the action had proceeded from the date of transfer in the Magistrates Court. 306 I will hear the parties on the precise orders to be made. -- 50 of 50 --