D.G. Certifiers Pty Ltd v Hawksworth (No 2) [2018] QDC 164

DISTRICT COURT OF QUEENSLAND CITATION: D.G. Certifiers Pty Ltd & Another v Hawksworth (No 2) [2018] QDC 164 PARTIES: D.G. CERTIFIERS PTY LTD (first plaintiff) and DARRYL ANTONY GREEN (second plaintiff) v STEVEN GEORGE HAWKSWORTH (defendant) FILE NO/S: 3749 of 2015 DIVISION: Civil PROCEEDING: Claim DELIVERED ON: 21 August 2018 DELIVERED AT: Brisbane HEARING DATE: On the papers JUDGE: Rosengren DCJ ORDER: CATCHWORDS: The plaintiffs are to pay the defendant’s costs of the proceeding on the standard basis. DEFAMATION – PROCEDURE – COSTS – where the plaintiffs’ claims in defamation against the defendant were dismissed after trial – where the defendant contends for costs to be awarded on an indemnity basis pursuant to s 40(2)(b) of the Defamation Act 2005 (Qld) – where the defendant made one offer to settle prior to trial – where the plaintiffs rejected the offer – whether the plaintiffs acted unreasonably – whether an award of costs on an indemnity basis is in the interest of justice - whether costs ought to be awarded on an indemnity basis Defamation Act 2005 (Qld) ss 15, 40 Uniform Civil Procedure Rules 1999 r 361, r 681 Astway Pty Ltd v Council of the City of the Gold Coast [2007] QSC 224 Di Carlo v Dubois [2002] QCA 225 Hyndes v Nationwide News Pty Ltd [2012] NSWCA 349 The Ten Group Pty Ltd (No 2) v Cornes (2012) 114 SASR -- 1 of 8 -- 2 106 Nationwide News Pty Ltd v Weatherup [2017] QCA 70 Roberts v Prendergast [2013] QCA 89 Hazeldene’s Chicken Farm Pty Ltd v Victorian WorkCover Authority (No 2) [2005] VSCA 298 Mizikovsky v Queensland Television Limited & Ors [2013] QCA 68 Mayfair Property Holdings Pty Ltd v Southland Packers Pty Ltd (No 3) [2016] QSC 150 Maclag (No 11) Pty Ltd as trustee for the Burns Family Trust & Anor v Chantay Too Pty Ltd as trustee for the Chantay Trust (No 2) [2010] QSC 396 Rosinak v Governor Insurance Office (1997) 41 NSWLR 608 Emmanuel Management Pty Ltd (in liquidation) v Fosters Brewing Group and Ors [2003] QSC 299 Todrell Pty Ltd v Finch (No 2) [2007] QSC 386 COUNSEL: A Newman for the plaintiffs The defendant appeared on his own behalf SOLICITORS: Goldsmiths Lawyers for the plaintiffs The defendant appeared on his own behalf [1] In this matter I gave judgment on 17 May 2018 that the plaintiffs’ claims be dismissed. The defendant, who is self-represented, was absent from Australia at the time. I indicated that subject to further written submissions to be provided by 4pm on 8 June 2018, the plaintiffs would be ordered to pay the defendant’s costs on a standard basis. [2] Further written submissions were made by the parties. The plaintiffs’ submissions were provided on 8 June 2018. By email dated 11 June 2018, the defendant requested an extension until 13 June 2018. This was because he had assumed that costs would be automatically awarded to him and he was unaware that there was a discretion as to whether costs would be ordered on the standard or the indemnity basis. The extension was opposed by the plaintiffs. The reason for this was that it was contended that the only reason the defendant was seeking to make submissions was to in effect, respond to the plaintiffs’ submissions. Further, it was noted that the judgment was clear as to when the submissions were required. I granted the extension, given that the defendant is self-represented and was not present in court when the judgment was delivered. In addition, the judgment is lengthy and the issue as to costs is only addressed in the final paragraph. The defendant’s submissions were provided on 11 June 2018. Background [3] The first plaintiff is owned and operated by the second plaintiff. He is the sole director and principal of the first plaintiff and is an accredited building surveyor -- 2 of 8 -- 3 and a licensed building certifier. The first plaintiff’s business is one of building certification, inspections and approvals. The defendant was a client who engaged the first plaintiff to perform some certification services for him in relation to a residential block of land at Narangba. [4] The claim by the plaintiffs was for damages for defamation in relation to three reviews written by the defendant, which first appeared on four different websites on 6 August 2015. The reviews related to the professional services provided by the plaintiffs to the defendant. The plaintiffs also sought a permanent injunction restraining the defendant from making further defamatory allegations. [5] On 26 August 2015, the defendant was served with a Concerns Notice which invited the defendant to make amends pursuant to section 15 of the Defamation Act 2005. It invited a response within 28 days. There was no response within this time period and the plaintiffs commenced proceedings on 24 September 2015. [6] By email dated 9 October 2015, the then solicitors for the defendant informed the plaintiffs that there would be no offer to make amends and that the defendant would defend any defamation proceedings. This was on the basis that even if there were defamatory imputations in the reviews, the common law defences of qualified privilege and fair comment and the statutory defence of honest opinion were available to the defendant. A defence was filed on 27 October 2015. An amended defence was filed on 27 November 2015. [7] Two applications were heard in the Brisbane District Court on 15 March 2016, one for each party. Both applications were for strike out orders or alternatively, the provision of further and better particulars in relation to the other party’s pleadings. The plaintiffs were successful with their application in relation to three subparagraphs of the amended defence. The defendant’s application was dismissed. The defendant was ordered to pay the plaintiffs’ costs with respect to both applications on the standard basis. [8] There was a further interlocutory application on 2 June 2016. It related to two particulars which were the subject of the earlier interlocutory applications. An order was made striking out the particulars, with the defendant to file an amended pleading within 14 days. The costs of the application were ordered to be costs in the cause. [9] An amended statement of claim was filed on 30 June 2016. The amendments were not substantial. The further amended defence was filed on 12 July 2016. It disputed that the alleged imputations arose and/or were defamatory, and pleaded defences of common law and statutory privilege and statutory honest opinion. It also pleaded what appeared to be the defence of triviality. The plaintiffs joined issue with a reply filed on 22 July 2016. -- 3 of 8 -- 4 [10] By correspondence dated 27 September 2016, the defendant via his solicitor made a formal offer to settle the proceedings under Part 5, Chapter 9 of the Uniform Civil Procedure Rules 1999 (‘UCPR’). That offer was for the defendant to pay the plaintiffs $10,000 for damages and interest, together with costs on the standard basis (‘the defendant’s offer’). It remained open for acceptance for a period of 14 days. There is no evidence of a specific rejection of the offer. Rather, it appears to have lapsed. [11] On 26 May 2017, the plaintiffs filed a second further amended statement of claim. No defence was filed in response to that pleading and therefore the defendant continued to rely on his defence filed on 12 July 2016. [12] There was a further application dispensing with the defendant’s signature on the request for trial date. The parties agreed to consent orders on 17 August 2017, granting the application with an order for the defendant to pay the plaintiffs’ costs of the application on the standard basis. [13] The trial was by judge alone. The plaintiffs were given leave to file an amended reply to the defence filed on 22 July 2016 at the commencement of the trial on 8 November 2017. The hearing went for five days. The defendant had legal representation until 17 October 2017, but was not represented at the hearing and appeared in person. The plaintiffs’ claims were defeated on the bases that while some of the defamatory imputations were made out, the common law and statutory defences of qualified privilege and the statutory defence of honest opinion were made out. Accordingly, the plaintiffs’ claims were dismissed. Statutory framework [14] Rule 361 of the UCPR applies where a defendant makes an offer to settle and the judgment is not more favourable to the plaintiff than the defendant’s offer. However, it has no application where the plaintiff does not recover judgment for any sum. This is because subsection (1)(a) is not engaged in the absence of such a judgment. [15] Where a plaintiff fails entirely making rule 361 inapplicable, the court may make ‘another order’ under rule 681.1 This section provides that the usual order is for costs on the standard basis and that a special feature warranting a more generous award will need to be established to justify an order for indemnity costs.2 [16] The Defamation Act 2005 (‘the Act’) makes specific provision for costs in defamation proceedings. It does not displace the Court’s power to order costs for some other reason or displace the applicable rules of the UCPR.3 1 Astway Pty Ltd v Council of the City of the Gold Coast [2007] QSC 224. 2 Di Carlo v Dubois [2002] QCA 225 [37]. 3 Hyndes v Nationwide News Pty Ltd [2012] NSWCA 349 at [56]. -- 4 of 8 -- 5 [17] Section 40(1) of the Act requires a court in awarding costs in defamation proceedings, to have regard to the way in which the parties conducted their cases and any other matters that the court considers relevant. Section 40(2)(b) provides that if defamation proceedings are unsuccessfully brought by a plaintiff and costs in the proceedings are to be awarded to the defendant, the court must, unless the interests of justice require otherwise, 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.” [18] The purpose of section 40(2) is to broaden the cases in which indemnity costs can be awarded to parties in defamation proceedings.4 The focus of section 40(2)(b) is on a plaintiff’s unreasonable failure to accept a settlement proposed by the defendant. Standard or indemnity costs [19] In the context of the plaintiffs’ claims having been dismissed, the defendant submits that the conditions established by s 40(2)(b) are established, requiring his costs to be assessed on the indemnity basis. [20] The plaintiffs resist this and contend that the defendant’s costs be paid on the standard basis. There are two principal submissions made in support of this. The first is that the plaintiffs did not unreasonably fail to agree to the defendant’s offer. The second is that the “interests of justice” require some order other than an order for indemnity costs. [21] As to whether a party acts unreasonably in failing to accept an offer from an opposing party, in Roberts v Prendergast5, Fraser JA referred to the following observations by the Victorian Court of Appeal in Hazeldene’s Chicken Farm Pty Ltd v Victorian WorkCover Authority (No 2): “deciding whether conduct is ‘reasonable’ or ‘unreasonable’ will always involve matters of judgment and impression” and “… are questions about which different judges might properly arrive at different conclusions”. 6 [22] In Mizikovsky v Queensland Television Limited & Ors, Fraser JA observed that: “As the litigation fell out, it was the respondents who were entitled to the benefit of that usual approach to costs, but it does not follow that 4 This was observed by the Full Court of the Supreme Court of South Australia in The Ten Group Pty Ltd (No 2) v Cornes (2012) 114 SASR 106 at [14] in relation to an identical provision which was referred to in Nationwide News Pty Ltd v Weatherup [2017] QCA 70. 5 [2013] QCA 89. 6 [2005] VSCA 298 at [23]. -- 5 of 8 -- 6 the appellant’s mere failure to accept the offer afforded a ground for the costs awarded in favour of the respondents to be assessed on an indemnity basis.” 7 [23] The authorities establish a number of factors that are relevant to the reasonableness or otherwise on the non-acceptance of an offer to settle. These include the stage of the proceeding at which the offer was received; the time allowed to the offeree to consider it; the extent of the compromise offered, the offeree’s prospects of success assessed at the date of the offer; the clarity with which the terms of the offer were expressed; and whether the offer foreshadowed an application for indemnity costs in the event of the offeree rejecting it.8 [24] Turning to these factors, first, the offer was made under Chapter 9, Part 5 of the UCPR and in accordance with this, the plaintiffs were given 14 days to consider it and the terms of the offer were clearly expressed. While the offer does not expressly state that an application would be made for indemnity costs if it was not accepted, it was certainly impliedly foreshadowed to the plaintiffs that such an application might be made. [25] Second, the offer was made 12 months after proceedings were commenced. By this time there had been two interlocutory skirmishes. The plaintiffs were successful in both, with a costs order in their favour in relation to the first of the two applications. [26] Third, as to the extent of the compromise, the offer of damages and interest in the amount of $10,000 inclusive of interest, could be best described as modest at best. It was substantially less than the amount claimed of $180,000 plus interest and costs. [27] Fourth, it could not be said that the plaintiffs’ prospects of successfully establishing their claims at the date of the offer were such as to make their refusal to accept the offer unreasonable. [28] It perhaps may have been a reasonable decision for the plaintiffs to accept the defendant’s modest offer given the risks of the litigation. However, even if it had been, it does not necessarily follow that it was unreasonable for the plaintiffs not to have accepted it. Indeed, I find that it was not. The plaintiffs had available evidence which, if accepted, supported their case. The defendant’s credibility was central to the resolution of malice in relation to the defences of common law and statutory qualified privilege and also as to whether he honestly held the opinions expressed, in the context of the statutory defence of honest opinion. Whilst each of these issues were ultimately resolved in the defendant’s favour and while in 7 [2013] QCA 68 at [54]. 8 Roberts v Prendergast [2013] QCA 89, per Fraser JA. -- 6 of 8 -- 7 general I thought the defendant’s evidence was reliable, I did not accept everything said by him was entirely accurate. [29] Therefore, putting hindsight aside, I am satisfied that at the time of the defendant’s offer in September 2016, there was nothing which ought to have made the plaintiffs appreciate that it was more probable than not that the defendant would present favourably in court. The claim was resolved to a significant extent upon my assessment of the credibility of the defendant in the witness box. The plaintiffs had limited opportunity to test this until after the trial had commenced. [30] I am ultimately persuaded that there was nothing about the approach of the plaintiffs to this litigation which would enable it to be characterised as sufficiently unreasonable to justify an order for costs on the indemnity basis. [31] The plaintiffs further contend that the interests of justice require that costs be paid on the standard rather than the indemnity basis. The defendant’s submissions do not address this issue. I am persuaded by the plaintiffs’ submissions on this issue for the following reasons. [32] It is accepted that litigation is very expensive and that a limited indemnity is provided to a successful party. However, in Di Carlo and Dubois & Ors,9 White J said that this divergence between those costs which are actually incurred and those costs which can be recovered “does not mean that it is open to a judge to award costs having regard to his or her own view as to the adequacy of party and party costs so fixed.”10 [33] To make an award of indemnity costs, it is not necessary for the party seeking such an order to establish moral or ethical delinquency on the part of the opposing party.11 It is sufficient to establish unreasonable or irresponsible conduct by the opposing party, which has exposed the successful party to costs, which in all fairness, should be ordered on an indemnity basis.12 No such circumstances exist in this case. Thus, I am satisfied that the interests of justice require that the costs be awarded on the standard basis rather than the indemnity basis. [34] The written submissions of neither party address the question of costs in the context of rule 681 of the UCPR. It provides that the usual rule is that costs are paid on the standard basis. This is not easily displaced and it is for the defendant to demonstrate that the departure is justified.13 I am satisfied that there are no reasons to depart from the general rule in this case. 9 [2002] QCA 225. 10 at [36]. 11 Rosinak v Governor Insurance Office (1997) 41 NSWLR 608 at 616. 12 Emmanuel Management Pty Ltd (in liquidation) v Fosters Brewing Group and Ors [2003] QSC 299; Todrell Pty Ltd v Finch (No 2) [2007] QSC 386 at 4. 13 Citing Mayfair Property Holdings Pty Ltd v Southland Packers Pty Ltd (No 3) [2016] QSC 150; Maclag (No 11) Pty Ltd as trustee for the Burns Family Trust & Anor v Chantay Too Pty Ltd as trustee for the Chantay Trust (No 2) [2010] QSC 396. -- 7 of 8 -- 8 [35] I conclude that the circumstances, as they are informed by rule 681 of the UCPR, favour an order for costs on the standard basis. There is nothing about the conduct of the plaintiffs, or their attitude to the Court, or their overall approach, or any other special or unusual features that justifies an order for costs to be made on the indemnity basis. In short, there are no special features warranting a more generous award. Order [36] I order the plaintiffs to pay the defendant’s costs of the proceeding on the standard basis. -- 8 of 8 --