Federal Court of Australia Herron v HarperCollins Publishers Australia Pty Ltd (No 4) [2021] FCA 1021 File number: NSD 1620 of 2017 NSD 1621 of 2017 Judgment of: JAGOT J Date of judgment: 26 August 2021 Catchwords: COSTS — application for indemnity costs — application for indemnity costs on basis of slip or omission on part of party seeking indemnity costs following entry of usual costs order — application dismissed Legislation: Federal Court Rules 2011 (Cth) rr 39.05(f), 39.05(h), 40.02(a), 40.02(b) Cases cited: Herron v HarperCollins Publishers Australia Pty Ltd [2018] FCA 1495 Herron v HarperCollins Publishers Australia Pty Ltd [2020] FCA 805 Herron v HarperCollins Publishers Australia Pty Ltd (No 3) [2020] FCA 1687 Notaras v Barcelona Pty Limited (No 2) [2019] FCA 617 Wagner & Ors v Harbour Radio Pty Ltd & Ors [2018] QSC 267 Division: General Division Registry: New South Wales National Practice Area: Other Federal Jurisdiction Number of paragraphs: 26 Date of hearing: 5 August 2021 In NSD 1621 of 2017: Counsel for the Applicant: Ms S Chrysanthou SC, with Mr BC Dean Solicitor for the Applicant: Company Giles Counsel for the Respondents: Mr A D'Arville, with Mr K Sharma Solicitor for the Respondents: Banki Haddock Fiora ORDERS NSD 1621 of 2017 BETWEEN: JOHN GILL Applicant AND: HARPERCOLLINS PUBLISHERS AUSTRALIA PTY LTD ACN 009 913 517 First Respondent STEVE CANNANE Second Respondent order made by: JAGOT J DATE OF ORDER: 26 August 2021 THE COURT ORDERS THAT: 1. The costs the subject of order 2 made on 25 November 2020 be assessed in a fixed lump sum. 2. All other outstanding orders for costs in the proceeding be assessed in a fixed lump sum. 3. The interlocutory application filed on 19 February 2021 otherwise be dismissed. 4. The respondents pay the applicant's costs of the interlocutory application, such costs to be assessed in a fixed lump sum. 5. The total costs owing to the applicant in a fixed lump sum be set-off against the total costs owing to the respondents in a fixed lump sum. 6. The assessment of all costs in a fixed lump sum, including the set-off in accordance with order 5, be referred to and determined by a Registrar of the Court. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. ORDERS NSD 1620 of 2017 BETWEEN: JOHN HERRON Applicant AND: HARPERCOLLINS PUBLISHERS AUSTRALIA PTY LTD ACN 009 913 517 First Respondent STEVE CANNANE Second Respondent order made by: JAGOT J DATE OF ORDER: 26 August 2021 THE COURT ORDERS THAT: 1. The respondents be granted leave to join the estate of the late John Herron as a respondent to its interlocutory application within seven days. 2. The interlocutory application be adjourned for a case management hearing at 9.30am on 14 September 2021. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. REASONS FOR JUDGMENT JAGOT J: 1 These reasons for judgment relate to an application for indemnity costs, following the publication of Herron v HarperCollins Publishers Australia Pty Ltd (No 3) [2020] FCA 1687 (the principal judgment). 2 Defined terms in the principal judgment have the same meaning in these reasons. 3 In the principal judgment, I explained why the applicants' claims for defamation against the respondents in proceedings NSD1620/2017 (Mr Herron) and NSD1621/2021 (Dr Gill) had to be dismissed. I made orders at the same time as follows in each matter: 1. The originating application be dismissed. 2. The applicant pay the respondents' costs as agreed or taxed. 4 When I made these orders, on 25 November 2020, neither party had raised any issue about costs. Neither party had suggested at any time that they wished to be heard about costs or that I should do other than make the usual order as to costs following the event. 5 The respondents first raised the issue of the applicants paying the respondents' costs on an indemnity basis, in part or whole, on 17 December 2020. The respondents then filed interlocutory applications in both proceedings on 19 February 2021 seeking that order 2 made on 25 November 2020 be vacated, and that orders for the applicants to pay the respondents' costs on an indemnity basis in part or whole be made. The respondents also sought that the respondents' costs be assessed in a fixed lump sum to be determined by the Court. 6 The applicant in NSD1620/2017, Mr Herron, has died and it is necessary for any orders to be made against Mr Herron's estate. It was agreed that the interlocutory application in NSD1620/2017 would be adjourned pending the resolution of the interlocutory application in NSD1621/2017. The estate of the late Mr Herron will need to be joined as a respondent to the interlocutory application to enable the orders for lump sum costs to be made in that proceeding. Orders will be made to facilitate this occurring. 7 The interlocutory application against Dr Gill was based in part on r 40.02(a) of the Federal Court Rules 2011 (Cth) (the Court Rules), which provides that a party or person who is entitled to costs may apply to the Court for an order that costs awarded in their favour be paid other than as between party and party, and in part on r 40.02(b), which provides that a party or person who is entitled to costs may apply to the Court for an order that costs be awarded in a lump sum, instead of, or in addition to, any taxed costs. 8 Order 2 was entered on its making on 25 November 2020. Accordingly, under r 39.05, the Court may only vary or set aside order 2 if, relevantly, the other party consents, or there is an error arising in a judgment or order from an accidental slip or omission (rr 39.05(f) and (h) respectively). 9 Dr Gill does not oppose the making of the lump sum costs order provided he is given an adequate opportunity to submit that certain costs were not incurred reasonably and fairly. The procedure for the assessment of lump sum costs is set out in Costs Practice Note (GPN-Costs). This practice note provides that the party the subject of the costs order may file affidavits and, with leave, submissions relating to disputed costs. Accordingly, as he will have an adequate opportunity to submit that certain costs were not incurred reasonably and fairly, it can be taken that Dr Gill consents to the making of the lump sum costs order. As I propose to refer the assessment of the lump sum costs to a Registrar, it is appropriate to indicate the following matters: (1) this is a complex case within the meaning of cl 4.4 of Costs Practice Note (GPN-Costs); (2) if the parties require leave from the Registrar to file material that exceeds the length specified in cll 4.12 and 4.14 (10 and 8 pages respectively), a reasonable extension of length should be granted; and (3) it would also be reasonable for the parties to have leave to file written submissions as referred to in cl 4.15 and again it would be reasonable to grant leave to exceed the specified length of 3 pages by some amount. 10 The claim for indemnity costs is in a different category. Dr Gill does not consent to that order. The respondents must rely on r 39.05(h) (there is an error arising in a judgment or order from an accidental slip or omission). The relevant slip or omission is said to be that of the lawyers for the respondents. They overlooked the capacity to apply for indemnity costs until after the principal judgment was published. When it occurred to them that they had not applied for indemnity costs, they promptly put the applicants on notice of their intention to make that claim. 11 There is no factual dispute that the respondents never mentioned the possibility of a claim for indemnity costs to the applicants before the principal judgment was published except in a letter dated 8 August 2017. While I agree with the respondents that this letter was not confined to the costs of the respondents' interlocutory application to summarily dismiss the proceeding (the respondents' interlocutory application was dismissed in Herron v HarperCollins Publishers Australia Pty Ltd [2018] FCA 1495, the interlocutory judgment), the relevant facts are: (a) after the interlocutory judgment was published on 5 October 2018, the respondents never again made any suggestion that they would be seeking indemnity costs if the applicants failed, (b) each of the matters on which the respondents now rely to seek indemnity costs was known to the respondents by 28 February 2020 other than the terms of the principal judgment, (c) the hearing occurred in June to August 2020, and (d) the principal judgment was published on 25 November 2020. In other words, there was ample opportunity for the respondents to raise the issue of indemnity costs after 28 February 2020 had they considered it appropriate to do so. The very fact the respondents did not raise that issue tends to suggest that the respondents and their lawyers, rather than merely having overlooked a potential claim for indemnity costs, did not perceive the circumstances to be such as to support a claim for indemnity costs. 12 The respondents properly accepted that it cannot be the case that a party would be justified in seeking indemnity costs merely because the judgment ultimately vindicates the position of that party. More is required than mere success, even comprehensive success, in litigation to justify an order for indemnity costs. The respondents submitted that there is more in the present case, being the fact that the applicant put the respondents to proof of the respondents' defence of truth in circumstances where, as the respondents would have it, the truth defence was bound to succeed. 13 The respondents submitted that their truth defence was bound to succeed because: (a) they served five different expert reports which spoke with one voice about the extreme danger of deep sleep therapy (DST), (b) they served various historical expert reports which had been prepared for the Royal Commission, or which had been provided to it, to the same effect, (c) they served a report of Professor McGorry about the applicant's relevant reputation, (d) the applicants only served a report of Dr Clark, an epidemiologist, in respect of the calculation of death rates but this report did not address the danger of DST, and (e) the applicants served no other expert evidence but sought to rely on a large number of academic and other articles about DST in order to demonstrate that it was an accepted practice in the 1960s and 1970s. 14 It is relevant that the respondents' evidence was filed and served by 11 October 2019. The applicants' evidence in response was served by 28 February 2020. As such, it cannot be the case that the applicants should have known the proceeding was hopeless and doomed to fail before, at the earliest, 28 February 2020. This is because, until that point, the circumstances on which the respondents rely to establish that the applicants' case was doomed (the serving of the respondents' expert evidence and the lack of relevant expert evidence from the applicants in response) had not yet occurred. 15 Indeed, contrary to the proposition that the applicants' case was doomed before 28 February 2020, the very reason for the respondents' interlocutory application for summary dismissal was the respondents' argument that the proceedings involved an abuse of process because, in part, the effluxion of time since the relevant events meant that the respondents would not be able to prove the truth of the alleged defamatory imputations based on the dangers posed by DST. At [23] of the interlocutory judgment, I said: If, as may be the fact, the respondents are now unable to prove that the defamatory imputations are true then that would have been the position also in 2016 when the respondents chose to publish. Having chosen to publish in 2016 it is not now for the respondents to say that they cannot obtain a fair hearing in 2018 because they cannot prove to be true what may well have been able to be proved to be true by others who published in or around 1990. 16 The fact that the respondents comprehensively established their defence of truth to the effect that DST, at the time, was a dangerous experimental treatment for which there was no medical indication for any patient subjected to it at Chelmsford does not mean that the applicants, acting reasonably, should have appreciated that the proceeding was hopeless from 28 February 2020. 17 Contrary to the respondents' submissions, the applicants did adduce evidence to support their case, being the historical scientific articles, the evidence of Dr Clark, and the evidence of the applicants. As the principal judgment discloses, I either rejected that evidence or found that it did not in any way undermine the expert evidence adduced by the respondents. But that rejection was the result of the process of the hearing, including extensive cross-examination and submissions. 18 It is true that the evidence adduced by the applicants did not include expert evidence, from a psychiatrist, that DST was other than dangerous experimental treatment for which there was no medical indication for any patient subjected to it at Chelmsford. But this does not mean that, from 28 February 2020, the applicants' case was doomed. As it was, the hearing went well from the perspective of the respondents. But litigation involves inherent uncertainties. Evidence may be rejected as inadmissible. Witnesses may not come up to proof or their evidence may not survive cross-examination. Competing evidence may be given more weight than anticipated. 19 In particular, while I concluded, in Herron v HarperCollins Publishers Australia Pty Ltd [2020] FCA 805, that nothing prevented the respondents from using documents produced for the Royal Commission, both parties were aware that the Royal Commission report itself was not admissible for the truth of its contents. To establish the truth of the alleged imputations founded on DST being dangerous experimental treatment for which there was no medical indication for any patient subjected to it at Chelmsford, the respondents had to adduce sufficient evidence from experts and patients and sufficient medical records to enable me to reach my own conclusions in that regard. In circumstances where, with good reason, the respondents believed that they would not be able to do so given that the events occurred in the 1960s and 1970s, it is not surprising that the applicants might have held the same view. 20 For the reasons already given, the expert evidence adduced by the respondents and lack of expert evidence from a psychiatrist adduced by the applicants did not change this position, given the nature of litigation generally and this litigation in particular. The respondents needed to get their evidence admitted over objections, needed to effectively cross-examine the applicants, needed to undermine the relevance of Dr Clark's evidence, and needed to undermine the relevance of the historical scientific articles on which the applicants relied in order to succeed. The respondents did all these things well. To succeed, the respondents had to do so because they bore the onus. But none of this was certain or should have made it obvious to the applicants, or their lawyers, that the applicants' case was doomed. 21 It is not relevant to the issue whether indemnity costs should be ordered that the majority of the respondents' costs were incurred after the service of the evidence. Nor is it relevant to that issue that the respondents were put to enormous costs to defend the proceeding. Nor, in my view, can it be relevant to that issue that the costs expended in the litigation can objectively be viewed as disproportionate to the number of copies of the book sold and any possible economic benefit that the respondents could have obtained from it. Some may say that such lack of proportionality is characteristic of the very cause of action of defamation which is concerned with the vindication of reputation. None of these matters can be weighed as part of the evaluation as to whether an order for indemnity costs is justified. If the applicants should have known their case was hopeless from 28 February 2020, indemnity costs would be in play. If not, indemnity costs are not in play. In the present case it is difficult to avoid the inference that the application for indemnity costs is based on the success of the respondent as reflected in the principal judgment. But that hindsight perspective cannot justify an order for indemnity costs. 22 The real weight of the respondents' propositions is that, having failed to persuade the Royal Commission more than three decades ago that DST was other than a dangerous experimental treatment for which there was no medical indication for any patient subjected to it at Chelmsford (when all of the relevant witnesses were available), it should have been obvious to the applicants and their lawyers that they could not now defeat the respondents' defence of truth to that effect. The respondents referred in this regard to Wagner & Ors v Harbour Radio Pty Ltd & Ors [2018] QSC 267 at [32]. However the facts of the present case are different. In Wagner the defendants bore the onus of proving the defence of truth, and they persisted in that defence contrary to the findings of two Royal Commissions proximate in time to the litigation. In the present case, the applicants did not bear the onus. The respondents did. The respondents' defence of truth had to come up to proof. Both the amount of evidence that the respondents had to adduce, and the extent of cross-examination of the applicants, demonstrate that enormous effort was involved in making good that defence. The defence was never bound to succeed. But for the cogency of their evidence and the efficacy of their cross-examination of the applicants, the respondents may not have been able to establish the defence of truth because the relevant events occurred decades ago, potential witnesses had died, and other witnesses could not be found. 23 For these reasons, no order for indemnity costs is warranted. It cannot reasonably be concluded that from 28 February 2020 the applicants' claims were hopeless and doomed to fail. It can be concluded that the applicants' determination to vindicate their own perception of historical injustice against them through the law of defamation required enormous effort on the part of the respondents to defend successfully given the unusual circumstances. As I have said, that circumstance may reveal something about the operation of the law of defamation, but it should not result in an order for indemnity costs against the applicants. 24 It follows that it is not necessary to resolve the dispute between the parties whether this is a case in which the respondents overlooked the issue of costs by reason of inadvertence, thereby engaging r 39.05(h) consistently with the reasoning in Notaras v Barcelona Pty Limited (No 2) [2019] FCA 617. It is sufficient to say that the facts in Notaras were different. In that case, the issue of indemnity costs was in play because offers of compromise had been made. In the present case, it would appear that none of the lawyers considered the issue of indemnity costs until after the principal judgment had been published. This tends to suggest that the lawyers did not in fact consider the applicants' case hopeless until they read the principal judgment. While this may nevertheless be sufficient inadvertence to engage r 39.05(h), it is not sufficient to engage the principle of indemnity costs. 25 Only one other observation should be made. It has repeatedly been said that applications for indemnity costs or other departures from the usual order as to costs need to be raised at the hearing and before the judgment is reserved. There are good reasons for this. While failure to do so does not exclude the filing of a subsequent application, it is undesirable for such applications to be made. Cases such as Notaras, involving a clear oversight by the lawyers when the issue of indemnity costs was in play, are rare. This is not such a case. 26 Accordingly, to the extent that the interlocutory application seeks indemnity costs, that application must be dismissed with costs. All outstanding issues of costs should be assessed on a lump sum basis. Further, the applicants' costs should be set-off against the respondents' costs so that there is only one cost debt of each applicant to the respondents in each proceeding. I certify that the preceding twenty-six (26) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Jagot. Associate: Dated: 26 August 2021