Supreme Court New South Wales Medium Neutral Citation: Cosco v Hutley (No 3) [2020] NSWSC 1125 Hearing dates: Written Submissions Date of orders: 24 August 2020 Decision date: 24 August 2020 Jurisdiction: Common Law Before: Rothman J Decision: (1) Vacate Orders 3, 5 and 6 of the Court, issued in these proceedings, on 13 July 2020 (hereinafter "the Original Orders"). (2) Pursuant to s 100 of the Civil Procedure Act 2005 (NSW), the defendant shall pay, in addition to the award of damages, interest on the amount of said damages from 4 July 2016 until 13 July 2020 at 3% per annum and, thereafter, pursuant to the provisions of s 101 of the Civil Procedure Act 2005 (NSW) interest is payable at the rate prescribed for post-judgment interest by the Uniform Civil Procedure Rules 2005 (NSW). (3) Pursuant to s 100 of the Civil Procedure Act 2005 (NSW) and s 101 of the Civil Procedure Act 2005 (NSW), the defendant shall pay interest on the amount of costs at the rate applicable to post-judgment interest under the Uniform Civil Procedure Rules 2005 (NSW) from the date on which those costs were paid by the plaintiff. (4) Pursuant to the provisions of the Uniform Civil Procedure Rules 2005 (NSW) r 42.14, the defendant shall pay the plaintiff's as costs of and incidental to the proceedings: (i) Assessed on the ordinary basis up to and including 13 March 2017; and (ii) Assessed on an indemnity basis from 14 March 2017 onwards. (5) The Court orders that the amounts paid into Court by the plaintiff pursuant to orders of the Court on 3 May 2017, 19 September 2017, 14 December 2018 and 13 March 2019, being amounts paid in security for costs, be returned to the plaintiff. (6) As a matter of abundant caution, the Consent Orders made and entered on 21 August 2020 are declared to apply to the Orders made herein, except this Order, so that the reference to the enforcement of the judgment of Rothman J includes these Orders and these orders are, as a consequence, stayed on the same terms. (7) Otherwise proceedings are dismissed. Catchwords: Defamation – interest and costs – offer made – indemnity costs ordered – interest at less than usual rate for pre-judgment interest Legislation Cited: Civil Procedure Act 2005 (NSW), ss 100, 101 Defamation Act 2005 (NSW), s 40(2)(a) Uniform Civil Procedure Rules 2005 (NSW), rr 20.26, 42.13, 42.14 Cases Cited: Amalgamated Television Services Pty Ltd v Marsden [2002] NSWCA 419 Australian Consolidated Press v Driscoll (1988) Aust Torts Reports 80–175 Grace v Grace (No 9) [2014] NSWSC 1239 John Fairfax & Sons Ltd v Kelly (1987) 8 NSWLR 131 McGaw v Channel Seven Sydney Pty Ltd [2006] NSWSC 1270 Polias v Ryall (No 2) [2015] NSWSC 1 Project Blue Sky v Australian Broadcasting Authority (1998) 194 CLR 355; [1998] HCA 28 Vilo v John Fairfax & Sons Ltd (2000) NSWSC 1206 Category: Costs Parties: Anthony John Cosco (Plaintiff) Vanessa Hutley (Defendant) Representation: Counsel: S T Chrysanthou / N G Olson (Plaintiff) M Richardson (Defendant) Solicitors: D'Arcy Sloman Peacock Lawyers (Plaintiff) Harris & Company Solicitors & Notaries (Defendant) File Number(s): 2016/332100 Judgment 1. HIS HONOUR: On 13 July 2020, the Court issued reasons for judgment and judgment for the plaintiff and an award of $300,000. Orders were made in relation to interest and costs. Leave was granted to either party to apply to the Court in writing for different or special order as to interest or costs. The plaintiff has sought indemnity costs under s 40 of the Defamation Act 2005 (NSW) and the defendant seeks an order varying the rate of interest ordered by the Court. Costs 1. The plaintiff seeks indemnity costs pursuant to the terms of the Uniform Civil Procedure Rules 2005 (NSW) ("UCPR"), UCPR r 42.14 on and from 14 March 2017 as an alternative to indemnity under the Defamation Act. Further, the plaintiff seeks that the defendant pay interest on the plaintiff's costs. Other ancillary orders are sought relating to moneys paid into Court as security for costs. The defendant consents to the return to the plaintiff of the amounts paid into Court pursuant to the orders made in relation to security for costs. 2. The provisions of UCPR r 42.14 are in the following terms: "42.14 Where offer not accepted and judgment no less favourable to plaintiff (1) This rule applies if the offer is made by the plaintiff, but not accepted by the defendant, and the plaintiff obtains an order or judgment on the claim no less favourable to the plaintiff than the terms of the offer. (2) Unless the court orders otherwise, the plaintiff is entitled to an order against the defendant for the plaintiff's costs in respect of the claim— (a) assessed on the ordinary basis up to the time from which those costs are to be assessed on an indemnity basis under paragraph (b), and (b) 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." 1. The reference to an offer in the foregoing rule is an offer of compromise made under UCPR 20.26. [1] 2. Further, in relation to defamation proceedings, the provisions of s 40(2)(a) of the Defamation Act applies, which subsection is, relevantly, in the following terms: "40 Costs in defamation proceedings (2) Without limiting subsection (1), a court must (unless the interests of justice require otherwise)— (a) if defamation proceedings are successfully brought by a plaintiff and costs in the proceedings are to be awarded to the plaintiff—order costs of and incidental to the proceedings to be assessed on an indemnity basis if the court is satisfied that the defendant unreasonably failed to make a settlement offer or agree to a settlement offer proposed by the plaintiff." 1. The plaintiff submits that the terms of s 40(2)(a) are "mandatory" as a consequence of use of the term "must". The term "mandatory" has been deprecated. [2] The difficulty with the proposition that the provision in question is "mandatory" is that the term "must" is qualified by the phrase "unless the interests of justice require otherwise". The interests of justice must be the primary concern in any order for costs. 2. Costs are compensatory and are not for the purpose of punishing the unsuccessful party. Courts order costs in order to compensate the successful party from the costs of enforcing their rights or defending their conduct. 3. On 13 March 2017, the plaintiff made an offer on terms that provided a verdict and judgment for the plaintiff in a sum significantly less than the sum awarded by the Court. The offer that was made was open for more than a month. 4. On 19 April 2017, the defendant rejected the offer on the basis that the defendant was confident she would establish a defence of truth. The Court determined that the substantial truth of the allegations had not been proved by the defendant and, as stated, awarded damages that were significantly more favourable to the plaintiff than the terms of the 13 March 2017 offer. 5. Further, the terms of the plaintiff's offer, in the scheme of these proceedings, would not have been more than would otherwise be spent on the costs of the hearing itself. Thus, the unreasonableness of the rejection of the offer becomes manifest. 6. The offer was made, as can be seen from the dates recited, early in the proceedings, which would have allowed each of the parties to put these unsavoury matters behind them, with a minimum of legal costs having been incurred. 7. Given the issues asserted in the interview by the journalist of the defendant, and the findings of the Court, the defendant must have known that at least some of the imputations conveyed about the plaintiff were false. Certainly, any reasonable view of the imputations pleaded and the statements made, bearing in mind that the defendant would have known the facts of the events that occurred, would not have allowed for the degree of confidence that the rejection of such a reasonable offer would have involved. 8. As earlier stated, costs are not intended as a punishment; and an order for costs is made in compensation for the costs associated with enforcing or defending the successful party's rights. Most appropriately, the plaintiff made an offer to settle the proceedings, at an early stage, in most modest terms. Nevertheless, it does not appear to me to be in the interests of justice to order indemnity costs for the period up to and including the date on which that offer was made. 9. In the circumstances, I apply the effect of the UCPR, r 42.14 provisions and will vary the costs order, already made, to provide for costs on the ordinary basis up to and including 13 March 2017 and assessed on an indemnity basis on and from 14 March 2017. 10. I shall also order that the defendant pay interest on the plaintiff's costs and that the monies paid into Court on account of security for costs be returned to the plaintiff. In relation to the interest on costs, I rely and apply the discussion and outcome in Polias v Ryall (No 2) [3] at [23]-[25] and the judgment of Brereton J (as his Honour then was) extracted. [4] Interest 1. At the time that judgment issued, the parties had not addressed the Court on interest. The Court ordered interest at 5% per annum, being a figure that was less than the average interest rate between the date of the publication and the date of judgment. Those orders were made pursuant to the terms of s 100 of the Civil Procedure Act 2005 (NSW). 2. The issue of the rate of interest to be paid in relation to pre-judgment damages in defamation has been the subject of some authority. The Court, as presently constituted, dealt with the matter at length in McGaw v Channel Seven Sydney Pty Ltd [2006] NSWSC 1270. 3. It is unnecessary to restate, in these reasons for judgment, the authorities on which the Court relied in McGaw v Channel Seven Sydney Pty Ltd. Primarily, those authorities included John Fairfax & Sons Ltd v Kelly (1987) 8 NSWLR 131; Vilo v John Fairfax & Sons Ltd (2000) NSWSC 1206; Australian Consolidated Press v Driscoll (1988) Aust Torts Reports 80–175; and Amalgamated Television Services Pty Ltd v Marsden [2002] NSWCA 419. 4. The defendant submits that there is no evidence that the damage was heavily weighted towards the initial publication, not of the whole interview, but of the program on national television. Nevertheless, common sense would dictate that a significant amount of the damage would have occurred immediately after the publication on the national media, which was some little time after the initial interview. 5. It is, as has been stated, impermissible to follow some mathematical formula, without assessing the appropriateness of the interest rate and determining that which is fair and proper. It would seem to me, in the circumstances, and notwithstanding the evidence that some 18 months later, the matter was still the subject of the grapevine effect, that approximately three-quarters of the damage would have been effected from the date of the publication 6. In the circumstances, the Court must do its best to award interest on the basis that is fair and appropriate. In all the circumstances, it seems that the Court should order that pre-judgment interest (except in relation to the costs) be at 3% and the orders that were made will be varied accordingly. The interest on costs, awarded as a consequence of the principles discussed by the Court, as presently constituted, in Polias v Ryall (No 2) [2015] NSWSC 1 at [23]-[24] will be paid at the rate applicable, from time to time, for post-judgment interest. Conclusion 1. For the foregoing reasons, the Court will vary the orders issued on 13 July 2020 to reflect the foregoing reasons. The Court issues the following orders: 1. Vacate Orders 3, 5 and 6 of the Court, issued in these proceedings, on 13 July 2020 (hereinafter "the Original Orders"). 2. Pursuant to s 100 of the Civil Procedure Act 2005 (NSW), the defendant shall pay, in addition to the award of damages, interest on the amount of said damages from 4 July 2016 until 13 July 2020 at 3% per annum and, thereafter, pursuant to the provisions of s 101 of the Civil Procedure Act 2005 (NSW) interest is payable at the rate prescribed for post-judgment interest by the Uniform Civil Procedure Rules 2005 (NSW). 3. Pursuant to s 100 of the Civil Procedure Act 2005 (NSW) and s 101 of the Civil Procedure Act 2005 (NSW), the defendant shall pay interest on the amount of costs at the rate applicable to post-judgment interest under the Uniform Civil Procedure Rules 2005 (NSW) from the date on which those costs were paid by the plaintiff. 4. Pursuant to the provisions of the Uniform Civil Procedure Rules 2005 (NSW) r 42.14, the defendant shall pay the plaintiff's as costs of and incidental to the proceedings: 1. Assessed on the ordinary basis up to and including 13 March 2017; and 2. Assessed on an indemnity basis from 14 March 2017 onwards. 1. The Court orders that the amounts paid into Court by the plaintiff pursuant to orders of the Court on 3 May 2017, 19 September 2017, 14 December 2018 and 13 March 2019, being amounts paid in security for costs, be returned to the plaintiff. 2. As a matter of abundant caution, the Consent Orders made and entered on 21 August 2020 are declared to apply to the Orders made herein, except this Order, so that the reference to the enforcement of the judgment of Rothman J includes these Orders and these orders are, as a consequence, stayed on the same terms. 3. Otherwise proceedings are dismissed. ********** Endnotes 1. UCPR, r 42.13. 2. Project Blue Sky v Australian Broadcasting Authority (1998) 194 CLR 355; [1998] HCA 28. 3. Polias v Ryall (No 2) [2015] NSWSC 1. 4. Grace v Grace (No 9) [2014] NSWSC 1239. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 24 August 2020