Vass v Nationwide News Pty Ltd: 2020/112959 (No 2) [2022] NSWSC 256

Supreme Court New South Wales

Medium Neutral Citation: Vass v Nationwide News Pty Ltd: 2020/112959 (No 2) [2022] NSWSC 256 Hearing dates: 3 March 2022 Date of orders: 3 March 2022 Decision date: 03 March 2022 Jurisdiction: Equity Before: Parker J Decision: See [34] Catchwords: COSTS – application for indemnity costs – plaintiff's false defamation claim – cross-claim for rescission for fraud – potential issue of reliance – later informal offer of compromise – indemnity costs awarded from time of offer only Cases Cited: Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397 Tabbaa v Nine Network Pty Ltd (No 11) [2018] NSWSC 389 Category: Costs Parties: Damien Vass (Plaintiff/Cross-Defendant) Nationwide News Pty Limited (Defendant/Cross-Claimant) Representation: Counsel: T Molomby SC/L Goodchild (Plaintiff/Cross-Defendant) D Sibtain/J Rogers (Defendant/Cross-Claimant)

Solicitors: O'Brien Criminal & Civil Solicitors (Plaintiff/Cross-Defendant) Thomson Geer (Defendant/Cross-Claimant) File Number(s): 2020/112959 Publication restriction: Nil

Judgment – EX TEMPORE Revised from transcript; issued 11 March 2022 1. I delivered my judgment in these proceedings on 23 December last year: Vass v Nationwide News Pty Ltd: 2020/112959 [2021] NSWSC 1704. I ordered the plaintiff to pay the defendant's costs of the proceedings. The defendant now moves to vary the order so as to provide for the costs to be assessed on an indemnity basis. 2. I set out the background to the proceedings in last year's judgment (which I will refer to as "J1"), at [7]-[48]. This judgment assumes familiarity with what I said in that judgment. The abbreviations used in that judgment are used in this judgment. 3. These proceedings arose out of defamation proceedings in the Common Law Division. The defendant made an offer to settle those proceedings. The plaintiff responded with a much higher counter-offer. Later the plaintiff purported to accept the defendant's original offer. 4. An issue arose as to whether the purported acceptance was valid. That issue was determined in the plaintiff's favour at first instance and again on appeal. 5. The offer which the plaintiff accepted was an offer by the defendant to publish an apology; to pay the plaintiff $50,000 by way of damages; and to pay the plaintiff's costs of the proceedings. 6. the defendant, which by then had apparently concluded, based on investigations carried out for the purposes of the Common Law proceedings, that the imputations relied upon by the plaintiff were in fact true. 7. Following the Court of Appeal decision, the defendant still refused to proceed with the settlement of the proceedings in accordance with the terms of its offer. As a result, these proceedings were commenced in this Division by the plaintiff to enforce the offer. The defendant cross-claimed for rescission, on the ground of fraud, of the settlement agreement which the parties assumed had arisen as a result of the acceptance of the offer. 8. In my judgment I found that the imputations which were the subject of the plaintiff's defamation claim were indeed true. It followed that the plaintiff had put forward a false claim in circumstances in which he must have known that the claim was false. 9. In those circumstances I dismissed the plaintiff's claim. I did not find it necessary to make any order on the defendant's cross‑claim but the costs order that I made in favour of the defendant covered the costs of the cross‑claim proceedings. 10. The application for indemnity costs is put on two bases. I will deal with them in turn. 11. The defendant's first contention is based on my finding that the plaintiff's claim in the defamation proceedings was a false one. The defendant claimed that this attracted the principles associated with the prosecution of proceedings where the plaintiff knows, or ought, properly advised, to know, that the proceedings have no prospect of success; or where the proceedings are conducted for a collateral purpose: Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397. 12. Counsel for the plaintiff submitted that these proceedings should never have been brought and were indeed an abuse of process. Counsel relied, in particular, on the decision of the Court in Tabbaa v Nine Network Pty Ltd (No 11) [2018] NSWSC 389. That was a defamation case in which it was found that the imputations on which the plaintiff relied were false and the plaintiff must have known that they were false. Fagan J considered that in these circumstances it was a proper case for the award of indemnity costs. 13. It is true that on my findings the plaintiff's defamation claim was a false one and probably an abuse of process. But these are separate proceedings. If I am to make an award of costs on an indemnity basis for the whole of the costs of these proceedings I must consider them as a separate piece of litigation. 14. The plaintiff's principal claim in these proceedings was an order for specific performance (which is no doubt why the proceedings were instituted in this Division). Alternatively, the plaintiff claimed damages. Probably the plaintiff could have obtained no damages from the defendant's refusal to publish the apology; that could only have been enforced by an order in the nature of specific performance. But the plaintiff's damages claim would have permitted him if successful to recover a money judgment for the amount of the settlement ($50,000 and his costs). 15. In its defence, the defendant pleaded a specific equitable defence to the plaintiff's claim for specific performance. This was a defence of unclean hands based on the alleged falsity of the plaintiff's case. It was also contended on behalf of the defendant that even if it failed to prove that the imputations were false the Court would not compel it to give an apology in which it genuinely did not believe. 16. These defences, of course, did not answer the plaintiff's claim for damages at law for breach of the settlement agreement. The defence to that claim was that the agreement was liable to be rescinded because of the plaintiff's fraud as alleged in the defendant's cross‑claim. That defence was an answer not only to the claim for specific performance but also to the contractual claim for damages since, if successful, it would result in the contract being unenforceable. 17. In order to succeed on its claim for rescission for fraud the defendant, of course, had to prove that the plaintiff had in fact been guilty of fraud in making and pursuing his defamation claim. But as I noted in the judgment there was another potential issue; the defendant also needed to prove that it had relied on the plaintiff's fraud in making the offer. 18. There might have been room to argue that at the time the defendant made the offer it was alive at least to the possibility that the plaintiff's claim was fraudulent. I raised this point with counsel for the defendant at the trial; the upshot was an amendment to the plaintiff's claim which, if successful, would have outflanked any difficulty with proving reliance. 19. The plaintiff, by the amendment, relied on authority to the effect that the compromise of a claim which is not genuinely believed to be true is not a form of consideration which will be recognised by the law. On this contention, the settlement contract would be invalid as lacking consideration. It would not be necessary to go into whether the defendant, when making the offer, was relying on the truthfulness of the plaintiff's allegations. 20. In the end, however, this did not have to be tested. Counsel for the plaintiff did not cross‑examine the witness the defendant called on the reliance question and conceded the reliance point. 21. To the extent that the plaintiff's claim sought specific performance I accept that, on my findings, it could never have succeeded, and the plaintiff would or should have known that. The defence of unclean hands was bound to succeed but as I have pointed out there was more to the plaintiff's claim than the application for relief in the nature of specific performance. The plaintiff had a contractual claim for damages to which the falsity of the imputations was not a complete answer. 22. An award of indemnity costs on the principles which I am discussing, where it is based on falsity of the plaintiff's claim which is known to the plaintiff, will cover the whole of the costs of the proceedings. In such a case the proceedings should never have been instituted in the first place. That was the type of situation presented to Fagan J in Tabbaa. 23. Whatever order may be appropriate in the Common Law Division proceedings, I do not think I can make such an award of indemnity costs against the plaintiff in these proceedings. The plaintiff had an arguable case at least in part and at least at the beginning of the proceedings, to which the falsity of his imputations was not a complete answer. 24. This brings me to the second basis for the defendant's application. The defendant claimed an order for costs of the proceedings on an indemnity basis for the period after it made an informal offer of compromise in February last year. 25. The offer in question was made on 19 February. It was made in conventional Calderbank form. The letter from the defendant's solicitor recited that by the time the letter had been written the defendant had incurred costs of more than $45,000 in defending the proceedings. The letter expressed confidence in the likelihood of the defendant's ultimate success but indicated a willingness to settle the proceedings on a purely commercial basis so as to avoid further expense. 26. The offer was that the proceedings be dismissed with no order as to costs with each party to bear their own costs. The offer was accompanied by another offer concerning the costs of the Common Law Division proceedings (including the appeal). But that offer was a separate one. It was open to the plaintiff to accept the offer in these proceedings without giving up his right to enforce the costs orders made in his favour in the Common Law Division proceedings (although for practical purposes acceptance of the offer in these proceedings involved the plaintiff giving up his rights flowing from acceptance of the defendant's earlier offer to settle the Common Law Division proceedings). 27. The defendant's offer did not specify a time for acceptance, but the parties agreed in the argument before me that 14 days would have been a reasonable time to consider it and to accept it if it was to be accepted. 28. Had the offer been recorded in a formal offer of compromise complying with the Rules, it would have given rise to a prima facie entitlement to an indemnity costs order. As I have said the offer was only made informally but such an informal offer can give rise to an indemnity costs order if the Court is satisfied that the failure to accept the offer was unreasonable in the circumstances which then obtained. 29. It was argued for the plaintiff that, at the time the offer was made, he had the benefit of two judgments, including costs orders in his favour, in the Common Law Division proceedings. Those judgments had confirmed that he had validly accepted the offer previously made by the defendant, which was of course more favourable than the one he was then being offered. But I do not think that this makes any real difference. It was up to the plaintiff and his advisors to consider the offer on its merits having regard to the issues which had been raised in these proceedings. 30. The plaintiff could have been under no illusion that the central issue in these proceedings was the allegedly fraudulent nature of his defamation claim. The plaintiff's previous success in the Common Law Division proceedings was no guide at all to the likelihood or otherwise of the defendant succeeding on that issue. Indeed, on my findings the plaintiff must have known that the claim was false. 31. It was also pointed out for the plaintiff that, as I have already noted, the onus was always on the defendant to show reliance in order to obtain rescission. It is true that on the pleadings this issue was open, but the evidence of the relevant witness had been served well before the offer was made. The reliance point was only raised as a potential point at the trial, and it was raised by the Court rather than the plaintiff. When it was raised counsel for the plaintiff did not pursue it. 32. There is no evidence before me on this application that that the plaintiff ever intended to take the reliance point. In the absence of such evidence, I can only conclude that the plaintiff's contemplation at the time the offer was made was that the determinative issue at the trial would be the falsity or otherwise of his claim. As I have said, on that issue the plaintiff must have known that his case was false. 33. In these circumstances, I consider that the failure to accept the offer was unreasonable and the defendant should be entitled to an indemnity costs order from a date two weeks after the offer was made. I will now hear the parties on the precise form of the order. (Parties addressed on the form of orders) 1. The orders of the Court are: 1. Order that Order 2 made on 23 December 2021 be varied such that the plaintiff is to pay the defendant's costs of the proceedings including the cross-claim up to: 1. up to 5 March 2021; and 2. thereafter on an indemnity basis. 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: 11 March 2022