New South Wales District Court CITATION: Bechara v Bonacorso (No. 5) [2010] NSWDC 260 HEARING DATE(S): 10 November 2010 EX TEMPORE JUDGMENT DATE : 10 November 2010 JURISDICTION: Civil JUDGMENT OF: Gibson DCJ DECISION: (1) Vary order 2 of my orders of 15 October 2010 to provide that the plaintiff pay the defendant's costs of these proceedings on a party and party basis until 29 August 2009, and on an indemnity basis thereafter; (2) The plaintiff pay the defendant's costs of this motion on an indemnity basis. CATCHWORDS: Tort - defamation - costs - plaintiff unsuccessful in defamation proceedings - defendant seeks indemnity costs for offer of compromise made before the matter was set down for trial - consideration of legislative provisions designed to promote the making of offers in defamation proceedings Defamation Act 1974 (NSW), s 48A LEGISLATION CITED: Defamation Act 2005 (NSW), s 40 Uniform Civil Procedure Rules 2005 (NSW), rr 20.26, 42.15A Antoniadis v TCN Channel Nine Pty Ltd (Supreme Court of New South Wales, 24 April 1997) Bechara v Bonacorso (No. 4) [2010] NSWDC 234 Davis v Nationwide News Pty Ltd [2008] NSWSC 946 Gaskin v Ollerenshaw [2010] NSWSC 874 Habib v Nationwide News Pty Ltd (No. 2) [2010] NSWCA 291 Hennessy v Lynch (No. 4) [2008] NSWDC 15 CASES CITED: Larach v Urriola (No 2) [2009] NSWDC 142 Leichhardt Municipal Council v Green [2004] NSWCA 341 Melchior v Sydney Adventist Hospital [2009] NSWSC 65 National Auto Glass Supplies (Aust) Pty Ltd v Nielsen & Moller Auto Glass (NSW) Pty Ltd (No.9) [2007] FCA 1826 Regency Media Pty Ltd v AAV Australia Pty Ltd [2009] NSWCA 368 Skalkos v Assaf [2002] NSWCA 14 Skalkos v T S Recoveries Pty Ltd [2004] NSWCA 281 TEXTS CITED: The Honourable Justice M H McHugh AC, "When is a defamation actionable?", Aspects of the Law of Defamation in NSW, Law Society of NSW, 1990 PARTIES: Plaintiff: Antoine Bechara Defendant: Paul Bonacorso FILE NUMBER(S): 5084 of 2008 COUNSEL: Plaintiff: G Adelstein, solicitor Defendant: Ms K Rees SOLICITORS: Plaintiff: Diamond Conway Defendant: Puleo Lawyers Judgment [1] These are proceedings for defamation which were listed for hearing for five days commencing on 17 May 2010. After ten days of hearing and extensive submissions to 24 August 2010, I handed down my decision in Bechara v Bonacorso (No. 4) [2010] NSWDC 234 and made orders as follows: (1) Judgment for the defendant for each of the first, second and third matters complained of. (2) Plaintiff pay defendant's costs. (3) Liberty to restore concerning costs. (4) Exhibits retained for 28 days. [2] The defendant now brings an application by notice of motion pursuant to s 40 Defamation Act 2005 (NSW) and r 42.15A Uniform Civil Procedure Rules 2005 (NSW) (hereafter "UCPR"), that the plaintiff pay the defendant's costs of the proceedings: (a) on a party and party basis until 29 August 2009, and (b) on an indemnity basis thereafter. [3] The principal basis for the application is that on 28 August 2009 (after the pleadings were closed, and before the matter was listed for trial) the defendant served an offer of compromise in accordance with r 20.26 UCPR offering to settle the proceedings on the following basis: (a) Verdict and judgment for the plaintiff; (b) Defendant to pay the plaintiff $35,000; (c) Defendant to pay the plaintiff's costs as agreed or assessed. [4] The affidavit of Mr John Puleo deposes to having sent the offer of compromise on 28 August 2009. This letter was not replied to. No counter offer was ever made by the plaintiff. Accordingly, as provided for by r 42.15A, the defendant is entitled to indemnity costs from the expiry of the offer, unless the court otherwise orders. The court has a discretion to make a different order from that specified in the rules in order to prevent substantial injustice in an exceptional case, but the exercise of that discretion would be "rare": Leichhardt Municipal Council v Green [2004] NSWCA 341 at [19]; Melchior v Sydney Adventist Hospital [2009] NSWSC 65 at [15]; Regency Media Pty Ltd v AAV Australia Pty Ltd [2009] NSWCA 368 at [14]; Gaskin v Ollerenshaw [2010] NSWSC 874. [5] Counsel for the defendant submits that this is not an exceptional case, and points to the following as being relevant not only on this issue, but also concerning s 40 Defamation Act 2005 (NSW): (a) Each of the three matters complained of was a very limited publication, being ostensibly to one person each, with a possible republication of the first and second matters complained of to those persons authorised to use the COPS data retrieval system set up by the NSW Police Service. Only part of one of the publications was in fact found to have been made; (b) No evidence at all was led at the trial concerning the third publication; (c) As to the first and second publications, it is asserted these were "classic" qualified privilege claims where the defendant, an authorised representative of his business (where the first car fire occurred) and family company (where the second car fire occurred), had gone to the police following the occurrence of these and another car fire which happened to his neighbour's vehicle. The neighbour had been actively supporting the defendant's opposition to the plaintiff's company's development proposals for property in the residential area known as the Strathfield Triangle. [6] The defendant submits, and I agree, that the amount offered was generous, given the limited extent of publication of each of the matters complained of and the facts of the case. In addition, the plaintiff would have been entitled to a judgment in his favour, as well as payment of his costs if he had accepted the offer. The defendant points out that at all relevant times the plaintiff was represented by senior counsel and a solicitor who were experienced in defamation law and that it would be safe to assume that these persons had given sound advice to the plaintiff concerning the relevant principles. [7] The plaintiff submits that the phrase "unless the court orders otherwise" (r 42.15A(2) UCPR) means that the court should order otherwise where it is in the interests of justice. The following are matters relied upon: (a) Those imputations pleaded in the first publication which I found to be conveyed were defamatory entitle the plaintiff to have brought the litigation as he had suffered a wrong. (b) The plaintiff did not have enough information about the defendant's claim to enable him to accept the defendant's offer at the time, and there were significant changes to the defendant's case during the trial. [8] As to the first matter, the defendant submits that a partial success of this limited nature on one issue in the case should not entitle a party to avoid the consequences of failure to accept the offer, and that the nature of defamation actions is such that the test is not whether the publication is defamatory but whether the defamation is actionable: The Honourable Justice M H McHugh AC, "When is a defamation actionable?", Aspects of the Law of Defamation in NSW, Law Society of NSW, 1990. As to the second, the defendant submits that while r 20.26(4) UCPR provides that a plaintiff may not make an offer unless the defendant has been given such particulars of the claim as are necessary to consider the offer, there is no comparable provision in respect of an offer by the defendant. However, the defendant's case was, it is submitted, abundantly clear to the plaintiff at all times, and the complaints raised at trial by the plaintiff's counsel about asserted inadequacies of particulars and answers to interrogatories (e.g. complaints that there were too many particulars, or that matters were particularized rather than provided as answers to interrogatories) were technicalities. Counsel for the defendant, in helpful written submissions, has carefully analysed all of these objections to particulars, and I do not propose to set these out again. [9] The defendant submits (written submissions, paragraph 22) that similar objections could be raised by the defendant to the plaintiff's conduct of the trial, including the vastly expanded case on malice (in circumstances where the defendant's request for particulars had not been answered) and the production, on day 4 of the trial, of four lever-arch folders of documents which had never been discovered (T 286). The production of undiscovered documents during defamation trials and the expansion of particulars are, however, a common occurrence in defamation trials, so I shall simply note these matters, as well as the matters I set out in my judgment at [258]. [10] None of the circumstances put to me on behalf of the plaintiff, or of which I am aware as the trial judge, would justify the exercise of the discretion to "otherwise order". The applicability of s 40 Defamation Act 2005 (NSW) [11] Although the defendant's written submissions refer to s 40 Defamation Act 2005 (NSW), no submission is made for any costs orders for any period other than that covered by the offer of compromise. The plaintiff made no submissions concerning s 40 beyond repeating the submissions on the offer of compromise. [12] I briefly noted that s 40 Defamation Act 2005 (NSW), or its predecessor s 48A Defamation Act 1974 (NSW), have been applied in similar circumstances by McClellan CJ at CL in Davis v Nationwide News Pty Ltd [2008] NSWSC 946 (plaintiff's offer of compromise for an amount very close to the damages award results in indemnity costs); Larach v Urriola (No 2) [2009] NSWDC 142 (defendant's "walk away" offer insufficient and indemnity costs ordered); Hennessy v Lynch (No. 4) [2008] NSWDC 15 (defendant's offer of compromise of $33,500 substantially better than the judgment sum awarded to the plaintiff) and the Federal Court in National Auto Glass Supplies (Aust) Pty Ltd v Nielsen & Moller Auto Glass (NSW) Pty Ltd (No.9) [2007] FCA 1826 (costs application by defendant who succeeded in the majority of the defamation claims) and s 48A was most recently considered by the NSW Court of Appeal in Habib v Nationwide News Pty Ltd (No. 2) [2010] NSWCA 291. [13] While s 40 may apply in circumstances where no offers are made or relevant, where an offer has been made, the section confers the advantage of indemnity costs unless the court otherwise orders. In Davis, the plaintiff made an offer of compromise of $150,000, and ultimately received a sum, inclusive of interest, of $150,736.00. The defendant made a "walk away" offer, which it was submitted was sufficient to amount to compliance with s 40. McClellan CJ at CL did not accept this submission, nor did he accept that the failure of the plaintiff on certain aspects of the claim, such as the finding that a number of the imputations pleaded had not been conveyed, would disentitle the plaintiff to such a claim. [14] Where a defendant has complied with s 40, and the plaintiff has failed to accept the offer (s 40(2)), the court "must" make an order for indemnity costs if the plaintiff "unreasonably failed to accept a settlement offer made by the defendant": National Auto Glass Supplies (Aust) Pty Ltd v Nielsen & Moller Auto Glass (NSW) Pty Ltd (No. 9) [2007] FCA 1826. [15] When considering whether the court should otherwise order, regard should be had to the purpose of this provision, because the cost of defamation litigation may be very high, and the trials "combative", to use Levine J's description of the multiple trials in Antoniadis v TCN Channel Nine Pty Ltd (Supreme Court of New South Wales, 24 April 1997). Even where the extent of publication is limited, defamation actions may still result in very substantial legal costs. For instance, in Skalkos v Assaf [2002] NSWCA 14, where there were two limited publications (one to one person), the costs certificate for the trial totalled $941,444.77: Skalkos v T S Recoveries Pty Ltd [2004] NSWCA 281. [16] Even if an offer of compromise had not been made, these are matters which, in my view, would have warranted the making of costs orders under s 40. [17] Although entitled to do so under s 40, the orders sought by the defendant fall short of a request for indemnity costs for the trial. This is a moderate and sensible course of action in the circumstances, and to the credit of the defendant and those who have advised him during the conduct of this complex litigation. Orders [18] Accordingly, the orders I make are as follows: (1) Vary order 2 of my orders of 15 October 2010 to provide that the plaintiff pay the defendant's costs of these proceedings on a party and party basis until 29 August 2009, and on an indemnity basis thereafter; (2) The plaintiff pay the defendant's costs of this motion 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.