New South Wales Supreme Court CITATION : HOWLETT v. SAGGERS [1999] NSWSC 445 CURRENT JURISDICTION : Common Law FILE NUMBER(S) : 20783 of 1995 HEARING DATE(S) : 28 October 1998; 17 February 1999 JUDGMENT DATE : 14 May 1999 Vernon Charles HOWLETT & ANOR PARTIES : v. Colin Arthur SAGGERS & ANOR JUDGMENT OF : Greg James J at 1 COUNSEL : Plaintiff: A. Shand, QC. Defendant. A.R. Young SOLICITORS : Plaintiff: Bush Burke & Co. CATCHWORDS : Costs - defamation - verdict less than provided under Rule - appropriateness of matter in the Supreme Court - discretion to award costs - costs of whole proceedings or issue by issue - whole costs or part - conduct of parties - complex issues of principle Defamation Act 1974 ACTS CITED : Supreme Court Act 1970 Evidence Act 1995 John Fairfax & Sons Limited v. Palmer (1987) 8 NSWLR 297 CASES CITED : Toomey v. John Fairfax & Sons Limited (Hunt CJ. at CL. unreported 22 May 1995) DECISION : Successful defendants to have limited costs against second plaintiff. Successful first plaintiff to have costs against defendants. All parties to pay own costs of disqualification and costs proceedings. HOWLETT2 -13- IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION No. 20783 of 1994 GREG JAMES, J. FRIDAY 14 MAY 1999 VERNON CHARLES HOWLETT & ANOR v. COLIN ARTHUR SAGGERS & ANOR JUDGMENT HIS HONOUR: 1 This judgment relates to the question of costs which remained reserved following the judgments of His Honour Acting Justice Donovan of 24 April and 29 April 1998 in defamation proceedings brought by Vernon Charles Howlett and Daphne Pearson against Colin Arthur Saggers and Keith Raymond Jones. 2 The substantive proceedings had been heard by his Honour with, as to the two questions of whether the imputations pleaded arose and whether they were defamatory, a jury. Publication had been admitted. 3 His Honour recorded the result of the jury's deliberations in his judgment of 24 April 1998 at p.4 as follows:- "The jury found that the first imputation arose and that it was defamatory. They found the second imputation arose but was not defamatory. They found the third imputation, that is the one concerning Mrs. Pearson, did not arise. This meant that after the jury returned their answers, the trial proceeded pursuant to s.7A before me only in relation to the first imputation and the first plaintiff. I record now that there will be a verdict for the defendants in relation to the claim by the second plaintiff." 4 His Honour, in accordance with that then newly inserted provision of the Defamation Act 1974 (s.7A), heard the balance of the proceedings. In the result, after about two weeks of evidence and later, two days of submissions, his Honour found a verdict for the first plaintiff jointly against both defendants in the sum of $13,500 and a verdict for the defendants against the second plaintiff, reserving costs. 5 Prior to his Honour hearing and deciding the question of costs, application was made that he disqualify himself from hearing that question. After some quite complex manoeuvring, his Honour held that neither actual nor ostensible bias existed, and declined to disqualify himself. However, in the upshot, both parties objected to his further proceeding with the matter of costs, and for that reason, he acceded to those submissions and recused himself. He set out the circumstances in his judgment of 24 April. 6 Notwithstanding this contretemps was caused by the plaintiffs' solicitors apparently attempting to deliver a brief to his Honour in anticipation of his return to the bar and the then foreshadowing of the application, made before me, that the plaintiffs' solicitors should pay the costs thrown away by reason of that decision, since the defendants lost on the basis they put for his Honour stepping down, it is clear that his Honour held that the solicitors' actions were not causative of the result. His Honour said he only took the course he did at the instance of both parties, thus neither party was particularly responsible. His Honour evidently saw no basis for the application of s.76C of the Supreme Court Act nor for any exercise, to similar effect, of inherent or common law power or any power under s.76 or Part 52A of the Rules. Neither do I. 7 In consequence of his Honour's recusancy, the matter was re-listed, before me, on 28 October 1998. Acutely aware of the parties' sensibilities from the history of the matter, I raised the fact that when I was at the bar prior to my appointment, I had acted for one of the parties and had done so in circumstances where I had been made aware of, at least, to a limited extent, matters which may have underlain one or more of the imputations. Notwithstanding this, all the parties sought that I deal with the costs question. I recorded in a short note on that day the parties' consent to my determining the matter. 8 In these unusual circumstances, I determined I should proceed, accepting that it was clear that I had power to, and indeed should, determine the question of costs by exercising such discretions as would necessarily be exercised, for myself, without having had the advantage of being the trial judge. Nonetheless, in doing so, I considered it would be necessary for me to have regard to the verdicts, judgments and findings of the trial judge and the views expressed by him, since the parties are at issue, except in respect of the asserted necessity for and acceptance of an order for the general costs of her action against Mrs. Pearson, as to the events of the trial and particularly their significance for costs, as to the appropriate principles and rules of court and have expatiated upon their differences in their submissions. 9 Oral hearings occurred on 28 October 1998 and on 17 February 1999. Thereafter, eschewing any further oral hearing, the parties exchanged and provided to me written submissions until I put a stop to the process. I had the parties advised that in the absence of anything further, at the close of 14 days, I would proceed to judgment, and I now do so. 10 It is regrettable that the climate and detail of argument in this matter, even in the written submissions, has developed to the point where undignified and ascerbic aspersions are cast by counsel on each other and their respective competencies. The transcript reveals the development of these attitudes during the case. This culture has infected the proceedings and prolonged them well beyond what the issues deserved. Regrettably, his Honour's stepping down means that another judge, unfamiliar with the events and the proceedings, must attempt, from the transcript and written submissions, which are affected by those attitudes, to distil the critical matter on which to found a dispassionate determination. 11 The legal practitioners have each attributed to the other the responsibility for various of the events of the trial and the submissions have descended, in support of contentions as to which party should have the costs advantage of success on particular issues, to the attempted allocation of blame as to such matters as: those giving rise to Donovan, AJ.'s stepping down; counsels' comments to the jury; and the resulting extended discharge application (see judgment of 6 March 1998); counsels' mode of cross-examination and mode of address leading to an application to re-open (judgments of 10 March 1998 and 25 March 1998); and the late filing and amendment of defences (as to this last, Donovan, AJ. expressly reserved the costs). 12 It is the applicability of the appropriate rule of court and the principles underlying it for the exercise of the discretion in awarding costs and the question of whether the costs occasioned on the determination of particular issues should be offset or awarded that have been the principal focus of the disputes before me. 13 Section 76 of the Supreme Court Act and Parts 52 and 52A of the Supreme Court Rules deal generally with costs. The proceedings having commenced after 1 July 1994, Part 52A would, in the absence of my otherwise ordering under Part 52 Rule 1, be the appropriate Part. I see no basis to "otherwise order". 14 Section 76(1)(a) and (b) of the Supreme Court Act provide as follows:- "(1) Subject to this Act and the rules and subject to any other Act:- (a) costs shall be in the discretion of the court; (b) the court shall have full power to determine by whom and to what extent costs are to be paid; …" 15 Part 52A regulates the exercise of that discretion and provides the particular exemplification of the principles that enable the discretion to be exercised judicially. 16 Part 52A, Rule 4(1) provides for the powers and discretions of the court under s.76 to be exercised subject to and in accordance with Part 52A. Rule 11 provides:- "If the court makes any order as to costs, the court shall, subject to this Part, order that the costs follow the event, except where it appears to the court that some other order should be made as to the whole or any part of the costs." 17 That Rule reflects the general position at common law that the successful party should have the costs of obtaining vindication. 18 Part 52A, Rule 33 reads:- "… (1) This rule:- (a) applies to proceedings in the Common Law Division or entered into the Commercial List on a claim for debt, damages or other money; … (2) Where:- … (e) in proceedings commenced after 30 June 1993, but on or before 1 October 1997, a plaintiff recovers a sum not more than $75,000; … the plaintiff shall not be entitled to payment of his or her costs of the proceedings unless, it appearing to the court that the plaintiff had sufficient reason for commencing or continuing proceedings in the court, the court makes an order for payment." 19 Part 52A, Rule 33(3) provides:- "Without limiting the generality of subrule (2), it shall be taken to be a sufficient reason if the plaintiff had reasonable grounds at the relevant time for expecting that he would recover an amount in excess of the amount prescribed by that subrule." 20 Rules 33(4) and (5) provide:- "Subject to subrule (5) where, by or under the rules or any order of the court, the plaintiff is entitled to his or her costs of any proceedings to which this rule applies, the amount of costs payable to him or her shall:- … (e) in respect of proceedings commenced after 30 June 1993, but on or before 1 October 1997, where he or she recovers a sum more than $75,000 but not more than $150,000, be only a half of the whole amount; … (5) In a case to which subrule (5) applies, if it appears to the court that the plaintiff had sufficient reason for commencing or continuing proceedings in the court, the court may order that the amount of costs payable to the plaintiff be some greater part or the whole of the amount which would be payable to him or her apart from that subrule." 21 Subrule (7) provides that where under the Rules or any order, costs are payable to the plaintiff and the proceedings had commenced at the time at which these did, and had resulted in a recovery by the plaintiff of less than $150,000, the costs of more than one counsel shall not be allowed unless otherwise ordered. 22 The action, the first or one of the first under the new provisions of the Defamation Act also, unsurprisingly, was beset by questions of admissibility under the then, recent Evidence Act. The hearing of the action was prolonged and bitterly fought, notwithstanding that the defamation found by the jury was held by his Honour to be of a private nature of limited circulation, of transient significance for the plaintiffs' reputation, not a serious defamation with significant but not substantial aggravation. There was no claim for special damage nor for general loss nor loss of business and not only no apology but confirmation in a subsequent publication. His Honour noted that there were special circumstances which considerably confirmed the damage. 23 I have referred to publication having been admitted and the jury determinations. The trial judge had held that all the imputations pleaded were capable of arising and of being defamatory. Counsel for the defendants did not submit otherwise. The real issues were as to the defences (particularly the "innocent distributor defence") and damages. The main time consuming questions appeared to relate to the events I have above referred to, the innocent distributor defence and defence contentions, to some extent successful, particularly in the context of the new s.46A, to some extent artificial, seeking to limit damages so that the figure awarded would be much lower than that which might otherwise be expected. Whilst the action had been commenced after the amendments to the Defamation Act had come into effect, the full impact of them, even though they were designed to diminish general damages in defamation, was still to be ascertained. 24 The action could have been brought in the District Court. It might have been transferred to the District Court. The novelty and complexity of the legal issues might have mitigated against such a course. But since it was brought and maintained in this court and the verdict was below $75,000, the defendant submits that, by reason of Part 52A, Rule 33(2) the plaintiff should be deprived of his costs. The plaintiff claims that because of the reasonable expectation of a sufficient verdict and for other reasons he should have his costs. 25 I do not consider the plaintiff has established such reasonable grounds as are referred to in Rule 33(3) in the light of the trial judge's findings. Prima facie these defamations as alleged and particularised were unlikely to require an award fairly proportionate to their injury so large as would be necessary to satisfy the Rule. No unforeseeable event occurred to diminish what otherwise might have been the reasonably expected level of damages. The Defamation Act amendments occurred nine months before filing of the statement of claim. It was notorious they were expected to lower damages awards. I turn to whether there is any other basis on which the prima facie effect of Rule 33 might be displaced. 26 His Honour noted that this "may also be one of the few cases of this type to be heard in the Supreme Court in view of the potential limitations under s.46A and the increased jurisdiction of the District Court to $750,000" (judgment of 24 April 1998, at p.67). At various points his Honour notes the novelty and complexity of the legal propositions he had to consider and published a number of judgments, that of 24 April being most extensive. 27 His Honour had reserved the costs of the amendment application. He refers specifically to costs but only in general terms, in the context of his declining to decide the question of costs at p.3 of his judgment of 29 April 1998 as follows:- "It is possible that the costs decision in this matter may not be an easy decision. There are provisions in the rules for reduced costs to a plaintiff where a verdict is below a certain amount but, of course, other factors such as the complexity of the case may lead to either a full costs order or something more than the order in the rules. Some cases of a similar type but until the pre-1994 amendments as this case have led to special or reduced costs orders (see, for example, Toomey v. John Fairfax & Sons (Hunt, J., unreported 22 May 1995, noted in Ritchie's Supreme Court Practice at para.13035)." 28 He had earlier, in his judgment on 24 April 1998 (at pp.51-52), said:- "Sections 7A and 46A introduce the new approaches to defamation law. In most areas of our tort law the general duty of care has become the yardstick for civil liability. Such a general duty may find its way into the ancient rules of libel and slander as we approach the next millennium, but not in this decision. Although this it (sic) is not part of my function in this trial to consider the balance in determining the appropriate damages it has seemed to me that the law as it stands is not adequately equipped to deal with the type of defamation which has taken 12 days of hearing time in this Supreme Court. The financial effect on one or other (and perhaps both) parties will be utterly catastrophic. The costs will be overwhelming. No litigant (be they plaintiff or defendant) should be exposed to such costs in a matter of this type. Mr. Howlett is of course entitled to have his reputation vindicated. It should not be through a duel and nor should it be through someone's financial ruin. Even though there are costs rules in the Supreme Court Part 52 Rule 24, which may be applied in some circumstances to relieve a defendant's costs burden, it still means the plaintiff is left with the costs burden and even if the whole of these proceedings had been heard in the District Court, while there would have been some costs savings, the totality of the costs would still have been overwhelming for private individuals. This raises a question whether the time has come for a re-examination of the whole law of defamation which might be subject to that general duty of care propounded by Lord Atkin in Donoghue v. Stevenson [1932] AC 562, which little by little in increments, has been established as an overriding duty to be applied in most tortious circumstances. This is not the place to reflect further on that question." 29 While one can appreciate these sentiments, they are of little assistance in the task I must perform. 30 Alternatively, to their primary submissions both parties have sought costs be resolved issue by issue. Although both parties have contributed to the prolongation of the present proceedings, it does not seem to me that in any particular respect the conduct of either has been such, on balance and overall, as to require dissection of the dispute instead of dealing with the matter more generally. 31 Thus, as and between the successful plaintiff and the defendants, notwithstanding the multiple issues to which the parties refer in their submissions, I consider that this is not a matter where it is appropriate to seek to balance and offset success or failure on particular forensic issues or to turn to some elaborate time costing, in the light of the conduct of the matter by the parties and their legal representatives, to which I have referred above. 32 In particular, as the matter went to trial on the three imputations, notwithstanding that they constitute under the Act separate causes of action, and the defendants succeeded as against one plaintiff on one imputation and as against the other on one imputation, I would not be minded to consider that, thereby, there should be some offsetting of success on one imputation against failure on another. I am concerned with the costs of the proceedings not as to individual causes of action in the proceedings where the evidence and argument are anything but compartmentalised. Particularly is this so, since part of the successful imputation upon which Mr. Howlett sued reflected the unsuccessful imputation and this gave rise to an entirely artificial argument which occupied much time concerning damages. Similarly, I am not minded, considering the foreshadowing of the defences, to make any special order by way of costs or in recognition of some offset principle for the amended defences, or, bearing in mind the way both parties conducted the proceedings, the discharge application, one way or the other, notwithstanding which party enjoyed the eventual success on such matter. 33 Appreciating, as I do, that the general approach would be to award the costs, at least as to the general costs of the action, to the successful party, taking the view I do I consider that no costs should be awarded against Mrs. Pearson, in particular, following the rejection of the imputation upon which she sued by the jury except as are involved in the formal entry of judgment consequent thereon. 34 I now turn to whether under Rule 33 the successful plaintiff should have his costs and if so, to what extent. 35 The purpose of the applicable Rules is to encourage litigants to commence or maintain their proceedings in the court which has an appropriate extent of jurisdiction such as to ensure that the cases which remain in this court are of appropriate importance, complexity or nature suitable to be decided in this court rather than the District Court. The rules seek to achieve this result by requiring the satisfaction of the flexible but objective criteria posed by Part 52A Rule 33(2) before costs are ordered even for a successful party and by diminishing those costs unless otherwise ordered proportionately to the range in which the verdict is placed. 36 Where the issues are legally complex and novel, where because of that, the argument is sophisticated and vigorous and the resolution of the issues likely to produce valuable procedural or substantive precedents, a matter might be maintained in this court and consistently with authority, costs might be awarded in the sound exercise of discretion, giving full regard to what was said in John Fairfax & Sons Limited v. Palmer (1987) 8 NSWLR 297 and Toomey v. John Fairfax & Sons Limited (Hunt, CJ. at CL., unreported 22 May 1995) and in the cases cited therein. Notwithstanding the changes in the Rules, the principles applicable to the making of exceptional orders, remain of great importance. 37 Here, the defence vigorously fought all issues and required the exploration of novel, complex and sophisticated concepts to dispose of the matters raised, as his Honour's judgments show. It hardly lies in the defence mouth to submit as it has that it was a simple case. The otherwise limited factual ambit and importance of the case as shown by the evidence and verdicts do not reflect the matters of great difficulty and legal importance which, by reason of the way the parties fought the case had to be resolved. There were decisions on the application of new procedures, new legislation and new damages concepts and which were assisted by extensive argument resulting in detailed judgments on matters of important principle for future litigation in defamation in this and other courts. 38 In my view, this was an appropriate matter to be maintained in the Supreme Court once the application to amend and the necessity to explore new procedures to accommodate the new legislation arose. The damages issues followed as a consequence. 39 The very level of debate persuades me that this is also a matter in which the plaintiff should have his full costs of the action until verdict and judgment. Thereafter, since what occurred was on the application of both parties, the costs of his Honour's stepping down and of the costs argument before me should not fall otherwise than on the parties incurring them. 40 I order that the second plaintiff pay the defendants' costs of her action limited as I have said and that the defendants pay the first plaintiff's costs of his action up to Donovan, AJ. retiring from the matter. Thereafter each party is to pay their own costs. ******** Last Modified: 05/14/1999 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.