New South Wales Supreme Court CITATION : Megna & Anor v Marshall & Anor [2005] NSWSC 1326 HEARING DATE(S) : 13 December 2005 JUDGMENT DATE : 16 December 2005 Common Law Division JURISDICTION : Defamation List JUDGMENT OF : Studdert J DECISION : (1) The costs of the hearing pursuant to s 7A(3) of the Defamation Act are reserved. (2) The costs of the plaintiffs' application considered in this judgment are to be costs in the cause. CATCHWORDS : Costs of s 7A hearing. Civil Procedure Act, s 98, Pt 42 r 42.7 LEGISLATION CITED : Defamation Act, s 7A Law Reform (Miscellaneous Provisions) Act, s 2 Charlie Brown Pty Limited & Anor v Green & Ors (unreported, McLelland CJ in Eq, 3 July 1995) Doran Constructions Pty Limited v University of Newcastle (unreported, Giles J, 16 December 1994) Fiduciary Limited v Morningstar Research Pty Limited (2002) 55 NSWLR 1 Gattellari v Meagher [1999] NSWSC 1279 Haertsch v Andrews (unreported, Ireland AJ, 1 December 2000) CASES CITED : Harrobin v ANZ Bank Limited (unreported, Priestley JA, 6 June 1997) Johnson v Department of Community Services (unreported, Rolfe J, 17 December 1999) Laguillo v Haden Engineering Pty Limited (1978) 1 NSWLR 306 Latoudis v Casey (1990) 170 CLR 534 Martin Madden as Official Liquidator of Aquanaut Constructions Pty Limited (In Liq.) [2001] NSWSC 1051 SMEC Holdings v Boniface [2005] NSWSC 1099 Thiess v TCN Channel 9 Pty Limited (No 5) (1994) 1 Qld R 156 Michael Megna (1st Plaintiff) Russell James Lloyd (2nd Plaintiff) PARTIES : David John Marshall (1st Defendant) Richard Martin Tory (2nd Defendant) FILE NUMBER(S) : SC 10261/04 T. Molomby SC/R. Rasmussen (Plaintiffs) COUNSEL : In person (1st Defendant) A.T.S. Dawson (2nd Defendant) Etheringtons (Plaintiffs) SOLICITORS : Osborne Bricknell Howell (2nd Defendant) LOWER COURT JURISDICTION : IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION DEFAMATION LIST STUDDERT J Friday 16 December 2005 10261/04 MICHAEL MEGNA & ANOR v DAVID JOHN MARSHALL & ANOR JUDGMENT 1 HIS HONOUR: Following the successful outcome for the plaintiffs of a hearing pursuant to s 7A of the Defamation Act, the plaintiffs have sought an order for the costs concerning that hearing. They have also sought an order that such costs should be assessable and payable forthwith. 2 Section 98 of the Civil Procedure Act provides, relevantly: "(1) Subject to rules of court and to this or any other Act: (a) costs are in the discretion of the court, and (b) the court has full power to determine by whom, to whom and to what extent costs are to be paid, and (c) the court may order that costs are to be awarded on the ordinary basis or on an indemnity basis… (3) An order as to costs may be made by the court at any stage of the proceedings or after the conclusion of the proceedings. (4) In particular, at any time before costs are referred for assessment, the court may make an order to the effect that the party to whom costs are to be paid is to be entitled to: (a) costs up to, or from, a specified stage of the proceedings, or (b) a specified proportion of the assessed costs, or (c) a specified gross sum instead of assessed costs, or (d) such proportion of the assessed costs as does not exceed a specified amount…" 3 Part 42 r 42.7 provides: "(1) Unless the court orders otherwise, the costs of any application or other step in any proceedings, including: (a) costs that are reserved, and (b) costs in respect of any such application or step in respect of which no order as to costs is made, are to be paid and otherwise dealt with in the same way as the general costs of the proceedings. (2) Unless the court orders otherwise, costs referred to in subrule (1) do not become payable until the conclusion of the proceedings." 4 As the provisions of the Act and of the rules above set out reveals, the Court has a very broad discretion as to costs but, of course, that discretion has to be exercised judicially. Here the plaintiffs' application as to costs is strenuously opposed by both defendants. 5 Before considering how the discretion should properly be exercised in the present case, it is necessary to record something of the history of this matter. 6 The application follows a lengthy hearing to determine questions raised for the consideration of the jury. Those issues considered by the jury went to (a) the publication of the matter complained of; (b) whether the matter complained of carried the imputations for which the plaintiffs contended; (c) if so, whether the imputations were defamatory. 7 The hearing began on 22 August 2005 and continued over a period of fifteen days until 9 September 2005. The jury returned with its verdict at 9.50 pm on what was the fifteenth day of the hearing. 8 The jury was called upon to consider no less than fifty imputations. All the questions raised for the jury's determination in the plaintiffs' claims were answered in favour of the plaintiffs. 9 The jury was also called upon to consider claims brought by the defendants against the plaintiff Michael Megna. 10 The second defendant, together with a company known as Victory Finance Pty Limited, brought a discrete action against the plaintiff Michael Megna alleging a publication of defamatory material by him. The issues raised for the jury's consideration on that claim were answered against the plaintiffs in that cause and, in consequence, I made an order that the plaintiffs in those proceedings should pay the defendant's costs: proceedings 20240/04. 11 The first defendant in the proceedings brought by Michael Megna and Russell Lloyd presented a cross claim in those plaintiffs' proceedings. The jury determined the issues the subject of paras 2 and 3 of the cross claim unfavourably to the cross claimant, and in consequence an order was made that David Marshall pay the costs in relation to such issues. 12 So it is that some costs orders have been made in favour of the present plaintiffs arising out of the hearing before the jury. What remains to be considered presently is the plaintiffs' claim for the balance of the costs incurred in relation to that hearing concerning the issues presented for the determination of the jury on the plaintiffs' claims against the defendants, David Marshall and Richard Tory. 13 Very comprehensive submissions have been filed on behalf of the parties and I have been referred to a considerable number of authorities. 14 It is submitted on behalf of the plaintiffs that the outcome of this lengthy jury hearing has been the determination of discrete issues, all of which have been determined in favour of the plaintiffs. This being the case, it is submitted that there is no reason in principle why the Court should not exercise its discretion to make the orders that are sought by the plaintiffs as to costs. Mr Molomby has cited authority which he has submitted supports the submission that it is proper for the Court to make an order for costs which reflects the outcome of discrete issues: see Martin Madden as Official Liquidator of Aquanaut Constructions Pty Limited (In Liq.) [2001] NSWSC 1051; Laguillo v Haden Engineering Pty Limited (1978) 1 NSWLR 306; and Thiess v TCN Channel 9 Pty Limited (No 5) (1994) 1 Qld R 156. 15 I have considered the above authorities, but no useful purpose would be served by a detailed discussion of any one of these cases. Each demonstrates the exercise of the discretionary power of the court in the particular circumstances of that case. None of the decisions concerned an application for costs of a hearing under s 7A of the Defamation Act. 16 Mr Molomby submitted that this particular case is unusual because of the length of the s 7A hearing. Because of that length the costs will be unusually heavy for such a class of hearing. Moreover, he submitted there will inevitably be delay between now and a final hearing of the action. The delay may be increased by an appeal by the second defendant, who has filed a holding appeal at the present time. 17 The Court has also been invited to consider the effect of s 2 of the Law Reform (Miscellaneous Provisions) Act 1944. 18 Mr Molomby has also submitted that it is proper for the Court to have regard to the risk that assets that would otherwise have been available to satisfy an order for costs may be dissipated with the effluxion of time. He has pointed to recent events concerning the property of the first defendant David Marshall. There has been litigation between the second defendant and the first defendant in which the second defendant sought to prevent the Marshalls from dealing with their property until such time that any judgment debt in favour of the plaintiff against the first defendant has been satisfied. The present situation is that there is a Mareva order in place as against the defendant David Marshall, but there is no such order in place as against the second defendant. 19 Mr Molomby submitted that it would be appropriate to make an order not only in the plaintiffs' favour as to costs but a further order such as would permit the assessment and recovery of costs of the s 7A hearing forthwith. The Court was referred to the helpful judgment of Barrett J in Fiduciary Limited v Morningstar Research Pty Limited (2002) 55 NSWLR 1 in which his Honour reviewed the authorities concerning those factors which have influenced courts to depart from the normal rule that costs do not become payable until the conclusion of proceedings. His Honour referred to Charlie Brown Pty Limited & Anor v Green & Ors (unreported, McLelland CJ in Eq, 3 July 1995) supporting one recognizable category, namely where a separately identifiable issue has been determined. Reference was made to Gattellari v Meagher [1999] NSWSC 1279 as an example of a case in which it was considered appropriate to make an order for payment of costs forthwith where there has been some unreasonable conduct. Doran Constructions Pty Limited v University of Newcastle (unreported, Giles J, 16 December 1994) was cited by Barrett J as a case in which an order for costs was made before the end of litigation because the end was a long way off. So too was the decision in Harrobin v ANZ Bank Limited (unreported, Priestley JA, 6 June 1997). 20 As I understand Mr Molomby's submissions, the making of an order now in relation to the costs of the s 7A proceedings is warranted because the decision of the jury can be treated as having determined discrete issues and also because the end of the proceedings is not in sight, but rather a long way off. 21 The defendants on the other hand have submitted that importance is to be attached to the general rule recognized in Pt 42 r 42.1 that: "…if the court makes any order as to costs, the court is to order that the costs follow the event unless it appears to the court that some other order should be made as to the whole or any part of the costs." 22 It is submitted that the "event" in context generally means the outcome of the proceedings. 23 The defendants drew attention to the principle that the award of costs to a successful party is not intended to punish the unsuccessful party but to compensate the successful party for expense incurred: see Latoudis v Casey (1990) 170 CLR 534 per Mason CJ at 542-543 and per McHugh J at 566-567. It has been submitted that it is not possible to fashion an appropriate order for any part of the hearing costs until the hearing is complete and this involves the further hearing at which defences pleaded by the defendants will require consideration. 24 I have had the opportunity of reflecting upon the submissions made on this costs issue and, having done so, have concluded that it would not be appropriate to make the orders which the plaintiffs seek at this point of time. When it becomes appropriate to provide for the costs of the hearing that has been held pursuant to s 7A, it will be plain that the plaintiffs succeeded altogether on that hearing and that the defendants failed altogether. A judge addressing the question of costs at the conclusion of this litigation will be able at that time to fashion costs orders which have due regard to the outcome of the proceedings that have been determined before me, but which also have due regard to the final decision and the reasons for it. 25 However, at this point of time I am not in a position to judge or to predict what the final outcome of this litigation will be. Indeed, for reasons which are not clear to me, the defendants have not yet filed defences. Doubtless, this is something they will be required to do in the very near future, if not when they are next before the registrar then at a point of time shortly thereafter when they come before a judge in the Defamation List. I do not make that observation by way of criticism of the registrar because I do not know why there has been no order requiring the filing of defences to the present time. 26 Of course, there are categories of cases in which it is appropriate for orders for costs to be made prior to the final hearing. For example, it may well be appropriate where an application is made under the Limitation Act for the court to make an order for the costs of that application before the final hearing: see Johnson v Department of Community Services (unreported, Rolfe J, 17 December 1999); it may well be appropriate to make an order for costs against a plaintiff where an interim claim for injunctive relief against the defendant is dismissed; it may be appropriate to make an order for costs against a party on an unsuccessful application for an order to interrogate his opponent in pending litigation. I instance these classes recognizing that there are many other classes of case where the court may make an order for costs in advance of the final hearing. 27 However, I am not persuaded that the present case is one in which an order for costs should be made in favour of the plaintiffs now. 28 Mr Molomby was unable to draw my attention to any case in which an order for costs had been made in favour of a plaintiff immediately following a successful outcome on a hearing under s 7A. Nor has my own research taken me to any case in which that has occurred. There was a lengthy s 7A hearing in this court in the matter of SMEC Holdings v Boniface [2005] NSWSC 1099. The s 7A hearing in that case took thirteen days and after that hearing directions were given as to the later hearing before a judge alone to deal with the issues referred to in s 7A(4) of the statute. The costs of the s 7A hearing in that case were reserved. It does not appear that counsel sought any contrary order. 29 I was referred to the case of Haertsch v Andrews (unreported, 1 December 2000) in which Ireland AJ declined to order costs in proceedings which remained on foot after a s 7A hearing. In that case the answer of the jury to one of the questions posed meant that the plaintiff failed to prove publication against one of the defendants. That failure meant, of course, that the proceedings were at an end as against that defendant and his Honour ordered the plaintiff to pay that defendant's costs. However, proceedings remained on foot involving the first and third defendants, albeit on only one of the six pleaded imputations. The plaintiff sought an order in the nature of a Bullock order against the first and third defendants concerning the second defendant's costs otherwise payable by the plaintiff and the first and third defendants sought an order that the plaintiff pay five-sixths of their costs so as to reflect the fact that the plaintiff had only succeeded on one of the six imputations pleaded. His Honour refused both applications, determining them to be premature. I respectfully agree with the course that his Honour adopted. 30 Returning to the present case, the issues that have been determined by the jury are limited in their effect. Their resolution does not determine that either of these defendants is ultimately to be liable to compensate either plaintiff in damages for an actionable tort. 31 There would be no practical effect of an order for costs if such was now to be made without also making an order enabling the assessment of those costs to proceed forthwith. Yet, if a costs order was now made and costs were now recovered, it may well be that when the proceedings are finally heard, the court would be asked to make a costs order to a contrary effect. 32 Mr Molomby made application when this matter was argued on Tuesday last that the defendants should be directed to file their defences by a date to be specified. In the absence of consent to the giving of such a direction, I indicated that I considered it would be unfair to entertain that application, of which no prior notice had been given. There was some apparent dispute at the Bar table as to the reason for the outcome at the last registrar's hearing. If there was a dispute as to what then happened, it may be necessary for affidavit evidence to be presented. In any event, the matter is to be listed before the registrar in January when it is to be expected that the time for filing defences will be set. 33 It seems to me that this is a case in which the hearing should be expedited and a strict timetable should be put in place to bring about expedition. I express these remarks for the benefit of the parties and the registrar who will, doubtless, ensure that the matter goes into the Defamation Judge's list at the earliest opportunity to determine any necessary interlocutory issues. 34 The orders I now make are as follows: 1 The costs of the hearing pursuant to s 7A(3) of the Defamation Act are reserved. 2 The costs of the plaintiffs' application considered in this judgment are to be costs in the cause. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. 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