New South Wales Supreme Court CITATION : Palace Films Pty Ltd v Fairfax Media Publications Pty Limited [2010] NSWSC 962 HEARING DATE(S) : 12 August 2010 JUDGMENT DATE : 16 August 2010 JUDGMENT OF : McCallum J at 1 EX TEMPORE JUDGMENT DATE : 16 August 2010 1. Subject to order 2 that the plaintiffs pay the defendants' costs of the hearing before me on 30 April 2010 but not on an indemnity basis. DECISION : 2. The costs thrown away by reason of the plaintiffs' reliance on a cause of action for breach of confidence and their subsequent abandonment of that cause of action be assessed on an indemnity basis. 3. Mr Rosen's costs in accordance with orders 1 and 2 be payable forthwith. CATCHWORDS : COSTS - application for indemnity costs - application for costs payable forthwith - where plaintiff dismissed points raised in correspondence but subsequently abandoned some claims LEGISLATION CITED : Uniform Civil Procedure Rules CATEGORY : Consequential orders Palace Films Pty Limited & Ors v Fairfax Media Publications Pty Limited & Ors [2010] NSWSC 415 CASES CITED : Lahoud v Lahoud [2006] NSWSC 126 Oshlack v Richmond River Council (1998) 193 CLR 72 Fiduciary v Morning Star Research Pty Limited (2002) NSWSC 432 PARTIES : Palace Films Pty Ltd ACN 089 674 279 Fairfax Media Publications Pty Limited ACN 003 357 720 FILE NUMBER(S) : SC 09/297851 R. Rasmussen (Plaintiff) COUNSEL : A.T.S. Dawson (First and Third Defendants) R. Potter (Second Defendant) M. Richardson (Fourth, Fifth and Sixth Defendants) - 1 - IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION McCallum J 16 August 2010 09/297851 - PALACE FILMS PTY LTD ACN 089 674 279 v FAIRFAX MEDIA PUBLICATIONS PTY LIMITED ACN 003 357 720 JUDGMENT 1 McCALLUM J: These proceedings arise out of the publication of four articles concerning Palace Films Pty Limited, a film distribution company. On 15 October 2009 Palace Films and its two directors, Mr Antonio Zeccola and Mr Benjamin Zeccola, commenced these proceedings claiming damages for defamation and breach of confidence arising out of the four publications. On 30 April 2010, I heard an application by the defendants to have the pleadings struck out. I granted that application for reasons published on 14 May 2010 (see Palace Films Pty Limited & Ors v Fairfax Media Publications Pty Limited & Ors [2010] NSWSC 415). This judgment deals with the costs of that hearing. 2 There are three groups of defendants in the proceedings. The first and third defendants are, respectively, the company that publishes the Australian Financial Review and a journalist formerly employed by that company. It is convenient to refer to them as the Fairfax defendants. 3 The second defendant, Mr Brian Rosen, was formerly the chief executive officer of the Film Finance Corporation. He is alleged to have provided information to the journalist for the purpose of the articles. 4 Finally, the fourth, fifth and sixth defendants are, respectively, a company and two individuals involved in the publication of a website known as "Screenhub" which publishes film and television news on the internet. It is convenient to refer to them as the Screenhub defendants. 5 All of the defendants seek their costs of the hearing before me on an indemnity basis. Mr Rosen seeks a further order that his costs be payable forthwith. 6 Having been unsuccessful in the application the plaintiffs do not resist an order that they pay the defendants' costs as contemplated by UCPR 42.1 . Otherwise, the orders sought by the defendants are opposed. Indemnity Costs 7 The principles to be applied in determining whether to accede to an application for indemnity costs are well known. It is open to the Court to make such an order when the justice of the case requires: see Lahoud v Lahoud [2006] NSWSC 126 at [11]. The purpose of such an order is not to punish an unsuccessful party but to more fully compensate the successful party in respect of such of his costs as have been occasioned by conduct involving some "relevant delinquency" on the part of the unsuccessful party: see Oshlack v Richmond River Council (1998) 193 CLR 72 at [44] per Gaudron and Gummow JJ. 8 There were three areas in which the pleading in the present case was alleged to be defective. They were: (a) the manner in which the issue of publication had been pleaded for the purpose of the causes of action in defamation; (b) the form and content of the defamatory imputations relied upon by the plaintiffs; and (c) the manner in which the cause of action for breach of confidence had been pleaded, particularly in so far as it appeared to be subverted by the pleading of falsity of the imputations relied upon in respect of the causes of action in defamation. 9 The defendants' complaints in relation to those three matters were identified in correspondence shortly after the commencement of the proceedings. The present applications are based primarily on the plaintiffs' responses to that correspondence, which it is alleged demonstrated that they did not treat the defendants' complaints seriously, resulting in significant waste of time and legal costs. In that context, it is necessary to give close consideration to the correspondence exchanged. 10 The correspondence between the plaintiffs and the Fairfax defendants is contained in exhibit 1 on the application. The first letter sent by the Fairfax defendants was dated 25 November 2009. That letter set out briefly a complaint as to each imputation. It also articulated the concern in respect of the way in which publication had been pleaded and, as to the cause of action for breach of confidence, simply noted that no particulars had been provided in support of those allegations. The response to that correspondence was, I accept, brief and, so far as the complaints about the imputations are concerned, dismissive. 11 As to the cause of action for breach of confidence further particulars were provided and that is I think where the correspondence as between the Fairfax defendants and the plaintiffs rested on that issue. It is however necessary to consider all of the correspondence on behalf of all of the defendants together. 12 The correspondence between Mr Rosen and the plaintiffs was exhibit 2 on the application. That correspondence set out in greater detail the precise difficulties alleged to arise in respect of the breach of confidence action. 13 As to the way in which publication had been pleaded the correspondence properly made the point which was ultimately dealt with in the judgment as to an ambiguity concerning whether Mr Rosen was sued as an original publisher or a republisher of the matters complained of. The correspondence responded on that issue with an allegation which appeared effectively to have been withdrawn by the time of the hearing. 14 Finally, the correspondence between the Screenhub defendants and the plaintiffs is annexed to an affidavit of Alexander Barnett sworn 5 February 2010 which was read on behalf of those defendants on the application. That correspondence did identify with greater particularity the complaints concerning the imputations and made a cogent point in respect of the breach of confidence action that, apart from the difficulties in the pleading itself, by the time the Screenhub defendants published any material it had already been published in the other matters complained of and therefore could no longer be said to be confidential in any way. 15 The point concerning the way in which publication had been pleaded was the subject of a brief response by the plaintiffs namely that the pleading was in the "normal" form. I accept as submitted on behalf of the defendants that the response given appears to disclose little consideration of the issues raised. However, it must be recognised that those complaints themselves were expressed in brief terms which belied the complexity of the issues discussed in my judgment. On balance, I do not think that any relevant delinquency is established in the way in which the plaintiffs responded to that specific complaint. 16 As to the defendants' complaints concerning the imputations, it is not uncommon in the defamation list for there to be extensive argument as to form and capacity. For some years now the rules have required defendants who wish to take such points to articulate their objections to the pleadings at an early point in the proceedings. A practice has evolved of doing that in fairly brief terms which assume a common vocabulary among barristers for defendants and plaintiffs and almost take points by reference to labels only. I think there is something of that in the present case. That is, an objection was taken to every imputation but in some instances the correspondence did little more than to give a label to the objection taken without expansion of the particular complaint. 17 The argument for indemnity costs in relation to the imputations was perhaps put highest by Mr Dawson on behalf of the Fairfax defendants. He submitted that the defendants' contentions were dismissed without any consideration of the matters raised, yet many of the objections were then conceded at the hearing. However, in my view, those matters were not conceded without debate. 18 A careful review of the transcript of the argument before me discloses that Mr Rasmussen attended to the argument carefully and made proper concessions after hearing in full what was put against him and having proper regard to the exchanges that had occurred between bar and bench. 19 I have ultimately concluded that although the defendants were largely successful in respect of the imputations arguments there was no "relevant delinquency" in the sense discussed in Oshlack. 20 The claim in breach of confidence is in a different category. In the first instance, as it appeared in the original statement of claim it was not particularised. That was the first point taken against the plaintiffs in the correspondence. Once the claim had been particularised to an extent the defendants pointed out further difficulties. In my view a careful consideration of the correspondence discloses that the plaintiff did fail to give proper consideration to those complaints. The result is that they inevitably acceded to the need to do so at the hearing and ultimately they abandoned the claim altogether. 21 Had proper consideration been given to that cause of action from the outset those costs would have been avoided. I am satisfied that the plaintiffs' pleading and subsequent abandonment of the cause of action for breach of confidence does disclose delinquency in the relevant sense and that the plaintiffs should pay the defendants' costs thrown away on that account on an indemnity basis. 22 It remains to consider Mr Rosen's application to have his costs payable forthwith. The making of such an order is unusual. Ordinarily, a party in favour of whom an order for costs is made must be wait until the conclusion of the proceedings to have those costs assessed and paid. 23 Factors which have lead the Courts to depart from the normal rule were identified by Justice Barrett in Fiduciary v Morning Star Research Pty Limited (2002) NSWSC 432. One factor is where the application in respect of which the costs order is made before the conclusion of the proceedings represents the determination of a separately identifiable matter or a discrete aspect of the claim. A second is some unreasonable conduct on the part of the party against whom costs have been ordered. A third is the fact that there is "much to come" in the proceedings such that one can see a fairly long time before they are finally disclosed of. 24 Clearly enough, in my view, the costs thrown away by the abandonment of the breach of confidence claim satisfy those three factors. I have given careful consideration to whether I should carve out that part of the costs order and order only those costs to be payable to Mr Rosen now. I do think however that although I have indicated that I am satisfied the imputations argument was not too far out of the ordinary exchange which occurs in this list, closer attention might have been given to the points raised in Mr Rosen's correspondence such that the plaintiffs' dismissal of those points can be described as unreasonable. In those circumstances I am satisfied that Mr Rosen should have his costs payable now on the basis I have indicated. 25 The orders are: 1. Subject to order 2 that the plaintiffs pay the defendants' costs of the hearing before me on 30 April 2010 but not on an indemnity basis. 2. The costs thrown away by reason of the plaintiffs' reliance on a cause of action for breach of confidence and their subsequent abandonment of that cause of action be assessed on an indemnity basis. 3. Mr Rosen's costs in accordance with orders 1 and 2 be payable forthwith. ********** 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.