Supreme Court New South Wales Medium Neutral Citation: Cantwell v Sinclair [2012] NSWSC 157 Hearing dates: None - orders made in Chambers Decision date: 01 March 2012 Before: Rothman J Decision: The defendant pay the plaintiff's costs of and incidental to the proceeding: (a) Incurred in the period up to and including 11 February 2010, on a party/party basis; and (b) Incurred in the period from 12 February 2010 on an indemnity basis. Proceedings otherwise dismissed. Catchwords: COSTS - indemnity costs - offer of compromise or Calderbank letter; where - compliance with UCPR - reasonableness of rejection Legislation Cited: Defamation Act 2005 Uniform Civil Procedure Rules 2005 Cases Cited: Davis v Nationwide News Pty Ltd [2008] NSWSC 946 Mundine v Brown (No 7) [2011] NSWSC 170 Category: Costs Parties: Melanie Cantwell (Plaintiff) Douglas Sinclair (Defendant) Representation: Lander & Rogers Lawyers (Plaintiff) File Number(s): 2009/297730 Judgment Introduction 1The Court, as presently constituted, delivered judgment in this matter on 25 October 2011 and made the following orders: (i)Judgment for the plaintiff; (ii)The defendant shall pay damages in the sum of $77,750 (including interest) to the plaintiff (iii)Within seven days of the date hereof, the plaintiff shall file and serve a document setting out its claim for any order as to costs and within a further seven days thereafter, the defendant shall respond thereto. If there be no agreement, the Court shall contact the parties in order to direct written submissions and/or a short hearing on costs. 2The plaintiff and defendant's submissions were sent to Justice Rothman's Associate via email on 1 November 2011 and 9 November 2011, respectively. The plaintiff's submissions in reply were sent by email on 6 December 2011. Relevant legislation 3Section 40 of the Defamation Act 2005 states: "(1) In awarding costs in defamation proceedings, the court may have regard to: (a) the way in which the parties to the proceedings conducted their cases (including any misuse of a party's superior financial position to hinder the early resolution of the proceedings), and (b) any other matters that the court considers relevant. (2) Without limiting subsection (1), a court must (unless the interests of justice require otherwise): (a) if defamation proceedings are successfully brought by a plaintiff and costs in the proceedings are to be awarded to the plaintiff-order costs of and incidental to the proceedings to be assessed on an indemnity basis if the court is satisfied that the defendant unreasonably failed to make a settlement offer or agree to a settlement offer proposed by the plaintiff..." 4Costs on an indemnity basis are to be calculated from the commencement of proceedings, not from the time an offer was served: Davis v Nationwide News Pty Ltd [2008] NSWSC 946. 5Rule 42.14(2) of the Uniform Civil Procedure Rules 2005 ('UCPR') states: "42.14 Where offer not accepted and judgment no less favourable to plaintiff (1) This rule applies if the offer concerned is made by the plaintiff, but not accepted by the defendant, and the plaintiff obtains an order or judgment on the claim concerned no less favourable to the plaintiff than the terms of the offer. (2) Unless the court orders otherwise, the plaintiff is entitled to an order against the defendant for the plaintiff's costs in respect of the claim: (a) assessed on the ordinary basis up to the time from which those costs are to be assessed on an indemnity basis under paragraph (b), and (b) assessed on an indemnity basis: (i) if the offer was made before the first day of the trial, as from the beginning of the day following the day on which the offer was made, and (ii) if the offer was made on or after the first day of the trial, as from 11 am on the day following the day on which the offer was made." The offers made by the plaintiff 6On 11 February 2010, the plaintiff served on the defendant two offers of compromise and a Calderbank offer. The defendant did not accept those offers. The plaintiff made a subsequent Calderbank offer on 1 December 2010, which was also rejected by the defendant. 7The first offer of compromise, dated 11 February 2010, offered to settle the proceedings on the following terms: "1. The defendant to pay the plaintiff the sum of $35, 000.00 2. The defendant to publish an apology in the following terms: On 4 April 2009, I, Douglas Sinclair, sent an email to various members of the dragon boat racing community in Australia. The email made various allegations against Melanie Cantwell, Janine Lette, Karen Taylor and Silvia Wong, DBNSW and AusDBF. I acknowledge that there was no factual basis to those allegation and wish to unreservedly retract the allegations. I apologise for any hurt or offence that was caused by Melanie and others by the email. 3. The defendant to pay the plaintiff's costs and disbursements as agreed or assessed." 8The second offer of compromise, served the same day, was as follows: "1. The defendant to pay the plaintiff the sum of $60,000.00 2. The defendant to pay the plaintiff's costs and disbursements as agreed or assessed." 9The offers of compromise and the Calderbank offer were served shortly after the completion of mediation. 10The Calderbank offer, also served on 11 February 2010, sought payment of the total sum of $55,000, being $17,500 in damages, $37,500 in costs and publication of an apology. The offer was highly favourable to the defendant at the time according to the defendant's senior counsel. However, the offer was not accepted. 11A second Calderbank offer was served on 1 December 2010 and sought payment of $25,000, party party costs and the publication of an apology. The letter stated that party party costs were likely to be $50,000. The defendant also rejected this offer. The Court's findings 12It was not unreasonable for the defendant to reject such offers because there was a reasonable basis upon which qualified privilege could be argued. However, the purpose of rule 42.14(2) is to encourage early settlement of proceedings, therefore the rule makes clear that where an offer of compromise has been made, which offer is less than the result obtained in the judgment of the Court, the defendant should ordinarily pay indemnity costs thereafter, that is, from 12 February 2010 onwards. 13The plaintiff received damages in the sum of $75,000, not including interest. The amounts offered in the offers of compromise were $35,000 with an apology or $60,000 without an apology. The award of damages was no less favourable than the amounts included in each offer of compromise. 14It is unnecessary to reconcile s 40 of the Defamation Act and UCPR 42.14 because of the earlier finding that the rejection of the offers was not unreasonable within the meaning of that term in the Defamation Act , particularly given the manifest purpose of that legislation (see Mundine v Brown (No 7) [2011] NSWSC 170) and the timing of the offer. Orders 15The Court makes the following further orders, in accordance with rule 42.14(2) of the UCPR and s 40(2)(a) of the Defamation Act 2005: (1)The defendant pay the plaintiff's costs of and incidental to the proceeding: (a) Incurred in the period up to and including 11 February 2010, on a party/party basis; and (b) Incurred in the period from12 February 2010 on an indemnity basis. (2)The proceeding is otherwise dismissed. 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: 01 March 2012