Ell v Milne (No 9) [2014] NSWSC 489

Supreme Court New South Wales

Medium Neutral Citation: Ell v Milne (No 9) [2014] NSWSC 489 Hearing dates: 9 April 2014 Decision date: 11 April 2014 Before: McCallum J Decision: Each party to bear his or her own costs of the proceedings Catchwords: DEFAMATION - costs - claim by property developer against local counsellor - limited circulation publication - plaintiff successful in obtaining small award of damages - whether acceptance of defendant's offer to publish an apology would have achieved a better result - whether plaintiff entitled to his costs after choosing not to give evidence and therefore failing to obtain any award for hurt feelings - whether claim cynically motivated Legislation Cited: Defamation Act 2005 Cases Cited: Dow Jones v Gutnick [2002] HCA 56 Ell v Milne (No 7) [2013] NSWSC 600 Ell v Milne (No 8) [2014] NSWSC 175 Category: Costs Parties: William Robert Ell (plaintiff) Katie Milne (defendant) Representation: Counsel: T Tobin QC, B Kelleher T Molomby SC Solicitors: Anthony Smith Solicitor (plaintiff) NLS Law Pty Ltd (defendant) File Number(s): 2010/417226 Publication restriction: None

Judgment 1HER HONOUR: This is an action for defamation brought by a property developer, Mr William Ell, against a councillor on the Tweed Shire Council, Ms Katie Milne. I gave the principal judgment in the proceedings on 7 March 2014: see Ell v Milne (No 8) [2014] NSWSC 175. It remains to determine what orders should be made, if any, as to the costs of the proceedings. 2Mr Ell's claim arose from the distribution by Ms Milne of an email. The primary focus of the email was the council's treatment of two development applications evidently propounded by companies controlled by or associated with Mr Ell. Mr Ell did not sue on any imputation in respect of those matters. His action was confined to imputations arising from a discrete part of the matter complained of. 3The imputations on which Mr Ell succeeded were: (b) that he had a scandalous association with the murdered man Mr McGurk; (c) that he paid $100,000 bail for a person who was suspected by police of serious crimes and violence in order to advance his business interests; (f) that he conducted his business with regard to property development by employing a person with a reputation for violence. 4Ms Milne pleaded a defence of truth but that was abandoned prior to the hearing. A defence of contextual truth was partly struck out prior to the hearing and an aspect of that defence remained to be determined at the hearing. It was unsuccessful. Ms Milne also pleaded the defence of qualified privilege. I would accept the characterisation of that defence suggested by Mr Tobin QC, who appears for the plaintiff, that it was a weak instance of the defence. 5Mr Tobin complained that the defendant had been - in my words not his - difficult on the issue of publication and had not made proper concessions. I do not accept that criticism. It was tolerably clear, I thought, during the hearing that what the defendant sought to do in respect of publication was to make proper concessions where there was evidence that the email had in fact been opened and read by a person, but otherwise to reserve the argument arising from the decision of the High Court in Gutnick that publication was not established unless the plaintiff, on his onus, established that the electronic publication was downloaded and comprehended by any particular recipient: Dow Jones v Gutnick [2002] HCA 56. 6In the principal judgment I drew the inference, after considering those matters, that the matter complained of was probably read by "more than a few people, but considerably fewer than the complete list of persons to whom it was sent" (at [26] of the judgment). 7The plaintiff did not give evidence at the hearing. I held that in all the circumstances he was not entitled to any component of damages for hurt to feelings. I assessed his damages in the sum of $15,000. Judgment has been entered in that sum. 8Ms Milne submits that Mr Ell should pay her costs, notwithstanding the fact that he was successful in the proceedings. The basis for that contention is the fact that Ms Milne offered on two occasions prior to the commencement of proceedings to publish an apology. 9Mr Ell submits that, since he was successful in his action, he should have his costs. He further submits that, having regard to the way in which Ms Milne conducted her defence of the proceedings, those costs should be assessed on an indemnity basis. 10Each of the parties invoked section 40 of the Defamation Act 2005 in support of those respective contentions. That section provides: 40 Costs in defamation proceedings (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, or (b) if defamation proceedings are unsuccessfully brought by a plaintiff and costs in the proceedings are to be awarded to the defendant-order costs of and incidental to the proceedings to be assessed on an indemnity basis if the court is satisfied that the plaintiff unreasonably failed to accept a settlement offer made by the defendant. (3) In this section: "settlement offer" means any offer to settle the proceedings made before the proceedings are determined, and includes an offer to make amends (whether made before or after the proceedings are commenced), that was a reasonable offer at the time it was made. 11Ms Milne relied on an exchange of correspondence prior to the commencement of proceedings. The correspondence reveals that she did, on two occasions, offer to publish an apology. In light of the importance the apologies have assumed in the determination of costs, it is appropriate to set them out in full. The first was offered by letter dated 16 August 2010, as follows: WITHOUTH PREJUDICE Dear Mr Smith I refer to your correspondence of the 30th June and 3rd August (sent to my personal email address), on behalf of your client, Mr William Robert (Bob) Ell. I do not accept your claim that my further particulars notice was invalid under the Uniform Defamation Act. I also do not accept that your latest correspondence is a valid response under the Defamation Act 2005, to my request for a 'further particulars notice'. To the extent that the court may construe otherwise and in the interest of resolving the situation I am prepared to make 'an offer of amends' under s15.1(b) of the Defamation Act 2005. As required under section s15.1(c) of the Act, the particulars of this offer is limited to the proposed text below relating to the claims identified in your letter of 30 June at (A), (B), and (C). I am prepared to send the proposed text to all of the recipients of my original letter. Proposed Text "On 30th March 2010 I published a 'letter to the editor' about the Kings Forest and Cobaki Lakes development projects which was also published, in part, in the Tweed Shire Echo. In that letter I made some comments about Mr Bob Ell and Mr McGurk, (this part was not published in the Echo). I wish to make it clear that I did not intend to suggest of Mr Ell: (A) that he was implicated by his own wrongful conduct in the murder of Mr McGurk; (B) that he conducted his business with regard to property development by seeking the assistance of criminal elements with known propensities to the use of violence; (C) that he had a scandalous association with the murdered man, Mr McGurk. To the extent that anyone has understood my letter as suggesting any of the above I unreservedly apologise to Mr Ell." End Text I hope this proposed text will be of satisfaction to your client. I am amenable to changes if required. Yours sincerely Katie Milne 12Presumably encouraged by the statement that Ms Milne was amenable to changes if required, Mr Ell's solicitor took issue with the terms of the apology offered and set out the text it was asserted Ms Milne needed to agree to send, as follows (letter dated 8 September 2010): "On 30 March 2010 I published the text of a proposed 'letter to the editor' which I sent to a number of media organisations as well as community groups, concerning the Kings Forest and Cobaki Lakes developments. In addition, the letter was forwarded by email to the Tweed Shire Council, the Mayor, Director of Development and Regulation and other executive members of the Council. It has been pointed out to me my letter contained serious allegations that were not true involving Mr Bob Ell of Leda and a Mr Michael McGurk (deceased) and involving the developments above. Although the media outlets excluded and did not print those serious and untrue allegations, the publication to members of the community and the Tweed hire Council in particular were of the full text. The text involved the following false imputations concerning Mr Ell: (A) that he was implicated by his own wrongful conduct in the murder of Mr McGurk; (B) that he conducted his business with regard to property development by seeking the assistance of criminal elements with known propensities to the use of violence; (C) that he had a scandalous association with the murdered man, Mr McGurk. I, without reservation, apologise to Mr Ell for circulating such material as to give rise to such false imputations and acknowledge there is no truth or basis to such imputations, either involving Mr Ell personally or any associated dealings by him with his company's involvement in the Kings Forest or Cobaki Lakes projects". 13Following a short letter indicating that she wished to seek advice from senior counsel in respect of that response, Ms Milne responded (after receiving such advice) as follows: ... I have now received advice from Senior Counsel and I refer my letter below. Your latest notification that you are commencing proceedings is disappointing and surprising as your previous letter of the 30 September, states that you would commence proceedings if you have not received a reply by 14 October 2010. As far as I am concerned you have not conformed to the NSW Uniform Civil Procedure Rules 2005 and the NSW Defamation Act 2005. In an effort to avoid a court hearing I make a revised Offer of Amends to your client in the following terms. I am prepared to submit an apology without admissions or paid advertisement. You were asking me, by publishing a paid advertisement in the Tweed Echo newspaper, to apologise to a larger number of people who did not receive my original unedited letter with the comments in question. There is no reasonable basis for me to apologise to people who did not receive the unedited letter. I understand that your client is also not satisfied with my suggested apology and has provided an alternative text. I am willing to clarify to the recipients of my original letter that I did not intend to suggest any such meaning as at (A), (B) and (C) of your letter of the 30 June 2010. I cannot agree to admit that I made these allegations or imputations as requested, but I have made every effort to incorporate your client's wording as suggested as far as possible. Furthermore I cannot make any comment about the validity of the points (A), (B) and (C) by stating that these points are untrue, as requested, as I am not in a position to make a judgment on these matters. I would be willing to add the following to the proposed text if requested: "Mr Ell has advised me that the above at (A), (B) and (C) would be untrue. I have no grounds for believing otherwise". I am prepared to send the proposed text below to all of the recipients to whom I sent my original letter, and would forward this to the Tweed Shire Council officials as listed in your letter, despite the fact I did not send it to Council. In the interest of resolving the situation I am prepared to make a new 'offer of amends' under s15.1(b) of the Defamation Act 2005. As required under section 215.1(c) of the Act, the particulars of this offer is limited to the proposed text below (relating to the claims identified in your letter of 30 June 2010 at (A), (B) and (C). Proposed Text: "On 30 March 2010 I published the text of a proposed 'letter to the editor' which I sent to a number of media organisations as well as community groups, concerning the Kings Forest and Cobaki Lakes developments. It has been pointed out to me that my letter has been construed as containing the following allegations involving Mr Bob Ell: (A) that he was implicated by his own wrongful conduct in the murder of Mr McGurk; (B) that he conducted his business with regard to property development by seeking the assistance of criminal elements with known propensities to the use of violence; (C) that he had a scandalous association with the murdered man, Mr McGurk. I would like to clarify that I was not alleging that my concerns about Mr McGurk involved any of the above in relation to Mr Ell. To the extent that anyone has understood my letter as suggesting the above I unreservedly apologise to Mr Ell." End Text. 14The solicitor for Mr Ell responded that he was not satisfied with the wording offered and again set out the text of the terms of the apology required by Mr Ell, as follows: "On 30 March 2010 I published the text of a proposed 'letter to the editor' which I sent to a number of media organisations as well as community groups, concerning the Kings Forest and Cobaki Lakes developments. In addition, the letter was forwarded by email to the Tweed Shire Council, the Mayor, Director of Development and Regulation and other executive members of the Council. It has been pointed out to me my letter contained serious allegations that involved Mr Bob Ell of Leda and a Mr Michael McGurk (deceased) and involving the Cobaki Lakes and Kings Forest developments. Although the media outlets excluded and did not print those serious allegations, the publication to members of the community and the Tweed Shire Council in particular were of the full text. The text involved the following false imputations concerning Mr Ell: (A) that he was implicated by his own wrongful conduct in the murder of Mr McGurk; (B) that he conducted his business with regard to property development by seeking the assistance of criminal elements with known propensities to the use of violence; (C) that he had a scandalous association with the murdered man, Mr McGurk. I, without reservation, apologise to Mr Ell for circulating such material as to give rise to such imputations and acknowledge I do not know the truth or any basis for such imputations, either involving Mr Ell personally or any associated dealings by him with his company's involvement in the Kings Forest or Cobaki Lakes projects". 15Ms Milne again responded that she was taking legal advice and would reply shortly. That was on 12 November 2010. On 16 November 2010 Mr Ell's solicitors responded that they had instructions to commence proceedings without further notice, and that is in fact what occurred. Unfortunately, the negotiations to resolve the matter by way of publication of an apology appear, so far as the evidence before me reveals, to have ended there. 16Mr Tobin submitted that the two apologies offered by Ms Milne were "proleptic." I confess that submission sent me to the dictionary. It is evidently a term used by Hunt J to describe an apology in which the defendant is simply purporting to apologise for whatever the plaintiff may have perceived the matter complained of to convey without acknowledging that the matter complained of did in fact convey the false imputation. 17As correctly submitted by Mr Tobin, I have in fact found that the imputation that the plaintiff had a scandalous association with the murdered man, Mr McGurk, was conveyed and was defamatory of him. The question of the proper or fair characterisation of the defendant's apologies proffered in the present case has nonetheless caused me some consternation. Defamation is the publication of a defamatory imputation which the law treats as being false, unless the defendant proves the imputation to be true. The publisher's intention is not relevant to any element of the plaintiff's cause of action. Damage is assumed to flow from the publication of a defamatory imputation. 18It follows that a proper apology should retract the defamatory meanings in fact conveyed by the publication, acknowledge their falsity and apologise for the damage caused. However, there is a temporal difficulty for a defendant seeking to offer a proper apology. The difficulty arises from the fact that the meaning of a defamatory publication is frequently the subject of dispute. There is ample jurisprudence to reveal that that is an issue on which good, reasonable minds can and frequently do differ. 19If the accusation of prolepsis arises from the defendant's failure to capitulate to the meanings articulated by the plaintiff, I am not persuaded that will always be a fair criticism of an apology. As in so many areas of the law which fall for determination by a Court, all will depend on context. Here, there was a dispute as to the meanings conveyed by the matter complained of. As events transpired, the defendant was partly right. I am not persuaded that the apologies proffered by her in the present case can fairly be criticised as being proleptic in the sense in which Hunt J evidently used that term. 20The considerations I have set out above are relevant to an assessment of the reasonableness of the conduct of each party during the negotiation phase prior to the commencement of proceedings. My consideration of the correspondence had led me to the conclusion that, although the exchange was at times robust, each party demonstrated a genuine willingness to engage with the prospect of settlement of the proceedings out of court, or at least appeared to do so. That was a difficult negotiation in the present case. Feelings were evidently running high. I am not satisfied that either party acted unreasonably during that phase of the present dispute. 21I accept that the apologies offered by Ms Milne were genuine. It does not follow, however, that the publication of those apologies would have achieved a better result than was ultimately achieved in the litigation. Mr Molomby set out in his written submissions a series of considerations which he submitted would warrant that conclusion. In particular, he noted that the apology extended to imputations ultimately not the subject of any award of damages. He said that, in that sense, Mr Ell got more than he was entitled to by way of apology. Mr Molomby further noted that an apology can mitigate damages. He submitted that, in the present case, there were aspects of the proposed apologies which made them not only attractive but more advantageous than the damages awarded, including the fact that Ms Milne offered to apologise to each person to whom the email was sent, a result that is not guaranteed by the publication of the Court's judgment. Mr Molomby further noted that the proposed apologies carried the advantage of being closer in time to the original publication. Finally, he submitted that an advantage of an apology is that it comes directly from the defendant whereas a judgment of the Court, for all the weight it carries, is something imposed on the defendant. 22There is some force in those contentions but they have not persuaded me that the apologies offered by Ms Milne on their own indicate that acceptance of them would have achieved a better result, in the sense in which that term is understood in the context of costs arguments, than was achieved in the published judgment. As noted by Mr Tobin, and as recorded in the principal judgment, the purpose of the remedy of damages is to vindicate damage to reputation. It is difficult to compare an apology with a published judgment in those terms, but I would certainly not hold that an apology offered without anything else is a better vehicle to vindicate damage to reputation than a published judgment of the Court which "nails the lie". 23Further, as noted by Mr Tobin, the terms of the correspondence reveal that what Ms Milne was prepared to offer was nowhere near what would be required to trigger the principles relating to Calderbank offers. 24In all the circumstances, I have not been persuaded by Mr Molomby's submissions that the plaintiff should pay the defendant's costs of the proceedings. 25It remains to consider the plaintiff's application that the defendant should pay his costs of the proceedings, and on an indemnity basis. Plainly the starting point is to take into account the fact that the plaintiff was successful, but some regard must be had to the manner in which he ran the case. 26As already noted, Mr Ell did not give evidence and I determined that he was not entitled to any award for hurt to feelings. The publication was of limited circulation and the award to vindicate the presumed damage to reputation was accordingly small. 27After my decision in the proceedings was reserved, the defendant made an application to have the proceedings dismissed as an abuse of process. That application was determined in my judgment in Ell v Milne (No 7) [2013] NSWSC 600. I was not satisfied that the proceedings were an abuse of process. It does not follow, however, that the circumstances relied upon in support of that application and the fact that the plaintiff decided not to give evidence in the proceedings are irrelevant to the question of costs. 28My consideration of that material has led me to the unhappy conclusion that the proceedings, although not an abuse of process, were in some measure a cynical exercise undertaken for the purpose of causing grief to a political opponent of Mr Ell. Certainly there is no basis, in the absence of evidence from the plaintiff, for concluding that hurt to feelings played any part in the decision to sue. 29The evidence on the abuse of process application demonstrated that many other similarly damaging articles have been published concerning Mr Ell on which he has not sued. He has sued only Ms Milne. He retained senior and junior counsel of, I would respectfully say, the highest calibre. The proceedings were commenced in the Supreme Court and were listed so that the Court set aside two weeks for the hearing (there being no oral evidence the hearing was in fact considerably shorter). 30I have also had regard to the defendant's conduct of the proceedings, as noted by Mr Tobin. The defendant ran defences robustly and they were entirely unsuccessful. However, some of the plaintiff's cost incurred in respect of those defences have already been the subject of awards of costs in various interlocutory judgments published in the proceedings. The balance of that conduct, if I can put it that way, was not in my view unreasonable in the context of an adversarial system. 31I am not persuaded, in all the circumstances, that the plaintiff should have his costs of the proceedings. Accordingly, the order I make is that each party bear his or her own costs of the proceedings.