District Court New South Wales Medium Neutral Citation: Mallegowda v Sood (No. 7) [2019] NSWDC 252 Hearing dates: Written submissions, 11 April to 9 May 2019 Date of orders: 12 June 2019 Decision date: 12 June 2019 Jurisdiction: Civil Before: Gibson DCJ Decision: (1) The second defendant's application for damages is refused. (2) The application by the defendants/cross-claimant for indemnity costs for the whole of the proceedings is refused. (3) By way of variation of order 3 of the orders of 29 June 2018, the plaintiff is to pay the costs charged by all the expert witnesses, including their report fees, witness expenses and any other incidental fees which are to be paid in full for all such work carried out after 12 July 2013. (4) By way of variation of order 3 of the orders of 29 June 2018, the plaintiff is to pay the defendants'/cross-claimant's reasonable disbursements as litigants in person, on the ordinary basis, for the conduct of the trial (including reasonable preparation costs) on the following trial dates: 2, 3, 5, 6, 9, 10, 11, 12, 13, 16, 17, 18, 19, 20, 23, 24 and 25 May 2016; 24 August 2016; 1 June 2017; 9, 10 and 11 August 2017; 26 October 2017; 1 December 2017; 9 February and 29 June 2018 and their reasonable disbursements in the making of this application for costs. (5) By way of variation of order 3 of the orders of 29 June 2018, all costs orders in these proceedings in favour of the plaintiff/cross-defendant are vacated. (6) Order 5 of the orders of 29 June 2018 for the plaintiff to pay the cross-claimant's costs of the cross-claim on the ordinary basis as well as the cross-claimant's reasonable disbursements in relation to the cross-claim is confirmed, but with the restriction that these costs run from 12 July 2013 and are restricted to the costs of retaining the experts and identifying the publication issues set out in the cross-claim for the trial. (7) Pursuant to UCPR r 20.14, I refer the determination of these reasonable disbursements and legal costs (and disbursements) to a costs assessor agreed upon by the parties (or, in default of agreement, by Mr B Bellach, the Manager, Costs Assessment, Supreme Court of NSW) for inquiry and report by the costs assessor on the costs questions arising from these proceedings, including but not limited to: (a) An assessment, on the ordinary basis, of the defendants' reasonable disbursements for the trial on the dates above (including reasonable disbursements in relation to preparation of the trial); (b) An assessment of the disbursements and entitlements of the expert witnesses as well as of the defendants as for the retaining and briefing of these experts both by the litigants in person and of their solicitors for the period from the filing of the defence on 12 July 2013; (c) Any other issue germane to the assessment of these costs, such as the costs payable by the parties for the assessment. (8) Mr Bellach is to advise the court as well as the parties of any issues in relation to the costs of the referral, including but not limited to the payment of referral fees in advance. (9) Liberty to apply in relation to the implementation of the orders set out above. Catchwords: COSTS – application for indemnity costs by defendants and cross-claimant – whether offers of compromise and Calderbank offers bettered – whether plaintiff's denial of publication and conduct of the trial warranted special costs orders – application for plaintiff for orders that each party pay his own costs by reason of the conduct of the trial by the defendants and cross-claimant – application for indemnity costs refused – orders for the plaintiff to pay certain of the costs and disbursements on an issue by issue basis - method for assessment of costs where parties all litigants in person – referral pursuant to UCPR r 20.14 I to a costs assessor agreed upon by the parties (or, in default of agreement, by Mr B Bellach, the Manager, Costs Assessment, Supreme Court of NSW) for assessment of costs and disbursements in accordance with the orders made in these proceedings Legislation Cited: Civil Law (Wrongs) Act 2002 (ACT), s 139K Civil Procedure Act 2005 (NSW), ss 56 – 62 Defamation Act 1974 (NSW), ss 7A and 48A Defamation Act 2005 (NSW), s 40 Defamation Act 2006 (NT), s 37 Defamation Act 2005 (Qld), s 40 Defamation Act 2005 (SA), s 38 Defamation Act 2005 (Tas), s 40 Defamation Act 2005 (Vic), s 40 Defamation Act 2005 (WA), s 40 Uniform Civil Procedure Rules 2005 (NSW), rr 7.3, 20.14, 20.26, 20.27, 42.1 and 42.13A Cases Cited: Attard v James Legal Pty Ltd [2010] NSWCA 311 Barnes v Forty Two International Pty Limited (No 2) [2015] FCAFC 19 Black v Lipovac (1998) 217 ALR 386; [1998] FCA 699 Cachia v Haines (1994) 179 CLR 403 CPB Contractors Pty Limited v Celsus Pty Limited (formerly known as SA Health Partnership Nominees Pty Ltd) (No 2) [2018] FCA 2112 David Syme & Co v Hore-Lacy [2000] VSCA 24 Hazeldene's Chicken Farm Pty Ltd v Victorian WorkCover Authority (No 2) [2005] VSCA 298 Johnston v Nationwide News Pty Ltd [2005] NSWCA 17 Jones v Sutton (No 2) [2005] NSWCA 203 Ludwig v The Public Trustee [2008] NSWCA 115 Magenta Nominees Pty Ltd v Richard Ellis (WA) Pty Ltd [1994] FCA 302 Mallegowda v Sood [2013] NSWDC 97 Mallegowda v Sood (No 2) [2014] NSWDC 216 Mallegowda v Sood (No. 3) [2015] NSWDC 14 Mallegowda v Sood (No 4) [2016] NSWDC 88 Mallegowda v Sood (No 5) [2017] NSWDC 470 Mallegowda v Sood (No. 6) [2018] NSWDC 281 Mallegowda v Sood [2019] NSWCA 37 Newell; Muriniti v De Costi [2018] NSWCA 49 Optiver Australia Pty Ltd v Tibra Trading Pty Ltd [2012] FCA 558 Prothonotary of Supreme Court of New South Wales v Mallegowda [2016] NSWSC 1087 Rush v Nationwide News Pty Ltd [2018] FCA 357 Stockland (Constructors) Pty Ltd v Darryl I Coombs Pty Ltd [2004] NSWSC 333 Stokes v Ragless [2019] SASCFC 31 Tickell v Trifleska Pty Ltd (1990) 25 NSWLR 353 Tilden v Gregg [2015] NSWCA 164 von Reisner v Commonwealth of Australia (No 2) [2009] FCAFC 172 Webb v Bloch (1928) 41 CLR 331 Whitehouse Properties Pty Ltd v Bond Brewing (NSW) Ltd (1992) 28 NSWLR 17 Whitney v Dream Developments Pty Ltd [2013] NSWCA 188 Yu v Cao (2016) 91 NSWLR 190 Texts Cited: P. Taylor SC, Justice G. Bellew, M. Meek SC, Dr E. Elms OAM, Ritchie's Uniform Civil Procedure New South Wales (LexisNexis, Australia) Category: Costs Parties: Plaintiff/Cross-Defendant: Shashikanth Mallegowda First Defendant/Cross-Claimant: Amit Sood Second Defendant: Naveen Lingaiah Representation: Plaintiff/Cross-Defendant: In person First Defendant/Cross-Claimant: In person Second Defendant: In person File Number(s): 2012/352080 Publication restriction: None Judgment The applications before the court 1. These are proceedings for defamation in which the defendants were successful in relation to the plaintiff's claim, and in which the first defendant's cross-claim against the plaintiff (also for defamation) resulted in an award of $5,000 (Mallegowda v Sood (No. 6) [2018] NSWDC 281). In a judgment handed down on 29 June, 2018, I made orders as follows: 1. Judgment for the defendants on the plaintiff's claim. 2. In relation to the Cross-Claim, judgment for the cross-claimant against the cross-defendant in the sum of $5,000. 3. The plaintiff pay the defendants' reasonable disbursements of the trial commencing on 2 February 2016 before Gibson DCJ, including reasonable disbursements relating to the preparation of the hearing and at all times when they have been self-represented, such disbursements to be agreed or assessed. 4. Subject to existing costs orders to the contrary, the parties pay their own costs of all vacated hearings prior to the trial of these proceedings and in relation to the referral to the Supreme Court. 5. In relation to the Cross-Claim, cross-defendant to pay cross-claimant's legal costs and, where the cross-claimant has represented himself, the cross-claimant's reasonable disbursements. 6. Liberty to apply in relation to costs and in relation to interest (in relation to the cross-claim), such liberty to be a self-executing order, to be exercised within 28 days. 7. The plaintiff's applications under s 203 District Court Act 1973 (NSW) and ss 327 and/or s 338(c) Crimes Act 1900 (NSW) are refused. 8. The defendants' applications for leave to reopen are refused. 9. Exhibits retained for 28 days. 1. The plaintiff's application for leave to appeal was dismissed: Mallegowda v Sood [2019] NSWCA 37. Although not referred to in the appellate judgment, any application for leave to appeal from the cross-claim by the cross-defendant (the plaintiff in the main decision) would have been dismissed as well. There was no application by the first defendant/cross-claimant for leave to appeal from the cross-claim's quantum, although the second defendant, as part of this application, now seeks an award of damages for himself as well, on the basis of emotional distress caused by these proceedings rather than a claim in defamation. 2. In addition to the second defendant's claim for damages, this is an application by the defendants/cross-claimant (hereafter referred to as "the defendants" or identified as "the first defendant" or "the second defendant", unless the first defendant is referred to in his role as cross-claimant) for costs of the proceedings on an indemnity basis. This application is brought on two bases: 1. The plaintiff failed to accept either of the two Offers of Compromise (which were alternatively framed as Calderbank offers); and 2. The plaintiff's conduct of the trial, in which he told lies from beginning to end, warranted an order for indemnity costs. 1. As to the first ground, there are significant problems with the content of the Offers of Compromise, which are set out in more detail below. As to the second ground, adverse credit findings were made by me about all of the parties in these proceedings. 2. The plaintiff/cross-defendant also brings a costs application, namely for each party to pay his own costs. The costs the subject of these applications 1. The following general features of the costs orders made at trial should be noted: 1. Costs of the trial of the plaintiff's claim: In the judgment orders set out above, I have already made an order for the costs of the trial, limited to the entitlement of the defendants as litigants in person to claim for disbursements, as opposed to legal costs. The defendants now seek not only indemnity costs but also "reasonable costs" of the proceedings, from which I infer they are seeking payment of sums greater than the disbursements normally permitted to litigants in person. The written submissions do not clarify whether they are seeking the "reasonable costs" while they have been self-represented solely for themselves or on behalf of some undisclosed legal adviser. However, claims for pre-trial legal costs clearly relate to the costs of their former legal representatives. 2. Costs of the cross-claim: I made an order for costs on the ordinary basis, including legal costs, in favour of the cross-claimant for the whole of the cross-claim proceedings. This would include such disbursements as the cross-claimant is entitled to as a litigant in person at the trial. The cross-claimant now seeks orders for these costs to include "reasonable costs" (as opposed to disbursements) of the trial, as well as an order that all these costs (his own and those of his former legal representatives) be payable on an indemnity basis. 3. Costs of bringing the contempt application: The defendants appear to acknowledge that they are not entitled to these costs in their first set of submissions (paragraph 2) although this is in conflict with their submissions in reply. They are not entitled to such costs: Johnston v Nationwide News Pty Ltd [2005] NSWCA 17. 4. Damages: As noted above, the second defendant brings an application for damages for "emotional trauma suffered by the second defendant" following the "reinforced position" due to the orders made by the Court of Appeal in Mallegowda v Sood. This appears to relate in part to the Court's findings concerning the issuing of subpoenae in the Newcastle registry of the District Court after the proceedings were transferred to the Defamation List in the Sydney registry. Costs applications made by litigants in person cannot include claims of this nature: Cachia v Haines (1994) 179 CLR 403; see the discussion of the limitations on claims by litigants in person set out in von Reisner v Commonwealth of Australia (No 2) [2009] FCAFC 172 at [8]-[14]. Problems in the determination of these issues 1. Three preliminary issues need to be noted as the submissions of the parties do not reflect their actual entitlement to costs. 2. First, the defendants go beyond the reference to "disbursements" in my judgment orders and now seek "all reasonable costs" of self-representation, which presumably are not merely disbursements of the limited kind for litigants in person which I have already ordered. If the defendants are bringing applications for their lost time, or some other interpretation of "reasonable costs" of representation, that is not permitted: see Cachia v Haines at 408, 409 and 417. This excludes compensation for time spent by a litigant who is not a lawyer in preparing and conducting his case: von Reisner v Commonwealth of Australia (No 2) at [13]. I note in particular the second defendant's claim for damages, which also appears to have been made as some form of costs claim. 3. No information about these "reasonable costs" is provided. It is not uncommon for a list to be given to the court (see for example Ludwig v The Public Trustee [2008] NSWCA 115 at [42]); this is not a pre-requisite, but the failure to give any specificity is one of the reasons for my making an order for the appointment of a referee, as is set out below. All I know is that the defendants incurred legal costs before trial of a very high nature: Mallegowda v Sood (No. 3) [2015] NSWDC 14 at [8]. If those are the "reasonable costs", then these must be differentiated from the disbursements claimed by the defendants. For example, a litigant in person may be able to claim "expenses" (Tilden v Gregg [2015] NSWCA 164, order 2) of the kind sought by Mr Ludwig in Ludwig v The Public Trustee, which may not strictly be able to be claimed by a legal practitioner. 4. Second, the plaintiff asks for an order for each party to pay his own costs of the litigation. His submissions on this application include additional information that his former solicitors obtained judgment for unpaid legal fees of $355,834.96 and that the costs payable for the contempt proceedings taken against him remain unpaid. He appears to be saying there is not much left. However, inability to pay is not a reason for refusing to make costs orders, so the sole grounds upon which I have considered the plaintiff's application relate to the offers of compromise/Calderbank offers and the arguments both sides put before me as to the conduct of these proceedings. 5. Third, although it is clear from the content of all parties' submissions that they have received legal assistance in drafting their submissions, the defendants have not addressed the provisions of ss 56 – 62 Civil Procedure Act 2005 (NSW) or s 40 Defamation Act 2005 (NSW), even in reply, despite this being pointed out by the plaintiff in his written submissions. However, as these provisions are addressed in the course of the offers exchanged, I am able to deal with this issue. 6. In approaching the costs issues, I have been careful to afford the parties procedural fairness and to note the additional obligations of the court where litigants in person are before the court: Stokes v Ragless [2019] SASCFC 31 at [15] – [31]. However, in the present case, I am satisfied that all the fact-based problematic issues in that case have not occurred here. In particular, all parties were legally represented at the time offers were made (the defendants were in fact represented up until a month before the trial: T 655) so the concerns addressed by the Court in Stokes v Ragless at [32]-[41] need not be addressed. 7. The issues raised by the parties in their submissions mean that the way in which these proceedings have been conducted by the parties is of particular relevance in terms of the manner and extent to which costs have been incurred and it is necessary to set out some parts of this history in detail. An overview of the written submissions 1. The defendants set out their request for indemnity costs for the whole of the proceedings on the following bases: 1. The defendants (and, as to the second offer, the first defendant in his capacity as cross-claimant) made offers of compromise and Calderbank offers on 30 November 2012 and 30 August 2013. 2. The plaintiff's action was "from beginning to end based upon a lie" (paragraph 6 of the written submissions), namely that he did not set up the email accounts used in relation to the publication of the matter complained of. 3. The defendants had been "entirely vindicated" (paragraph 11) and the adverse findings made against them in the judgment were either wrong or should be disregarded. 1. The plaintiff opposes the application and asks the court to order each party pay his own costs. He submits: 1. The plaintiff was driven to these proceedings after the defendants disseminated confidential information about his bipolar condition in the Indian community after his medical file was accessed by a doctor working in the same ward as the first defendant's wife (written submissions, paragraph 1). I note the Police and Privacy Commission inquiry findings, set out at [118] – [128] in my judgment concerning the events which followed. How this provoked the defamation proceedings is unexplained. 2. The plaintiff complains that "it is very unclear in their submission [sic] about what costs they are seeking" (paragraph 18). In addition, they were not legally represented at the trial and should not be entitled to legal costs for themselves. 3. The plaintiff claims there are conflicting statements as to whether the defendants are seeking indemnity or ordinary costs (written submissions, paragraph 21) but submits that the conduct of the hearing warrant an order for each party to pay his own costs. 4. The plaintiff also points out that the defendants have failed to address costs law issues arising from ss 56 – 62 Civil Procedure Act 2005 (NSW) and s 40 Defamation Act 2005 (NSW) (written submissions, paragraph 22). The defendants have not answered this objection in their submissions in reply. 1. The defendants in reply state: 1. The plaintiff was similarly guilty of delay in the proceedings (paragraph 2) 2. The defendants challenge the basis upon which the plaintiff complains about the issue of subpoenae in the Newcastle registry of the District Court after the proceedings were transferred to the Defamation List in Sydney. The defendants now "seek damages for emotional trauma suffered by the second defendant on account of this malicious and unfair claim" (written submissions, paragraph 6). 3. The defendants clarify that they are seeking not only costs of being represented but also "reasonable costs of defending while being self-represented". 4. The defendants challenge findings of fact in the first instance judgment including the finding that the defendants authorised the sending of an anonymous email in 2011 in which they were listed as candidates to take over the Indian Association of Newcastle, on the basis that expert evidence should have been required to make this finding. 5. The orders sought are for costs on an indemnity basis while being represented, "all reasonable costs" while being self-represented and damages to the second defendant, apparently in part due to observations made in the Court of Appeal. The manner in which this application has been heard 1. This application has proceeded by way of written submissions only. That is not uncommon in costs applications following a trial, but there were particular reasons for doing so in these proceedings. 2. I set out in Mallegowda v Sood (No 6) at [19]-[47] some of the difficulties of conducting this trial. In Mallegowda v Sood [2019] NSWCA 37, McCallum JA described these difficulties as follows: "[4] The hearing of the claim presented a difficult task for the primary judge (Gibson DCJ). Mr Mallegowda was the plaintiff. There were two defendants, Mr Amit Sood and Mr Naveen Lingaiah. All three parties were unrepresented. There was extreme hostility between the plaintiff on the one hand and the two defendants on the other. The parties' lack of legal training combined with their determination to pursue every point meant they not only gave no assistance to the primary judge but made her task more difficult in many respects." 1. Another problem was that the conduct of the plaintiff towards one of the witnesses led to his being charged with, and convicted of, contempt of court during the hearing: Prothonotary of Supreme Court of New South Wales v Mallegowda [2016] NSWSC 1087. In the course of sentencing, Adams J noted (at [21]-[23]) that the plaintiff suffers from a severe form of bipolar disorder. The plaintiff cites as one of the triggers for commencement of these proceedings the circumstances in which confidential medical information was obtained by the defendants; the plaintiff has always claimed that this was obtained from the health records security breach referred to at [118] – 128] in my judgment. Whether or not that is the case, the defendants' persistent attempts to use trial processes ranging from subpoenae to applications for the plaintiff to be examined by a psychiatrist to obtain information about the plaintiff's bipolar condition has been a significant contributor to the tensions of the trial. 2. By reason of the level of hostility between the parties (which includes requests for their respective addresses to be kept confidential as well as angry exchanges which led me to adjourn the court more than once), I invited the parties to provide full submissions in writing, this having been the method used for final submissions on liability and quantum for the claim and cross-claim. 3. I am satisfied from perusal of these submissions that, while there are issues upon which the parties could have provided more information, this is the most information I am likely to receive from the parties on the issue of costs, and that an oral hearing where I seek further information would be unnecessary. I do so for four reasons: 1. This is how the submissions stage of these proceedings were conducted and, as the plaintiff's appeal was dismissed, it is clear that this procedure was not disadvantageous to the parties. 2. It is clear from the parties' written submissions that they have received some assistance of a legal nature, in that they refer to certain principles concerning offers of compromise and Calderbank offers and, in the case of the plaintiff, some statutory provisions relevant to the making of costs orders in defamation proceedings. 3. The parties were asked to prepare full written submissions on this basis, and they have done so. The defendants were given an opportunity to reply to the plaintiff's submissions. 4. Given the history of the proceedings and the bitterness between the parties, it is a disproportionate use of court resources for the issue of indemnity and reserved costs to require an oral hearing as well. 1. The second defendant's claim for damages appears to be at least in part because of their "reinforced position" (paragraph 6) in the Court of Appeal judgment concerning the early issuing of subpoenae in the Newcastle registry both before and after the proceedings were transferred to the Sydney registry, so I will first set out the chronology of the proceedings, as this is of relevance in relation to the parties' competing "moral turpitude" claims. An overview of these proceedings 1. The plaintiff, representing himself, commenced his claim for defamation in the Newcastle registry of the District Court of New South Wales on 12 November 2012. Roberts Legal filed a Notice of Appearance for the defendants on 26 November 2012, and the defendants were legally advised in relation to the steps they took thereafter. 2. By reason of the imminent long vacation and the transfer of the proceedings to the Defamation List in the Sydney registry on 20 February 2013, very little case management or activity occurred in the Newcastle registry, with one notable exception. What makes the history of these proceedings very different from other defamation actions is that the defendants made applications to the Newcastle registry to issue subpoenae on 17 December 2012, 8 and 16 January 2013, and 5 and 11 February 2013. 3. The plaintiff (still acting for himself) then formally sought leave to issue subpoenae on 25 and 30 January and 18 February 2013, as is required for all litigants in person (r 7.3 Uniform Civil Procedure Rules 2005 (NSW) ("UCPR")), although it does not appear that any were actually issued. He did, however, object to the subpoena of hospital and medical records concerning his bipolar condition. I should add that the plaintiff's bipolar condition was a subject to which the defendants devoted much energy throughout the whole of the proceedings (other attempts included notices of motion, notices to produce, oral applications and cross-examination, as may be seen in the first five judgments I have handed down as well as in the judgment on liability and quantum: Mallegowda v Sood (No 6) at [20], [32] – [33] and [51]). 4. The plaintiff filed an amended statement of claim on 12 December (and apparently again on 19 December) and both parties filed notices of motion (on 24 December 2012, 23 January and 19 February 2013). The filing of these motions, which had to come before the circuit judge, resulted in the transfer of the proceedings to the Defamation List in the Sydney registry on 20 February 2013, with a return date of 22 March 2013. 5. By this stage, the defendants' subpoenae had resulted in the production of 8 packets of documents, which are noted by JusticeLink on 26 February 2013 as having been transferred to the Sydney registry along with the file. 6. However, the defendants' subpoena activities in the Newcastle registry did not stop there. According to JusticeLink, they brought 4 further applications for production under subpoena in the Newcastle registry between 27 February and 18 March 2013, all of which postdate the transferring of these proceedings to the Sydney registry. 7. The Defamation List Judge's orders on 22 March 2013 merely stood the proceedings over to 12 April 2013 (a date later changed to 3 May 2013), but the defendants' subpoena applications continued apace, with general access being granted to a further 11 packets on 25 March, another on 26 March, yet another on 2 April and two on 4 April 2013. By this stage there were 19 subpoena packets in the registry, according to the subpoena numbering system. 8. The plaintiff's notice of motion filed on 18 March 2013 sought to set aside these subpoenae, particularly those which sought information about his hospitalisation and treatment for his bipolar disorder (Mallegowda v Sood [2013] NSWDC 97 at [38]). On 3 May 2013 the parties' competing applications came before the Defamation List Judge, Bozic SC DCJ, for argument. Bozic SC DCJ struck out the statement of claim with leave to replead but did not deal with the plaintiff's complaints about subpoenae, noting in his orders that "the outstanding issues" of production of documents would be stood over until after the close of pleadings. 9. The plaintiff's new solicitors filed a Notice of Appointment of Solicitor on 14 May 2013, the same day as an application by the plaintiff for leave to issue subpoenae for production (a second application was made the following day). As is noted in my judgment in Mallegowda v Sood at [40], the documents the plaintiff sought leave to obtain included information about what subpoenae had been issued to third parties, as he had not been notified about at least some of these subpoenae being issued.. 10. This was the state of the proceedings when the defendants' challenges to imputations and the plaintiff's complaints about the early issuing of subpoenae came before me on 12 June 2013. Counsel for the defendants told the court that the defendants had issued 18 subpoenae in the Newcastle registry, including subpoenae issued and/or returnable in Newcastle despite the file being transferred to Sydney. Concessions were made concerning the inappropriateness of subpoenae for the plaintiff's mental health. As to the balance, the defendants were invited to, but did not, bring any challenge to the proposed order that these subpoenae be set aside, and I accordingly set them aside. It was acknowledged that the content of all of them (except those directed to the plaintiff's medical history) went to a proposed justification plea and that no defence had ever been filed. 11. A defence which included a cross-claim by the first defendant was filed on 12 July 2013. (The plaintiff/cross-defendant filed a defence denying publication on 19 August 2013.) In their defence, the defendants used information that had been obtained under subpoenae, which had also been provided to the defendants' expert, Dr Watt, whose report on this issue is referred to in the second offer of compromise from the solicitors for the defendants dated 30 August 2013. 12. It is trite law that a defendant in defamation proceedings cannot issue subpoenae as a fishing expedition in the hope of finding something in support of the plea of justification or its particulars. In Rush v Nationwide News Pty Ltd [2018] FCA 357, where subpoenae in support of a pleaded defence of justification were set aside, Wigney J stated (at [172]). "A defendant who pleads justification must do so on the basis of the information which it has in its possession when the defence is delivered and is not permitted to undertake a fishing expedition in the hope of finding something in support of its plea: TCN Channel Nine Pty Ltd v Berrigan (1996) Aust Torts Reports 81-404; (unreported, Supreme Court of Western Australia Full Court, Kennedy, Rowland and Franklyn JJ, 17 June 1996) at p. 12; Associated Dominions Assurance Society Pty Ltd v John Fairfax & Sons Pty Ltd (1955) 72 WN (NSW) 250 at 254; Sunday Times Newspaper Co Ltd v Sun Newspaper Co Ltd (1919) 36 WN (NSW) 72 at 73. In Zierenberg, Kay LJ said (at 188-189): If the defendant says that he is unable to state any such facts without discovery, the answer is simple and conclusive – he ought not to have published the libel, and cannot plead any justification for having done so.". 1. At least a defence had been filed in Rush v Nationwide News Pty Ltd, the opposing party had been notified of all the relevant subpoenae, and the issue dealt with before the action proceeded further, unlike the present case, where it took until June 2013 for the subpoena argument to be heard, in circumstances where the defendants issued one subpoena after another in another registry of the court (although some may have been issued in the Sydney registry) for a period of over six months. 2. In addition, the issue of subpoenae for confidential treatment of the plaintiff for mental health issues would have had no relevance to any part of the justification defence. If subpoenae had been issued to Mr Rush's medical practitioners seeking such information, I imagine that these would have been set aside. 3. Even more compelling than these two other factors is the sheer scale of the documents sought. This was a blanket request for production of a vast range of records, including the plaintiff's telephone records, as well as subpoenae to a series of data holders. If a similar number of subpoenae had been issued for Mr Rush's telephone, employer and/or data provider records, these might similarly have been regarded as fishing subpoenae. 4. One of the plaintiff's grounds of appeal was that the material produced in response to these subpoenae (at least some of which he was unaware until Mr Connell advised the court of their existence in June 2013, in response to the plaintiff's notice of motion to set them aside) had been tampered with. The defendants submit that the Court of Appeal's rejection of this argument, in part because the Court of Appeal considered I was wrong to have set the subpoenae aside, "reinforced" the correctness of the defendants' conduct and that my credit findings concerning the defendants should be acknowledged by me to be wrong. 5. Ultimately, however, whether the Court of Appeal (which did not have this chronology before it) was correct in saying that the subpoenae should not have been set aside, this was not a finding relevant to the defendants' credit, as their subpoenae were issued by their legal practitioners, because litigants in person need leave to issue subpoenae (UCPR r 7.3). The Court of Appeal did not hear argument about, or set aside my judgment, but made observations about the correctness of the authority I cited. McCallum J's remarks were confined to the issues on appeal. 6. Whatever the merits of the judgment I handed down, the conduct of the parties from the commencement of this litigation, including (relevantly for this application) at times when the parties were represented, has been one of general disregard for the principles set out in ss 56 – 62 Civil Procedure Act 2005 (NSW). The most egregious of these failures has been the constant delays and applications for adjournment which prevented the trial from proceeding and, when it was adjourned, from continuing to its conclusion. 7. These delays can all be laid at the feet of the defendants. The first hearing date (18 August 2014) had to be vacated because of late service of an expert report by the defendants: Mallegowda v Sood (No 2) [2014] NSWDC 216. There were also case management delays, including amendments to the defence to plead contextual justification and Hore-Lacy imputations (David Syme & Co v Hore-Lacy [2000] VSCA 24). A hearing in Newcastle District Court did not proceed because three days were spent on interlocutory argument, largely generated by the defendants. 8. The defendants' solicitors continued to act up until April 2016, when the defendants unsuccessfully sought an adjournment of the trial which commenced on 2 May 2016; a fuller history of these delays is set out in Mallegowda v Sood (No 4) [2016] NSWDC 88. These constant delays are relevant to the issue of those solicitors' legal costs. These delays continued during the period when the defendants were acting for themselves; after the hearing was adjourned shortly before the conclusion of the evidence, the defendants' applications to call more evidence resulted in the adjourned hearing date being put off five times. The relevant statutory provisions 1. UCPR r 20.26 provides: "20.26 Making of offer (1) In any proceedings, any party may, by notice in writing, make an offer to any other party to compromise any claim in the proceedings, either in whole or in part, on specified terms. (2) An offer under this rule: (a) must identify: (i) the claim or part of the claim to which it relates, and (ii) the proposed orders for disposal of the claim or part of the claim, including, if a monetary judgment is proposed, the amount of that monetary judgment, and (b) if the offer relates only to part of a claim in the proceedings, must include a statement: (i) in the case of an offer by the plaintiff, as to whether the balance of the proceedings is to be abandoned or pursued, or (ii) in the case of an offer by a defendant, as to whether the balance of the proceedings will be defended or conceded, and (c) must not include an amount for costs and must not be expressed to be inclusive of costs, and (d) must bear a statement to the effect that the offer is made in accordance with these rules, and (e) if the offeror has made or been ordered to make an interim payment to the offeree, must state whether or not the offer is in addition to that interim payment, and (f) must specify the period of time within which the offer is open for acceptance. (3) An offer under this rule may propose: (a) a judgment in favour of the defendant: (i) with no order as to costs, or (ii) despite subrule (2) (c), with a term of the offer that the defendant will pay to the plaintiff a specified sum in respect of the plaintiff's costs, or (b) that the costs as agreed or assessed up to the time the offer was made will be paid by the offeror, or (c) that the costs as agreed or assessed on the ordinary basis or on the indemnity basis will be met out of a specified estate, notional estate or fund identified in the offer. (4) If the offeror makes an offer before the offeree has been given such particulars of the offeror's claim, and copies or originals of such documents available to the offeror, as are necessary to enable the offeree to fully consider the offer, the offeree may, within 14 days of receiving the offer, give notice to the offeror that: (a) the offeree is unable to assess the reasonableness of the offer because of the lack of particulars or documents, and (b) in the event that rule 42.14 applies to the proceedings, the offeree will seek an order of the court under rule 42.14 (2). (5) The closing date for acceptance of an offer: (a) in the case of an offer made two months or more before the date set down for commencement of the trial--is to be no less than 28 days after the date on which the offer is made, and (b) in any other case--is to be such date as is reasonable in the circumstances. (8) Unless the notice of offer otherwise provides, an offer providing for the payment of money, or the doing of any other act, is taken to provide for the payment of that money, or the doing of that act, within 28 days after acceptance of the offer. (9) An offer is taken to have been made without prejudice, unless the notice of offer otherwise provides. (10) A party may make more than one offer in relation to the same claim. (11) Unless the court orders otherwise, an offer may not be withdrawn during the period of acceptance for the offer. (12) A notice of offer that purports to exclude, modify or restrict the operation of rule 42.14 or 42.15 is of no effect for the purposes of this Division." 1. Although referred to by Roberts Legal to Vaikom Rajeev Criminal and Commercial Lawyers in their letter of 30 August 2013, as well as by the plaintiff, the defendants make no reference to s 40 Defamation Act 2005 (NSW) in their written submissions. 2. Section 40 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." The offers between the parties 1. Regrettably, the parties did not attach, let alone discuss, the offers made by the opposing side, although the defendants had the opportunity to do so in that the timetable provided for submissions in reply. I have set out the correspondence in question in chronological order. 30 November 2012: Roberts Legal to the plaintiff 1. The text of Roberts Legal's letter to the plaintiff dated 30 November 2012 is as follows: "We refer to the above matter. Our clients deny any liability to you for defamation and will defend the claim vigorously and seek costs of the proceedings against you on an indemnity basis. On our instructions you have in fact made the statements and/or sent the emails that have been attributed to you and, therefore, our clients have an absolute Defence under Section 25 of the Defamation Act 2005. Our clients already have unequivocal evidence that the 'arithi.desphande@gmail.com' email account was linked to your mobile phone number. We also have compelling evidence that you are responsible for the 'members.ian@gmail.com' email account and are instructed to issue a Subpoena to Google in relation [sic] that account to further verify your ownership. In our view, it is inevitable that your role in the emails sent from the above accounts will be exposed in open Court and that Judgment in relation to these proceedings will be entered in favour of our clients together with costs. In the circumstances, and so as to position our clients with respect of costs should you continue to prosecute the proceedings, we are instructed to offer settlement of the proceedings on the basis that Judgment is entered in favour of our clients by consent. The offer is made in accordance with Rule 20.26 of the Uniform Civil Procedure Rules 2005 and the principles in Calderbank v Calderbank [1975] 2 All ER 333 and shall remain open for a period of 28 days. In the event that this offer is not accepted and the matter proceeds to hearing with Judgment entered in favour of our clients on terms no less favourable than this offer, our client will rely on this letter and Rule 42.15A in support of an application for indemnity costs against you. We suggest that you obtain independent legal advice in relation to this matter and the implications of you not accepting this offer without delay." 1. This was accompanied by a Notice to Admit Facts dated 30 November 2012. Does this offer of compromise/Calderbank offer warrant the award of indemnity costs? 1. This offer of compromise for judgment by consent was made at a time when the general position was that no reference should be made to costs in such offers: Whitney v Dream Developments Pty Ltd [2013] NSWCA 188; UCPR rr 20.27 and 42.13A; see [20.27.10A] in P. Taylor SC, Justice G. Bellew, M. Meek SC, Dr E. Elms OAM, Ritchie's Uniform Civil Procedure New South Wales (LexisNexis, Australia). As such, the offer having been made prior to 7 June 2013, should be taken to have been made on the basis of costs being paid on a party/party basis. 2. The meaning of "compromise" is that an offer must reflect some real element of compromise: Tickell v Trifleska Pty Ltd (1990) 25 NSWLR 353. However, there is no compromise here. What is sought is total victory, namely judgment for the defendants and costs. What is more, the offer of compromise clearly states it is made "so as to position our clients with respect of costs should you continue to prosecute the proceedings". In Ritchie's Uniform Civil Procedure New South Wales at [20.26.10], the authors note that "the offer of compromise procedure is not to be used simply as a strategy to trigger an ultimately successful party's automatic award of costs on an indemnity basis". 3. I further note that the offer of compromise does not refer to the cross-claim, which may be permissible, but that would limit the indemnity costs to the claim the subject of the offer: Whitehouse Properties Pty Ltd v Bond Brewing (NSW) Ltd (1992) 28 NSWLR 17. This would mean, at the very least, that this offer cannot be relied upon in relation to the cross-claim. As the claim and cross-claim are inextricably intertwined, I consider this is one of those rare cases where the omission of the cross-claim (which was clearly envisaged, as the defendants' next offer of compromise makes clear) should be similarly fatal to this offer of compromise. 4. These factors, individually as well as in combination, give rise to exceptional circumstances which mean that the offer of compromise does not provide a basis upon which indemnity costs could be ordered. 5. As to Calderbank offers, the relevant factors are set out in Hazeldene's Chicken Farm Pty Ltd v Victorian WorkCover Authority (No 2) [2005] VSCA 298 at [23]‑[29], namely: 1. the stage of the proceeding at which the offer was received; 2. the time allowed for the offeree to consider the offer; 3. the extent of the compromise offered; 4. the offeree's prospects of success, assessed as at the date of the offer; 5. the clarity with which the terms of the offer were expressed; and 6. whether the offer foreshadowed an application for indemnity costs in the event of the offeree rejecting it. 1. As to (a), (b) and (d), an offer made to a litigant in person within weeks of having commenced the litigation and giving him 28 days over the Christmas period to find a solicitor to advise him would not satisfy the relevant criteria. I note the observations of the Court of Appeal to this effect in Stokes v Ragless. 2. The offer does not refer to the cross-claim, as this is before cross-claim had been put on. It is permissible to make a Calderbank offer for just part of the proceedings: Magenta Nominees Pty Ltd v Richard Ellis (WA) Pty Ltd [1994] FCA 302. This would mean, however, that this offer cannot be relied upon in relation to the cross-claim. Once again, given the interconnection between the claim and cross-claim, it is hard to see how it would be unreasonable for the plaintiff to have accepted this offer if a cross-claim was then to be brought. There is nothing in this letter indicating that the settlement would be an end to the litigation between the parties. 3. Walk-away offers can be acceptable in a Calderbank offer: Barnes v Forty Two International Pty Limited (No 2) [2015] FCAFC 19 at [18]. However, the offer goes beyond a "walk away" offer in that it seeks complete victory for the defendants, namely judgment for them in circumstances where the plaintiff would be liable for their costs. 4. It must be shown that it was unreasonable for the plaintiff to have refused the offer: Black v Lipovac (1998) 217 ALR 386; [1998] FCA 699 at [218] per Miles, Heerey and Madgwick JJ. All that the defendants say is that they did better at the trial and that the plaintiff should have known his lies about not setting up the account would not be accepted, even though he did not actually compose the matter complained of. At this very early stage of the litigation, given the complexity of liability for publication, and where no defence had been filed, it was not unreasonable for the plaintiff to have refused the offer. 5. I note that, as is set out in more detail below, in the alternative to all of the above findings, factors of the kind discussed in Jones v Sutton (No 2) [2005] NSWCA 203 would also warrant this being regarded as an exceptional case where offers of compromise should not result in an award of indemnity costs. 6. The plaintiff was able to find a firm of lawyers in the Newcastle region within the 28 days, who replied to this offer with a comparatively modest counter-offer as follows: 13 December 2012: Turnbull Hill to Roberts Legal 1. The text of this letter is as follows: "We refer to the above matter and your "without prejudice" correspondence dated 30 November 2012. We are instructed to act for the Plaintiff on a limited basis in respect of settlement of this matter. Our client intends to proceed with his action in defamation and is confident that your clients will be unable to rely on a defence of justification or truth. We are instructed as follows: 1. Contrary to your assertion about possessing "unequivocal" evidence, our client has provided us with evidence from Google to confirm that the last three (3) numbers of the Second Defendant's mobile phone number (not our client's number) match the Gmail account "members.ian@gmail.com". 2. Ms Harjit Singh, the President of the Indian Association Newcastle (IAN), is prepared to give oral or written evidence in these proceedings. The President will also respond to questions asked by the Plaintiff of the Association and will comply with any subpoena served on her in these proceedings. 3. Our client firmly denies ever having set up any 'bogus' email accounts in the name of either members.ian@gmail.com or arithi.deshpande@gmail.com. Our client will disprove suggestions of his involvement by tendering independent evidence in the course of the matter. 4. The evidence by way of email correspondence from the First and Second Defendants defaming our client is clear. The emails explicitly name our client and falsely declare that he has been fraudulent and/or responsible for emails sent from the above accounts, which the Plaintiff maintains is not true. 5. Our client has spoken to a man named Asif Syedulla, who has learned that the Defendants may have put forward his name as a defence witness or used his name in support of their defence. Mr Syedulla has confirmed to our client that he has not had any conversations with our client about emails (or this matter generally) and has made it clear to our client that he has not signed any statement and does not propose to give evidence for the Defendants. Our client will also give sworn evidence that he has not discussed email correspondence with Mr Syedulla and has not indicated to a third party any intention to set up bogus email accounts. Our client has been active in the Indian community and public life for the last ten (10) years. We are instructed that our client has organised many Indian community events in Sydney, Melbourne and Newcastle. Our client has demonstrated his commitment and passion towards the Indian community and over the years has earned a good name and reputation amongst the Indian community throughout Australia. Our client submits that defamatory, untrue emails have caused great damage to his reputation as an event organiser and respected member of the Indian community, as the email correspondence was sent by the Defendants to over 380 Indian families. Any defence based on justification, truth or contextual truth will be vigorously opposed. Our client has further evidence to confirm that the first Defendant's complaints to the Police are inconsistent with emails sent to the Indian community and our client will rely on those inconsistencies to disprove any defence of justification in the proceedings. Notwithstanding the above, our client is prepared to settle the matter on a commercial basis only and without admission of liability as follows: 1. First Defendant to publish an apology to relevant members of the Indian community (in a form acceptable to the Plaintiff) and pay the sum $10,000.00 to the Plaintiff within 21 days of acceptance of this offer; 2. Second Defendant to publish an apology to relevant members of the Indian community (in a form acceptable to the Plaintiff) and pay the sum of $10,000.00 to the Plaintiff within 21 days of acceptance of this offer. 3. If the Defendants comply with terms one (1) and two (2) above, the Plaintiff will withdraw the proceedings against the Defendants. This Offer of Compromise is made in accordance with Rule 20.26 of the Uniform Civil Procedure Rules 2005 (NSW) and remains open for 28 days, namely, it is open for acceptance on or before 14 January 2013 at 4:00pm, time remaining of the essence. This letter will be tendered in Court on the question of costs if our client receives a more favourable judgment in the proceedings and our client will seek indemnity costs from your clients." 1. This offer was never replied to. As the plaintiff did not do better, its only relevance is in relation to s 40 issues. Given the contents of the offer, especially the modest damages sum sought, I consider this to be a reasonable response in terms of the plaintiff's obligations under s 40. Mediation 26 August 2013 1. The parties attended mediation with their legal advisers but the matter did not settle. The parties give conflicting accounts of what occurred but it would appear that a figure of $100,000 was sought by the first defendant in relation to the cross-claim (the plaintiff says it was $200,000). The first defendant says that this sum was just for costs, although it is hard to see how the costs of the whole proceedings (let alone the cross-claim) could have amounted to $100,000 after seven months of litigation which consisted essentially of issuing 20 or more subpoenae, a short argument on imputations and filing a defence and cross-claim. As the mediation was followed by an offer of compromise seeking $100,000 damages for the cross-claim plus costs, it is more likely than not that the same offer was made during the mediation. 2. There is no reliance upon the offers made at mediation but in view of the contents of the offer of compromise, I consider it more likely than not that the plaintiff's version of the offers made (which is the same as that which he said the defendants sought at the mediation) is the correct one. 30 August 2013: Roberts Legal to Vaikom Rajeev Criminal and Commercial Lawyers 1. This is the defendants' second offer, following upon the rulings on the plaintiff's imputations on 12 June 2013, the filing of the defence and cross-claim (by the first defendant) on 12 July 2013, the filing of a defence to the cross-claim on 19 August 2013 and the failed mediation on 26 August 2013. By this stage all parties knew where they were going. 2. The letter starts by referring to adverse credit findings concerning the plaintiff in other proceedings, as well as the plaintiff's previous offer, and goes on to state: "We note your comments concerning the Road & Maritime Services IP Address being a shared address with other employees, however, we draw your attention to the computer log for Mr Mallegowda's RMS workstation at page 49 of the bundle to Dr Watt's Expert Report. You will note that, allowing for adjustment for different time zones, Mr Mallegowda was accessing gmail from his RMS computer at the time the members.ian@gmail.com account was created. With respect, to suggest that the members.ian@gmail.com account was created by any other Roads & Maritime Services employee at the Newcastle office is fanciful. No other employees had any connection with the Indian Association of Newcastle or reason to attack Mr Sood. We note also that you client asserts that Mr Sood himself was responsible for the members.ian@gmail.com and that you rely on documents produced by our client in response to a Notice to Produce dated 26 March 2013. It is illogical and untenable to suggest that Mr Sood would publish an email to the Newcastle Indian Community defaming himself, presumably with the view to then sending another email [sic] the community attributing the email to your client. In view of the other evidence against your client such an argument would only benefit our client's claim for aggravated damages and indemnity costs. The suggestion that Mr Sood was responsible for the email sent from the members.ian@gmail.com account is ludicrous. It is beyond doubt that the email account was created by someone accessing the internet via the Roads & Maritime Services IP Address, that person being your client. Further, in relation to the deletion of the members.ian@gmail.com account prior to 25 August 2012 we enclose a copy of an email sent from Mr Sood to members.ian@gmail.com.au [sic] on 23 August 2013 (at 3:07pm) and refer you to pages 126 and 51 of the bundle to Dr Watt's Expert Report. It is apparent that your client received the email sent by Mr Sood to members.ian@gmail.com on 23 August 2012 and took immediate steps to delete the Gmail account, including by contacting Mr Vishweshwariah for assistance. The matters set out above are only part of the evidence that we have already amassed in support of our clients' Defence and Cross Claim. With respect, in our view, your client has no prospect of success. Simply, your client has been caught out sending anonymous and defamatory emails and must now either accept responsibility for his actions or live with the damning Judgment that will inevitably be entered against him if the matter is not settled. Your client should perhaps consider the impact on his own reputation in the community of a detailed Judgment on the public record addressing his calculated steps to defame Mr Sood and commencement of proceedings against two (2) respectable members of the Indian community in relation to emails that in truth originate from him. Our clients have been put to substantial expense already as a result of your client's mischievous conduct; including the commencing of these proceedings under the mistaken belief that his responsibility for the members.ian@gmail.com and arithi.deshpande@gmail.com accounts could not be proven. Our client's only desire to settle this matter is because of the perceived inevitable bankruptcy of your client following Judgment being entered in favour of our clients with costs. Notwithstanding that we consider that Mr Sood is entitled to substantial damages, including aggravated damages, and indemnity costs in view of your client's conduct, in an attempt to resolve this matter, and to position our clients with respect to costs should the matter proceed to a final hearing, we are instructed to offer settlement of all matters before the Court on the following basis: 1. Judgment for the Defendants in relation to the Plaintiff's Claim, 2. Judgment for the Cross Claimant in relation to the Cross Claim in the sum of $100,000.00, and 3. Without limiting the existing costs orders made in relation to the proceedings: (a) an Order that the Plaintiff pay the Defendants' costs on a party/party basis as agreed or assessed, and (b) an Order that the Cross Defendant pay Cross Claimant's costs on a party/party basis as agreed or assessed. This offer is made in accordance with Rule 20.26 of the Uniform Civil Procedure Rules 2005 and the principles in Calderbank v Calderbank [1975] 2 All ER 333 and shall remain open for a period of 28 days. In the event that this offer is not accepted and the matter proceeds to hearing with Judgment entered in favour of our clients on terms no less favourable than this offer, our clients will rely on this letter, Rules 42.14 and 42.15A and Section 40 of the Defamation Act in support of an application for indemnity costs against your client. We suggest that your client carefully consider this offer, and the overwhelming evidence already provided, and that your firm also carefully evaluate the truth of the matters that your client may be asserting in his defence if there is to be any prospect of avoiding the need to have the matter determined by the Court with further substantial costs to all parties." 1. Contrary to the previous offer, there is a costs order set out (cf Whitney v Dream Developments Pty Ltd). This is an offer made after the "cut-off" offer of compromise date of 7 June 2013 and the presumption of an order for costs for offers before that date does not apply: see Ritchie's Uniform Civil Procedure New South Wales at [20.27.10A]. The real difficulty with this offer of compromise is that the combined offers (see the use of the word "and") include a claim of damages on the cross-claim of $100,000, which is far in excess of the amount of $5,000 awarded. 2. This is a whole offer, not a severable one and, as to the cross-claim, this was not an offer which was bettered at the trial. 3. Viewing this letter as a Calderbank offer, it is similarly unacceptable, for the same reasons. The submission that "no further compensation was ever sought" for the cross-claim 1. I specifically noted that, in submissions in reply, both defendants deny that, either at the mediation or in their offer of compromise, any compensation was ever sought for the first defendant's cross-claim. 2. The precise text of this claim is as follows. The defendants' written submissions state: "We did seek $100,000 as legal costs incurred at that time [the mediation, where the plaintiff said they asked for $200,000 damages and costs] and no further compensation was ever sought" (submissions in reply, paragraph 3). 1. Given the contents of this offer (set out above), that statement is untrue. The second offer of compromise sets out in the clearest of terms that the settlement offer made is not only for judgment for the defendant plus costs on the proceedings commenced by the plaintiff but also the entry of judgment for Mr Sood, the cross-claimant, for $100,000 plus costs on the cross-claim. What is more, that amount was an unseverable part of the offer by both defendants in the proceedings brought by the plaintiff. 2. It is not to the credit of the defendants that they would put such a statement in their written submissions. The Court has to be able to rely upon the parties to put forward their evidence honestly. 3. No further offers were ever made by the defendants. In 2016 the plaintiff, acting for himself, made the following offer shortly before the trial commenced: 30 March 2016 letter from the plaintiff to Roberts Legal 1. The text of this letter is as follows: "I refer to you to the above matter which is listed for hearing starting from 02 May 2016. I [sic] plaintiff make offer to compromise this matter on the following basis 1. The [sic] judgement [sic] for the plaintiff. 2. The defendants pay the plaintiff's costs on [sic] ordinary basis (party/party costs). This offer is made in accordance with part 20 Rule 26 of the Uniform Civil Procedure Rules. This offer is open for twenty-eight (28) days and will expire on 28 April 2016, thereafter is withdrawn. If this offer is not accepted in the manner described by the Rules of Court and judgement on this claim ultimately is not less favourable than this offer the plaintiff shall seek an order against the defendant for costs from the date of this offer on an indemnity basis. I have received advice from counsel that this matter will succeed as the experts reports and subsequent evidences obtained after the joint expert report does not prove that the plaintiff is responsible for creating an email account members.ian@gmail.com. The recent evidence from RMS in response to the defendants subpoena suggests that there are in excess of 330,000 URL appears "accounts.google.com" generated by more than 1,000 RMS staff around that time. Therefore the earlier opinion from the Chapman and Dr Watt will change when this new evidence is shown and the question is asked during the cross-examination. There are 2 witness who will give evidence that just the travel to the shopping centre itself takes around 20 minutes and at least further 10 to 15 minutes to access the computer and compose an email (if its already typed-up) therefore it is highly unlikely that plaintiff could travel 10 kilometres from office to Charlestown Square and compose an email in less than 16 minutes using RMS car which are not permitted to use for private purposes. The Deshpande email does not establish any defamatory publication on any of the defendants and no evidence suggests that the operators of both accounts are same, its one of the several dummy emails sent at that time. There is compelling evidence that suggests that the plaintiff was not at his residence when Deshpande email was sent and same view was expressed by expert Dr Watt in his first report. Accordingly, in order to avoid incurring further and unnecessary costs for the hearing, I propose that this matter be settled in accordance with the abovementioned Offer of Compromise. If you do not agree to this proposal and trail proceeds and is successful, I will rely upon this letter in support of an application that the successful appellant's costs be paid on an indemnity basis". In the event this offer does not comply with rules of offer of compromise, then this offer should be treated in accordance with the principles in Calderbank v Calderbank [1975] 2 All ER 333." (Email reproduced as typed) 1. This offer just refers to "judgment" for the plaintiff and is not a valid offer of compromise, as it is void for meaninglessness. There has to be a judgment amount. In addition, the plaintiff did not do better than the amount offered. The same is the case if the offer is viewed as a Calderbank offer. 2. This letter is, however, an indication that the plaintiff was complying with his obligations under s 40. He may have been confused about what judgment for the plaintiff meant (I assume he was simply asking for this to be entered, and not a monetary sum) but his offer was nevertheless an attempt to settle the case. Findings concerning the offers of compromise and Calderbank offers 1. I am satisfied that neither party has made an offer of compromise or Calderbank offer warranting a variation from the usual position as set out in UCPR r 42.1, namely that costs follow the event. 2. I am, however, also satisfied that both parties had regard to their obligations to make settlement offers and that the sanctions in s 40 for parties who do not do so should not operate. The principles set out in Jones v Sutton (No 2) [2005] NSWCA 203 1. In the event that I have erred in relation to my findings concerning the defendants' offers of compromise, I would in any event have refused to make an order for indemnity costs of the proceedings for the reasons set out in Jones v Sutton (No 2). 2. Jones v Sutton is an important decision in relation to defamation costs because the public concern raised by the facts of this case in fact led to the introduction of s 48A Defamation Act 1974 (NSW), which in turn was adopted by all jurisdictions around Australia: see Civil Law (Wrongs) Act 2002 (ACT), s 139K; Defamation Act 2005 (NSW), s 40; Defamation Act 2006 (NT), s 37; Defamation Act 2005 (Qld), s 40; Defamation Act 2005 (SA), s 38; Defamation Act 2005 (Tas), s 40; Defamation Act 2005 (Vic), s 40; Defamation Act 2005 (WA), s 40. In a far-sighted fashion, this judgment takes into account issues of greater moment today than was the case in 2005, such as proportionality. 3. The facts were as follows. The plaintiff, a Local Councillor for several decades, brought proceedings for defamation against a newly-elected councillor for statements she allegedly made on one occasion to councillors from the plaintiff's faction and on another occasion to a friend of the plaintiff. The plaintiff and the other council members who were present on both occasions all denied that the statements had been made at all, but the s 7A jury believed the evidence of the plaintiff and his witnesses. 4. The first instance judge found for the defendants on the sole defence, unlikelihood of harm, but this finding was set aside by the Court of Appeal on the basis that the wrong test for the defence had been applied and that, when the correct test was applied, the defence could not succeed. The trial judge's alternative findings that damages of $5,000 should be awarded was accordingly the sum awarded. The plaintiff then sought indemnity costs, relying upon an offer of compromise served shortly before the hearing to settle for $1,000 plus costs. 5. Ms Sutton sought an order for each party to pay their own costs, on the following bases: 1. The conduct was political and vindictive: "Essentially, however, the respondent made three points. First, these were very limited publications to a total of five people. Secondly, the appellant had been found by the trial judge to be a person of no or limited credit, whose conduct towards the respondent had been appalling and whose motive in bringing the proceedings was suspect. Thirdly, the costs were wholly disproportionate to the amount of damages involved." (at [33]) 1. The extent of publication was extremely limited. 2. There were adverse credit findings against the plaintiff and his witnesses. In particular, the trial judge found that the plaintiff was anxious to, and did, denigrate others in far stronger terms than the contents of the matter complained of. (I should note that the defendant, Ms Sutton, also denied publication of the matters complained of, which places her in a position analogous to Mr Mallegowda). 3. The plaintiff did not seek an apology or otherwise seek to resolve the matter amicably. 4. The lack of proportion between damages and costs. 1. Each of the above factors occurs in this case: 1. Denial of publication which is not accepted at trial: Ms Sutton denied publication on oath but this was disbelieved by the jury. 2. Animosity: Mr Jones' disproportionate and vindictive conduct of the proceedings warranted looking behind the offers of compromise. 3. Extent of publication: The extent of publication was limited to friends of Mr Jones; similarly in this litigation, publication was limited to members of the Indian community, where even some of Mr Sood's supporters had stopped reading IAN emails in any event because of the unpleasant nature of the ongoing hostility between the defendants and the IAN executive and President. 4. Proportionality: the cross-claim damages award is $5000 (coincidentally, the same sum as that was awarded in the proceedings between Mr Jones and Ms Sutton). 5. The timing of the offer: The defendants here did not make any attempt to settle the litigation after 2013. The offer made in Jones v Sutton, made at the last minute when the costs were enormous, was regarded as a positioning for the purpose of claiming indemnity costs. 6. Political litigation, conducted in an oppressive fashion: The degree of denigration and hostility between the parties was of a similar kind, in that the publication was "political" in the sense of warring factions in a small organisation. 7. Delay: Mr Jones delayed bringing his claim for some months but thereafter conducted the case with expedition. However, unlike the proceedings commenced by Mr Jones, the litigation in these proceedings has been conducted in a time-wasting fashion by the defendants. 1. The plaintiff relies upon principles of this kind to seek an order for each party to pay his own costs. When is an order for each party to pay their own costs appropriate? 1. The relevant principles are set out and applied in Jones v Sutton as follows: [61] The principles as to the circumstances in which a successful party should be deprived of costs are clear. [62] In Oshlack v. Richmond River Council (1998) 193 CLR 72, McHugh J said at 97-98: "The traditional exceptions to the usual order as to costs focus on the conduct of the successful party which disentitles it to the beneficial exercise of the discretion. In Anglo-Cyprian Trade Agencies Ltd. v. Paphos Wine Industries Ltd , Devlin J formulated the relevant principle as follows: 'No doubt, the ordinary rule is that, where a plaintiff has been successful, he ought not be deprived of his costs, or, at any rate, made to pay the costs of the other side, unless he has been guilty of some sort of misconduct.' 'Misconduct' in this context means misconduct relating to the litigation, or the circumstances leading up to the litigation. Thus, the court may properly depart from the usual order as to costs when the successful party by its lax conduct effectively invites the litigation; unnecessarily protracts the proceedings; succeeds on a point not argued before a lower court; prosecutes the matter solely for the purpose of increasing the costs recoverable; or obtains relief which the unsuccessful party had already offered in settlement of the dispute." (emphasis added by the Court of Appeal) [63] The relevance of the conduct of the party claiming costs had been considered in the earlier decision of Latoudis v. Casey (1990) 170 CLR 534, where Mason CJ said at 544 : "…there will be cases in which, when regard is had to the particular circumstances, it would not be just and reasonable to order costs against the prosecutor or to order payment of all the defendant's costs. … … Likewise, if a defendant conducts his or her defence in such a way as to prolong the proceedings unreasonably, it would be just and reasonable to make an award for a proportion of the defendant's costs." See also Toohey J at 565 and McHugh J at 569. [64] We have discussed above the findings of the trial judge in relation to the credit and conduct of the appellant and his witnesses. Those findings were made in the context of the s13/damages hearing. They were not challenged on the appeal. There is considerable force in the respondent's submission that it offends all proper notions of justice that a party can be the recipient of a costs orders in circumstances where the entire case advanced by that party is disbelieved. In our opinion, relying on the same matters that satisfied us that the appellant should not have costs on a solicitor and client basis pursuant to DCR Pt 39A r.25(4), we are satisfied that this case falls into that category, rare though it be, that the appellant should not have his costs, at least of the s13/damages hearing." (Emphasis added) 1. These observations were made prior to the enactment of the Civil Procedure Act 2005 (NSW), where the requirement for proceedings to be conducted in a manner that is just, quick and cheap is mandated by s 56(1). The plaintiff specifically draws my attention to these provisions, as well as to s 40 Defamation Act 2005 (NSW) which is also now in force, at page 3 of his submissions. The defendants have not referred to these issues, or to any of this legislation, in their submissions in reply. 2. Both ss 56(5) and 61(3) contain specific provisions that contemplate orders for costs being made against parties who fail to comply with their obligation to assist the court in furthering the overriding purpose. The emphasis on the exercise of the costs power in s 56(5) is the attainment of that purposes, and not merely as a sanction for trial default. In particular, s 61(3) is designed to assist the court to control its procedures in order to discourage the kind of conduct in which the defendants engaged throughout the trial. 3. There are significant similarities between the issues in both cases: a party who denies publication, politically motivated conduct of proceedings and while there are also differences in both cases, the court did not simply award costs to the victor but considered the parties' conduct on an issue by issue basis. 4. Conformably with that decision and with the approach taken by the Court of Appeal in Newell; Muriniti v De Costi [2018] NSWCA 49, I propose to identify those parts of this litigation for which I consider the plaintiff should pay the costs. These are: 1. The cross-claim; 2. The expert evidence, which I consider should be the subject of orders for payment in full of the fees incurred after the filing of the defence on 12 July 2013, as well as the costs of the solicitors who retained and briefed those experts (although on the ordinary basis); and 3. The defendants' reasonable disbursements of the trial (excluding the period of delay occasioned by the conduct of the defendants). 4. In addition, all costs orders in favour of the plaintiff/cross-defendant should be vacated. 1. In making these orders, I also take into account the plaintiff's conduct of the proceedings, particularly in relation to the expert evidence. Having regard to the very serious bipolar disorder from which he suffers, the plaintiff did well in terms of preparing helpful court books at the commencement of the trial, having his witnesses ready, and generally keeping on point with the issues in question. I have accepted his evidence that he did not write the matter complained of and have found that he merely set up the email address for someone else to do so. It is not to his credit that he denied doing so, and it is on this issue that his arguments are weakest. For this reason, he must pay the costs of retaining the experts after the defence was filed, including the legal costs of retaining those experts from that date onwards. 2. However, the solicitors for the defendants should not be able to claim costs for their conduct of the proceedings other than for the retaining of the experts. The first trial date was vacated due to their late service of an expert report and the second trial date was vacated due to their lengthy pre-trial applications. They also brought, or assisted the defendants to bring, a series of applications for the plaintiff to be medically cross-examined (Mallegowda v Sood (No 3) at [37] – [40]; Mallegowda v Sood (No 4) at [29]). These applications inflamed and distressed the plaintiff and thus contributed to the difficulties and delays in the case. The plaintiff's serious mental health issues had no relevance to the facts of this case. 3. In making these findings I have taken into account the submissions of the parties concerning the conduct of this litigation, My findings on these issues (which is the second basis upon which the defendants' application for costs is brought) are to the same effect, namely that the defendants, rather than the plaintiff, bear most of the blame for the conduct of these proceedings. The defendants' conduct of the proceedings 1. I will not set out again the adverse findings I made against both defendants in the course of the judgment I handed down. They are of limited relevance to the issue of costs other than in relation to two issues. 2. The first relevant issue is the degree to which the venom with which these proceedings have been conducted, which has contributed to the costs of these proceedings. These included applications for inappropriate and/or intimidatory orders such as the following: 1. A series of applications from the defendants for the laying of criminal charges and/or further contempt proceedings (Mallegowda v Sood (No 3) [2015] NSWDC 14); Mallegowda v Sood (No 5) [2017] NSWDC 470 at [84]; the plaintiff also sought similar orders (see order 7 in Mallegowda v Sood (No 6)). 2. Applications for the plaintiff to be medically examined by a psychiatrist (Mallegowda v Sood (No 3) [2015] NSWDC 14) or court-appointed medical practitioner Mallegowda v Sood (No 6) at [30]). 3. An application by the defendants after the hearing was set down for a final 3-day hearing (after five adjournments brought about by the defendants) to reopen their case to call the plaintiff's brother in India who also has a bipolar disorder (Mallegowda v Sood (No 5)). The documentation was so large that the electronic file could not be opened (Mallegowda v Sood (No 6) at [338]) and the submissions were so prolix they were largely incomprehensible. 1. Most of the cases coming before the courts upset at least one and often all of the participants. Many of the case management tools are aimed at limiting these causes of stress by ensuring a just, quick and cheap result to the proceedings. Very few litigants respond with the degree of hostility and animosity shown by the defendants in their correspondence with the court as well as with the plaintiff, in their obsessive pursuit of information about the plaintiff's mental health issues and in their whole approach to their duties as litigants in this court. I note the observations to this effect by the Court of Appeal in Mallegowda v Sood which are set out elsewhere in this judgment. 2. The second is that a lot of the costs and delay were due to the defendants' disorganisation, lack of legal knowledge and obstructive approach to any attempt at case management. For example, the history of the five adjournments of the part-heard hearing is set out in Mallegowda v Sood (No 5). I considered that each of those adjournments arose as a result of the conduct of the defendants. These difficulties were integral to the delay and cost of the litigation. 3. There is an additional issue raised by the defendants which I have considered but rejected. In my judgment, I found that the defendants had played a role in authorising the sending of an anonymous email for which the anonymous attacking email was a "tit for tat" reply (at [239], [293] and [322]). The defendants submit that my findings must be accepted by me to be in error, in that I made those findings without the benefit of expert evidence as to who set up the account from which this earlier email was sent. 4. This argument is misconceived. The expert evidence necessary to sheet home the plaintiff's liability centred on who had created the email account because that was the plaintiff's contributing role to the publishing of the attacking email. He neither wrote it nor authorised it. 5. The defendants, however, were found by me to have participated in the discussions which led to the sending of an email 30 November 2011, which was headed "IAN Special Annual General Meeting (SAGM)", sent from a Gmail account called "TEAM@ SAGM" and signed "Fellow Community Members" (at [88] – [89]), and to have authorised the sending of this email attacking Mrs Singh. They were not found by me to have set up the fake email account from which the anonymous email was sent, because their liability for publication came from their role in authorising it. No expert evidence was required in relation to this finding of fact which was based on the evidence of the defendants' roles in trying to unseat Mrs Singh and have themselves elected as part of the TEAM@SAGM team. 6. Liability for publication is a very broad concept; Isaacs J in Webb v Bloch (1928) 41 CLR 331 at 363–364 explained: "The term 'published' is the proper and technical term to be used in the case of libel, without reference to the precise degree in which the defendant has been instrumental to such publication; since, if he has intentionally lent his assistance to its existence for the purpose of being published, his instrumentality is evidence to show a publication by him." 1. This leads to the oft-repeated explanation of the many forms of publication by Isaacs J as follows: "In Parkes v. Prescott Giffard Q.C. quotes from the second edition of Starkie: "All who are in any degree accessory to the publication of a libel, and by any means whatever conduce to the publication, are to be considered as principals in the act of publication: thus if one suggest illegal matter in order that another may write or print it, and that a third may publish it, all are equally amenable for the act of publication when it has been so effected." 1. No expert evidence is required for a finding that Mr Sood authorised the sending of the TEAM@SAGM email (as opposed to setting up the email account). It is not only the creator of the email account who is the publisher: Yu v Cao (2016) 91 NSWLR 190 at [77]. I note that no such submission was made at the trial in any event. There are many ways that a person may be liable as a publisher, and nearly all of them require no expert evidence whatsoever. The parties' complaints about each other's conduct of the trial. 1. The plaintiff complains that the length and complexity of the hearing were largely as a result of the defendants' conduct. A quick look through the transcript provides the following examples: 1. Many issues raised during the trial (often by notice of motion: T 671) were of an intimidating nature in that they sought information about the plaintiff's bipolar condition, or Fabian in nature in that they sought adjournment of the trial. The second defendant told the court that he was "unaware" (T 650) of being able to seek orders in the Defamation List because "our lawyers won't tell us" (T 655) how to run their case. As the defendants were represented up until a month before the trial, this was an unlikely explanation for the myriad of applications for adjournments of the hearing, medical examination of the plaintiff and the like, all of which had to be listened to, on occasions in situations where the level of tension between the parties required me to temporarily adjourn the court. 2. Not even the experts were immune from the hostility and anger of the parties. When the expert witnesses were about to give evidence in conclave, the defendants sent them three pages of material without the permission of the court (T 650). Their explanation was that the plaintiff "has done this before" (T 650) as recently as a month ago. When asked to produce a copy of any such correspondence, it turned out to be an email from the plaintiff advising the experts of the hearing date (T 650 – 4). Additionally, this email to the experts was sent at 11.30 pm (T 650), which inconvenienced not only the plaintiff but the expert witnesses, who ought to be entitled to a good night's sleep instead of receiving emails in the middle of the night. 3. The defendants tendered many documents which had not been provided on discovery (T 673 – 106 pages of undiscovered documents; see also T 676). When the plaintiff complained about their late production, the defendants' excuse for late production was that it was "very tedious" to look for them (T 673), that "we have them now" (T 673), that it would be "a waste of the court's time" to look into whether documents they relied upon had been discovered or not (T 681), that they were not informed that they were obliged to discover them, that the plaintiff was just as guilty (T 677), or that I should have told them this before. 1. I have set out other examples in my judgment that I shall not repeat, but the whole conduct of the trial consisted of one application of this kind after another. 2. The defendants complain the plaintiff was himself responsible for delays as follows (defendants' costs submissions in reply, paragraph 2): 1. The defendants complain that the plaintiff filed and changed his statement of claims "more than four times leading to a statement of claim one after another". This is asserted to have led to major expense and delay for the defendants. However, I note that the first few iterations of the statement of claim were drafted by the plaintiff himself. After the plaintiff's statement of claim was challenged (largely unsuccessfully) by the defendants (see the 12 June 2013 judgment) the pleadings never changed. By contrast, the defendants brought and abandoned applications for a Hore-Lacy defence and amended the particulars of justification many times, the last time being at the close of the trial, when they sought leave to reopen the case. 2. The defendants complain that the plaintiff "raised numerous notices of motions". However, I am satisfied that the many notices of motion brought by the defendants occupied the lion's share of the time. I note the substance of these is set out above. 3. The defendants complain that the plaintiff "changed close to four or more counsels during the litigation and each time it meant repetition of work and responses which further led to increased costs and time delays". However, while the plaintiff did consult Mr Potter and Mr Rasmussen, and their assistance in the conduct of the proceedings was considerable. There was no repleading of the case or bringing of fresh applications by new counsel. The defendants also changed counsel, in that at one stage they retained Mr Tobin QC. 4. The defendants complain that the plaintiff engaged a new expert witness after his own expert changed his opinion, which led to the creation of new expert reports and it caused further delays and expense. I agree that this is a valid complaint and one which warrants the award of costs on an appropriate costs order in relation to all expert witness reports. Given the significant contribution made to the conduct of the proceedings by the experts I have singled out their fees and the cost of retaining them accordingly. 5. The defendants complain that the plaintiff's contempt charge caused further delays and expense for all parties. However, the proceedings had to be adjourned three days before the completion of the evidence so that the plaintiff could prepare medical evidence for his imminent sentencing. However, if the defendants had spent less time arguing with the plaintiff and bringing hopeless applications, the evidence could have been finished by the time the plaintiff had to attend these medical appointments, the dates of which were known when the trial commenced. 6. The defendants submit that "whilst there are instances where defendants had to request court for extensions in seeking justice but at no point was ever intentional." For the reasons set out above, I do not agree. 1. Looking at the transcript of the proceedings, well over half of the time allotted for the trial was spent in applications and arguments on issues of little relevance to the trial. The defendants were responsible for most of this. The plaintiff tended to respond in kind, but the issues he raised with the court (such as his concern about the experts being emailed in the middle of the night) were generally relevant to the conduct of the proceedings. The plaintiff's lies about setting up the fake email addresses 1. The defendants' second submission was that the whole of the plaintiff's case is a lie, in that he was found to have published the matter complained of whereas he denied doing so. 2. In this regard, one aspect of my judgment is of critical importance. I found only that the plaintiff set up the email account from which the attacking email was sent, and not that he had composed it. The case for both defendants, and particularly for the second defendant (who said as much in the publication for which he was sued), was that he not only set up the account but composed and sent it. 3. As the Court of Appeal noted in Mallegowda v Sood at [25]: "[25] Ground 5 raises a question as to the application of the test in Webb v Bloch. The applicant contends that the primary judge is to be understood to have held that he was liable as a publisher of the attacking email merely because he set up the email account from which it was sent, even though her Honour was evidently not satisfied that he composed the email or even that he actually sent it. If the finding was based on the bare act of establishing an email account, without more, there would be a reasonably arguable ground of appeal against that part of the decision. However, as submitted by Mr Connell, it is clear that her Honour was further satisfied that the applicant established the account for the single purpose of sending or allowing the sending of the attacking email in order to enable the author of the email to escape attention. The reasons for that finding are stated at [216] and [217] of the primary judgment. With that further finding, the decision falls comfortably within the principles in Webb v Bloch." (Footnotes omitted) 1. The plaintiff is deserving of criticism for his denial that he set up the accounts and this should be reflected in the costs orders. He was, however, entitled to lead evidence that he did not write the matter complained of. Evidence that he did not do so formed a large part of the trial evidence because the plaintiff called a number of witnesses to demonstrate this. These witnesses were vigorously cross-examined by the defendants and it could be said that this part of the trial evidence related to an issue on which they lost. Conclusions concerning costs 1. For the above reasons, I propose to make costs orders as follows: 1. The cross-claimant is entitled to the legal costs relevant to the cross-claim, as well as the cross-claimant's reasonable disbursements when he was a litigant in person, from the date when it was put on (12 July 2013). 2. For the period following the filing of the defence and cross-claim on 12 July 2013, the plaintiff is to pay the costs of the expert evidence, which I consider should be the subject of orders for payment in full of all their fees from that date, as well as the costs (on a party-party basis) of the solicitors, specifically limited to their role in retaining and briefing those experts after that date. 3. The costs of the trial (excluding the period of delay in between the dates set out below, which delays were occasioned by the conduct of the defendants). 4. In addition, all costs orders in favour of the plaintiff/cross-defendant should be vacated. Referral of the costs issues under UCPR r 20.14 1. The difficulty is how to achieve such an order in practical terms, given the antagonism between the parties, the enormous amount of documentation generated and the undesirability of these litigants being locked in battles over costs for what could be a period of years. 2. UCPR r 20.14 provides: "20.14 Orders of referral (1) At any stage of the proceedings, the court may make orders for reference to a referee appointed by the court for inquiry and report by the referee on the whole of the proceedings or on any question arising in the proceedings. (2) The court must not make an order under subrule (1) in respect of a question to be tried with a jury." 1. The court has a discretion to refer matters to a referee in circumstances where it is necessary pursuant to the overriding principles of s 56, even after the hearing has commenced: Stockland (Constructors) Pty Ltd v Darryl I Coombs Pty Ltd [2004] NSWSC 333. Such an order may be made of the court's own motion, irrespective of whether parties agree: Optiver Australia Pty Ltd v Tibra Trading Pty Ltd [2012] FCA 558. In those proceedings, Rares J made such an order, noting the parties were "entrenched" in "hard fought" litigation which would exceed court time estimates, and where the issues were technical in nature. 2. Orders of this kind are of particular benefit where a technical issue such as the assessment of costs is involved: Attard v James Legal Pty Ltd [2010] NSWCA 311. In Attard v James Legal Pty Ltd, the first instance judge had been reluctant to make a referral to a costs assessor because of perceived conflict with the costs assessment process. The Court of Appeal set aside this order and noted the usefulness of the procedure in cases which I consider applicable to the facts here. Similarly, in Newell; Muriniti v De Costi, where similar litigious excesses resulted in a variation of costs orders on appeal, the Court noted (at [236]) the advantages of referral under UCPR r 20.14 but remitted the case to the District Court so that the trial judge could determine if this was the best way to deal with the costs issues. 3. The use of this process means that the costs assessor can then determine the precise amount payable which can then be, subject to any issues raised by the parties, the subject of orders by this court, rather than a lengthy and almost certainly hostile assessment process. There is no open justice issue arising where the matter referred out is a costs assessment: CPB Contractors Pty Limited v Celsus Pty Limited (formerly known as SA Health Partnership Nominees Pty Ltd) (No 2) [2018] FCA 2112 at [92]. In addition, as the parties are self-represented, the costs assessor will be able to communicate with them with a greater degree of informality than is possible for a judge. 4. There are, however, disadvantages for the parties, in that one or all of them will have to pay the costs of the referral out, as opposed to determining the costs between themselves. If I thought there was any likelihood that they could do so, I would not have made this order. Regrettably, these parties are so hostile to each other that a referral out is a cheaper and quicker way of achieving the result.. The machinery for the appointment of a referee 1. The procedure is set out in Attard v James Legal Pty Ltd as follows: "[183] In my opinion it follows that her Honour's exercise of her discretion having miscarried, it falls to this Court to re-exercise it. In my view this Court should favour an order that the question of the fairness and reasonableness of the costs the subject of the cross-claim be referred to assessment by an appropriately qualified assessor. The consideration of the referee's report should be by a judge of the Common Law Division of the Court. [184] However, the respondents submit that this should occur only on condition that the appellants pay 85% of the outstanding costs and disbursements as found by her Honour together with interest as well as the costs of the reference. [185] In my view, such a condition should be imposed with respect to 60% of the costs the subject of her Honour's orders. I would make no order as to the costs of the referral: that should be determined after the referee's report is returned to the primary judge for her adoption or otherwise pursuant to UCPR 20.24. In the event that the assessment of costs ultimately embodied in judgment on the cross-claim is less than the 60%, the Court has power to order the return of the excess. [186] It will be necessary for the parties to agree on a referee (if they cannot, the Court can nominate the referee), and for a more detailed order for reference to be made. Orders 3 and 4 made by Simpson J, dealing with costs the subject of the cross-claim being less than 60% of the whole, should be stayed consequent upon payment of the 60%, until the whole of the costs have been assessed." 1. I have made orders to enable the parties to approach the Costs Assessment Manager in the Supreme Court, Mr Bellach, for an appropriate referral, with the caveat that if they cannot agree, Mr Bellach is to select a referee. 2. The question of liability for the referee's costs is one which I will determine after hearing submissions and receiving any relevant advice from the referee, as well as hearing from the parties as to whether the referee's findings should be adopted. 3. I am aware there is a significant cross over in terms of the issue of publication between the plaintiff's claim and the cross-claim but trust that the referee will be able to resolve this issue. Essentially the technical evidence as to the issue of the plaintiff's liability for publication (which is the subject of the cross-claim as well as an issue in the plaintiff's claim) is all that is claimable in terms of legal costs and self-represented disbursements for the period from 12 July 2013 onwards. Orders 1. The second defendant's application for damages is refused. 2. The application by the defendants/cross-claimant for indemnity costs for the whole of the proceedings is refused. 3. By way of variation of order 3 of the orders of 29 June 2018, the plaintiff is to pay the costs charged by all the expert witnesses, including their report fees, witness expenses and any other incidental fees which are to be paid in full for all such work carried out after 12 July 2013. 4. By way of variation of order 3 of the orders of 29 June 2018, the plaintiff is to pay the defendants'/cross-claimant's reasonable disbursements as litigants in person, on the ordinary basis, for the conduct of the trial (including reasonable preparation costs) on the following trial dates: 2, 3, 5, 6, 9, 10, 11, 12, 13, 16, 17, 18, 19, 20, 23, 24 and 25 May 2016; 24 August 2016; 1 June 2017; 9, 10 and 11 August 2017; 26 October 2017; 1 December 2017; 9 February and 29 June 2018 and their reasonable disbursements in the making of this application for costs. 5. By way of variation of order 3 of the orders of 29 June 2018, all costs orders in these proceedings in favour of the plaintiff/cross-defendant are vacated. 6. Order 5 of the orders of 29 June 2018 for the plaintiff to pay the cross-claimant's costs of the cross-claim on the ordinary basis as well as the cross-claimant's reasonable disbursements in relation to the cross-claim is confirmed, but with the restriction that these costs run from 12 July 2013 and are restricted to the costs of retaining the experts and identifying the publication issues set out in the cross-claim for the trial. 7. Pursuant to UCPR r 20.14, I refer the determination of these reasonable disbursements and legal costs (and disbursements) to a costs assessor agreed upon by the parties (or, in default of agreement, by Mr B Bellach, the Manager, Costs Assessment, Supreme Court of NSW) for inquiry and report by the costs assessor on the costs questions arising from these proceedings, including but not limited to: 1. An assessment, on the ordinary basis, of the defendants' reasonable disbursements for the trial on the dates above (including reasonable disbursements in relation to preparation of the trial); 2. An assessment of the disbursements and entitlements of the expert witnesses as well as of the defendants as for the retaining and briefing of these experts both by the litigants in person and of their solicitors for the period from the filing of the defence on 12 July 2013; 3. Any other issue germane to the assessment of these costs, such as the costs payable by the parties for the assessment. 1. Mr Bellach is to advise the court as well as the parties of any issues in relation to the costs of the referral, including but not limited to the payment of referral fees in advance. 2. Liberty to apply in relation to the implementation of the orders set out above. ********** Amendments 12 June 2019 - Paragraph 90(d): The words "cross-defendant" inserted. 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: 13 June 2019