Chel v Fairfax Media Publications Pty Ltd (No 8)

1. [1]

   This judgment deals with interest and costs in defamation proceedings.

2. [2]

   On 28 July 2017, I published judgment in Chel v Fairfax Media Publications (No 7) [2017] NSWSC 996 (“Chel (No 7)”). I determined that the plaintiff, Ms Lilli Chel, was entitled to damages of $100,000.00 against the two defendants, Fairfax Media Publications Pty Ltd and Ms Vanda Carson (“Fairfax”), following her (partial) success in a defamation trial. I did not enter judgment in Ms Chel's favour but instead ordered the parties file written submissions concerning interest and costs. On 22 September 2017, the parties advised the Court that they were content to rely on their written submissions and did not wish to supplement them with oral submissions.

3. [3]

   I described the defamatory publications, each party's case, the course of the trial and the jury's verdict in Chel (No 7). I will not repeat this discussion. This judgment should be read together with Chel (No 7).

Interest

1. [4]

   The parties' written submission agreed that prejudgment interest should be awarded from the date of publication, 28 December 2010, at the rate of 3 per cent. The plaintiff contended that somehow judgment should be entered with effect from the date of publication of Chel (No 7) such that interest at post judgment rates would run on the judgment amount from that date. I deliberately refrained from taking that course in Chel (No 7). No reason has been put forward to revisit it.

2. [5]

   As this judgment is being published on 29 September 2017, prejudgment interest at the rate of 3 per cent totals $20,268.49 (being six years at $3000 per year and 276 days at $8.22 per day). Accordingly, I will enter judgment for that amount.

Submissions on Costs

1. [6]

   The plaintiff expressly disavowed seeking indemnity costs pursuant to s 40(2)(a) of the Defamation Act 2005. [1] Instead the plaintiff contended that she was entitled to an order for costs on the ordinary basis up to and including 20 October 2015 and her costs on an indemnity basis thereafter. On 20 October 2015, the plaintiff served an offer of compromise to settle the proceedings for a judgment in her favour for $100,000 exclusive of costs. The offer was not accepted. It was not disputed that the offer complied with Uniform Civil Procedure Rule 20.26 and that the plaintiff “obtain[ed] an order or judgment on the claim no less favourable [her] than the terms of the offer” such as to engage an entitlement to order for costs on an ordinary basis up to and including 20 October 2015 and indemnity costs thereafter unless the Court “orders otherwise” (UCPR 42.14(2)). In the alternative, the plaintiff also relied on another offer of compromise to settle the proceedings for a judgment in her favour for $40,000 exclusive of costs made on 9 January 2017.

2. [7]

   Fairfax submitted that Ms Chel should only receive one third of her costs on the ordinary basis. They contended that the Court should “otherwise order” under UCPR 42.14(2) and make a differential costs order because of three related matters.

3. [8]

   The first matter that Fairfax relies on is that the plaintiff failed on substantial aspects of her claim. In support of this contention, Fairfax pointed out that they successfully defended five of the seven imputations pleaded by the plaintiff (see Chel (No 7) at [4] to [9])) and contended that they were successful or mostly successful in respect in respect of four legal arguments determined during the trial and unsuccessful in respect of two [2] .

4. [9]

   In response, the plaintiff submitted that the imputations she succeeded on were the most significant. She also pointed to the failure of Fairfax's defence of contextual truth and fair report of proceedings in the Land and Environment Court and referred to the reasons for the adjournment of the first trial as outlined in Chel v Fairfax Media Publications Pty Ltd (No 2) [2015] NSWCA 379. The plaintiff also contended that a tabulation of successes and losses on the interlocutory judgments was irrelevant. The plaintiff referred to the observation of Nicholas AJ in Ahmed v Harbour Radio, unreported, 14 March 2014 at [18] to the effect that “[i]n a piece of litigation such as the present, which was conducted over a long period of time, and necessarily embraced many issues, on some of which each of the parties had varying degree of success, [then the] Court would not usually make orders with regard to a party's success or failure on a separate issue…”.

5. [10]

   The second matter that Fairfax rely on as justifying a differential costs order, is the various instances where I determined that Ms Chel's evidence should be rejected or concluded that the jury must have done so (see Chel (No 7) at [20], [33], [79], [102], [109], [111] and [113]). Fairfax contended that these findings are relevant to the exercise of a discretion to award costs (citing Holt v TCN Channel Nine Pty Ltd (No 2) [2012] 968 “Holt (No 2)”; Jones v Sutton (No 2) [2005] NSWCA 203). The plaintiff submitted that these matters were “submissions on the quantum of damages disguised as submissions on costs”.

6. [11]

   The third matter relied on by Fairfax was the plaintiff's response to a notice to admit facts served on 22 October 2015. The notice to admit contained 212 paragraphs and also sought the plaintiff's admission as to the authenticity of 23 documents being the CCTV footage inside the plaintiff's nightclub and documents concerning the Land and Environment Court proceedings the subject of the fair report defence. On 3 November 2015, the plaintiff responded disputing all the facts and the authenticity of all the documents referred to in the notice. Fairfax pointed out that a number of the facts asserted in the notice to admit were established at the trial. Uniform Civil Procedure Rule 42.8(2) provides that where the facts in a notice to admit are disputed by a party and subsequently shown to be true, the disputing party must pay the requesting party's costs of proving the relevant fact on an indemnity basis unless the Court orders otherwise. Fairfax contended that the assessment of these costs would be difficult and that instead the plaintiff's conduct should be considered in the exercise of the discretion as to costs.

7. [12]

   The plaintiff submitted that the notice to admit “contained numerous sub-facts including value judgments and estimates” and that the notice was served to “put pressure on the Plaintiff rather than to illicit information which the Defendant needed”. It was also submitted that, even if the facts had been admitted, Fairfax would still have called its witnesses and the length of the trial would not have been shortened.

Consideration

1. [13]

   Given that the plaintiff has obtained a more favourable judgment than both its offers of compromise then it follows that the first issue that has arisen is whether the Court should order otherwise under UCPR 42.14(2). I am not persuaded that the mixed success on the plaintiff's imputations justifies the Court doing so. This was not a case where the plaintiff pleaded many imputations and only succeeded on some minor aspect of them. The two most significant imputations were those concerning drink spiking and sex on stage (imputations (a), (b), (f) and (g)). The plaintiff was completely successful on the imputation concerning drink spiking and partially successful on the allegations concerning sex on stage. The plaintiff undoubtedly suffered a few setbacks throughout the trial, but ultimately she won.

2. [14]

   In relation to the second matter, in Holt (No 2) at [33] Adamson J concluded that “the credibility of the plaintiff; the length of the hearing in so far as it was prolonged by the plaintiff's failure to make admissions except in the face of powerful evidence; and the gross disproportionality between the costs on the one hand and the damages on the other are relevant considerations” were relevant to exercise of the discretion concerning costs. This was approved on appeal (Holt v TCN Channel Nine Pty Ltd [2014] NSWCA90; 86 NSWLR 96 at [88]). These factors are also relevant to a determination to order otherwise under UCPR 42.14(2).

3. [15]

   In that regard, the difficulty with the plaintiff's evidence was not so much that aspects of it were not credible but that it exemplified an overall determination on her part not to concede any fact that was perceived to be of any assistance to Fairfax notwithstanding the evidence to the contrary. Thus, for example in Chel (No 7) at [102] to [114] I addressed the plaintiff's contention that she should be awarded aggravated damages because of thirty-six instances when it was allegedly put to her in cross examination that her evidence was false. I rejected all of those complaints mostly on the basis that her evidence either was false or there was a reasonable basis for suggesting it was false. In relation to the first four instances I found as follows (Chel (No 7) at [120]):

4. [16]

   This is reinforced by considering the plaintiff's response to Fairfax's notice to admit. Contrary to the plaintiff's submissions the notice was not drafted in terms that reflected "value judgments and estimates". There were clearly some facts asserted in the notice that the plaintiff could not agree to and were not established (eg "during the period 7 April 2003 to 26 December 2010 at least one incident of drink spiking at the Club"). However others were indisputable (eg "From on or about 7 April 2003 on or about 1 October 2009, the plaintiff was the licensee of the Club"). In relation to all the paragraphs of the notice to admit it was open to the plaintiff to identify which facts she admitted and what was not. Further, as submitted by Fairfax, many paragraphs in the notice were either not in dispute or established [3] .

5. [17]

   The plaintiff's response to the notice to admit was grossly unreasonable. She refused to admit any fact or the authenticity of any document. There was no justification for putting Fairfax to proof of some of these facts. Her failure to even admit the authenticity of any of the documents attached to the notice to admit along with her evidence is demonstrative of a determination on her part to not concede anything that was perceived to be of any possible assistance to Fairfax.

6. [18]

   As noted, the plaintiff contended that it cannot be said that the length of the hearing would have been reduced had she engaged with the notice to admit. I am satisfied that the combination of her refusals to concede matters that were obvious and her refusal to engage with the notice to admit did extend the time taken for the hearing especially those parts of the hearing that were taken up with the tender of documents. Most importantly these aspects of the conduct of the plaintiff's case were inconsistent with her obligations under s 56(3) of the Civil Procedure Act 2005. There is no exception within the Civil Procedure Act for defamation proceedings. It does not contain any provision which preserves trial by ambush for defamation proceedings. A party who has served an offer of compromise cannot thereafter refuse to make necessary or appropriate concessions and expect the other party to pay its legal costs on an indemnity basis.

7. [19]

   Accordingly, I will "order otherwise" under UCPR 42.14(2) in respect of both offers of compromise.

8. [20]

   In relation to the appropriate costs order it follows from what I have stated that the plaintiff has succeeded overall and that I do not consider that a differential costs order is warranted on the basis of the matters in respect of which the plaintiff failed. However, the hearing was extended by the plaintiff's conduct. Further, absent the Court otherwise ordering under, Fairfax would be entitled to an order that the plaintiff pay its costs of proving various facts in the notice to produce on an indemnity basis. To avoid exacerbating the cost of the assessment process I consider it is appropriate to order otherwise under UCPR 42.8(2) and instead reduce the costs to be awarded to the plaintiff on the ordinary basis.

9. [21]

   Overall, an order that Fairfax pay three quarters of the plaintiff's costs on the ordinary basis is appropriate. The costs order made in Chel v Fairfax Media Publications Pty Ltd (No 2) [2015] NSWCA 379 will not be affected.

Orders

1. [22]

   Accordingly, the Courts orders: