FEDERAL COURT OF AUSTRALIA

Bellino v Queensland Newspapers Pty Ltd (No 2) [2019] FCA 1691

ORDERS

THE COURT ORDERS THAT:

1.    Order 3 of the Orders made on 30 August 2019 is vacated.

2.    The Applicant is to pay the costs of the Respondent, such costs being on an indemnity basis as from 18 December 2018.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

FLICK J:

1    In September 2017, the Applicant in the present proceeding, Mr Antonio Bellino, commenced a proceeding in this Court claiming that he had been defamed by two articles published by the Respondent, Queensland Newspapers Pty Ltd (“Queensland Newspapers”).

2    At the outset of this proceeding Mr Bellino was represented, including at times by Counsel. That representation ended with the unfortunate death of Counsel in August 2018. Solicitors for Mr Bellino also ceased to act on 21 January 2019. Mr Bellino thereafter appeared on his own behalf, including at the hearing in April 2019.

3    In August 2019, reasons for decision were published rejecting the claims made by Mr Bellino: Bellino v Queensland Newspapers Pty Ltd [2019] FCA 1380. Orders were then made, including an order dismissing the proceeding and ordering Mr Bellino to pay costs.

4    An application was then made by Queensland Newspapers seeking an order in substance vacating the order as to costs that had been made (or at least a variation of that order) and seeking in lieu an order that costs be paid on the ordinary basis up to 17 December 2018 but thereafter that costs be paid on an indemnity basis. The reason relied upon for seeking the indemnity costs order was the making of a Calderbank offer in December 2018.

5    An opportunity was extended to Mr Bellino to file written submissions with respect to the application made by Queensland Newspapers. Regrettably he filed no submissions. The application was thereafter resolved on the papers.

6    It is concluded that the order sought by Queensland Newspapers should be made.

The offer made in the 10 December 2018 letter

7    The offer relied upon by Queensland Newspapers was made by a letter dated 10 December 2018 (the “December 2018 letter”).

8    In relevant part that letter stated as follows:

Without any admission of liability, we are instructed to make an offer to the applicant to settle the above proceedings on the following terms (the Offer):

1.    The proceedings will be dismissed against the respondent, with no order as to costs.

2.    Any existing costs order be vacated.

3.    The respondent will pay the applicant the sum of $80,000 inclusive of the applicant’s party/party costs and disbursements in the proceedings.

4.    The parties will enter into a Deed of Release in substantially the same terms as the enclosed document.

This Offer remains open for acceptance until 5.00pm on 11 January 2018, after which time it will lapse.

(emphasis in original)

The letter went on to state (inter alia) that the offer was “made on a ‘without prejudice’ basis, save for the question of costs…”. The letter also stated “[t]he respondent will apply for costs on an indemnity basis from the date of this letter in accordance with the principles in Calderbank v Calderbank [1975] 3 All 333 and/or pursuant to s 40(2)(b) of the Defamation Act…”. Although, it should be noted that the submissions filed by the Respondent with respect to the special costs application presently being considered made no reference to relying on s 40(2)(b) of the Defamation Act 2005 (NSW) (the “Defamation Act”).

9    The Deed of Release, to which reference is made in the December 2018 letter, also contained an offer to publish the following statement (without alteration) in the “For the Record” section of the Courier Mail:

A graphic accompany article “The Day a Revolution Started” (p10, 12/01/2017) included a statement which referred to Tony Bellino. The Courier Mail accepts that Mr Bellino was not fleeing to Italy and accepts his assertion that he was not a brothel owner. The Courier Mail apologises to Mr Bellino for any hurt caused by the publication.

The apology proffered by Queensland Newspapers, it may be noted, did not extend to the other defamatory imputations relied upon by Mr Bellino.

The making of an indemnity costs order

10    The December 2018 letter, it may be noted, was not expressed to be given pursuant to Pt 25 of the Federal Court Rules 2011 (Cth). But that does not preclude the consideration by this Court of a Calderbank offer of settlement: Alpine Hardwood (Aust) Pty Ltd v Hardys Pty Ltd (No 2) [2002] FCA 224 at [18] to [20], (2002) 190 ALR 121 at 124 to 125 per Weinberg J. Nor do the provisions of Pt 3 of the Defamation Act preclude an exercise of discretion in respect to costs the making of a Calderbank offer: Nationwide News Pty Ltd v Vass [2018] NSWCA 259 at [74] to [77], (2018) 98 NSWLR 672 at 692 per McColl JA.

11    Any difference as to the form in which an offer of compromise is made is, as explained by Katzmann J in Moroccanoil Israel Ltd v Aldi Foods Pty Ltd (No 3) [2019] FCA 470 (“Moroccanoil Israel Ltd”), as follows:

[31]    The ordinary principle is that costs follow the event. In other words, the Court will order the unsuccessful party to pay the costs of the successful party. The ordinary basis upon which costs are ordered is the party and party basis, which falls short of a complete indemnity. Having regard to the breadth of the Court’s discretion, however, indemnity costs may be awarded “where there is some special or unusual feature in the case” which justifies the exercise of the discretion in this way: Re Wilcox; Ex parte Venture Industries Pty Ltd (No 2) (1996) 72 FCR 151 at 152 (Black CJ).

[32]    While there is a presumption that a party who betters an offer of compromise made under the rules of court will recover indemnity costs, there is no such presumption where an offer is not made under the rules or does not conform to the rules: CGU Insurance Ltd v Corrections Corporation of Australia Staff Superannuation Ltd [2008] FCAFC 173; (2008) 15 ANZ Insurance Cases ¶61–785 at [75] (per curiam).

Irrespective of any presumption, any difference assumes no importance in the present case. The Calderbank offer communicated by the December 2018 letter remains a sound basis upon which the order for indemnity costs sought by Queensland Newspapers should be made.

12    In summarising the principles to be applied when seeking an indemnity costs order, Sundberg and Emmett JJ in Dukemaster Pty Ltd v Bluehive Pty Ltd [2003] FCAFC 1 (“Dukemaster”) observed:

[7]    The mere making of an offer of compromise and its non-acceptance, followed by a result more favourable to the offeror, does not automatically lead to an order for payment of costs on an indemnity basis: … The applicant for a more generous award must show that the rejection of the offer was imprudent or plainly unreasonable: …

(citations omitted)

Prior to endorsing this summary of principles, Rares J in Mount Isa Mines Ltd v The Ship ‘Thor Commander’ (No 2) [2018] FCA 1702 observed:

[9]    The Full Court has discussed the principles applicable to determine, at common law, whether an offeree who fails to accept an offer of settlement will be liable to pay costs thereafter on an indemnity basis. Different Full Courts have stated the test as that the rejection of the offer must be either “imprudent or unreasonable” or “imprudent or plainly unreasonable” in order to enliven the discretion to award costs on an indemnity basis. This difference in expression, while unfortunate, does not appear to be substantive.

(emphasis in original)

His Honour thereafter proceeded to extract the summary provided by Sundberg and Emmett JJ. Dukemaster has since been applied by other Judges of this Court: e.g., Moroccanoil Israel Ltd, supra at [34]; Lane v Oakley (No 2) [2019] FCA 488 at [17] per Rangiah J.

13    To this summary of principles, s 40 of the Defamation Act may be added. That section provides as follows:

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.

With reference to s 40(2)(a), White J in Hockey v Fairfax Media Publications Pty Ltd (No 2) [2015] FCA 750; (2015) 237 FCR 127 at 137 concluded:

[46]    … I see no warrant for reading into subs (2)(a) an adjective such as “wholly” or “substantially”. Mr Hockey had partial success evidenced by the monetary award to be made in his favour in each proceeding. His failure on significant elements of his claim is relevant to other aspects of the costs claims, but not to the first issue arising under subs (2)(a).

There is, similarly, no reason to read into s 40(2)(b) any requirement that an unsuccessful plaintiff to a defamation proceeding must be wholly “unsuccessful” – s 40(2)(b) simply referring to a defamation proceeding which has been “unsuccessfully brought by a plaintiff” and a plaintiff “unreasonably” failing to accept an offer of settlement.

14    In the present proceeding, Queensland Newspapers contend that Mr Bellino’s failure to accept the offer made was “imprudent or plainly unreasonable”. That submission is accepted.

15    On the facts of the present case, and in very summary form, Mr Bellino did obtain a measure of “success” in that it was concluded:

    two of the five pleaded imputations were not conveyed.

But the offer made in the December 2018 letter was otherwise a more favourable result to Mr Bellino by reason of the conclusions that:

    in respect to those three imputations which were conveyed and which were defamatory of Mr Bellino, Queensland Newspapers had made good its defence under s 25 of the Defamation Act; and

    any damages that would otherwise have been awarded (had the s 25 defence not been made out) would have been minimal.

The offer being made by Queensland Newspapers, moreover, included an offer:

    to forego its own entitlement to claim costs that had been incurred;

    to publish a “correction”, albeit a statement limited in its terms; and

    to pay Mr Bellino $80,000.

16    Although any conclusion as to whether a decision to reject an offer of compromise was “imprudent or plainly unreasonable” is not solely to be judged by reference to a confined comparison between the offer being made and the judgment obtained, it was “imprudent or plainly unreasonable” for Mr Bellino to not accept the offer being made in circumstances where:

    at least up until 21 January 2019 he was represented by solicitors;

    the offer on any view was a sensible “commercial” resolution of the dispute between the parties at the time it was made – Queensland Newspapers on the one hand wishing to limit (inter alia) its own exposure to forthcoming legal costs and, on the other hand, the wish of Mr Bellino to obtain some personal redress with respect to what he viewed as damage to his own reputation by reason of the statements made, these concerns being addressed by the proposed payment of $80,000 and the proposed “correction” to be published in the “For the Record” section; and

    the defamatory imputations being made in the matter complained of being statements largely admitted by Mr Bellino in the book titled Time for Truth: Antonio Bellino tells it as it is and in his evidence to the Fitzgerald Inquiry.

If not “imprudent”, the failure to accept the offer was “plainly unreasonable”.

CONCLUSIONS

17    Although the making of an offer which is more favourable than the judgment ultimately obtained does not “automatically” result in an order for indemnity costs, in the circumstances of the present case the making of offer in the December 2018 letter warrants such an order being made with respect to costs thereafter incurred.

18    It was “unreasonable” within the meaning of s 40(2)(b) of the Defamation Act for Mr Bellino not to have accepted the offer made. See: Collier v Country Women’s Association of NSW (No 2) [2017] NSWSC 1729. The limited success that Mr Bellino did secure in the proceeding does not preclude or confine the discretion to award indemnity costs in favour of the publisher.

19    The order for costs as sought by Queensland Newspapers should be made.

THE ORDERS OF THE COURT ARE:

1.    Order 3 of the Orders made on 30 August 2019 is vacated.

2.    The Applicant is to pay the costs of the Respondent, such costs being on an indemnity basis as from 18 December 2018.

Associate:    

Dated:    17 October 2019