FEDERAL COURT OF AUSTRALIA

Russell v Australian Broadcasting Corporation (No 4) [2023] FCA 1279

ORDERS

THE COURT ORDERS THAT:

1.    Judgment for the applicant against the respondents in the sum of $412,315.48.

2.    The respondents pay the applicant’s costs of the proceeding on an ordinary basis in relation to costs incurred prior to 11am on 14 September 2022 and thereafter on an indemnity basis.

3.    The parties be granted leave to appeal from order 4 of the orders made on 1 February 2023 subject to any notice of appeal being filed within 28 days.

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

REASONS FOR JUDGMENT

(Delivered ex tempore)

LEE J:

1    This judgment deals with residual issues following my delivery of judgment in Russell v Australian Broadcasting Corporation (No 3) [2023] FCA 1223.

2    The judgment sum has been agreed and I will proceed to enter judgment in the amount of $412,315.48, which includes the amount awarded by way of interest.

3    That leaves two matters: injunctive relief and costs.

4    As to the first matter, the parties agree there is no need for me to make an order enjoining the respondents because the impugned publications have now been removed from the ABC website and, in any event, I do not consider that there is any appreciable danger of the defamatory imputations being republished.

5    Secondly, Mr Russell seeks an order that the respondents pay part of his costs of the proceeding on an indemnity basis. The basis for seeking this order can be stated shortly.

6    On 12 September 2022, Ms Rebekah Giles, Mr Russell’s solicitor, sent a notice of offer of compromise to Ms Alessandra Steele, the Head of Disputes & Litigation at ABC Legal Services, in the following terms:

The Applicant offers to compromise this proceeding on the following terms:

1.    Judgment for the Applicant in the sum of $99,000.

2.    First Respondent to remove the November Article and Linked Article (as defined in the Statement of Claim), any republications thereof and any matter to the same effect from the World Wide Web within the control of the First Respondent.

3.    Respondents to pay the Applicant’s costs as agreed or taxed.

This offer of compromise is open to be accepted for 14 days after service of this offer of compromise.

The amount of the offer will be paid within 28 days after acceptance of this offer.

This offer is made without prejudice.

7    The principles concerning the award of indemnity costs following the service of an offer of compromise were recently canvassed in considerable detail by Halley J in Callan v Chawk (Costs) [2023] FCA 1198 (at [9]–[16]) as follows:

9    Rule 25.14(3) of the Federal Court Rules 2011 (Cth) (Rules) provides:

25.14 Costs where offer not accepted

…

(3)    If an offer is made by an applicant and not accepted by a respondent, and the applicant obtains a judgment that is more favourable than the terms of the offer, the applicant is entitled to an order that the respondent pay the applicant’s costs:

(a)    before 11.00 am on the second business day after the offer was served—on a party and party basis; and

(b)    after the time mentioned in paragraph (a)—on an indemnity basis.

10    As the Full Court of this Court relevantly explained in JMC Pty Ltd v Commissioner of Taxation (Costs) [2023] FCAFC 95 at [6] (Bromwich, Thawley and Hespe JJ):

Rule 25.14 does not expressly or implicitly turn on whether a rejection of an offer was “reasonable”. Rather, it turns on the question whether the judgment “is more favourable than the terms of the offer”. Where the judgment “is more favourable than the terms of the offer” the applicant “is entitled” to indemnity costs in accordance with the terms of r 25.14(3).

11    Rule 1.35 of the Rules provides a discretionary power to make an order that is “inconsistent” with the Rules. It provides:

1.35 Orders inconsistent with Rules

The Court may make an order that is inconsistent with these Rules and in that event the order will prevail.

12    If the Court were to make an order that a party that had received an offer from an applicant that was less favourable than the judgment achieved by the applicant, pay the costs of the trial on the ordinary basis rather than the indemnity basis, it would be “inconsistent” with r 25.14.

13    The party seeking an order under r 1.35 that is inconsistent with r 25.14, bears the onus of establishing that the inconsistent order should be made: JMC at [8].

14    The Full Court of this Court stated in JMC in the following passages:

10    The discretion in r 1.35 is confined by the requirement that it be exercised judicially having regard to the purpose for which it was conferred. It has been said that the discretion to make an order inconsistent with the Rules must “be exercised for proper reasons which will generally only arise in exceptional circumstances”: Lodestar at [27]. This is undoubtedly correct, although care must be taken not to transform or confine the broad statutory discretion by permitting judicial descriptions of the circumstances in which the discretion might be exercised to become constraints not sourced in the statute or glosses on the terms of the statute: Sydney Equine Coaches Pty Ltd v Gorst [2017] FCAFC 34 at [22].

11    In exercising the discretion under r 1.35 to make an order inconsistent with r 25.14, the reasonableness of the rejection of the offer will be relevant. It is most unlikely that an order inconsistent with r 25.14 would be made where the rejection of an offer was not reasonable. On the other hand, merely establishing that the rejection of an offer was reasonable at the time of rejection is not necessarily sufficient.

15    An offer of compromise that is not made under Pt 25 of the Rules does not give rise to any presumption that indemnity costs should be awarded in favour of an applicant that obtains a judgment that is more favourable than an offer made to the respondent. A failure to accept an offer of compromise that is not made under Pt 25, however, may give rise to an award of indemnity costs where the Court is satisfied that either the rejection was “imprudent or unreasonable” or “imprudent or plainly unreasonable”, having regard to the circumstances that existed at the time the offer was made: Dukemaster Pty Ltd v Bluehive Pty Ltd [2003] FCAFC 1 at [7] (Sundberg and Emmett JJ); Seven Network Limited v News Limited (2007) 244 ALR 374; [2007] FCA 1489 at [59]-[61] (Sackville J); Hardingham v RP Data Pty Limited (No 2) [2021] FCAFC 175 at [19] (Greenwood, Rares and Jackson JJ) at Camm Cattle Company Pty Ltd v Acumen Finance Pty Ltd (No 3) [2021] FCA 1611 at [13] (Downes J). For present purposes, it is unnecessary to express a view as to which formulation is to be preferred.

16    The Full Court of this Court in Anchorage Capital Partners Pty Limited v ACPA Pty Ltd (No 2) [2018] FCAFC 112 at [7] (Nicholas, Yates and Beach JJ), stated that the matters to be taken into account in assessing whether the refusal of an offer to compromise was “unreasonable”, included:

(a)    the stage of the proceeding at which the offer was received;

(b)    the time allowed to the offeree to consider the offer;

(c)    the extent of the compromise offered

(d)    the offeree’s prospects of success, assessed as at the date of the offer;

(e)    the clarity with which the terms of the offer were expressed; and

(f)    whether the offer foreshadowed an application for an indemnity costs in the event of the offeree rejecting it.

(Emphasis in original).

8    With respect, I agree with this summary, subject to adding a further important matter.

9    As noted above, r 1.35 of the Federal Court Rules 2011 (Cth) (FCR) provides a discretion. It is a discretion conferred by a civil practice and procedure provision (within the meaning of s 37M(4) of the Federal Court of Australia Act 1976 (Cth) (FCA Act)). It necessarily follows that in exercising the discretion, the Court must have regard to the mandatory requirement in s 37M(3) that such a power be exercised “in the way that best promotes the overarching purpose”, being the just resolution of disputes according to law as quickly, inexpensively and efficiently as possible (see s 37M(1)).

10    Although it is literally true to say a party seeking an alternative order bears an onus, that onus will be discharged if the Court is satisfied it is necessary to make an order other than that provided for in the FCR to facilitate the overarching purpose.

11    Further, it is worth making an additional observation in relation to defamation proceedings in this Court. Speaking generally, s 40(2)(a) of the Defamation Act 2005 (NSW) provides that unless the interests of justice require otherwise, if defamation proceedings are successfully brought by one party and that party obtains costs, those costs are to be awarded on an indemnity basis if the court is satisfied that the other party unreasonably failed to make, or agree to, a proposed settlement offer. I have previously noted the complication as to whether this provision is “picked up” in federal jurisdiction, most recently in Murphy v Nationwide News Pty Ltd (No 2) [2021] FCA 432 (at [6]) and Palmer v McGowan (No 6) [2022] FCA 927; (2022) 405 ALR 462 (at 468 [41]). It is unlikely to matter much in practice, as this specific defamation law requirement points to somewhat similar considerations as the applicable and more generally expressed mandatory consideration contained in s 37M(3) of the FCA Act.

12    In any event, the respondents accept that Mr Russell obtained a judgment more favourable than the terms of the offer of compromise and have indicated to me they expressly agree to pay his costs on an ordinary basis before 11am on 14 September 2022, and on an indemnity basis thereafter.

13    Given the proposed order is the subject of consent, I will make it notwithstanding I would have made a different order but for that consent. I will briefly explain why.

14    I made a finding that Mr Russell gave deliberately false evidence to the Court. It is obvious, but worth remarking, that it is fundamental to the just resolution of disputes that a witness tells the truth. Absent the consent of the respondents, I would have concluded that I would be acting in a manner contrary to facilitating the overarching purpose to allow Mr Russell any of his costs relating to dealing with the subject matter of his false evidence and the time spent by the respondents and the Court in dealing with this issue. To the extent I would have been required to consider onus in making a different order than as provided for upon rejection of an offer of compromise, this finding would have represented the discharge of any such onus.

15    I would have made this order cognisant of the fact that costs orders should not be punitive, and parties should not be deprived of costs as a punitive measure. I would have adopted a rough and ready approach to the compensatory order, estimating the percentage of hearing time, submissions and evidence devoted to this issue and reducing the overall costs Mr Russell would otherwise have been able to recover. But, on balance, I consider it would be an inappropriate exercise of discretion to proceed to reduce Mr Russell’s recovery in circumstances where the respondents expressly consent to the order proposed by Mr Russell.

16    Further, as foreshadowed in my first judgment, I grant leave to both parties to appeal from my conclusion as to the meaning of the defamatory matters given the prevailing view in authorities that leave is needed to appeal from a separate (albeit final) determination. These findings as to meaning are reflected in a declaration I made on 1 February 2023.

Associate:

Dated:    24 October 2023