FEDERAL COURT OF AUSTRALIA

Lehrmann v Network Ten Pty Limited (Costs) [2024] FCA 486

ORDERS

THE COURT ORDERS THAT:

1.    The applicant pay the respondents’ costs of the proceeding on:

(a)    the ordinary basis for the costs incurred in relation to the defence of statutory qualified privilege pursuant to s 30 of the Defamation Act 2005 (NSW) (Defamation Act); and

(b)    the indemnity basis for any other costs of or incidental to the proceeding (including the costs referred to in Order 2 made on 23 November 2023).

2.    Notwithstanding Order 1, no costs are to be recoverable by the respondents against the applicant in relation to the following affidavits:

(a)    Affidavit of Ms Lisa Wilkinson affirmed 2 February 2024.

(b)    Affidavit of Ms Tasha Smithies sworn 25 January 2024.

(c)    Affidavit of Ms Lisa Wilkinson affirmed 16 January 2024.

(d)    Affidavit of Ms Lisa Wilkinson affirmed 5 December 2023.

(e)    Affidavit of Mr Craig Campbell sworn 18 October 2023.

(f)    Affidavit of Mr Angus Llewellyn affirmed 21 September 2023.

(g)    Affidavit of Mr Christopher Bendall affirmed 28 July 2023.

(h)    Affidavit of Ms Laura Binnie affirmed 28 July 2023.

(i)    Affidavit of Ms Lisa Wilkinson affirmed 28 July 2023.

(j)    Affidavit of Mr Peter Meakin sworn 28 July 2023.

3.    Pursuant to ss 37P(2) and 54A of the Federal Court of Australia Act 1976 (Cth), the quantification of costs payable pursuant to Order 1 (as qualified by Order 2) be referred to a referee for inquiry and report, with the terms of the reference to be settled by the Court at the case management hearing listed at 9:30am on 27 May 2024.

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

REASONS FOR JUDGMENT

LEE J:

A    INTRODUCTION

1    There are no real winners in this litigation.

2    The result is best characterised as the respondents overcoming a misconceived claim in relation to a broadcast because they were able to prove at trial the substantial truth of what the contemporaneous material demonstrates they considered to be the less substantial allegation made in the broadcast.

3    Of course, with the predictability of an atomic clock, partisans have focused solely on those parts of the judgment (Lehrmann v Network Ten Pty Limited (Trial Judgment) [2024] FCA 369 (judgment or J)) that happen to align with preconceived notions. But the reality of mixed findings has also been somewhat obscured in the public statements of the respondents and their submissions as to costs, which advance the assertion that they “won” the litigation and that costs should axiomatically follow the event.

4    Understandably, strong criticisms of Mr Lehrmann in his conduct of the litigation have featured prominently in the written submissions filed on this application and do assume decisive importance. However, at the urging of all parties, I dealt with all pleaded issues rather than simply deciding what turned out to be the determinative justification defence. At the risk of repeating matters canvassed at length in my judgment, it is appropriate to commence these reasons by making two points relevant to the conduct of the respondents.

5    First, in Section K of the judgment, I explained why the conduct of both Network Ten and Ms Wilkinson in publishing the Project programme (in its character of conveying the defamatory imputations as to Mr Lehrmann) was unreasonable.

6    Contrary to the assertions of Network Ten, the examination of the respondents’ conduct was not devoid of, nor divorced from, reality; nor did it involve picking apart and dissecting the respondents’ conduct by reference to a standard of perfection. Anyone taking the trouble to read the judgment would conclude I did not consider the evaluative assessment required by the statutory qualified privilege defence to be a close-run thing.

7    I also explained that although the respondents legally justified their imputation of rape, their conduct was not justifiable in any broader sense. The material in evidence is replete with recognition by the Project team that the major theme of the broadcast was the publication of what Mr Sharaz (the promoter of the “Project” and the regular conduit between Ms Higgins and Mr Llewellyn) had “pitch[ed]” to Ms Wilkinson (see Ex R105).

8    The credulous approach taken as to the allegations pitched by Mr Sharaz – and as to Ms Higgins’ credit generally – lacked both rigour and objectivity. None of this can be separated from the approach taken to the publication of the imputation of rape on the material then in the possession of the respondents. Contrary to the recent assertions of Network Ten, a publication is not reasonable simply because it turns out to be true in some respects.

9    Secondly, there is the behaviour of Network Ten justifying aggravated damages, being the conduct relating to Ms Wilkinson giving the Logies speech for the reasons it was given. I will come back to this issue briefly below.

10    Against the background of all my findings (and not just the findings critical of Mr Lehrmann), it is now necessary to deal with the balance of issues that require resolution before this Court’s involvement in this controversy concludes. This involves answering the following three questions:

(1)    Should Network Ten obtain a costs order and, if so, what should it be?

(2)    Should Ms Wilkinson obtain a costs order and, if so, what should it be?

(3)    What orders should be made to resolve the costs position as between the respondents?

11    Before addressing these three questions, it is necessary to make some additional factual findings and briefly indicate the principles relating to costs, which are not in dispute. These reasons, obviously enough, assume familiarity with the judgment.

B    THE FACTS RELEVANT TO SETTLEMENT GENERALLY

12    Only one offer of settlement was made. When one has regard to the evidence adduced at the hearing, the reason for this seemed clear.

13    In Lehrmann v Network Ten Pty Limited (Cross-claims) [2024] FCA 102 (cross-claims judgment), I refer (at [38]) to the fact that on 7 March 2023, Ms Higgins instructed her solicitor to send an email to the solicitors acting on behalf of Network Ten (Thomson Geer) (Ex X1 (at 1172)) which asserted, among other things, the following:

… Brittany cannot give, and has not given, any party an assurance that she will be able to provide a witness statement or swear an affidavit or provide an outline of her evidence or give oral evidence at a civil trial and subject herself to further cross examination. And if she is subpoenaed to give evidence by any party, she may make application to be relieved from compliance with it …

Brittany currently intends to instruct me to assist your client(s) in their defences as much as she reasonably can. As you know we have developed a strong and respectful professional relationship with you personally as a result of the Rush defamation trial. And your client(s) [sic] senior counsel, Dr Matt Collins, is regarded by us as one of the leading defamation advocate [sic] in Australia with whom we also share a strong professional and personal relationship. Knowing [Dr Collins] well, I also have great confidence in his ability to respectfully, elegantly and carefully engage with Brittany. But it is important for your client(s) to appreciate that Brittany is doing so on the basis that your client(s) will not offer Lehrmann a payment of damages or a retraction of the defamatory statements or an apology or costs (or any other relief) to settle the civil claims commenced by Lehrmann against your clients.

For the avoidance of any other misunderstandings, Brittany has instructed me not to assist lawyers and Counsel currently retained by [Ms Wilkinson] to defend civil claims commenced by Lehrmann against [Ms Wilkinson]. I am not prepared to work with [Ms Wilkinson’s] current senior Counsel, under any circumstances …

(Emphasis added)

14    It is worth putting these stipulations of Ms Higgins into context.

15    This email came a few days after Thomson Geer had received a letter from Ms Wilkinson’s solicitors, Gillis Delaney, on 3 March 2023 (Ex X1 (at 1147–48)) where Ms Wilkinson was asserting that it:

seems plain that Network 10 is seeking to punish Ms Wilkinson for choosing to be independently represented in these proceedings, and to put pressure on her to abandon that path. Such conduct on the part of Network 10, which has been ongoing since Ms Smithies’ email on 15 February 2023, is unconscionable.

Merely by way of example, the following indicates clearly that the interests of our client and Network 10 do not coincide.

Your client’s complaint about Ms Wilkinson’s choice of senior counsel is, frankly, absurd. As you would be aware, Ms Chrysanthou has appeared in many defamation matters for defendants, including media defendants, over nearly 20 years, with a considerable degree of success. The objection to Ms Chrysanthou acting against the interests of Network 10 is surprising for a number of reasons. First, the very point of separate representation is that it be independent from Network 10, and second, because of the operation of the cab rank rule. The notion that barristers permanently take sides is simply wrong.

The email itself is evidence of why Ms Wilkinson needs to be separately represented – those who instruct your firm in these proceedings cannot bring an impartial mind to the matter and be relied upon to give instructions, when required, which are in Ms Wilkinson’s interests. For many months Ms Wilkinson has been concerned about the conflicted position of lawyers who have purported to act in Ms Wilkinson’s interest who, to her observation, have not done so where those interests do not align with those of Network 10.

16    This letter had prompted Mr Justin Quill, acting on behalf of Network Ten (Ex X1 (at 1153)), to advise his client later that evening, among other things, that:

… we could consider whether (probably through Nick Fordham) we could offer [Ms Wilkinson] some advice on this indemnity issue in a conference from a totally independent KC (and hopefully that KC might explain to [Ms Wilkinson] that if she stays with Ten, she will be totally protected, but that if she doesn’t, she could be exposed). That’s advice she is unlikely to have heard, and it might change her (and Nick’s) mind on the course they’re adopting …

17    A proposal to seek independent advice from senior counsel was subsequently communicated directly to Ms Wilkinson by Ms Beverley McGarvey, the then “Executive Vice President & Chief Content Officer, Paramount ANZ” (Ex X1 (at 1159)). Subsequently, one of the silks nominated by Network Ten was instructed.

18    Mr Bret Walker SC and Mr Patrick George provided advice on 17 March 2023 (Ex X1 (at 1174)). They advised the stipulations made in exchange for the cooperation of Ms Higgins were “at the least unwise” as it showed a lack of regard for the complexities of representation in the proceeding.

19    Moreover, although not relevant to the advice, one of the stipulations was also unwise because, if agreed to, it would have the apparent consequence, relatively early in the life of the case, of fettering the ability of Network Ten to compromise the dispute. This is significant because under s 37N(1) of the Federal Court of Australia Act 1976 (Cth) (FCA Act), all parties were required to conduct any negotiations for settlement of this dispute in a way that is consistent with its quick, inexpensive and efficient resolution. It is apparent that an offer by Network Ten to resolve the dispute in the manner like that adopted in the compromise of the two related proceedings (or even settling the case with a partial retraction or the most nominal contribution towards costs) would have been inconsistent with Ms Higgins’ proposed stipulations.

20    Two days, and then again four days after Mr Walker’s advice, but without seeing it, Ms McGarvey sent emails (Ex X1 (at 1192, 1196–97)) to a representative of Ms Wilkinson, Mr Nick Fordham. In those communications, Ms McGarvey referred to Ms Higgins’ conditions being an “obstacle to cooperation with Brittany Higgins or her lawyer” and returned to the topic of Ms Wilkinson’s choice of senior counsel. Ms McGarvey also noted, in the latter email, that she appreciated that Ms Wilkinson did not wish to instruct Network Ten’s legal team, but that (Ex X1 (at 1192–93)):

… we are concerned that [Ms Wilkinson’s] best interests are not served by her selection of senior counsel in circumstances in which [Ms Wilkinson] is running defences that rely on the truth of a key witness, Ms Britney [sic] Higgins, and Ms Higgins has instructed her lawyer that she will not assist counsel currently retained by [Ms Wilkinson] to defend the defamation claim against [Ms Wilkinson] and Ms Higgins’ lawyer has indicated that he himself is not prepared to work with [Ms Wilkinson’s] current senior counsel under any circumstances.

In these particular circumstances, it does not seem that [Ms Wilkinson’s] prospects of defending the defamation claim are optimised, and are potentially compromised, by the lack of access of [Ms Wilkinson’s] legal team to a key witness in the defence.

21    No evidence was adduced before me as to whether Network Ten entered some formalised arrangement with Ms Higgins by which it expressly agreed to the conditions purported to be imposed by Ms Higgins in exchange for her cooperation as a witness. But by reason of the fact that Ms McGarvey, on behalf Network Ten, at least twice expressly referred to the conditions as a reason why Ms Wilkinson should replace her chosen senior counsel, it appeared to me available to infer that what might be thought to be the appropriate response to Ms Higgins’ solicitor was not conveyed (which would have been to say, with respect, that if Ms Higgins did not wish to cooperate with Network Ten without imposing conditions upon representation of a party and potential settlement options, then Ms Higgins will need to be subpoenaed and she will be obliged to assist a court of justice in coming along and tell the truth until excused).

22    The inference that Network Ten acted in accordance with the stipulations of Ms Higgins also gained apparent support from the fact that on 31 August 2023, the respondents jointly made their only offer to resolve the proceeding (O’Beirne 22 April 2024 (at 6)), being a “walk away” compromise by which: (a) the proceeding be dismissed without any admission of liability; and (b) there be no order as to costs as between the parties. It is not in dispute that the offer, if accepted, would have required Mr Lehrmann to give up his then accrued right of a costs order obtained during the limitation extension argument. Hence it would have involved no amount being paid to Mr Lehrmann, even though he then had the benefit of a costs order made against Ms Wilkinson four months earlier: see Lehrmann v Network Ten Pty Limited (Limitation Extension) [2023] FCA 385 (at [181]).

23    Needless to say, no party is required to settle a case and the respondents, in the end, were vindicated in the sense they obtained judgment on the statement of claim. The current point is a more subtle one. It is whether Network Ten, if it accepted the conditions sought to be imposed by Ms Higgins, would be acting contrary to its statutory obligation to engage in settlement negotiations in accordance with the overarching purpose. Albeit without the benefit of evidence, I am told that notwithstanding Ms McGarvey twice referred to the conditions in her dealings with Ms Wilkinson’s agent, no cooperation agreement was formalised, and the conditions proposed by Ms Higgins did not inform Network Ten’s subsequent actions relating to a compromise.

24    Despite the inferences available on the evidence, I accept the assurance of senior counsel that this was not the case. This potential breach of the obligations to engage in efforts to compromise the dispute in accordance with the requirements of s 37N(1) was a matter of preliminary concern relevant to costs, but given what I have been told upon instructions by Dr Collins KC, it is unnecessary to reach a final view as to the appropriateness of a party accepting such conditions sought to be imposed by a third party witness in exchange for cooperation, and this issue can be put it to one side.

25    In any event, Mr Lehrmann peremptorily rejected the offer in less than two hours and there is no evidence of any counter-offer being made.

C    RELEVANT PRINCIPLES

26    The principles are not in dispute and only four aspects need to be emphasised.

27    First, an award of costs is in the discretion of the Court and although it has often been remarked the discretion is unfettered, s 37N(4) of the FCA Act requires the Court to take account of any failure by a party to comply with the overarching purpose of the civil procedure provisions, which, as noted above, is to facilitate the just resolution of disputes according to law as quickly, inexpensively and efficiently as possible: see s 37M(1).

28    Secondly, an award of indemnity costs is not a punitive measure, but is designed to compensate a party fully for costs incurred when the court takes the view that it was unreasonable for the party against whom the order is made to have subjected the innocent party to the expenditure of costs: Hamod v New South Wales [2002] FCAFC 97; (2002) 188 ALR 659 (at 665 [20] per Gray J, Carr and Goldberg JJ agreeing). Consistently with the requirement to facilitate the overarching purpose, such circumstances may include where a proceeding is unduly prolonged by groundless contentions: see Melbourne City Investments Pty Ltd v Treasury Wine Estates Limited (No 2) [2017] FCAFC 116 (at [3]–[5] per Jagot, Yates and Murphy JJ).

29    Thirdly, and more specifically in relation to defamation proceedings, the fact that it was for the respondents to prove the truth of the imputations, and not for the applicant to prove the falsity of the imputations, is not decisive in terms of awarding indemnity costs.

30    Fourthly, as to offers of settlement, the relevant factors in considering whether the rejection of a Calderbank offer was unreasonable are well known and have been identified in many cases being: (a) the stage of the proceeding at which the offer was received; (b) the time allowed for 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 indemnity costs in the event of the offeree rejecting it.

D    NETWORK TEN’S COSTS

31    Mr Helvadjian during his helpful written submissions indicated that although Mr Lehrmann did not advocate for a particular order, it “may be appropriate” to recognise the success the respondents have enjoyed in the litigation but, having regard to the failure of the qualified privilege defences, temper that success by ordering the applicant pay only a proportion of the respondents’ costs on an ordinary basis. Having noted this, Mr Lehrmann accepts that it is open for the Court, in the light of authority such as Roberts-Smith v Fairfax Media Publications Pty Limited (No 45) [2023] FCA 1474, to order that Mr Lehrmann pay the costs of the respondents on an indemnity basis.

32    Network Ten accepts it is relevant to have regard to all its conduct up until the date of judgment but asserts there is an insufficient basis upon which it would be an appropriate exercise of discretion to deprive Network Ten of an order for costs. Further, Dr Collins stressed that notwithstanding the Court concluded that certain comments made by Network Ten’s spokesman immediately following the delivery of judgment mischaracterised what the Court had found, any such post-judgment conduct was an irrelevant consideration when it comes to awarding costs. Although I am not convinced any post-judgment conduct could always be irrelevant to costs, for present purposes I do not consider any mischaracterisations of my judgment are material to the exercise of the present costs discretion and I accept it must be put to one side.

33    When one returns to the relevant conduct, Network Ten makes three main points.

34    First, reliance upon the outcome and findings made as to the statutory qualified privilege defence ought be treated with caution in circumstances where Section J of the judgment was entirely counterfactual, in that it had “as its point of departure, the notion that the respondents cannot prove that Mr Lehrmann raped Ms Higgins and, consequently, the substantial truth defence is not made out” (at J [760], [922]).

35    Secondly, despite some “strong indications of the unreliability of their main source”, the Project team was correct to believe Ms Higgins’ core allegation as to the rape. Indeed, Network Ten rely on the fact that I came to the same conclusion as Network Ten as to the credibility of Ms Higgins’ description of the critical incident, despite “all my reservations as to the credibility and reliability of Ms Higgins”, principally because her evidence of not being fully aware when the sexual act commenced and not giving consent “struck me forcefully as being credible and as having the ring of truth”.

36    Thirdly, the findings themselves do not amount to a failure by Network Ten to comply with the overarching purpose. The pleading and prosecution of the separate statutory qualified privilege defence was not doomed to fail, and it was not the dominant issue in the proceeding.

37    All these points have some merit. Having said that, while it is correct that particularised aspects of the conduct examined in relation to the s 30 defence were not found to be improper or mala fide (such as to justify aggravated damages), one cannot ignore the fact that the relevant conduct of Network Ten relating to the publication of the Project programme was far from reasonable and the statutory qualified privilege case, while not hopeless, was weak.

38    I raised with Dr Collins whether the appropriate exercise of discretion (leaving aside the basis upon which any costs would be paid) would be to make an order for costs, but only costs relating to the conduct of the substantial truth defence.

39    In response, Network Ten submitted there must be exceptional circumstances to warrant depriving a successful party of an order for the whole of its costs. The mere fact that the successful party has been unsuccessful on some issues will ordinarily not be sufficient to displace the ordinary rule. Network Ten pointed to the recent summary by Stewart J in Siemens WLL v BIC Contracting LLC (costs) [2024] FCA 201 (at [9]), as follows:

The court may depart from the general rule and exercise its discretion to apportion costs on an issue by issue basis where there are special circumstances to warrant a departure (Firebird Global Master Fund II Ltd v Republic of Nauru (No 2) [2015] HCA 53; 90 ALJR 270 at [6]), such as where there has been disentitling conduct of the successful party, where the raising of the unsuccessful issue was not justified, or it was so unreasonable that it is fair and just to make the order apportioning costs (Findex Group Ltd v McKay (No 3) [2020] FCA 259 at [9]), or where the particular issue was clearly dominant and separable (Bostik Australia Pty ltd v Liddiard (No 2) [2009] NSWCA 204 at [38]).

(Emphasis added)

40    Reference was also made to Les Laboratoires Servier v Apotex Pty Ltd [2016] FCAFC 27; (2016) 247 FCR 61 (at 132 [303]), where the Full Court (Bennett, Besanko and Beach JJ) explained:

… the Courts have been slow to order a successful party to pay the costs where it has been unsuccessful on some issues. In Mok v Minister for Immigration, Local Government and Ethnic Affairs (No 2) (1993) 47 FCR 81, Keely J was of the view (at 84) that, without attempting to fetter the discretion, this power ought to be exercised only where the Court, on a consideration of all the circumstances, has concluded that the raising of an issue by the applicant on which it has failed was so unreasonable that it is fair and just to make the order.

(Emphasis added)

41    Without discounting the accuracy of these expressions of principle, it is important not to be too prescriptive about the exercise of a broad discretion, particularly by reference to cases decided prior to the introduction of Pt VB of the FCA Act and absent the present need to have regard to facilitating the promotion of the overarching purpose in the exercise of the discretion: s 37M(3). In the present case, and while having regard to the principles summarised above, the relevant issue material to my discretion is better expressed as being: whether the persistence in advancing the statutory qualified privilege defence was consistent with the overarching purpose obligations and whether the issues it raised were sufficiently clear and severable from the other issues?

42    The evidence on the cross-claims makes clear that the solicitors knew, from the outset, that the statutory qualified privilege defence faced formidable challenges (with a solicitor for Thomson Geer recording in a file note as early as 8 February 2023) that (Ex X1 (at 1071)):

[Qualified privilege] is something we don’t need to run … It’s something that often isn’t successful … Court’s impose a very high standard of perfection. Reasonable … John Garnaut. Wing … Timeframe for a response wasn’t long enough. Should have spoken to this person as well. Etc.

43    With some reluctance, however, and despite my reservations as to whether the persistence of the respondents in pursuing the statutory qualified privilege defence did facilitate the efficient and cost effective resolution of the case, I have concluded the issues in the statutory qualified privilege defence were not sufficiently severable from other aspects of the case such as to make it appropriate to deprive Network Ten of its costs of this aspect of the proceeding entirely. This is because many of the same matters canvassed relating to the conduct in publishing the Project programme were also in play because of Mr Lehrmann’s decision to particularise reckless indifference to the truth of the imputations as amounting to improper conduct for the purposes of aggravated damages. In my counterfactual analysis, I found against Mr Lehrmann on this contention as to aggravated damages, and it was necessary to have regard to the conduct of the respondents in making this determination.

44    There is one qualification to this general statement. In explaining it, it is worth repeating the view I expressed in Transport Workers’ Union of Australia v Qantas Airways Limited [2021] FCA 873; (2021) 308 IR 244 (at 253–254 [24]–[27]):

[24]    … I raised with the parties my preference that evidence in chief in relation to controversial facts be led orally. In doing so, I had in mind both the terms of the Practice Note and the sort of considerations thoughtfully discussed by the Hon Justice A Emmett writing extra-judicially in his article, ‘Practical Litigation in the Federal Court of Australia: Affidavits’ (2000) 20 Australian Bar Review 28, where that very highly experienced judge observed (at 28):

Where an assessment of credit is required, a judge will have a much better prospect of assessing a witness who gives evidence in chief orally rather than being exposed to cross-examination immediately upon entering the witness box.

[25]    Qantas expressed a “strong preference” for affidavits … and senior counsel of the Union perceived some advantages in written evidence in chief, despite my indication … that:

I’m always conscious of what Lord Buckmaster said – and this is no [reflection on] any party, but it’s a famous quote that used to be repeated constantly by the Honourable T.E.F. Hughes AO QC, and that is that the truth comes out of affidavits like water from a leaky well, whereas people come along and tell their story in the witness box, there might be a better chance of the account being given in a more spontaneous way, and it may save a lot of money and cost and time.

[26]       This aphorism was one I had mentioned in Lloyd v Belconnen Lakeview Pty Ltd [2019] FCA 2177; (2019) 377 ALR 234 (at 269 [110]–[113]), where I also repeated the comment made by Lord Woolf MR contained in the Access to Justice Report, Final Report (HMSO), 1996 (at [55]) that:

Witness statements have ceased to be the authentic account of the lay witness; instead they have become an elaborate, costly branch of legal drafting.

[27]       In citing my observations in Lloyd v Belconnen with apparent approval in Queensland v Masson [2020] HCA 28; (2020) 94 ALJR 785, Nettle and Gordon JJ observed (at 810 [112]) (footnotes omitted):

The oft unspoken reality that lay witness statements are liable to be workshopped, amended and settled by lawyers, the risk that lay and, therefore, understandably deferential witnesses do not quibble with many of the changes made by lawyers in the process – because the changes do not appear to many lay witnesses necessarily to alter the meaning of what they intended to convey – and the danger that, when such changes are later subjected to a curial analysis of the kind undertaken in this matter, they are found to be productive of a different meaning from that which the witness intended, means that the approach of basing decisions on the ipsissima verba of civil litigation lay witness statements is highly problematic. It is the oral evidence of the witness, and usually, therefore, the trial judge’s assessment of it, that is of paramount importance.

45    As I explained in the judgment, this was a case where the extensive contemporaneous record demonstrates the large gulf between the carefully drafted respondents’ affidavits and the true position as to the immediate and unquestioning belief in Ms Higgins’ account by Mr Llewellyn and Ms Wilkinson (and as to the Project team’s lack of interest in examining the account properly or obtaining contrary accounts). Significant costs in preparing the affidavits by both respondents were wasted. Given my time over again, I would have been best assisted by hearing any such evidence orally. In making this comment I am cognisant that several deponents were not cross-examined but, as I explained in the judgment, my findings as to what occurred were not only unassisted by this material, but the real approach taken was obscured. The true position only emerged from a review of the extensive transcripts and other contemporaneous records. The picture revealed stands in contrast to numerous representations made in the affidavits.

46    Although I accept parts of the affidavits relevant to the statutory qualified privilege defence were material to other issues, a relatively rough and ready approach is warranted. The quantification process will be simplified by disallowing the costs associated with these affidavits (while still allowing for an overall fair result as to what ought to be recoverable against Mr Lehrmann).

47    Having determined that subject to this exception it is appropriate that Mr Lehrmann pay Network Ten’s costs, it is necessary to address whether those costs should be paid, wholly or partly, on an indemnity basis.

48    Network Ten submits it follows from the findings made in the judgment that, at the time of commencing the proceeding, Mr Lehrmann knew he had raped Ms Higgins. He knew that proof of the rape would be sufficient to establish the substantial truth of the imputations and would lead to the dismissal of the proceeding. It is not an answer to say that Mr Lehrmann considered he had some prospects of success by persuading the Court to accept facts known by him to be false: Roberts-Smith (No 45) (at [21] per Besanko J). Network Ten asserts that Mr Lehrmann gambled on the respondents not being able to discharge their burden of proof in respect of a matter that, in view of the outcome, he must have known to be true.

49    It follows, it is submitted, that Mr Lehrmann engaged in an abuse of the Court’s processes, ran a case based on falsities, and put Network Ten to the cost of defending a baseless proceeding. Given the subject matter and the success of the substantial truth defence, the seriousness of such conduct cannot be overstated and is of such a character as to justify an award of indemnity costs.

50    I substantially accept the submissions of Network Ten but would describe the unreasonable conduct of Mr Lehrmann, justifying an award of indemnity costs, somewhat differently.

51    Even in final submissions (see Applicant’s Closing Submissions dated 28 February 2023 (ACS) (at [382A])), Mr Lehrmann persisted in the assertion the evidence could not “sustain a positive finding that any sexual activity took place”. This was Mr Lehrmann’s primary case. Having said this, when it came to the “question of consent”, in respect of which argument was joined in final submissions (see ACS [382A–F]), it was accepted by Mr Lehrmann that if sex did take place, the “bare fact of rape [as imputed by the Project programme] ... might be committed simply by being recklessly indifferent to whether or not there was consent” (ACS [386]), but that (ACS [382F]):

… whilst there is a relatively confined period in which any sexual activity might have occurred, there is no cogent and reliable evidence as to Mr Lehrmann’s state of mind at the time of any such sexual activity in relation to his knowledge, belief or advertence as to Ms Higgins’ level of inebriation and ability to consent sufficient to permit the requisite finding of fact necessary to establish that rape or sexual intercourse without consent on the basis of intoxication occurred.

52    What I found (at J [590]–[591]), is that Mr Lehrmann “may well” have turned his mind to consent and been aware Ms Higgins was unconscious when sexual intercourse commenced (but that I was not positively satisfied that Mr Lehrmann had a state of mind of actual cognitive awareness that Ms Higgins did not consent to having sex). In accepting the critical part of Ms Higgins’ evidence that she was not fully aware when sexual intercourse commenced and did not thereafter give her consent, I found (at J [601]) Mr Lehrmann was so intent upon gratification to be indifferent to Ms Higgins’ consent, and hence went ahead with sexual intercourse without caring, one way or another, whether she consented. As anticipated in the ACS, this finding of reckless indifference as to whether there was consent, was sufficient to make out the substantial truth of the fact of rape as that concept was understood by the ordinary reasonable viewer of the Project programme.

53    But it is noteworthy that I also rejected (at J [606]–[608]) two other scenarios potentially available on the evidence that ranked “higher on the likelihood range” than others (being that “consensual sex occurred, or Mr Lehrmann was not reckless while having non-consensual sex”).

54    In accordance with the fact-finding principles and cautions explained in the judgment, I rejected all other scenarios as individually and collectively less likely than what I found took place (based upon my demeanour-based credit finding accepting the critical part of Ms Higgins’ evidence). But even leaving aside what I found happened, in any non-fanciful (albeit unlikely) scenario, Mr Lehrmann had sexual intercourse with Ms Higgins and yet ran a primary case premised upon the fanciful and knowingly false premise that in the early hours of 23 March 2019, he was preoccupied with noting up details as to French submarine contracts.

55    As I said (at J [1071]), Mr Lehrmann defended the criminal charge on a false basis, lied to police, and then allowed that lie to go uncorrected before the jury. He wrongly instructed his senior counsel to cross-examine a complainant of sexual assault, in two legal proceedings, including, relevantly for present purposes, this case, on a knowingly false premise.

56    Indeed, this was misconduct in the running of his case of such a character, that even if I had not reached the level of satisfaction that Mr Lehrmann raped Ms Higgins (and Mr Lehrmann was therefore entitled to judgment of $20,000), in the counterfactual explained in the judgment, I would have declined to award costs in Mr Lehrmann’s favour. This would have been the appropriate exercise of discretion in those circumstances given Mr Lehrmann had acted in serious breach of his obligations under Pt VB of the FCA Act in advancing a case he knew was false and which occasioned much delay, inefficiency, and increased cost.

57    In the end, it comes down to the order for costs that best does overall justice in the circumstances. On balance, the appropriate exercise of discretion is to make an award that Network Ten recover its costs against Mr Lehrmann on an indemnity basis except for costs incurred in relation to the statutory qualified privilege defence, which will be recoverable (save for costs of the affidavits to which I have referred), on an ordinary or party-party basis.

58    For completeness, I should mention two further matters.

59    First, when it comes to the conduct of the proceeding, Network Ten also relies on s 40(1)(a) of the Defamation Act 2005 (NSW). This provision provides that the Court may have regard to the way in which the parties conducted their case. I have previously expressed doubts as to whether this provision is picked up in federal jurisdiction but, in any event, the issue as to its applicability does not require resolution, given the same principles promoted by this state statutory provision necessarily inform the discretion to be exercised pursuant to s 43 of the FCA Act. If s 40(1)(a) was applicable, my discretion (and the discretion I would have exercised in the counterfactual) would not have been different.

60    Secondly, there is the Calderbank letter. Having regard to the factors outlined above (at [30]), Mr Lehrmann’s decision to reject the offer, made at a relatively early stage in the proceeding, in circumstances where he knew that he was prosecuting the proceeding on the basis of a falsehood, amounts to conduct which has been described as a “very significant consideration” in assessing the reasonableness of the refusal of a Calderbank offer: Roberts-Smith (No 45) (at [29]). Hence, even if I was not otherwise satisfied of the appropriateness of a partial indemnity award from the commencement of the proceeding, I would have been satisfied that Mr Lehrmann’s rejection of the offer was unreasonable and, consistently with ordinary Calderbank principles, would have entitled the respondents to an award of indemnity costs from the date of the offer, being 31 August 2023 (but again, in the exercise of my discretion, I would have limited the extent of the indemnity award).

E    MS WILKINSON’S COSTS

61    Ms Wilkinson makes the same points made by Network Ten.

62    Mr Lehrmann made the decision to sue Ms Wilkinson in her personal capacity as a publisher. Notwithstanding the existence of the costs indemnity explained in the cross-claims judgment, the same considerations that inform the making of the type of costs order against Mr Lehrmann in favour of Network Ten apply mutatis mutandis to Ms Wilkinson. The appropriate exercise of the discretion is to make an order in favour of Ms Wilkinson in the same terms.

F    THE POSITION AS BETWEEN THE RESPONDENTS

63    At the hearing, a process was agreed between the respondents by which Ms Wilkinson would provide a copy of the relevant documentation supporting her claim pursuant to the costs indemnity, and then Network Ten would respond by identifying those costs it considers falls outside the scope of the indemnity (so as to identify that part of the total costs and disbursements charged to Ms Wilkinson that are accepted as being costs reasonably incurred in defending Mr Lehrmann’s claim (indemnified costs)). When the ambit of this dispute as to any disputed costs Ms Wilkinson contends are covered by the indemnity has been crystallised, I have requested the parties to provide me with proposed questions to be asked of a referee to inquire into and report upon the proper amount of the total indemnified costs.

64    I made the following orders to facilitate the identification of questions for the referee:

…

6.    By 10 May 2024, Ms Wilkinson’s solicitors provide to Network Ten’s solicitors, in a single paginated bundle, copies of:

(a)     all relevant costs agreements and/or fee agreements provided to and accepted by Ms Wilkinson in relation to the proceeding;

(b)     any office account ledgers or documents evidencing time recording details relevant to any agreement referred to in paragraph 6(a) above;

(c)     all of the invoices issued to Ms Wilkinson during the proceeding;

(d)     all other bills (including disbursements and memoranda of fees) issued to Ms Wilkinson during the proceeding; and

(e)     any other document evidencing any cost incurred or payment by Ms Wilkinson which she alleges are the subject of the indemnity.

7.     By 23 May 2024, Network Ten’s solicitors provide a response in relation to the materials provided in accordance with Order 6 above, by identifying disputed costs.

8.     By 4pm on 24 May 2024, the respondents provide either agreed or competing proposed orders for reference to the Associate to Justice Lee.

9.     The matter be listed for a further case management hearing at 9:30am on 27 May 2024 to determine the appropriate scope and terms of any reference to Mr Matters on the question of whether and the extent to which Ms Wilkinson’s costs have been reasonably incurred.

65    At the hearing, Network Ten made the submission that its obligation to indemnify Ms Wilkinson is an obligation to reimburse Ms Wilkinson for her actual loss suffered and that the “extent of Network Ten’s liability to Ms Wilkinson cannot be finally ascertained until Ms Wilkinson’s own loss is finally determined, by reference to: (a) the Court’s consideration of the report of the referee…; and (b) the extent to which Ms Wilkinson succeeds in recovering costs from Mr Lehrmann by prosecuting any order for costs made in her favour”.

66    This is disputed by Ms Wilkinson who makes the point that Network Ten (as the indemnifying party as to the indemnified costs) is subrogated to the rights of the indemnified party (Ms Wilkinson) to recover the indemnified costs from Mr Lehrmann, and may stand in her shoes and exercise those rights (and hence there may be no need for an order for costs in Ms Wilkinson’s favour as the indemnified costs can be recovered pursuant to the costs order in favour of Network Ten).

67    As it turns out, at the urging of Ms Wilkinson, I have made a costs order in her favour, but a dispute between the respondents arose as to whether Ms Wilkinson must await the completion of any enforcement action by her against Mr Lehrmann (or any insolvency event) to “crystallise” her loss and only then be able to recover the total indemnified costs against Network Ten.

68    It is unclear whether this aspect of the dispute still needs resolution. If so, I will hear argument, but as I noted during argument, as a general proposition, an indemnity is an enforceable requirement to hold the indemnified party harmless against loss: Total Oil Products (Australia) Pty Ltd v Robinson [1970] 1 NSWR 701 (at 703 per Asprey JA, with whom Sugerman and Holmes JJA agreed); Canty v PaperlinX Australia Pty Ltd [2014] NSWCA 309; (2014) 9 BFRA 524 (at 536 [39] per Gleeson JA, with whom Barrett and Emmett JJA agreed); Sunbird Plaza Pty Ltd v Maloney (1988) 166 CLR 245 (at 254 per Mason CJ). Consistently with the foundational nature of an indemnity, there is a well-established principle to the effect that a right of action under an indemnity crystallises when loss or expense is incurred. Given the purpose of the indemnity is to hold an indemnified person harmless against loss, the right of action arises (absent express provision to the contrary) when the indemnified person suffers loss or incurs an expense: Firma C-Trade SA v Newcastle Protection & Indemnity Association (The Fanti) [1991] 2 AC 1 (at 28 per Lord Brandon; 35–36 per Lord Goff; 40–41 per Lord Jauncey). Further, again as a general proposition, it is the indemnified person’s liability to pay that triggers the indemnity: Abigroup Limited v Abignano (1992) 39 FCR 74 (at 83 per Lockhart, Morling and Gummow JJ). That being so, it seems to me, as I presently understand the position, Ms Wilkinson would have become entitled to call on the indemnity when she incurred the liability to pay properly incurred costs (being indemnified costs): see Evolution Precast Systems Pty Ltd v Chubb Insurance Australia Limited [2020] FCA 1690 (at [45]–[49] per Derrington J).

69    In any event, these are preliminary views only and if the timing issue is required to be determined following full argument, that can be arranged at the same time I settle questions for the referee.

G    ORDERS AND CONCLUDING REMARKS

70    In addition to a referee reporting upon the total amount of the indemnified costs, the parties agree that it is consistent with the overarching purpose for the same referee to inquire into and report upon the amount payable by Mr Lehrmann pursuant to the costs order made in favour of the respondents.

71    The parties should provide, by 4pm on 24 May 2024, agreed or competing proposed orders for reference to my Associate, not only as to the issue of the ascertainment of the total indemnified costs pursuant to the order I have already made, but also as to quantification of the adverse costs order made in favour of the respondents against Mr Lehrmann. I will make orders for reference at a case management hearing at 9:30am on 27 May 2024.

72    Before leaving this matter, for completeness, it is appropriate to refer briefly to a further matter canvassed at the recent hearing.

73    In the judgment, Network Ten’s attributed conduct relating to the giving of the Logies speech, for the reasons it was given (Relevant Conduct), was held to be grossly improper and unjustifiable as amounting to conduct apt to cause disruption to the criminal justice system (at J [1041]) and amounted to conduct that could be characterised as egregious (at J [1077]) (Relevant Findings).

74    Following the delivery of judgment, however, a solicitor spokesman retained on behalf of Network Ten made what might be described as a “victory” tour and expressed public comments relating to the Relevant Findings and repeatedly expressed the view that the Logies speech not only did not have the tendency to interfere with the administration of justice but presented no difficulty whatsoever.

75    In the wake of these comments, I indicated to Network Ten that it appeared open to infer and, if relevant, act upon the basis that the considered view to be attributed to Network Ten (as informed by internal and external legal advice) is that the Relevant Conduct was appropriate and similar comments may be made again if the broadcaster was similarly placed in relation to a future and immediately pending jury trial.

76    Notwithstanding the position taken by Network Ten at the hearing and the comments of its spokesman after judgment, after these issues were raised, further affidavits and submissions explaining the considered and current view of Network Ten were provided to the Court. This material suggests that (Saul of Tarsus-like) the scales have belatedly fallen from the anthropomorphic eyes of Network Ten – in the circumstances, no further comment or action from this Court is necessary nor appropriate.

Associate:

Dated:    10 May 2024