Federal Court of Australia

Edwards v Nine Network Australia Pty Limited (No 6) [2024] FCA 758

ORDERS

THE COURT ORDERS THAT:

1.    The respondents pay the applicant’s costs of the proceedings assessed as follows:

(a)    on a party and party basis for the period up to 11.00 am on 15 March 2022;

(b)    on an indemnity basis for the period after 11.00 am on 15 March 2022, other than the costs of or incidental to the hearing concerning the question of costs; and

(c)    on a party and party basis in respect of the costs of and incidental to the hearing concerning the question of costs.

2.    The amount of costs payable by the respondents in accordance with order 1 be referred to a Registrar of the Court, acting as a referee pursuant to Pt 28 Div 28.6 of the Federal Court Rules 2011 (Cth), for determination on a lump-sum basis in accordance with the lump-sum procedure in the Costs Practice Note (GPN-COSTS) dated 25 October 2016.

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

REASONS FOR JUDGMENT

(Revised from transcript)

WIGNEY J:

1    The applicant, Ms Gina Edwards, commenced proceedings against Nine Network Australia Pty Limited, an associated company and one of its journalists (collectively, the respondents) in which she alleged that she had been defamed. On 26 April 2024 I handed down a judgment in which I found in favour of Ms Edwards: Edwards v Nine Network Australia Pty Limited (No 5) [2024] FCA 422 (liability judgment). The respondents later removed the offending publications from the internet and on 16 May 2024 the Court made orders which gave effect to the judgment. Those orders included that judgment be entered for Ms Edwards in the sum of $150,000. The outstanding issue between the parties concerns costs. This judgment addresses that issue.

2    There is, in effect, no dispute that, as the successful party, Ms Edwards is entitled to a costs order in her favour. The issue concerns the basis upon which costs should be assessed. Ms Edwards contends that the respondents should be ordered to pay her costs assessed on an indemnity basis, either in respect of the entire proceeding, or alternatively from 15 March 2022, which was said to be the second business day after she served an offer of compromise on the respondents. Ms Edwards also seeks an order that the costs be determined and fixed by a Registrar on a lump sum basis. The respondents contend that Ms Edwards should have her costs paid on an ordinary (party and party) basis, or that any order in respect of indemnity costs should not include costs incurred in relation to certain issues in respect of which Ms Edwards was unsuccessful.

3    For the reasons that follow, the appropriate costs order in the circumstances of this case is that the respondents pay Ms Edwards’ costs on a party and party basis up to 11.00 am on 15 March 2022 and on an indemnity basis thereafter. The quantum of the applicant’s costs should be determined by a Registrar on a lump sum basis.

4    These reasons should be read in conjunction with the liability judgment.

Relevant principles

5    The Court’s discretionary power to award costs derives from s 43 of the Federal Court of Australia Act 1976 (Cth) (FCA Act). The usual rule is that an order for costs means costs “as between party and party”: r 40.01 of the Federal Court Rules 2011; see also the definition of “costs” in the Dictionary in Sch 1 of the Rules; Mango Boulevard Pty Ltd v Whitton [2015] FCA 1352 at [12]. A party or person who is entitled to costs may, however, apply for an order that costs be awarded in their favour “other than as between party and party”: r 40.02(a) of the Rules. That includes an order that costs be awarded on an indemnity basis.

6    The discretion to award costs on a basis other than as between party and party, including on an indemnity basis, is “unfettered, save that it must be exercised judicially and not arbitrarily or capriciously”: Australian Competition and Consumer Commission v The Construction, Forestry, Mining and Energy Union (No 4) [2018] FCA 684 at [96]. The discretion must also be exercised in light of the requirement that the Court consider any failure by a party to comply with the overarching purpose of the civil practice and procedure provisions to facilitate the just resolution of disputes according to law as quickly, inexpensively and efficiently as possible: see ss 37N(4), 37M(1) of the FCA Act; LFDB v SM (No 2) [2017] FCAFC 207 at [7].

7    The discretion to depart from an order for party and party costs will not be exercised unless there is some special or unusual feature or the justice of the case so requires: Cirillo v Consolidated Press Property Ltd (formerly known as Citicorp Australia Ltd) (No 2) [2007] FCA 179 at [3]; Seven Network Ltd v News Ltd (2009) 182 FCR 160; [2009] FCAFC 166 at [1102]; Melbourne City Investments Pty Ltd v Treasury Wine Estates Limited (No 2) [2017] FCAFC 116 at [5].

8    The purpose of a costs order is to compensate the successful party, not to punish the unsuccessful one: King v Yurisich (No 2) [2007] FCAFC 51 at [19], citing Latoudis v Casey (1990) 170 CLR 534; Seven Network at [1099]. An award of indemnity costs is to “serve the purpose of compensating a party fully for costs incurred, as a normal costs order could not be expected to do, 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) 188 ALR 659; [2002] FCAFC 97 at [20]; see also Kazal v Independent Commission Against Corruption and Ors (No 2) [2020] NSWSC 17 at [60]-[62]; Cirillo at [4]-[5]; Melbourne City Investments at [5].

9    One circumstance in which an order for indemnity costs may be appropriate is where the unsuccessful party unreasonably or imprudently refused or failed to accept an offer by the successful party to settle the proceeding: Calderbank v Calderbank [1976] Fam 93; Hazeldene's Chicken Farm Pty Ltd v Victorian WorkCover Authority (No 2) (2005) 13 VR 435; [2005] VSCA 298; Black v Lipovac [1998] FCA 699 at [217]-[223]; Dukemaster Pty Ltd v Bluehive Pty Ltd [2003] FCAFC 1 at [7]; Hardingham v RP Data Pty Ltd (No 2) [2021] FCAFC 175 at [19]; Hill v Forteng Pty Ltd [2019] FCAFC 105 at [76].

10    In considering whether the rejection of the offer to settle was unreasonable, the matters that the Court may have regard to include: the stage of the proceeding at which the offer was received; the time allowed to the offeree to consider the offer; the extent of the compromise offered; the offeree’s prospects of success, assessed as at the date of the offer; the clarity with which the terms of the offer were expressed; and whether the offer foreshadowed an application for indemnity costs in the event of the offeree rejecting it: Anchorage Capital Partners Pty Limited v ACPA Pty Ltd (No 2) [2018] FCAFC 112 at [7]. It may also be necessary to have regard to the likely party and party costs incurred at the time the offer was made: Hill v Forteng at [80].

11    It should also be noted in this context that s 40 of the Defamation Act 2005 (NSW) provides as follows:

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.

12    There is, however, an issue as to whether s 40 of the Defamation Act is relevantly “picked up” in federal jurisdiction pursuant to s 79 of the Judiciary Act 1903 (Cth): see Murphy v Nationwide News Pty Ltd (No 2) [2021] FCA 432 at [6]; Palmer v McGowan (No 6) [2022] FCA 927 at [41]; Russell v ABC (No 4) [2023] FCA 1279 at [11]; Stead v Fairfax Media Publications Pty Ltd (No 2) (2021) 386 ALR 237; [2021] FCA 65 at [13]; Lehrmann v Network Ten Pty Ltd (Costs) [2024] FCA 486 at [59]. That said, in Hayson v Age Company Pty Ltd (No 3) (2020) 280 FCR 139; [2020] FCA 1163 at [39], Bromwich J found that s 40 of Defamation Act was relevantly picked up by s 79 of the Judiciary Act and applied in defamation proceedings conducted in this Court. The respondents did not submit that that conclusion was plainly wrong. Accordingly, I should proceed on the basis that s 40 of the Defamation Act applies in this case, despite the reservations that have been expressed in other cases. I should also note that s 40 of the Defamation Act has been taken to apply to, or has otherwise been considered as relevant to, the question of costs in several defamation cases in this Court: Bellino v Queensland Newspapers Pty Ltd (No 2) [2019] FCA 1691 at [13]-[18]; Hanson-Young v Leyonhjelm (No 5) [2020] FCA 34 at [29]-[72]; JWR Productions Australia Pty Ltd v Duncan-Watt (No 3) [2020] FCA 528 at [17]-[36].

13    It should also be emphasised that insofar as s 40 of the Defamation Act applies in respect of the question of costs in defamation proceedings brought in this Court, it would not preclude the continued operation of provisions in the FCA Act and Rules that concern or relate to the question of costs. That is the position taken in State courts: see Hyndes v Nationwide News Pty Ltd [2012] NSWCA 349 at [56]. In particular, the application of s 40 of the Defamation Act in defamation proceedings in this Court is subject to the requirements in s 37M and s 37N(4) of the FCA Act. Moreover, insofar as the application of s 40(2)(a) of the Defamation Act turns on the question whether it was unreasonable for a defendant not to accept a settlement offer, it does not in any event significantly differ from the principles that apply in relation to the rejection of settlement offers generally.

14    Another circumstance where an order for indemnity costs may be warranted is provided for in Pt 25 of the Rules. Rule 25.01 of the Rules provides that a party “may make an offer to compromise by serving a notice, in accordance with Form 45, on another party”. Subsequent rules provide for the content and timing of the offer and its withdrawal or acceptance. It is unnecessary for present purposes to consider those rules. Of more significance is r 25.14(3) which relevantly 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.

15    As can be seen, r 25.14(3) does not turn on whether the non-acceptance of the offer was or was not reasonable, but simply turns on whether the judgment was more favourable than the terms of the offer. Where that is the case, the applicant is “entitled” to indemnity costs: see JMC Pty Ltd v Commissioner of Taxation (Costs) [2023] FCAFC 95 at [6].

16    The Court can, however, make an order which is inconsistent with r 25.14(3) by virtue of r 1.35 of the Rules, which generally permits the Court to make orders inconsistent with the Rules. A party which seeks an order under r 1.35 which is inconsistent with an order which would otherwise be made pursuant to, or by operation of, r 25.14(3) bears the onus of establishing that the inconsistent order should be made: JMC at [9]. The Full Court in JMC also observed (at [10]-[11]) as follows in relation to the circumstances in which the discretion under r 1.35 might be exercised in those circumstances:

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].

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.

17    In exercising the discretion under r 1.35 in these circumstances, the Court must also have regard to the requirement in s 37M(3) of the FCA Act that the power be exercised “in the way that best promotes the overarching purpose” in s 37M(1) of the FCA Act, which is to facilitate “the just resolution of disputes” both “according to law” and “as quickly, inexpensively and efficiently as possible”: see Russell at [9].

18    Having regard to the way in which the respondents put their case in respect of costs, it is necessary to have regard to the principles that apply where a party, though ultimately successful, may have failed in respect of certain issues raised or arguments advanced in their case.

19    In some circumstances, a successful party who has failed on certain issues may not only be deprived of the costs of those issues but may be ordered as well to pay the other party’s costs of them: Siemens WLL v BIC Contracting LLC (costs) [2024] FCA 201 at [8]. In general, however, “where there are multiple issues in a case the Court generally does not attempt to differentiate between the issues on which a party was successful and those on which it failed” and “unless a particular issue or group of issues is clearly dominant or separable it will ordinarily be appropriate to award the costs of the proceedings to the successful party without attempting to differentiate between those particular issues on which it was successful and those on which it failed”: Bostik Australia Pty Ltd v Liddiard (No 2) [2009] NSWCA 304 at [38] (first dot point).

20    The mere fact that a court does not accept all of the arguments advanced by a successful party does not make it appropriate to deal with costs on an issue-by-issue basis: The State of Victoria v Sportsbet Pty Ltd (No 2) [2012] FCAFC 174 at [8]; Siemens at [8]. Moreover, a court will be reluctant to adopt an approach of apportioning costs between different issues depending on success or failure on those issues where it is likely to be difficult, if not impossible, to allocate items of costs between the different issues: Marmax Investments Pty Ltd v RPR Maintenance Pty Ltd (No 2) [2015] FCAFC 155 at [16] citing Cretazzo v Lombardi (1975) 13 SASR 4 at 16; and Chevron Australia Holdings Pty Ltd v Commissioner of Taxation (No 5) [2015] FCA 1310 at [15]; PKT Technologies Pty Ltd v Peter Vogel Instruments Pty Ltd (No 2) [2020] FCAFC 46 at [15].

21    Generally speaking, “applications regarding costs on an issue-by-issue basis, involving apportionments based on degrees of difficulty of issues, time taken to argue them and the like” are not to be encouraged: Firebird Global Master Fund II Ltd v Republic of Nauru (No 2) [2015] HCA 53; (2015) 90 ALJR 270 at [6].

The appropriate costs order in this case

22    As noted earlier, there is essentially no dispute that Ms Edwards is entitled to a costs order in her favour. The issues raised by the competing submissions of the parties are: first, whether it is appropriate to order the respondents to pay indemnity costs for the entire proceeding; second, if not, whether it is appropriate to order the respondents to pay indemnity costs from 15 March 2022 (and party and party costs before that date); and third, whether it is appropriate to order indemnity costs in relation to some issues, or parts of the proceeding, but not others. As will be seen, the third issue is somewhat intertwined with the second issue. The fourth and final issue is whether the Court should make a lump sum costs order.

Is it appropriate to order the respondents to pay indemnity costs for the entire proceeding?

23    This question may be dealt with shortly. The short answer to this is no.

24    Ms Edwards’ submission that it is appropriate to order the respondents to pay indemnity costs for the entire proceeding was primarily based on s 40 of the Defamation Act. Ms Edwards contended that a concerns notice that she served on the respondents on 24 November 2021 contained or constituted a settlement offer, for the purposes of s 40(2)(a) of the Defamation Act, which the respondents did not accept. Ms Edwards also contended that the respondents unreasonably failed at any time to make a settlement offer in the proceeding and were therefore liable to pay indemnity costs by reason of s 40(2)(a) of the Defamation Act.

25    There are several problems with Ms Edwards’ contentions in that regard.

26    The first difficulty is that it is somewhat hard to accept that the concerns notice could fairly be said to constitute a settlement offer, either pursuant to s 40 of the Defamation Act or more generally, given its timing and terms. The concerns notice was sent almost six months after the publication of the last of the offending publications and Ms Edwards did not commence proceedings until a further three months had passed. The terms of the “offer” in the notice were, in summary, that the respondents: immediately remove the publications from their websites and social media sites; undertake not to republish the publications or any imputations that were the same or “substantially the same” as those allegedly conveyed by the publications; pay Ms Edwards’ legal costs (which were unspecified and at large); pay Ms Edwards damages “in an amount to be agreed or as determined by the Court by reason of a referral under the Defamation Act 2005”; and publish a specified apology for a minimum period of 14 days. The offer was only open for acceptance within seven days, failing which Ms Edwards threatened that she would commence proceedings.

27    The terms of that “offer” could fairly be characterised as a demand that the respondents completely capitulate. The only compromise offered by Ms Edwards was that if the respondents accepted the offer and “opted” to have Ms Edwards’ damages determined by the Court, the respondents would be required to pay all of the costs of the proceeding, but Ms Edwards would accept 15% less than the amount that the Court ordered the respondents to pay by way of damages.

28    The second and more fundamental difficulty is that, to the extent that the concerns notice could be said to constitute a settlement offer, either generally or for the purposes of s 40 of the Defamation Act, I am not persuaded that it was unreasonable for the respondents to refuse or fail to accept that offer in all the circumstances. It could scarcely be said to be unreasonable for the respondents to refuse an offer which required them to effectively completely capitulate at such an early stage, particularly in circumstances where the amount that they might be required to pay in respect of costs and damages was entirely at large and the offer was only open for acceptance for seven days. Ms Edwards pointed out that the respondents did not even respond to the concerns notice and submitted that their failure to respond was unreasonable. I would tend to agree that the failure of the respondents to respond to or engage at all with the concerns notice was somewhat unsatisfactory and unproductive. The point remains, however, that the terms of the offer in the concerns notice were such that it was not unreasonable at that stage of the dispute for the respondents not to accept the offer in the notice, within the very short stipulated time, such as to warrant an order for indemnity costs from that point in time.

29    The third difficulty is that I am not persuaded that it was unreasonable for the respondents not to make a settlement offer, at least prior to 10 March 2022 when Ms Edwards served an offer of compromise. It might perhaps be said that it was unreasonable for the respondents not to make a settlement offer at some later point in the proceeding, however, given the findings I have made in respect of the respondents’ failure to accept Ms Edwards’ offer of compromise, it is unnecessary to explore that issue further, other than to deal with one submission made by Ms Edwards in this context.

30    Ms Edwards submitted that the purpose of s 40 of the Defamation Act was to promote or procure the early settlement of defamation proceedings. While no authority was cited in support of that proposition, reference was made to the general objects of the Defamation Act as specified in s 3, which include “to promote speedy and non-litigious methods of resolving disputes about the publication of defamatory matter”. Ms Edwards submitted that, given that legislative objective, if the Court found that it was unreasonable for a defendant not to make a settlement offer at some later stage of the proceeding, that would justify an order for indemnity costs pursuant to s 40(2)(a) of the Defamation Act for the entire proceeding, even if it may not have been unreasonable for the defendant to make an offer at some earlier point in the proceeding. She also submitted, in that context, that an indemnity costs order for the entire proceeding was warranted in this case because the respondents never made a settlement offer.

31    I find that submission concerning the construction or operation of s 40(2)(a) difficult to accept. I would also consider that the interests of justice would require otherwise in those circumstances in any event. Moreover, in this case the respondents did in fact make settlement offers, albeit not until September and November 2022. While the terms of those offers were such that it is unsurprising and not unreasonable that Ms Edwards did not accept them, they nonetheless constituted offers. I am, in the end result, unpersuaded that it is appropriate to order the respondents to pay indemnity costs for the entire proceeding, either on the basis of s 40(2)(a) of the Defamation Act or otherwise, on the basis that they unreasonably failed to make a settlement offer.

Is it appropriate to order the respondents to pay indemnity costs from 15 March 2022?

32    Ms Edwards’ contention that the respondents should be ordered to pay indemnity costs from 15 March 2022 was based on her service of an offer of compromise on 10 March 2022. The terms of the offer were that the respondents remove the offending publications from their websites and social media sites, that judgment be entered for Ms Edwards in the sum of $79,000 and that Ms Edwards’ costs be paid by the respondents as agreed or assessed. The offer was open to be accepted for 14 days after service.

33    There is no dispute that the offer of compromise met all the requirements of Pt 25 of the Rules. There is also no dispute that the respondents did not accept the offer. Indeed, once again it appears that the respondents ignored or failed to respond at all to the offer. It is clear that Ms Edwards secured a judgment which was more favourable than the terms of the offer. It follows that, by virtue of r 25.14(3) Ms Edwards is “entitled” to an order that her costs be paid on an indemnity basis from 11.00 am on the second business day after the offer was served and on a party and party basis before that time.

34    The respondents accept that Ms Edwards was entitled to indemnity costs from 15 March 2022 by virtue of r 25.14(3) of the Rules and their failure to accept the offer of compromise. They contend, however, that the Court can and should exercise its discretion under r 1.35 to make an order inconsistent with r 25.14(3) as it would otherwise apply in the circumstances of this case. They contend that the Court should exercise its discretion under r 1.35 by virtue of what was said to be “disentitling conduct” by Ms Edwards. That disentitling conduct was said to be the advancement and pursuit of issues that were ultimately not accepted by the Court and the giving of evidence that was found to be unreliable or not credible. The pursuit of those supposedly “groundless” issues and the giving of that unreliable evidence was said to have unduly prolonged the proceeding and was therefore contrary to the overarching purpose. The respondents also relied on the obiter observation made by Lee J in Russell (at [14]) that it is “fundamental to the just resolution of disputes that a witness tells the truth”.

35    The issues pursued by Ms Edwards that the respondents claimed were groundless included, in summary: that she and Mr Flavell had entered into an agreement with Mr Gillespie pursuant to which they were co-owners of Oscar; that Mr Gillespie had abandoned Oscar when he went overseas for work and left Oscar in the care of his relatives in Wingello; that Mr Gillespie’s relatives in Wingello mistreated Oscar; that Ms Edwards’ actions in taking possession of Oscar were justified by the mistreatment of Oscar; and that, at least until this issue was conceded by Ms Edwards on the first day of the trial, that she did not obtain possession of Oscar from Mr Gillespie’s relatives by employing a deception. The respondents also relied on the Court’s findings that Ms Edwards was an unreliable and unsatisfactory witness in certain respects and that some of her evidence was not credible.

36    There is and can be no dispute that the Court found that some of Ms Edwards’ evidence in respect of those issues was unreliable and lacked credibility in certain respects. It should be emphasised, however, that the Court did not find that Ms Edwards deliberately lied or was a dishonest witness. The credibility findings were more nuanced than that. There is also no doubt that the Court ultimately found against Ms Edwards in relation to those issues. Ms Edwards was cross-examined at some length concerning those issues and the Court was ultimately required to wade through other evidence, documentary and testimonial, to resolve the issues.

37    It may, in those circumstances, be accepted that the length of the hearing was extended, at least to some extent, by the need to resolve those issues. I would not, however, characterise the issues that were ultimately determined adversely to Ms Edwards as being “groundless” and do not accept that the proceeding was “unduly prolonged” by reason of Ms Edwards’ pursuit of those issues, at least to such an extent as to disentitle Ms Edwards to an award of indemnity costs which she would otherwise be entitled to. Nor do I accept that the fact that I did not find all of Ms Edwards’ evidence concerning the disputed issues to be reliable or credible constitutes “disentitling conduct” in that respect.

38    I accept that the pursuit of groundless issues, and the giving of unreliable evidence by a party, may in some circumstances warrant or justify the exercise by the Court of its discretion under r 1.35 of the Rules to make an order inconsistent with an order that would otherwise effectively be compelled or at least warranted by virtue of r 25.14(3) of the Rules. Such conduct by a party may be said to be inconsistent with the overarching purpose and a relevant consideration in exercising the discretion under r 1.35 and the Court’s discretion in relation to costs generally. I am not, however, persuaded that the circumstances of this case are such as to warrant or compel the Court to relevantly exercise its discretion under r 1.35 of the Rules, or otherwise make an order other than one to which Ms Edwards is entitled by virtue of r 25.14(3) of the Rules. Indeed, I am satisfied that in all the circumstances it is appropriate to make an order that the respondents pay Ms Edwards’ costs assessed on an indemnity basis from 15 March 2022 on the basis of the respondents’ failure to accept her offer of compromise.

39    Each of the factual and legal issues that were determined adversely to Ms Edwards ultimately related to the question of whether the respondents had made out their justification defence under s 25 of the Defamation Act. In summary, to make out that defence, the respondents were required to prove, on the balance of probabilities, that it was substantially true that Ms Edwards stole Oscar. While Ms Edwards did not bear any onus in relation to the respondents’ justification defence, she was in effect required to defend herself against the serious allegation advanced by the respondents that she was a dog thief. The Court was ultimately not persuaded, on the whole of the evidence, that Ms Edwards stole Oscar, mainly because the evidence supported the inference or conclusion that Ms Edwards genuinely and honestly believed that she was entitled to obtain and retain possession of Oscar. The issues that were ultimately determined adversely to Ms Edwards, which essentially related to Ms Edwards’ contention that she was a co-owner of Oscar who had, in all the circumstances, a greater entitlement to possess him than Mr Gillespie and his relatives, did not affect that conclusion.

40    It is by no means unusual for the Court to find in favour of a litigant, despite the fact that the Court might not have accepted or resolved all of the legal and factual issues in the litigation in favour of the otherwise successful litigant. The issues which were determined adversely to Ms Edwards in this matter were important, but nevertheless subsidiary issues in the overall litigation. They were by no means dominant, distinct, separate or severable issues, but were rather inextricably entwined or embedded in the overall factual and legal matrix of the case. It is also very difficult, if not impossible, to apportion or identify the time taken at trial in respect of those issues. Moreover, as already indicated, I do not accept that the issues that were unsuccessfully pursued by Ms Edwards were groundless. They were more nuanced and not as black and white as suggested by the respondents’ submissions.

41    Much the same can be said about the fact that the Court ultimately found that some of Ms Edwards’ evidence was not reliable or credible. It is by no means unusual for the Court to find in favour of a litigant despite the fact that not all of that litigant’s evidence was accepted as reliable and credible. The fact that Ms Edwards was found to be an unsatisfactory witness in certain respects was ultimately not particularly significant in the overall determination of the proceeding in her favour. While the proceeding was perhaps prolonged to some extent by Ms Edwards’ evidence, including her evidence which was ultimately found to be unreliable, I am not persuaded that the proceeding was “unduly” delayed by that evidence and not persuaded, in all the circumstances, that the evidence constituted “disentitling conduct” as contended by the respondents. While I accept as a general proposition that it is fundamental to the just resolution of disputes that a witness tells the truth, I do not accept that Ms Edwards deliberately told untruths, or that the fact that some of her evidence was found to be unreliable or to lack credibility constituted a failure to comply with the duty to conduct the proceeding in a way that is consistent with the overarching purpose such as to disentitle her to an award of indemnity costs to which she would otherwise be entitled.

42    I should also add in this context that, in considering whether Ms Edwards engaged in any “disentitling conduct” which would warrant or justify the Court to decline to make an indemnity costs order in her favour despite the operation of r 25.14(3) of the Rules, it is relevant to have regard to the respondents’ conduct of this litigation. Not to put too fine a point on it, the respondents’ conduct of this litigation was far from exemplary or beyond reproach. Their justification defence only emerged shortly before the trial. Not without some misgivings, the Court granted the respondents leave to amend their defence to include the justification defence: see Edwards v Nine Network Australia Pty Ltd (No 2) [2022] FCA 1332. The pleaded particulars of the justification defence were complex and prolix and raised a number of what turned out to be false issues or largely irrelevant allegations. The respondents also sought to tender a voluminous bundle of documents in circumstances where many of the documents in the bundle were of marginal, if any, relevance or significance. The respondents’ contention that Ms Edwards’ conduct unduly prolonged the litigation, including their contention that she disputed that she had engaged in deceptive conduct until the very commencement of the trial, must be considered in that context.

43    In all the circumstances, I decline to exercise the discretion under r 1.35 of the Rules to make an order which is, in effect, inconsistent with the order to which Ms Edwards is otherwise entitled pursuant to r 25.14(3) of the Rules. It is, in those circumstances, appropriate to make an order that Ms Edwards’ costs from 11.00 am on 15 March 2022 be assessed on an indemnity basis. Her costs before that date should be assessed on a party and party basis.

44    I should also make it abundantly clear, that, had I found that the provisions in Pt 25 of the Rules were for some reason inapplicable, for example because the offer served by Ms Edwards on 10 March 2022 did not constitute an offer of compromise for the purposes of Pt 25 of the Rules, I would nonetheless have found, in all the circumstances, that it was unreasonable for the respondents to not only fail to accept that offer, but to fail to engage with it in any meaningful way.

45    Given the finding I have made in respect of the offer of compromise and the engagement of r 25.14(3), I do not propose to elaborate in respect of that issue, save as to note the following. In my view, it should have been readily apparent to the respondents, as at 10 March 2022, that Ms Edwards had a relatively strong case and that their defence, which at that point did not include any justification defence, was fairly weak and tenuous. While the respondents at that point may have been pondering and investigating the availability of a justification defence, it should have been readily apparent to them that it would be very difficult (and costly) to make out any such defence. In any event, it was not until November 2022 that the respondents applied to amend their defence to include a justification defence. It should also have been apparent to the respondents as at 10 March 2022 that, if Ms Edwards succeeded, the damages payable to her were likely to be significant and that the offer to settle for $79,000 and the payment of costs as agreed or assessed was eminently reasonable. While there was no indication of Ms Edwards’ costs at that time, the respondents ought to have realised that her costs were likely to escalate considerably if the matter proceeded to trial.

46    It follows that, had I not determined that Ms Edwards was entitled to an order for indemnity costs from 15 March 2022 on the basis of the respondents’ failure to accept an offer of compromise made pursuant to Pt 25 of the Rules, I would nonetheless have found that she was entitled to such an order for indemnity costs on the basis of the general Calderbank principles.

47    It should perhaps finally be noted in this context that the 10 March 2022 offer of compromise was not Ms Edwards’ final settlement offer. On 24 October 2022, only a short time before the trial, Ms Edwards made a further attempt to settle the proceeding by offering to accept $45,000 plus costs as agreed or assessed. The respondents – as it turns out most unwisely – failed to accept or otherwise meaningfully engage with that reasonable offer.

Should Ms Edwards be deprived of indemnity costs in respect of some issues, or some parts of the proceeding?

48    I have, in effect, already answered this question. The short answer is again “no”.

49    For the reasons I have already given in the context of declining to exercise the discretion under r 1.35 of the Rules, I am unpersuaded that the circumstances of this case are such that the Court should determine the issue concerning costs, including indemnity costs, on an issue-by-issue basis. The unsuitability of an issue-by-issue approach to costs in this matter was perhaps demonstrated by the vagueness and uncertainty of the respondents’ contentions as to the order or orders that the Court should make if the question of costs was to be approached that way.

50    While the respondents accepted that r 25.14(3) was engaged and Ms Edwards was entitled to indemnity costs from 15 March 2022 on an indemnity basis, they put forward three alternative forms of orders which they submitted were appropriate and should be made having regard to the fact that Ms Edwards had not succeeded in respect of all of the issues and had been found to have given unreliable evidence. Those alternatives were: first, that Ms Edwards have her costs on an indemnity basis from 15 March 2022, other than in respect of “certain parts of the proceeding” (presumably those parts which related to the issues which were determined adversely to Ms Edwards), in respect of which Ms Edwards should not receive any costs; second, that having regard to the disentitling conduct, Ms Edwards should only have her costs assessed on an “ordinary basis” for the entire proceeding, despite the operation of r 25.14(3); and third, that Ms Edwards was only entitled to have her costs paid on an indemnity basis after 15 March 2022 in respect of the issues in respect of which she was successful, and that her costs of the (unspecified) issues in respect of which she was unsuccessful should be assessed on a party and party basis.

51    The respondents’ submissions in support of those alternatives failed to identify, with any precision, the parts of the proceeding in respect of which Ms Edwards was only entitled to costs on an ordinary basis, and failed to grapple with the complexity, if not impossibility, of somehow separating or severing the issues upon which Ms Edwards failed from the issues in the litigation generally. As discussed earlier, it would be virtually impossible to identify “parts of the proceeding” that related only to the issues in respect of which Ms Edwards was unsuccessful, and virtually impossible to excise from the costs order any costs associated with the issues in respect of which Ms Edwards did not succeed.

52    In any event, the respondents’ submissions concerning an issue-by-issue approach to the costs orders effectively ignore the fact that ultimately Ms Edwards was successful in respect of all of the causes of action she pursued and received a sizable award of damages.

Should the Court make a lump-sum costs order?

53    Ms Edwards contended that it would be appropriate for the Court to order that the Court should make a lump-sum costs order, which is to say that the costs payable to Ms Edwards should be awarded in a lump sum as opposed to being determined by taxation in accordance with Pt 40 Div 40.2 of the Rules. Ms Edwards did not suggest that I should determine the lump sum and did not tender any evidence which would have enabled me to do so in any event. Rather, she contended that the lump sum should be determined by a Registrar of the Court. The respondents submitted that it would not be appropriate to make a lump-sum costs order, though their submission to that effect was premised to a large extent on the Court accepting their submission that any indemnity costs order made in Ms Edwards’ favour should carve out costs in respect of certain parts of the proceedings, or costs in respect of certain issues.

54    The Court’s Preference, where it is “practicable and appropriate to do so”, is for the making of a lump-sum costs order: Costs Practice Note (GPN-COSTS) at [4.1]. Utilisation of a lump-sum costs procedure is “at the discretion of the judge” and the parties must be “given a fair opportunity to present their views as to the appropriateness of utilising a lump-sum costs procedure”: GPN-COSTS at [4.2]. The Court’s preference for lump-sum costs orders is no doubt to avoid the almost inevitable delay and expense of the taxation procedures in Pt 40 Div 40.2 of the Rules: see Michael Wilson & Partners Ltd v Porter (No 3) [2022] FCA 998 at [22]. Paragraph 4.9 of GPN-COSTS envisages that in an appropriate case, a judge may refer the costs dispute to mediation or to a Registrar as a referee.

55    I would have been reluctant to employ the lump-sum costs procedure had I acceded to the respondents’ contention that I should make a complex costs order that excised or carved-out of the costs order certain costs associated with certain issues, or certain parts of the proceeding. A complex costs order of that sort would not be readily amenable to the lump-sum costs procedure. As events have transpired, however, I have determined that the appropriate costs order is that the respondents pay Ms Edwards costs on a party and party basis up to 11.00 am on 15 March 2022 and thereafter on an indemnity basis. That is a relatively simple costs order that is amenable to determination by a Registrar employing the lump-sum procedure. It is my view it is appropriate, in all the circumstances, to order that the quantification of that order proceed by way of the lump-sum procedure.

56    The order sought by Ms Edwards did not expressly or explicitly provide that a Registrar be appointed as a referee, however that would appear to me to be the appropriate basis upon which the Registrar should determine the amount of costs to be paid by the respondents. The Rules make provision for the referral of questions or issues to a referee for determination: see Pt 28 Div 28.6 of the Rules.

CONCLUSION AND DISPOSITION

57    The respondents will be ordered to pay Ms Edwards’ costs assessed as follows: on a party and party basis for the period up to 11.00 am on 15 March 2022; and on an indemnity basis for the period after 11.00 am on 15 March 2022. The quantification of the costs payable pursuant to that order will be referred to a Registrar acting as a referee pursuant to Pt 28 Div 28.6 of the Rules.

58    At the very death-knell, the respondents requested that the order in respect of indemnity costs should not include the costs associated with the hearing in respect of the question of costs. They submitted that their approach to the question of costs was not unreasonable. I accept that submission, though not without some hesitation. I will accordingly carve out of the indemnity costs order any costs incurred in respect of the hearing on the question of costs, which should be paid on a party and party basis.

Associate:

Dated:    12 July 2024