Newman v Speigler[2008] QDC 266

DISTRICT COURT OF QUEENSLAND

Introduction

1. [1]
   The plaintiff was successful in a defamation action against both defendants.  The jury found that statements made by the defendants, who were prison officers, suggested that the plaintiff was engaged in corrupt activity or was stealing money from the Queensland Prison Officers Association (QPOA).  The jury awarded damages as follows:

Judgment was given accordingly against each defendant.  Two issues remain for  determination. Whether an award for interest should be made, and the nature of the              costs order, given an offer to settle by the plaintiff.^[1]  The defendants contended in               oral argument that there should be no award of interest, but have asked for a               limited award in written submissions.^[2]

Basis for ordering interest

2. [2]
   An award for interest can be made for compensatory damages which include aggravated compensatory damages.^[3]  The appropriate rate was also discussed.^[4]  The rate of 4% spread over the whole period from the date of the publication until judgment was seen as appropriate, and reflected by halving of this rate to 2%.  The relevant period in the present case is fixed at five years.  The defamation occurred on 1 June 2005 and the jury decision was given on 12 November 2008.  As this is a non-commercial matter, that rate of 2% is appropriate but not for exemplary damages.  The rationale for that is that it is not the plaintiff’s loss but awarded to punish the defendant.  In any event, part of the damages awarded would be referable to the future and allowance should be made for this.^[5]  There has been a slight reduction in the period of time allowed to nominally reflect part of the latter adjustment.  The defendants’ counsel in his written submissions ^[6] suggests that interest for one half of the period is justifiable as the award “covers the likelihood of future damage to reputation”.  In assessing the appropriate amount, the following have been taken into account: the moderate award, the nature of the evidence in the case about most of the upset being around the time of the defamation and the low rate of interest of 2%.   Interest will be allowed on the sum of $5,000.00 as against the first defendant and on the sum of $2,000.00 as against the second defendant.

3. [3]
   Interest is allowed as follows in favour of the plaintiff:

  First defendant: $500.00

  Second defendant $200.00

Costs

4. [4]
   The Magistrate’s court has jurisdiction to hear matters involving claims up to $50,000.00.  As the evidence evolved, there was a paucity of evidence as to how the defamation affected the plaintiff on an ongoing basis, despite attempts to do so by various witnesses.  The plaintiff kept his position as Secretary of the QPOA and went on to become President.  Prior to the trial, it may have appeared that the plaintiff was entitled to significant damages.  At the trial, the range of $5,000.00 to $40,000.00 was given to the jury.  However, that was with the benefit of hindsight, given the evidence adduced.  The plaintiff was entitled to a jury trial which was not available in the Magistrates Court.  There were difficult questions of evidence and law, including what the pleadings in fact conveyed, which had to be ruled upon during the course of the trial.  The serious nature of the alleged defamation was another reason for the matter being commenced in the District Court.  Rule 697 ^[7] requires that if a plaintiff obtains a judgment in the District Court and when proceedings began, such a judgment could have been given in the Magistrates Court, then costs must be assessed as if the proceedings had been commenced in the Magistrates Court.  That rule allows the court to “order otherwise.” For the reasons stated above, it is appropriate to order otherwise. The decision of Beardmore v Franklins Management Services Pty Ltd ^[8] concentrated on the quantum being within 20% of the of the upper limit of the Magistrates Court.  That decision is not limit the quantum as being the only test for ordering otherwise.  Of some relevance also, as noted by McMurdo P, is that the Magistrates Court does not distinguish between standard and indemnity costs in the scale of costs.

5. [5]
   The issue remains as to whether the plaintiff is entitled to costs on an indemnity basis.  Rule 360 ^[9] provides as follows:

 360 Costs if offer to settle by plaintiff

 (1) If—

1. (a)
   the plaintiff makes an offer to settle that is not accepted by the defendant and the plaintiff obtains a judgment no less favourable than the offer to settle; and

2. (b)
   the court is satisfied that the plaintiff was at all material times willing and able to carry out what was proposed in the offer;

the court must order the defendant to pay the plaintiff’s costs calculated on the indemnity basis unless the defendant shows another order for costs is appropriate in the circumstances.

6. [6]
   In a letter from the plaintiff’s solicitors dated 27 April 2007,^[10] the plaintiff made the following offer to resolve the action:

1. The defendants jointly pay to the plaintiff the amount of $5,000 by way of  agreed damages within 21 days of the date of acceptance of this offer;

2. The defendants jointly pay to the plaintiff the amount of $15,000 by way of               agreed costs within 21 days of the date of acceptance of this offer;

3. Acceptance of the offer is to be conveyed in writing to the solicitors for the               plaintiff; and

4. Upon acceptance of the offer the parties will sign a consent order in terms  of paragraph 1 and 2 above to be filed in the Court.

7. [7]
   It is clear, at least in respect of the amount awarded by the jury that the plaintiff has obtained a sum “no less favourable than the offer to settle”.  There is no suggestion that the plaintiff was not willing and able to give effect to the offer.  In relation to costs, the court can infer whether the amount referred to of $15,000.00 would be “no less favourable”.^[11]  The present case took some 3 days.  An experienced junior counsel appeared for the plaintiff and senior counsel for the defendants. The plaintiff costs would exceed $15,000.00. It has not been submitted by the defendants that the costs would be less up to the present time.

8. [8]
   The defendants submit ^[12] that the offer is not one to which Rule 360 applies.  It is submitted that the offer is made on the basis that the defendants “jointly” pay the sum of $5,000.00 and “jointly” pay the amount of $15,000.00 in costs.  It is accepted that the defendants were not joint tortfeasors, nor were there contribution proceedings between them.  Rule 363 applies to multiple defendants.  It provides:

363 Multiple defendants

3. (1)
   If there are 2 or more defendants, the plaintiff may make an offer to settle with any defendant, and any defendant may offer to settle with the plaintiff.

3. (2)
   However, if defendants are alleged to be jointly or jointly and severally liable to the plaintiff and rights of contribution or indemnity may exist between the defendants, this rule applies to the offer to settle only if—

1. (a)
   for an offer made by the plaintiff—the offer is made to all of the  defendants and is an offer to settle the claim against all the               defendants; or

2. (b)
   for an offer made to the plaintiff— …

9. [9]
   The claim against the defendants was from both or either.  It was open to find that one of the defendants did not make any defamatory statements.  However, the jury found that they were both liable for making statements which referred to corruption, or that money had been taken from the QPOA or its members. The nature of the defamation in each instance was reflected by the differing awards.  There is no evidence that one or the other wanted to settle.^[13]  In Banks case, one of the defendants was willing to settle but the offer was rejected by the other defendants.  In that case an order for indemnity costs was refused.

10. [10]
    The offer to settle was not made in accordance with the rules.^[14]  If the procedure required under the rules is not followed, the without prejudice letter is of less weight.  It is submitted that it was not clear as to what was required of each defendant.  Certainly, they could have paid 50% each but the allegations against each of them differed.  The jury found separate defamatory statements and made awards accordingly.  It is submitted by the defendants that an order for indemnity costs is not appropriate if the above principles applied.  The usual order in relation to costs should apply.

11. [11]
    However, the plaintiff relies upon Rule 703 ^[15] which provides as follows:

703Indemnity basis of assessment

3. (1)
   The court may order costs to be assessed on the indemnity basis.

Note—

Costs on the indemnity basis were previously solicitor and client costs—see rule 743S (Old basis for taxing costs equates to new basis for assessing costs).

3. (2)
   Without limiting subrule (1), the court may order that costs be assessed on the indemnity basis if the court orders the payment of costs—

1. (a)
   out of a fund; or

2. (b)
   to a party who sues or is sued as a trustee; or

3. (c)
   of an application in a proceeding brought for noncompliance with an order of the court.

3. (3)
   When assessing costs on the indemnity basis, a costs assessor must allow all costs reasonably incurred and of a reasonable amount, having regard to—

1. (a)
   the scale of fees prescribed for the court; and

2. (b)
   any costs agreement between the party to whom the costs are payable and the party’s solicitor; and

3. (c)
   charges ordinarily payable by a client to a solicitor for the work.

12. [12]
    It is acknowledged that the rule says that the court “may order costs to be assessed on an indemnity basis”.  However, that rule is more concerned about where the monies may come from and the approach to be taken by an assessor in giving effect to the order for indemnity costs. In Beardmore’s case ^[16] Ambrose J made reference to r 703 in the context of defining the concept of solicitor and client costs and indemnity costs.  His Honour also referred to the difference in costs on the lowest scale in the District Court on an indemnity basis and the highest scale in the Magistrates Court as being in the vicinity of some $4,000.00. Costs have not decreased in that time.  Therefore, one can assume that the plaintiff would lose a substantial part of his claim if indemnity costs were not ordered. Ambrose J commented: ^[17]

[103] The difference between fees payable to counsel in the Magistrates Court under the highest scale and in the District Court under the lowest scale is only about $100.

[104] Had the respondent's case been conducted in the Magistrates Court, one would think that the actual costs incurred by the respondent -  albeit not recoverable under the Magistrates Court scale of costs - would have not been significantly different from those incurred in pursuit of her action in the District Court.

[105] In the absence of an order for indemnity costs the respondent's legal fees paid to her solicitor would exceed the costs recoverable in the Magistrates Court under the highest scale and would reduce the value of her judgment by about $4,000.

[106] One of the objects of UCPR r360 and r361 is to encourage and motivate parties to litigation to make bona fide and reasonable efforts to settle their litigation and to avoid the expense and expenditure of time involved in pursuing a claim to judgment in court.

13. [13]
    The plaintiff submits ^[18] that “where a party makes an offer to compromise a claim during the course of an action which he subsequently equals or betters at trial, he should be awarded indemnity costs”.  That proposition accords with the remarks made by Ambrose J.  The plaintiff relies upon the common law offer to settle as reflected in Calderbank v Calderbank.^[19]  There is no suggestion that the offer to settle was not a genuine one.  In retrospect, it was not unreasonable given the decisions referred to in a schedule presented.^[20]

14. [14]
    The other ground relied upon by the plaintiff in seeking indemnity costs was that the conduct of the defendants during the litigation is relevant.^[21] Of course, the defendants denied the allegations.  It was not a case of qualified privilege or truth and for the public benefit.^[22]  The defendants were asked for an apology and none was forthcoming.  It is open to find that the jury did not accept the defendants as witnesses of truth.

15. [15]
    The fact that the letter containing the offer to settle ^[23] did not comply with the rules, should not mean that the offer was not effective if the intention was to compromise the action and the offer was genuine.  One aspect of this case which also takes it outside r 363 is that there were two defendants who were not joint tortfeasors but who were found to be liable for similar imputations.^[24] The plaintiff submits that the defendants ran their defence jointly, were represented by the same counsel, that one defence was filed and that any republication by the first defendant was not accepted by the jury ^[25] and so there was no point of distinction concerning publication.  All of these points are valid.  For the purposes of the present issue of costs, the defendants could have responded to the offer in a meaningful way and avoided the hearing.

16. [16]
    For those reasons an order for indemnity costs seems appropriate.

Apportionment of Costs

17. [17]
    The Defamation Act 1889 made provision for the apportionment of costs. Section 23 provided as follows:

23 Consolidation of actions

 (1) … 

3. (2)
   In an action consolidated under this section the judge or jury shall assess the whole amount of the damages (if any) in one sum, but a separate verdict shall be given for or against each defendant in the same way as if the actions consolidated had been tried separately; and if a verdict is given against the defendants in more than 1 of the actions so consolidated, the judge or jury shall proceed to apportion the amount of damages so found between and against the lastmentioned defendants; and the judge at the trial, if the judge awards to the plaintiff the costs of the action, shall thereupon make such order as the judge deems just for the apportionment of such costs between and against such defendants.

18. [18]
    It is accepted that no order was made for consolidation but the causes of action were heard together.  The section provides some guidance to a court in relation to costs.   In any event, in an appropriate case, a robust order for costs can be made.^[26] This avoids problems for the assessor particularly where the defendants defend jointly with the same legal representatives.  The jury made similar findings against each defendant in relation to the imputations of corrupt activity and taking money from the QPOA.  The damages were $7,000.00 plus interest of $500.00 as against the first defendant and $3,000.00 plus interest of $200.00 as against the second defendant.  Costs should be apportioned accordingly.^[27]

Orders

1. Judgment for the plaintiff against the first defendant in the sum of $7,500.00;

2. Judgment for the plaintiff against the second defendant in the sum of $3,200.00;

3. It is ordered that the defendants do pay the plaintiff’s costs of and incidental to the               action to be assessed on an indemnity basis; and

4. It is further ordered that the costs be apportioned as to seven tenths payable by the               first defendant and three tenths as against the second defendant.