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Daunt Watney v Kencian[2018] QDC 135

Daunt Watney v Kencian[2018] QDC 135

DISTRICT COURT OF QUEENSLAND

CITATION:

Daunt Watney v Kencian & Anor [2018] QDC 135

PARTIES:

CHRISTOPHER DAUNT WATNEY

(plaintiff)

v

JANET KENCIAN

(first defendant)

and

ANTHONY WOOLLEY

(second defendant)

FILE NO/S:

CLAIM NO: 52 of 2013

DIVISION:

Civil

PROCEEDING:

Trial

ORIGINATING COURT:

Cairns

DELIVERED ON:

24 July 2018

DELIVERED AT:

Cairns

HEARING DATE:

25-29 July 2016, 1-3 August 2016, 26-29 March 2018, 3-5 April 2018.

JUDGE:

Morzone QC DCJ

ORDER:

  1. The plaintiff will pay the defendants’ costs of and incidental to the proceeding, excluding the costs of the trial from 25 July 2016 to 3 August 2016, to be assessed on the standard basis.

CATCHWORDS:

DEFAMATION – ACTIONS FOR DEFAMATION – COSTS – SETTLEMENT OFFER - trial – where jury found the publication conveyed the meanings, but found that none of the meanings were defamatory - appeal allowed – findings of jury that meanings were not defamatory set aside and answered affirmative – costs of first trial reserved to await outcome of new trial - new trial limited to availability of defences of qualified privilege and honest opinion and, if applicable, damages – amendment of defence after first trial and appeal to include new defence of triviality pursuant to s 33 of Defamation Act 2005 (Qld) – amendment allowed on first day of new trial – jury questions agreed – jury found defence of triviality proved and not required to find on other defences – judgment for the defendants – whether costs of first trial thrown away amendment – conduct of parties in proceeding - whether defendants’ correspondence a ‘settlement offer’ before proceedings determined within meaning of s 40 of the Act – whether unreasonable response to offer - whether defendants’ ought have costs on an indemnity basis.

Legislation

Civil Proceedings Act 2011 (Qld) s 15.

Defamation Act 2005 (Qld) ss 15, 33, 40.

Uniform Civil Procedure Rules 1999 (Qld) rr 34, 307, 352, 360, 361, 681, 692, 701, 702, 703.

Cases

Calderbank v Calderbank [1975] 3 All ER 333

Davis v Nationwide News Pty Ltd [2008] NSWSC 946 

Haddon v Forsyth (2) [2011] NSWSC 693

Hockey v Fairfax Media Publications Pty Ltd (No 2) (2015) 237 FCR 127

Kencian & Anor v Watney [2015] QCA 212

Nationwide News Pty Ltd v Weatherup [2017] QCA 70

Waters v PC Henderson (Australia) Pty Ltd (1994) 254 ALR 328

Watney v Kencian & Anor [2017] QCA 116

COUNSEL:

Dr M Jonsson QC for the plaintiff

A Boe & P McCafferty for the defendants

SOLICITORS:

Miller Bou-Samra solicitors for the plaintiff

Robertson O'Gorman solicitors for the defendants

  1. [1]
    The defendants who successfully defended a defamation proceeding after a further jury found that the defence of triviality was made out, now seek their costs from the plaintiff.
  1. [2]
    I have had the advantage of written submissions since the trials.

Background

  1. [3]
    The plaintiff, a private school principal, sued the defendants for defamation claiming a letter dated 21 June 2012 conveyed defamatory meanings about him personally and professionally.
  1. [4]
    The letter was headed “Repeated and Systemic Failures of Duty of Care in response to bullying at Trinity Anglican School White Rock (TAS)".  The defendants sent the letter to the Director General of the Department of Education.  It was republished when the Director General referred it to the chair of the Non-State Schools Accreditation Board.  The letter also came to the notice of the school board in the ordinary course.
  1. [5]
    Before starting the proceeding the plaintiff (and separately, the school) sent a Concerns Notice dated 17 December 2012 to the defendants, which invited the defendants to make amends pursuant to s 15 of the Defamation Act 2005 (Qld), by offering to: jointly publish a correction, pay reasonable expenses, publish an apology and pay compensation of $75,000.
  1. [6]
    In the absence of any response to the Concerns Notice, and a further letter from the plaintiff’s solicitor dated 27 February 2013, the plaintiff commenced proceedings on 21 March 2013.
  1. [7]
    The defendants filed their notice of intention to defend and defence on 6 May 2013. They disputed that the alleged imputations arose and/or were defamatory, and pleaded defences of qualified privilege or alternatively honest opinion.
  1. [8]
    The plaintiff joined issue with a reply filed on 13 May 2013.
  1. [9]
    The defendants’ solicitors sent three letters to the plaintiff’s solicitor all dated 22 May 2013.  Through their solicitors the defendants proffered an apology while the defendants denied the asserted imputations and any damage; they expressed a wish to send a letter to the recipients in the form of a draft (subject to clarification of one recipient); and indicated a preparedness to absorb their own costs if the plaintiff discontinued within 14 days. 
  1. [10]
    These matters were rebuffed by the plaintiff’s solicitor’s letter of 6 June 2013, which offered to resolve the proceeding by payment of $25,000 for claim and interest, the plaintiff’s standard basis costs, an ‘unqualified apology’ and an undertaking not to further defame.  That offer lapsed after 14 days.
  1. [11]
    After further interlocutory skirmishes including an appeal about the mode of the trial, the trial first proceeded with judge and jury over 8 days from 25 July 2016 to 3 August 2016 including jury deliberations.  The jury returned its verdict by answering questions addressing the disputed issues.  They found that the letter concerned the plaintiff and carried all the imputations contended by the plaintiff, but those imputations were not defamatory of the plaintiff. 
  1. [12]
    Accordingly, there was judgment for the defendants against the plaintiff with prospective costs orders.
  1. [13]
    The plaintiff appealed the decision on the grounds that the jury’s answers to question 3 were perverse. He succeeded. The Court of Appeal ordered that affirmative answers be substituted in lieu of the jury’s answers with the effect that the matter was defamatory of the plaintiff.  The court further ordered that “there be a new trial limited to the availability of defences of qualified privilege and honest opinion, and if applicable, damages.”[1]
  1. [14]
    Although the plaintiff got his costs of the appeal, the Court of Appeal reserved the costs of and incidental to the proceeding at first instance to the trial judge to await the outcome of a new trial or further order in the event the matter does not proceed to trial.
  1. [15]
    On the first day of the second trial the defendants were granted leave to amend the defence for the fifth time to plead the defence of triviality premised upon s 33 of the Defamation Act 2005, if the defendant proves that the circumstances of publication were such that the plaintiff was unlikely to sustain any harm.
  1. [16]
    The second trial proceeded with a newly empanelled jury over a further 7 days straddling the Easter public holidays from 26 March 2018 to 5 April 2018. The hearing proceeded on the premise of the earlier determinations that the matters were defamatory, and was confined to the pleaded defences, which by then included the defence of triviality, as well as the previous pleaded defences of qualified privilege and honest opinion.
  1. [17]
    The jury delivered a verdict by answering the relevant questions, with the effect that the defence of triviality was established.  The jury were not required to answer the questions relevant to the defences of qualified privilege and honest opinion. 
  1. [18]
    The defendants were granted judgment against the plaintiff.
  1. [19]
    The defendants seek orders that the plaintiff pay their costs assessed on the indemnity basis, or at least on the standard basis.

Issues

  1. [20]
    The defendants argue that all trial costs ought follow the event in their favour pursuant to r 681(1) of the Uniform Civil Procedure Rules 1999 (UCPR), and in reliance on the unaccepted ‘settlement offer’ pursuant to s 40 of the Act.  Alternatively, costs could be assessed on the standard basis at the minimum.
  1. [21]
    On the contrary, the plaintiff argues that, although the defendants could have their costs of the second trial in vindication of their defence, they will be roughly equivalent to the costs incurred by the plaintiff but thrown away due to the defendants’ conduct in the first trial and late amendment to the defence pursuant to r 692(2) of the UCPR.  In the result, he argues, each party ought bear their own costs.

Jurisdiction

  1. [22]
    The court has power to award costs.[2]The general rule pursuant to r 681 of the Uniform Civil Procedure Rules 1999 is that costs of a proceeding are in the discretion of the court but follow the event, unless the court orders otherwise. 
  1. [23]
    In Waters v PC Henderson (Australia) Pty Ltd Mahoney JA quoted the following principle:[3]

“Where the proceedings involve multiple issues the application of the rule that costs follow the event may involve hardship where a party succeeds on some issues and yet fails on others.  Particularly is this so where, for example, a defendant succeeds on issues that occupied the bulk of the time taken by the proceedings.  Nevertheless 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.”

  1. [24]
    Costs are ordinarily assessed on the standard basis, unless the rules or a court order requires assessment on an indemnity basis.[4]
  1. [25]
    The rules are subservient to the special costs rules in s 40 of the Act which provides:

“(1) In awarding costs in defamation proceedings, the court may have regard to—

  1. (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
  1. (b)
    any other matters that the court considers relevant.
  1. (2)
    Without limiting subsection (1), a court must (unless the interests of justice require otherwise)—
  1. (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
  1. (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.
  1. (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.”

  1. [26]
    Those provisions are broader than the relevant costs provisions of the Uniform Civil Procedure Rules 1999 (Qld).[5]  They encourage parties to take a reasonable approach to the conduct of the case, negotiations, and offers by imposing a sanction of a party who unreasonably fails to accept and offer.[6]They apply to the entire costs of the defendants, and are not limited to formal offers,[7]or any time period after a settlement offer.[8]However the provision is expressed to not limit the court’s discretion under s 40(1), and is subject to the pre-condition that “unless the interests of justice require otherwise”.
  1. [27]
    In the result, the plaintiff unsuccessfully brought the defamation proceedings.
  1. [28]
    The critical issues relevant to the determination of costs include the parties’ conduct of their cases, whether the defendants made a ‘settlement offer’ not accepted by the plaintiff, and whether the interests of justice require otherwise.

Parties’ Conduct in the Proceeding

  1. [29]
    The way in which the parties conducted their cases must be considered in the unusual course of the proceeding.
  1. [30]
    At the time the proceeding was started on 21 March 2013, the defendants had not engaged with or responded to the plaintiff regarding the Concerns Notice and related correspondence. Their notice of intention to defend and defence filed on 6 May 2013 first disclosed their formal position. They disputed that the alleged imputations arose and/or were defamatory, and pleaded defences of qualified privilege or alternatively honest opinion.  The plaintiff joined issue with a reply filed on 13 May 2013.
  1. [31]
    The parties fulfilled the procedural requirements for trial including amending pleadings. The plaintiff sought to abandon his election in the statement of claim for trial by jury by not paying jury fees, which was ultimately resolved by the Court of Appeal order that the trial proceed as a trial by jury at the appellant/defendants’ election.[9]
  1. [32]
    The first trial proceeded with judge and jury over 8 days from 25 July 2016 to 3 August 2016.  By that time, the plaintiff amended the statements of claim twice, and the defendants amended their defence four times.  The plaintiff’s case comprised of a bundle of relevant documents and oral testimony.  The defendants did not give or call evidence as was their right.  The parties agreed on questions to resolve the disputed issues of whether the alleged imputations arose and/or were defamatory, and, if so, whether the pleaded defences of qualified privilege or alternatively honest opinion were made out.
  1. [33]
    In their verdict, the jury affirmatively answered the first question to the effect that an ordinary reasonable reader would have understood the letter to be “of and concerning the plaintiff”.  They also affirmatively answered the second question as follows:

“Has the plaintiff established that the letter dated 21 June 2012 would have been understood by the ordinary reasonable reader as conveying in respect of the plaintiff any of the following imputations:

(a)  the plaintiff, as principal, is responsible in the sense of being morally blameworthy for a culture of denial of problems involving bullying at TAS.  Yes

(b)  the plaintiff directed the production of misleading reports into bullying at TAS for the sole purpose of deflecting criticism and to avoid litigation liability.  Yes

(c)  the plaintiff directed the production of misleading reports into bullying at TAS which vilely attacked and harmed a young girl who was the victim of bullying.  Yes

(d)  the plaintiff’s failure to appropriately respond to bullying at TAS might have contributed to the suicide of a TAS student. Yes

(e)  the plaintiff is responsible in the sense of being morally blameworthy for the deliberate misuse of information provided to him about the defendant’s daughter.  Yes

(f) the plaintiff is not fit to manage and oversee TAS.  Yes”

  1. [34]
    Notwithstanding the affirmative findings on each of the alleged imputations, the jury found that those imputations were not defamatory of the plaintiff. In that regard, the jury answered “No” to the cognate Questions 3(a) to (f) prefaced by:

“3. Has the plaintiff established that any imputation or meaning so conveyed would have been understood by the ordinary reasonable reader as defamatory of the plaintiff …”

  1. [35]
    As a result the jury were not required to answer the questions relevant to the defences of qualified privilege and honest opinion. The defendants were granted judgment against the plaintiff with prospective costs orders.
  1. [36]
    All issues subject of the first 8 day trial including questions, evidence and argument about the defences of qualified privilege and honest opinion (since the defence of triviality was not raised at that stage), merged into the judgment.
  1. [37]
    The plaintiff appealed the decision on the grounds that the jury’s answers to question 3 were perverse. He succeeded. The Court of Appeal found that the jury’s verdict (as to question 3 that the plaintiff was not defamed) was perverse.  The court ordered that affirmative answers be substituted in lieu of the jury’s answers and that “there be a new trial limited to the availability of defences of qualified privilege and honest opinion, and if applicable, damages.”[10]  The order did not contemplate an additional defence of triviality (joined on the first day of the second trial).
  1. [38]
    The second trial proceeded with a newly empanelled jury over a further 7 days straddling the Easter public holidays from 26 March 2018 to 5 April 2018. Like the first trial, the plaintiff’s case comprised of a bundle of relevant documents (differently constituted to the first trial), and oral testimony. The defendants did not give or call evidence.
  1. [39]
    In delivering their verdict the jury upheld the defence of triviality by affirmatively answering the first question as follows:

Have the defendants established the circumstances of publication of the letter dated 21 June 2012 to Julie Grantham, then Director General of the Queensland Department of Education, were such that the plaintiff was unlikely to sustain any harm?Yes

  1. [40]
    As a result the defendant had a complete defence, and the jury were not required to answer the questions relevant to the defences of qualified privilege and honest opinion. Accordingly, the defendants were granted judgment against the plaintiff. 

Whether costs thrown away

  1. [41]
    By r 692(2) of the UCPR, the effect of that late amendment is that the defendants ‘…must pay the costs thrown away by [that] late amendment, unless the court orders otherwise.’
  1. [42]
    The plaintiff argues that, in hindsight, the costs of the whole of the first trial can be seen to have been thrown away by a combination of:
  1. (a)
    Confusion instilled in the jury by certain submissions made by the defendants as to the use that the jury ought make of the letter dated 21 June 2012 having been marked ‘Confidential’; and
  2. (b)
    Further, or alternatively, the defendants’ failure to plead a defence premised upon s 33 of the Defamation Act 2005 in the first instance.
  1. [43]
    The plaintiff argues that the defendants’ counsel’s address plainly influenced the jury and encouraged their apparent misapprehension. The defendants dispute that any costs were “costs thrown away” within the meaning of r 692 of the UCPR alternatively, the court should order otherwise as they contend.  It is further argued that  if the plaintiff’s argument found favour with the Court of Appeal, it would have determined costs of the first trial in his favour.[11] 
  1. [44]
    The Court of Appeal remarked about the conduct of the case in the context of exploring how the jury became so confused to reach the perverse findings in answer to Question 3.[12]The court critically analysed the salient parts of the defendants’ leading counsel’s closing address, the jury’s apparent confusion exposed by the last jury note, and the overnight delay before redirections.  In my respectful view, the courts’ discussion amply exposed the closing address as causative of the jury’s confusion.  However, having concluded that the jury’s answers to Question 3 were perverse it was unnecessary for the Court of Appeal finally decide the issue.[13] 
  1. [45]
    Therefore it is not to the point to suggest that if the plaintiff’s argument found favour, the appellate court would have determined costs of the first trial. Indeed, the court expressly reserved the matter for the trial judge. At paragraph [71] Applegarth J (with whom Morrison and McMurdo JJA, agreed) remarked:[14]

“… As for costs at first instance, ultimately it will be a question for the trial judge:

  1. (a)
    whether the costs of the proceedings, including the costs of the previous trial, or part of it, should follow the event;
  1. (b)
    whether the costs thrown away by or as a result of the new trial should be ordered to be paid by the respondents.”
  1. [46]
    Of course, these orders were made before the advent of the additional defence of triviality.
  1. [47]
    It seems to me that any impact of the amendment, and the matters argued in the Court of Appeal, are live and relevant matters when considering the parties conduct in the proceeding in determining costs here.
  1. [48]
    The plaintiff argues that but for the jury’s confusion, the jury would have affirmatively answered all Questions 1 to 3, and a timely pleading of the new defence of triviality would have been sufficient to dispose of the whole of the action at the first trial (without the need for the second trial).[15]In that event, the second trial and its attendant costs would have been avoided. 
  1. [49]
    Unlike a case where an amended pleading abandons, or substantially changes live issues in the proceedings, here the new defence of triviality was an additional defence, albeit a complete defence if successful.
  1. [50]
    It is difficult to quantify how much the two trials overlapped, or to isolate costs thrown away as a consequence. Much of the first trial focused on the defamatory matter in questions 1, 2 and 3. And while the new trial did not require re-litigation and determination of those issues, it necessarily involved substantial duplication to provide context for a new jury to re-consider the defences of qualified privilege and honest opinion.  On my reckoning those matters occupied about half of the first trial, and were effectively thrown away.  But the new trial also included a short vior dire going to matters of law about those defences.  And, of course, argument and evidence was required to litigate and decide the additional defence of triviality.
  1. [51]
    In the new trial, whilst it was agreed that the jury should first consider the new defence of triviality, and that it was a complete defence if established, it is not accurate to say that the parties also agreed the jury should not consider any further questions if the defence was made out.[16]
  1. [52]
    The plaintiff’s counsel cautioned against relieving the jury’s consideration of the further defences:[17]

“MR JONSSON:  Just one point that I raised with my learned friends in relation to the questions for the jury, your Honour.  The narrative at the bottom of – or following question 1 has been varied, as your Honour will have noticed, and I accept that the effect of the variations technically correct.  If the question’s answered in the affirmative, well, there is a defence under section 33. 

The – at the risk of pessimism, one of the issues that arose when the matter, I think, was before the Court of Appeal was the benefit in avoiding a retrial – if the matter does go further, of having more information upon the jury rather than less.  So the way it was originally worded was a direction of the jury to proceed regardless, and I just raise whether that might be a beneficial course for that reason, again at the risk of some measure of pessimism on my part, but just to avoid the – or minimise the prospects of a further retrial if there is some issue.

HIS HONOUR:   So what do you say should change?

MR JONSSON:   Well, “Regardless of your answer to question 1, please proceed to question 2” – the way it was originally worded.

HIS HONOUR:   So you say that the defences are alternative.

MR JONSSON:   I accept that the – that what’s there directed is technically correct – that …

… if there is a positive answer to question 1, well, that makes a good defence and there is no reason for the jury to proceed.  Save and accept that, if there is a – an – if there is any issue that – and the matter proceeds further, it might actually be beneficial for the appellate court to have jury answers to the con – the further questions to resolve the matter rather – upon appeal, if it gets – if it goes that way, rather than to have to have another retrial.  And I raised that my learned friends, and I – it’s not necessarily a position that I’m firmly wedded to, but I thought it might be beneficial to raise it before your Honour, to allow for that contingency.”

  1. [53]
    After considering the matter, I allowed the question to be put on the basis that the jury would be relieved of answering further questions if the defence of triviality was established. They were directed that “If you answer “Yes” to question 1, please do not answer any further questions”. 
  1. [54]
    Having returned a verdict founded on the new defence, the jury did not answer any further questions, and the defendants were ultimately successful in the proceeding.
  1. [55]
    In the result, doing the best I can, about half of the first trial directly or indirectly related to questions 1, 2 and 3. The new six day trial was premised on these findings as corrected by the Court of Appeal, to give sufficient context to the pre-existing defenses of qualified privilege and honest opinion (including the short vior dire going to matters of law), and about the new defence of triviality.  These costs ought follow the event in favour of the defendants.
  1. [56]
    However, it seems to me that about one half of the first trial was thrown away as a consequence of the conduct of the trial at first instance. For the reasons discussed above, this was substantially attributable to the defendants conduct in the first trial. And the plaintiff ought be compensated for these costs.
  1. [57]
    The net result is that the competing costs outcomes related to the first trial should cancel the other, leaving the costs of the second trial to be disposed of by an order in favour of the defendants.

Whether the plaintiff unreasonably rejected a settlement offer

  1. [58]
    The defendants argue that the costs ought be assessed on the indemnity basis because the plaintiff unreasonably failed to accept the defendants’ ‘settlement offer’ within the meaning of s 40(2)(b) and (3) of the Act. 
  1. [59]
    This argument enlivens the issues of whether the letters constituted a ‘settlement offer’ capable of acceptance, and whether the plaintiff’s response was unreasonable.

Settlement offer

  1. [60]
    In this regard, they argue that the ‘settlement offer’ is constituted by the three letters to the plaintiff’s solicitor all dated 22 May 2013. 
  1. [61]
    By the first letter the defendants denied the imputations and “did not intend by their letter to convey” the imputations, but “hereby unequivocally apologise for such imputations” if any were so conveyed by the letter.  The letter is assertive in its tone, and does not seek any response to it content.
  1. [62]
    The second letter of the same date attached a draft letter, which the defendants “wish to send to the original recipients of their letter” and sought clarification about whether the letter should also go to the new Director General.  The attached draft letter reads:

Draft letter to the Director General, Queensland Department of Education and to Professor Vianne McLean of the Non-State Schools Accreditation Board

22 May 2013

Dear Director General & Professor Vianne McLean

Re:  Letter dated 21 June 2012

We refer to our letter to the Director General dated 21 June 2012, which we understand was received by the Director General sometime after that date and subsequently forwarded to Professor McLean.

The letter was marked “confidential” and entitled “Repeated and Systemic Failures of Duty of Care in response to bullying at Trinity Anglican School, White Rock”. As you know, we are parents of children at this school; the letter was sent in that capacity.

Mr Daunt Watney, the principal of TAS, has commenced proceedings in the District Court of Queensland against us seeking some $400,000 in damages for defamation which he alleges arises from the letter. In particular, he alleges that the letter conveyed the following meanings:

(a) Mr Daunt Watney, as principal, is responsible for a culture of denial of problems involving bullying at TAS;

(b) Mr Daunt Watney directed the production of misleading reports into bullying at TAS for the sole purpose of deflecting criticism and to avoid litigation liability;

(c) Mr Daunt Watney directed the production of misleading reports into bullying at TAS which vilely attacked and harmed a young girl who was a victim of bullying;

(d) Mr Daunt Watney’s failure to appropriately respond to bullying at TAS might have contributed to the suicide of a TAS student;

(e) Mr Daunt Watney is responsible for the deliberate misuse of information provided to him about our daughter;

(f) Mr Daunt Watney is not fit to manage and oversee TAS.

We deny, in the proceeding and otherwise, that the letter – properly understood – conveyed any of the meanings set out above. We are surprised both that Mr Daunt Watney would extract those meanings from the letter and would, as principal of a school at which we as parents have expressed concerns about bullying, commence legal proceedings against us on the basis of the letter.

However, we wish to clarify that we did not intend to defame Mr Daunt Watney by our letter or to convey any of the imputations listed above concerning Mr Daunt Watney.  If and to the extent that you understood the letter to convey any one or more of those imputations, we hereby unequivocally withdraw them.

We repeat that our focus, as we hope is reflected in the letter, was and remains on trying to have our concerns about bullying at TAS properly addressed.”

  1. [63]
    The defendants place particular emphasis on this draft correspondence. That document is subservient to the covering letter wherein the defendants seek the plaintiff’s response about whether the letter should also go to the new Director General.
  1. [64]
    By the third letter marked “Without Prejudice Save as to Costs” the defendants’ solicitors made assertions about the merit and effect of the proceeding, disavowed the damaged sought, and affirmed the sentiments expressed in the other two letters.  In the last paragraph the author asserts:

“We refer to the above proceeding, in which your client seeks damages approaching $400,000 for defamation allegedly contained in a letter sent by our clients to the Director General of the Queensland Department of Education detailing their concerns about bullying at TAS and the treatment of the issue.

The proceeding seems to us to be a clear over-reaction to the letter, when it is understood in context.  The damages sought, even if defamation could be established, are vastly higher than any conceivable award. Our clients’ letter was not published to the world at large but to two individuals to whom, most would think, our clients would be entitled as parents to complain without fear of being sued.  ln our view, the Court and a jury will not be sympathetic to your client's cause.

We consider it extraordinary that your client has issued and is aggressively pursuing the proceeding.  It is surprising for many reasons, including that the letter and our clients‘ concerns were plainly focussed on institutional matters rather than your client individually, and because, ironically, your client's approach appears to be consistent with the culture of denial of bullying which our clients believe exists at the school.  Further, the proceeding and the trial process are likely to involve the public airing of substantial concerns about the school’s management of bullying which - we assume - neither the school nor your client would wish to gain further publicity.

As you know, by our first open letter earlier today, our clients have now apologised through us for any of the alleged defamatory imputations which arc found to arise from the letter.  They have also, by our second open letter, indicated their intention to withdraw any such imputations which the recipients understood the letter to convey; this is subject only to the need for clarification of your client’s wishes regarding who should be sent the withdrawal letter.  Given the limited publication of the original letter, it is difficult to see what injury to reputation or hurl, distress and embarrassment could genuinely be believed to persist in light of the apology and once the withdrawal has been sent.

We urge your client to reconsider his approach in this proceeding, and to discontinue it.  If that occurs within 14 days of the date of this letter, our clients are prepared to consent to an order that there be no order as to costs upon the discontinuance.  If there is no discontinuance within 14 days, our clients are resolved to defend the proceeding to judgment and believe they will be successful.

  1. [65]
    However, it is unclear whether the correspondence conveys an offer or merely an invitation to treat as understood by a reasonable person in the position of the addressee.
  1. [66]
    The third letter in didactic terms largely comprises the author’s opinions and assertions about the plaintiff’s case. It harks to the defendants’ apology ‘through us’ in the first letter.  The apology was expressed and not offered. 
  1. [67]
    The defendants’ stated ‘wish’ to send a letter withdrawing ‘any such imputations which the recipients understood the letter to convey’ in terms of the draft letter, was expressed to be conditional on the plaintiff’s clarification about recipients.  It is unclear whether this formed part of some offer, and therefore a pre-condition to its acceptance, or some collateral arrangement.  In any event, no response was sought from the plaintiff about the defendants’ intention to send the letter to the original recipients, and about the content of the draft letter.  The defendants merely invited the plaintiff to consider whether it should also be sent to the new Director General. 
  1. [68]
    It is also hard to discern any offer in the defendants’ solicitors ‘urge’ of the plaintiff to ‘reconsider his approach in this proceeding, and to discontinue it’, coupled with the defendants being ‘prepared to consent” to no order as to costs if the proceedings were discontinued. 
  1. [69]
    It seems the expectation was for the plaintiff to accept the proposal by the conduct of effecting the discontinuance of the proceeding governed by r 304(2) of the UCPR.  But the plaintiff was unable to discontinue the proceeding (after service of the defence) unilaterally.  He could only do so with the court’s leave or the consent of the defendants.[18]  The defendants’ solicitors’ letter does express consent to the discontinuance but that may be inferred by the context of the proposed attitude to costs expressed as a preparedness to bear their own costs.  However, this seems to address the trigger of automatic liability for costs by operation of s 307(1) rather than the process of discontinuance. 
  1. [70]
    In my view the correspondence sent by the defendants on 22 May 2013 is insufficient to indicate an intention for the defendants to be bound without further discussion or negotiation, upon acceptance of the terms set out in the letters. Further discussion, and perhaps negotiation, was needed to effect a discontinuance, and the uncertainty of whether the clarification sought about the new Director General for part of this arrangement.
  1. [71]
    In my view, the correspondence did not constitute a settlement offer within the meaning of s 40 of the Act.

Reasonableness of Response

  1. [72]
    If the correspondence was a settlement offer, as to whether the plaintiff’s response was reasonable or unreasonable is a question of fact to be resolved by regard to all relevant circumstances.[19]
  1. [73]
    It is tolerably clear that the respondent had a window of 14 days to respond to the correspondence.
  1. [74]
    The matters raised in the defendants’ solicitors’ correspondence were rebuffed by the plaintiff’s solicitor’s letter of 6 June 2013 for reasons which included that the proffered apology and draft letter did not convey a personal apology and was qualified by their denial of the pleaded imputations. The defendants offered to resolve the proceeding by payment of $25,000 for claim and interest, the plaintiff’s standard basis costs, an ‘unqualified apology’ and an undertaking not to further defame.
  1. [75]
    However, as was made clear by the defendants’ solicitors’ ultimatum in the third letter dated 22 May 2013, unless their proposal was met within 14 days, “our clients are resolved to defend the proceeding to judgment.”  Accordingly, the plaintiff’s offer lapsed.
  1. [76]
    The defendants also point to the plaintiff’s cross-examination answer ‘simply [seek] redress for what has been said about me’[20]as motivation for commencing proceedings.  They argue that, if this sentiment was genuine, the best redress available to the plaintiff was for the authors of the matter complained of to apologise and write to the recipients and withdraw any defamatory comments made about him. 
  1. [77]
    The plaintiff has consistently sought the publication of a reasonable correction, and a appropriate apology in respect to the imputations, together with compensation and costs.[21] 
  1. [78]
    Assuming that this was the only sufficient ‘redress’, I do not accept these matters were met by the defendants’ solicitors’ correspondence dated 22 May 2013. The apology expressed in the first letter was not a personal apology of the ‘authors of the matter complained’. As for the draft letter, the defendants expressed their ‘wish’ to write the draft letter to the recipients, but apparently did not act on their wish because of their query about a non-recipient, the new Director General.
  1. [79]
    I am not persuaded that, at the early stage of the proceeding, the plaintiff’s conduct in responding to the defendants’ correspondence dated 22 May 2013 was unreasonable. Therefore, the requirements of s 40(2)(b) of the Act are not met, and the interests of justice do not warrant an award of costs on the indemnity basis.

Conclusions

  1. [80]
    The plaintiff was ultimately unsuccessful in the proceeding. 
  1. [81]
    However, the success must be considered in the context of my discussion about the conduct of the parties before and during the proceeding are complicated in the particular unusual circumstances if this case. I have remarked the defendants’ correspondence and the plaintiff’s response.  The defendants’ counsel’s flawed address on Question 3, likely confused the jury and resulted in a perverse verdict.  While the defendants obtained a favourable verdict on the first trial, the plaintiff was successful on the questions as corrected by the court of appeal.  This in turn led to delay (pending the appeal), and further costs, delay and inconvenience of a new trial.  The new trial involved substantial duplication and was ultimately determined on the defence that was not an issue leading up to or during the first trial. 
  1. [82]
    More broadly, the nature and complexity of the proceeding is clearly evident. The merits of the new defence were relatively strong and supportable by sound law or able argument.  The case required special skill, labour, specialist knowledge and responsibility of the representatives.  This has included significant time, research and consideration of the questions of law and fact agitated in the case.
  1. [83]
    In the circumstances of this case, it would be inequitable, I think, for the plaintiff to bear the financial burden of the defendants’ conduct in the first trial. That necessitated a re-litigation of the original defences, and therefore about one half of the former trial was thrown away. Having taken that approach, I think it would be just and reasonable to proportionally compensate both parties for costs of the first trial, and award costs to the first and second defendants of the new trial on the standard basis.
  1. [84]
    I opine that the competing costs related to the first trial are relatively equivalent and neutralise the effect of a competing order. This then leaves the costs of the new trial, which I think ought be disposed by an order in favour of the defendants on the standard basis.

Order

  1. [85]
    For these reasons, I will order that the plaintiff will pay the defendants’ costs of and incidental to the proceeding, excluding the costs of the trial from 25 July 2016 to 3 August 2016, to be assessed on the standard basis.

Judge DP Morzone QC

Footnotes

[1]Watney v Kencian & Anor [2017] QCA 116, at [69].

[2]Civil Proceedings Act 2011 (Qld), s 15.

[3]Waters v PC Henderson (Australia) Pty Ltd (1994) 254 ALR 328 at pp 31-32.

[4]UCPR rr 360 (formal offer by plaintiff), 361 (formal offer by defendant), 701 (standard), 703 (indemnity).

[5]See Nationwide News Pty Ltd v Weatherup [2017] QCA 70 at [73].

[6]Haddon v Forsyth (2) [2011] NSWSC 693 at [5] citing Davis v Nationwide News Pty Ltd [2008] NSWSC 946 at [27].

[7]Contrast UCPR, rr 352 and 702, which requires statutory formality as distinct from a Calderbank letter/offer so named after Calderbank v Calderbank [1975] 3 All ER 333.

[8]Haddon v Forsyth (2) [2011] NSWSC 693 at [5]

[9]Kencian & Anor v Watney [2015] QCA 212, at [55].

[10]Watney v Kencian & Anor [2017] QCA 116, at [69].

[11]Defendants’ Submissions on Costs, para. 19.

[12]Watney v Kencian & Anor [2017] QCA 116 at [37]-[46].

[13]Watney v Kencian & Anor [2017] QCA 116 at [37] & [45].

[14] Watney v Kencian & Anor [2017] QCA 116 at [71].

[15]Watney v Kencian & Anor [2017] QCA 116, at [67].

[16]Defendants’ submissions on Costs, para. 14

[17]T5-4/24 – 5/10

[18]Uniform Civil Procedure Rules 1999 (Qld) r 34; and Form 27.

[19]Hockey v Fairfax Media Publications Pty Ltd (No 2) (2015) 237 FCR 127 at [69].

[20]T4-21/20-21.

[21]Affidavit of Williams, Exhibit 2 Notice of Concerns 17.12.12 & MBS letter 6.6. 13. 

Close

Editorial Notes

  • Published Case Name:

    Daunt Watney v Kencian & Anor

  • Shortened Case Name:

    Daunt Watney v Kencian

  • MNC:

    [2018] QDC 135

  • Court:

    QDC

  • Judge(s):

    Morzone DCJ

  • Date:

    24 Jul 2018

Appeal Status

Please note, appeal data is presently unavailable for this judgment. This judgment may have been the subject of an appeal.

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