Brose v Baluskas (No 2)[2018] QDC 239

DISTRICT COURT OF QUEENSLAND

Overview

1. [1]
   On 31 October 2018, I gave judgment dismissing applications by the third, fifth and seventh defendants for leave to re-plead defences of honest opinion.^[1]  In doing so I stated my preliminary view as to the appropriate costs order to be that each of these unsuccessful defendants pay one third of the plaintiff’s costs to be assessed if not agreed. I allowed the parties the opportunity to provide written submissions if alternative orders as to costs were sought and or could not be agreed. I subsequently received written submissions as to costs.

2. [2]
   The plaintiff submits that the third, fifth and seventh defendants ought to be jointly and severally liable for the costs and that such costs ought to be assessed on the indemnity basis.

3. [3]
   The fifth and seventh defendants accept that a costs order ought to be made in favour of the plaintiff but submit that such an order should be made against them separately.

4. [4]
   The third defendant has not filed written submissions in relation to costs. Previously she was represented by the same counsel and solicitors as the fifth and seventh defendants. It is accepted that the third defendant is now a bankrupt.^[2] 

5. [5]
   Having considered the parties’ written submissions and for the reasons discussed below, it remains my view the appropriate order is that each of the third, fifth and seventh defendants ought to pay one third of the plaintiff’s costs. But I am persuaded that this is an appropriate case for an award of costs on the indemnity basis.

Analysis 

6. [6]
   The starting point is r 681 of the Uniform Civil Procedure Rules 1999 (Qld) (“UCPR”) which provides that the costs of an application in a proceeding are in the discretion of the court but follow the event unless the court orders otherwise. The authorities establish that “the event” is not determined merely by reference to the overall result or outcome but is to be determined by reference to “the events or issues, if more than one, arising in the proceedings.”^[3]

7. [7]
   The purpose of an award of costs is to indemnify the successful party, not to punish an unsuccessful party.^[4]  In Oshlack v Richmond River Council (1998) 193 CLR 72, the High Court explained the rationale behind this principle as follows:^[5]

“…if the litigation had not been brought, or defended, by the unsuccessful party the successful party would not have incurred the expense which it did. As between the parties, fairness dictates that the unsuccessful party typically bears the liability for the costs of unsuccessful litigation.”

8. [8]
   Rule 703(1) UCPR provides that “[t]he court may order costs to be assessed on the indemnity basis.”

9. [9]
   The power to award indemnity costs is not closed but is ordinarily limited to cases where there is some special or unusual feature. The relevant principles were summarised by Morrison JA recently in Palmer v Parbery & Ors [2018] QCA 268 as follows:^[6]

“The ordinary rule is that costs are assessed on the standard basis, and a party seeking to have indemnity costs awarded must show that there is some “special or unusual feature” which warrants such an order. In Colgate Palmolive Company v Cussons some exploration was made of the sort of circumstances that might justify a finding that there was a sufficient special or unusual feature to warrant making an order for indemnity costs. Some examples proposed by Sheppard J included the commencement of an action in wilful disregard of known facts or clearly established law, the making of allegations which ought never have been made, and the undue prolongationof a case by groundless contentions. However, those were merely examples and the categories of cases where indemnity costs may be awarded are not closed.” [Emphasis added]

10. [10]
    In the present case, the third, fifth and seventh defendants were each unsuccessful in their respective bids for leave to re-plead a defence of honest opinion because the material facts as pleaded and particularised as supporting the basis on which their opinions were based, were not stated in the relevant publication or were not notorious. Each of these defendants sought to maintain such defences in the face of clearly established law and in circumstances where they had been given considerable notice by the plaintiff that in the context of each of their publications, such a defence was hopeless and doomed to fail. In my view, these features warrant an award of costs to the plaintiff on the indemnity basis.

11. [11]
    In seeking an order for costs making the third, fifth and seventh defendants jointly and severally liable, the plaintiff submits that there is a requirement to show special circumstances^[7] to depart from the general rule that where a court orders that costs be paid by two or more persons, the costs liability is joint and several and can be enforced against those persons jointly or against any of them separately.^[8] 

12. [12]
    I accept this proposition. But in my view, the principle does not apply to the present facts.

13. [13]
    In Cart Provider Pty Ltd & Ors v Park & Ors [2017] QSC 27, the question of whether a costs order should be made against the unsuccessful parties jointly and severally, or jointly only, arose. In determining this issue, Bond J referred to the observations of Cooper J in Thiess Watkins White Construction (in liq) v Witan Nominees (1985) Pty Ltd [1992] 2 Qd R 452 that:^[9] 

“The general rule that costs against two or more persons are joint and several is not disturbed unless, and only to the extent that one defendant conducts a separate and distinct defence which incurs costs which cannot be attributed to the joint conduct of the defendants in the defence of the action.” [Emphasis added]

14. [14]
    The present facts are clearly distinguishable from the circumstances in Cart where Bond J saw no reason to depart from the general rule and observed that:^[10]

“Only one form of statement of claim and reply was delivered on behalf of all the applicants. None of the applicants sought to advance their case for removal of the liquidators in any separate or distinct way”. [Emphasis added]

15. [15]
    In the present case the plaintiff has not sued the defendants on the basis they are jointly and severally liable. The case in defamation against each of them is set against the same background but the plaintiff relies on different publications by each defendant from which different imputations are said to arise. Separate awards of damages against each of the defendants are sought.

16. [16]
    The third, fifth and seventh defendants sought to maintain defences of honest opinion based on separate and distinct facts. Whilst the relevant legal principles that applied were the same and there was some overlap in my findings (for example that a publication about a local school principal was a matter of public interest), I analysed each of their defences separately and I made separate findings. That each of the third, fifth and seventh defendants were represented by the same law firm at the relevant time and chose to run the same defence does not, in my view, mean that they should be jointly liable for each other’s costs. The success or lack of success of one defendant in these circumstances ought not to have costs repercussions for another defendant.

17. [17]
    The plaintiff points to the bankruptcy of the third defendant as justifying a joint and several costs order. The bankruptcy of the third defendant does not mean that a costs order cannot be made against her. Nor is it a basis for avoiding an adverse costs order.^[11]   The other defendants ought not, in my view, be punished because of the third defendant’s impecuniosity.

18. [18]
    The fifth and seventh defendants submit the costs orders ought to be confined to the plaintiff’s costs to review the submissions filed and served on 20 July 2018 and the plaintiff’s costs of drafting submissions in response. I am not willing to confine the orders as such. There may be other costs. For example, the plaintiff’s cost of reviewing each of the revised defences of honest opinion. These are ultimately matters for the assessment process. But, to be clear, the present costs orders do not include costs incurred in relation to the applications heard on 24 May 2018.

Orders 

19. [19]
    It follows, and I order, that the third, fifth and seventh defendants each pay one third of the plaintiff’s costs (of opposing the applications for leave to re-plead a defence of honest opinion heard on the papers), to be assessed on the indemnity basis.