Lenox Hewitt v Queensland Newspapers Pty Limited [1996] ACTSC 78 (18 July 1996)

SUPREME COURT OF THE ACT

LENOX HEWITT v. QUEENSLAND NEWSPAPERS PTY LIMITED
No. SC 283 of 1993
Number of pages - 5
Costs

COURT

IN THE SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY
HIGGINS J

CATCHWORDS

Costs - date from which costs order takes effect - date from which costs order will carry interest - date of judgment - appeal - power to pre-date order for judgment - effective from date of original decision or earlier - exercisable in the case of a subsidiary order for costs - party and party costs - circumstances that warrant indemnity costs - failure to act reasonably with regard to offer of compromise - persisting with a hopeless case - costs thrown away.

Words And Phrases - "Judgment".

Supreme Court Rules, Order 42 rule 3
Supreme Court Act 1933, s2

Tarlinton v Hall (1981) 38 ACTR 1
Hunt v R M Douglas (Roofing) Ltd (1990) 1 AC 398
Minister Administering the Environmental Planning and Assessment Act 1979 v

Carson (1994) 35 NSWLR 342

Bothwick v The Elderslie Steamship Co Ltd (No. 2) (1905) 2 KB 516
Turner v London and South Western Railway Co (1874) LR 17 Eq 561
Ecroyd v Couthard (1897) 2 Ch 554
Bonsor v Musicians' Union (1954) Ch 479
Vitous v Tuohill (1964) VR 624
Quirk v Bawden [1992] ACTSC 118; (1992) 111 FLR 115
Blackburn v State of New South Wales, unreported, Supreme Court, New South

Wales, CLD, 9 August 1991

Degman Pty Ltd v Wright (No. 2) (1983) 2 NSWLR 354
Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants

Pty Ltd (1988) 81 ALR 397

HEARING

CANBERRA, 27 May 1996
18:7:1996

Counsel for the Plaintiff: Mr G O L Reynolds QC with
Mr M Friedgut

Instructing solicitors: Freehill Hollingdale Page

Counsel for the Defendant: Mr J Gibson

Instructing solicitors: Blake awson Waldron

ORDER

THE COURT ORDERS THAT:
1. The plaintiff pay the defendant's costs of the plaintiff's amendment to his particulars of imputations and any costs thrown away thereby.

2. The defendant pay the costs of the plaintiff's action including the application for this order for costs on an indemnity basis save for the costs incurred by the plaintiff in respect of the plaintiff's amendment to particulars of imputations.

3. Interest is not to be payable in respect of the balance of costs found in favour of the plaintiff after 27 November 1995 unless the sum taxed or agreed as the balance in favour of the plaintiff exceeds $65,000.00.

DECISION

HIGGINS J On 5 June 1995, I found a verdict for the plaintiff and ordered that judgment be entered accordingly in the sum of $80,500.00. Costs were reserved.

2. On 27 May 1996, the plaintiff applied for an order for indemnity costs against the defendant.

3. The defendant questioned whether the costs order should date from the date of verdict or the date upon which the costs order is pronounced. Absent any special order, the costs order will bear interest from the date upon which it takes effect.

4. Tarlinton v Hall (1981) 38 ACTR 1 was referred to. In that case the defendant contended that the costs order should bear interest only from the date when the sum due was calculated. The order for costs had been made on the same date as the judgment. Kelly J held that it should bear interest as from the date of judgment. His Honour said, at 7,

There is much to be said for a rule that the party required
to pay taxed costs should not be required to pay interest on
those costs until he can calculate it. He cannot do this until
the costs are taxed. It may be said that it rests in the hands
of the successful party to tax his bill as soon as possible. It
may be said, too, that it is unjust, in one sense, to require a
debtor to pay interest on an amount which he cannot be forced
immediately to pay.
On the other hand, it seems unjust that the sum of money
represented by the costs should be "fructifying in the wrong
pocket" of the unsuccessful party until taxation.

5. Whilst there may be some justification for denying interest on costs incurred after judgment and on disbursements due but then unpaid, the general rule is that, in the absence of any special order, costs orders will carry interest between the date of judgment and the date of taxation and thereafter until payment. Lord Ackner, in Hunt v R M Douglas (Roofing) Ltd (1990) 1 AC 398, 415-6, provides convincing justification for this, see also Minister Administering the Environmental Planning and Assessment Act 1979 v Carson (1994) 35 NSWLR 342, 354 per Kirby P. In any event, as Kelly J pointed out in Tarlinton v Hall (supra), 8, the unsuccessful party can, by tender, reduce the potential liability for interest.

6. In Bothwick v The Elderslie Steamship Co Ltd (No. 2) (1905) 2 KB 516, the Court of Appeal found that, where, on appeal, judgment is entered for the first time in favour of a party, it is appropriate to pre-date the order for judgment so that it takes effect from the date of the original decision, thus allowing interest on the whole judgment sum from that date.

7. In Turner v London and South Western Railway Co (1874) LR 17 Eq 561, Ecroyd v Couthard (1897) 2 Ch 554 and Bonsor v Musicians' Union (1954) Ch 479, pursuant to the equivalent of this Court's Order 42 rule 3, a judgment was pre-dated to the date of completion of argument, that is, pre-dating the decision itself.

8. The term "judgment" in O42 r3, consistent with s2 Supreme Court Act 1933, includes "any decree, order or sentence". Thus the costs order, if the date of judgment was to pre-date the decision could be dated then or later.

9. Of course, the power to predate an order must be exercised before it is entered, see Vitous v Tuohill (1964) VR 624. That power will only be exercised for good reason but it seems to me that, in the case of a subsidiary order, such as an order for costs, good reason will usually exist to order that it date from the date of the judgment in consequence of which it is made.

10. The order for costs will, therefore, date from 5 June 1995, the date of my decision on the substantive claim.

11. The next question is whether costs should be ordered on an indemnity basis.

12. The practice of this Court in relation to the ordering of indemnity costs was considered by a Full Court in Quirk v Bawden [1992] ACTSC 118; (1992) 111 FLR 115. That decision emphasised that the usual consequence of success in litigation is an order for costs on the standard or "party and party" basis. There needs to be more than a clear victory to enliven the discretion to order costs on a more generous basis. The most generous basis is an "indemnity" basis.

13. The resources of the Courts are under pressure to more efficiently deal with litigation. It is appropriate, therefore, to insist on timely and reasonable conduct by litigants in order to prevent wastage of those resources.

14. Thus, in Quirk v Bawden (supra) the rejection of a reasonable offer of settlement and the refusal to make a realistic counter-offer was considered so unreasonable as to warrant the sanction of indemnity costs. It was pointed out that mere failure on the part of the defendant to accept an offer less than the ultimate judgment would not entitle the plaintiff to indemnity costs. There must be a failure to act reasonably and that failure must be sufficiently serious to warrant a greater than usual costs sanction.

15. The circumstances in which such an order is appropriate are not limited to offers of compromise. Hunt J in Blackburn v State of New South Wales, unreported, Supreme Court, New South Wales, CLD, 9 August 1991, noted that in Degman Pty Ltd v Wright (No. 2) (1983) 2 NSWLR 354, false and perjured allegations grossly prolonging the litigation had been considered to warrant a costs sanction on an indemnity basis. Persistence in a clearly hopeless case, despite lack of proper foundation, may also warrant indemnity costs, see Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397.

16. As Hunt J said in Blackburn (supra) at 5,

It should be emphasised that the test is whether the
unsuccessful party, properly advised, should (not would) have
known that he had no chance of success. It does not require a
finding that the action was in fact commenced or continued for an
ulterior motive or in wilful disregard of the known facts or
clearly established law.

17. That test his Honour found satisfied in the case then before him.

18. I have no doubt, for the reasons I stated in my judgment in this case, that the defendant, assuming it had been properly advised, should have known it had no substantive defence. The level of ignorance of the effect of the matter complained of displayed by the relevant servants and agents of the defendant was "so absurd as to cause serious doubt on the bona fides of that refusal", (Judgment 5 June 1995, 26). For this purpose, it does not matter whether the relevant officers of the defendant were, in fact, not properly advised or whether they ignored proper advice.

19. I will not repeat my comments on the defendant's conduct in this litigation. It suffices to say that it is my view that this litigation might well have been avoided if the defendant had properly appreciated, as it should have, that it had no substantive defence.

20. It does not seem to me to matter that when the pleadings were formulated, the plaintiff drew more defamatory inferences from the matter complained of than I found were justified. Those failed imputations were not irrationally or unreasonably pleaded and did not disguise the truth of the matter, namely, that the matter complained of seriously and unjustifiably defamed the plaintiff.

21. It may also be noted that both Quirk v Bawden and Blackburn were decided before this action was commenced. The defendant should, therefore, have been on notice that unreasonable conduct in the course of litigation could result in a greater than usual costs sanction.

22. It was pointed out that the plaintiff had amended his particulars of imputations. He did not succeed on the original particulars. That may be so but, in general, the defamatory meaning of the matter complained of was obvious. It was clearly drawn to the defendant's attention in the pre-action correspondence even if the original statement of claim failed to do so. Nevertheless, the defendant should not have to pay the costs of the amendments to the pleadings made by the plaintiff, nor the costs, if any, thrown away thereby. Indeed, the defendant should have its costs thereof. The defendant should, otherwise, pay the costs of the action including the application for this order on an indemnity basis and I so order. The order will take effect from the date of the original judgment.

23. I note that the defendant has made an open offer of $65,000.00 in respect of costs. That offer was made on 27 November 1995. I order that, in the event that costs are taxed at less than $65,000.00 inclusive of interest up to 27 November 1995, interest not be payable thereon after that date.