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Rothe v Scott (No. 5) [2016] NSWDC 225 (22 September 2016)

Last Updated: 22 September 2016

Case Name:	Rothe v Scott (No. 5)
Medium Neutral Citation:	[2016] NSWDC 225
Hearing Date(s):	22 September 2016
Date of Orders:	22 September 2016
Decision Date:	22 September 2016
Jurisdiction:	Civil
Before:	Gibson DCJ
Decision:	(1) The plaintiff is awarded interest on costs at 3% from 12 March 2014, making a total of $6,264 and increasing the judgment sum to $156,264. (2) The defendant is to pay the plaintiff’s costs of these proceedings on an indemnity basis pursuant to s 40(2)(a) of the Defamation Act 2005 (NSW). (3) The plaintiff is entitled to an order for interest on those costs at the prescribed rate pursuant to s 101 of the Civil Procedure Act 2005.
Catchwords:	TORT – defamation – judgment for plaintiff for $150,000 – applications for interest on judgment, indemnity costs and interest on costs – no issue of principle
Legislation Cited:	Civil Procedure Act 2005 (NSW) ss 21, 100, 101 Courts and Other Justice Portfolio Legislation Amendment Act 2015 (NSW) Defamation Act 2005 (NSW) s 40
Cases Cited:	Cerrutti v Crestside Pty Ltd [2016] 1 Qd R 89 Davis v Nationwide News [2008] NSWSC 946 Doppstadt Australia v Lovick & Son Developments  [2014] NSWCA 158  Grattan v Porter [2016] QDC 202 John Fairfax & Sons v Kelly (1987) 8 NSWLR 131 Leichhardt Municipal Council v Green [2004] NSWCA 341 MBP (SA) Ltd v Gogic [1991] HCA 3; (1991) 171 CLR 657 McGaw v Channel Seven Sydney [2006] NSWSC 1270 Polias v Ryan (No 2) [2015] NSWSC 1 Rothe v Scott (No. 4) [2016] NSWDC 160
Texts Cited:	-
Category:	Costs
Parties:	Plaintiff: Kenneth Rothe Defendant: David Scott
Representation:	Counsel: Plaintiff: Mr C J Dibb Defendant: Mr D Scott (in person) Solicitors: Plaintiff: Slater & Gordon Defendant: Mr D Scott (in person)
File Number(s):	2015/74837
Publication Restriction:	None

JUDGMENT

1. In Rothe v Scott (No. 4) [2016] NSWDC 160, the plaintiff was awarded $150,000 damages following publication of grave allegations about the plaintiff on Facebook. The plaintiff now brings applications for:
   • (a) Interest on the damages awarded;
   • (b) Costs on an indemnity basis; and
   • (c) Interest on costs.
2. These are my reasons for making the orders sought by the plaintiff.

Interest on the damages awarded

3. The plaintiff claims pre-judgment interest pursuant to s 100 of the Civil Procedure Act 2005 (NSW). The entitlement of a plaintiff to claim interest on defamation damages is of long standing (John Fairfax & Sons v Kelly (1987) 8 NSWLR 131) and while s 100, by use of the word “may”, conveys discretion, interest is almost invariably awarded, as Applegarth JA (setting aside a refusal by the first instance judge to award interest) explains in Cerrutti v Crestside Pty Ltd [2016] 1 Qd R 89 at [93] – [102].
4. The appropriate rate for non-economic loss has been accepted as being 4%: MBP (SA) Ltd v Gogic [1991] HCA 3; (1991) 171 CLR 657. Awards of 4% in defamation are rare, as the 4% figure is reduced to take into account that the damage has been spread over the period from publication to judgment: Grattan v Porter [2016] QDC 202 at [113].
5. In Grattan v Porter the amount awarded was 3%. Where the damage is evenly spread, a rate of 2% is mathematically appropriate, but if the evidence demonstrates that significant damage occurred soon after publication (continuing at a lesser intensity over the subsequent period) the rate of 3% is applied: McGaw v Channel Seven Sydney [2006] NSWSC 1270 per Rothman J; Davis v Nationwide News Pty Ltd [2008] NSWSC 946 per McLellan CJ at CL. As that is generally the case in defamation actions, interest of 3% has become the common figure, as Robertson DCJ notes in Grattan v Porter at [112] – [113].
6. The evidence in this case supports the finding of significant damage shortly after publication. Mr Dibb also points out that the matter complained of was removed from the internet soon after publication, which supports the inference that most of the damage was suffered early on, and submits that the 3% rate should be awarded.
7. This brings me to a consideration of the defendant’s submissions in reply. The defendant, although previously represented by two legal firms with experience in defamation, represented himself at the hearing. He also represented himself (by telephone link) on this application and made submissions in reply to Mr Dibb, who had served on him written submissions in support of all the plaintiff’s applications.
8. It is the obligation of the judge hearing applications such as these to set out fully and frankly the submissions of both parties. This is particularly the case where a party is a litigant in person. However, the defendant’s submissions had nothing to do with the legal issues the subject of these applications, in that they consisted solely of allegations of an inflammatory nature about a wide range of persons. For this reason, Mr Dibb, in his client’s interests, submitted that if I were to set out in my judgment what the defendant had said, this would merely multiply the defamatory publications by giving the defendant a further platform with which to attack the plaintiff.
9. While this request may appear to be contrary to open justice as well as being contrary to the interests of the parties in litigation, it is the course that I propose to take. The judicial process should not be used (or perhaps I should say misused) by a party to make public statements of the kind the defendant made to the court today. I take into account that his accusations went beyond the plaintiff and amounted to slurs upon a wide range of groups of people, none of whom would be able to answer the defendant’s claims. Accordingly, I do not propose to refer to the content of the defendant’s submissions in any further detail.
10. I accept Mr Dibb’s submissions made as to the rate of interest. The date of publication was 12 March 2014. Mr Dibb estimates that the pre-judgment period is one year and 143 days (1.392 years) and the appropriate calculation, if the court awards interest at 3%, is: $150,000 x 3% x 1.392 years = $6,264.00.

Costs

11. To promote settlement of defamation proceedings, s 40 of the Defamation Act 2005 (NSW) provides for indemnity costs where no offer of settlement has been made. Section 40 provides:

“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. The plaintiff relies on s 40(2)(a) to seek an order that costs be paid on an indemnity basis. The only offer ever made by the defendant was by a letter from the defendant’s solicitor received on 28 August 2015. That letter was couched in combative terms:

“Dear Sir
...
We refer to our client’s further amended defence filed on 20 August 2015.
Our client contends that, having regard to the matters pleaded, your client’s claim will fail. Indeed, for the reasons pleaded, our client contends that your client’s claim simply lacks merit.
As your client will not doubt appreciate, both parties have incurred legal costs to date and, inevitably, further substantial costs will be incurred if the matter proceeds to trial.
Against that background, our client invites your client to discontinue his proceedings at this time. If he agrees to do so, our client will agree to there being no order as to the costs of the proceedings but subject to any previous costs orders being vacated.
Our client contends this offer to be a generous one, given the costs that our client has already incurred. Our client appreciates that some costs orders have already been made in favour of your client and he further appreciates that even if he is successful in defending these proceedings, certain costs would not be recoverable in any event, being those costs associated with the various versions of our client’s defence, and the application for leave to file a further amended defence.
This letter is written in accordance with the principles enunciated in Calderbank v Calderbank [1975] 3 All ER 333.
This offer is open for acceptance for a period of 7 days from the date of this letter and, if the offer is not accepted by that time, it is withdrawn, given that we will need to continue to undertake further work on the matter.”

13. Mr Dibb submits that this “offer” is in no sense an offer of compromise: Leichhardt Municipal Council v Green [2004] NSWCA 341. The offer from the defendant actually would have required the plaintiff to abandon the benefit of the costs orders that had already been made in his favour. As such, this is not an offer that meets the requirements of s 40(2)(b), as the offer is, on its face, unreasonable: Davis v Nationwide News [2008] NSWSC 946 at [27] – [30].
14. The plaintiff, by contrast, sought a retraction and apology from the very beginning, as the correspondence tendered by the defendant during the hearing (which he acknowledged receiving) demonstrates. Once the plaintiff contacted the defendant and explained the errors in the Facebook post, it should have been obvious to the defendant (and to his solicitors when he consulted them) that there was no real defence available for this gravely defamatory publication.
15. The history of these attempts to plead a defence of justification by successive solicitors, in circumstances where that defence was incapable of any proper particularisation, is further evidence of the combative approach taken by the defendant and of his failure to engage with the need to consider an appropriate settlement. Mr Dibb submits, and I agree, that this is the purpose to which s 40 is directed. The plaintiff should therefore be awarded his costs of and incidental to the proceedings on the indemnity basis.

Interest on costs

16. The plaintiff also claims interest on costs. As these provisions have been the subject of recent amendment, I will first set out the two regimes which govern the awarding of interest on costs under the Civil Procedure Act 2005.
17. Prior to 24 November 2015, s 101 subs (4) and (5) of the Civil Procedure Act 2005 provided:

“(4) The court may order that interest is to be paid on any amount payable under an order for the payment of costs.
(5) Interest under subsection (4) is to be calculated, at the prescribed rate or at such other rate as the court may order, as from:

(a) the date or dates on which the costs concerned were paid, or
(b) such later date as the court may order.”

18. By reason of Courts and Other Justice Portfolio Legislation Amendment Act 2015 (NSW), which came into operation on 24 November 2015, s 101 subs (4) and (5) were amended as follows:

“(4) Unless the court orders otherwise, interest is payable on an amount payable under an order for the payment of costs.
(5) Interest on an amount payable under an order for the payment of costs is to be calculated, at the prescribed rate or at any other rate that the court orders, as from the date the order was made or any other date that the court orders.”

19. The savings provisions, which is now incorporated into Schedule 6 of the Civil Procedure Act 2005, at s 21 provides:

“Part 8 - Provisions consequent on enactment of Courts and Other Justice Portfolio Legislation Amendment Act 2015
21 Pending proceedings
The amendments made to this Act by Schedule 1.2 to the Courts and Other Justice Portfolio Legislation Amendment Act 2015 do not extend to proceedings commenced before the commencement of that Subschedule and those proceedings may continue as if those amendments had not been enacted.”

20. The statement of claim in these proceedings was filed on 12 March 2014, well before the cut-off date of 24 November 2015. That means that the entitlement to interest on costs falls under s 101 in its previous form, and that the plaintiff must demonstrate an entitlement to such costs. Interest on costs was not commonly awarded under s 101, and this includes defamation proceedings: Polias v Ryan (No 2) [2015] NSWSC 1 at [63] to [65] per Rothman J.
21. In seeking the order for interest on costs, Mr Dibb draws to my attention the statement by Gleeson JA (with whom Ward and Emmett JJA agreed) in Doppstadt Australia v Lovick & Son Developments  [2014] NSWCA 158  at  [403] :

“Thus in the absence of any countervailing discretionary factor, it is appropriate that an order for interest on costs be made to compensate the party having the benefit of a costs order for being out of pocket in respect of relevant costs which it had paid. There is no requirement to establish that the circumstances of the case are out of the ordinary: Drummond and Rosen Pty Ltd v Easey & Ors (No 2) [2009] NSWCA 331 at [4] per Macfarlan JA (Tobias JA agreeing) citing Lahoud v Lahoud [2006] NSWCA 126 at [82] - [83] per Campbell J.”

22. Mr Dibb submits that, conformably with this reasoning, unless some countervailing factor is identified by the defendant, the plaintiff should be entitled to interest on costs. Such factors would be vacated hearing dates, unsuccessful interlocutory arguments, or other factors resulting in adverse costs orders (Doppstadt Australia v Lovick & Son Developments at [405]), which did in fact occur in these proceedings, but solely as a result of the conduct of the defendant and not the plaintiff. In particular, the defendant sought to vacate a hearing date, had his defence of justification struck out and applied unsuccessfully to have it reinstated, and failed to comply with orders for discovery.
23. Taking all of the above into account, I am satisfied that the plaintiff should be entitled to interest pursuant to s 101, and that such should run from the dates on which the plaintiff made each payments of costs. While I note that actual evidence of payment was provided in Doppstadt Australia v Lovick & Son Developments at [404]), it is not necessary for the court to receive actual evidence that payments of costs have been made, or that the costs have been ‘’fructifying in the wrong pocket”: Polias v Ryan at [63] to [65] per Rothman J. Nor is it necessary for me to set out the details of when any such payments occurred in the interest on costs order that I propose to make, as any dispute as to quantum on assessment of costs can be dealt with by the costs assessor on the basis of the statements to this effect in this judgment.

Orders

(1) The plaintiff is awarded interest on costs at 3% from 12 March 2014, making a total of $6,264 and increasing the judgment sum to $156,264.
(2) The defendant is to pay the plaintiff’s costs of these proceedings on an indemnity basis pursuant to s 40(2)(a) of the Defamation Act 2005 (NSW).
(3) The plaintiff is entitled to an order for interest on those costs at the prescribed rate pursuant to s 101 of the Civil Procedure Act 2005.

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