While David Anderson, the Managing Director of the ABC, stated to a Senate committee last week that the ABC sought to “minimise costs” of the legal action through mediation, the significant expense incurred by the broadcaster during the early two months of the litigation prior to settlement highlights the cost implications in defamation proceedings.

Danielle Snell, who represented a witness in the Charles Christian Porter v Australian Broadcasting Corporation & Anor case, said that defamation proceedings are technical and complex which means that there is often significant expense for a plaintiff seeking vindication.

This article provides insight into how an individual seeking to protect his/her reputation can attempt to protect themselves on the question of costs in defamation proceedings.

How do cost orders work?

Before attending Court it is important to consider the associated risk of adverse cost orders, which require a party to reimburse another party for legal fees and disbursements. Typically the unsuccessful party will pay for costs considered by the Court to be reasonably and necessarily incurred during litigation. Indemnity costs can also be ordered at the Court’s discretion, which provide compensation for all reasonable costs incurred by a successful party. They will usually be up to 80% of all reasonable legal costs.

Defamation proceedings and costs orders

Section 40 of the Defamation Act provides that, in awarding costs in defamation proceedings, the Court may have regard to:

• the way in which the parties conducted their cases;
• any misuse of a party’s superior financial position to hinder the early resolution of the proceedings; and
• any other matter that the court considers relevant.

Indemnity Costs

Section 40(2) of the Defamation Act provides that a successful defamation plaintiff who is awarded their costs must be awarded their costs on an indemnity basis if the Court is satisfied that the defendant unreasonably failed to make a settlement offer or failed to make or accept a settlement offer, unless the interests of justice require otherwise.

Section 40 does not restrict the Court from ordering indemnity costs for reasons that are not outlined in the section. The non-restrictive nature of this provision aims to broaden the situations in which indemnity costs are awarded to plaintiffs who may otherwise face immense financial strain from bringing defamation proceedings.

Whilst there has been limited application of this section, Chief Justice Quinlan’s costs decision in Jensen v Nationwide News Pty Ltd recognised that in defamation proceedings, additional matters need to be considered to the usual ‘reasonableness’ factors. ‘Walk-away offers’ from defendants to defamation proceedings are unlikely to be considered ‘reasonable’.

Offers of settlement

Indemnity costs are commonly awarded where a party unreasonably rejects an offer of settlement. It is therefore important to consider whether making an offer pursuant to the rules of the Federal Court, the Defamation Act, or the common law in the form of a Calderbank offer are in your best interests and offer the greatest chance of certainty when it comes to avoiding such financial burden.

Christian Porter and barrister cost order

Although Porter ultimately dropped his primary action against the ABC, the proceedings still resulted in significant financial ramifications for all parties. . Shortly after the case with the ABC was settled at mediation, Justice Tom Thawley imposed a cost order on Porter and his barrister Sue Chrysanthou in connection with a separate but related action brought by Ms Dyer, a friend of the woman who made the rape allegation.

Ms Dyer had sought to prevent the barrister from representing Porter due to an alleged conflict of interest that arose between the women, and the Federal Court found in her favour.

Whilst such cost orders come at the end of litigation, they can reflect the parties’ conduct in the early stages of the proceedings. Careful consideration is required when making crucial decisions such as making or accepting an offer.

How we can help

Elit Lawyers by McGirr & Snell prides itself on its ability to communicate with individuals at the outset of any litigation using a scenario plan-based approach. We identify your objectives, clearly explain litigation risks upfront including cost implications, and provide you with a “journey” map to illustrate the various ways in which your dispute may unfold and the steps required to achieve your stated objective whilst managing the risks involved.

Elit Lawyers by McGirr & Snell is of the few Australian firms with specialised defamation experience who can act on behalf of an individual plaintiffs including high profile executives, parliament, sporting and public figures.

For more information please contact Danielle Snell or Robert McGirr.