A blow to media defendants – Indemnity costs under section 40(2) of the Defamation Act

By Alex Tharby

28 January 2020

Section 40(2) of the Defamation Act 2005 (WA) relevantly 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.

The intention of section 40(2) is to broaden the situations in which indemnity costs are awarded to plaintiffs, recognising that unless in appropriate cases costs are awarded on an indemnity basis, a defamation plaintiff may be out of pocket to such an extent that the risks in bringing proceedings are unacceptable ¹. This provision seeks to provide a balance for general damages being ‘capped’. Despite this legislative intention, the provision has been sparingly applied. In its 14 years of operation there are only a handful of reported instances of plaintiffs being awarded indemnity costs pursuant to the section – more people have walked on the moon.

On 20 December 2019, Chief Justice Quinlan of the WA Supreme Court awarded Dr Dennis Jensen his costs of his successful defamation proceedings against Nationwide News Pty Ltd, the publisher of The Australian and its journalist Mr Andrew Burrel ²

His Honour ordered that these costs be assessed on an indemnity basis pursuant to section 40(2) of the Defamation Act and on 21 January 2020 delivered a written record of his Honour’s ex tempore reasons for decision ³

The defendants had sought costs orders by reference to issues on which Dr Jensen was unsuccessful but the Chief Justice refused, ordering that costs should follow the event and finding that there was “no basis to conclude that it is in the interests of justice not to apply the statutory position” in section 40(2). The defendants also relied on offers they had made pre-trial that involved Dr Jensen agreeing to a dismissal of his proceedings with no order as to costs, or the parties agreeing to dismiss Dr Jensen’s proceedings and a counterclaim brought by Mr Burrell against Dr Jensen for defamation (abandoned on the eve of trial) with no order as to costs.

Chief Justice Quinlan’s costs decision recognised the established principle that the ‘reasonableness’ of settlement offers in the context of defamation proceedings requires consideration of matters in addition to the usual ‘reasonableness’ factors, including whether an offer includes some form of apology or correction, or removal of material from the internet. The ‘walk-away offers’ provided no effective remedy to Dr Jensen for the hurt and damage caused by the defamation. His Honour did not accept that any of these offers were reasonable at the time they were made.

Although it is always a matter of discretion in the particular circumstances of each case, ‘walk-away offers’ from defendants to defamation proceedings are unlikely to be considered ‘reasonable’.

1. The Ten Group Pty Ltd (No. 2) v Cornes (2012) 114 SASR 106 [14].
2. For a summary of the trial decision, click here.
3. Jensen v Nationwide News Pty Ltd [No 13] [2019] WASC 451 (S).

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