Federal Court Justice Michael Lee expressed that as Clive Palmer rejected Mark McGowan's offer to settle back in December last year, Palmer would need to pay part of McGowan's defamation costs.
"Both men went too far in their political jousting and both men litigated, but only one was willing to draw back and avoid the long and costly hearing" Lee said.
With the court finding that both Palmer and McGowan defamed each other, there has likely been no benefit in this legal battle. The damages awarded are far from their legal expenses. $20,000 has been awarded to McGowan, which is less than his lawyer Bret Walker SC who charges more than $20,000 a day. Palmer has been awarded $5000.
The origins of the defamatory battle:
In late 2020, Palmer begun a defamation action against McGowan for comments made against him that "hurt his feelings." McGowan then counter-sued stating that Palmer defamed him in the media. McGowan then tried to settle this matter which Palmer rejected.
McGowan was able to recover his legal costs because of the offer to walk away from the proceedings earlier. This was made on an ordinary basis not an indemnity basis. The reason for this according to Justice Lee was because of the mixed outcome of the cross claim. These costs protect parties who try to reasonably settle proceedings before trial.
Ordinary legal costs v Indemnity costs
There are two types of legal costs recoverable from an opposing party, ordinary costs or indemnity costs.
Ordinary costs are also known as 'party/party' costs and they do not usually cover all of the legal costs obtained by a successful party. It is usually 60% to 75% of actual costs incurred.
Indemnity costs are all fees, charges, disbursements, expenditures, and compensation incurred by a party to litigation in carrying out proceedings. However, this is only as long as they were not unreasonable or excessive.
A party can recover costs on an indemnity basis where they made a legally correct offer of settlement, where the outcome would have been more favourable to the losing party than the actual judgement that was made. The indemnity costs are only applicable from the date of that offer.
Defamation costs: Court's limited resources wasted and taxpayer's money drained
The judge criticised both McGowan and Palmer for wasting the courts' time.
"The notion that Mr Palmer and Mr McGowan are equally responsible for these proceedings having consumed significant private and public resources cannot be reconciled with the objective facts." Lee stated.
While Palmer had been covering his legal expenses, McGowan's legal fees has been covered by taxpayers. The WA state budget in September 2021 detailed how the state had already spent $1.47 million fighting a series of legal battles brought against by Palmer.