Federal Court Justice Michael Lee has ordered Clive Palmer to pay part of the costs from his defamation proceeding with Mark McGowan.

Clive Palmer initiated defamation proceedings against Mark McGowan following defamatory statements made at a press conference in 2020. Mr McGowan’s comments included labelling Mr Palmer an “enemy of the state” after he and his firm Mineralogy, contested Western Australia’s hard border. Mr Palmer was then counter-sued by Mr McGowan over defamatory comments concerning “legislation which prevented [Mr Palmer] from claiming up to $30 billion in damages over a mining development by his firm.”

On 8 August 2022, the Federal Court found that both parties had defamed each other. The Court ordered $5,000 to be paid to Mr Palmer and $20,000 to be paid to Mr McGowan.

In the costs hearing three days later, Justice Lee reiterated to Mr Palmer and Mr McGowan that litigating this matter was a suboptimal use of Court resources. Justice Lee labelled Mr Palmer’s initiation of legal action as unreasonable. His Honour identified Mr McGowan to have been “dragged into Court” and was satisfied that but for Mr Palmer suing Mr McGowan, Mr McGowan would not have commenced legal action.

When assessing the costs to be awarded, Lee J considered the “evidentiary matter of significance”. In his view, the offer of compromise or Calderbank offer made by Mr McGowan demonstrated a significant attempt to reconcile. His Honour added that “both men went too far in their political jousting, and both men litigated, but only one was willing to draw back and avoid a long and costly hearing.”

Lee J noted that the offer, if accepted, would have meant both parties would walk away from the proceedings, with no orders as to costs.

The Federal Court Rules 2011 (Cth) rr 25.14 provides that if an offer made by someone making a claim, is unreasonably not accepted, and a judgment is obtained more favourable than the terms of the offer, indemnity costs follow. Additionally, if an offer made by someone defending a claim is unreasonably not accepted, and a judgment was obtained in terms better than the offer, indemnity costs follow.

Lee J queried whether rejecting the offer would be classified as “unreasonable” as, among other reasons, the offer did not recognise that Mr Palmer had been defamed. However, Mr Palmer continuing down a litigious path, without making a counter-offer, was said to lack reasonableness.

In considering what was a just cost order in all the circumstances, Lee J ordered Mr Palmer to pay Mr McGowan’s costs of the Cross-Claim only. The costs were not awarded on an indemnity basis. His Honour made this order (not ordering costs generally) as Mr McGowan defamed Mr Palmer, hence the full costs of the Primary Proceeding were not warranted.

To read the full judgment of Palmer v McGowan (No 6) [2022] FCA 927, click here.

If you would like legal advice or representation in relation to a defamation claim, contact Jonathan Xian (jonathan@sanickilawyers.com.au) or Darren Sanicki (darren@sanickilawyers.com.au) or call us on (03) 9510 9888.