1. Introduction
The Western Australian Court of Appeal's decision in Wright v de Kauwe [2024] WASCA 51 provides guidance on the significance of apologies in defamation proceedings, particularly in the context of settlement offers.
The case illuminates how courts assess the adequacy of apologies when determining whether a plaintiff's rejection of a settlement offer was reasonable for costs purposes.
The Court's analysis offers insights into the relative importance of monetary and non-monetary elements in defamation settlements, emphasising that vindication of reputation through an appropriate apology can be as significant as financial compensation.
This decision is noteworthy for its detailed consideration of how courts should approach the adequacy of proffered apologies when exercising costs discretion following a plaintiff's rejection of Calderbank offers. It provides authoritative guidance on a previously underdeveloped area of law concerning the intersection of apologies, settlement offers, and costs consequences in defamation proceedings.
2. Background of Relevant Preceding Case Law
The Role of Apologies in Defamation Law
Apologies have long held a special place in defamation law, serving multiple purposes:
Statutory recognition: Section 38(1)(a) of the Defamation Act 2005 (WA) specifically recognises that an apology is evidence in mitigation of damages. Section 20 protects apologies from being admissible in determining fault or liability.
Vindication of reputation: As noted in Cassell & Co Ltd v Broome [1972] AC 1027, an apology can serve to vindicate a plaintiff's reputation where monetary compensation alone may be insufficient.
Settlement context: In Ford Motor Co of Australia Ltd v Lo Presti [2009] WASCA 115, the Court established principles for assessing Calderbank offers, including "the extent of the compromise offered" as a relevant factor.
Costs consequences: In Strzelecki Holdings Pty Ltd v Jorgensen [2019] WASCA 96, the Court emphasised that in determining whether rejection of an offer was unreasonable, "all relevant facts and circumstances must be considered" including the extent of compromise offered.
Prior to Wright v de Kauwe, there was limited guidance on how courts should weigh the adequacy of apologies when assessing whether rejection of a settlement offer was reasonable for costs purposes.
3. Detailed Facts of the Case
The Defamatory Publications
Dr Brendan de Kauwe brought a defamation action against Mr Matthew Wright, five director defendants (Mr Cohen, Mr Saad, Ms Shenhar, Mr Gilboa, and Mr Karasik) and Mr Pamensky. Dr de Kauwe and the director defendants were directors of eSense Lab Ltd, and Mr Pamensky was its company secretary [96].
The trial judge found that Dr de Kauwe had been defamed by imputations in four publications:
A letter from three director defendants to Dr de Kauwe on 5 February 2018 [97(1)]
A letter from Mr Cohen to Dr de Kauwe on 15 February 2018 [97(2)]
An announcement by eSense to the ASX on 13 March 2018 (First ASX Announcement) [97(3)]
An announcement by eSense to the ASX on 21 March 2018 (Second ASX Announcement) [97(4)]
The defamatory imputations included that Dr de Kauwe was not fit to be a director, was a blackmailer and extortionist, and had engaged in conduct warranting investigation [136-137].
Settlement Offers and Proposed Apologies
The defendants made several Calderbank offers:
17 August 2020: $500,000 plus costs and an apology [289-290]
14 October 2020: $650,000 plus costs and an apology [289-290]
26 January 2021: $750,000 plus costs and an apology [289-290]
27 January 2021: $850,000 plus costs and an apology [289-290]
28 January 2021: $850,000 plus costs and an apology [289-290]
The proposed apology in each offer was identical and stated:
"We the undersigned (Haim Cohen, Ilan Saad, Galit Shenhar, Eran Gilboa, Benjamin Karasik and Ian Pamensky) each accept that we variously published or caused to be published 2 ASX announcements released to the market and to other parties by eSense-Lab Ltd in 2018. In the ASX announcements various allegations were made concerning Dr de Kauwe, which we accept were defamatory of him.
We sincerely and unreservedly apologise for the damage, hurt, distress and embarrassment that we have caused to Dr de Kauwe and we fully and unreservedly retract the defamatory allegations we made.
We hereby undertake to refrain from making any further such statements regarding Dr de Kauwe in the future." [290]
Notably, Mr Wright was not a signatory to the proposed apology.
4. Analysis of the Court's Reasoning
The Trial Judge's Approach to Apologies in Settlement Offers
The trial judge found that Dr de Kauwe's rejection of the Calderbank offers was not unreasonable, in part because the proposed apology was inadequate. The trial judge identified several limitations in the apology:
It referred only to the ASX Announcements and not to the defamatory letters [304]
The defendants made no offer to publish it to a wider audience [305]
It did not identify the specific allegations being retracted [306]
The settlement was "without any admission of liability" which detracted from the apology's value [307]
The trial judge stated that "in settlement of defamation claims the offer and terms of an apology is of paramount importance" [319] and concluded that "the inadequacy of the apology... is of itself a sufficient reason to make Dr de Kauwe's failure to accept the offer not unreasonable" [320].
The Court of Appeal's Analysis
Mitchell JA (with whom Buss P and Lundberg J agreed) concluded that the trial judge did not make an error of principle in his approach to the significance of the apology. The Court held:
Weight versus error of principle: The director defendants' complaint that the trial judge placed "excessive weight" on the terms of the apology did not disclose a proper basis for appellate intervention [324].
Significance of apologies in defamation: It is open to a trial court to give significant weight to the adequacy or inadequacy of an apology proffered as part of a settlement offer when assessing whether rejection was unreasonable [325].
Statutory context: The Court noted the significance of apologies in the Defamation Act, including their role as evidence in mitigation of damages under s 38(1)(a) and in offers to make amends under s 18 [325].
Holistic approach: Mitchell JA emphasised that the trial judge had considered all the circumstances, with the apology being only one factor (albeit an important one) [326].
Vindication versus compensation: The Court recognised that "the publication of a judgment of the court provides for its own vindication of a plaintiff's reputation. Where a private settlement is offered, there will ordinarily be no public vindication of the plaintiff's reputation except to the extent that a public apology is offered by the defendant" [328].
The Court rejected the argument that the trial judge had erred in principle by elevating the significance of the apology, finding that the judge had properly considered all relevant circumstances.
5. Quantification and Assessment Aspects
Balancing Monetary and Non-Monetary Elements
The Court's approach demonstrates the need to balance monetary and non-monetary elements when assessing the adequacy of settlement offers in defamation cases:
Comparing monetary value: The trial judge compared the settlement sum offered ($650,000-$850,000) with the judgment eventually obtained ($530,880 plus interest of $72,262.82, totalling $603,142.82) [297-302].
Costs considerations: The difference between costs taxed on a special costs order basis versus party/party costs was taken into account when comparing the offers to the judgment [300-301].
Vindication value: The Court recognised that an apology offers vindication that monetary compensation alone cannot provide, particularly where a private settlement precludes the vindication provided by a judgment [328].
Timing factors: The timing of offers and time allowed for consideration were relevant factors, with the Court noting that some offers were open for unreasonably short periods close to trial [312-315].
The Court's analysis reinforces that quantifying the adequacy of settlement offers in defamation cases requires consideration of both the monetary value and the qualitative aspects of proposed apologies.
6. Worked Example of Practical Application
Perspective A: Plaintiff's Counsel
Scenario: Your client has been defamed by publications alleging professional misconduct. The defendant has offered $200,000, costs on a party/party basis, and an apology.
Application of Wright v de Kauwe principles:
Assess apology adequacy:
Does it address all defamatory publications or only some?
Does it clearly identify and retract the defamatory imputations?
Is it offered without qualification or undermined by denial of liability?
Will it be published to reach the same audience as the defamation?
Monetary assessment:
Compare offer amount to likely damages plus interest
Consider difference between party/party costs and potential special costs order
Calculate overall difference between offer and potential judgment value
Timing considerations:
Is sufficient time allowed for proper consideration of the offer?
Is the offer made close to trial when preparation costs are high?
Advise client: "While the monetary offer of $200,000 appears reasonable, the apology is inadequate because it doesn't clearly identify the imputations being retracted and wouldn't reach the same audience as the original publication. Based on Wright v de Kauwe, rejection would likely not be considered unreasonable for costs purposes."
Perspective B: Defendant's Counsel
Scenario: Your client has published material that may be defamatory. You are preparing a Calderbank offer.
Application of Wright v de Kauwe principles:
Design comprehensive apology:
Address all potentially defamatory publications
Specifically identify the imputations being retracted
Provide for publication to reach similar audience as the defamation
Consider whether unqualified acceptance of defamatory nature is possible
Structure monetary component:
Ensure offer covers likely damages plus reasonable interest
Consider offering costs on a more generous basis than party/party
Calculate potential value difference if special costs order were made
Timing strategy:
Allow reasonable time for consideration (at least 14-21 days)
Make offer well before trial preparation intensifies
Advise client: "To maximize costs protection, your apology should address both publications, specifically acknowledge the false imputations, and be published on your website. The monetary offer should exceed your counsel's assessment of likely damages by at least 20% to account for interest and costs differentials. We should allow at least 21 days for consideration to avoid the timing issues identified in Wright v de Kauwe."
7. Step-by-Step Guidance for Practitioners
Advising Plaintiffs on Settlement Offers
Assess the apology's adequacy:
Does it address all defamatory publications?
Does it specifically identify and retract the defamatory imputations?
Is the publication method appropriate to reach the original audience?
Is the apology undermined by qualifications or denials?
Evaluate monetary compensation:
Compare offer to realistic assessment of general and special damages
Add pre-judgment interest likely to accrue
Consider difference between party/party costs and indemnity costs
Assess total package value against likely judgment value
Consider timing factors:
Is sufficient time provided to consider the offer?
At what stage of proceedings is the offer made?
What costs have already been incurred?
Document reasons for rejection:
Record specific deficiencies in the apology
Note any valuation issues in monetary component
Consider counter-offering with adequate apology terms
Advising Defendants on Formulating Offers
Craft a comprehensive apology:
Address all defamatory publications specifically
Clearly identify the imputations being retracted
Propose appropriate publication method(s)
Avoid qualifying language that undermines sincerity
Structure monetary component strategically:
Offer should exceed realistic damages assessment
Include allowance for pre-judgment interest
Consider offering costs on more favorable basis than party/party
Ensure total package exceeds likely judgment value
Time the offer appropriately:
Allow reasonable time for consideration (minimum 14-21 days)
Make offer sufficiently early in proceedings
Avoid timing close to hearing dates or when plaintiff is preparing for trial
Clear communication:
Specify all terms clearly without ambiguity
Explicitly state costs consequences if rejected
Ensure settlement deed terms (if applicable) are provided with offer
8. Specific Evidence and Arguments
For Plaintiffs
Inadequacy of apology:
Evidence of all defamatory publications not addressed in the apology
Analysis of audience reached by original publication versus proposed apology
Expert evidence on reputational harm requiring specific vindication
Evidence of continuing harm due to inadequate vindication
Monetary considerations:
Evidence of special damages incurred
Comparable awards in similar defamation cases
Documentation of actual legal costs exceeding party/party costs
Evidence of aggravating factors justifying higher damages
Procedural arguments:
Evidence of unreasonable time pressure to consider offer
Documentation of proximity to trial and preparation costs already incurred
Evidence of ambiguity or uncertainty in offer terms
For Defendants
Adequacy of apology:
Evidence that apology would reach similar audience to original publication
Precedents showing similar apologies accepted as adequate
Evidence that apology addresses core reputational concerns
Documentation of attempts to refine apology terms
Monetary considerations:
Comparative analysis showing offer exceeded likely judgment
Expert evidence on appropriate quantum
Calculations showing offer's value considering interest and costs
Evidence of mitigating factors justifying lower damages
Procedural arguments:
Evidence that timeframe for considering offer was reasonable
Documentation of early timing in proceedings
Evidence of clarity and certainty in offer terms
9. Key Takeaways for Legal Practice
Apology design is critical: Courts recognize that apologies serve a distinct purpose in defamation that monetary compensation cannot provide. Apologies should address all defamatory publications, specifically identify the imputations being retracted, and propose appropriate publication methods.
Holistic assessment: When assessing settlement offers, courts take a holistic approach considering the monetary component, adequacy of apology, timing, and procedural aspects. No single factor is determinative.
Vindication value: Courts acknowledge that vindication of reputation through an appropriate apology is a core purpose of defamation proceedings, and private settlements lacking adequate vindication may reasonably be rejected despite generous monetary offers.
Cost protection strategy: To maximize costs protection, defendants should ensure apologies are comprehensive, specific, and published appropriately, while monetary offers should clearly exceed likely judgment values accounting for interest and costs differentials.
Timing matters: Offers should allow reasonable time for consideration and be made sufficiently early in proceedings to avoid being compromised by proximity to trial.
Documentation importance: Both parties should document their reasoning regarding offer adequacy or inadequacy to support later costs applications.
10. Conclusion on Broader Significance
Wright v de Kauwe represents an important development in defamation jurisprudence by providing guidance on the significance of apologies in settlement offers. The decision reinforces that defamation law serves purposes beyond mere compensation, with vindication of reputation being a central objective that apologies specifically address.
The Court's approach acknowledges the unique nature of reputational harm and the limited capacity of monetary compensation alone to remedy such harm. This recognition has significant implications for defamation practice, emphasizing that crafting appropriate apologies is not merely a peripheral element of settlement strategy but central to it.
The decision also brings welcome clarity to the application of Calderbank principles in the defamation context, providing a structured framework for assessing whether rejection of settlement offers was reasonable. This guidance will likely influence settlement practices in defamation proceedings by encouraging more carefully crafted apologies and more realistic assessment of non-monetary elements.
As defamation continues to evolve in the digital age, where reputational harm can spread rapidly and persistently, the significance of appropriately tailored apologies is only likely to increase. Wright v de Kauwe provides a foundation for this evolving area of law, emphasizing that effective vindication requires attention to the qualitative aspects of apologies rather than merely their existence.