Defamation — Defamation Act 1992 – compensatory and exemplary damages sought for the publication of YouTube videos — security for costs sought by defendants — plaintiff filed a notice of discontinuance for defamation claim — High Court Rules 2016— costs following a discontinuance — indemnity costs – defamation claim never intended to go to trial — costs awarded to defendant
McCullah v De Hek  NZHC 2230 per Associate Judge Paulsen.
Stephen McCullah lives in the US and describes himself as an entrepreneurial chief executive officer of companies operating internationally within the finance and investment sector.
YouTuber Danny De Hek is active in exposing what he regards as cryptocurrency scams. He has posted videos to YouTube about McCullah and his activities.
McCullah sought compensatory and exemplary damages totalling $750,000 plus interest against De Hek and his company, Danny : De Hek Ltd, for defamation. McCullah also sought injunctive relief in respect of the YouTube videos.
The defendants filed statements pleading their defences of truth, honest opinion, qualified privilege, insufficient reputational harm and responsible public interest communication. The second defendant pleaded the defence of non-publication.
The defendants applied for security for costs and an order for stay until McCullah provided security. On the morning of the stay hearing, McCullah filed a notice of discontinuance. De Hek sought costs against McCullah for all costs incurred.
The starting point is r 15.23 of the High Court Rules 2016 – a plaintiff who seeks discontinuance must pay costs to the defendant unless the defendant otherwise agrees or the court otherwise orders.
De Hek also sought indemnity costs under r 14.6(4)(a) of the High Court Rules 2016 and s 45 of the Defamation Act 1992. This allows for costs to be awarded where it can be proved the plaintiff never intended to take the defamation proceeding to trial. The existence of this intention must be inferred from the circumstances of the case.
Associate High Court Judge Owen Paulson found McCullah never intended to take his case to trial for three reasons. His decision to discontinue came “very quickly” after commencing the proceeding – three months and 13 days after filing proceedings. This decision to discontinue came only one month and 12 days after the defence filed their application for security for costs. It was also apparent the proceeding was not to vindicate McCullah’s reputation or obtain compensation for damage, but to stifle further publications from the defendant.
Associate Judge Paulson found De Hek was entitled to indemnity costs, but the claimed amount of $35,666.96 was excessive. A reasonable award of $27,500 was given.
Applicable principles: Defamation — damage to reputation — discontinuance — indemnity costs — frivolous and vexatious defamation claims.
Held: The defendant awarded $27,500 for costs incurred.
Jamie Dierick is a law clerk working for an Auckland criminal defence barrister.