Perhaps unwisely, The Daily Telegraph has gloated over Fairfax's loss and defamation track record, describing Hockey's case as "a rolled-gold certainty" and criticising Fairfax for not settling. The truth is that this case has been a disaster for Hockey and it may yet prove to be a significant victory for Fairfax. Leaving aside Hockey's poor performance in the witness box, and the fact that Justice White did not accept Hockey's evidence that the access provided by the North Sydney Forum was the same as the access available to the person in the street, the real difficulty confronting the treasurer is the possibility of an adverse costs order being made against him. Justice White has reserved the question of costs and both parties will make submissions on that issue. The issue of costs is, in fact, far more important than the issue of damages in this case.

One would expect Hockey's legal expenses to be in the order of $1 million. Fairfax's expenses will be of a similar order, if not more. Normally costs will follow the event. That is, a successful plaintiff will usually obtain an order that the unsuccessful defendant pay all his legal costs. The court, however, has a very wide discretion in awarding costs and, in circumstances where an unsuccessful party has succeeded on key issues, it may refuse to award the successful litigant costs in respect of those issues. Even more disturbing for the treasurer, in such circumstances, the court may order the successful party to pay the losing party's costs relating to those issues. Costs orders of this kind are known as differential costs orders and are not uncommonly made in defamation cases. On the facts, Fairfax would seem to have very strong grounds for seeking a differential costs order. After all, the primary publications sued upon were the three articles and that portion of the case failed.

There can be no doubt that the bulk of the legal costs expended in Hockey's action would have related to the three articles. If a differential costs order is made denying Hockey a costs order in respect of the articles portion of the case, then he will have to pay his own legal costs for that portion of the case. These costs would far exceed his $200,000 damages award. If Hockey is ordered to pay Fairfax's costs relating to the articles portion of the case, then his position becomes even worse. And the Treasurer's problems do not end there. Justice White's findings on defamatory meaning will be very difficult to overturn on appeal, while his findings on the issue of damages appear less secure. It may be that this has been a pyrrhic victory for the Treasurer, and it is possible that at some point he may find himself echoing King Pyrrhus' comment: "Another victory like this and I shall be utterly ruined".

Graham Hryce is a media lawyer at Beazley Singleton. This article was first published in The Gazette of Law and Journalism.