Kerry Stokes capitulates in fight over costs of Roberts-Smith defamation battle

Seven West Media chairman Kerry Stokes has capitulated and agreed to pay the multimillion-dollar costs of the Ben Roberts-Smith defamation litigation, in a move that stops communications between the former soldier’s lawyers and his chief supporters at Seven from being made public.

At a surprise hearing in the Federal Court on Monday, lawyers for Stokes said his private company would pay The Age and The Sydney Morning Herald’s legal costs – estimated at more than $16 million – on an indemnity basis, which covers a higher proportion of a costs bill than the standard order.

Ben Roberts-Smith and Seven West Media chairman Kerry Stokes.

Including Roberts-Smith’s own costs, the total costs of the litigation are estimated at more than $30 million.

Stokes had resisted an application by the Nine-owned newspapers for his private company, Australian Capital Equity (ACE), to pay the costs of the litigation but agreed to the orders after the Seven parties failed to meet a court-ordered deadline to produce a tranche of communications with Roberts-Smith’s lawyers by noon on Friday.

Nicholas Owens, SC, appearing for the newspapers, described the move as a “complete capitulation” by Stokes’ private company.

Stokes bankrolled Roberts-Smith’s lawsuit via a loan provided by ACE. Seven Network (Operations) Ltd had originally funded the former soldier’s case, but ACE took over Seven’s loan on June 24, 2020, and Stokes’ company paid out his existing debt.

In a historic decision on June 1 this year, Federal Court Justice Anthony Besanko dismissed the lawsuit and found the newspapers had proven to the civil standard – on the balance of probabilities – that Roberts-Smith was complicit in the murder of four unarmed prisoners in Afghanistan. He also found the news outlets had proven the former Special Air Service corporal had bullied a fellow soldier.

Besanko later ruled that Roberts-Smith was liable for the legal costs of the dispute on an indemnity basis, which allows the successful party to recover 90 to 95 per cent of their costs.

Nine, owner of The Age and the Herald and former owner of The Canberra Times, sought a court order forcing ACE, and potentially also Seven, to pay the costs of the litigation.

As part of its application, Nine sought to show ACE and Seven controlled the litigation. It sought, and was granted access to, documents from Seven West Media commercial director Bruce McWilliam, Stokes, ACE and Roberts-Smith’s legal team showing their communications about the case.

The court heard earlier this year that a search of McWilliam’s Seven Network emails alone yielded 8650 emails between McWilliam and one or more of Roberts-Smith and his lawyers between 2018, when the case was filed, and 2023.

Roberts-Smith was employed by the Seven Network as general manager of its Queensland operations. He took leave from his position ahead of the defamation trial and resigned on June 2, a day after Besanko dismissed his lawsuit.

Roberts-Smith denies all wrongdoing and is appealing against that decision. The Full Court of the Federal Court will hear his appeal from February 5 to 16.

Owens said lawyers for ACE and the Seven Network had informed his chambers of the proposed consent orders via email at 4.20pm on Friday afternoon, “without warning or notice”.

“Up until that time we had been pursuing both the applicant [Roberts-Smith] and the third parties for the material that they were required to produce in accordance with the orders that your honour had made only one day earlier,” he said.

Besanko ordered ACE to pay the newspapers’ costs for the proceedings, assessed on an indemnity basis. The matter will return to court on Tuesday.

Neil Young, KC, appeared for both ACE and Seven Network, but the costs will be paid solely by ACE.

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