Anderson Formrite Pty Ltd v Baulderstone Pty Ltd

REASONS FOR JUDGMENT 1 On 25 August 2010, the Court delivered its reasons for judgment in this matter and made the following orders: '1. … that there be judgment for the applicant in the sum of $4,611,317.09, inclusive of a lump sum of $1,965,000.76 in lieu of interest up to judgment. 2. … that the determination of appropriate orders as to costs be reserved.' 2 The proceedings were stood over to 31 August 2010 for consideration of the appropriate orders as to costs and argument thereon, and directions were given in respect of the provision of proposed orders and the submissions of the parties thereon. The Court has had the benefit of the helpful written submissions of the solicitor for the Applicant and counsel for the Respondent. 3 The only additional exhibit now before the Court is a bundle of documents comprising 'Costs Exhibit A'. 4 By a letter sent by facsimile from the solicitors for the Applicant to the solicitors for the Respondent, the Applicant offered to settle the proceedings on the basis that the Respondent pay the Applicant $3,500,000 plus costs as agreed or assessed. There were other terms forming part of the offer, but it is unnecessary for present purposes to refer to them. The offer was expressed to be made without prejudice except as to costs, and was made in accordance with the principle laid down in Calderbank v Calderbank [1975] 2 All ER 333 ('Calderbank'). It would seem clear that the offer came to the attention of the solicitors for the Respondent no later than 22 July 2009, when a further copy was sent under cover of an email which suggested it was transmitted at 7.26 pm on that day. 5 The Applicant has now proposed an order as to costs in the following terms: 'The Respondent is to pay 65% of the Applicant's costs of the proceedings assessed on a party and party basis up to and including 22 July 2009 and is to pay 100% of the Applicant's costs assessed on an indemnity basis on and from 23 July 2009 onwards.' 6 The Respondent has presented two alternative submissions as to the appropriate costs order. One proceeded on an issue by issue basis, and the other on a global basis. If I understand the oral submission of senior counsel for the Respondent correctly, the order proposed on an issue by issue basis is that the Applicant pay the Respondent's costs in respect of the Applicant's claim under the Trade Practices Act 1974 (Cth) (the 'Trade Practices Act'), its tortious conspiracy claim and its claim of a contravention of the Workplace Relations Act 1996 (Cth) (the 'Workplace Relations Act'). It would follow that the Respondent should pay the costs of the Applicant in respect of the issues upon which the Applicant succeeded. 7 The Respondent also seeks an order, as I understand it, that the Applicant pay the Respondent's costs in respect of claims said to have been made under the Industrial Relations Act 1979 (WA), which were originally included in paragraph 27 of the various iterations of the Statement of Claim. 8 The solicitor for the Applicant points out that the references to the Industrial Relations Act 1979 (WA) have been included in the pleading in relation to the Agreement or Combination pleaded in paragraph 26 of the Statement of Claim as part of the Applicant's tortious conspiracy claim. 9 As an alternative to the adoption of an issue by issue approach, the Respondent proposed that there be no order as to costs, viewing the matter on a global basis and measuring the success of the respective parties in relation to the litigation as a whole. 10 The Respondent submits in relation to the Calderbank offer that it was for the Applicant to demonstrate that the Respondent's refusal of that offer was unreasonable, and that the Applicant has failed to establish such unreasonableness. 11 One issue raised by the Respondent was the delay of the Applicant in the institution of the proceedings in this Court. The relevant application was filed on 5 July 2007. On the hearing of the present application in relation to costs, the Respondent read certain paragraphs from an affidavit of Mr Nicholas Mavrakis, sworn 11 December 2007, relating the history of earlier proceedings commenced by the Applicant against the Respondent in the Supreme Court of Western Australia in which, amongst other claims, the Applicant sought damages for breaches of s 52 of the Trade Practices Act, breaches of contract and wrongful conversion of formwork equipment (see Anderson Formrite v Baulderstone Hornibrook Pty Ltd 206 ALR 614). The West Australian proceedings were commenced in December 2003. It would appear that in 2004 the Respondent applied to have the West Australian proceedings cross-vested into the Supreme Court of New South Wales. On 2 June 2004, Simmonds J in the West Australian Supreme Court ordered that the proceedings be transferred to the Supreme Court of New South Wales in terms of the Notice of Motion of the Respondent, dated 27 January 2004. His Honour also ordered that the Applicant pay the Respondent's costs of that application. The West Australian proceedings did not apparently include any claimed contraventions of the Workplace Relations Act on the part of the Respondent. The evidence suggests that on 30 July 2004 leave was granted by a judge of the Supreme Court of New South Wales for the cross-vested proceedings to be discontinued. 12 There does not appear to be any significant difference between the parties as to the applicable principles. In respect of the costs issue reference has been made to section 43 of the Federal Court of Australia Act 1976 (Cth), conferring jurisdiction on the Court to award costs. In Haviv Holdings Pty Limited v Howards Storage Work Pty Limited (No 2) [2009] FCA 652, Jagot J stated the applicable principles in her reasons for judgment at [7] - [11] as follows: '7 The award of costs is discretionary (s 43(2) of the Federal Court of Australia Act 1976 (Cth)). The discretion is broad but not unconfined. It is a judicial discretion to be exercised on a principled basis. 8 Costs are awarded to compensate the successful party. For this reason costs ordinarily follow the event (Oshlack v Richmond River Council (1998) 193 CLR 72; [1998] HCA 11; Latoudis v Casey (1990) 170 CLR 534 and Ruddock v Vadarlis (No 2) (2001) 115 FCR 229; [2001] FCA 1865 at [33] - [36]). 9 In Dodds Family Investments Pty Ltd (formerly Solar Tint Pty Ltd) v Lane Industries Pty Ltd (1993) 26 IPR 261 at 271 the Full Court of the Federal Court approved the observations of Toohey J in Hughes v Western Australian Cricket Assn (Inc) (1986) 8 ATPR 40-748 at p 48-136 as follows: 1. Ordinarily, costs follow the event and a successful litigant receives his costs in the absence of special circumstances justifying some other order … 2. Where a litigant has succeeded only upon a portion of his claim, the circumstances may make it reasonable that he bear the expense of litigating that portion upon which it has failed … 3. A successful party who has failed on certain issues may not only be deprived of the costs of those issues but may be ordered as well to pay the other party's costs of them. In this sense, "issue" does not mean a precise issue in the technical pleading sense but any disputed question of fact or of law … 10 To these considerations, the Court in Dodds added the following observations (at 271 - 272): The propositions enunciated in that case are subject to the further consideration that justice may not be served if parties are dissuaded by the risk of costs from canvassing all issues which might be material to the decision in the case… … Where there is a mixed outcome in proceedings, the question of apportionment is very much a matter of discretion for the trial judge. Mathematical precision is illusory and the exercise of the discretion will often depend upon matters of impression and evaluation. 11 In Elite Protective Personnel Pty Ltd v Salmon (No 2) [2007] NSWCA 373 … the New South Wales Court of Appeal discussed the apportionment of costs in these terms: [6] Where there are multiple issues in a case the Court generally does not attempt to differentiate between the issues on which the appellant was successful and those on which it failed. Unless a particular issue or group of issues is clearly dominant or separable it will ordinarily be appropriate to award the costs of the proceedings to the successful party without attempting to differentiate between those particular issues on which it was successful and those on which it failed: Waters v P C Henderson (Aust) Pty Ltd (Court of Appeal, 6 July 1994, unreported). [7] As the appellants submit, the commencing position is that costs follow the event so that a successful party is entitled to costs. In relation to trials it has been said that it may be appropriate to deprive a successful party of costs or a portion of the costs if the matters upon which that party was unsuccessful took up a significant part of the trial, either by way of evidence or argument: Sabah Yazgi v Permanent Custodians Limited (No 2) [2007] NSWCA 306 (at [24]). A similar approach is adopted in the Court of Appeal. If the appellant loses on a separate issue argued on the appeal which has increased the time taken in hearing the appeal, then a special order for costs may be appropriate which deprives the appellant of the costs of that issue: Sydney City Council v Geftlick & Ors (No 2) [2006] NSWCA 374 (at [27]). 13 Her Honour proceeded to deal with the question of costs in the case then before her, where there were two Applicants and three Respondents, on an issue by issue basis. Where the Applicants had otherwise succeeded, the first Respondent was ordered to pay the Applicants' costs of the proceeding. 14 A global approach was adopted by Young J in AWB Limited v Honourable Terence Rhoderic Hudson Cole (No 6) (2006) 235 ALR 307 at [10] - [17]. At [12] - [17] his Honour said: '12 AWB submitted that the circumstances do not warrant any departure from the usual approach that an applicant who achieves substantial success should have the costs of the proceedings. AWB relied in particular on the following passage from Cretazzo v Lombardi (1975) 13 SASR 4 ('Cretazzo') where Jacobs J said at 16: 'But trials occur daily in which the party, who in the end is wholly or substantially successful, nevertheless fails along the way on particular issues of fact or law. The ultimate ends of justice may not be served if a party is dissuaded by the risk of costs from canvassing all issues, however doubtful, which might be material to the decision of the case. There are, of course, many factors affecting the exercise of the discretion as to costs in each case, including in particular, the severability of the issues, and no two cases are alike. I wish merely to lend no encouragement to any suggestion that a party against whom the judgment goes ought nevertheless to anticipate a favourable exercise of the judicial discretion as to costs in respect of issues upon which he may have succeeded, based merely on his success in those particular issues.' In short, AWB submitted that it achieved substantial success and that it should have the costs of the proceeding, notwithstanding its failure on the issues of waiver and the fraud exception. 13 The Commonwealth submitted that AWB should pay its costs of the proceedings. It argued that success in this case cannot be measured purely in numerical terms; rather a judgement ought to be made as to which party has had substantial success in the case, having regard to the significance of the issues decided by the Court in favour of one or other party. It added that a finding that privilege subsists in a large number of technical or peripheral documents cannot be weighed in the same scale. 14 The Court's discretion to order costs under s 43 of the Federal Court of Australia Act 1976 (Cth) is unfettered, except that it must be exercised judicially. The usual order as to costs is that a successful party will have its costs paid on a party and party basis by the unsuccessful party: Colgate-Palmolive Company v Cussons Pty Ltd (1993) 46 FCR 225 at 232-234. As the passage from Cretazzo indicates, the mere fact that a substantially successful applicant fails on particular issues of fact or law along the way may not afford an adequate ground for depriving that applicant of some or all of its costs. On the other hand, it lies within the Court's discretion to make a costs order that reflects the degree of success attained: Ruddock v Vadarlis (No 2) (2001) 115 FCR 229 at 234-235 [11] and 236 [15]. Depending on the circumstances, it may be an appropriate exercise of the Court's discretion to deprive a party of its costs in respect of an issue which it lost at trial: Cummings v Lewis (1993) 41 FCR 559 at 599-604; and Dias Aluminium Products Pty Ltd v Ullrich Aluminium Pty Ltd (No 2) [2005] FCA 1400 at [3]. Alternatively, the Court can order a successful party to pay some costs in respect of unsuccessful aspects of the case: Hughes v Western Australian Cricket Association (Inc) (1986) ATPR 40-748 at 48,136; Forster v Farquhar (1893) 1 QB 564; and Inn Leisure Industries Pty Ltd v DF McCloy Pty Ltd (No 2) (1991) 28 FCR 172. 15 In many cases, these principles can only be applied sensibly by taking a broad view of the results of the case and the issues that were litigated. An allocation of costs in a case of mixed results can rarely if ever be done with mathematical precision: Dodds Family Investments Pty Ltd v Lane Industries Pty Ltd (1993) 26 IPR 261 at 272 per Gummow, French and Hill JJ. 16 Taking a broad and overall view of the outcome of this case, I consider that both AWB and the Commonwealth achieved a substantial measure of success. I cannot agree with AWB's submission that, in material respects, it was the successful litigant. The Commonwealth succeeded on a number of very important issues. It established that privilege did not attach to numerous documents that are likely to be material to the issues being investigated by the Commission. AWB did not merely fail 'along the way' to prove particular issues of fact and law which, in the end, did not prevent it achieving substantial success; rather, AWB lost some of the most substantial issues that were litigated. Those issues involved more than half of the hearing time occupied by this case. 17 In all the circumstances, I consider that the just and appropriate order is that there be no order as to the costs of the proceeding. The result will be that AWB and the Commonwealth must each bear its own costs.' 15 A summary of the issues in the current proceedings is to be found in the Court's reasons for judgment of 25 August 2010 (Anderson Formrite Pty Ltd against Baulderstone Pty Ltd (No. 7) [2010] FCA 921 at [208]. The Applicant failed with its Trade Practices Act claim but succeeded with its contract and conversion claims. As indicated in the reasons for judgment the evidence in relation to damages was far from satisfactory. Be that as it may, the Court was able to reach conclusions as to appropriate amounts to be awarded by way of damages in respect of the contract claims that succeeded and the conversion claim that succeeded. The Workplace Relations Act claim, to which a special costs regime applies, was abandoned on 21 September 2009, the sixth last day out of 22 hearing days, and the conspiracy claim was abandoned on 25 September 2009, the second last day of the hearing. 16 Whilst the issues on which the Applicant failed or which the Applicant abandoned were major issues in the proceedings as they were conducted before the Court, the claims in respect of which the Applicant was successful were of importance in the proceedings as a whole. In my opinion this is a proper case for the Court to take a broad view of the results of the case and the issues that were litigated. It is not an appropriate case for an order for costs to be made on an issue by issue basis. 17 Taking a broad and overall view of the outcome of the case I consider that both the Applicant and the Respondent have achieved a substantial measure of success. However, I do not consider it to be one where the ultimate result in respect of costs is that there should be no order as to costs. In my opinion, the Applicant is entitled to an order for the payment of 10% of its costs. 18 As to whether or not the costs of the Applicant in respect of the period 23 July 2009 to 25 August 2010 should be paid on an indemnity basis, I am satisfied that, given the result in the proceedings on the claims which were successful, it was unreasonable for the Respondent to refuse the Calderbank offer that was made. 19 The Respondent urged the view that there was a significant delay in the commencement of the proceedings which should bear upon the ultimate decision of the Court. It was said that the only reason the judgment sum exceeded the figure of $3.5 million was the inclusion of interest, awarded as a lump sum in respect of an eight-year period. It was submitted that the Applicant should not be entitled to a benefit from delaying the commencement of the proceedings for five years, until 2007. 20 Had one undertaken a calculation of the amount of interest which should be allowed up to judgment at the rates referred to in the earlier reasons for judgment of the Court at [343] for the period 23 July 2009 to 25 August 2010, the relevant amount would be slightly in excess of $210,000. Even if one were to deduct such an amount from the overall figure for which judgment has been ordered one would still end up with a figure well in excess of the $3.5 million offer made by the Applicant to the Respondent to settle the matter on 21-22 July 2009. 21 In my opinion the delay is adequately explained by the earlier West Australian proceedings and it needs to be observed that the Respondent has had the advantage of monies