Becker Group Ltd v Motion Picture Company of Australia Ltd

REASONS FOR JUDGMENT 1 In the judgment delivered in this matter on 24 May 2004, I directed the applicant to file and serve short minutes of order giving effect to the judgment and written submissions as to costs: Becker Group Ltd v Motion Picture Company of Australia Ltd [2004] FCA 630. I also ordered the respondent to file and serve short minutes of order insofar as the respondent disagreed with those proposed by the applicant, and its written submissions as to costs. 2 The applicant has proposed short minutes of order as follows: '1. The respondent pay to the applicant damages in the sum of $725,402 ("the damages amount"). 2. The respondent pay to the applicant interest on the damages amount up to the date of judgment in the sum of $284,963 pursuant to s 51A of the Federal Court of Australia Act 1976 (Cth). 3. Judgment be entered for the applicant against the respondent in the amount of $1,010,365. 4. The respondent pay one-half of the costs of the proceedings of the applicant as follows: (a) in respect of the costs incurred until 22 September 2003 - taxed on a party and party basis; and (b) in respect of the costs incurred after 22 September 2003 - taxed on an indemnity basis.' 3 The respondent accepts that pars 1, 2 and 3 of the Short Minutes of Order reflect the intent of the judgment. There is therefore no dispute as to these paragraphs. The only remaining dispute relates to the appropriate costs order. In the judgment I indicated that I was inclined to think that the respondent should be awarded the costs attributable to the applicant's claim under the Trade Practices Act 1974 (Cth) ('TP Act'), which, in large measure, had been abandoned by the applicant in final submissions. 4 In its written submissions, the applicant accepts that, but for an offer of compromise made by it pursuant to Federal Court Rules ('FCR'), O 23, it could not have resisted a costs order according with the prima facie view expressed in the judgment. However, the applicant relies upon an offer of compromise made on 22 September 2003, in which it offered to compromise all causes of action in the proceedings on the basis that 'judgment be given for the applicant against the respondent requiring the respondent to pay the applicant the sum of $500,000 as a debt due to the applicant for breach of a contractual obligation of the respondent to pay that amount'. 5 The offer of compromise contemplated that the respondent would pay interest pursuant to s 51A of the Federal Court of Australia Act 1976 (Cth) ('Federal Court Act') and would also pay the costs of and incidental to the proceedings up to the date of judgment, being the date of acceptance of the offer of compromise in accordance with the FCR. 6 The applicant relies particularly on FCR, O 23 r 11(4), which provides as follows: 'If: (a) an offer is made by an applicant and not accepted by the respondent; and (b) the applicant obtains judgment on the claim to which the offer relates not less favourable than the terms of the offer; then, unless the Court otherwise orders, the applicant is entitled to an order against the respondent for costs incurred in respect of the claim: (c) up to and including the day the offer was made - taxed on a party and party basis; and (d) after that day - taxed on an indemnity basis.' It is common ground that the respondent did not accept the offer. I am prepared to assume that the applicant is entitled to obtain a judgment which is 'not less favourable than the terms of the offer', within the meaning of O 23 r 11(4)(b). 7 The applicant points out that the offer of compromise was made immediately following the mediation of the proceedings before the Registrar and well before the parties had commenced their pre-trial preparations. The applicant also relies upon the policy underlying FCR, O 23, which it says is to impose a cost penalty upon a party which unreasonably refuses to compromise proceedings. The applicant argues that it made a timely offer to surrender nearly one-third of the judgment debt to which it is now entitled and should be compensated for having done so by a partial award of indemnity costs. 8 The applicant accepts that the respondent should not pay the costs of the abandoned TP Act claim. However, it says that because the trial of the TP Act claim was 'proximately referable to [the respondent's] unreasonable conduct in refusing the offer', the applicant should not have to bear the respondent's costs of responding to the TP Act claim. The applicant suggests that one-half of the costs of the proceedings should be attributed to the contract claim for the purpose of making an appropriate apportionment of costs between the parties. 9 The respondent submits that, assuming the offer of compromise complied with FCR, O 23, the Court nonetheless retains a discretion as to costs pursuant to s 43(2) of the Federal Court Act. It contends that I should take into account that: