Federal Court of Australia|1993-04-20|Before: Spender J

Bruce Wayne Smallacombe; Carmel Mercia Smallacombe and Swanwood Pty Ltd Lockyer Investment Co Pty Ltd v Lockyer Investment Co Pty Ltd; Crown-Pacific Pumps, Inc and Thunderbird Irrigation, Inc [1993] FCA 169 (20 April 1993)

BRUCE WAYNE SMALLACOMBE; CARMEL MERCIA SMALLACOMBE and SWANWOOD PTY LTD

LOCKYER INVESTMENT CO PTY LTD v. LOCKYER INVESTMENT CO PTY LTD; CROWN-PACIFIC

Costs - offer of settlement of claim, including any claim for costs - offer made during course of trial - offer open until early next day - offer rejected - whether relevant on issue of costs - discussion of approach to offer to settle - offer to settle claim including costs ought not to be a relevant consideration on the question of costs - source of power to award interest - power to reconsider rate at which interest awarded - interest awarded part of judgment - discretion to award a proportion of a party's costs if that party's conduct unreasonably prolongs the proceedings - allowance for delay not made in costs orders.

Queensland Wire Industries Pty Ltd v. Broken Hill Proprietary Co Ltd (1987) 17 FCR 211

Netaf Pty Limited v. Bikane Pty Limited [1990] FCA 35; (1990) ATPR 41-011

Hughes v. West Australia Cricket Association (Inc) [1986] FCA 382; (1986) ATPR 40-748

Messiter v. Hutchinson (1987) 10 NSWLR 525

Colburt v. Beard (1992) 2 Qd.R. 67

Serisier Investments Pty Limited v. English (1989) 1 QD.R. 678

In re Elgindata Ltd (No. 2) (1992) 1 WLR 1207

Corby District Council v. Holst and Co. Ltd (1985) 1 WLR 427

Leckie v. Cummings (unreported judgment of Full Court of Federal Court of 6 April 1993

1. The applicants to have 80 per cent of their costs to be paid

by the respondent, to be taxed if not agreed.

2. The respondent pay the costs of the second cross-respondent

of the cause of action based on Californian law.

3. Otherwise, the second cross-respondent pay the respondent's

costs of the cross-claim.

4. The second cross-respondent indemnify the respondent in

respect of the costs the respondent is ordered to pay to the

applicants.

5. The second cross-respondent pay the respondent's costs of

defending the applicants' claims.

Any notice of appeal, other than a notice of appeal the subject of the order made on 16 April 1993, shall be filed and served within 10 days after today's date.

Liberty to apply, to be exercised by 4 p.m. on Wednesday 28 April 1993.

NOTE: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

SPENDER J These are reasons for judgment in respect of applications for costs and other orders.

2. On 1 April 1993 I gave judgment for the applicants against the respondent, Lockyer Investment Co Pty Ltd, in the sum of $326,000 and I ordered that the respondent is entitled to an indemnity from the second cross-respondent, Thunderbird Irrigation Inc, in the amount of the judgment debt ordered in the applicant's favour. I said then that I would hear the parties on costs and on the form of the other orders I should make in the light of the reasons for judgment which I then published.

3. On 7 April 1993 counsel for the applicants, the respondent and the second cross-respondent made submissions. On 7 April 1993 the matter was adjourned so as to permit further submissions to be made on 16 April 1993.

4. On 16 April 1993 I gave leave to the respondent cross-claimant, Lockyer Investment Co Pty Ltd, to file and serve a notice of appeal within seven days after the filing and serving of any notice of appeal by either of the cross-respondents. I further ordered that the respondent cross-claimant have the costs of the hearing on 14 August 1987 against the first and second cross-respondents.

5. I ordered that the costs of 30 April 1991 and the costs of 21 July 1989 be the respondent's costs in the principal proceedings.

6. On 16 April 1993 I made no order in respect of costs that had been reserved on 15 December 1987 because those costs are caught by the orders made a week later. It is therefore, in my view, inappropriate to make any order concerning the costs that were reserved on 15 December 1987.

7. I then indicated that I would give reasons for judgment and make further orders today.

8. The first matter requiring resolution concerns the effect of a Calderbank letter. During the course of the trial, which was a lengthy one, Feez Ruthning, who are solicitors for the respondent, wrote two letters which have been referred to as Calderbank letters. The first of them, of 17 May 1991, made an offer of $220,000 in settlement of the applicants' claims with costs to be taxed. That offer was rejected. In the light of my reasons for judgment, it is accepted by the respondent that that letter has no present significance.

9. However on 21 May 1991 a further letter was sent for the attention of Mr Carmelo Mangano of Gilshenan and Luton. Mr Mangano, unfortunately, has since died but he had the carriage of the action on behalf of the applicants. The letter said, in part:

"We are instructed to make the following offer on behalf

of our client:

Our client will pay your clients the sum of $400,000 in

full and final settlement of all your clients' claims

against our client including any claim for costs. This

offer remains open for acceptance until 9.30 am,

Wednesday, 22 May 1991. In the event that the offer is

accepted, the said sum will be paid within 14 days from

the date of acceptance and the costs either forthwith

upon agreement or if no agreement, upon taxation."

(my underlining)

10. The final paragraph of the letter which was marked "without prejudice"was:

"In the event that your clients do not accept this offer,

we will be bringing this letter to the court's attention

in the event it becomes necessary to do so on the

question of costs."

11. In the context of an offer which includes both claim and costs, the words, "and the costs either forthwith upon agreement or if no agreement, upon taxation"are clearly not appropriate. Those words in fact have been included in error and probably as a consequence of the terms of the earlier letter of 17 May 1991. In an affidavit filed by Mr Ritchie from Feez Ruthning, it is said the words after "the date of acceptance"appearing in the second paragraph of that letter were inserted in error. That circumstance, it seems to me, re-enforces the difficulty facing the recipient of the letter in making a sensible and informed choice as to what should be a proper response to it in the time allowed by it.

12. The letter was dated 21 May 1991 and the evidence suggests that it was received by Mr Mangano during the course of the afternoon of 21 May 1991. It is to be noted it called for acceptance by 9.30 a.m. on the following morning. The offer, in fact, was rejected on the 21 May 1991.

13. The reference to the letter as a Calderbank letter is a reference to the letter considered in Calderbank v. Calderbank (1976) Fam 93; (1975) 3 WLR 586; (1975) 3 All ER 333. In that case the wife had made an offer of compromise which was greater than the award subsequently made.

14. The judge ordered that each party should pay his or her own costs of the proceedings. The Court of Appeal (constituted by Cairns and Scarman LJJ and Sir Gordon Willmer) held, inter alia, that the wife's appeal against the order as to costs would be allowed. The Court held that although a 'without prejudice' letter containing a compromise offer by one party which was greater than the award subsequently made could not be relied on in order to protect that party from costs subsequently incurred, the wife's offer in the affidavit was one which, in the circumstances of the case, the husband ought to have accepted. Accordingly the right order was that the husband should have the costs of his application up to 14 days after the letter and thereafter the wife should have the costs of the proceedings.

15. In Cutts v. Head (1984) Ch 290, the Court of Appeal held that a Calderbank letter may be relied upon in proceedings in any division of the court, not just in family disputes. However Oliver LJ, who delivered the principal judgment said that the procedure may be adopted only where the facility of a payment into court is not available. His Lordship said, at 312:

"I would add only one word of caution. The qualification

imposed on the without prejudice nature of the Calderbank

letter is, as I have held, sufficient to enable it to be

taken into account on the question of costs; but it

should not be thought that this involves the consequence

that such a letter can now be used as a substitute for a

payment into court, where a payment into court is

appropriate. In the case of the simple money claim, a

defendant who wishes to avail himself of the protection

afforded by an offer must, in the ordinary way, back his

offer with cash by making a payment in and, speaking for

myself, I should not, as at present advised, be disposed

in such a case to treat a Calderbank offer as carrying

the same consequences as payment in.

16. Fox LJ at 317 explicitly concurred in that observation by Oliver LJ.

17. In Corby District Council v. Holst and Co. Ltd (1985) 1 WLR 427 the judgment of the Court of Appeal was again that of Oliver LJ. His Lordship said at 433:

"The cost of legal proceedings are by statute left to the

discretion of the court, and that discretion is to be

exercised in accordance with the rules. One of the

matters which may be taken into account, and indeed,

ordinarily would be, is an open offer by the defendant of

everything to which the plaintiff ultimately showed

himself entitled. Whether, however, such an offer is to

be treated for all purposes in the same way as a payment

into court must itself be a matter on which the judge of

trial will have to make up his own mind in the exercise

of his discretion. "

18. In Messiter v. Hutchinson (1987) 10 NSWLR 525, Rogers J held that a letter of offer, in which a party has offered as much as or more than that to which the opposing party ultimately establishes his entitlement following a hearing, should be taken into account by the court in determining whether to make a special costs order displacing the usual order that costs follow the event.

19. That case concerned the value of a race horse that had been destroyed. Somewhat prophetically his Honour said at 526:

"Very reasonably, if I may say so, the parties agreed to

have this question determined by an arbitrator or referee

somewhat more knowledgable in these matters than the

usual commercial judge."

20. The letter with which his Honour was concerned was written on 3 April 1986, was headed "without prejudice"and, in essence, offered $120,000 inclusive of interest (plus agreed or taxed costs) to settle the claim provided that the amount is accepted prior to 4.00 pm on Wednesday, 8 April 1987.

21. Notice was given that the making of the offer would be used if and when the question of costs arose.

22. There was no response to that letter and ultimately the arbitration determined that the value of the horse with interest was less than the sum offered. After referring to the English cases, his Honour said at 528:

"There are good reasons why, generally speaking, in order

to get the benefit of an offer of payment, a defendant

should be required to comply with the provisions of Pt 72

(that part of the rules which deals with payment in under

the rules of the Supreme Court). ...the rules rightly

take the view that, all other things being equal, a

plaintiff who is desirous of accepting an offer should

not be left to look for the actual amount from a possibly

impecunious defendant."

23. His Honour, however, did not think it appropriate to adopt the position advocated by Oliver LJ that the court should not have regard to a Calderbank letter in circumstances where a payment into court can be effected under the rules. His Honour said at 528:

"The public policy on which the judgments in Cutts rests

argues against a hard and fast exclusion of the

availability of this method for disposition of disputes

by compromise. The purpose of a Calderbank letter is,

after all, essentially the promotion of settlement of

disputes, "

"The discouragement to practitioners to the use of a

Calderbank letter in instances where the procedure of

payment in is available is that the consequences of

payment in, prescribed by the rules will not

automatically be available."

and his Honour expressed his conclusion in these words:

"In my view, at least as a matter of principle, a

Calderbank letter should be permitted to be taken into

account by the Court in determining whether a special

order displacing that which generally obtains of costs

following the event should be made."

"In considering what weight should be given to an offer,

the Court will no doubt pay regard to all relevant

circumstances including the reason why no payment in was

made, the security of payment available to the plaintiff

and the time at which the Calderbank letter was received

by the plaintiff. "

24. Section 43(1) of the Federal Court of Australia Act 1976 relevantly provides:

"Subject to subsection (1A), the Court or a Judge has

jurisdiction to award costs in all proceedings before the

Court... ... other than proceedings in respect of which

any other Act provides that costs shall not be awarded."

"Except as provided by any other Act, the award of costs

is in the discretion of the Court or Judge."

25. Payment in is specifically provided for in O. 23 of the Federal Court Rules and the consequences of the payment in and the times during which the money paid into court may be accepted or withdrawn are specifically dealt with in those rules. There is no provision in the Federal Court Rules similar to the provisions of O. 26 of the Rules of the Supreme Court which deal with formal letters of offer to settle.

26. However, I have regard particularly to O. 26 r. 9 dealing with costs which persuades me that the application of that rule does not extend to an offer which incorporates as an integral component of the offer, the party and party costs that might be recovered on taxation.

27. It seems to me, having regard to the terms of s. 43 of the Federal Court of Australia Act and the absence of any rules similar to O. 26, the flexibility of the approach of Rogers J expressed in Messiter v. Hutchinson (supra) should be adopted.

28. There are aspects of any such offer which might make it appropriate to give no effect to such a letter. One circumstance would be the existence of a genuine doubt as to the worth of the offer. That is an inherent difficulty with a Calderbank letter, contrasted with the regime provided for payment in under O. 23.

29. Secondly, the time frame of the offer might be such as to make it right to pay no attention to it. In Messiter v. Hutchinson (supra), the offer was made on Friday 3 April and was open for acceptance until Wednesday 8 April.

30. Further, it is right to have regard to the consideration that a Calderbank letter is such that to accept the offer contained in it carries with it the possibility of further litigation in the event of non-payment.

31. The certainty of payment under a regime of payment in in respect of a money claim reflects the common wisdom concerning the value of a bird in the hand.

32. However, I am satisfied that I should not have regard to the making of an offer which is, in effect, an all-up offer. The letter of 21 May 1991 is not a Calderbank letter nor is it a letter of the kind considered in Messiter v. Hutchinson (supra), nor is it in any way analogous to a 'payment in'.

33. It requires an applicant to assess two components: the likely value of the claim and the likely party and party costs to date as they would tax. It is not analogous to the offer considered in any of the cases, and Mr Doyle, counsel for the respondent, has been unable to cite a case where an all-up offer of settlement of claim, that is, one including costs, has been considered.

34. To give effect to such an offer would tend against lean litigation. Not all firms conduct litigation so that the costs recoverable on taxation in similar litigation is the same or of the same order. To accept the all-up offer as a relevant consideration on costs would, over time, reward the firm whose costs were 'padded' although still recoverable on a party and party basis, and disadvantage those firms who conducted litigation with tight efficiency.

35. In my view, it would not promote the finality of litigation, but fragment it. This is demonstrated by what was suggested by counsel for the respondent in this case. It was suggested that the question of costs be adjourned until there was a taxation of costs up until 21 May 1991. If those costs were clearly over $110,000 (which was the difference between the judgment awarded, adjusted for interest up to that date, and the offer) the submission was that the applicants should have their costs. If the taxed costs up to that date were significantly under $110,000 it was submitted that the applicants should pay the respondent's costs subsequent to that date.

36. The position if the taxation should approximate very closely to the difference between the amount of the judgment as adjusted as at that date and the offer seems to be somewhat conjectural. Two consequences might be suggested: on the one hand, it really is a question of precise dollar and cents so that if there is a shortfall, however small, then the respondent would be liable for costs, but if there was a surplus, however small, the respondent would have the applicants pay their costs subsequent to that date, or alternatively, the matter might be brought back before a judge to examine the position and to exercise the court's discretion in the light of the closeness of the result.

37. In my opinion, I think the flexible approach espoused by Rogers J in Messiter v. Hutchinson (supra) is preferable, but I am firmly of the view that an 'open' offer ought to be an offer to settle the claim and that an 'all-up' offer of 'claim plus costs' ought not to be a relevant consideration on the question of costs and does not fall to be considered in the same way as a Calderbank letter.

38. Even if I be wrong on that, I would not, in the circumstances of this case, deprive the applicants of any costs. The first reason is the uncertainty inherent in the terms of the offer itself. The second is the timing of the offer: it occurred on the afternoon of a complex and lengthy trial when the person to whom the consideration of the offer fell was engaged in the heavy duties of the trial. The third reason is the extraordinary short period of time that the offer was open. On any view of the matter, to get realistic instructions as to the likely amount of party and party costs on taxation, the evidence suggests that it would take, at the very least, a full working day.

39. In my opinion it would be unfair to expect a sensible and considered response to the offer in those circumstances, such that a failure to accept the offer should result in a substantial costs penalty. For those reasons then, I will not order a reduction in any costs to which the applicant might be entitled, in the sense of making orders as to costs up to a certain time, and a different costs order after that time.

40. The second matter of importance arising out of the submissions made on costs concerns the awarding of interest. In my reasons for judgment I allowed interest at 14 per cent on the s. 82 of the Trade Practices Act 1974 losses. At page 42 of my reasons for judgment I said:

"I allow interest under section 51A of the Federal Court

of Australia Act 1976 at 14%, being a fair averaged

figure having regard to the fluctuating interest rate

since that time. I will allow interest from 1 October

1983 notwithstanding that the disposal of many of the

items was much later than that. "

41. The commencing date for the calculation of interest took account of the fact that some of the proceeds of sale were received prior to that time, while some were received after it. The results of the proceeds of sale had the effect of reducing the original amount of the loss. I referred to s. 51A of the Federal Court of Australia Act. That section applies only to causes of action arising after 22 November 1984.

42. The representations, the making of which I held constitute s. 52 conduct, occurred in about April 1983, and I was therefore in error in referring to s. 51A of the Federal Court of Australia Act as the source of power to award interest. The power to award interest in this case, in my opinion, arises by the operation of s. 79 of the Judiciary Act in relation to s. 72 of the Common Law Practice Act (Qld). So much seems to have been accepted by counsel for the second cross-respondent.

43. It was submitted that in the circumstances of that error I am able to reconsider the rate at which I applied interest. It was further submitted by counsel for the respondent that I should deny the awarding of interest for a period to reflect what was said to be the deleteriousness of the applicants in the prosecution of their claim: a period of eight months relief from the payment of interest was suggested.

44. Order 35 r. 8 of the Federal Court Rules provides for post-judgment interest. That rate presently is at 12 per cent. That rate is effective from 1 January 1993. From 12 August 1991 until that date, the rule provided that the interest rate on judgment debts was 15 per cent. Before that, from 12 March 1990 the rate was 17 per cent. Before that, from 1 May 1986 the rate was 15 per cent. Before that from 31 January 1984, the rate was 12 per cent. Before that from 1 October 1982 the rate was 15 per cent.

45. Those were the applicable interest rates for judgment debts post-judgment, in the period covered by these transactions. In addition there was some evidence in the proceedings as to actual interest rates that were current during that period.

46. It seems to me, even if it were appropriate to reconsider the rate at which I awarded interest (and I do not think there is power, because my error was in the statutory source of the power I exercised) I would apply 14 per cent as an appropriate averaged interest rate.

47. As to the second aspect of the matter, it is true that the matter took a long time from the filing of the application. As to whether the period during which interest was awarded should be reduced, I do not regard that as a matter that can be reopened at this stage.

48. Interest under s. 51A is part of the judgment - see s. 51A(1). As a matter of principle, it is part of the loss or damage suffered by the applicants representing the compensation for being out of pocket to the extent of the principle amount. I respectfully agree with the observations of Wilcox J (who was in dissent as to the result) in Netaf Pty Limited v. Bikane Pty Limited [1990] FCA 35; (1990) ATPR 41-011 where his Honour said at 51,233:

"In the present case Burchett J awarded interest under

sec. 51A upon a figure estimated to be the difference

between what Bikane paid for the business and what it was

really worth, at the date of purchase. The award was

appropriate because the misrepresentations made by the

second appellant on behalf of the first appellant had

caused Bikane to pay an excessive amount for the

business. To the extent of the difference between the

two figures, Bikane incurred a capital loss. That loss

was suffered in November 1985. Therefore, it was

appropriate to award interest to Bikane as compensation

for being out of pocket, to the extent of that amount,

between November 1985 and the date of judgment. That

course would have been equally appropriate if no trading

loss had occurred."

49. I gave judgment on 1 April 1993 and the time to make the submission that by reason of the conduct of the litigation by the applicants the interest awarded should be for a lesser period was in the time of submissions before judgment.

50. Even if there was power to entertain the submission, I would not accede to it. The evidence as to whose responsibility each component of the delay was, is such that a reliable apportionment of blame is not able to be done. While I accept that there is power to take delay into account and reduce the award of interest otherwise properly payable accordingly, I would not exercise that discretion in the circumstances of this case.

51. The Full Court of the Supreme Court of Queensland in Serisier Investments Pty Limited v. English (1989) 1 Qd R 678 was concerned with the question of interest arising under s. 72 of the Common Law Practice Act 1867-1981. There are a number of observations in that case which are relevant to the particular problems here. The Court held that it would be undesirable to encourage the calling of accountants or other experts to give evidence on applicable rates of interest in every case, or even frequently. The court noted that courts generally accepted a figure of 12 per cent as a median figure representing a perception of commercial rates, and held that that figure should be adopted in that case.

52. As I have said, having regard to the period that is relevant in the present proceedings and the volatility of interest rates as reflected in the post-judgment rates referred to in O. 35 r. 8 over that period, in my opinion a figure of 14 per cent, as a median figure, is appropriate.

53. More directly in respect of the present question, Thomas J, in whose judgment Sir George Kneipp and Derrington J agreed, said at 679:

"Section 72 of the Common Law Practice Act 1867-1981 gives

an unfettered discretion to the court to award interest

"at such rate as it thinks fit on the whole or any part

of that sum,"(that is the sum for which judgment is

given) "for the whole or any part of the period between

the date when the cause of action arose and the date of

judgment." There are sometimes circumstances in which it

would be unfair to order a defendant to pay interest over

the whole period. This includes the situation where the

defendant is unaware of the existence of any claim or

liability and would have ordered his affairs differently

had he been advised of it, or where a defendant may have

offered amends at an earlier date had the claim been

made. A far more common case in which interest is not

allowed from the date of the loss is where the plaintiff

has been guilty of unreasonable delay in prosecuting the

claim. The public policy of having claims brought and

determined promptly seems to underlie this approach.

Goff J thought that "this may be to encourage plaintiffs

to prosecute their claims with diligence, and also

because such conduct may lull a defendant into a false

sense of security, leading him to think that the claim

will not be pursued against him. (BP Exploration

(Libya) Co Ltd v Hunt (No 2) at 847.) "

"These examples are however exceptions to the normal

position that in order to remove the advantage that the

wrongdoer has had from the money that ought to have been

in the pocket of the plaintiff interest is awarded from

the date of the loss."

54. In the circumstances of this case, even if there were the power now to make a reduction in the period during which interest should be paid, I would not.

55. I turn now to the more particular submissions concerning costs.

56. The nature of the discretion vested in a trial judge as to the award of costs and the principles which guide the exercise of the discretion are set out by Toohey J in Hughes v. West Australia Cricket Association (Inc.) [1986] FCA 382; (1986) ATPR 40-748 at 48,136:

"Subsection 43(2) of the Federal Court of Australia Act

1976 vests the award of costs 'in the discretion of the

Court or Judge'. The Federal Court Rules do not purport

to qualify that discretion. The only rule to which

reference is necessary is O. 62 r. 15 whereby, when costs

are reserved, those costs follow the event 'unless the

Court or a Judge otherwise orders'.

The discretion must of course be exercised judicially.

There are decisions, both of Australian and English

courts, that throw light on the way in which the

discretion is to be exercised. I shall not refer to

those decisions in any detail; I shall simply set out in

a summary way what I understand to be their effect.

1. Ordinarily, costs follow the event and a successful

litigant receives his costs in the absence of special

circumstances justifying some other order. Ritter v.

Godfrey (1920) 2 KB 47.

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

he has failed. Forster v. Farquhar (1893) 1 QB 564.

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. Cretazzo v. Lombardi (1975)

13 SASR 4 at p 12."

57. That statement of principle was approved by the Full Court of the Federal Court in Queensland Wire Industries Pty Ltd v. Broken Hill Proprietary Co. Ltd (1987) 17 FCR 211 at 222.

58. It is within the discretion of the trial judge to award only a proportion of a successful party's costs if the conduct of that party in a trial was such as to unreasonable prolong the proceedings: Latoudis v. Casey [1990] HCA 59; (1990) 170 CLR 534 at 544.5 per Mason CJ and 565.9 per Toohey J; and see also In re Elgindata Ltd (No 2) (1992) 1 WLR 1207 at 1214-1217 and the judgment of Cooper J (with whom Sheppard and Neaves JJ agreed) in Leckie v. Cummings (unreported judgment of the Full Court of the Federal Court, 6 April 1993).

59. It was submitted that the applicants should be deprived of part of their costs and that they should pay part of the respondent's costs. There is no doubt, in my view, that the trial was lengthened and costs on both sides increased by the applicants' claim that the conduct in breach of s. 52 of the Trade Practices Act induced the applicants to acquire the farm and that, as a consequence, the losses of farming it and a capital loss made on its resale were properly recoverable.

60. Mr Doyle, counsel for the respondent, has referred in the course of submissions to the witnesses who were called in relation to this aspect of the matter and to the expert evidence that was necessary to be given in relation to it. I think it right in the circumstances of this case to make an allowance for this aspect of the applicants' case. In my opinion there was a significant lengthening of the trial and extra costs to both sides as a consequence, but they were not to the extent alleged in the course of submissions by Mr Doyle.

61. In relation to this aspect of the matter, I have had regard to the observations of Toohey J in Hughes v. Western Australia Cricket Association (Inc.) (supra) and to Forster v. Farquhar (1893) 1 QB 564 and to the judgment of the Full Court of the Supreme Court of Queensland in Colburt v. Beard (1992) 2 Qd R 67.

62. I think I can make a just order as to costs between the applicants and the respondent having regard to the serious areas in which the applicants were unsuccessful, if I order that the applicants have 80 per cent of their costs to be paid by the respondent, to be taxed if not agreed.

63. The next matter relates to the costs of the cross-claim by the respondent against the second cross-respondent.

64. There were three causes of action pleaded in the cross-claim: the first was based on Californian law under the Commercial Code of California; the second was based on the Trade Practices Act; and the third alleged a cause of action in negligent misstatement. As to the cause of action based on Californian law, that was quite a discrete matter and amenable to what might be termed the usual order. Before me the respondent failed on the basis of the cause of action on Californian law and the respondent should pay the costs of the second cross-respondent of the cause of action based on Californian law.

65. The second and third causes of action were factually inter-related. I frankly acknowledge, as I did in the course of submissions, that there is a tension between my findings on the Trade Practices matter (although the time limitation is another ground against the grant of relief under the Trade Practices Act) and the findings that I made concerning negligent misrepresentation. However, in respect of those causes of action, I think it right that the second cross-respondent should pay the costs of the respondent.

66. The third matter of costs, and one which does not seem contentious, is that the second cross-respondent should indemnify the respondent in respect of the costs I have ordered it to pay to the applicants.

67. The next matter is whether the respondent should have a full indemnity from the second cross-respondent as to the costs of the respondent in defending the applicants' claim, it being asserted by the second cross-respondent that the respondent should have compromised the issue of liability and therefore it should not have a full indemnity of its costs of defending the action.

68. As the transcript shows, the second cross-respondent took an active part in the hearing of the applicants' claim against the respondent and I can see no reason why the second cross-respondent should not be ordered to pay to the respondent the costs incurred by the respondent as its costs in defending the claims by the applicants.

69. The next matter relates to the first cross-respondent who did not appear at the trial. I have earlier made orders, the effect of which I think disposes of the matter so far as it concerns the first cross-respondent. Should I be in error in that respect, I give liberty to apply by Wednesday 28 April 1993.

70. On 16 April 1993, I made orders in respect of the respondent/cross-claimant and I then ordered that it file and serve any notice of appeal within seven days after the filing and serving of a notice of appeal by either of the cross-respondents if it so wished.

71. Having regard to the nature and extent of the submissions that I have heard in relation to costs, pursuant to O. 52 r. 15, I direct that any notice of appeal other than a notice of appeal the subject of the order made on 16 April 1993 shall be filed and served within 10 days after today's date.

72. For those reasons, then, I make the orders that I have indicated. I grant liberty to apply, to be exercised by 4 pm on Wednesday 28 April 1993.

Common Law Practice Act 1867

Court of Australia Act 1976

Bruce Wayne Smallacombe; Carmel Mercia Smallacombe and Swanwood Pty Ltd Lockyer Investment Co Pty Ltd v Lockyer Investment Co Pty Ltd; Crown-Pacific Pumps, Inc and Thunderbird Irrigation, Inc [1993] FCA 169

At a glance

Court

Decision date

Before

Source

Judgment (113 paragraphs)

Bruce Wayne Smallacombe; Carmel Mercia Smallacombe and Swanwood Pty Ltd Lockyer Investment Co Pty Ltd v Lockyer Investment Co Pty Ltd; Crown-Pacific Pumps, Inc and Thunderbird Irrigation, Inc [1993] FCA 169 (20 April 1993)

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Legislation Cited (4)

Cases Cited (7)