Daebo Shipping Co Ltd v The Ship Go Star

REASONS FOR JUDGMENT 1 This is an application by the defendant for an order for indemnity costs arising from the judgment which I gave in this matter on 31 August 2011, when I dismissed the claim made by the plaintiff. 2 On 16 September 2011, Rares J made an order that Order 2 of the orders I made on 31 August 2011, be stayed until the hearing and determination of the appeal in this matter. Some confusion has arisen as to the effect of Rares J's order and the position needs to be clarified. The confusion arises from the fact that the document which was handed to the parties in Court on the 31 August 2011 when judgment was delivered, comprised the reasons for judgment and provisional orders. Order 2 of the provisional orders was: "The plaintiff is to pay the defendant's costs." However, at the time of handing down the judgment in Court, the parties raised with me the fact that there might be an application for a special order for costs. As a consequence, I did not make Order 2 in the terms of the provisional order. Instead, I made as Order 2, an order that: "I will hear the parties in relation to costs." 3 It is apparent, however, that when Rares J came to hear the application on 16 September 2011, his Honour had the original provisional Order 2 in mind, and not Order 2 as made, when he ordered that Order 2 of my orders made on 31 August 2011, be stayed pending the hearing and determination of the appeal. 4 I propose to rule on the arguments made as to whether there should be a special order for costs, and then stay the costs orders in accordance with the spirit of Rares J's order of 16 September 2011. 5 The defendant contends that the plaintiff should pay costs on an indemnity basis from one of a range of alternative dates, on the grounds of the plaintiff having unreasonably refused an offer of compromise on Calderbank principles; or, in respect of one of the dates, by reason of the operation of O 23 of the Federal Court Rules. 6 The defendant referred to three Calderbank offers of compromise which had been made to the plaintiff during the course of the proceeding leading up to trial, and to one offer of compromise made under O 23 r 2 of the Federal Court Rules. The chronology is as follows. The first Calderbank offer of compromise was made in a letter of 3 June 2009. The second Calderbank offer of compromise was made in a letter of 20 April 2010. On 9 June 2010, the defendant served on the plaintiff a notice of offer of compromise under O 23 of the Federal Court Rules. By a letter dated 17 March 2011, the defendant made a further Calderbank offer of compromise to the plaintiff. 7 The plaintiff has conceded that there were no exceptional circumstances which would displace the defendant's presumptive entitlement to indemnity costs in relation to the O 23 offer of compromise; and so the real argument today has addressed the two preceding Calderbank offers. 8 It is necessary, therefore, to determine whether the plaintiff acted unreasonably in rejecting either of the two Calderbank offers. That is a determination which must be made in all the circumstances of the case. However, one must be mindful, that the object of the Calderbank principles is to encourage so far as is possible, the settlement of litigation. 9 In the recent case of Management 3 Group Pty Ltd (in liq) v Lenny's Commercial Kitchens Pty Ltd (No 3) (2011) 278 ALR 754 at [40], Dodds-Streeton J referred with approval, to a list of factors identified by the Victorian Court of Appeal in Hazeldene's Chicken Farm Pty Ltd v Victorian WorkCover Authority (No 2) (2005) 13 VR 435, as comprising a non-exhaustive list of factors to be taken into account in assessing whether a party has unreasonably rejected an offer of compromise. These factors are: (a) the stage of the proceeding at which the offer was received; (b) the time allowed to the offeree to consider the offer; (c) the extent of the compromise offered; (d) the offeree's prospects of success, assessed as at the date of the offer; (e) the clarity with which the terms of the offer were expressed; (f) whether the offer foreshadowed an application for an indemnity costs in the event of the offeree's rejecting it.