REASONS FOR JUDGMENT
(Revised from transcript)
1 The respondents/cross-claimants in each of these matters were ultimately successful in resisting the damages claim made against them by the applicants: see Enterprise Finance Solutions Pty Limited v Austec Pty Limited [2013] FCA 491. I must now deal with the matter of costs.
2 In the Austec proceedings, I found that Austec was entitled to the benefit of a set-off pursuant to s 73 of the Trade Practices Act 1974 (Cth) (the TP Act), in an amount equal to the damages claim brought against it by Enterprise Finance Solutions Pty Limited (EFS). Mr and Mrs Harrison also had some success in their cross-claim. In particular, I found that both of them were entitled to relief under the Contracts Review Act 1980 (NSW) (the Contracts Review Act). However, Austec and Mr and Mrs Harrison were unsuccessful on a number of issues. Their claim based upon ostensible agency failed. I also rejected their claim based upon s 47 of the TP Act.
3 In the Airmark proceedings, Airmark and Mr Gonsalves also had mixed success but they too were ultimately successful in defending the damages claim brought against them by Quikfund. Airmark failed in its claim based upon ostensible agency, but succeeded in its claim based upon s 73 of the TP Act. Like Mr and Mrs Harrison, Mr Gonsalves succeeded in establishing his entitlement to relief under the Contracts Review Act. The claim by Airmark and Mr Gonsalves for damages in respect of an alleged contravention of s 47 of the TP Act was abandoned by them in the course of final submissions.
4 An issue in the Airmark proceedings that occupied a not insignificant amount of hearing time concerned the question whether the equipment the subject of the second and third rental agreements made between Quikfund and Airmark was delivered. This issue was resolved against Airmark and Mr Gonsalves.
5 Under s 43(2) of the Federal Court of Australia Act 1976 (Cth) (the FCA Act) the Court has a general discretion in relation to costs. Ordinarily, costs follow the event. However, if a litigant succeeds in relation to some parts of his or her claim, but fails in relation to other parts, then it may be appropriate to award such a litigant only a portion of his or her costs or, alternatively, to require that he or she pay the other party's costs in relation to those issues upon which he or she was unsuccessful: Roadshow Films Pty Ltd v iiNet Ltd (No 2) (2011) 91 IPR 482 (Emmett, Jagot, Nicholas JJ at [3]).
6 When deciding whether it is appropriate to apportion costs, there are two factors that usually feature in the Court's consideration of the matter. The first concerns the degree of overlap between the issues upon which the party seeking costs had mixed success. The second concerns the undesirability of dissuading a party from raising all issues material to a decision in the case: Doric Products Pty Ltd v Lockwood Security Products Pty Ltd (2002) 54 IPR 495 at [10].
7 If the Court is of the view that it is appropriate to reduce the costs to be awarded to a litigant who succeeds on only some of his or her claims, it will be necessary for the Court to make some broad approximations for the purpose of arriving at an appropriate figure. Of necessity, the figure arrived at is not the product of a mathematical exercise, but will usually reflect the Court's impression of the amount of time devoted to various issues upon which the parties have had mixed success.
8 In my view, the most appropriate approach in these proceedings is to make a composite order in these matters awarding the respondents in each matter their costs, subject to a reduction reflecting their lack of success on various issues. Taking that approach, I am satisfied that in the Austec proceedings, EFS should pay 80% of Austec and the Harrisons' costs of the proceeding. Similarly, in the Airmark proceedings, I am satisfied that Quikfund should be required to pay 80% of Airmark and Mr Gonsalves' costs of each of the two proceedings.
9 There are two other matters raised by the parties which I need to consider. First, the applicants submitted that the costs awarded to the respondents should be taxed on the following basis:
• In the conduct of any taxation, the taxing officer is to tax the bill of costs on the basis that the proceedings could have been determined in the Local Court of New South Wales.
• Insofar as that taxation in accordance with that direction would result in allowing a lesser sum of costs, the taxing officer is to allow only that lesser sum of costs.
10 I am not persuaded that it is appropriate to limit costs payable to the respondents as suggested by the applicants. The total amount claimed by Quikfund in the proceedings against Airmark and Mr Gonsalves was for an amount in excess of the Local Court's jurisdiction. It was only because Quikfund commenced three separate proceedings against Airmark that two of those proceedings could be brought in the Local Court. A third proceeding brought against Airmark and Mr Gonsalves was commenced by Quikfund in the District Court. It is difficult to see why all three proceedings were not brought in one proceeding before the one Court at the time they were initially commenced. In any event, as a result of consent orders that were later made, each of the three proceedings was then transferred into this Court where they were heard together.
11 The proceeding brought by EFS against Austec and Mr and Mrs Harrison always involved amounts within the Local Court's jurisdiction. But for the s 47 claim raised in their case by way of cross-claim, the Austec proceeding could have been heard in the Local Court.
12 Counsel for EFS and Quikfund said that his clients only consented to the transfer of the various proceedings into this Court due to the presence of the s 47 claims. Although the s 47 claims were ultimately either abandoned or rejected, I am certainly not satisfied that they were brought for the purpose of attracting this Court's jurisdiction, that they were colourable or that they were not raised in good faith. In fact, neither EFS nor Quikfund put a submission to the effect that the s 47 claims were brought for the purpose of attracting this Court's jurisdiction.
13 EFS and Quikfund were represented by the same counsel and solicitors, as were Austec and the Harrisons and Airmark and Mr Gonsalves. Hearing all proceedings involving EFS, Quikfund, Mr and Mrs Harrison and Mr Gonsalves together in this Court - something which all parties agreed should occur - was sensible and, ultimately, economical given the significant overlap in issues.
14 The second matter that remains to be dealt with concerns an application for indemnity costs made by the respondents. In support of this application, reliance was placed upon a series of written offers made by the respondents in January and August 2011. These offers were not offers of compromise under the rules but were offers made in correspondence from the respondents' solicitors to the applicants' solicitors.
15 Counsel for the respondents accepted that the exercise of discretion to award indemnity costs based upon the rejection of such an offer must usually involve a consideration of whether the rejection of the offer was "imprudent or plainly unreasonable". Here, the offers relied upon by the respondents required the applicants to give up their claims. In fact, in the Austec case, the offer also required EFS to pay a substantial proportion of Austec and Mr and Mrs Harrisons' costs.
16 In Dukemaster Pty Ltd v Bluehive Pty Ltd [2003] FCAFC 1 Sundberg and Emmett JJ said:
[7] The mere making of an offer of compromise and its non-acceptance, followed by a result more favourable to the offeror, does not automatically lead to an order for payment of costs on an indemnity basis: John S Hayes & Associates Pty Ltd v Kimberley-Clark Australia Pty Ltd (1994) 52 FCR 201 at 204-206; MGICA (1992) Pty Ltd v Kenny & Good Pty Ltd (No 2) (1996) 70 FCR 236 at 239. The applicant for a more generous award must show that the rejection of the offer was imprudent or plainly unreasonable: NMFM Property Pty Ltd v Citibank Ltd (No 2) ("NMFM") (2001) 109 FCR 77 at 98; Australian Competition & Consumer Commission v Australian Safeway Stores Pty Ltd (No 3) [2002] FCA 1294 at [28]; Sydney Markets Ltd v Sydney Flower Market Pty Ltd [2002] FCA 283 at [16]-[17] and [23].
[8] Whatever the position may be with an offer made under Order 23, a Calderbank offer, or any offer of compromise outside the regime in Order 23, is unlikely to serve its purpose of attracting an indemnity award of costs if the rejecting applicant fails to recover more than what is offered, unless the offer is a reasonable one and contains a statement of the reasons the offeror maintains that the application will fail. In NMFM at [87]-[88] Lindgren J said:
"No doubt where a party puts with sufficient particularity to the opposing party the reasons why the latter must fail, yet the latter does not recognise the inevitable, this will be a factor pointing to an award of indemnity costs. …
The requirements of 'sufficient particularity' and 'inevitability of failure' are important. In their absence, it would be open to parties to put their respective cases to the opposing party urging it to recognise the merit of what is put in the hope that if it ultimately finds favour with the Court, an award of indemnity costs will follow. If this were correct, one might ask rhetorically, 'Why write a letter as distinct from simply relying on the pleadings?'."
(original emphasis)
17 In the present case the correspondence relied upon by the respondents contains no reasons of the kind referred to in para [8] of the Full Court's reasons. It is by no means clear to me why it would have seemed apparent to EFS or Quikfund - at least in the absence of any reasoned explanation of the strength or weaknesses of the applicants' and the respondents' relative positions - that they should have accepted the offers that were made to them at the time. Nor is it apparent to me that their rejection of offers requiring them to accept nothing in return for the settlement of their claims was imprudent or unreasonable. In the result, the application for indemnity costs is refused.
18 The other declarations and orders to be made in light of my reasons were not the subject of any disagreement.
19 Orders accordingly.
I certify that the preceding nineteen (19) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Nicholas.