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[2003] FCA 1254
Federal Court of Australia
2003-11-07
Beaumont J, Branson J
Original judgment source is linked above.
INTRODUCTION 1 On 2 October 2003 I delivered reasons for judgment and pronounced orders in each of these matters. In each matter the bankruptcy notice was set aside and the respondent ordered to pay the applicant's costs. Immediately thereafter counsel for the applicant indicated that his client wished to seek costs in each matter on an indemnity basis. As there was no appearance by the respondent at the delivery of judgment, I was unable to deal with the issue raised by the applicant at that time. I directed the applicant to file and serve written submissions in support of his claim for indemnity costs and made provision for the filing and serving of answering submissions by the respondent. No application has been made by the respondent for an order varying or qualifying the operation of the costs orders pronounced on 2 October 2003. Neither party has requested a further opportunity to address the Court. 2 The applicant places reliance on a letter dated 17 February 2003 forwarded by his solicitors to the solicitors for the respondent. By that letter the applicant offered to consent in each matter to the bankruptcy notice being set aside and the respondent paying his costs as agreed or assessed. The applicant has made the following written submissions: '2. By letter dated 17 February 2003, the applicant made an open offer which is not less favourable than the outcome: …. There is no reason why a hearing which is an application to set aside a notice cannot properly be the subject of an offer. It is unlike a creditor's petition or an application to wind up a company in insolvency where third parties such as other creditors may be involved: cf Kapeleris And Others v Bytenet Pty Ltd, Fed Ct (Beaumont J), 4 September 1997. … 4. The applicant says that the order of the court should be varied to include costs on an indemnity basis from the date of the letter.' 3 The letter dated 17 February 2003 was not an offer of compromise; it was a letter inviting capitulation by the respondent. Nonetheless, had the respondent accepted the proposal contained in the letter it would be no worse off than it is on my present orders and there would have been a saving of costs on both sides. 4 Order 23 of the Federal Court Rules is concerned with offers of compromise. The applicant concedes that the letter of 17 February 2003 is not in the form prescribed by O 23 r 3 of the Federal Court Rules. The difficulty facing the applicant on the present application, however, is more fundamental. Order 23, and the policy which it reflects, are concerned with the promotion of sensible compromise of disputes. In Tickell v Trifleska Pty Ltd (1990) 25 NSWLR 353 at 355 Rogers CJ Comm D observed that: 'Unless circumstances are wholly exceptional a demand for payment to the plaintiff of everything to which it may possibly be entitled hardly falls in the category of the compromise.'
An invitation to an applicant to discontinue with no order as to costs has been held in this Court not to be an offer of compromise (Vasram v AMP Life Ltd [2002] FCA 1286; Australian Competition & Consumer Commission v Universal Music Australia Pty Ltd (No 2) (2002) ATPR 41-862; [2002] FCA 192).
5 Some proceedings do not readily lend themselves to compromise. An application for an order setting aside a bankruptcy notice is such a proceeding. The applicant will ordinarily require the order if the commission of an act of bankruptcy is to be avoided. The respondent, costs aside, is at risk of nothing more than that the notice may be set aside. Little room for compromise exists. 6 Although s 43 of the Federal Court of Australia Act 1976 (Cth) confers on the Court a wide discretion as to costs, the established general rule is that costs will be awarded on a party and party basis unless there are some special or unusual features or the justice of the particular case so requires (Re Wilcox; Ex parte Venture Industries Pty Ltd (No 2) (1996) 72 FCR 151). 7 In my view, the failure by a respondent to take up an invitation advanced by the applicant to concede the validity of the applicant's claim for relief and pay the applicant's costs is not a special or unusual feature in the relevant sense. Every claim for relief made in legal proceedings carries with it an implicit invitation to the opposing party to acknowledge the claimant's entitlement to relief. In the absence of some unusual feature of a kind not present in this case, an applicant does not, in my view, improve its position in respect of costs merely by sending a letter inviting the other party not to oppose its claim to relief. The position might be different were an applicant to demonstrate in its letter, by reference to legal principle and authority, that opposition to its claim would necessarily be pointless. However, the letter sent by the applicant's solicitor in this case did not so demonstrate. 8 I do not consider that the justice of these cases requires the respondent to pay the applicant's costs on other than a party and party basis. 9 The application for orders requiring the respondent to pay the applicant's costs on an indemnity basis is refused. As, in my view, this application could have been dealt with on 2 October 2003 had the respondent been represented on that day, no order will be made as to the costs of this application. I certify that the preceding nine (9) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Branson.
Solicitor for the Applicant: DTA Lawyers
Counsel for the Respondent: Mr A J Ogborne
Solicitor for the Respondent: Wilshire Webb Solicitors
Date of Filing Last Written Submissions: 22 October 2003
Date of Judgment: 7 November 2003
Franks
Warringah Council, in the matter of Franks