GEC Marconi Systems Pty Limited v BHP Information

Judgment (19 paragraphs)

[1]

GEC Marconi Systems Pty Limited v BHP Information Technology Pty Limited [2003] FCA 688 INTEREST - s 51A of the Federal Court of Australia Act 1976 (Cth) - rate of interest - the Court's usual practice - the purposes of prejudgment interest awards - "ordinary commercial rates" - difference between investment and borrowing bases of compensation. INTEREST - rates of interest - guidance from Practice Direction of ACT Supreme Court - opinion evidence adduced of how the parent company of the successful party would have used the judgment monies - not a Hungerfords claim - lower rates proposed than those in Practice Direction - Practice Direction followed. COSTS - purported Calderbank offer - offer inclusive of interest and costs - practice of Court in relation to such offers. COSTS - discounting costs of successful party - unsuccessful on a number of issues. COSTS - third party claim - rendered of no consequence because of cross-claimant's successful defence of application against it - whether third party entitled to its costs. COSTS - third party claim - whether unsuccessful cross-claimant entitled to pass on its third party costs liability to the unsuccessful applicant - applicable principles in such third party cases. COSTS - subpoena - Commonwealth policing agreement with party served - confidentiality and public interest immunity - whether costs incurred recoverable under s 43 of the Federal Court of Australia Act 1976 (Cth).

[2]

(1) Interest is payable on awards made in favour of BHP-IT at the rates specified in the 2001 Practice Direction of the Supreme Court of the Australian Capital Territory. (2) Interest is payable to BHP-IT on its judgment against GEC Marconi for the periods agreed by the parties. (3) Interest is payable to BHP-IT on its judgment against the Commonwealth from 1 November 2001. (4) GEC Marconi pay BHP-IT's costs of the application. (5) GEC Marconi pay BHP-IT 80 per cent of BHP-IT's costs of the first cross-claim. (6) GEC Marconi Australia pay BHP-IT's costs of the claim made against GEC Marconi Australia. (7) BHP-IT pay the Commonwealth's costs of the second cross-claim to the extent that those costs relate to matters other than (a) the "reflexive" claims as described in these reasons for judgment and (b) CR3053 as to which there will be no order as to costs. (8) GEC Marconi pay the Commonwealth's costs of the second cross-claim to the extent that those costs relate to the "reflexive" claims. (9) GEC Marconi pay the Commonwealth's costs on the Notices to Produce served on the Commonwealth on a party and party basis. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

REASONS FOR JUDGMENT 1 It was to be expected as a result of my reasons and proposed orders in the principal proceeding in this matter - see GEC Marconi Systems Pty Ltd v BHP Information Technology Pty Ltd [2003] FCA 50 - that complex and contentious submissions would be made on the award of prejudgment interests and of costs. I have not been disappointed. Almost 100 pages of written submission have been filed and oral submissions took place over two days. 2 These reasons should be taken as incorporating by reference those referred to above which are far too lengthy to admit of sensible précis. All I need note for present purposes is that the proceedings involved - (i) an unsuccessful claim by GEC Marconi against BHP-IT; (ii) a successful cross-claim by BHP-IT against GEC Marconi and against GEC Marconi Australia (the parent company); (iii) a cross-claim by BHP-IT against the Commonwealth, the true effect of which is in dispute for present purposes; and (iv) a successful cross-claim by the Commonwealth against BHP-IT. 3 Because the litigation involved back-to-back contracts between the Commonwealth and BHP-IT and BHP-IT and GEC Marconi, there is a distinct issue as to the extent to which costs payable in respect of the cross-claims between the Commonwealth and BHP-IT should be passed on to GEC Marconi. 4 Some measure of agreement emerged at the present hearing, primarily between GEC Marconi and the Commonwealth, which has somewhat reduced the matters now in issue. For convenience in exposition I will deal first with the two remaining issues that have arisen in relation to pre-judgment interest. INTEREST 5 I should say by way of preface that, save in relation to BHP-IT's monetary award against the Commonwealth (relating to payment for Change Request 3053), the parties are in agreement as to the dates from which interest should run in respect of the various damages awards made. I will deal later in these reasons with the question of interest in relation to CR3053 in conjunction with the issue of costs. (i) The Rate of Interest 6 This Court's power to award pre-judgment interest is conferred by s 51A of the Federal Court of Australia Act 1976 (Cth) ("the Act"). I need only refer to the following provisions of it: "(1) In any proceedings for the recovery of any money (including any debt or damages or the value of any goods) in respect of a cause of action that arises after the commencement of this section, the Court or the Judge shall, upon application, unless good cause is shown to the contrary, either: (a) order that there be included in the sum for which judgment is given interest at such rate as the Court or the Judge, as the case may be, thinks fit on the whole or any part of the money for the whole or ay part of the period between the date when the cause of action arose and the date as of which judgment is entered; … (2) Subsection (1) does not: (a) authorize the giving of interest upon interest or of a sum in lieu of such interest." 7 No rate of interest is fixed or prescribed by the section and the Court has not, by Practice Direction or otherwise, sought to provide guidance on what might be considered an appropriate rate to be applied. Though the matter is, and remains, one of judicial discretion, the usual practice that has been followed in applying s 51A has been to adopt the rates of interest applied by the Supreme Court of the State or Territory in which this Court is dealing with the matter: Namol Pty Ltd v A W Baulderstone Pty Ltd (No 2) (1993) 47 FCR 388; Kettle Chip Company Pty Ltd v Apand Pty Ltd (No 2) (1998) 83 FCR 466; H K Frost Holdings Pty Ltd (in liq) v Darvall McCutcheon (a firm) [1999] FCA 795; McCormick v Riverwood International (Australia) Pty Ltd [2000] FCA 32; unless there is evidence that those rates are penal or not commercial: EMCL Pty Ltd v ESANDA Finance Corp Ltd [1999] FCA 978. The practice itself is one from which there has been occasional departure: see eg White Industries (Qld) Pty Ltd v Flower & Hart (2000) 103 FCR 559. 8 Notwithstanding that this matter was heard in the Australian Capital Territory, BHP-IT has advanced the hopeful submission that, as it was originally set down for trial in New South Wales, the rates of interest to be applied should be those provided by the Rules of the Supreme Court of New South Wales. Needless to say those rates were higher than their ACT counterparts. 9 If the practice noted above is to be followed in this matter, the ACT rates are clearly the appropriate ones to be considered. The matter was transferred by consent to the ACT; it was heard there over many weeks; it was substantively a Canberra matter and Canberra was the proper place in which it should have been heard. 10 The ACT has a statutory provision equivalent to s 51A of the Act: see s 69 of the Supreme Court Act 1933 (ACT). In March 2001 a Practice Direction was issued by order of the Judges of the ACT Supreme Court for the purposes of s 69 of the ACT Act. It indicated, for present purposes: "When computing interest for the purposes of s 69 of the Australian Capital Territory Supreme Court Act 1933, subject to any evidence adduced, it may be taken that the following yearly rates of interest are appropriate to guide the Court: Period Per cent … (i) 1 July 1993 to 30 April 2001 10 (j) After 1 May 2001 9" Emphasis added. As I will note below GEC Marconi has sought to adduce evidence on this question. 11 Commenting on the Practice Direction superseded by the above, the majority judgment in Grincelis v House (2000) 201 CLR 321 at 331 noted that it was accepted that the Direction had no statutory force or effect and that: "in its terms, it acknowledges, not only that its application is "subject to any evidence adduced", but also that the rates stated in it are rates that are "appropriate to guide the Court" (emphasis added). Although the parties, and the Full Court of the Federal Court of Australia, referred to these rates as "commercial" rates of interest, we were taken to no evidence which would reveal the basis upon which they were struck. But there being no evidence about rates of interest, and litigants being on notice from the Practice Direction that the published rates will be taken to be appropriate to guide the Court in fixing interest under s 69, there would ordinarily be no reason to do other than apply those rates to damages of the kind now in question." 12 Before turning to the evidence adduced and its significance, I should comment, first, on the policies, purpose and character of pre-judgment interest. 13 (i) First and foremost interest has a compensatory purpose. To quote again from Grincelis at 328-329: "As was noted in Gogic [(1991) 171 CLR 657 at 663] "The function of an award of interest is to compensate a plaintiff for the loss or detriment which he or she has suffered by being kept out of his or her money during the relevant period." There is no doubt that this is a very important purpose of statutory provisions providing for the award of interest on the amount of a debt or damages in respect of the period between the cause of action accruing (or, in some statutory provisions, the commencement of the proceedings …) and the date of judgment. It may be, however, that statutory provisions for interest serve not only that purpose, but also a purpose of encouraging early resolution of litigation." See also on encouraging dispute resolution, Hon JJ Spigelman, "Negligence: the Last Outpost of the Welfare State" (2002) 76 ALJ 432 at 449-450; J S Hill & Associates Ltd v Dawn [2001] ACTSC 28 at [23]; and see generally on interest Edelman and Cassidy, Interest Awards in Australia,s7.13 (2003); Tilbury, Civil Remedies, Vol 1, 3226ff (1990). 14 (ii) While the courts characteristically have referred to the rates which are appropriate to be applied as "commercial" or "ordinary commercial" rates: see eg Gould v Vaggelas (1985) 157 CLR 215 at 275; EMCL Pty Ltd v ESAND Corp Ltd (above) at [59]ff; it has justly been said that these terms appear "deliberately to have been left at large by the courts": Serisier Investments Pty Ltd v English [1989] 1 Qd R 678 at 681. There seems to be a variety of reasons for this. First, as noted in Serisier at 681: "Obviously the courts do not adopt a totally commercial approach, because whatever rate is adopted, it is simple interest, not compound. An assessment on a compound basis, even on yearly rests, would make a considerable difference, but plainly the courts see the merit of keeping the assessment simple." Secondly, there is no uniformly agreed view as to the basis on which interest is to be awarded. Accepting that a person is to be compensated for the loss suffered by being kept out of his or her money, should that person be compensated on the basis of (a) what he or she could earn if he or she had the money to invest or (b) what that person would have to pay if he or she wished to borrow? As Spigelman CJ noted extracurially in "Negligence" (above) at 449, that differentiation alone "would amount to several percentage points". It is also reflected in the varying sources of interest rates (ie for investment and for borrowing) to which resort is had on occasion by the judges: see eg Cremer v General Carriers SA [1974] 1 WLR 341 at 355ff; Smith v In Shoppe Pty Ltd [1976] 2 NSWLR 175 at 177. Thirdly, it has been said, and the practice has been followed on occasion (when a borrowing rate is used), that something should be added to the rate to be adopted to reflect the cost of borrowing over the relevant period (eg a one per cent addition: see Cremer's case (above) at 355). Fourthly, courts have been conscious in selecting appropriate rates in individual cases of the desirability (a) of there being uniformity in the practice followed within a court; cf R W Miller & Co Pty Ltd v The Ship Patris [1975] 1 NSWLR 704 at 716; and (b) of there being relative continuity in the rates applied: "it [being] undesirable to encourage the calling of accountants to give evidence on applicable rates of interest in every case or even frequently": Serisier at 681 and note the cases referred to therein. 15 In this matter GEC Marconi sought to read a report prepared by an accountant, Craig Edwards, the purposes of which were stated to be (inter alia): "(i) provide my opinion as to an appropriate rate of interest to apply to the damages so as to fairly and reasonably compensate BHP-IT for the loss it has incurred (ii) provide my opinion on whether the interest rates adopted by the Supreme Courts of NSW and the ACT are appropriate rates of interest to apply to the damages so as to fairly and reasonably compensate BHP-IT for the loss it has incurred." 16 The first of these he estimated by engaging in a counterfactual (a pervasive and largely unhelpful phenomenon in this proceeding) as to how in his view BHP - not BHP-IT - would have dealt with the money had it had it in its hands. His favoured assumption was that it would have held it as cash rather than use it to retire debt and so he proposed an interest rate based on the 90 day bank bill interest rate. Because he applied what he considered to be "commercial interest rates" he assumed both to compound interest (notwithstanding the prohibition in s 51A(2)) and to deduct tax. He also proposed as an (unfavoured) alternative that BHP might have used the money to retire debt and he purported to calculate the "average interest rate paid on the large majority of BHP's interest bearing debt as at balance date". He regarded that rate as appearing to be "commercially reasonable". His report, unsurprisingly, did not refer to BHP's "Weighted Average Cost of Capital", an in-house figure that was advanced in BHP-IT's unsuccessful claim for loss of use of moneys (a claim advanced as an alternative to its s 51A claim). 17 BHP-IT objected to the admission of Mr Edward's affidavit save as to those paragraphs that narrated matter on the public record. The objection was based both on the ground that the task engaged in by Mr Edwards misconceived what s 51A mandated and on the ground of relevance. 18 My own view is that the objection is properly taken, but that in any event I would not admit the evidence under ss 135(b) and (c) given its speculative character, the form of inquiry it conjures up purely for the purposes of the Evidence Act 1995 (Cth)of costs and the nature of the proceeding in which it is advanced. 19 The court should not as a rule, for the purposes of applying s 51A, engage in an inquiry as to how a given individual may have used the money out of which he or she had been kept. Hungerfords v Walker (1990) 171 CLR 125 now permits a party to make a damages claim for loss of use of money. Putting to one side the inquiry such a claim would raise, the clear and intelligible purpose behind following a practice of applying generalised rates is to avoid the necessity for any such individualisation of an interest award. The form of speculation engaged in by Mr Edwards ought positively to be discouraged. 20 Provided (in the context of the ACT Practice Direction) evidence is not adduced that demonstrates that the rates to be applied are not commercial and are penal, those rates ought be applied for the reasons given in Grincelis. 21 Accepting the predominant compensatory purpose of interest awards, their aim is not to reflect exactly any particular type of interest rate be it on investment or for borrowing which may be able to be described as an "ordinary commercial rate". I agree, with respect, with the views expressed in Serisier's case on the "at large" signification of this description. 22 While Mr Edwards has given some evidence of general interest rates for cash funds (ie the 90 day bank bill rate and the "11am Call cash rate"), he has not referred to general borrowing rates and in particular to base overdraft rates offered by banks. These are not matters about which I consider I should take judicial notice, the more so given the Practice Directions' reference to adducing evidence. I am satisfied that, absent evidence on borrowing rates which would show the ACT rates to be non-commercial I should proceed to apply those rates. 23 Given the ambiguity as to the foundation for selecting the appropriate basis for awarding interest by way of compensation (ie investment or borrowing), and with the very significant endorsement of a borrowing basis in many decisions, I am not satisfied that the evidence adduced provides reason for not accepting that the ACT rates are nonetheless "commercial" ones given, as I have noted above, what can be encompassed by that description. 24 The parties having agreed the various dates upon which interest is to run on the sums awarded BHP-IT, I will order that GEC Marconi pay interest thereon at the rates specified from time to time in the Practice Direction of the Supreme Court of the Australian Capital Territory. COSTS 25 The power of this Court to award costs in proceedings before the Court is conferred by s 43 of the Federal Court of Australia Act 1976 (Cth). It is well accepted that the discretion given is unfettered but that it must be exercised judicially: Oshlack v Richmond River Council (1998) 193 CLR 72 at 96. As the parties have raised a variety of issues relating to the proper exercise of that discretion, I will defer further comment on the discretion itself until those issues are considered individually.

GEC Marconi's claim and BHP-IT's cross-claim 26 BHP-IT successfully defended GEC Marconi's claim and had judgment in its favour on its cross-claim. It seeks costs in respect of each of these on a party and party basis until 29 June 2001 and thereafter on an indemnity basis on account of GEC Marconi's unreasonable and imprudent refusal of a Calderbank offer. 27 For its part GEC Marconi not only denies that its refusal of the compromise offer made was unreasonable, it also contends that the costs to be awarded on BHP-IT's cross-claim should be apportioned or discounted in light of its very limited success and the manner in which it adduced evidence in support of its damages claim. 28 I will consider these matters in turn. (i) The Calderbank offer 29 On 22 June 2001 (after four days of hearing devoted primarily to the parties' openings) BHP-IT's solicitors wrote to GEC Marconi's making an offer to settle all claims in the proceeding. The terms were (inter alia) that (i) GEC Marconi's application be dismissed; and (ii) that GEC Marconi pay "the sum of $5 million inclusive of interest and costs to [BHP-IT]" in full satisfaction of BHP-IT's cross-claim. This was to remain open until 29 June 2001. 30 The letter described the offer and its effect in the following terms: "As you will appreciate, the attached offer is made pursuant to Calderbank v Calderbank (1975) 3 All ER 333. Accordingly, should your client fail to accept this offer within the time specified, and our client obtains a judgment against your client for any amount in excess of the proposed settlement sum, then your client will also be responsible for indemnity costs for the remainder of the trial." 31 I would merely note in passing the in terrorem character of the above comments. The offer made did not conform to the "Offer of Compromise" rules of the Federal Court Rules (esp O 23 rr 3-5) and for that reason BHP-IT did not enjoy a presumptive entitlement to indemnity costs. As Lindgren J observed in MGICA (1992) Pty Ltd v Kenny & Good Pty Ltd (No 2) (1996) 70 FCR 236 of 239: "It is important … to appreciate that the mere making of an offer by a Calderbank letter and its non-acceptance followed by a result more favourable to the offeror (less favourable to the offeree) than that represented by the offer will not automatically lead to the making of an order for payment of costs on an indemnity basis: WCW Pty Ltd v Charthill Ltd (unreported, Federal Court, Olney J, 7 July 1992); John S Hayes & Associates Pty Ltd v Kimberly-Clark Australia Pty Ltd (1994) 52 FCR 201 at 204-206." See also NMFM Property Pty Ltd v Citibank Ltd (No 2) (2001) 109 FCR 77 at 98; and see generally Dal Pont, Law of Costs [13.45]-[13.47] (2003). I will return below to this matter. 32 On 30 June GEC Marconi rejected BHP-IT's offer. Its letter set out at some length its reason for so doing: the offer did not reflect "any reasonable assessment of the strengths and weaknesses of our respective … positions"; BHP-IT did not make the slightest attempt to support its offer "as reasonable"; there were serious legal and factual issues. GEC Marconi in turn renewed an offer of settlement of its own. BHP-IT rejected that offer. 33 The principles generally applied in this Court in exercising the s 43 discretion judicially are well established. They have been conveniently stated in the joint judgment of Cooper and Merkel JJ in Re Wilcox; Ex parte Venture Industries Pty Ltd (No 2) (1996) 72 FCR 151 at 156-157: "(a) the Court ought not to depart from the rule that costs be ordered on a party and party basis unless the circumstances of the case warrant the Court in departing from the usual course; (b) the circumstances which may warrant departure from the usual course arise as and when the justice of the case so requires or where there may be some special or unusual feature in the case to justify the Court in departing from the usual course; (c) whilst the circumstances in cases in which indemnity costs have been ordered offer a guide, the question must always be whether the particular facts and circumstances of the case in question warrant the making of an order for costs other than on a party and party basis." 34 The significance to be ascribed to the non-acceptance of a Calderbank offer for indemnity costs purposes where the ultimate result is less favourable to the offeree than that contained in the offer, differs somewhat in this Court's jurisprudence from that in State Supreme Courts. First, it has been held in first instance decisions of the Court that where the offer made is not one that relates to the claim alone, but is an "all-up" one (ie the offer relates to the claim and to interest and/or costs), that offer "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": Smallacombe v Lockyer Investment Co Pty Ltd (1993) 42 FCR 97 at 102; Hanave Pty Ltd v LFOT Pty Ltd [1998] FCA 1429; Dr Martens Australia Pty Ltd v Figgins Holdings Pty Ltd (No 2) [2000] FCA 602. This contrasts, for example, with the view that has been taken in the Supreme Court of Victoria that "any form of offer assuming it can be adduced into evidence should be considered by the court on the question of costs": M T Associates Pty Ltd v Aqua-Max Pty Ltd (No 3) [2000] VSC 163. Secondly, and there is a long line of authority to this effect endorsed by the Full Court: see Black v Lipovac [1998] FCA 699 at [217]; the mere refusal of a Calderbank does not of itself warrant an order for indemnity costs. The offeror needs to show the conduct of the offeree was unreasonable: Alpine Hardwoods (Aust) Pty Ltd v Hardys Pty Ltd (No 2) (2002) 190 ALR 121 and the cases referred to herein; cf in NSW, Multicon Engineering Pty Ltd v Federal Airports Corporation (unreported Supreme Court of NSW, Rolfe J, 20 June 1996). The reasonableness of the rejection of an offer is to be considered in light of the circumstances which existed at the time of the rejection. And, relevant in that consideration are the terms of the offer and the circumstances of the litigation, "including the time at which the offer is made and the understanding of the parties as to the strengths and weaknesses of their respective cases": Australian Competition and Consumer Commission v Amcor Printing Papers Group Ltd [2000] FCA 163. 35 I have been invited by BHP-IT to disregard the body of case law that has held that an offer of the type made by it should not "be considered in the same way as a Calderbank letter": cf Smallacombe's case, above; in that it is clearly wrong. It was suggested instead that I should follow the approach exemplified in Victoria in MT Associates case. 36 Whatever view I may have taken of how an "all-up" offer should be treated in the absence of authority on the matter in this Court, I am not prepared to say that the approach that has been taken is clearly wrong - I refer in this regard particularly to the views expressed by Goldberg J in Dr Martens' case at [24]. 37 In any event I would not in the circumstances have reached the conclusion that it was unreasonable or imprudent for GEC Marconi to have rejected the offer. Put shortly, my reasons for that conclusion are as follows. The fact that the offer gave no indication at all of the breakdown of the $5 million between the claim, interest and costs blunts significantly the weight to be given the offer. When one has regard to the offer being related both to the claim and to BHP-IT's cross-claim, that deficiency becomes the more significant. Such an offer could, in fact, be no more than a vehicle to recover costs despite the weakness of a cross-claim. 38 Distinctly, it may have been the case, particularly in light of my findings as to the intentions and actions of officers of GEC Marconi prior to its purported termination of Sub-Contract, that GEC Marconi realised (despite its letter of rejection) that its claim faced formidable obstacles. Such was not the case at the time of the offer with its defence of the cross-claim. There had been no opening on the cross-claim. The evidence that had been put on in support of it (given the magnitude of the claim made which was around $13 million) provided a less than satisfactory basis upon which GEC Marconi could properly be required to make a judgment at the risk of exposing itself to a claim that it acted unreasonably. 39 It do not consider that BHP-IT has demonstrated that GEC Marconi acted unreasonably. (ii) The discounting of BHP-IT's costs 40 BHP-IT'S contention is that it was successful both in relation to its defence of GEC Marconi's claim and in prosecuting its cross-claim. The Court should in consequence adhere to its usual practice of ordering that costs follow the event. 41 GEC Marconi, while accepting that BHP-IT is entitled to costs in respect both of its successful defence and of the cross-claim, has submitted that the costs of the damages component of the cross-claim should be discounted for the following reasons. While there was dispute between the parties as to the amount of damages that were being claimed by BHP-IT (the affidavits it put on computed the loss at between $13 million and $14.5 million: Mr Hammond's Witness Statement and Supplementary Witness Statement), it was the case that BHP-IT was in considerable measure unsuccessful in its recovery under the various heads of damage it propounded. Its total recovery was only $2,747,446. It had failed on a number of "issues". Equally the manner in which it tendered its evidence (particularly Mr Hammond's) and the need for its later elaboration (particularly to render intelligible and accessible how BHP-IT's charge codes were calculated) impacted on the costs incurred by GEC Marconi in attempting to understand and then to challenge the claim for damages as it was originally, then finally, put. A discount in the order of 30-40 per cent is said to be appropriate in the circumstances. 42 BHP-IT in contrast contends it did not act unreasonably in its prosecution of the cross-claim. The evidence it adduced on its damages claim was necessary and was in large degree accepted. The case was one of considerable complexity and BHP-IT was hampered, as it made known at the time, by no longer having access to its own primary documentation because of inability to now retrieve it. In any event the time spent on the cross-claim at the hearing was small relative to the other claims. No case for apportionment had been made out. 43 The particular line of principle relied upon by GEC Marconi to justify the discount sought is as well accepted as it is cautiously exercised. It inheres in two of the regularly cited propositions of Toohey J in Hughes v Western Australian Cricket Association (Inc) (1986) 8 ATPR 40-748 at 48,136. (1) Where a litigant has succeeded only upon a portion of his or her claim, the circumstances may make it reasonable that he or she bear the expense of litigating that portion on which he or she has failed: see Foster v Farquhar [1893] 1 QB 564. (2) 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 law: Cretazzo v Lombardi (1975) 13 SASR 4 at 12. See also Inn Leisure Industries Pty Ltd v D F McCloy Pty Ltd (No 2) (1991) 28 FCR 172; Gibbett v Forwood Products Pty Ltd (No 2) [2001] FCA 434; and see generally, Dal Pont, above, [8.2]ff. 44 I am satisfied that there ought be some discounting of BHP-IT's costs in respect of its cross-claim consistent with the justice of the case: Australian Prudential Regulation Authority v Holloway (2000) 35 ACSR 276 at [45]. BHP-IT pursued multiple, distinct heads of damage: see [943] of the reasons in [2003] FCA 50; though it needs to be said that some, but not all, of those heads had interconnected factual foundations and could be dealt with as a group: see [955], [1087]. Some of the lost heads clearly constituted distinct issues in the sense noted above: [1090]ff; [1103]ff; [1126]ff; [1047]ff. BHP-IT's lack of success should reflect that loss in some degree. 45 It is neither sensible nor desirable to seek to make something like a precise calculation of the costs of each such issue. A just and equitable solution here is not "reached simply as a matter of arithmetic": Australian Prudential Regulation Authority v Holloway (above) at 291. The hearing of the evidence on damages was of relatively short duration in the scheme of the trial. This said, the factual and legal complexity of the issues raised and the time necessary to evaluate and to respond to them as they evolved (or were reformulated) needs to be taken into account. The lengthy submissions (written and oral) made at the end of the hearing and argument during the hearing illustrate the reason for this. 46 I do not accept completely GEC Marconi's contention that, for practical purposes, the costs of the counterclaim were the costs of proving damage. Liability, it was said, was largely established in BHP-IT's defence to GEC Marconi's claim. I am satisfied, though, that some relatively small part of the costs of the cross-claim were attributable to liability. 47 I do consider that some impediment to the preparation of a defence to BHP-IT's claim was caused, initially, by the manner in which Mr Hammond's evidence in particular was brought forth. This is a small factor of which account should be taken in the exercise of my discretion. 48 Discounting BHP-IT's costs on the cross-claim by twenty per cent would, in the circumstances, be fair and just between the parties. Accordingly I will order that GEC Marconi pay 80 per cent of BHP-IT's costs of the first cross-claim.

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Judgment (19 paragraphs)

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Legislation Cited (6)

Cases Cited (33)