Guo v Commonwealth of Australia

1. Judgment for the applicant in the sum of $35,001.
2. Subject to any order for costs already made, the respondent pay the applicant's costs of the proceedings as agreed or taxed. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

JAGOT J: 1 The remaining issue in this matter is costs. 2 In Guo v Commonwealth of Australia [2017] FCA 1355 I gave reasons for judgment explaining why I concluded, at [264], that: Mr Guo was falsely imprisoned by the Commonwealth. He should be awarded nominal damages in the sum of $1.00 and exemplary damages in the sum of $35,000 for the period between the evening of 5 March 2015 and the afternoon of 6 March 2015. I propose to ask the parties to submit agreed or competing orders within seven days so that each may consider if any submission about the provisions of the Civil Liability Act is necessary or not. 3 Subsequently, I also invited the parties to consider whether they wished to make any submission about the award of exemplary damages given my assessment that compensatory damages must be nominal (in the amount of $1.00). In this regard, having regard to the fact that loss is not an element of the tort of false imprisonment, I noted the following observations of Giles JA in Fatimi Pty Ltd v Bryant [2004] NSWCA 140; (2004) 59 NSWLR 678: [71] Where the plaintiff has a complete cause of action without proof of loss, exemplary damages can be awarded. That is illustrated by Cousins v Wilson (1994) 1 NZLR 463. The plaintiff sued in trespass. He did not prove loss, but was awarded nominal damages and exemplary damages. See also Johnston Terminals & Storage Ltd v Miscellaneous Workers, Wholesale and Retail Delivery Drivers & Helpers Local Union (1995) 61 DLR (3d) 741 (no damages proved, but breach of statute actionable per se and nominal damages plus exemplary damages awarded); Cash & Carry Cleaners Ltd v Delmas (1973) 44 DLR (3d) 315 (no damages proved, but injunction to restrain further trespass granted and exemplary damages awarded). [72] It is otherwise, however, when proof of loss is an ingredient of the plaintiff's cause of action. In XL Petroleum (NSW) Pty Ltd v Caltex Oil (Australia) Pty Ltd (1985) 155 CLR 448 at 468-9 Brennan J said - Exemplary damages are parasitic on compensatory damages, the plaintiff being unable to recover exemplary damages if he is not the victim of the behaviour which attracts the exemplary damages: per Lord Devlin in Rookes v Barnard [(1964) AC 1129 at 1227]. A single cause of action provides the foundation of a judgment awarding, in an appropriate case, exemplary damages as well as compensatory damages. When a plaintiff's claim for compensatory damages has been satisfied in full, however, he no longer has a cause of action that can support an award of compensatory damages to which an award of exemplary damages can attach. 4 The parties did not wish to make any further submissions other than about costs. 5 The Commonwealth seeks an order that it pay Mr Guo's costs on the usual basis up to 11am on 25 July 2016 and that Mr Guo pay the Commonwealth's costs thereafter on an indemnity basis. Mr Guo seeks an order that the Commonwealth pay his costs of the proceedings on the usual basis. 6 The Commonwealth relies on three offers of compromise and the operation of r 25.14 of the Federal Court Rules 2011 (Cth) which provides that: (1) If an offer is made by a respondent and not accepted by an applicant, and the applicant obtains a judgment that is less favourable than the terms of the offer: (a) the applicant is not entitled to any costs after 11.00 am on the second business day after the offer was served; and (b) the respondent is entitled to an order that the applicant pay the respondent's costs after that time on an indemnity basis. 7 Alternatively, the Commonwealth relies on the principles in Calderbank v Calderbank [1975] 3 All ER 333 which it says are engaged in the circumstances of this case 8 Mr Guo does not dispute that the offers satisfied the requirements of Pt 25 of the Rules. He contends, however, that he did not obtain a judgment "less favourable than the terms of the offer" because although the Commonwealth offered to pay $75,000, the Commonwealth did not admit liability for false imprisonment and required Mr Guo to indemnify the Commonwealth. By the judgment, the Commonwealth was found liable for false imprisonment and Mr Guo does not have to indemnify the Commonwealth. 9 Each of the offers was in the same terms. The Commonwealth offered to settle the claim by the parties entering into a deed under which it would pay $75,000 without admitting liability, Mr Guo would discontinue the proceedings, Mr Guo would release the Commonwealth and all its agencies and officers from all claims concerning the proceedings and the matters giving rise to the proceedings, Mr Guo would indemnify the Commonwealth and all its agencies and officers with respect to any and all losses arising as a result of the claims concerning the proceedings and the matters giving rise to the proceedings, and Mr Guo would be prohibited from disclosing or permitting to be disclosed the terms of the deed. 10 It may be accepted that, as the Commonwealth submitted, the question whether an applicant has obtained a judgment that is less favourable than the terms of the offer involves asking if the applicant "won anything of value or anything he could not have won without fighting the action through to a finish?" (Roache v News Group Newspapers Ltd [1992] TLR 551 applied in Timms v Clift [1998] 2 Qd R 100 at 107), and that this requires a comparison of the relief sought with a comparison of the relief granted (Metz Holdings Pty Ltd v Simmac Pty Ltd (No 3) [2011] FCA 1450 at [26]; Timms v Clift [1998] 2 Qd R 100 at 107). 11 In the present case, the relief sought was damages "[o]n the grounds stated in the statement of claim". The grounds involved Mr Guo's claims of false imprisonment. The "judgment" Mr Guo will obtain is the order that he be awarded $35,001 damages. While the Commonwealth's offer would have given Mr Guo $75,000 it involved non-monetary elements which are not irrelevant to the question whether the judgment Mr Guo obtained is less favourable than the terms of the offer. Inherent in the judgment is a judicial determination that the Commonwealth did falsely imprison Mr Guo. In the offer, there was to be no admission of liability by the Commonwealth. By the judgment, Mr Guo does not have to indemnify the Commonwealth and all its agencies and officers with respect to any and all losses arising as a result of the claims concerning the proceedings and the matters giving rise to the proceedings. In the offer, there was to be such an indemnity. By the judgment, Mr Guo is free to publicise the fact that he was falsely imprisoned by the Commonwealth. In the offer, Mr Guo was to be prohibited from any such disclosure. 12 If the Commonwealth had simply offered to pay Mr Guo $75,000 on the basis the proceedings were to be dismissed, then I would have concluded that the judgment was less favourable than the terms of the offer. The terms of the offer, however, were not so confined. In particular, they included the indemnity and the prohibition on disclosure. These are material terms to the comparison between the judgment and the offer. For the purposes of Pt 25 of the Rules it does not matter if Mr Guo could have queried the terms. Nor does it matter that he rejected the offer because he wanted the grant of a visa. The question is confined to whether the judgment is less favourable than the terms of the offer. In my view, the answer to this question is "no". Take the indemnity as an example. The Commonwealth would have it that an indemnity is a standard requirement of a deed of settlement. This may or may not be so. The point is that if Mr Guo had accepted the offer he would have been bound to enter into a deed under which he indemnified the Commonwealth, its agencies and officers with respect to any and all losses arising as a result of, in effect, Mr Guo's claims in the proceedings. To take but one example. If an officer sued the Commonwealth for harm the officer claimed to have suffered by reason of the officer's involvement in falsely imprisoning Mr Guo for lengthy periods, Mr Guo would have to indemnify the Commonwealth if it was liable to the officer. 13 For these reasons I do not accept that the judgment obtained is less favourable than the terms of the offer. Rule 25.14(1)(b), accordingly, does not apply. If I am wrong in this regard, then the considerations set out below would cause me to conclude that, in any event, an order inconsistent with r 25.14(1)(b) should be made, relying on r 1.35 (as to which see Sydney Equine Coaches Pty Ltd v Gorst [2017] FCAFC 34, another case involving facts as unusual as the present, albeit in a different context). 14 I also do not consider that Mr Guo's conduct in not accepting the offers was unreasonable so as to enliven the discretion to make an order for indemnity costs in favour of the Commonwealth, outside the context of Pt 25 of the Rules. 15 First, the Commonwealth never offered simply to pay Mr Guo money, even on the basis of not admitting liability. As noted, its offers all required an indemnity and a prohibition on disclosure. Thus it cannot be said that Mr Guo was unwilling to settle his money claim for money. Indeed, in my view, it cannot be said that Mr Guo obtained a judgment less favourable than the terms of the Commonwealth's offers once all those terms are considered. This conclusion, already reached above for the purposes of Pt 25 of the Rules, is reinforced by the fact that the Commonwealth's offer to pay the $75,000 was, in each case, further qualified by a raft of requirements, the significance of which is unclear to me and which the Commonwealth has not sought to explain, including a "Medicare Australia notice of settlement", a "valid notice of charge, or a release, from Medicare Australia", a "Compensation Release Notice" from Centrelink, and "any other applicable notice under" various statutes. It is not apparent that Mr Guo could have obtained those documents, and thus the true value of the Commonwealth's offers remains unknown. While Mr Guo could have requested more information at the time the offers were made, it was for the Commonwealth, as the party seeking to rely on the offers, to persuade me that the circumstances warrant an exercise of discretion to grant indemnity costs in its favour. 16 Second, the issue is whether Mr Guo not accepting the offer was unreasonable. It is not whether Mr Guo's failure to make any offer (subsequent to the offer to settle for $75,000, costs, and a visa) was unreasonable. 17 Third, being on notice that the Commonwealth would contend that nominal damages only were payable even if had falsely imprisoned Mr Guo, did not make Mr Guo's pursuit of his claims in the face of the offers unreasonable. The Commonwealth had not filed its evidence when the offers were made. In the present case, that is important because it is the Commonwealth's own evidence that founded the claim for exemplary damages. I accepted one component of Mr Guo's claim for exemplary damages, but there was another component which I rejected and, more to the point, until he received the Commonwealth's evidence, Mr Guo could not know whether any claim for exemplary damages could succeed. 18 Fourth, the policy underlying the principles relating to Calderbank offers is that it is in the public interest to encourage the settlement of litigation. In a case such as the present, where the terms of the offer are unclear given the conditions to which payment was subject, and the terms included a broad indemnity and prohibition on disclosure, there are other public policy considerations in play. While Mr Guo did not claim, for example, a declaration that the Commonwealth had falsely imprisoned him, the fact is that the pursuit of his claims gave Mr Guo (and the Commonwealth for that matter) something a settlement could not. It explained why the Commonwealth's policies, procedures and practices had enabled it to repeatedly falsely imprison Mr Guo. 19 To my mind, the considerations set out above provide compelling grounds why the Commonwealth ought not to obtain a costs order against Mr Guo by reason of its offers to settle. Rather, Mr Guo should have the usual order as to costs of the proceedings. I certify that the preceding nineteen (19) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Jagot.