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[2013] FCA 921
Federal Court of Australia
2013-09-11
Robertson J
Original judgment source is linked above.
REASONS FOR JUDGMENT 1 These reasons deal with three issues left outstanding from my judgment in Hockey v WIN Corporation Pty Ltd [2013] FCA 772.
Judgment sum 2 The first issue is the sum for which judgment should be entered, apart from pre-judgment interest. 3 Despite what appeared originally to be a wide-ranging dispute, the matter came down to a much narrower issue, it being common ground that the calculation that should be made was to yield the net sum of $224,198.20. That is, the object of the exercise was to arrive at an amount in the present tax year, which would provide to the applicant the sum that I have just mentioned. Ultimately the applicant contended for a figure of $374,185.42 and the respondent for $368,594.76. 4 The issue narrowed further into whether or not the net amount of $13,659.16 (gross $19,940) paid to the applicant in February 2012 should be factored in. 5 In my opinion the respondent's approach is to be preferred and the payment that was made should be taken into account as the respondent has done. 6 The relevant calculation, applying the current tax rates to the employment termination payment, therefore is: $368,594.76 $180,000 x 68.5% = $123,300 $188,594.76 x 53.5% = $100,898.19 $123,300 + $100,898.19 = $224,198.19 7 The sum for which judgment is to be entered, apart from pre-judgment interest is therefore $368,594.76.
Interest 8 The second issue is pre-judgment interest under s 51A of the Federal Court of Australia Act 1976 (Cth). 9 In my opinion the appropriate question is what is the appropriate sum to compensate the applicant for the detriment of being kept out of his money? 10 It follows that the money on which the interest is calculated should be the amount the applicant would have received in his hand as at 13 February 2012. 11 The applicant's submissions were originally founded on the sum of $384,549.82 either the entirety of the lump sum payable less only four weeks notice paid or a grossed up total which yielded the same figure. In either case the amount would not be the amount the applicant would have received as at 13 February 2012. 12 The applicant relied on Hodgson v Amcor Limited [2012] VSC 205, but in my view the relevant part of that judgment, from [44]-[55] deals with a different situation which is the undesirability for the court to become enmeshed in potentially complex and uncertain issues of taxation law in the award of statutory interest under s 58 of the Supreme Court Act 1986 (Vic). 13 I also accept, as submitted by the respondent, that there is a material difference between the terms of s 51A of the Federal Court of Australia Act 1976 and s 58 of the Supreme Court Act 1986: see [54] of the reasons in Hodgson v Amcor Limited [2012] VSC 205 where his Honour held that the court was required to allow interest on the sum recovered, as opposed to "part of the money" as stated in s 51A. 14 Also it does not appear that that case concerned withholding of an amount by the employer under the Taxation Administration Act 1953 (Cth). The relevance of that is that, on this aspect of the present case, there are no such "uncertain issues of taxation law", as the amount to be withheld by the employer at the time is sufficiently certain and it is a relatively simple calculation to subtract that amount from the agreed gross amount, as follows. 15 The agreed gross total is $404,490.20. That is step one. 16 From this should be subtracted the amount required to be withheld by the respondent employer under the withholding regime then in force. That is step two. The respondent submits that this amount would have been $237,857.36 and that is now agreed. 17 It is agreed that the applicant received $13,659.16. That amount should be subtracted as step three. 18 The shortfall on which interest should be calculated is therefore $224,198.20. Calculated in accordance with Practice Note CM 16 the relevant amount of interest up to 11 September 2013 is $26,278.79. That is the fourth and final step. 19 The applicant originally submitted that the amount should be $43,168.05 but, as I have explained above, that calculation is based on a grossed up total rather than the amount the applicant would have received in his hand if the contract had been performed by the respondent. 20 My approach is consistent with the calculations made by Whitlam J in Patterson v Middle Harbour Yacht Club (1996) 64 FCR 405 at 409.
Costs 21 The third and last issue is costs. 22 There was tendered a letter dated 24 October 2012 from the solicitors for the applicant to the solicitors for the respondent enclosing an offer of compromise. That offer was $350,000 plus interest of $19,286. The offer was in addition to costs. The offer was open to be accepted for 14 days. 23 There was no dispute before me as to the validity of the offer of compromise in terms of Part 25 of the Federal Court Rules 2011 (Cth). 24 The usual rule therefore under r 25.14(3), where the applicant obtains a judgment that is more favourable than the terms of the offer, is that the applicant is entitled to an order that the respondent pay the applicant's costs, in this case, before 11 a.m. on 26 October 2012 on a party and party basis and after that time on an indemnity basis. 25 I note that the point reached in the proceedings when the offer was served was well before the hearing commenced on 25 March 2013; the pleadings had closed; but no affidavit evidence had been filed or subpoenas issued. 26 The respondent submits that the appropriate order is that it pay 75 percent of the applicant's costs on a party and party basis. 27 It relies on two grounds: first that the applicant failed on his misleading or deceptive conduct case and, the respondent submits, the bulk of the discovery, evidence and cross-examination was directed to that case; and second that, as part of that case, the applicant relied on irrelevant evidence designed, so it is contended, to embarrass the respondent and which evidence was rejected. 28 I am not persuaded that the bulk of the discovery, evidence and cross-examination was directed to the misleading or deceptive conduct case such that I should exercise my discretion to displace the consequences of r 25.14(3). Neither am I persuaded that the scope or purpose of the applicant's evidence which I rejected was of such a quality. 29 In my opinion this is not a case where the successful party's costs should be reduced by reason of his failure on part of his case. That is, I do not accept that the applicant's misleading or deceptive conduct case was, relevantly, separate: there was some overlap. 30 In my view it was not unreasonable for the applicant to run the alternative case. It was not sufficiently separate from the contract case to warrant, in my opinion, a reduction in the amount or basis on which the applicant would otherwise be entitled to costs. Some of the evidence on which the respondent relied in the contract case was of an equivalent nature, involving an examination of the applicant's state of knowledge or state of mind at the time the contract was entered into. I do not accept that there was a substantial amount of unnecessary or inappropriate and thus time-wasting evidence adduced by the applicant such as to warrant a reduction in the applicant's costs, as a matter of the Court's discretion. 31 For completeness, I have also considered whether some lesser reduction than 75 percent, with or without moving from the indemnity to a party and party basis, would be appropriate. In my view it would not be appropriate by reason of the circumstances to which I have already referred. 32 The order I therefore make in relation to costs is that the respondent pay the applicant's costs of the proceedings, before 11 a.m. on 26 October 2012 on a party and party basis and after that time on an indemnity basis. I certify that the preceding thirty-two (32) numbered paragraph are a true copy of the Reasons for Judgment herein of the Honourable Justice Robertson.
Hockey
WIN Corporation Pty Ltd