REASONS FOR JUDGMENT
1 On 23 March 2005, I ordered that the cross-claim brought by Cardinal against, inter alia, Ms Ibrahim and Hartford be dismissed. I ordered Cardinal to pay the costs of Ms Ibrahim and Hartford. By notice of motion, filed on 26 April 2005, Hartford has asked the Court to vacate or vary the order for costs that I made on that day to provide that Cardinal pay Hartford's costs as taxed on an indemnity basis. I have now heard argument and received written submissions in relation to that matter.
2 The parties are agreed as to the principles that should govern the question of whether indemnity costs should be ordered. Generally, the Court ought not 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. The circumstances that may warrant such departure arise as and when the justice of the case so requires, or where they may be some special or unusual feature in the case to justify the Court in departing from the usual course. While 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 (see Re Wilcox; ex parte Venture Industries (1996) 141 ALR 727 at 732).
3 Hartford points to a number of features of the cross-claim that it says are special or unusual so as to enliven the discretion to order indemnity costs. The first concerns what is described as the forensic purpose of Cardinal in commencing and prosecuting the cross-claim at the time at which, and in the circumstances in which, it did so. Hartford points to the circumstance that the cross-claim was for contribution or indemnity in respect of Cardinal's liability to Ms Lukey which, at most, was several thousand dollars. Hartford says that it would be irrational to conclude that Cardinal commenced the cross-claim simply to recover contribution to that sum. Alternatively, Hartford accepts that a possible object or purpose in the commencement of the cross-claim was to seek contribution or indemnity in respect of all claims by members of the class, on whose behalf Ms Lukey commenced the proceeding, and who had an involvement with Hartford. I must say I am at a loss to understand precisely why I should not draw the inference that that was the purpose of the commencement and prosecution of the cross-claim.
4 Hartford points to the fact that the resolution of the question of whether Hartford was liable to Ms Lukey would not be determinative of the question of whether Hartford had a liability to other members of the class. That must be so, because each claim would depend upon the precise relationship that existed between the class member and Hartford or Ms Ibrahim, as the case may be, and the subjective state of mind of particular members. Nevertheless, the proceeding had to commence somewhere. That is to say, to the extent that Cardinal sought to be indemnified or sought contribution in respect of its liability to members of the class represented by Ms Lukey, it was necessary to make a claim against Hartford and Ms Ibrahim.
5 The proceeding was commenced in 2000. As a result of directions at the interlocutory stage of the proceeding in 2001, the decision was made that Ms Lukey's claim be determined in its entirety before commencement of the hearing of claims on behalf of other members of the class. Cardinal's cross-claim was filed in March 2002 and, in October 2002, orders and directions were given pursuant to Order 29 of the Federal Court Rules concerning the determination of certain questions separately from and prior to the determination of all other questions in the proceeding. Hartford participated in that process and no suggestion was ever made on behalf of Hartford that a different course should be adopted.
6 The procedures that are to be adopted in relation to class actions of the nature of that brought by Ms Lukey are complex. There is no ideal procedure to be adopted where one proceeding is brought on behalf of a number of claimants, each of whom have individual claims and whose claims will require specific evidence if they are to succeed, being evidence that will be irrelevant to all of the other claims. The Court's object in giving directions in such a proceeding is to achieve a process which is as convenient and cost effective as is practical in the circumstances.
7 As I have said, there has never been any suggestion by Hartford, prior to today, that the course that was adopted was in any way improper or that some better course should have been adopted. In the course of submissions today, Hartford, in effect, suggested that the proper course would have been either for Cardinal not to have commenced a cross-claim at all or, having done so, to have asked the Court to defer the consideration of the cross-claim altogether. I am inclined to suppose that I would not have acceded to any such request, had it been made either by Cardinal or Hartford at the time. However, it is pure speculation as to what I might have done because I was never asked to do so and no consideration was ever given to that question.
8 Hartford expressly eschews any allegation of delinquency, unreasonableness, impropriety or abuse of process on the part of Cardinal in commencing and prosecuting the cross-claim. However, it points to Cardinal's purpose, which it says is such as to enliven the discretion to order indemnity costs, or at least is a factor, taken with others, that would enliven the discretion to order indemnity costs. Harford says that Cardinal's purpose, in commencing the cross-claim and prosecuting it as it did, was to recover indemnity or contribution in respect of the costs that it might be ordered to pay to Ms Lukey for defending her claims against it.
9 Agreement was reached between Cardinal, on the one hand, and Hartford and Ms Ibrahim, on the other, concerning the quantum of costs that Cardinal incurred in defending Ms Lukey's claim. They agreed that the reasonable costs and disbursements of Ms Lukey's claim against Cardinal, as assessed on a party/party basis, was $2,151,000. Under that agreement, it was agreed that Cardinal's claim against Hartford and Ms Ibrahim was for contribution towards the sum of $2,152,337.28, being the amount of a judgment entered in favour of Ms Lukey against Cardinal, together with the sum of $2,150,000 for party/party costs. I refer to these matters in [338] to [341] of my reasons of 23 March 2005.
10 I would draw the inference, from the material before me, that Cardinal's object and purpose in commencing and prosecuting the cross-claim was to seek contribution or indemnity from the cross-respondents in respect of whatever liability Cardinal might be found to have, not just to Ms Lukey, but to all members of the class. Not all members of the class, of course, had been involved with Hartford or Ms Ibrahim, but substantial numbers were involved with them. To the extent that it would be the incident of judgment for contribution or indemnity that Cardinal would recover at least part of its costs of defending the claim by Ms Lukey and other members of the class, it was a purpose or object of Cardinal to seek that recovery. In my reasons of 23 March 2005, I made observations on the principles that are to be applied in that regard.
11 It may be, in the light of the conclusions that I reached, that Cardinal's claims for contribution in respect of its costs were at least partly misconceived or based on erroneous principles. Hartford makes no suggestion, however, that the basis for the claim by Cardinal to indemnity or contribution in respect of costs was unreasonable or was a claim that should not have been pursued. It is not a basis for an order for indemnity costs that a novel claim is being made, so long as it cannot be said that the claim is so irrational that it is doomed to failure. As previously mentioned, Hartford does not suggest that that was this case.
12 A further matter relied upon by Hartford as enlivening the discretion is what is described as 'the fluidity' of Cardinal's claim. In my reasons of 23 March 2005, I referred to some difficulties that were experienced in the course of the hearing in comprehending precisely the way in which Cardinal put its claim as to its liability to Ms Lukey and the prospective liability of Hartford and Ms Ibrahim to Ms Lukey. In complex litigation such as this, that is almost invariably the case.
13 One of the luxuries of the system that we operate under is full oral argument that enables submissions to be honed and refined. So long as the final submission is ultimately within the terms of the pleading as it stands, there is no difficulty. Indeed it is not uncommon for leave to amend to be given in the course of a proceeding or, in some circumstances, even in the course of address, where there is no prejudice to the parties. Indeed, there were amendments made, pursuant to leave granted, in the course of the hearing of this proceeding. To the extent that there was any fluidity in the way in which Cardinal's claim was formulated, I do not regard that as being in any way exceptional and I emphasise again that Hartford does not submit that at any stage the claim that was made by Cardinal was unreasonable or that it was a claim that should not or could not have been persisted in.
14 Next, Hartford points to a number of offers that were made after the commencement of the cross-claim, whereby it indicated a preparedness to forego either all or part of the costs to which it might be entitled if Cardinal were to abandon the cross-claim against it. On a number of occasions Hartford invited Cardinal to throw in the towel, so to speak, on the basis that Hartford would not insist upon its full entitlement to costs. Such offers are not really offers of compromise so as to attract the sorts of principles that derive from Calderbank v Calderbank [1975] 3 All ER 333.
15 Where a reasonable offer of compromise is rejected and the rejecting party obtains a result less favourable than any offer, then it may well be appropriate in some circumstances to order indemnity costs in respect of costs incurred after that time. However, I do not consider that the proposals advanced by Hartford fall within that category. Indeed, it was not suggested by Hartford that they do. The proposition was that they constitute one of the factors that, taken along with the other factors to which I have referred and am referring, enlivened the Court's discretion.
16 Another factor referred to is the seriousness of the claims mounted by Cardinal against Ms Ibrahim and Hartford, involving, as they did, breach of professional duties. Again, however, Hartford eschewed any suggestion that there was any impropriety in the making of the claims. While Ms Ibrahim at one stage sought summary dismissal because of the letter to which I referred in my reasons, it has not been suggested that it was unreasonable for Cardinal to mount the claims that it did against Ms Ibrahim and Hartford.
17 Hartford also refers to the sheer scale of the costs that it has incurred in defending the cross-claim. I have considerable sympathy for any defending or responding party who incurs substantial costs in successfully resisting a claim. No doubt there are good policy reasons why the rules provide, as they do, that there is a right to recover only part of the costs incurred in defending the claim. It is not appropriate for me to investigate those policy reasons. They have led to the scheme which presently applies. While one might feel sympathy for Hartford in having incurred substantial costs that it will never be able to recover, in circumstances where its position is ultimately vindicated, that of itself, nor taken with the other matters to which I have referred, is not sufficient to warrant departure from the normal rule.
18 A final matter that is referred to by Hartford is the absence of any express power in the Court to award interest on the costs incurred before they are formally taxed and quantified. That may be a criticism of the Rules, but that is the position and that of itself does not, in my view, justify any exercise of discretion to grant indemnity costs.
19 I am not persuaded that the circumstances of this case are such that the usual practice should be departed from. It follows, in my view, that the motion should be dismissed. I will order Hartford to pay Cardinal's costs of the motion.