Mayfield Development Corporation Pty Ltd v NSW Ports Operations Hold Co Pty Ltd

1. Further to Order 2 made on 17 September 2020, the respondents' costs of the application for leave to appeal dated 5 June 2020 be assessed on an indemnity basis from 11.00 am on 2 July 2020.
2. For the avoidance of doubt, the respondents' application for indemnity costs be taken as part of their costs of the application for leave to appeal. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

YATES J: 1 On 17 September 2020, I dismissed the applicant's application for leave to appeal from an order made in the primary proceeding dismissing its application for non-party discovery (the leave application). I also ordered the applicant to pay the costs of the respondents (in the primary proceeding) and the Interested Parties to the leave application: Mayfield Development Corporation Pty Ltd v NSW Ports Operations Hold Co Pty Ltd [2020] FCA 1334 (Reasons 1). 2 At the hearing of the leave application, the respondents informed the Court that they wished to be heard on the question of costs in the event that the leave application was unsuccessful. I gave the respondents that opportunity. 3 The respondents contend that their costs should be assessed on an indemnity basis pursuant to r 25.14(2) of the Federal Court Rules 2011 (Cth) or, alternatively, in the exercise of the Court's general discretion, on the basis that the applicant failed unreasonably to accept an offer of compromise which was also made, in the alternative, as a Calderbank offer. 4 The respondents' offer was made on 30 June 2020, approximately three weeks after the leave application was filed. The offer was that the leave application be dismissed with no order as to costs. In other words, the offer was a "walk away" offer, with the applicant and the respondents bearing their own costs that had, by then, been incurred in respect of the application. Had that offer been accepted, then further costs in respect of the application would have been avoided. 5 The offer was expressed through a letter from the respondents' solicitors dated 30 June 2020 (the Offer Letter). The Offer Letter enclosed a notice of offer to compromise in accordance with Form 45. The offer was open for acceptance within a 14 day period. 6 The Offer Letter explained that the respondents had incurred costs in reviewing the leave application and the affidavits filed in support of it. It explained that further substantial costs would be incurred in preparing written submissions and participating in any oral hearing of the application. 7 The Offer Letter set out why, in the respondents' view, the leave application was "doomed to fail". After setting out the principles on which leave to appeal from interlocutory orders is approached, and noting further that the leave sought was in respect of a discretionary decision regarding practice and procedure, the Offer Letter stated: There is no possibility of Mayfield suffering any injustice if leave to appeal is refused. The effect of [the primary judge's] orders does not preclude Mayfield from obtaining discovery of documents at the appropriate time. Rather, they reflect the circumstance that the application for discovery is "profoundly premature": Judgment at [6]. Your client appears to contend that it is unable to prepare its case while the proceeding is stayed without the non-party discovery that it seeks, and that the Respondents may as a result be "better prepared" than your client (proposed Ground 2(c)(vii)). Even if that speculative assertion were to be accepted, there can be no injustice to Mayfield. Mayfield consented to the stay. Further, when the stay is lifted, appropriate timetabling orders can be made to ensure that your client has adequate opportunity to prepare for a hearing. There can be no injustice, let alone "substantial injustice". 8 The letter then set out, in summary, the reasons why there was no reason to doubt, in any event, the correctness of the primary judge's decision. The Offer Letter continued: Maintenance of the Application for Leave to Appeal by Mayfield is unreasonable for the additional reason that it imposes an undue burden on the Respondents in circumstances where the proceeding is stayed. The Application for Leave to Appeal is, in effect, the third time that Mayfield has sought to undermine the stay to which it agreed in August 2019. It is unreasonable for your client to subject our clients to this burden, including the expenditure of further costs, in circumstances where your client has no reasonable basis to appeal the judgment and orders of [the primary judge]. 9 The reasons advanced by the respondents as to why the leave application would not succeed were vindicated in Reasons 1. 10 In these circumstances, the respondents submit that it was unreasonable for the applicant not to accept the offer and that, for this reason, their costs should be assessed on an indemnity basis from 11.00 am on 2 July 2020. 11 In response, the applicant says that it does not "concede" that its failure to accept the offer was unreasonable. It submits that its case for leave was that the primary judge erred in interpreting and applying s 83(1) of the Competition and Consumer Act 2010 (Cth) (the Competition and Consumer Act) as mandating the outcome that non-party discovery be refused and that the primary judge did not, therefore, exercise the discretion that was reposed in her. It submits that the Offer Letter "did not appear to press upon the applicant that [the primary judge] did not interpret s 83 of the CCA as the applicant contended". 12 For this reason, the applicant submits that the costs of the leave application should be assessed on a party and party basis, with the applicant and the respondents bearing their own costs of the respondents' application for indemnity costs. 13 I reject that submission. 14 First, in order to succeed on the leave application, it was incumbent on the applicant to demonstrate that the primary judgment was attended by sufficient doubt to warrant reconsideration by a Full Court and that it would suffer substantial injustice if the leave application were to be refused, supposing the primary judgment to be wrong: Décor Corporation Pty Ltd v Dart Industries Inc (1991) 33 FCR 397 at 398 - 399. I was not satisfied that any of the proposed grounds of appeal had sufficient prospects of success to warrant a grant of leave to appeal. However, even if those grounds had sufficient merit to warrant a grant of leave to appeal, I said that I would not have granted that leave because the applicant had not demonstrated that a denial of leave would lead to it suffering substantial injustice: Reasons 1 at [43] - [49]. Thus, the applicant's inability to demonstrate substantial injustice was reason enough to dismiss the leave application. This was the headline contention made in the Offer Letter: see [7] above. 15 Secondly, it was the applicant who attributed to the primary judge a particular construction and application of s 83(1) of the Competition and Consumer Act. That attribution was plainly erroneous and did not capture the primary judge's reasoning. As I explained in Reasons 1: 20 It is true, as the applicant contends, that s 83(1) does not require or compel a party in other proceedings for, say, damages under s 82 of the CCA, to await the findings that might be made for the purposes of s 83. Still less does it require the other proceeding to be stayed pending the making of any relevant s 83 findings. But the primary judge did not construe s 83(1) as if it compelled either of those outcomes. All the primary judge did was to observe that s 83(1) provided a facility with potential application in the primary proceeding. That potential application might render non-party discovery completely unnecessary or appropriate only to a limited extent. That is the underlying reason why the primary judge observed that the applicant's application for non-party discovery assumed that, even after judgment is given in the ACCC proceeding, all the issues raised in the applicant's pleading will remain in dispute, requiring subsequent proof by documentary or testimonial evidence at trial. That assumption simply could not be made. (Emphasis in original.) 16 The Offer Letter did not state that the applicant's attribution was erroneous, but it did state, correctly, why the correctness of the primary judge's decision was not in doubt on this point. It was not necessary for the Offer Letter to descend to further detail: In any event, there is no reason to doubt the correctness of [the primary judge's] decision. The determination of the ACCC Proceeding may result in a significant narrowing of the issues to be litigated in the Mayfield Proceeding and, therefore, the appropriate scope of any discovery. Mayfield's application for discovery assumed that all the issues in the Statement of Claim will remain in dispute following the resolution of the ACCC Proceeding: Judgment [3]. That assumption may not be well founded, not only because of the purpose and effect of s 83 of the Competition and Consumer Act 2010 (Cth) (which your client seeks to agitate on appeal), but also because of your client's consent to the Mayfield Proceeding being stayed on the basis that the ACCC Proceeding involves several issues for determination that are threshold issues in the Mayfield Proceeding, with significant overlap in factual allegations. (Emphasis in original.) 17 Thirdly, there is no evidence before me that even if the Offer Letter had descended to further detail, it would have made the slightest difference as to whether the applicant would have persisted with the leave application. My sense of the matter is that the applicant would have pushed on regardless. 18 I am satisfied that the offer was a genuine offer of compromise that was clearly explained. The applicant was given ample opportunity to consider its reasonableness. I am satisfied that, in all the circumstances, it was unreasonable for the applicant not to accept the offer. Therefore, the respondents are entitled to the indemnity costs they seek. Further, the respondents' application for indemnity costs should be treated as part of the costs of the leave application. There is no reason to treat them differently. 19 Orders will be made accordingly. I certify that the preceding nineteen (19) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Yates.