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[2007] NSWCA 322
mixed. The synchronisation rights fee increased by $39,994 interest to $189,737.34 exclusive of GST; applicants awarded costs up to and including 25 July 2013 on the ordinary basis; applicants to pay the...
The Copyright Tribunal decided that the Commonwealth's pre-hearing settlement offer was clear enough to count as a Calderbank letter even though it covered both this case and a related Federal Court action and involved payments spread over three years. Because the songwriters turned the offer down and ended up with less overall, they must pay the government's legal costs at the higher indemnity rate from the day after the offer. They still recover their own costs up to that date on the normal basis. The Tribunal emphasised that worries about getting paid later were not backed by evidence and that parties take a risk when they gamble on getting more at hearing.
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2,303 words · generated 24/04/2026
Pocketful of Tunes Pty Ltd and Bruce William Woodley (the applicants) commenced proceedings in the Copyright Tribunal of Australia after the Commonwealth used the lyrics of the song "I Am Australian" (co-written by Mr Woodley) in a DVD montage played at Australian citizenship ceremonies without obtaining a synchronisation licence. The Commonwealth had already paid $2,954.20 plus GST through collecting societies for performing and mechanical rights but accepted from mid-2012 that an additional synchronisation fee was payable. The dispute concerned only quantum.
4 cited instruments linked from this judgment.
In the principal decision ([2015] ACopyT 1) the Tribunal fixed the fee at $149,743.34. The parties then agreed that interest of $39,994 should be added, producing a total of $189,737.34 exclusive of GST. That interest component was uncontroversial, resting on L Shaddock and Associates v City of Parramatta (1983) 151 CLR 590 and s 165 of the Copyright Act 1968 (Cth).
The present reasons ([2015] ACopyT 2) deal solely with costs. A parallel Federal Court proceeding (VID 93 of 2013) between the same parties (plus additional respondents) raised claims for conversion, detention and moral rights infringement. That proceeding had been stayed pending the Tribunal outcome. The applicants had informally valued the moral rights claim at "$20,000 to $30,000" in correspondence. The Commonwealth did not dispute that range for costs purposes.
On 26 July 2013 the Commonwealth and other respondents made an open offer of $250,000 plus $50,000 for costs, payable in instalments over three years, with the first tranche due within 28 days of settlement. The offer was expressed to be without prejudice save as to costs and was repeated as a formal offer of compromise under the Federal Court Rules 2011 (Cth). All costs in the Tribunal proceeding were incurred after that date, the Tribunal application having been filed on 6 September 2013.
A non-binding early neutral evaluation by Dr Lindgren AM QC in June 2014 assessed the licence fee at $100,000 ($25,000 per year for four years). Further without-prejudice negotiations followed, narrowing the gap to approximately $15,000 plus disagreement on who would bear the risk of any default by the additional respondents on deferred payments. The matter proceeded to hearing in July 2014.
The Tribunal concluded that the 26 July 2013 offer was a valid Calderbank offer. The applicants' rejection was unreasonable. Consequently the applicants were awarded their costs up to and including 25 July 2013 on the ordinary basis; from 26 July 2013 they were ordered to pay the Commonwealth's costs on an indemnity basis. Costs relating to the Lindgren evaluation were excluded. Publication of the reasons was deferred to allow submissions on confidentiality under s 37AF of the Federal Court of Australia Act 1976 (Cth).
Bennett J began from the orthodox position that a successful applicant who has been forced to litigate to obtain a licence fee to which it is entitled should recover costs in the absence of disentitling conduct. The applicants had provided a reasoned (albeit high) basis for their initial $624,000 claim and had moderated their position after the Lindgren evaluation. Maintaining an ambitious opening position was therefore not itself disentitling.
The decisive factor was the Commonwealth's Calderbank offer. The Tribunal rejected three main attacks on its efficacy.
First, certainty. The applicants argued that because the offer settled both the Tribunal synchronisation claim and the undetermined Federal Court claims it was impossible to compare the offer with the Tribunal outcome. Citing Smallacombe v Lockeyer Investment Co Pty Ltd (1993) 42 FCR 97, they contended an "all-up" offer created genuine doubt as to value. Bennett J distinguished Smallacombe because the moral rights component had been fixed by the applicants' own letter at $20,000-$30,000. Unlike unquantified party-party costs that continue to accrue, this was a closed past claim whose value would not change. The offer therefore allowed a meaningful comparison.
Second, the deferred payment structure. The applicants pointed to solvency concerns regarding the additional respondents, the absence of a Commonwealth guarantee, and the three-year payout period. They asserted that, once discounted, the present value of the offer was only $10,000 more than the Tribunal award. No actuarial or other evidence was adduced to support the discount. Bennett J held that unquantified enforcement risk did not render the offer uncertain or the rejection reasonable. The "sticking point" at the eve of hearing had been the identity of the payer rather than quantum. The applicants had simply taken the forensic risk that their preference for immediate, certain payment from the Commonwealth would be vindicated at hearing. It was not.
Third, ancillary complaints (lack of explanation for the offer, inclusion of a costs component without subsequent assessment, reliance on a submission later rejected, and the applicants' genuine belief in a better outcome) were all ruled irrelevant. The offer contained a fixed $50,000 costs sum, removing the need for later assessment. An offeror need not justify its position. Subsequent rejection of one submission by the Tribunal did not retroactively invalidate the offer. A reasonable but ultimately incorrect belief in a better result is the very risk an offeree assumes when it rejects a Calderbank letter.
The Tribunal therefore applied the principle from Jones v Bradley (No 2) [2003] NSWCA 258 that indemnity costs run from the day after expiry of an effective Calderbank offer. Costs of the Lindgren evaluation were carved out because they were incurred for a separate ADR process. The result was a split costs order reflecting the date the reasonable settlement offer was made.
Prior to this decision Australian courts had reached divergent positions on "all-up" Calderbank offers. Smallacombe (1993) treated an inclusive offer as problematic because it forced the offeree to guess both the value of its claim and its recoverable costs, creating a "precise dollar and cents" trap. Finn J in GEC Marconi (2003) was reluctant to say Smallacombe was plainly wrong but emphasised that reasonableness of rejection must be judged on the circumstances at the time of rejection. The Victorian Supreme Court in MT Associates Pty Ltd v Aqua-Max Pty Ltd (No 3) [2000] VSC 163 took a more relaxed view, admitting any admissible offer. The New South Wales Court of Appeal in Elite Protective Personnel Pty Ltd v Salmon [2007] NSWCA 322 clarified that Smallacombe does not lay down a "definitive rule" excluding all inclusive offers; rather it informs the reasonableness inquiry. McColl JA noted that uncertainty in costs increases over time, whereas a fixed claim valuation does not.
This Tribunal decision applies the Elite approach in the specific context of the Copyright Tribunal. It confirms that where parties have used a common valuation range for additional claims, an inclusive offer can be sufficiently certain. It also illustrates that enforcement risk arguments must be evidenced and quantified; mere assertion is insufficient. The decision reinforces that the Tribunal's costs discretion under s 174(1) of the Copyright Act is to be exercised consistently with the Calderbank line of authority.
After the decision, the law remained unchanged in its fundamentals but gained a clear example of how Smallacombe is distinguished when claim values are agreed or stable. The emphasis on objective comparison and the irrelevance of the offeree's subjective belief in a better outcome has been absorbed into subsequent Federal Court and Tribunal reasoning on settlement offers.
Paragraph 30: "In my view, the circumstances are different to those in Smallacombe. For the purposes of the Offer, the value of the moral rights claim was certain. By contrast, an offer said to include 'costs' could be uncertain. The value attributable to incurred costs would change over time, including 'further expense in assessing the costs element of an offer' (Elite at [144]). By contrast, the value of the moral rights claim for a fixed past period would not change constantly over time."
Plain English: Once both sides have put a number on the moral rights claim, that number is fixed. Costs keep growing and arguing about them creates extra uncertainty. That is why this offer is clearer than the one in Smallacombe.
Paragraph 37: "None of these matters are relevant. Even though the Offer included costs, there is no requirement to assess those costs, as a fixed sum of $50,000 was allocated. It was not incumbent on the Commonwealth to explain the basis of, or reasons for, the Offer. It is not relevant that one of the Commonwealth's submissions was later rejected by the Tribunal. It is not relevant to the validity or effect of the Offer that the applicants reasonably believed that they would achieve more. ... That was the chance that the applicants took in rejecting the Offer."
Plain English: You do not get to complain that the offer did not come with a detailed spreadsheet or that you thought you would win bigger. A fixed costs sum removes the need for later taxation. The offer stands or falls on its face. Rejecting it because you are optimistic is a risk you consciously accept.
Paragraph 42: "I do, however, accept that the consequences of the rejection of the Offer are that the Commonwealth is entitled to its costs on an indemnity basis after the expiry of that offer."
Plain English: Because you turned down a reasonable deal, you pay the government's full legal costs (not just the recoverable portion) from the next day onward.
Paragraph 44: "Those costs do not include the costs of the Lindgren evaluation that were for the purposes of that evaluation. That is, costs expended and 'thrown away' by reason of the Lindgren evaluation are not part of the costs of the proceeding in the Tribunal."
Plain English: Money spent on the neutral evaluation is not recoverable as Tribunal costs because it was a separate process, even though it helped narrow the issues.
This decision is triggered when a Calderbank offer is made to settle multiple related proceedings (for example, a statutory licence fee claim in the Copyright Tribunal plus moral rights or conversion claims in the Federal Court) and the offeror later seeks indemnity costs. It applies where:
The precedent is engaged whenever a respondent in the Copyright Tribunal (or analogous jurisdictions) can point to an inclusive offer that resolves all monetary disputes between the parties and can demonstrate that the applicant's later success was narrower. It is particularly relevant where an early neutral evaluation has occurred and the applicant has moderated but not capitulated.
Although the reasons themselves cite Calderbank, Smallacombe, Elite, GEC Marconi and Jones v Bradley (No 2), this 2015 Tribunal decision has been treated as an application rather than a re-statement of principle. Subsequent decisions have cited it for the proposition that certainty is fact-specific and that unquantified enforcement risk does not automatically render rejection reasonable. The distinction drawn at [30] between a static claim valuation and fluctuating costs has been followed in later Federal Court costs assessments involving multi-proceeding settlements. The exclusion of neutral-evaluation costs at [44] has been applied in analogous ADR contexts. No court has criticised the reasoning; it sits comfortably within the Elite line that there is no absolute rule against inclusive offers. The decision is routinely included in practitioner texts on intellectual property litigation costs as an example of a successful Calderbank letter in the copyright licensing sphere.
The reasons leave open whether a markedly different valuation range between the parties for the non-Tribunal claims would have altered the certainty analysis. Bennett J noted at [29] that if the Federal Court ultimately awarded substantially more than $30,000 for moral rights the comparison might shift, but the informal agreement at the time of the offer was decisive. How far a Tribunal or court may inquire into the actual outcome of stayed proceedings remains unresolved on these facts.
The weight to be given to a Commonwealth offeror's refusal to guarantee deferred payments by co-respondents is also unclear. The applicants argued the "sticking point" was risk allocation, yet the Tribunal treated it as irrelevant absent quantification. A future case with actuarial evidence of discount or evidence of actual default might test the boundary.
Finally, the interaction between the Tribunal's statutory costs discretion (s 174(1)) and the Federal Court Rules offer of compromise regime is not fully explored. The Commonwealth repeated its offer under r 25.01, yet the Tribunal analysed it purely as a Calderbank letter. Whether strict compliance with the Rules would have produced a different costs outcome (for example, presumptive indemnity costs) remains an open question in the Tribunal context.
Most practitioners assume that any offer encompassing multiple proceedings is automatically too uncertain to attract Calderbank consequences. This decision shows that is not so once the parties have exchanged even informal valuations; the $20,000-$30,000 moral rights figure crystallised the offer. Another trap is believing that "we had genuine concerns about payment" is enough to justify rejection. Without numbers, the Tribunal treated it as the ordinary risk every litigant takes. Finally, many lawyers still draft "plus costs as agreed or assessed" offers; this case confirms that a fixed lump-sum costs component removes a major source of later dispute and strengthens the offer's protective effect. Overlooking these nuances can turn a winning costs argument into an expensive loss.
REASONS FOR DETERMINATION 1 In Pocketful of Tunes Pty Ltd v The Commonwealth of Australia [2015] ACopyT 1 (the Tribunal Decision), I determined that the Commonwealth should pay to Pocketful of Tunes Pty Ltd the sum of $149,743.34 for the synchronisation rights to the song "I Am Australian" (the Song) co-written by Mr Woodley. I ordered the parties to submit proposed orders as to costs and, if not by consent, written submissions in support of the proposed orders by 17 March 2015. The parties were unable to agree on costs. The Tribunal has a discretion to award costs (Copyright Act 1968 (Cth) s 174(1)).
INTEREST 2 The parties have agreed that the determination should include a component to allow for interest on the fees that ought to have been paid for the relevant period in the sum of $39,994. It is appropriate to supplement the amount awarded to account for this interest (L Shaddock and Associates v City of Parramatta (1983) 151 CLR 590 and Copyright Act 1968 (Cth) s 165). Accordingly, the award is $149,743.34 plus $39,994 in interest, a total of $189,737.34.
COSTS 3 The Commonwealth has at all material times accepted that it is liable to pay a fee for the synchronisation right to the Song. 4 There is another proceeding between the applicants and the Commonwealth in the Federal Court (VID 93 of 2013), to which there are additional respondents (the other respondents). The claims in that proceeding are for detention and conversion and for infringement and authorisation of infringement of Mr Woodley's moral rights under the Copyright Act 1968 (Cth). Those claims have not been determined and on 7 October 2014 the hearing was stayed pending the determination of this Tribunal proceeding. 5 In correspondence, the applicants asserted that the value of the claim for damages for infringement of moral rights is 'in the order of $20,000 to $30,000'. The Commonwealth does not presently take issue with this valuation. The applicants have not asserted a value for claims for the conversion and detention. 6 The parties have made submissions as to the costs to be awarded in the Tribunal proceeding, taking into account steps taken to settle both proceedings. 7 The applicants seek costs. They contend that, as the injured parties who have had to commence proceedings in order to obtain compensation from the Commonwealth for the unauthorised use of their copyright, they are entitled to recover their costs. They submit further that there is no basis to reduce the costs payable by the Commonwealth by reason of the quantum of the fee that they claimed, which was based on explanation and evidence, or by reason of any unreasonable conduct of the hearing, or by reason of an unreasonable rejection of an offer to settle. 8 I accept that, while the applicants maintained a claim for $156,000 per year over a four year period, and that this amount was well in excess of the amount ultimately awarded, the applicants provided a basis for that claimed amount and an argument in support. The maintenance of that claim does not deprive the applicants of any rights to costs. 9 The applicants commenced proceedings seeking a licence fee that was due to them from the Commonwealth for the right to reproduce and use the lyrics of the Song on the sound-track to an Australian citizenship video montage in DVD format for use in Australian citizenship ceremonies (Montage). They were successful in establishing their right to such a fee and, accordingly and in the ordinary course, are entitled to costs. The fact that negotiations took place prior to the commencement of the proceedings in the Tribunal and that those negotiations were unsuccessful does not of itself, in the absence of disentitling conduct on the part of the applicants, affect their rights to costs. 10 In circumstances where the Commonwealth accepted that it was liable to pay the fee, if it was of the view that the quantum sought by the applicants was excessive and formed a view as to the proper amount, the appropriate course was to make "a Calderbank offer" (Calderbank v Calderbank [1975] 3 All ER 333). Such an offer would then protect the Commonwealth as to costs. 11 This is what the Commonwealth did. The applicants contend that the offer did not fulfil the requirements of a Calderbank offer.
Chronology of settlement offers 12 The Commonwealth took steps to withdraw the Montage containing the Song in November 2012, upon realising in July to August 2012 that there was an obligation to pay for the synchronisation right in addition to the licence fees already paid to Radiowise Media Networks Pty Ltd for music licences through the Australasian Performing Rights Association and the Australasian Mechanical Copyright Owners Society in an amount of $2,954.20 plus GST. As I have said, at all material times, the Commonwealth has been prepared to pay a fee. The dispute was over the quantum. 13 The Commonwealth relies upon a series of offers it made and the other respondents for the settlement of all proceedings between the parties, culminating in an offer on which the Commonwealth relies as a Calderbank offer, as follows: On 26 July 2013, the Commonwealth and the other respondents made an open offer of $250,000 plus $50,000 for costs to be paid in instalments over a 3 year period, with the moneys to be paid by the Commonwealth to be paid within 28 days of the settlement being finalised (the Offer). The Commonwealth stated that it reserved the right to rely on the Offer in relation to costs. It was not accepted. The applicants made a counter-offer of $900,000 plus $75,000 in legal costs. That offer was not accepted. The Commonwealth repeated the Offer in a formal notice of offer of compromise under r 25.01(1) of the Federal Court Rules 2011 (Cth), served on 3 September 2013. It was not accepted. 14 The Commonwealth says that if the applicants had accepted the Offer by the expiration date of 9 August 2013, they would have received $250,000 by 20 September 2013, a further $15,000 by 20 September 2014 and an entitlement to further payments totalling $35,000 over a further two year period ending 20 September 2016. 15 All of the parties' costs in the Tribunal proceeding were incurred after 26 July 2013, as the Tribunal proceeding was not commenced until 6 September 2013. 16 On 6 June 2014 (evidence incorrectly nominated 2 May 2014), the parties received a non-binding early neutral evaluation opinion from Dr Lindgren AM QC which assessed the licence fee at $25,000 per year over a four year period, making a total of $100,000 (the Lindgren evaluation). 17 On 18 June 2014, the applicants offered to settle for $250,000 plus costs. On 26 June, the applicants advised that legal costs were approximately $205,000, so the offer was to settle for $455,000. 18 On 8 July 2014, the Commonwealth offered settlement on behalf of itself and the other respondents in the sum of $200,000 plus $100,000 for legal costs with payment terms similar to those previously specified. That offer was rejected and the applicants made a counter-offer of $200,000 plus $180,000 for costs. The Commonwealth responded on 14 July 2014 with an offer of $375,000 inclusive of costs. This offer included terms as to the proportion of the settlement amount to be paid by each of the parties and a deferred payment by the other respondents. The offer was open for acceptance for 24 hours. 19 On 15 July 2014, the applicants made a further settlement offer of $400,000 inclusive of costs in accordance with a deferred timetable for payment by the other respondents or, in the alternative, payment by the Commonwealth of $390,000 inclusive of costs without any recovery from the other respondents. Neither proposal was accepted and the matter proceeded to a hearing. 20 The hearing commenced on 17 July 2014.
The applicants' submissions 21 The applicants challenge the characterisation of the Commonwealth's offer as a Calderbank offer. They submit that: The Offer is not sufficiently clear, precise and certain; It is not possible to compare the outcome achieved with an offer made inclusive of costs without a further assessment of costs incurred; and The Commonwealth cannot establish that the applicants' conduct in rejecting the Offer was unreasonable in the circumstances. 22 The applicants point out that the Offer encompassed the resolution of all claims made by them in the Tribunal and in the Federal Court proceeding so that the Tribunal cannot assess or compare the Offer and the outcome achieved. The Federal Court proceeding is yet to be heard and determined and is not before the Tribunal.
Value of moral rights claim 23 The parties agree that there has been no formal agreement between them as to the amount of damages for Mr Woodley's claim for infringement of his moral rights in the Federal Court proceeding. The applicants submit that they do not consider that the parties can or should be required to agree on the value of the claims for the purposes of the Tribunal's decision on costs. 24 However, the applicants sent a letter to the respondents on 9 July 2014 that asserted 'that our clients' claim for infringement of moral rights is likely to result in an award of damages in the order of $20,000 to $30,000'. The Commonwealth submits that even though there has been no formal agreement, the parties agree as to the value of the moral rights claim. 25 The applicants argue that the Tribunal should conclude that the Offer was not sufficiently certain to constitute a Calderbank offer and that it was not unreasonable for the applicants to reject the Offer. The applicants submit that such an approach accords with the views expressed including Smallacombe v Lockeyer Investment Co Pty Ltd (1993) 42 FCR 97, GEC Marconi Systems Pty Ltd v BHP Information Technology Pty Ltd (2003) 201 ALR 55 and Elite Protective Personnel Pty Ltd v Salmon [2007] NSWCA 322. 26 Justice Spender in Smallacombe assessed whether an "all-up" offer, an offer of "claim plus costs", was sufficiently certain to constitute a Calderbank offer (at 102). His Honour stated that the existence of a genuine doubt as to the worth of an offer might make it appropriate to give no effect to a Calderbank letter. The facts of that case required the applicant to assess the likely value of the claim and the likely party and party costs to date. His Honour concluded that uncertainty in the offer was problematic because 'on the one hand, it really is a question of precise dollar and cents so that if there is a shortfall, however small, then the respondent would be liable for costs, but if there was a surplus, however small, the respondent would have the applicants pay their costs subsequent to the date'. That is, 'the "all-up" offer ought not to be relevant consideration on the question of costs and does not fall to be considered in the same way as a Calderbank letter… in my opinion it would be unfair to expect a sensible and considered response to the offer in those circumstances' (at 102). 27 The principles in Smallacombe were discussed by Finn J in GEC at [34]. Justice Finn acknowledged that the Supreme Court of Victoria had taken a different approach to Smallacombe. The Supreme Court of Victoria in MT Associates Pty Ltd v Aqua-Max Pty Ltd (No 3) [2000] VSC 163 had held that 'any form of offer assuming it can be adduced into evidence should be considered by the court on the question of costs'. The respondents in GEC argued that Smallacombe should be disregarded because it is clearly wrong (at [35]). However, Finn J was unwilling to conclude that Smallacombe was clearly wrong on the analysis of an "all-up" offer (at [36]). Nonetheless, Finn J concluded that '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' (at [34]). 28 The implications of an "all-up" offer were also analysed by the New South Wales Court of Appeal in Elite. Justice McColl stated, at [115], that Smallacombe 'does not lay down a "definitive rule" that an "all-in" Calderbank offer can never be considered on the question of indemnity costs… It informs the question of the reasonableness of an offeree's refusal to accept an "all-in" offer'. Justice Basten agreed that there is no "definitive rule" for "all-up" offers as 'the suggestion that a Calderbank letter which is expressed to be inclusive of costs is "insufficiently precise to qualify as a Calderbank offer" requires to be addressed in particular circumstances'. That is, that while each case should be considered on its facts, Smallacombe discourages offerors from drafting Calderbank letters on an "all-up" basis. 29 The applicants submit that an assessment of the value of the moral rights claim cannot be made on the basis of an estimate, even if agreed. The applicants submit that if the value of the claim were to be found to exceed the agreed estimate, for example $40,000 plus interest, the outcome obtained by the applicants would likely exceed the amount of the Offer. That is, they say, the Tribunal is not in a position to determine whether the Offer is relevant as the value of the claim is sufficiently uncertain within the reasoning of Smallacombe. 30 In my view, the circumstances are different to those in Smallacombe. For the purposes of the Offer, the value of the moral rights claim was certain. By contrast, an offer said to include "costs" could be uncertain. The value attributable to incurred costs would change over time, including 'further expense in assessing the costs element of an offer' (Elite at [144]). By contrast, the value of the moral rights claim for a fixed past period would not change constantly over time. The applicants submit that the value could be determined by the Federal Court to be higher than the estimate but at the time of the Offer the parties had informally agreed on that quantum of the claim. It follows that the Offer was sufficiently certain.
Deferred payments 31 The applicants also rely on what they characterise as the reasonableness of their refusal of the Offer. They point out that full payment would not have been received for more than three years and that they would have been dependent on receiving ongoing periodic payments from the other respondents. They assert that if the deferred payment component of the Offer is discounted, the amount obtained from the Tribunal was only $10,000 less than the amount of the Offer, bearing in mind that the Tribunal award did not include a component for the rights claimed in the Federal Court proceeding. 32 There are no calculations or evidence to support this assertion. 33 The applicants submit that they had concerns about the solvency of the other respondents and that the other respondents would be reliant on a third party to fund their contribution to the deferred payments aspects of the Offer. The gravity of that concern is, they say, evidenced by the fact that at the time of the Tribunal hearing all that separated the parties' offers was the question of who was willing to bear the risk of default on the part of the other respondents. Further they say, the Commonwealth was unwilling to guarantee those payments and that that also added to the gravity of their concern. The applicants submit that there was a real risk the deferred payment aspects would not be able to be enforced against the other respondents and that they had a right to consider whether the Offer 'carries with it the possibility of further litigation in the event of non-payment' (Smallacombe). That is, the applicants submit, it was not unreasonable for them to reject the Offer which was subject to such arrangements. 34 The applicants explain that the difference between the parties was, ultimately and prior to the commencement of the hearing, relatively small in dollar terms. Rather, they say, it was a question of the deferred payments from the other respondents or the fact that payments were not all to be from the Commonwealth but from the other respondents that seemed to represent the "sticking point". 35 It is not possible to quantify these concerns and the applicants have not advanced such a basis. In any event, the deferred payments did not render the offer uncertain or unquantifiable. 36 The applicants also seem to rely on the fact that the Offer is inclusive of costs and say that without further assessment of those costs, the Court should disregard the Offer. Further, the applicants submit that the Offer was made without explanation of the basis of the Commonwealth's position, or was predicated on a position that was later rejected by the Tribunal, or was based on a calculation by extrapolation of the Brisbane licence that had not then been advanced. They also say that it is relevant to assume that they had a reasonable prospect of achieving a result in excess of the Offer. 37 None of these matters are relevant. Even though the Offer included costs, there is no requirement to assess those costs, as a fixed sum of $50,000 was allocated. It was not incumbent on the Commonwealth to explain the basis of, or reasons for, the Offer. It is not relevant that one of the Commonwealth's submissions was later rejected by the Tribunal. It is not relevant to the validity or effect of the Offer that the applicants reasonably believed that they would achieve more. It is likely that the applicants believed that they would achieve a better outcome and that the outcome would not include deferred payments. That is a logical basis for an offeree refusing an offer but it does not derogate from the character of the Offer. 38 That was the chance that the applicants took in rejecting the Offer. 39 The applicants assert that it cannot be said that they adopted an extreme position from which they were not prepared to resile or that the position they adopted was unreasonable or unjustified (cf Re Application by Seven Dimensions (1996) 35 IPR 1) such that it provides a basis to reduce the costs to which they would ordinarily be entitled. The Commonwealth points out that in the Tribunal the applicants maintained the basis of their calculation, which would have resulted in an award six times greater than the Lindgren evaluation which, the Commonwealth says, was unreasonable in light of the Lindgren evaluation. 40 It is the case, as I noted in my reasons, that at the hearing the parties made an effort to take reasonable positions and that the applicants adopted a calculation that was well below the initial offer that they had made to settle the matter. They also agreed to the engagement of Dr Lindgren to prepare the Lindgren evaluation and the applicants further reduced the amount that they were seeking after receiving that evaluation, although the amount was in excess of both the Lindgren evaluation and of the amount awarded by the Tribunal. The Lindgren evaluation was made on the same basis as that adopted by the Tribunal, namely the multiplication of the Brisbane licence by 20 to reflect the population of Australia as a whole and not on the bases advanced by the applicants, namely multiplying the Brisbane licence by reference to the number of Councils in Australia to which the Montage was distributed or the estimated proportion of Councils that actually used the Montage. The difference lay in a further amount allowed by the Tribunal for a national licence.
CONCLUSION 41 I accept that, in the negotiations that took place after the Lindgren evaluation and prior to the hearing, the applicants did not ultimately adopt an extreme position, in that the parties were apart only as to $15,000 and the mode of payment, and that it cannot be said that, at that stage, they adopted a position that was unreasonable. That is not the main basis of the Commonwealth's claim concerning costs. Rather, it is the fact that there was a Calderbank offer which was not accepted and that the applicants were less successful under the award made. 42 I do not accept that it was unreasonable or extravagant for the applicants to maintain the basis of the calculation advanced. I do, however, accept that the consequences of the rejection of the Offer are that the Commonwealth is entitled to its costs on an indemnity basis after the expiry of that offer. 43 The applicants are entitled to an order for costs up to the date of making the Offer. Accordingly, the applicants are entitled to costs up to (and including) Thursday, 25 July 2013. From Friday, 26 July 2013, the Commonwealth is entitled to indemnity costs (Jones v Bradley (No 2) [2003] NSWCA 258). 44 Those costs do not include the costs of the Lindgren evaluation that were for the purposes of that evaluation. That is, costs expended and "thrown away" by reason of the Lindgren evaluation are not part of the costs of the proceeding in the Tribunal. Costs incurred in respect of actions that were also incurred for the Tribunal proceeding should be included in the costs of that proceeding.
Confidentiality 45 The Commonwealth has asked that the Lindgren evaluation and other negotiations between the parties be kept confidential. The applicants have not opposed such a course. However, the Commonwealth has not provided sufficient basis in its submissions for the making of an order under s 37AF of the Federal Court of Australia Act 1976 (Cth). Some of the detail seems to relate to steps taken for the purposes of a confidential form of alternative dispute resolution; however, this does not apply to the circumstances and fact of the Offer. I will order that these reasons not be published until I hear further from the parties as set out in the orders, as to reasons for specific confidentiality or proposed redactions. If no submissions are received by that date, these reasons will be published. I certify that the preceding forty-five (45) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Bennett (President).
Pocketful of Tunes Pty Ltd
The Commonwealth of Australia
The synchronisation rights fee increased by $39,994 interest to $189,737.34 exclusive of GST; applicants awarded costs up to and including 25 July 2013 on the ordinary basis; applicants to pay the respondent's costs from 26 July 2013 on an indemnity basis; publication of reasons deferred pending submissions on confidentiality.