Sagacious Legal Pty Ltd v Wesfarmers General Insurance Ltd

The Court 1 On 13 April 2011 the Court made an order that the appeal in this proceeding be dismissed. It also made an order that the respondent make any application as to costs within seven days and an order that on the expiration of seven days, if no such application had been filed by the respondent, that the appeal be dismissed with costs. 2 The respondent has made an application for the following orders as to costs: 1. The appellant pay the respondent's costs incurred up to 11 am on 14 July 2010 on party and party basis; and 2. The appellant pay the respondent's costs incurred after 11 am on 14 July 2010 on an indemnity basis. 3 The ground upon which the respondent seeks these orders is an offer of compromise made by it under Order 23 of the Federal Court Rules and dated 14 July 2010. The offer of compromise was in the following terms: The respondent offers to compromise the appeal in the following manner: 1. Appeal dismissed. 2. Each party to bear its own costs of the appeal. 3. The offer remains open until close of business on 30 July 2010. This offer is made under Order 23 of the Federal Court Rules. 4 The offer of compromise was accompanied by a letter from the respondent's solicitors to the appellant's solicitors. The letter contained the following statements: We are of the view that the Full Court of the Federal Court, when considering the evidence in this matter, will find against your client in respect of grounds of appeal 1-7, 9 and 10 in your client's notice of appeal. Should your client fail in any of grounds of appeal 1-4 or 10 then the appeal must fail. In our view, the appeal will fail on grounds 1-4 on the basis of the evidence given by Mrs O'Shanassy at trial. Your client will fail on ground 10 in light of the considerations identified in Aon Risk Services Limited v Australian National University (2009) 239 CLR 175. In the circumstances, our client offers to compromise its position by paying its own costs of the appeal to date should the appeal be withdrawn. Those costs include the costs of attending to preparation of Appeal Indices, e-court attendances and attendances on counsel in relation to the Appeal. 5 The appellant filed its notice of appeal in the proceeding on 8 June 2010. On the same day the respondent made the offer of compromise, that is 14 July 2010, the appellant filed an amended notice of appeal. 6 The respective submissions of the parties proceeded on the basis that the respondent's offer fell within the terms of Order 23 and that the respondent was entitled to the order it sought unless there were grounds for the Court to otherwise order under O 23 r 11(6). The submissions of the appellant, and perhaps those of the respondent, proceeded on the assumption that the Court would otherwise order where the unsuccessful party could show that its grounds of appeal were arguable and therefore its rejection of the offer of compromise was reasonable. That assumption is incorrect as the most recent decision of the Full Court on the operation of O 23 demonstrates: IFTC Broking Services Ltd v Commissioner of Taxation (2010) 268 ALR 1 (at 4-5 [9]) (see also Futuretronics.com.au Pty Ltd v Graphix Labels Pty Ltd [2009] FCAFC 40 and Visscher v Teekay Shipping (Australia) Pty Limited (No 2) [2011] FCA 278). 7 As will be apparent from our earlier reasons (Sagacious Legal Pty Ltd v Wesfarmers General Insurance Ltd [2011] FCAFC 53) the appellant needed to succeed on what we described as the first and third issues in order to be successful on the appeal. To succeed on the third issue the appellant needed to challenge the exercise of a broad discretion given to the trial judge and to that end to identify an error of the type identified in House v The King (1936) 55 CLR 499 at 504-505. The difficulties in doing so are well-known and on any view the appellant faced a formidable task. However, we do not need to go so far as to say that the appellant's arguments were without foundation because under O 23 r 11(6) the onus is on the appellant to establish that there are grounds for the Court to otherwise order and no such grounds have been established. 8 In the circumstances, we will make the costs order sought by the respondent. I certify that the preceding eight (8) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justices Besanko, Perram and Katzmann.