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[2010] FCA 992
Federal Court of Australia
2010-09-09
Ryan J
Original judgment source is linked above.
RULING ON COSTS 1 On 5 July 2010, I ordered that there be judgment for the plaintiff in the sum of $130,192.40 and that the application stand over to a date to be fixed for consideration of questions of costs and interest (if any) on the judgment sum. Written submissions on costs have been filed on each side and they have been supplemented by oral submissions made today by Dr Trichardt of Counsel for the defendant and Mr Salter, the solicitor for the plaintiff. 2 As the written submissions prepared by Mrs Hartley SC for the plaintiff have responded to the defendant's submissions in the order in which they were presented in Dr Trichardt's written outline, it is convenient to take the same course in indicating the reasons of the Court in relation to the various issues claimed to bear on the appropriate order to be made in respect of the costs of the application.
(i) On 20 February 2009 3 On this date, I varied an earlier Order of 24 April 2008 which provided a timetable for the filing, by 22 August 2008, of statements of evidence-in-chief on behalf of the defendant directed to the cause of damage to the cargo and the time when such damage had been sustained and for the filing, by 19 September 2008, of statements of the evidence-in-chief which the plaintiff proposed to adduce in response to the evidence on behalf of the defendant and for the filing of evidence on behalf of the defendant in response to the evidence so adduced on behalf of the plaintiff. The costs of both parties of the hearing on 20 February 2009 were reserved. The effect of the variation on that date of the earlier Order was to allow the plaintiff until 13 March 2009 to file its evidence in response and to allow the defendant until 19 March 2009 to file its answering material. 4 On its face, therefore, the Order of 20 February 2009, in effect, granted the plaintiff what Dr Trichardt has called "an indulgence". However, Mrs Hartley SC has pointed out in her written outline that the parties had, in September 2008, agreed between themselves that the time for filing of the defendant's statement should be extended to 7 October 2008 with a corresponding extension to 11 November 2008 for the filing of the plaintiff's material. It appears, in the light of statements made from the bar table today, that those arrangements were made to accommodate the fact that Mr Thompson, had moved from the defendant's previous solicitors to the firm now representing the defendant in which he is a partner. As well, extensions of time were informally agreed upon to suit the personal convenience of Mr Salter, the plaintiff's solicitor. Whether or not it was allowed to do so by the various agreed extensions, the defendant, in fact, filed its relevant witness statements only on 19 December 2008, 4 February 2009 and 8 February 2009. As a result, an order was made on 20 February 2009 for the filing of the plaintiff's material by 13 March 2009 and of the defendant's answering material by 19 March 2009. That was done to preserve new trial dates which had been fixed for 24, 25, 26 and 27 March 2009. In these circumstances, it can be seen that the need for the hearing on 20 February 2009 arose, at best from the defendant's point of view, from a mutually agreed accommodation between solicitors. On another view, less favourable for the defendant, the defendant appropriated to itself an "indulgence" beyond that which had been agreed in September 2008. On either view, I consider that the plaintiff's costs reserved on 20 February 2009 should form part of its costs in the action.
(ii) On 19 March 2009 5 On this date, I ordered that the plaintiff have leave to issue a subpoena duces tecum to DP World Australia Limited as successor to P & O Ports Ltd. The costs of both parties of the hearing on that day were reserved. The need for the issue of that subpoena was said to have arisen from the defendant's having pleaded that the container had been at the disposal of the plaintiff from, at the latest, 6.25 pm AEST on 2 December 2005. The subpoena was issued at my suggestion to overcome a difficulty which had arisen from the alleged failure of the defendant to give discovery of documents which it was said to have, or have had, in its possession bearing on the pleaded issue. It is now contended on behalf of the plaintiff that there were such documents of which discovery should have been given. Whether or not that be so, I regard as entirely reasonable the efforts made by the plaintiff on 19 March 2009 to obtain by one means or another, documents bearing on a matter which had been put in issue by the defendant's pleading. As with the costs of the hearing on 20 February 2009, the plaintiff's costs reserved on 19 March 2009 should form part of its costs of the action.
(iii) On 24 April 2008 6 On this date I made a number of orders including one directing that the action be set down for trial on a date in November 2008 to be fixed in consultation with the parties. Part of the material before the Court on 24 April 2008 was an affidavit by the plaintiff's solicitor, Mr Salter, sworn 18 April 2008. Paragraphs 11 and 12 of that affidavit recited; 11. In consequence of the defendants reliance upon various provisions of clause 19, I have requested the defendant to provide a copy of the 'carrier's applicable tariff' which is referred to in clause 19(5). The defendant's solicitor maintains that the tariff is not relevant and is therefore not discoverable, as the reference in clause 19(5) is to storage charges becoming due under the applicable tariff, and that no question of storage charges arises in this proceeding. 12. In the plaintiff's submission, the provisions of the carrier's applicable tariff relating to freight contingencies, demurrage and charges payable in respect of carriage covered by the bill of lading and matters associated therewith (my emphasis) are incorporated into the bill of lading and form part of the contract contained or evidenced therein. Indeed, clause 21(3) of 'RJS1' provides that 'details of the relevant provisions of the applicable tariff may be obtained by any merchant from the carrier on request'. In the plaintiff's submission, it is entirely inappropriate for the defendant to maintain that the document is not discoverable, and the plaintiff seeks an order requiring the defendant to discover it. 7 Mr Thompson, the defendant's solicitor, responded to that claim by deposing in an affidavit sworn 23 April 2008 that; 3. By email dated 27 March 2008, Mr Salter wrote to me and suggested that, as the defendant was seeking to rely on clause 19(5) of the ANL bill of lading, that "it would seem to follow that 'the Carrier's applicable tariff' to which there is a reference in that clause is a discoverable document". … 4. Rather than request formal discovery of the tariff document, Mr Salter requested that the defendant either produce a copy of the tariff document, or provide instructions as to where the tariff document could be located on the ANL website. 5. By email to Mr Salter dated 1 April 2008:
(a) I informed Mr Salter that the section of clause 19(5) of the defendant's bill of lading to which he had referred was not being relied upon by the defendant in its pleading and that, as a result, I did not consider that either the section of clause 19(5) to which he had referred or the tariff document referred to therein had any relevance to the action. … (b) I informed Mr Salter that, as a result, I did not consider the tariff document to which he had referred to be discoverable; (c) I nevertheless complied with Mr Salter's request and gave him explicit instructions as to how he could access the tariff document on the defendant's website. Namely: (i) Go to www.anl.com.au (ii) Double click on "Services" (iii) Double click on "Tariffs"; and (iv) Double click on "Container Detention." (d) I invited Mr Salter to explain why he thought the tariff document to be relevant. …
(b) The costs of the issue of the admissibility of Mr Munemasa's affidavit 11 In interlocutory reasons for judgment published under the name Seafood Imports Pty Ltd v ANL Singapore Pte Ltd (No 1) [2009] FCA 435, I gave reasons for refusing to admit into evidence an affidavit by Yoshihisa Munemasa affirmed on 6 March 2009, on which the plaintiff sought to rely. Those reasons should be read in conjunction with the present reasons in order to understand the circumstances in which the admissibility of Mr Munemasa's affidavit became an issue. 12 After a three day hearing on 24, 25 and 26 April 2009, the proceedings were adjourned to 28 April 2009 and then to 29 April when, by arrangement between Counsel, evidence from Mr Wakefield of Jackson Global Logistics and from Mr Salter, the solicitor for the plaintiff, was interposed before the resumption of cross-examination of Mr Southcombe, an expert witness called on behalf of the plaintiff. Mr Salter testified that he had made contact with Mr Munemasa through a representative of the plaintiff's Japanese insurers and had gathered that he, Munemasa, was not prepared to give oral evidence either in person in Melbourne or by video-link from Japan. Including some brief evidence, unrelated to Mr Munemasa, about attempts made to procure evidence from a Mr Paul Gray of Carrier Corporation, Mr Salter's evidence-in-chief and cross-examination occupied 27 minutes on the morning of 29 April 2009. 13 Submissions on the admissibility of Mr Munemasa's affidavit occupied just over one hour at the end of the next day's hearing on 30 April 2009 and a further 15 minutes on the following morning of 1 May 2009. At the end of the hearing on that day, I gave the ruling noted at [11] above. 14 It is true that a litigant who has succeeded in pursuing to judgment the substantial part of the claim advanced at trial may be deprived of the costs of litigating issues which had been decided adversely to that litigant and may even be ordered to make an allowance for the otherwise unsuccessful party's costs of litigating that issue; see Hughes v Western Australian Cricket Association Inc (1986) ATPR 40-748 at 48,136 and the cases there cited. The approach taken by Toohey J in that case has been approved by a Full Court of this Court in Cummings v Lewis (1993) 41 FCR 559 and by Goldberg J in Dr Martens Australia Pty Ltd v Figgins Holdings Pty Ltd (No 2) [2000] FCA 602, at [54]. 15 In the context of the total time occupied by the hearing of the present case, the time devoted to evidence and submissions directed to the admissibility of Mr Munemasa's evidence was relatively insignificant. The procedural issue of admissibility was not entirely discrete from the substantive issues in the case and was not unreasonably pursued in light of the defendant's having expressly put the plaintiff to proof of the pre-voyage condition of the goods; cf. Verna Trading Pty Ltd v New India Assurance Pty Ltd [1991] 1 VR 129, at 152-154. In these circumstances, I do not regard it as an appropriate exercise of the Court's discretion to direct that the costs of Mr Munemasa's affidavit and the issue of its admissibility be treated any differently from the costs of the other issues in the case.
(c) The effect of the plaintiff's Calderbank letter 16 On 30 March 2009, the plaintiff's solicitors sent to the defendant's solicitors an email in the following terms; The plaintiff has taken the opportunity of the adjournment of the proceedings to review the situation, having regard to the fact that the total costs now well exceed the amount in dispute.
The claim figure is agreed at $130,942.40. A judgment in favour of the plaintiff will result in the addition of a further $35,000 for interest, so that a total judgment in favour of the plaintiff will be for around $165,000 plus costs.
From the plaintiff's perspective, the case is a perfectly good one, it being apparent that even allowing for a latent defect in the controller, the loss was caused by the defendant's failure to properly care for the cargo. The plaintiff therefore expects in due course to acquire a judgment as described above.
Notwithstanding this situation, the plaintiff is prepared to allow the defendant a discount with a view to bringing the litigation to a conclusion sooner rather than later. In the circumstances, the plaintiff is prepared to settle the claim for $120,000 plus costs, a discount of more than 25%.
This offer remains open for acceptance by the defendant until close of business on Monday 6 April 2009, after which the plaintiff will begin further preparation for the resumed hearing. In the event that the offer is not accepted, and the plaintiff achieves a better outcome at the trial, the plaintiff reserves the right to draw this letter to the attention of the Court in support of an application on 'Calderbank' principles for payment of indemnity costs.
17 I regard that letter as an entirely appropriate Calderbank offer in the sense that it made clear that the plaintiff would accept $120,000 plus costs in full satisfaction of its claim and would forego any claim to interest on the amount so recovered. The letter also made clear that the offer was open for acceptance for a period of seven days and that, if it were not accepted, the plaintiff, if successful in recovering more than $120,000, would seek an order that the defendant pay its costs accruing after the date of the letter, ie, 30 March 2009, taxed on an indemnity basis or as between solicitor and client. 18 However, the existence of a Calderbank letter, even one expressed as clearly and unmistakably as the present, cannot pre-empt the Court's discretion as to costs and the basis on which they are to be taxed. As a Full Court of the Victorian Court of Appeal (Warren CJ, Maxwell P and Harper AJA) observed in Hazeldene's Chicken Farm Pty Ltd v Victorian Workcover Authority (No 2) (2005) 13 VR 435, at 442 [25] (footnotes omitted); The discretion with respect to costs must, like every other discretion, be exercised taking into account all relevant considerations and ignoring all irrelevant considerations. It is neither possible nor desirable to give an exhaustive list of relevant circumstances. At the same time, a court considering a submission that the rejection of a Calderbank offer was unreasonable should ordinarily have regard at least to the following matters:
(a) the stage of the proceeding at which the offer was received;
(b) the time allowed to the offeree to consider the offer;
(d) the offeree's prospects of success, assessed as at the date of the offer;
(e) the clarity with which the terms of the offer were expressed;
(f) whether the offer foreshadowed an application for an indemnity costs in the event of the offeree's rejecting it. 19 It follows from the analysis of the plaintiff's letter which I have undertaken at [17] above that the matters enumerated at (e) and (f) in the passage just quoted clearly tend in favour of the plaintiff. The hearing of the substantive trial of this action commenced on 24 March 2009 and, after some expression by Counsel of competing views about the shifting burden of proof or of going forward with evidence in cases involving the application of the Hague-Visby Rules to the sea carriage of goods, evidence was adduced from Mr Robertson, a loss adjuster who surveyed the goods on out-turn at the plaintiff's premises on 6 December 2005. The rest of the first day's hearing on 24 March 2009 was occupied with discussion of the effect which could be given to the affidavit of Mr Munemasa noted at [11] and [12] above. There was then only a short hearing on 25 March 2009 when directions were given to enable Counsel for the defendant to obtain instructions for cross-examining two expert witnesses, Mr Brown and Mr Southcombe. Mr Brown's statement in reply to an answering statement of the defendant's expert witness, Mr Andersson, had only been filed on the morning of 25 March 2009. Mr Andersson's answering statement, in turn, had not been filed until 19 March 2009. Mr Brown's evidence and cross-examination occupied almost the whole day's hearing on 26 March 2009 and was uncompleted when the proceedings were adjourned until 28 April 2009. The plaintiff took the opportunity afforded by that adjournment to formulate and make the Calderbank offer set out at [16] above. 20 In the circumstances, as they existed at the date of the offer, I do not regard it as unreasonable for the defendant to have refused it. At that time, the defendant had not had an effective opportunity to assess the comparative cogency of the evidence to be given by its expert, Mr Andersson, against that of Mr Brown, who was still under cross-examination and Mr Southcombe, who was still to give evidence and whose statement in reply was yet to be filed. The case raised complex issues about the operation and monitoring of computer-controlled refrigerated containers as appears from my substantive reasons for judgment; see Seafood Imports Pty Ltd v ANL Singapore Pte Ltd [2010] FCA 702. These factors made it difficult to assess, as at the date of the offer, the defendant's prospects of successfully defending the action. They certainly could not have been dismissed at that stage as negligible. 21 It was reasonable for the plaintiff to allow only seven days for the defendant to consider the offer because, as Mr Salter pointed out yesterday, it was concerned to avoid incurring further costs in preparing for the hearing to be resumed on 28 April and conducting the trial thereafter. Those costs would have been thrown away if it had been open to the defendant to accept the offer during any significant time after 6 April 2009. However, to acknowledge the reasonableness of the plaintiff's having limited the offer in that way makes irrelevant to the present discretion the hypothesis that at some time after 6 April the defendant's refusal of the offer might have been regarded as unreasonable. 22 A related consideration tending the same way is that, even allowing for the abandonment of any claim for interest, the offer did not represent a very large discount from the maximum amount which the plaintiff claimed to be recoverable. That is particularly so when account is taken of the fact, as pointed out by the writer of the Calderbank letter, that "the total costs [presumably accrued to the date of the letter] now well exceed the amount in dispute." 23 Although there are obvious factual differences between this case and Futuretronics.com.au Pty Ltd v Graphix Labels Pty Ltd [2009] FCAFC 40 which concerned a Calderbank offer to compromise an appeal, I consider that, in some respects, what the Full Court said in that case illuminates the discretion which has to be exercised here. Their Honours there said, at [5]; The refusal of a Calderbank offer will not always attract an award of indemnity costs. The offeror must show that the rejection was unreasonable in the circumstances of the case: Black v Lipovac (1998) 217 ALR 386 at [217]-[218]. The respondents have not convinced us that the rejection was unreasonable. By the August 2008 offer all the respondents were offering to give up was any claim they may have to costs of the appeal. There was little in the offer that was attractive to the appellant. Of course the appellant was entirely unsuccessful on the appeal, for substantially the reasons explained by the respondents in their August letter. However the appeal was not on its face without any prospect of success. Counsel for the appellant was able, on the available material, to present arguments that required careful attention. It was only on a close examination of the documentation that the Court concluded that the appeal on liability should be dismissed. In retrospect, the appellant's case was never a strong one, but on the principal points argued (liability) the appellant's case was not so weak that it should be taken to have acted unreasonably in refusing the August offer, which offered little in the way of a genuine compromise. 24 Similarly, the following observations of Byrne J in Premier Building & Consulting Pty Ltd v Spotless Group Ltd (No 13) [2007] VSC 516 at [13] can be paraphrased to apply with considerable force to the ability of the present defendant, as at 6 April 2009, to predict the likely outcome of the trial; What, then, is meant by "unreasonable" in this context? A decision to accept or not an offer of this kind will ordinarily be based upon the offeree's perception of its ultimate chances of success, that is, it involves a prediction as to the likely outcome of the trial. At the time the debate about costs occurs the trial will normally be over; the event will have demonstrated that the prediction which underlay the decision was not fulfilled, that it was erroneous or even imprudent [Colgate Palmolive Co v Cussons Pty Ltd [1993] FCA 536; (1993) 46 FCR 225 at 228, per Sheppard J]. … … The outcome of almost all litigation is uncertain. The erroneous prediction may not, however, be an unreasonable one if the predictor was not, at the time, for good reason in possession of sufficient information to make an assessment or if the circumstances upon which it was based later changed. …. 25 For the reasons which I have endeavoured to explain, I have decided on balance that the refusal of the Calderbank offer was not unreasonable in the circumstances so that the Court, in its discretion, should impose on the defendant a liability to pay, on an indemnity basis, the plaintiff's costs incurred after 6 April 2009.
Conclusion 26 It follows from the conclusions reached above on the various questions of costs which have been addressed in submissions that the only order which should be made as to the costs of the action is that the defendant should pay the plaintiff's costs, including any reserved costs, such costs to be taxed, in default of agreement, as between party and party. As each party has had a measure of success on the arguments as to costs, there will be no order as to the costs of and incidental to yesterday's hearing. I certify that the preceding twenty-six (26) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Ryan.
Seafood Imports Pty Ltd
ANL Singapore Pte Ltd
[2007] VSC 516
[1993] FCA 536
(1993) 41 FCR 559
(2005) 13 VR 435
(1998) 217 ALR 386
(1993) 46 FCR 225