MANSFIELD AND BESANKO JJ:
1 Judgment was delivered in this matter on 30 May 2014 when the following orders were made:
1. The appeal by Wealthsure Pty Ltd and Mr David Bertram be allowed.
2. The cross-appeal by Mr Peter Maurice Townley be allowed.
3. The second order made by the primary judge on 18 April 2013 be set aside and in lieu of that order there be orders as follows:
(i) Judgment for the plaintiffs against the first and second defendants in the sum of $875,506.80;
(ii) Judgment for the plaintiffs against the fifth defendant in the sum of $364,794.50;
(iii) Judgment for the plaintiffs against the sixth defendant in the sum of $218,876.70.
The parties be heard as to any other orders and costs.
2 The Court then received written submissions, and heard oral submissions, as to the costs orders which should follow the decision of the Full Court. The fifth respondent, who by cross-appeal broadly supported the appeal of the appellants, is hereafter included in the description "the appellants" unless his particular circumstances require separate consideration.
3 The appellants on the appeal, and the fifth respondent on his cross-appeal, succeeded on the apportionment issue and have succeeded in having the judgment sum significantly reduced as against them individually by virtue of the outcome on that issue. In the course of submissions, it was said that the apportionment issue probably occupied about half of the time of the appeal. That is a not unrealistic assessment. There were other matters argued on the appeal on which the appellants were unsuccessful, or largely unsuccessful. Ultimately, the Full Court determined that the overall entitlement to damages should not be reduced in any significant respect, although the liability for those damages was apportioned between the various persons or entities responsible for it. That outcome was reached after considering the appellants' contentions, including that the respondents' damages should be very substantially reduced, in effect to a nominal sum. On that issue they failed. In addition, a number of other points were unsuccessfully argued by the appellants. As noted, the fifth respondent, on his cross-appeal, substantially adopted those contentions, but otherwise took relatively little part in the appeal. He did not succeed on the appeal on any of the contentions which he adopted, other than the apportionment issue.
4 Having regard to those matters, and the rough estimate of the time spent on the apportionment issues and the other issues argued, we consider that it is appropriate that the appellants should recover 30% of their costs of the cross-appeal. That reflects the fact that they have succeeded on the principal issue argued on the appeal, and have had the judgments against them individually significantly reduced, but in significant other respects they did not succeed.
5 As to the costs of the trial, the respondents accept that order 5 of the orders as to indemnity costs in their favour made by the primary judge on 6 August 2013 should be discharged. That is because those orders were made upon the basis that there should be no apportionment of the collective liability of the respondents at the trial. That was an appropriate acknowledgement, having regard to the orders made on the appeal.
6 Consequently, subject to two matters, order 5 of the orders made on 6 August 2013 should be discharged and orders 8 and 9 of the orders of the primary judge of 18 April 2013 should be restored. They are that the first and second defendants pay the plaintiffs' costs of the plaintiffs' proceeding against them, and the fifth and sixth defendants pay the plaintiffs' costs of the proceeding in conjunction with the fifth defendant. Those costs would be thereby payable on a party and party basis.
7 The first of the two remaining matters which requires further consideration arises from the fact that the first respondent individually claimed for damages for personal injury as a consequence of the appellants' conduct but that claim was abandoned at trial at an early stage. It is common ground that the plaintiffs should not recover the costs of that claim, but should pay those costs. It was a claim that occupied little of the time for trial preparation or of the trial. In our view, it would be both inappropriate and not cost effective to make separate orders for costs in relation to it. That issue would require the isolation of work preparatory to the trial which addressed exclusively that issue, and potentially arguments about steps in the trial preparation to which that issue was tied in with other issues as to why isolating those costs to the extent that it is appropriate, as well as the formal process of taxing those costs, as well as taxing the first respondents' costs excluding those costs. Although no rough and ready apportionment is necessarily precise, in our view it would be reasonable in the light of the submissions to determine that the first respondents should recover 98% of their costs of their claim against the appellants, and 98% of their claim against the fifth and sixth defendants. That percentage is chosen to reflect the entitlement of the appellants to recover costs in relation to that relatively small claim (in terms of it as a component of the total work involved in the claim) and it reflects the set off which would otherwise occur on the costs otherwise recoverable by the respondents.
8 The second and more substantial issue is whether, by reason of a combination of a Rules of Court offer made pursuant to Rule 25 of the Federal Court Rules 2011 (Cth) on 23 March 2012 by the appellants for $690,000 and a Calderbank offer made by letter on the same date to pay a sum of $450,000 in full and final satisfaction of the costs entitlement in the action, costs of the trial should not routinely follow the event.
9 It was made plain that the costs offer could only be accepted if the Rules of Court offer (which, if accepted, would otherwise carry an entitlement to costs to be taxed) were also accepted. The total offer was $1.14 million. Both offers were open for acceptance only until 28 March 2012, a period of five days.
10 As to that, the Court notes the first submission of the appellants that the question of costs of the trial should be remitted to a single judge. It is not possible to remit the question of costs to the primary judge, as his Honour has now left the Court. In our view, it is not appropriate to accede to that request. There is no reason why the Court as presently constituted is not in as good a position as another single judge to hear and determine the costs issues. Indeed, to the contrary, being apprised of the processes of the trial, the evidence at first instance, and the issues both at first instance and on appeal, it is more efficient and therefore in the interests of justice that this Court should hear and resolve the question of costs of the trial. It is noted that the appellants say that "[i]t has not been possible, in the time, to analyse the reasons of the Full Court to ascertain whether or not a rules (sic) of Court offer and Calderbank offer made after 23 March 2012, is relevant to the question of costs after that date". That is especially so, it is said, as the primary issue between the parties at trial was apportionment.
11 In exploring with Senior Counsel for the appellants what additional investigation was required to develop that proposition, it emerged that it was proposed that the appellants would require, or seek to require, from the respondents such information as they could concerning the respondents' file as would enable the appellants to make a reasonably reliable assessment of the party and party costs to which the respondents were entitled to the time of that offer, with a view to arguing that those costs (necessarily significantly less than the nominated figure of $450,000) which accrued together with the amount of the judgment, but adjusted for the interest included in the judgment between the time of the offer and the time of the judgment, might be less than the total sum of $1.14 million.
12 The Court does not accept that that is an appropriate inquiry. The starting point is that the judgment in favour of the respondents against the appellants, putting aside the issue of costs, is not less favourable than the terms of the offer: cf Rule 25.15. So, if the terms of the Rules are applied on their face, the appellants would not have been in a position to seek to take advantage of the Rules of Court offer to avoid paying the proper costs of the trial.
13 It is sometimes appropriate to consider the overall effect of a Rules of Court offer and a Calderbank offer: Grbavac v Hart [1997] 1 VR 154; Principal Strategic Options Pty Ltd v Coshott (2003) 130 FCR 143 at [230] per Branson J. However, even in doing so in this matter, the overriding consideration must be the justice of the matter: Smallacombe v Lockyer Investment Co Pty Ltd (1993) 42 FCR 97 at 101 per Spender J; Henderson v Amadio Pty Ltd (1996) 65 FCR 66 at 70 per Heerey J.
14 In this matter, at the time of the combined offers, the respondents (plaintiffs) were given only a short time to consider the "package". They would have had to divert their resources from trial preparation and conduct an assessment of their recoverable costs with some precision. The process of considering the "package" was therefore a more complex one than addressing the potential quantum of their claim to decide whether to accept the Rules of Court offer. The Rules of Court provide the protection for both offeror and offeree as to costs if the Rules of Court offer is not accepted, depending on the outcome of the trial. The present proposition of the appellants would not be consistent with that approach. It would impose a costs penalty in circumstances where the Rules do not contemplate it, that is where the Rules of Court offer is less than the final judgment. It would do so where the time to consider the Rules of Court offer was radically shortened, as was the opportunity to consider the "package".
15 In those circumstances, it cannot be said that in any event the respondents were unreasonable in not accepting the "package" by 28 March 2012: Equuscorp Pty Ltd v Jiminez (No 2) [2002] SASC 266 at [25]; Elite Protective Personnel Pty Ltd v Salmon [2007] NSWCA 322 at [117] per McColl JA.
16 Finally, we do not consider that the approach of the appellants is an appropriate one in any event. They must stand by the terms of their offers. It is not reasonable to seek to break the overall sum into different components from those they specified in an endeavour to establish that the mix of those different components should entitle them to costs of the trial. In addition, we do not consider that the appellants should, in the present circumstances, be entitled to pursue through the respondents material for a "de facto" taxation of their costs as at the end of March 2012. The respondents have not suggested that the Calderbank offer on costs did not reflect a genuine and (so far as it could be done) a realistic assessment of the respondents' costs to that date. It would be most surprising if it were not such an assessment, perhaps erring on the side of proposing the upper range of their estimate. They have presented no material to justify the time and expense which would be involved in the exercise which they propose, or to know why it would be in the interests of justice to require that to be done. They do not suggest, whether by reference to their own costs to that time or in some other way, that the costs of the respondents to that point were probably considerably lower than $450,000. However, even then, the interests of justice would probably not require that the terms of the "package" offer should be disaggregated in some different way from the way it was presented.
17 Accordingly, in our view, there should be an order that the respondents pay 30% of the costs of the appellants (and the cross-appellant) of the appeal, and the costs orders made against the appellants at the trial should stand, other than the indemnity costs order, and by varying it to reduce the recoverable costs to 98% of the party and party costs of the respondents.
18 As there is a payment into Court of the sum of $500,000, on account of the judgment sum, by order made on 25 June 2013 it is also appropriate to order that that sum, together with any interest accrued on it be paid out of Court to the trust account of the respondents' solicitors in part payment of the judgment sum payable by the appellants.
19 The consequence of the orders to be made are that interest on the judgment sums will be calculated under the Federal Court Rules 2011 (Cth).
20 Compliance with the outstanding statutory demand to the first appellant is further extended for a period of 35 days. If the balance of the judgment sum payable by the appellants (after credit is given for the sum presently held in Court) is paid within 21 days, or agreed in writing within that period to be paid within 28 days and the appellants pay that amount within 28 days, that demand will be discharged. If that does not occur, the first appellant and the respondents may each file and serve written submissions within 28 days of this day as to what should be done with respect to the demand, and the Court will determine that issue on the papers.
I certify that the preceding twenty (20) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justices Mansfield & Besanko JJ.