470 St Kilda Road Pty Ltd v Robinson

[2017] FCA 647

FEDERAL COURT OF AUSTRALIA

470 St Kilda Road Pty Ltd v Robinson [2017] FCA 647

File number:	VID 284 of 2012
Judge:	O’CALLAGHAN J
Date of judgment:	8 June 2017
Catchwords:	COSTS – offers of compromise made – whether respondent liable to pay costs on indemnity basis
Legislation:	Federal Court Rules 2011 (Cth), rr 1.35 and 25.14
Cases cited:	Sydney Equine Coaches Pty Ltd v Gorst [2017] FCAFC 34
Date of hearing:	Determined on the papers
Registry:	Victoria
Division:	General Division
National Practice Area:	Commercial and Corporations
Sub-area:	Commercial Contracts, Banking, Finance and Insurance
Category:	Catchwords
Number of paragraphs:	11
Counsel for the Applicant:	Mr M A Robins QC and Mr A R Morrison
Solicitor for the Applicant:	Mr N Kuperholz
Counsel for the Respondent:	Mr N Pane QC and Mr C Young
Solicitor for the Respondent:	HWL Ebsworth

ORDERS

VID 284 of 2012

BETWEEN:

470 ST KILDA ROAD PTY LTD (ACN 006 075 341)

Applicant

AND:

GLENN ROY ROBINSON

Respondent

JUDGE:	O’CALLAGHAN J
DATE OF ORDER:	8 JUNE 2017

THE COURT ORDERS THAT:

1.The respondent pay the applicant’s costs of the proceeding:

(a)on a party-party basis up to 11.00 a.m. on 13 October 2016; and

(b)on an indemnity basis thereafter.

2.The amount of interest referred to in order 1 of the order dated 30 May 2017 be fixed at $505,634.75.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

O’CALLAGHAN J:

1. On 30 May 2017, I gave judgment for the applicant in this proceeding in the sum of $1,426,641.70.  I afforded the parties an opportunity to file written submissions on the question of costs.  They have done so.  They agree that I should resolve the remaining issue between them on the papers.

   CONSIDERATION

2. The applicant was wholly successful at trial.  It is not disputed that the applicant made two offers of compromise: on 11 October 2016, an offer to accept $1,200,000.00 inclusive of interest and costs (including reserved costs); and, on 24 March 2017, an offer to accept $950,000.00 inclusive of interest and costs (including reserved costs). 

3. The award on the applicant’s principal claim is therefore more favourable than the terms of either of its two offers of compromise.   

4. The applicant is entitled to interest from the date its cause of action arose, on 11 January 2012, until judgment.  The parties agree that the interest that is payable in accordance with order 1 of the Court’s order of 30 May 2017 is $503,700.02 as at 30 May 2017 and $214.97 daily thereafter (that is, for nine days).  The total interest payable to today’s date is therefore $505,634.75.

5. Each of the applicant’s offers was made in accordance with Form 45 and otherwise complied with Pt 25 of the Federal Court Rules 2011 (Cth) (the Rules).  The 11 October 2016 offer was accompanied by a detailed covering letter explaining why its offer represented a substantial compromise. Those reasons are in substance the reasons that the applicant succeeded at trial. 

6. The applicant submits that, pursuant to r 25.14(3) of the Rules, it is entitled to an order that the respondent pay its costs: before 11.00 a.m. on the second business day after the offer was served, being 13 October 2016, on a party and party basis; and, thereafter, on an indemnity basis. Those costs include the costs reserved by orders made on 26 April 2012 (Kenny J), 20 September 2012 (Kenny J), 27 September 2016 (Beach J), 29 September 2016 (Beach J), 18 October 2016 (Beach J) and 30 March 2017 (O'Callaghan J).

7. The respondent submits that it should only pay costs on a party and party basis, although he accepts that it is for him to persuade the Court that some other order for costs should be made than that which prima facie arises under r 25.14(3). That concession is properly made: see most recently Sydney Equine Coaches Pty Ltd v Gorst [2017] FCAFC 34 at [14]–[24] per Rares, Flick and Bromwich JJ, considering the discretion conferred by r 1.35 of the Rules to make an order inconsistent with the Rules.

8. The respondent submits that the case on which the applicant succeeded at trial relied on exhibits MFI-A1 and MFI-A2, which, he says, were not produced until 27 March 2017.  He says that the applicant always needed to prove which invoices it contended were payable and unpaid but did not provide that information until 27 March 2017.  He also says that the claim in the proceeding was based on evidence not filed until 23 November 2016.  He says therefore that, at either 11 October 2016 or 24 March 2017, he was not in a position properly to assess the applicant’s case and that, therefore, it was not unreasonable for him to reject each offer.  

9. I do not accept those submissions.  The 11 October 2016 letter from the applicant’s solicitor sets out extensive and detailed reasons why the applicant’s case was bound to succeed.  In the events that occurred, those were, in substance, the reasons that it did succeed.  The respondent had been in possession of the bank statements of Reed Constructions Australia Pty Ltd and the “Cheques Drawn Lists”, which were relied on in the applicant’s pleadings and particulars, for a very long time.  He, with his legal advisers, could readily have determined from those documents that a substantial number of significant invoices were overdue for payment either as at 12 or 22 December 2011.

   CONCLUSION

10. For those reasons, I will make the orders in relation to costs sought by the applicant, namely that the respondent pay the applicant’s costs of the proceeding:

    (1)on a party-party basis up to 11.00 a.m. on 13 October 2016;

    (2)on an indemnity basis thereafter.

11. The amount of interest referred to in order 1 of the order dated 30 May 2017 will be fixed at $505,634.75.

I certify that the preceding eleven (11) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice O'Callaghan.

Associate:

Dated:        8 June 2017