Bradshaw v Emirates (Costs)

Case [2021] FCA 1613


FEDERAL COURT OF AUSTRALIA

Bradshaw v Emirates (Costs) [2021] FCA 1613  

File number: NSD 2113 of 2019
Judgment of: STEWART J
Date of judgment: 21 December 2021
Catchwords: COSTS – where applicant was successful on liability – where applicant was made an offer under the Federal Court Rules 2011 (Cth) more favourable than the judgment – where applicant refused the offer – whether respondent is entitled to indemnity costs from after the offer – whether applicant should have the costs up to the offer
Legislation:

Federal Court of Australia Act 1976 (Cth) s 43(2)

Civil Liability Act 2002 (NSW)

Legal Profession Uniform Law Application Act 2014 (NSW)

Federal Court Rules 2011 (Cth) rr 1.35, 25.01, 25.05, 25.14, 40.08, 40.29, 40.30, Sch 3

Cases cited:

Bradshaw v Emirates [2021] FCA 1407

Calderbank v Calderbank [1975] 3 All ER 333

Clark v ING Life Ltd [2007] FCA 1960

Colgate Palmolive Co v Cussons Pty Ltd [1993] FCA 801; 46 FCR 225

Commissioner of Taxation v Crown Insurance Services Ltd (No 2) [2012] FCAFC 182

Dutton v Bazzi (No 2) [2021] FCA 1560

Hazeldene’s Chicken Farm Pty Ltd v Victorian WorkCover Authority (No 2) [2005] VSCA 298; 13 VR 435

Idenix Pharmaceuticals LLC v Gilead Sciences Pty Ltd (No 2) [2018] FCAFC 7

Inspector-General in Bankruptcy v Bradshaw (No 2) [2006] FCA 383

PKT Technologies Pty Ltd (formerly known as Fairlight.au Pty Ltd) v Peter Vogel Instruments Pty Ltd (No 2) [2020] FCAFC 46

Sandoz Pty Ltd v H. Lundbeck A/S (No 2) [2021] FCAFC 47

Specsavers Pty Ltd v The Optical Superstore Pty Ltd (No 4) [2012] FCA 652

State of Victoria v Sportsbet Pty Ltd (No 2) [2012] FCAFC 174

Tickell v Trifleska Pty Ltd (1990) 25 NSWLR 353

W Win Engineering Pty Ltd v Wiggins [2016] FCA 967

Division: General Division
Registry: New South Wales
National Practice Area: Other Federal Jurisdiction
Number of paragraphs: 37
Date of last submission: 10 December 2021
Date of hearing: Determined on the papers
Solicitor for the Applicant: BPC Law
Solicitor for the Respondent: Norton White

ORDERS

NSD 2113 of 2019
BETWEEN:

STEPHEN BRADHAW

Applicant

AND:

EMIRATES (ARBN 073 569 696)

Respondent

ORDER MADE BY:

STEWART J

DATE OF ORDER:

21 DECEMBER 2021

THE COURT ORDERS THAT:

1.Judgment for the applicant against the respondent in the sum of $5,000.00.

2.The respondent pay the applicant’s costs, as taxed or agreed, up to 11.00 am on 3 February 2020.

3.The applicant pay the respondent’s costs on an indemnity basis, as taxed or agreed, from 11.00 am on 3 February 2020.

4.The various orders be set-off against each other.

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


REASONS FOR JUDGMENT

STEWART J:

Introduction

  1. On 12 November 2021, I published reasons for judgment in which I concluded that the applicant should be awarded $5,000 in his claim against the respondent: Bradshaw v Emirates [2021] FCA 1407. The parties are agreed that that should be reflected as judgment…

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AGLC
Bradshaw v Emirates (Costs) [2021] FCA 1613
Case
[2021] FCA 1613
Decision Date

CaseChat Overview and Summary

In Bradshaw v Emirates, the applicant successfully sued the respondent for damages in the Federal Court. The respondent made two offers to settle the case: one on 9 July 2019 for $5,000 inclusive of costs, and another on 30 January 2020 for $15,000 plus costs. The applicant refused both offers and subsequently achieved a lesser outcome in court. The court had to determine whether the respondent was entitled to indemnity costs from the date of the second offer and whether the applicant should receive costs up to the date of that offer.

The legal issues centred on the operation of Federal Court Rules 2011 (Cth) rule 25.14(1), which mandates indemnity costs if certain conditions are met. The court considered whether the respondent was entitled to indemnity costs from the date of the second offer, and if there were any discretionary reasons to deviate from this rule. The applicant argued that the respondent's earlier communications and position suggested that costs would be limited under the Civil Liability Act and the Legal Profession Uniform Law Application Act 2014 (NSW), and that it was not reasonable to consider the second offer. The court found that the second offer satisfied the requirements of rule 25.14(1), and while there was a rebuttable presumption in favour of indemnity costs, the court had discretion to make a contrary order under rule 1.35.

The court ruled that the respondent was entitled to indemnity costs from the date of the second offer, but the applicant's costs up to that date should be considered for potential reduction under rule 40.08, though no application was made. The court concluded that the applicant should pay the respondent's costs from the time of the second offer, and the orders should be set-off against each other. The final orders included judgment for the applicant in the sum of $5,000, costs up to 3 February 2020 to be paid by the respondent, and indemnity costs thereafter to be paid by the applicant.

Orders

Orders of the court

1. Judgment for the applicant against the respondent in the sum of $5,000.00.

2. The respondent pay the applicant’s costs, as taxed or agreed, up to 11.00 am on 3 February 2020.

3. The applicant pay the respondent’s costs on an indemnity basis, as taxed or agreed, from 11.00 am on 3 February 2020.

4. The various orders be set-off against each other.

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

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

There is the possibility that the costs that the applicant is entitled to for that period should be reduced under r 40.08 because he claimed and was awarded damages of less than $100,000 and the proceeding could more suitably have been brought in another court. However, the respondent has made no application under that rule. Cf. Dutton v Bazzi (No 2) [2021] FCA 1560 at [37]ff.Conclusion In the result, there should be orders as follows:(1)Judgment for the applicant against the respondent in the sum of $5,000.00;(2)The respondent pay the applicant’s costs, as taxed or agreed, up to 11.00 am on 3 February 2020;(3)The applicant pay the respondent’s costs on an indemnity basis, as taxed or agreed, thereafter; and(4)The various orders be set-off against each other.

Ratio Decidendi

Legal Principle Established

Despite the apparently mandated consequences that follow upon the conditions in the chapeau to r 25.14(1) being met, there is a discretion to make a contrary order which arises from the effect of r 1.35. That rule provides that the court may make an order that is inconsistent with the Rules and in that event the order will prevail. It has been said that in the event that the conditions triggering the operation of r 25.14(1) are made out, there is a rebuttable presumption in favour of, rather than an entitlement to, indemnity costs: Specsavers Pty Ltd v The Optical Superstore Pty Ltd (No 4) [2012] FCA 652 at [10].Consideration The respondent’s 9 July 2019 Calderbank offer of $5,000 inclusive of costs was equal to or less than what the applicant ultimately achieved and consequently gives rise to no special costs consideration. However, the respondent’s 30 January 2020 offer to compromise the proceeding is material. There is no dispute that it satisfies the requirements of such an offer under Pt 25 of the Rules. It constitutes an express offer to pay $15,000 plus costs. It was not accepted by the applicant, and the applicant subsequently achieved a less favourable outcome. The conditions for the operation of r 25.14(1) are therefore satisfied and, subject to the court’s discretion, the consequence of that rule should follow. Those are that from 11.00 am on Monday, 3 February 2020, the respondent is entitled to its costs on an indemnity basis. The question then is, are there discretionary reasons not to make a costs order consistent with r 25.14(1)? The principal submissions advanced by the applicant as to why he should not be subjected to an indemnity costs order is that such an order would be inconsistent with the position taken by the respondent in correspondence, in its defence and at trial. That position was that the applicant’s claim was subject to the Civil Liability Act and that the applicant’s entitlement to costs would be limited under the Legal Profession Uniform Law Application Act 2014 (NSW). On that basis, it is said on behalf of the applicant that the respondent “abandoned reliance upon the Federal Court Rules … as applies to the assessment of costs”. A further and related submission on behalf of the applicant is that the offer to compromise of 30 January 2020 in the sum of $15,000 plus costs must be disregarded because earlier communications from the respondent had asserted that the applicant would only be entitled to costs on the limited basis allowed for a personal injuries claim under the Application Act. Those communications included a telephone conversation between the parties’ solicitors on 26 June 2019 in which the respondent’s solicitor asserted that the applicant’s claim would be subject to costs restrictions consequence on it being subject to the Civil Liability Act. On that basis it is said that the respondent’s offer to settle did not encompass a costs liability beyond $10,000. The applicant then submits that “it was not reasonable for the Applicant to consider the offers made by the Respondent, and the Court should exercise its discretion to make a costs order in favour of the Applicant”.