Central Innovation Pty Ltd v Garner (No 5)

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FEDERAL COURT OF AUSTRALIA

Central Innovation Pty Ltd v Garner (No 5) [2022] FCA 502   

File number: NSD 2221 of 2016
Judgment of: BROMWICH J
Date of judgment: 5 May 2022
Catchwords: COSTS  - where costs assessment conducted by Judicial Registrar and reasons published – question of indemnity costs referred to trial judge to consider Calderbank offer and the offer of compromise from applicants – held: indemnity costs to be paid by first respondent
Legislation:

Corporations Act 2011 (Cth) s 500

Federal Court of Australia Act 1976 (Cth) ss 37M, 37N

Federal Court Rules 2011 (Cth)

Cases cited:

Central Innovation Pty Ltd v Garner (No 4) [2020] FCA 1796
Garner v Central Innovation Pty Limited [2022] FCAFC 64
Harris v Morabito Holdings Pty Limited [2018] NSWSC 1353
Keays v JP Morgan Administrative Services Australia Ltd [2012] FCAFC 100; 224 IR 406

Port Kembla v Coal Terminal Ltd v Braverus Maritime Inc (No 2) [2004] FCA 1437; 212 ALR 281
Division: Fair Work Division
Registry: New South Wales
National Practice Area: Employment and Industrial Relations
Number of paragraphs: 23
Date of last submissions: 30 November 2021
Solicitor for the Applicants: SD Commercial Lawyers
Solicitor for the First Respondent: AJH Lawyers

ORDERS

NSD 2221 of 2016
BETWEEN:

CENTRAL INNOVATION PTY LTD

First Applicant

INTERCAD PTY LTD

Second Applicant
AND:

GARY GARNER

First Respondent

N C CADCAM SYSTEMS PTY LTD (IN LIQUIDATION)

Second Respondent

ORDER MADE BY:

BROMWICH J

DATE OF ORDER:

5 MAY 2022

THE COURT ORDERS THAT:

1.The first respondent pay the applicants’ costs in the sum of $1,552,751.14. 

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


REASONS FOR JUDGMENT

BROMWICH J:

Introduction

  1. On 16 December 2020, I delivered judgment and gave a verdict in favour of the applicants against the first respondent, Mr Gary Garner: Central Innovation Pty Ltd v Garner (No 4) [2020] FCA 1796 (verdict judgment).  The proceedings against the second respondent, N C Cadcam Systems Pty Ltd, were stayed by the operation of s 500 of the Corporations Act 2011 (Cth) by reason of the company going into liquidation eight months before the trial.  I ordered that Mr Garner pay the applicant’s costs. 

  2. On 2 February 2021, Mr Garner appealed from the verdict judgment.  That appeal was heard on 12 August 2021 and dismissed on 21 April 2022: Garner v Central Innovation Pty Limited [2022] FCAFC 64.

  3. In the intervening period between the appeal from the verdict judgment being delivered and that appeal being dismissed:

    (a)On 26 February 2021, I further ordered:

    1.The sum of the judgment and verdict awarded to the applicants by order 1 made on 16 December 2020 be fixed in the sum of $552,564.

    2.The applicants’ costs of the proceeding be assessed by a registrar on a lump-sum basis and:

    a)on a party and party basis up to and including 16 December 2020;

    b)on a party and party basis up to and including 11.00 am on 30 July 2019,…

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Details
Case
[2022] FCA 502
Decision Date

CaseChat Overview and Summary

Central Innovation Pty Ltd and another v Garner (No 5) is a costs case following on from Central Innovation Pty Ltd v Garner (No 4). The applicants were successful in proceedings against Mr Gary Garner, who had appealed the decision but the appeal was dismissed. Following the dismissal of the appeal, the applicants sought indemnity costs against Mr Garner, which he opposed. The court had ordered a costs assessment by a Judicial Registrar, which was completed and published in October 2021. The applicants then made submissions seeking indemnity costs and in the alternative, costs assessed on a party and party basis. Mr Garner did not file any submissions in response, but his solicitors advised the court that he would not be filing any and referred to his earlier written submissions.

The court was required to consider whether the applicants were entitled to indemnity costs as opposed to party and party costs, and if so, how much. The court had to consider the Judicial Registrar's assessment, the applicants' submissions, and Mr Garner's earlier written submissions. The court had to consider the principles relating to indemnity costs and the effect of a Calderbank offer and an offer of compromise on the assessment of indemnity costs. The court had to consider the effect of Mr Garner's failure to file any submissions in response to the applicants' submissions.

The court found that the applicants were entitled to indemnity costs as opposed to party and party costs. The court found that the applicants' costs were not excessive or unreasonable, and that the applicants had not acted unreasonably in incurring those costs. The court found that Mr Garner's failure to file any submissions in response to the applicants' submissions did not deprive the applicants of indemnity costs. The court found that the applicants' Calderbank offer and offer of compromise did not deprive them of indemnity costs. The court assessed the indemnity costs at $1,552,751.14, which included 70% of the costs incurred by the applicants after the verdict date of 16 December 2020.

The court ordered that the first respondent pay the applicants' costs in the sum of $1,552,751.14.

Orders

Orders of the court

1. The first respondent pay the applicants’ costs in the sum of $1,552,751.14.

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

Background

Background to the litigation

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Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

On 16 December 2020, I delivered judgment and gave a verdict in favour of the applicants against the first respondent, Mr Gary Garner: Central Innovation Pty Ltd v Garner (No 4) [2020] FCA 1796 (verdict judgment). The proceedings against the second respondent, N C Cadcam Systems Pty Ltd, were stayed by the operation of s 500 of the Corporations Act 2011 (Cth) by reason of the company going into liquidation eight months before the trial. I ordered that Mr Garner pay the applicant’s costs. On 2 February 2021, Mr Garner appealed from the verdict judgment. That appeal was heard on 12 August 2021 and dismissed on 21 April 2022: Garner v Central Innovation Pty Limited [2022] FCAFC 64. In the intervening period between the appeal from the verdict judgment being delivered and that appeal being dismissed:(a)On 26 February 2021, I further ordered:1.The sum of the judgment and verdict awarded to the applicants by order 1 made on 16 December 2020 be fixed in the sum of $552,564. 2.The applicants’ costs of the proceeding be assessed by a registrar on a lump-sum basis and: a)on a party and party basis up to and including 16 December 2020; b)on a party and party basis up to and including 11.00 am on 30 July 2019, and on an indemnity basis between 11.00 am on 30 July 2019 and 16 December 2020; c)on an indemnity basis up to and including 16 December 2020. 3.After the assessment by the registrar is carried out, the parties be at liberty to apply. 4.Costs be reserved. The reason for ordering the costs assessment on three alternative bases was to accommodate and inform the resolution of the question of indemnity costs sought by the applicants. (b)On 22 October 2021, Judicial Registrar Allaway published reasons for the assessments arrived at, taking into account a costs summary and submissions filed by the applicants, and a costs response and submissions filed by Mr Garner. Those reasons are annexed to these reasons. The conclusions Judicial Registrar Allaway reached as to the quantification of Mr Garner’s costs liability on the alternative bases set out in the 26 February 2021 orders were as follows (exclusive of GST):(a)on a party and party basis up to and including 16 December 2020 – $2,511,643.26 x 50% = $1,255,821.63 (b)on a party and party basis up to 30 July 2019 and on an indemnity basis from 30 July 2019 to 16 December 2020 $1,405,796.81 x 50% = $702,898.41 $1,105,846.45 x 70% = $774,092.52 $1,476,990.93 (c)indemnity costs up to and including 16 December 2020 – $2,511,643.26 x 70% = $1,758,150.28(c)On 30 November 2021, the applicants filed submissions, in accordance with orders made on 10 November 2021:(i)primarily seeking indemnity costs up to the judgment date of 16 December 2020 in the sum of $1,758,150.28 (conclusion (c) above), plus costs upon the same basis as used by Judicial Registrar Allaway of 70% of costs incurred after 16 December 2020 to the date of those submissions, being 30 November 2021, of $75,760.21; and(ii)in the alternative seeking costs up to 16 December 2020 in the sum of $1,476,990.93 (conclusion (b) above), plus costs upon the same basis as used by Judicial Registrar Allaway of 70% of costs incurred after 16 December 2020 to the date of those submissions, being 30 November 2021, of $75,760.21.(d)Mr Garner did not file any submissions by 10 January 2022, in accordance with the 10 November 2021 orders, nor advise by that date that no such submissions were going to be filed. (e)On 18 January 2022, in response to an email to my chambers from the applicants’ solicitors noting that no submissions had been filed, Mr Garner’s solicitors advised by email that he did not intend to file any additional submissions concerning Judicial Registrar Allaway’s costs assessment. However, that email did say that Mr Garner referred to, and repeated, the matters raised in the his written costs response submissions filed on 3 August 2021, with a particular focus on what was said to be:1.the disproportionate nature of the Applicants’ costs;2.the extent to which the costs incurred by the Applicants were due to the conduct of the Applicants or in relation to other parties, outside the control of the First Respondent; and3.the First Respondent’s inability to properly assess the Applicants’ Calederbank letter and offer of compromise relied upon in relation to the question of costs.

Ratio Decidendi

Legal Principle Established

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