Christofidellis v Zdrilic

Case [2000] FCA 679

FEDERAL COURT OF AUSTRALIA

Christofidellis v Zdrilic [2000] FCA 679

PRACTICE & PROCEDURE – COSTS – Award of – Indemnity costs – the principles governing the exercise of the judicial discretion to award indemnity costs against an unsuccessful applicant – where the credibility of the applicants was a critical factor in dismissing their application – the effect of expressing offers of settlement to be conditional on settlement of another respondent’s cross claim

Federal Court of Australia Act 1976 (Cth), ss. 23 and 43
Federal Court Rules, Order 23

Colgate Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225, referred to
Re Sanchez; Ex parte Smits & Anor (1994) 49 FCR 326, referred to
John S Hayes & Associates Pty Limited v Kimberley-Clark Australia Pty Limited (1994) 52 FCR 201, followed
Marks v GIO Holdings Ltd (1996) 66 FCR 128, referred to
MGICA (1992) Pty Limited v Kenny & Good Pty Limited (1996) 70 FCR 236, followed
Fountain Selected Meats (Sales) Pty Limited v International Produce Merchants Pty Limited (1988) 81 ALR 397, referred to
Multicon Engineering Pty Limited v Federal Airports Corporation (1996) 138 ALR 425, not followed
Re Wilcox; Ex parte v Venture Industries Pty Ltd (1996) 141 ALR 727, followed
Abbott v Random House Australia Pty Ltd [1999] FCA 1540, followed
Hetherington v Mirvac Pty Limited [1999] NSWSC 515, referred to
Sanko Steamship Co Ltd v Sumitomo Australia Ltd (unreported, Federal Court, Sheppard J, 7 February 1996), followed

STELIOS CHRISTOFIDELLIS & ORS V NED & VISJNA ZDRILIC & ORS

NG 772 OF 1995

EINFELD J
24 MAY 2000
SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

NG 772 OF 1995

BETWEEN:

STELIOS CHRISTOFIDELLIS
First Applicant

MARCIA SEIXAS CHRISTOFIDELLIS
Second Applicant

BELRAKE PTY LTD
Third Applicant

AND:

NED & VISJNA ZDRILIC
First Respondent

TERRY PFEIFFER REAL ESTATE PTY LTD
Second Respondent

TERRENCE STANLEY PFEIFFER
Third Respondent

TASS JAMES JOHNSON & TINO DI BELLO
Fourth Respondent

JUDGE:

EINFELD J

DATE OF ORDER:

24 MAY 2000

WHERE MADE:

SYDNEY

THE COURT ORDERS THAT:

1.   The applicants pay the costs of the second and third respondents on an indemnity basis from 27 May 1997, including the costs incurred by the second and third respondents in making their application for indemnity costs.

Note:    Settlement and entry of orders are dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

NG 772 OF 1995

BETWEEN:

STELIOS CHRISTOFIDELLIS
First Applicant

MARCIA SEIXAS CHRISTOFIDELLIS
Second Applicant

BELRAKE PTY LTD
Third Applicant

AND:

NED & VISJNA ZDRILIC
First Respondent

TERRY PFEIFFER REAL ESTATE PTY LTD
Second Respondent

TERRENCE STANLEY PFEIFFER
Third Respondent

TASS JAMES JOHNSON & TINO DI BELLO
Fourth Respondent

JUDGE:

EINFELD J

DATE:

24 MAY 2000

PLACE:

SYDNEY

REASONS FOR JUDGMENT

Introduction

  1. On 19 January 1999 I published the reasons for judgment in these proceedings (the judgment).  The issue then for consideration was whether the second and third…

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AGLC
Christofidellis v Zdrilic [2000] FCA 679
Case
[2000] FCA 679
Decision Date

CaseChat Overview and Summary

In the matter of Christofidellis v Zdrilic, the Federal Court was tasked with determining the appropriate costs order in the context of settlement offers made during litigation. The applicants contested the time period for which the offers were open, arguing that offers made for very short periods might not be reasonable. However, the court found that the first offer was open for two weeks, and subsequent offers were left open for shorter periods due to the approaching hearing date. The court acknowledged that settlement efforts should be encouraged, and to punish the respondents for their efforts would send a contradictory message.

The court considered the reasonableness of the settlement offers and the applicants' rejection of the first offer. It concluded that the applicants' rejection was unreasonable and significantly contributed to the costliness of the proceedings without a serious chance of success for their claim. Therefore, the court found that the applicants should bear the costs of the respondents on an indemnity basis from the day after the expiry of the first offer, 27 May 1997.

The court emphasised the importance of promoting reasonable settlement efforts and ensuring that parties are not discouraged from negotiating in good faith. In light of this, the court made an order that the applicants pay the costs of the second and third respondents on an indemnity basis from 27 May 1997. This includes the costs incurred by the respondents in making their application for indemnity costs. The settlement and entry of orders are governed by Order 36 of the Federal Court Rules.

Orders

Orders of the court

1. The applicants pay the costs of the second and third respondents on an indemnity basis from 27 May 1997, including the costs incurred by the second and third respondents in making their application for indemnity costs.

Note: Settlement and entry of orders are dealt with in Order 36 of the Federal Court Rules.

Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

EINFELD J
The final contention of the applicants, regarding the time period for which the offers were open, carries some relevance to the determination of this application. In this regard, the applicants are quite right in their submission that offers of settlement made so as only to be open for acceptance for very short periods of time might be so unreasonable as not to properly form the basis of an order of the kind sought here. Even so, the first offer of settlement was open for acceptance for a full two weeks. The shorter time periods in respect of the subsequent offers reflected the closeness of the commencement of proceedings. In those time periods, the costs of the preparation for the hearing would have also been growing in a manner inversely proportional to the period for which each offer was left open. So much is to be expected in the ordinary course of litigation. Furthermore, to accede to the applicants’ contention on this point would effectively punish the respondents for employing their best efforts to settle these proceedings in a manner that would, and was intended to, have saved costs. It would also send a message to litigants that this Court encourages parties to employ their best efforts to settle proceedings, but those best efforts should stop two weeks before hearing, because any efforts in those two weeks could not be objectively viewed as reasonable. I am keen to avoid sending any such message.Conclusion On balance, in my opinion, the circumstances of this case support an order that the applicants should pay the respondents’ costs on an indemnity basis from 27 May 1997, the day after the expiry of their first offer of settlement. It is my opinion that the applicants’ rejection of that offer was plainly unreasonable, and greatly contributed to the costliness of the proceedings without any serious likelihood that their claim would succeed.

Ratio Decidendi

Legal Principle Established

Established by: EINFELD J

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