FEDERAL COURT OF AUSTRALIA
Findex Group Ltd v McKay (No 3) [2020] FCA 259
File number: VID 1026 of 2016 Judge: STEWART J Date of judgment: 5 March 2020 Catchwords: COSTS – application by losing applicants for no order as to costs – where six of the eight issues at trial were determined in the applicants’ favour – whether first respondent’s conduct contributed to length and complexity of litigation – applicable principles – discretion as to costs – application dismissed
COSTS – application by first respondent for indemnity costs – whether rejection of offer of compromise unreasonable – applicable principles – discretion as to costs – application dismissed
Legislation: Federal Court of Australia Act 1976 (Cth) s 43
Federal Court Rules 2011 (Cth) rr 25.01, 25.05, 25.08, 25.14
Cases cited: Anchorage Capital Partners Pty Ltd v ACPA Pty Ltd (No 2) [2018] FCAFC 112
Australian Conservation v Forestry Commission [1988] FCA 144; 81 ALR 166
Australian Trade Commission v Disktravel [2000] FCA 62
Baulderstone Hornibrook Engineering Pty Ltd v Gordian Runoff Ltd [2008] NSWCA 243
Commissioner of Taxation v Crown Insurance Services Ltd (No 2) [2012] FCAFC 182
Evans v Sebel Furniture Ltd [2003] FCA 282
Findex Group Ltd v McKay [2019] FCA 2129
Griffith v ABC (No 2) [2011] NSWCA 145
Idenix Pharmaceuticals LLC v Gilead Sciences Pty Ltd (No 2) [2018] FCAFC 7
Les Laboratoires Servier v Apotex Pty Ltd [2016] FCAFC 27; 247 FCR 61
Macquarie International v Sydney South West (No 2) [2011] NSWCA 171
Mok v Minister for Immigration, Local Government and Ethnic Affairs (No 2) [1993] FCA 650; 47 FCR 81
Rhodes v Tower Australia Superannuation Ltd as Trustee for Tower Superannuation Fund [2004] FCA 812
Date of last submissions: 21 February 2020 Registry: New South Wales Division: General Division National Practice Area: Commercial and Corporations Sub-area: Commercial Contracts, Banking, Finance and Insurance Category: Catchwords Number of paragraphs: 64 Counsel for the Applicants: I Neil SC and N Furlan Solicitor for the Applicants: Harmers Workplace Lawyers Counsel for the First Respondent: M A Karam and T C Arnold Solicitor for the First Respondent: Just Dispute Resolution Counsel for the Second Respondent: The second respondent did not appear ORDERS
VID 1026 of 2016 BETWEEN: FINDEX AUSTRALIA PTY LTD (ACN 128 588 714)
First Applicant
CIVIC FINANCIAL PLANNING LTD (ACN 143 253 767)
Second Applicant
FINDEX SERVICES PTY LTD (ACN 128 588 705)
Third Applicant
FINANCIAL INDEX AUSTRALIA PTY LTD (ACN 094 287 037)
Fourth ApplicantAND: DAVID KEITH MCKAY
First Respondent
VANDAMAN PTY LTD (ACN 103 917 773)
Second Respondent
JUDGE:
STEWART J
DATE OF ORDER:
5 MARCH 2020
THE COURT ORDERS THAT:
1.The applicants’ and the first respondent’s applications to vary Order 2 made on 18 December 2019 are dismissed.
2.Order 2 made on 18 December 2019 is confirmed and…
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- Case
- [2020] FCA 259
- Decision Date
CaseChat Overview and Summary
The court considered the applicants' submissions that there was no evidence supporting Mr McKay's assertion that the offer of compromise involved a significant concession regarding costs. The court found that the offer of compromise, made at an early stage in the proceedings, did not entail a significant concession. The letters written by Mr McKay's solicitor at that stage did not identify the point on which Mr McKay was ultimately successful but rather raised procedural and technical objections. Given the early stage at which the offer was made and the lack of significant concession, the court held that the applicants' rejection of the offer of compromise was not unreasonable. The court also noted that the rejection was not particularly remarkable given the recent failed mediation and the tendentious nature of the correspondence.
The court dismissed both applications, confirming the earlier order that the applicants were to pay Mr McKay's costs of the proceeding. The court held that Mr McKay was not entitled to indemnity costs and that his application to reopen the preliminary costs order should be dismissed. Consequently, the preliminary order regarding costs was to stand, and each party was to bear their own costs in relation to the present applications. The court's decision was based on the lack of significant concession in the offer of compromise and the early stage at which the offer was made. The court found no reason to vary the preliminary costs order, and the applicants' and Mr McKay's applications to vary the order were dismissed.
Orders
Orders of the court
1. The applicants’ and the first respondent’s applications to vary Order 2 made on 18 December 2019 are dismissed.
2. Order 2 made on 18 December 2019 is confirmed and made final.
3. The parties are to bear their own costs on the applications referred to in Order 1 above.
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
Ratio Decidendi
Legal Principle Established
It is only thereafter that further particulars were provided to the statement of claim and some time after that that a defence was filed on 9 May 2017. Further particulars to the defence were provided on 24 July 2017, and discovery was given by Mr McKay on 19 September 2017. Mr McKay’s evidence was filed on 30 April 2018.Consideration The applicants submit that there is no evidence to support Mr McKay’s assertion that the offer of compromise involved Mr McKay making a concession as to significant costs incurred in the litigation up to that time. That submission can be broken down into two components. The first is the question of whether the offer involved a real compromise in the sense that there was a real concession with regard to significant costs given the early time at which it was made. The second is whether any costs that were incurred up until that time on behalf of the respondents were incurred by Mr McKay as opposed to by the second respondent, Vandaman Pty Ltd. Although, as indicated, by the time of the offer of compromise a mediation had already taken place from which one can infer that some legal costs had been incurred, there is no evidence as to the significance of the concession that was made with regard to costs. Some letters had been written for which the respondents’ solicitor no doubt charged one or other or both of his clients. The contents of those letters do not evidence a particularly in-depth or astute engagement with the merits of the case. For the most part they raise procedural and technical objections and other obfuscation, and they make unhelpful assertions such as that the claims are baseless or frivolous and vexatious. Moreover, as I have indicated, they do not raise the point on which Mr McKay was ultimately successful. At the time of the offer of compromise, further particulars had not yet been furnished to the amended statement of claim, no defence had been prepared, no discovery had taken place, no evidence had been served and submissions had not been prepared. In the circumstances, although the offer of compromise inevitably entailed some concession with regard to costs, it cannot be said with any confidence that that concession was particularly significant. With regard to the second component, I do not regard it as significant that it has not been established whether the costs in question were those of Mr McKay or of Vandaman. Those parties were jointly represented and the significance of their costs at that stage can be assessed together. Offers of compromise were served on behalf of both Mr McKay and Vandaman. Ultimately on taxation Mr McKay will have to establish what liability he bore for costs, but that is not relevant at this stage of the inquiry. Given the early stage at which the offer of compromise was made, and that the letters written on behalf of Mr McKay at that stage had not identified the point on which he was ultimately successful but rather raised a variety of tendentious matters, I do not regard the applicants’ rejection of the offer of compromise as unreasonable. I have taken into account how quickly the offer was rejected. In circumstances where a failed mediation had recently taken place between the parties, there had been the correspondence to which I referred and, as I have found, the offer of compromise did not on its face entail any significant concession by Mr McKay, it is not particularly remarkable that the offer of compromise was able to be rejected so quickly.