Koonara Management Pty Ltd v Rockliff (No 3)

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FEDERAL COURT OF AUSTRALIA

Koonara Management Pty Ltd v Rockliff (No 3) [2020] FCA 523

File number: NSD 1357 of 2016
Judge: GLEESON J
Date of judgment: 23 April 2020
Catchwords:

COSTS – application for indemnity costs by respondents and cross-claimant – where applicants and cross-claimant both unsuccessful in their respective claims and liable to pay the relevant costs of the other party – principle that costs should follow the event – how to define ‘event’– numerous offers of settlement made by respondents and cross-claimant – offers not accepted by applicants and cross-respondents – Calderbank offers and Notices of offer to compromise – what constitutes a genuine offer of compromise – refusal of offers by applicants and cross-respondents not unreasonable in the circumstances – application for indemnity costs refused

COSTS – competing applications for lump sum and consolidated costs orders – where applicants and cross-claimant both unsuccessful in their respective claims and liable to pay the relevant costs of the other party – where prior costs orders made in the proceeding – where necessary to undertake apportionment of costs of proceeding as between primary claim and cross-claim – lump sum orders consolidated
Legislation:

Federal Court of Australia Act 1976 (Cth) ss 37N(1), 43

Federal Court Rules 2011 r 40.02(b)

Cases cited:

Anchorage Capital Partners Pty Limited v ACPA Pty Ltd (No 2) [2018] FCAFC 112

Brookfield Multiplex Limited v International Litigation Funding Partners Pte Ltd (No 4) [2009] FCA 803

CGU Insurance Limited v Corrections Corporation of Australia Staff Superannuation Pty Ltd [2008] FCAFC 173

Clipsal Australia Pty Ltd v Clipso Electrical Pty Ltd [2016] FCA 37

Dukemaster Pty Ltd v Bluehive Pty Ltd [2003] FCAFC 1

Elite Protective Personnel Pty Ltd & Anor v Salmon [2007] NSWCA 322

Futuretronics.com.au Pty Ltd v Graphix Labels Pty Ltd [2009] FCAFC 40

Hislop v Paltar Petroleum Limited [2017] FCA 1632

Howell v Dering [1915] 1 KB 54

Keen v Telstra Corporation Limited (No 2) [2006] FCA 930

Koonara Management Pty Ltd v Rockliff (No 2) [2019] FCA 808

Mineralogy Pty Ltd v Sino Iron Pty Ltd (No 7) [2018] FCA 1217

Morony & Ors v Reschke & Ors [2017] NSWSC 544

NMFM Property Pty Ltd and Ors v Citibank Ltd (No 2) [2001] FCA 480; 109 FCR 77

Paciocco and Another v Australia and New Zealand Banking Group Limited (No 2) [2017] FCAFC 146; 253 FCR 403
Rocky Castle Finance Pty Ltd v Taylor; Rocky Castle Finance Pty Ltd v Gillen [2014] SASCFC 1; 118 SASR 349
Date of hearing: 2 October 2019
Registry: New South Wales
Division: General Division
National Practice Area: Commercial and Corporations
Sub-area: Corporations and Corporate Insolvency
Category: Catchwords
Number of paragraphs: 121
Counsel for the Applicants/ Cross-Respondents: J Hynes
Solicitor for the Applicants/ Cross-Respondents: Minter Ellison
Counsel for the Respondents/ Cross-Claimants: A Avery-Williams
Solicitor for the Respondents/ Cross-Claimants: Rockliff Snelgrove Lawyers

ORDERS

NSD 1357 of 2016
BETWEEN:

KOONARA MANAGEMENT PTY LTD (ACN 082 883 323)

First Applicant

ROCKY CASTLE FINANCE PTY LTD (ACN 082…

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Details
Case
[2020] FCA 523
Decision Date

CaseChat Overview and Summary

The case of Koonara Management Pty Ltd v Rockliff (No 3) involved an application for indemnity costs by the respondents and a cross-claimant, alongside a dispute over lump sum and consolidated costs orders. Both the applicants and the cross-claimant were unsuccessful in their respective claims and were held liable to pay the costs of the other party. The applicants and cross-respondents had previously made several offers of settlement, which were not accepted by the applicants and cross-respondents, raising the question of whether these offers were genuine and whether the refusal to accept them was unreasonable. The court needed to determine the appropriate approach to the apportionment of costs between the primary claim and the cross-claim.

The court examined the principle that costs should follow the event and defined the 'event' in this context. It considered the nature of the offers made by the respondents and the cross-claimant, including whether they were genuine and whether the refusal to accept them was unreasonable. The court found that the refusal of the offers was not unreasonable in the circumstances. As for the competing applications for lump sum and consolidated costs orders, the court found that it was in the interests of justice to adopt the approach proposed by the Reschke parties for a consolidated costs order. The court also considered the necessity of apportionment of costs between the primary claim and the cross-claim.

The court concluded that the application for indemnity costs should be refused, as the refusal to accept the settlement offers was not unreasonable. The court further ordered that lump sum costs orders be consolidated, reflecting the extent of success or failure on the costs questions determined by the orders. The parties were instructed to endeavour to agree on appropriate costs orders by a specified date and to file any agreed proposed orders or their respective proposed orders and supporting evidence if they could not reach an agreement.

The final orders included the fixing of specific lump sums for costs payable by the applicants to the respondents and by the cross-claimant to the cross-respondents, with instructions for the parties to endeavour to agree on consolidated lump sum costs orders and to file their proposed orders by certain dates. The court determined that the costs of the parties’ respective claims for indemnity, consolidated and lump sum costs would be decided on the papers.

Orders

Orders of the court

1. The costs payable by the first and second applicants to the second respondent pursuant to orders 1 and 2 of the orders made on 31 May 2019 be fixed in the lump sum of $115,000.00, with each of the first and second applicants to be jointly and severally liable to pay that amount.

2. The costs payable by the cross-claimant to the third cross-respondent pursuant to order 3 of the orders made on 31 May 2019 be fixed in the lump sum of $190,000.00.

3. The costs payable by the cross-claimant to the first cross-respondent pursuant to order 3 of the orders made on 31 May 2019 be fixed in the lump sum of $132,500.00.

4. The costs payable by the cross-claimant to the second cross-respondent pursuant to order 3 of the orders made on 31 May 2019 be fixed in the lump sum of $132,500.00.

5. The costs payable by the first applicant to the first respondent pursuant to order 1 of the orders made on 31 May 2019 be fixed at $nil.

6. The costs payable by the second applicant to the first respondent pursuant to order 2 of the orders made on 31 May 2019 be fixed at $nil.

7. The parties endeavour to agree on or before 7 May 2020 on appropriate costs orders, preferably a consolidated lump sum costs order or orders, reflecting the extent of their success or failure on the costs questions determined by these orders.

8. The parties file any agreed proposed orders pursuant to order 7 on or before 14 May 2020.

9. In the event that the parties cannot file agreed proposed orders, the parties are to file their proposed orders and any supporting evidence on or before 21 May 2020.

10. The issue of the costs of the parties’ respective claims for indemnity, consolidated and lump sum costs will be determined on the papers.

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

Ultimately, I have concluded that it is in the interests of justice to make orders that adopt the approach of the Reschke parties’ proposed consolidated costs order.EVIDENCERockliffs The Rockliffs relied on the following affidavits:(1)affidavit of John Snelgrove, solicitor sworn 13 September 2019;(2)affidavits of Stephen Rockliff sworn 1 July 2019 and 13 September 2019, together with exhibits “SJR-1” and “SJR-2”;(3)affidavit of Michelle Rockliff sworn 25 June 2019; and(4)affidavit of Bianca Williamson, employed solicitor of Rockliff Snelgrove Lawyers sworn 12 September 2019. In addition, the Rockliffs tendered the following documents:(1)letter from Curwoods to Minter Ellison dated 20 April 2017;(2)notice to admit; and(3)further notice to admit. Mr Snelgrove’s affidavit sets out the quantum and basis for calculation of the lump sum costs order sought by the Rockliffs. The affidavit also identifies various costs orders that were made in the proceeding prior to May 2019, including orders that costs be costs in the cause, an order that Koonara and RCF pay the costs thrown away by reason of the further amended statement of claim (FASOC), an order that the Rockliff parties pay the costs of a hearing on 22 August 2017, an order that Mr Rockliff pay the costs thrown away by reason of the amendments to the further amended cross-claim and three orders that there be no order as to costs. Mr Rockliff’s 1 July 2019 affidavit refers to an offer made on 4 June 2019 to Mr Reschke proposing that all previous costs orders be vacated and there be no order as to costs. Such an offer indicates that Mr Rockliff does not accept the liability judgment. The 4 June 2019 communication also informed Mr Reschke of the Rockliffs’ intention to make the application for an order for indemnity costs. As explained above, that intention conflicted with the order that Mr Rockliff pay the costs of the cross-claim. The affidavit also identifies previous offers made in the proceeding. The affidavit sets out facts concerning events prior to the final hearing, personal issues affecting Ms Rockliff, Mr Rockliff and Mr Rockliff’s wife; refers to the Rockliffs’ expectation that they will not recover any costs that may be awarded in their favour; and states that the Reschke parties’ non-compliance with orders and directions has resulted in considerable unnecessary legal costs being incurred. The affidavit also stated that Mr Rockliff has paid disbursements (principally barristers fees) totalling $723,750.74. The relevance of Mr Rockliff’s 13 September 2019 affidavit is not obvious. It commences with a letter dated 13 August 2019 from Rockliff Snelgrove Lawyers to Minter Ellison requiring the production of a large volume of documents for reasons that are not clear. I am not satisfied that this affidavit contains material of relevance to the costs orders sought by the parties. Ms Rockliff’s 25 June 2019 affidavit sets out certain historical matters and refers to several offers to settle the proceeding.

Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

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