FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Mann Travel Pty Ltd v Skyscanner Ltd [2021] FedCFamC2G 263
File number(s): MLG 2976 of 2018 Judgment of: JUDGE BAIRD Date of judgment: 19 November 2021 Catchwords: PRACTICE AND PROCEDURE - COSTS – Offer of compromise –where Notice of Offer refers to “costs to be assessed on a party/party basis in accordance with Rule 21.11(2) of the Federal Circuit Court Rules 2011 [sic]”– where Offer accepted – costs term construed – application allowed. Legislation: Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth), rr 15.02, 22.02(2)(c), 22.08(1), 22.09, 22.10,
Federal Circuit and Family Court of Australia Act 2021 (Cth), s 217
Federal Circuit Court of Australia Act 1999 (Cth) s 79
Federal Circuit Court Rules 2001(Cth), rr 15.03, 21.02(1)(c), 21.09(1), 21.10, 21.11(2),
Federal Court Rules 1979 (Cth), Schedule 2
Federal Court Rules 2011 (Cth), rr 25.01, 40.01, 40.12, 40.14, Schedule 3
Cases cited: 45 Degrees North v The Promotions Factory (Aust) Pty Ltd [2004] FMCA 49
Active Skin Pty Ltd v Yey Pty Ltd [2021] FCCA 329
Benyk v Mater Misericordiae Health Services Brisbane Ltd & Anor [2009] FMCA 544; (2009) 228 FLR 478
Calderback v Calderback [1975] 3 All ER 333
Centrestage Management Pty Ltd v Riedle [2007] FMCA 1260
Codelfa Construction Pty Ltd v State Rail Authority of NSW [1982] HCA 24; (1982) 149 CLR 337
Henley Arch Pty Ltd v del Monaco (No. 2) [2020] FCCA 1911
Otter Products v Peter Haydon [2021] FedCFamC2G 13
Portland Marketing (International) Pty Ltd Wulff & Ors (No. 3) [2018] FCCA 3103
Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165; (2004) 211 ALR 342
Washington v Qantas Airways Limited [2014] FCCA 1413;
Western Export Services Inc & Ors v Jireh International Pty Ltd [2011] HCA 45; (2011) 282 ALR 604
Division: Division 2 General Federal Law Number of paragraphs: 102 Date of last submission/s: 4 September 2020 Date of hearing: Determined on the papers Place: Sydney Counsel for the Applicant: A Sykes Solicitor for the Applicant: Brett Samuel, Rosendorff Lawyers Counsel for the Respondent: M Marcus Solicitor for the Respondent: Rani John, Ashurst ORDERS
MLG 2976 of 2018 BETWEEN: MANN TRAVEL PTY LTD
AND: SKYSCANNER LTD
ORDER MADE BY:
JUDGE BAIRD
DATE OF ORDER:
19 NOVEMBER 2021
THE COURT:
1.GRANTS LEAVE to the applicant pursuant to r 22.02(1)(c) of the Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules (Cth) 2021 (GFL Rules), to file its application in a case dated 4 June 2020, and EXTENDS the time prescribed by r 22.02(1) accordingly.
2.ORDERS, pursuant to r 22.02(2)(c) of the GFL Rules, that the respondent pay the applicant’s costs of the proceeding as agreed or to be taxed on a party / party basis in accordance with Part 40 of the Federal Court Rules 2011 (Cth).
3.DIRECTS within 7 days if either party wishes to be…
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- [2021] FedCFamC2G 263
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Orders
Orders of the court
MLG 2976 of 2018
BETWEEN:
MANN TRAVEL PTY LTD
AND:
SKYSCANNER LTD
ORDER MADE BY:
JUDGE BAIRD
DATE OF ORDER:
19 NOVEMBER 2021
THE COURT:
1. GRANTS LEAVE to the applicant pursuant to r 22.02(1)(c) of the Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules (Cth) 2021 (GFL Rules), to file its application in a case dated 4 June 2020, and EXTENDS the time prescribed by r 22.02(1) accordingly.
2. ORDERS, pursuant to r 22.02(2)(c) of the GFL Rules, that the respondent pay the applicant’s costs of the proceeding as agreed or to be taxed on a party / party basis in accordance with Part 40 of the Federal Court Rules 2011 (Cth).
3. DIRECTS within 7 days if either party wishes to be heard on costs of the application they are to file and serve a short submissions limited to 3 pages.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.05(2)(g) Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 17.05 Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth).
REASONS FOR JUDGMENT
JUDGE BAIRD
INTRODUCTION
1.
By application in a case dated and filed 4 June 2020, the applicant, Mann Travel Pty Ltd, seeks an order that the respondent, Skyscanner Ltd, “pay [its] costs of the proceeding as agreed or to be taxed [on] a party / party basis in accordance with Part 40 of the Federal Court Rules” (that is, the Federal Court Rules 2011 (Cth)).
2.
On 24 December 2019, more than 5 months earlier, at the written request of the parties and in the terms sought by them, I made orders in Chambers by consent, dismissing the proceeding referred to in the application in a case, that is, this proceeding. The Court’s consent order was:
The proceedings, including the Respondent’s [that is, Skyscanner’s] cross‑claim filed on 25 September 2019, be dismissed.
3.
Self-evidently, Mann Travel brings its application in a case more than 28 days after a final order was made in the proceeding. Accordingly, leave is required to bring the application. In its application in a case Mann Travel first seeks leave under r 21.02(1)(c) of the Federal Circuit Court Rules 2001 (Cth) (FCCR) to make an application for an order for costs, and secondly, pursuant to r 21.02(2)(c) of the FCCR, and s79 of the Federal Circuit Court of Australia Act 1999 (Cth) (FCCA) it seeks the above order for payment of its costs.
4.
The application in a case is brought because the parties have been unable to resolve their differences on the meaning and effect of numbered paragraph 3, a costs term, in a Notice of Offer to compromise dated 15 November 2019 made by Skyscanner, and accepted by Mann Travel on 29 November 2019. The dispute before me concerns the construction of that paragraph 3, which in these reasons I refer to as the Costs Term. It is set out below at [26].
A preliminary matter - Applicable Act and Rules
5.
On 1 September 2021, this Court was renamed the Federal Circuit and Family Court of Australia (Division 2) further to s 8(1) of the Federal Circuit and Family Court of Australia Act 2021 (Cth) (FC&FCoA), which Act then came into effect. Relevantly, the FC&FCoA in large part has imported the provisions of the FCCA. Pursuant to s 217 of the FC&FCoA, the Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth) (GFL Rules) were made, and have operated as Rules of this Court on and from 1 September 2021. In substance, the GFL Rules are restatements of those of the FCCR which were applicable to matters commenced under the General Federal law jurisdiction of this Court. There are no transitional provisions.
6.
Relevantly to the orders sought by the application in a case, r 22.02(2)(c) of the GFL Rules is in the same terms as r 21.02(2)(c) of the FCCR, and r 22.02(1)(c) of the GFL Rules is in the same terms as r 21.02(1)(c) of the FCCR. I set out in the table in Annexure A to these reasons a comparative table of some of the FCCR and GFL Rules referred to in these reasons. A more comprehensive table is to be found at https://www.fedcourt.gov.au/fcfcoa2/Cross-reference-FCFCOA-GFL-Rules-2021-and-FCC-Rules-2001.pdf. In these reasons I do not invariably refer to both the present and former Rules.
Material before me on the application in a case
7.
Further to directions I made by consent on 3 July 2020, the parties filed and rely on affidavits made by their respective solicitors, and have filed and served written submissions, respectively, in support of the application in a case, in response and in reply. Mann Travel relies on the affidavits Mr Brett Anthony Samuel dated 4 June 2021 (Samuel #1), and Mr Samuel’s affidavit in reply dated 17 August 2021 (Samuel #2). Skyscanner relies on the affidavit of Ms Rani Sara John dated 6 August 2020.
8.
By consent, pursuant to r 15.03 of the FCCR (now r 15.02 GFL Rules), the question of costs is to be determined on the papers.
Anterior issue – leave
9.
Skyscanner’s solicitor, Ms John, in her affidavit, states that she is instructed to oppose each of the orders sought. However, Ms John also says that her understanding was that if the parties did not reach agreement as to costs it would be necessary for Mann Travel to apply to the Court for an order to the effect it seeks.
10.
In her affidavit Ms John notes that Mann Travel requires leave to bring the application in a case, and that “the application was brought over 5 months after the proceedings were dismissed by consent”. There is no evidence before me to found any implication that the delay was unilaterally caused by Mann Travel. Samuel #2 annexes correspondence to the effect that any assertion that delay was unilaterally the fault of Mann Travel is not maintainable, and puts Skyscanner on notice that if any submission regarding delay is made, it will rely on correspondence to be tendered. In the event, no submission is made by Skyscanner regarding any delay, or that leave should not be granted because of any delay.
11.
Although expressed obliquely, as will be apparent from my reasons below, the import of Skyscanner’s submissions is that it now does not oppose the grant of leave, whilst opposing the costs order sought. Skyscanner does submit that once the application for the costs order was made by Mann Travel, “it is entitled to be heard about whether that [costs] order ought be granted”, and if the Court is minded to do so, the percentage reduction that ought to apply to the Federal Court scale”.
12.
Given the circumstances in which the application in a case was brought, I do not consider any delay material, or disentitling, and given those circumstances, I am satisfied it is appropriate to grant Mann Travel leave as sought, and I will so order.
BACKGOUND - THE SETTLED PROCEEDING
13.
Mann Travel commenced the proceeding in this Court on 4 October 2018 by filing an originating application, statement of claim, and applicant’s genuine steps statement. Mann Travel alleged that Skyscanner infringed its Australian registered Trade Mark No. 1685617 for the word mark ‘MANN TRAVEL’, and that Skyscanner had engaged in misleading and deceptive conduct under ss 18(1) and 29(1)(g) and (h) of the Australian Consumer Law, Schedule 2 to the Competition and Consumer Act 2010 (Cth). Mann Travel sought declarations, damages or an account of profits, and sought additional damages.
14.
The statement of claim discloses that the Trade Mark is registered with effect since 6 April 2015 in respect of “air travel services” in class 39 of the Register of Trade Marks. Mann Travel’s claim concerned a Google advertisement caused to be published by Skyscanner via Google Inc’s Google Adwords program. Mann Travel alleged that Skyscanner infringed its Trade Mark from at least 21 July 2018 to in or about 30 July 2018 by causing to be published a Google advertisement on www.google.com that included the words “Mann Travel” and which contained a hyperlink to the Skyscanner website. It alleged the advertisement appeared in Google’s search results in response to the search query term “Mann Travel” when entered through web browsers in Australia.
15.
Ms John attests, on information and belief, that prior to commencement of the proceeding, Mann Travel through its solicitor issued a letter of demand dated 27 July 2018 to Skyscanner, in which Mann Travel alleged that Skyscanner infringed the Trade Mark, requested it cease bidding on the Mann Travel name (by which I infer Ms John is referring to Skyscanner bidding on the name in Google’s Adwords program for its own use of the name as an Adword or search term in its internet search engine marketing activities), and sought its legal costs to date. Ms John attests that, without admission of liability, on or about 28 July 2018, Skyscanner ‘negatively matched’ the name Mann Travel in its search engine marketing activities, that is, it ceased bidding on Mann Travel’s name.
16.
Skyscanner submits that it thereby “immediately address[ed] the activity complained of” by Mann Travel. Whether or not this is so, however, as disclosed by the fact of the initiation of the proceeding, and the steps then taken, it is objectively apparent that the dispute was not resolved. Ms John attests that correspondence between the parties was exchanged in the period 1 August 2018 and 4 October 2021, when the proceeding was commenced.
17.
The proceeding was allocated to my docket. Before the first case management hearing, the parties proposed consent orders for production by Skyscanner of certain information and documents, and that the matter be referred to mediation before a Registrar of the Court. I made the orders sought without requiring any appearance before the Court. The parties participated in a mediation before a Registrar of the Court which commenced on 24 April 2019, and extended over various dates and adjournments until 28 August 2019, when the mediation was terminated, without resolving the dispute.
18.
On 3 September 2019, I made orders by consent in Chambers providing a timetable for finalisation of pleadings, including any cross‑claim, and for the filing and service of any application for security for costs and affidavits in relation to security, and listing the proceeding for further directions on 4 December 2019.
19.
24 September 2019, Skyscanner filed its response, defence, a genuine steps statement, and additionally, a notice of cross‑claim and statement of cross‑claim (together, the cross‑claim) seeking orders for the cancellation or removal of the Trade Mark pursuant to s 88(1), and ss 97 or 101 of the Trade Marks Act 1995 (Cth), on grounds under ss 59 and 92(4)(a) asserting no intention to use, and non‑use. In its cross‑claim Skyscanner claimed that Mann Travel had not used the Trade Mark for the specified services. Mann Travel filed a defence to the cross‑claim, and Skyscanner filed a reply to that defence. From a perusal of those pleadings it is apparent the parties envisaged a dispute encompassing contentions (at least) as to the meaning and ambit of the services within the Trade Mark’s specification, the ambit of the registration, and the characterisation of both the claimed use, and the claimed infringement.
20.
On 20 November 2019, I made orders by consent in Chambers granting leave to Mann Travel to file and serve an amended statement of claim as served, a timetable for the provision of amended responsive pleadings, and standing over argument as to costs to 11 February 2020. Although foreshadowed, no application for security for costs was filed.
21.
On 15 November 2019, Skyscanner served Mann Travel the Offer in respect of the proceeding (referred to above at [4], and see [26]). On 29 November 2019, Mann Travel accepted the Offer.
22.
On 2 December 2019, Skyscanner’s legal representatives informed my Chambers through email communication that the parties had reached an in principle settlement of the proceeding, subject to documentation of that settlement. On 20 December 2019, the parties provided signed consent orders. As I have said above at [2], on 24 December 2019, I made orders by consent in Chambers in the terms provided by the parties.
23.
At the time of dismissal, I had made orders by consent in Chambers on at least 7 occasions, obviating the need for any appearances before the Court. The proceeding had not progressed beyond pleadings. The proceeding had not been set down for hearing.
24.
Ms John states that Mann Travel did not obtain any certificate that it was reasonable to employ an advocate, or more than one advocate, to appear for it in the proceeding. Whilst this is correct, I note, however, that the pleadings filed by both parties have counsel’s names affixed, and in the case of Skyscanner, an express statement that the pleadings were prepared, or settled by its counsel.
THE OFFER OF COMPROMISE AND ACCEPTANCE
25.
It is not in dispute that the Offer was made in the form required pursuant to rule 25.01(1) of the Federal Court Rules, and stated on its face “Form 45, Rule 25.01(1) Federal Court of Australia Rules”. Whilst one of the terms of the Offer stipulated that terms 1, 2, and 3 be confidential, the Offer is annexed to Samuel #1, and no claim to confidentiality is maintained by either party.
26.
The Offer included 5 operative terms. Excluding formal parts, it was as follows:
To the applicant / cross‑respondent (Applicant)
The respondent / cross‑claimant (Respondent) offers to compromise this proceeding, including in its cross‑claim.
The offer is:
1. the Respondent pay to the Applicant the sum of $15,000.
2. no interest be payable by the Respondent to the Applicant.
3. the Respondent pay the Applicant’s costs of the proceeding, as agreed or to be assessed on a party/party basis in accordance with Rule 21.11(2) of the Federal Circuit Court Rules 2011 [sic].
4. terms 1, 2 and 3 are confidential.
5. the proceedings, including the Respondent’s cross‑claim, be otherwise dismissed.
The amount of offer in respect of the claim is $15,000.
This offer is in addition to the costs referred to in proposed order 3 above.
This offer of compromise is open to be accepted for 14 days after service of this offer of compromise.
The amount of the offer will be paid within 28 days after acceptance of this offer.
This offer is made on an open basis.
Date: 15 November 2019
[signed]
As I have said above (reasons at [4]), numbered paragraph 3 of the Offer is the Costs Term, the construction of which is in dispute.
27.
Mann Travel’s acceptance of the Offer was made by its solicitors by email dated 29 November 2019 as follows:
Dear Colleagues
Our client accepts your client’s offer as contained in their offer of compromise dated 15 November 2019.
We shall write to you shortly with our client’s position on costs.
In the interim we are content for you to:
1. Prepare a draft terms of settlement;
2. Prepare draft terms of consent in relation to both proceedings;
3. Inform the court that the parties have settles both proceedings and minutes of consent orders will be provided to the court in the near future.
Can you kindly confirm receipt of this email.
28.
In her affidavit at [17] Ms John states that “[t]he parties entered into a Deed of Settlement and Release on 20 December 2019. The Deed reflected the terms of the Offer of Compromise including the payment of $15,000 and the terms on costs”.
29.
As I have said above at [2], thereafter the parties informed the Court that the proceeding had settled, and subsequently provided signed form of orders, and orders were made in the form provided.
The Costs Term and Rule it specifies
30.
The Costs Term names r 21.11(2) of the FCCR. As is apparent from [26] above, there is a typographical error as to the year of the FCCR in the Costs Term. The year 2011 is the applicable year of the introduction of the Federal Court Rules 2011. Neither party makes anything of this error.
Rule 21.11(2) FCCR
31.
Rule 21.11(2) FCCR was as follows:
21.11 Taxation of costs
(2) When taxing a statement of costs, a taxing officer must apply:
(a) for a family law or child support proceeding – the scale of costs set out in Schedule 3 of the Family Law Rules; and
(b) for a general federal law proceeding – the scale of costs set out in Schedule 2 to the Federal Court Rules.
32.
Rule 21.11(2) FCCR is located in Part 21 of those Rules headed “Costs”, in Division 21.3, headed “Costs and disbursements”. See Annexure A.
33.
When the Offer was made and accepted the reference to “Schedule 2” of the Federal Court Rules in r 21.11(2)(b) FCCR was outdated. The reference should have been to “Schedule 3” of the Federal Court Rules. It appears this is because after the FCCR were introduced, and some time prior to, or when, the current Federal Court Rules came into operation on 1 August 2011, the numbers of the schedules changed, and the scale of costs previously appearing in Schedule 2 of the former Federal Court Rules was renumbered and henceforth appeared in Schedule 3, where it is presently found. The FCCR was not subsequently updated to reflect that the scale of costs was henceforth “Schedule 3”. For convenience, I refer to that schedule as FCR Schedule 3.
34.
Mann Travel submits that it is immaterial that r 21.11(2)(b) refers to the incorrect schedule number, and relies, inter alia, on the dictionary in the FCCR (relevantly, replicated in the GFL Rules) which defines Federal Court Rules as the “Federal Court Rules 2011” made under the Federal Court of Australia Act 1976, as amended from time to time”. Skyscanner expressly seeks to make nothing of the obvious error in the number of the schedule. I accept that the reference to the incorrect schedule is an obvious error, and that it is immaterial.
Rule 22.10(1) GFL Rules
35.
Rule 22.10(1) of the GFL Rules restates and updates r 21.11(2) FCCR. It is located in Part 22 headed “Costs”, in Division 22.3, headed “Costs and disbursements”. Rule 22.10(1) GFL Rules is as follows:
22.10 Taxation of costs
(1) In taxing a statement of costs, a taxing officer must apply the scale of costs set out in Schedule 3 to the Federal Court Rules.
36.
In both sets of Rules, a taxing officer means a Registrar. In both the GFL Rules and the FCCR, the Division/Subdivision in which is found the above rule (and its predecessor) applies to costs payable, or to be taxed, under an Act, these Rules or an order of the Court in a proceeding: see r 22.08(1) GFL Rules; r 21.09(1) FCCR.
37.
Division 21.2 and Division 21.3, FCCR (now see Divisions 22.02 and 22.03 GFL Rules) make specific provision for the order, awarding and calculation of costs in a general federal law proceeding in this Court.
RELEVANT PRINCIPLES AND PROVISIONS RE COSTS
Costs provisions in this Court
38.
To place r 21.11 (see above at [31]) in context in the FCCR, see extracts of Part 21 – Costs set out in my decision in Active Skin Pty Ltd v Yey Pty Ltd [2021] FCCA 329 at [29], concerning an application for security for costs in a trade mark proceeding in this Court, which I incorporate by reference.
39.
In Active Skin, at [43], I said, referring to the FCCR (emphasis in the original):
Division 21.3 – and r.21.10 within Div.21.3 - is enlivened if an order is made that costs are payable by a party (relevantly), or costs are to be taxed, that is, as r.21.10 expressly states, when a party is entitled to costs in a proceeding. Rule 21.09 states when and to what circumstance Division 21.3 applies. The rule makes clear that neither r.21.10 nor r.21.11 apply unless there is an order that costs are payable, or are to be taxed, that is, the Court has made an order pursuant to a power contained in Division 21.2 of the Rules, or, not relevant to the present case, another Act. An order for security for costs made pursuant to r.21.01 does not constitute such an order.
(See Annexure A for the corresponding costs provisions in the GFL Rules.)
GFL Rules r 22.02 and r 22.09
40.
Rules 22.02 and 22.09 GFL Rules are relevantly in the same terms as rr 21.02, and 21.10 FCCR respectively, which FCCR are referred to in the submissions made by the parties (save for the costs schedule number in r 22.09(a) which, with the reorganisation of the order of the schedules, is now Schedule 2, rather than Parts 1 and 2 of Schedule 1).
41.
Rules 22.02 and 22.09 GFL Rules provide respectively:
22.02 Order for Costs
(1) An application for an order for costs may be made:
(a) at any stage in a proceeding; or
(b) within 28 days after a final decree or order is made; or
(c) within any further time allowed by the Court.
(2) In making an order for costs in a proceeding, the Court may:
(a) set the amount of the costs; or
(b) set the method by which the costs are to be calculated; or
(c) refer the costs for taxation under Part 40 of the Federal Court Rules; or
(d) set a time for payment of the costs. Which may be before the proceeding is concluded.
22.09 Costs and disbursements
Unless the Court otherwise orders, a party entitled to costs in a general federal law proceeding (other than a proceeding to which the Bankruptcy Act 1966 applies) is entitled to:
(a) costs in accordance with Schedule 2; and
(b) disbursements properly incurred.
42.
Schedule 2 to the GFL Rules is an event-based schedule. The former costs schedule, Part 1, Schedule 1 to the FCCR (referred to in r 21.10 FCCR), in substantially the same terms, was similarly event‑based. In each case, events are identified by item number and description, and corresponding amounts specified per event.
43.
The default position in this Court is that costs, when ordered, are assessed as provided by Schedule 2 GFL Rules (formerly, Part 1, Schedule 1 FCCR). See generally, Otter Products v Peter Haydon [2021] FedCFamC2G 13 (15 September 2021).
44.
In a 2004 decision to which Skyscanner drew my attention, 45 Degrees North v The Promotions Factory (Aust) Pty Ltd [2004] FMCA 49, commenting on Schedule 1, FCCR (then named the
Background
Background to the litigation
Full text does not contain this section.
Evidence
Evidence Before The Court
Decision
Reasons for decision
Ratio Decidendi
Legal Principle Established
By referring to taxation under r 21.11 FCCR, Skyscanner says it was accepting assessment upon the item based method set out in FCR Schedule 3. It was not agreeing to Mann Travel having its costs assessed at the full Federal Court scale. Skyscanner submits that this ought to have been obvious to Mann Travel because that would have been an agreement between the parties as to the outcome. CONSIDERATION For the reasons I expand upon below, Skyscanner’s position cannot be accepted. In Codelfa Construction Pty Ltd v State Rail Authority of NSW [1982] HCA 24; (1982) 149 CLR 337 at 352, for the purpose of construing a contract Mason J, with the concurrence of Stephen J and Wilson J, said of the admission of evidence of surrounding circumstances on the one hand and of the parties’ intentions on the other hand: The true rule is that evidence of surrounding circumstances is admissible to assist in the interpretation of the contract if the language is ambiguous or susceptible of more than one meaning. But it is not admissible to contradict the language of the contract when it has a plain meaning. Generally speaking facts existing when the contract was made will not be receivable as part of the surrounding circumstances as an aid to construction, unless they were known to both parties, although, as we have seen, if the facts are notorious knowledge of them will be presumed.… prior negotiations will tend to establish objective facts known to both parties and the subject matter of the contract. To the extent to which they have this tendency they are admissible. But in so far as they consist of statements and actions of the parties which are reflective of their actual intentions and expectations they are not receivable. The point is that such statements and actions reveal the terms of the contract which the parties intended or hoped to make. They are superseded by, and merged in, the contract itself. In Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165; (2004) 211 ALR 342, the High Court said at [40]: It is not the subjective beliefs or understandings of the parties about their rights and liabilities that govern their contractual relations. What matters is what each party by words and conduct would have led a reasonable person in the position of the other party to believe. References to the common intentions of the parties to a contract are to be understood as referring to what a reasonable person would understand by the language in which the parties have expressed their agreement. The meaning of the terms of a contractual document is to be determined by what a reasonable person would have understood them to mean. That, normally, requires consideration not only of the text, but also of the surrounding circumstances known to the parties, and the purpose and object of the transaction. The surrounding circumstances in which the Offer was made are set out above at [13]-[24]. The purpose and object of making the Offer was to settle the proceeding, and, if it was not accepted, to enable Skyscanner to rely on it for the purposes of costs if the matter proceeded to hearing and Skyscanner obtained a better result than the Offer: see Pt 25 Federal Court Rules. That is, if not accepted, the Offer could place Mann Travel at risk of paying indemnity costs. Acceptance of the Offer brought the proceeding to an end. That was what it was intended to do. Thereafter, the parties engaged in the mechanics of giving effect to the Offer, that is, in performance of their agreement.