Mann Travel Pty Ltd v Skyscanner Ltd (No 2)
[2022] FedCFamC2G 33
•2 February 2022
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Mann Travel Pty Ltd v Skyscanner Ltd (No 2) [2022] FedCFamC2G 33
File number(s): MLG 2976 of 2018 Judgment of: JUDGE BAIRD Date of judgment: 2 February 2022 Catchwords: PRACTICE AND PROCEDURE – COSTS – No matter of principle. Legislation: Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules2021 (Cth), rr.13.08, 22.02, Schedule 2
Federal Circuit and Family Court of Australia Act 2021 (Cth), s.214
Federal Circuit Court of Australia Act 1999 (Cth), s.79
Federal Circuit Court of Australia Rules 2001 (Cth), rr.21.10, 21.11Cases cited: Australian Competition and Consumer Commission v Colgate‑Palmolive Pty Ltd (No 5) (2021) 151 ACSR 26; [2021] FCA 246
Hamod v New South Wales (2002) 188 ALR 659; [2002] FCA 424
Mann Travel Pty Ltd v Skyscanner Ltd [2021] FedCFamC2G 263
Melbourne City Investments Pty Ltd v Treasure Wine Estates Ltd (No 2) [2017] FCAFC 116
TSG Franchise Management Pty Ltd v Cigarette & Gift Warehouse (Franchising) Pty Ltd (No. 3) [2016] FCA 828Division: Division 2 General Federal Law Number of paragraphs: 26 Date of last submission/s: 26 November 2021 Date of hearing: Matter determined on the papers Place: Sydney Counsel for the Applicant A Skyes 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 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: MANN TRAVEL PTY LTD
Applicant
AND: SKYSCANNER LTD
Respondent
ORDER MADE BY:
JUDGE BAIRD
DATE OF ORDER:
2 FEBRUARY 2022
THE COURT ORDERS THAT:
1.The applicant’s application in a case dated and filed 4 June 2020 is allowed.
2.Pursuant to r 22.02(2) of the Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth), the respondent pay the applicant’s costs of and concerning the applicant’s application in a case dated and filed 4 June 2020, on an indemnity costs basis, including without limitation:
(a)from the earlier of the communication by the applicant to the respondent of the quantum of its costs, or the respondent’s first without prejudice offer to resolve costs (in each case made after the acceptance of the offer); and
(b)all disbursements be allowed and paid in full.
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 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
REASONS FOR JUDGMENT
JUDGE BAIRD
On 19 November 2021 the Court delivered its reasons for judgment and final orders on the construction of a costs term in an accepted Notice of Offer to compromise: Mann Travel Pty Ltd v Skyscanner Ltd [2021] FedCFamC2G 263 (judgment). This is my costs determination following the judgment. I adopt the terms I defined in the judgment. In these reasons I generally refer to paragraphs of the judgment using the prefix ‘J’.
In the judgment I found in favour of Mann Travel, the applicant, and applicant on the application in a case dated and filed 4 June 2020. At J [102] I noted that both parties sought a further opportunity to be heard on the costs of the application. I then said:
I am mindful that doing so will incur further costs. I consider that it should not have been necessary for Mann Travel to bring this application in a case. Consent orders would have sufficed. In these circumstances I foreshadow that Skyscanner should pay Mann Travel’s costs of the application in a case, on an indemnity basis. If either party contends otherwise, they may file and serve a short submission, of no more than 3 pages, within 7 days. In the absence of submissions I will make the costs order foreshadowed.
I made orders reflecting the above. Each party has filed a short submission in support of the appropriate order it contends should be made. Mann Travel submits costs of the application should be ordered in its favour on an indemnity basis. Skyscanner accepts that it should pay Mann Travel’s costs of the application, and submits that the circumstances do not warrant the Court awarding costs on an indemnity basis.
For the reasons I explain below, I consider that is appropriate in the circumstances of this case that Mann Travel’s costs of and incidental to the application be payable by Skyscanner on an indemnity costs basis, and that all disbursements be payable in full. I have not been informed by the parties of the amount of these costs.
The relevant principles
Pursuant to s 214(2) and (3) of the Federal Circuit and Family Court of Australia Act 2021 (Cth), in force since 1 September 2021 (formerly set out in s 79 of the Federal Circuit Court of Australia Act 1999 (Cth)), the Court has a broad discretion to order costs.
I set out the Court’s approach to costs in the exercise of its discretion in the judgment at J [45] ‑ [47]. It is not necessary to repeat all I said there; it suffices to observe and say further that the general rule is that costs follow the event, costs may be awarded, inter alia, according to the Court event‑based scale set out in Schedule 2, Federal Circuit Court and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth) (GFL Rules), on a party and party basis (including under the Federal Court scale), or on an indemnity basis. The Court may set the amount of the costs, or the method of calculation, or refer the costs to taxation: see r 22.02(2).
The fundamental purpose of a costs order is to compensate a successful party, rather than punish an unsuccessful party. Where the circumstances of the case warrant, the Court may order indemnity costs. As defined in the Dictionary, Schedule 1 to the Federal Court Rules (to which recourse may be had by this Court when the circumstances require, see r 1.06(2), GFL Rules), costs on an indemnity basis means costs as a complete indemnity against the costs incurred by the party in the proceeding, provided that they do not include any amount shown by the party liable to pay them to have been incurred unreasonably by the party incurring them. Indemnity costs may be distinguished from costs as between party and party. The Dictionary refers to that latter as ‘only the costs that have been fairly and reasonably incurred by the party in the conduct of the proceeding’: see also, J [49].
In broad terms, an order for indemnity costs requires that some special or unusual feature arises. There can be no exhaustive list of the circumstances that may warrant the exercise of the discretion to award indemnity costs: Melbourne City Investments Pty Ltd v Treasure Wine Estates Ltd (No 2) [2017] FCAFC 116 at [4] – [5]. In Melbourne City Investments, the Full Court of the Federal Court of Australia reiterated that indemnity costs are not punitive, but are designed to compensate a party fully for costs incurred, as a normal costs order could not be expected to do, when the Court takes the view that it was unreasonable for the party against whom the order is made to have subjected the innocent party to the expenditure of costs: at [5], citing Hamod v New South Wales (2002) 188 ALR 659; [2002] FCA 424, at 665 (per Gray J, Carr and Goldberg JJ agreeing).
As Davies J earlier explained in TSG Franchise Management Pty Ltd v Cigarette & Gift Warehouse (Franchising) Pty Ltd (No. 3) [2016] FCA 828 at [7] – [8], referring to Hamod:
[7]Indemnity costs are not designed to punish a party for persisting with a case that turns out to fail. They are not awarded as a means of deterring litigants from putting forward arguments that might be attended by uncertainty. Rather, they serve the purpose of compensating a party fully for costs incurred, as a normal costs order could not be expected to do, when the Court takes the view that it was unreasonable for the party against whom the order is made to have subjected the innocent party to the expenditure of costs.
[8]The cases illustrate the appropriateness of awarding costs on an indemnity basis where there has been particular misconduct that caused a loss of time to the Court and to other parties, where proceedings were commenced or continued in wilful disregard of known facts or clearly established law, where allegations were made which ought never to have been made, or where the proceeding was unduly prolonged by groundless contentions …
As further summarised by the Full Court in Melbourne City Investments at [5] (citations omitted) circumstances warranting indemnity costs orders may also include where “the applicant, properly advised, should have known that he [sic] had no chance of success” or “persists in what should on proper consideration be seen to be a hopeless case”.
Skyscanner drew my attention also to Australian Competition and Consumer Commission v Colgate‑Palmolive Pty Ltd (No 5) (2021) 151 ACSR 26; [2021] FCA 246 (ACCC v Colgate‑Palmolive), where Wigney J at [11] noted about the above and similar descriptions of types of cases in which an indemnity costs order may be warranted:
… first, they use expressions which suggest a high degree of certainty concerning the deficiencies in the losing party’s case. It would appear not to be enough that the losing party’s case was simply weak or tenuous. Second, and relatedly, the deficiencies must be sufficiently manifest and clear such that it can be inferred that the losing party would or should have appreciated them when the action was commenced or continued, at least if they had given proper consideration to, or been properly advised about, the merits of their case.
and at [12] warned that in assessing whether a case can be said to have no chance of success or be hopeless, it is also necessary to be wary of reasoning with the benefit of hindsight.
The parties submissions
Mann Travel
Mann Travel directs attention to J [87]. I there said: “the Costs Term is in plain terms. It is certain” … There is no warrant to imply into the Costs Term any discount, or subsequent chance to argue that costs should be otherwise than determined in accordance with FCR Schedule 3”. Mann Travel says this was always the case, and that it should not have been necessary to bring its application in a case.
Skyscanner
Skyscanner says the following in support of its submission that the present circumstances do not warrant indemnity costs:
(a)following acceptance of the Offer and a deed of settlement (together, Resolution), Mann Travel offered to resolve its costs for $92,292, a sum over six times in excess of the settlement sum (terms of the Offer are set out at J [26], reference to the deed is at J [28]);
(b)in circumstances where the proceeding had not proceeded past pleadings, orders (on at least 7 occasions) had been by consent and no Court appearances had been necessary (see J [23], but also see J [17] – [20]), Skyscanner “genuinely regarded the claimed sum as manifestly excessive”;
(c)Skyscanner made 2 without prejudice offers to resolve the costs issue, the second for $20,000;
(d)Mann Travel did not respond to the second offer, but instead filed the application;
(e)following the Resolution, it became apparent from inter partes correspondence that the parties held different views as to the application of the Federal Court scale without a prior order under r 21.10 FCCR (that is, the former Rules of this Court), what was encompassed in the Costs Term, and as to case law. Skyscanner submits this was a genuine dispute between the parties, and in this light Skyscanner opposed the orders sought in the application;
(f)nevertheless, the application having been brought, Skyscanner submits it conducted itself in a way to efficiently achieve determination of the application, including not making submissions opposing grant of leave, not pursuing arguments as to delay, and agreeing to a timetable for submissions and determination on the papers.
Skyscanner submits that the present does not present any ‘special or unusual feature’ justifying a departure from the ordinary practice of awarding costs on a party-party basis. It seeks to distinguish itself from those types of cases and positions identified in Melbourne City Investments at [5], and ACCC v Colgate‑Palmolive at [8], [10] (see above at [8] - [11]).
Consideration
In the judgment I reached the view that the application should not have had to be brought, consent orders should have sufficed. I set out the circumstances in which the application was brought, so far as disclosed to the Court, at J [13] – [23] (background to dispute and procedural history of the proceeding), and J [25] – [29], [57] – [69].
My conclusion at J [87] (set out in these reasons at [12]) should be read in the light of my consideration at J [79] – [86], and my further consideration and determination at J [97] – [99]. It follows from that consideration and my conclusion that Skyscanner, properly advised, should at all times have known that it had no chance of success, and further, that upon the application being brought, it persisted in what should on proper consideration be seen to be a hopeless case (see above at [10]), not merely a weak or tenuous case (c.f., above at [11]).
Nothing in Skyscanner’s submission now persuades me to the contrary.
The course that followed the Resolution (save for without prejudice correspondence) as then disclosed to the Court is set out in the judgment. Not disclosed in the evidence or submissions before the Court on the application and considered in the judgment is the gravamen of Skyscanner’s dispute as to costs now revealed in the points Skyscanner relies on that I have set out at [13(a)-(c)]. Skyscanner states it genuinely regarded the claimed sum (that is, Mann Travel’s claimed costs of the proceeding further to the Offer) as ‘manifestly excessive’.
Contrary to Skyscanner’s submission on the costs of the application, there is no necessary relationship between the quantum of a settlement sum and the amount of costs expended to reach such a settlement. So too, it does not invariably follow that because a proceeding had not proceeded beyond pleadings, or that Court appearances had been avoided, that costs should be minimal, or approximating $20,000, however that amount may be characterised. In each case costs fairly and reasonably incurred depends on the facts and circumstances of the particular dispute and what occurred in the course of that dispute and resultant litigation to the point of settlement. In the present case, see J [13] – [21], [66] - [67]; I note, inter alia, that orders made provided for certain discovery, for mediation, amended pleadings, and a cross‑claim, and that correspondence foreshadowed an application by Skyscanner for security for costs in the amount of $344,000 . I note at J [77], Skyscanner’s submission that the matter engendered “voluminous correspondence”. I have referred to the engagement of counsel at J [24]. To anticipate my orders on this costs determination, I consider that the engagement of counsel in the application and in this costs determination was appropriate.
In the circumstances of the Costs Term contained in the accepted Offer, the quantum of Mann Travel’s costs, and the composition of those costs (by which I mean disagreements as to whether they are encompassed within the meaning of party and party costs), and whether or not – in Skyscanner’s phrase – costs claimed by way of party and party costs were or were not “manifestly excessive” were matters properly to be dealt with in the orderly course of taxation of those costs by a taxing officer, if not readily agreed between the parties. Part 40, Federal Court Rules, and Schedule 3 of those Rules expressly provide for that course: see J [49].
Skyscanner’s view of the quantum of costs claimed, and its view of the amount it was willing to pay (at most, $20,000), placed Mann Travel in the invidious position where it had to bring, and to fully argue, the application in order to enforce the Resolution, and thus the Costs Term. Mann Travel should not have had to do so. As I said at J [88], in sum, the quantification of the costs was a matter for performance of the agreement; if it was necessary to give effect to the assessment in accordance with r 21.11(2) FCCR as provided by the Costs Term, that there be an order of the Court, then that was simply a matter of applying to the Court for a consent order to that effect: see now r 13.08 GFL Rules. See also, J [101]. The application should not have had to be brought.
Given Skyscanner’s stance (see e.g., [13(a)-(c)], Mann Travel could not proceed to taxation of its costs in accordance Schedule 3 to the Federal Court Rules.
It is necessary to consider Skyscanner’s submission that upon the application being brought it conducted itself in a way to efficiently achieve determination of the application: see above at [13(f)]. In the judgment I set out the parties’ conduct of the application, and the evidence and arguments they made. Skyscanner opposed the application, and as set out in Ms John’s affidavit opposed leave, and pointed to the 5 month period before the application was brought. Skyscanner could have consented to the application, or proposed a consent order. It could have filed a submitting appearance. It did not.
I accept that Skyscanner conducted itself as I have set out in [13(f)]. I consider however that its evidence and arguments raised in the application in opposing it tells against Skyscanner’s submission as to its conduct. Even apart from its arguments on the Costs Term, it did not expressly agree to the grant of leave, it pressed application of this Court’s event-based scale of costs, raised arguments about the absence of a certificate regarding counsel, raised evidence objections, without regard to the quality of its own filed evidence (see at J [60] [- [63], and J [58]). In the alternative to this Court’s scale costs, Skyscanner argued for a substantial (but undisclosed) discount on any party and party costs under the Federal Court scale. Mann Travel was placed in the position it had to respond to Skyscanner’s arguments.
Conclusion
For the foregoing reasons, in the exercise of my discretion, whilst noting the genuineness of the views of each party, I conclude that the circumstances of this case warrant an order that Skyscanner pay Mann Travel’s costs of the application on an indemnity costs basis from the earlier of the communication to Skyscanner of the quantum of its costs (see above at [13(a)], or Skyscanner’s first without prejudice offer to resolve costs. Further, balancing the matters I have referred to in the preceding 2 paragraphs, I consider that in these circumstances an order for indemnity costs for the period both before and after the application was commenced is warranted, and I will so order.
In relation to the period to which I order indemnity costs, to the extent that there may be any inconsistency with my orders made 19 November 2021, or any dispute or application to the taxation officer regarding Mann Travel’s costs after the Resolution for the period following Mann Travel’s communication of the quantum it claimed for costs and to date, the orders I make today take precedence over the orders of the Court made on 19 November 2021. To further make myself abundantly clear, and to ensure that the parties now do not seek to further argue that the costs of this costs determination should be separately heard and determined, whether on the papers or otherwise, the costs I now order include Mann Travel’s costs of this costs determination. To minimise further argument and consequent expense, I will order that disbursements be paid in full.
I certify that the preceding twenty-six (26) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Baird. Associate:
Dated: 2 February 2022
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