Meka v The Shell Company of Australia

[2005] FMCA 700

FEDERAL MAGISTRATES COURT OF AUSTRALIA

MEKA v THE SHELL COMPANY OF AUSTRALIA
LTD (No.2) [2005] FMCA 700

HUMAN RIGHTS – COSTS – Claim for costs on an indemnity basis – offer of compromise rejected by the applicant prior to trial – applicant unsuccessful in the proceedings.

Federal Court Rules
Federal Magistrates Court Rules 2001 (Cth)

Meka v Shell Company Australia Limited [2005] FMCA 250

Applicant: CHUKWUMA MEKA

Respondent: THE SHELL COMPANY OF AUSTRALIA LIMITED

File Number: SYG860 of 2004

Judgment of: Driver FM

Hearing date: Decided on written submissions

Date of Last Submission: 13 May 2005

Delivered at: Sydney

Delivered on: 27 May 2005

REPRESENTATION

Counsel for the Applicant: Mr I Asuzu

Counsel for the Respondent: Ms K Eastman

Solicitors for the Respondent: Blake Dawson Waldron

ORDERS

1. The applicant is to pay the respondent’s costs of and incidental to the proceedings, including any reserved costs, which costs, unless agreed, are to be assessed and, if necessary, taxed, pursuant to the Federal Court Rules and by reference to the Federal Court scale of costs.

2. For the purposes of order 1, the applicant shall pay the respondent’s costs on a party and party basis in respect of costs incurred up to 31 October 2004 and shall pay costs on an indemnity basis in respect of costs incurred on and from 1 November 2004.

3. The above costs are in addition to, and not in substitution of, any previous costs orders made in these proceedings.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
SYDNEY

SYG860 of 2004

CHUKWUMA MEKA

Applicant

And

THE SHELL COMPANY OF AUSTRALIA LIMITED

Respondent

REASONS FOR JUDGMENT

Introduction and background

1. This is an application for costs arising out of my judgment in Meka v Shell Company Australia Limited [2005] FMCA 250. I ordered that Mr Meka’s application for relief for asserted racial discrimination be dismissed. I invited submissions on costs. Shell submits that it should receive its costs up to 20 October 2004, assessed against the Federal Magistrates Court’s scale of costs in Schedule 1 to the Federal Magistrates Court Rules 2001 (Cth) (“the Federal Magistrates Court Rules”). Secondly, Shell submits that it should receive its costs of and incidental to the proceedings on an indemnity basis on and from 21 October 2004, in the light of an offer of settlement made on 5 October 2004 which remained open for 14 days and was not accepted.

2. In her written submissions, Ms Eastman, for Shell, also invites me to have regard to the applicant’s conduct of the case and comments made by me in dealing with an unsuccessful application by Shell for summary dismissal of the proceedings, and further comments made by me at a pre-trial directions hearing.  Finally, I am invited to take note of the fact that an interlocutory order for costs made by me on 17 January 2005, fixed in the sum of $200, has not yet been paid.

3. In his written submissions, Mr Asuzu, for Mr Meka, submits that there were special circumstances in this case because a novel question of law was raised involving a significant public interest element.  Mr Asuzu also invites me to taken into account the fact that the applicant minimised costs of the legal proceedings by electing not to cross-examine Shell’s witnesses. 

Reasoning

1. The general principles concerning consideration of costs issues have been stated many times and I do not need to repeat them.  As a general principle, as the successful party in the litigation, Shell should receive its costs on the usual basis, unless there are some special features in the case warranting a departure from that general principle.

2. I reject Mr Asuzu’s submission that Mr Meka should escape a costs order because of the public interest component of the proceedings.  There is always some public interest element in human rights proceedings because the legislation involved is remedial and gives statutory expression to important public interest principles.  Nevertheless, such proceedings are private actions for damages in general and the public interest element in particular proceedings needs to be exceptional in order to warrant a departure from ordinary costs principles.  While the facts in this case were somewhat unusual and indicated some administrative inefficiency on the part of Shell, the legal principles involved were not novel.

3. I accept that costs in the proceedings were reduced by the decision by Mr Asuzu, on behalf of Mr Meka, not to cross-examine Shell’s witnesses.  However, that decision also minimised Mr Meka’s prospects of success.  Further, if Mr Meka had considered that minimisation of costs was a primary consideration he could have accepted the offer made by Shell on 5 October 2004.  That would have avoided any liability for Shell’s costs and given him at least a substantial contribution towards his own costs.  Whilst Shell was unsuccessful in its attempt to have the application summarily dismissed as disclosing no reasonable cause of action, it should have been apparent well before the trial of the matter that Mr Meka’s claim faced considerable hurdles of proof and much would depend upon the testing of Shell’s evidence.  That did not occur and, in the result, the outcome was probably inevitable. 

4. Shell’s letter of offer dated 5 October 2004 meets the description of a Calderbank offer.  Shell offered Mr Meka $2,000 inclusive of costs and the letter made clear that if the offer were not accepted and Mr Meka was not successful in his claim the letter would be relied upon on the question of costs from the date of rejection or expiry of the offer.  The offer was not accepted.  Ms Eastman invites me to apply the relevant Federal Court Rules (“the Federal Court Rules”) in order to support an order for indemnity costs on and from 21 October 2004.  The Federal Court Rules[1] are said to apply pursuant to rule 1.05 and Schedule 3, Part 2 of the Federal Magistrates Court Rules. I agree that that is the correct approach. However, the form of the offer does not strictly comply with Order 23, rule 3 and the offer warns of a costs outcome different from that prescribed by Order 23, rule 11. In the circumstances, the issue should be resolved by reference to general principles rather than Order 23. Pursuant to general principles and consistently with the terms of the offer, Shell should receive its costs from the day after the offer closed or from the day the offer was rejected. The operative date for indemnity costs in this case is not 21 October 2004 but 1 November 2004. On that day the solicitor for Shell telephoned Mr Asuzu to discuss the offer of compromise. I take from that that although, according to the terms of the letter, the offer had already terminated, Shell was, on 1 November, still willing to contemplate it. In the conversation which ensued, Mr Asuzu confirmed that the applicant rejected Shell’s offer. Shell should receive its costs on an indemnity basis on and from 1 November 2004.

   [1] Order 23, except rules 14 and 15

5. The application of the Federal Court Rules as to indemnity costs carries with it, in my view, the application of the Federal Court scale of costs.  The Federal Magistrates Court scale of costs applies on a completely different event basis by reference to fixed amounts.  The application of the Federal Magistrates Court scale of costs up to the end of October 2004 and the Federal Court scale of costs on an indemnity basis on and from 1 November 2004 may produce anomalous and unjust results.  Having decided that costs should be paid on an indemnity basis for the latter part of the proceedings and that the Federal Court scale of costs should apply, the same scale should apply to costs assessed on a party and party basis in respect of costs incurred prior to 1 November 2004.  If not agreed, those costs will need to be assessed, and if necessary taxed, pursuant to the Federal Court Rules, on the two bases. 

6. I see no significance in the failure by the applicant to so far pay the costs awarded against the applicant by me on 17 January 2005.  I did not require those costs to be paid by a particular time and, in the ordinary course, such costs would only become payable when the proceedings had been completed.

I certify that the preceding nine (9) paragraphs are a true copy of the reasons for judgment of Driver FM

Associate: 

Date:  27 May 2005