Moss v Lowe Hunt & Partners Pty Ltd (No 2)

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FEDERAL COURT OF AUSTRALIA

Moss v Lowe Hunt & Partners Pty Ltd (No 2) [2011] FCA 18

Citation: Moss v Lowe Hunt & Partners Pty Ltd (No 2) [2011] FCA 18
Parties: ANDREW MOSS and PEGASUS STRATEGIC PLANNING PTY LIMITED v LOWE HUNT & PARTNERS PTY LTD and LOWE SYDNEY PTY LTD
File number(s): NSD 873 of 2008
Judge: KATZMANN J
Date of judgment: 20 January 2011
Catchwords: COSTS – Indemnity costs – offer of compromise
Legislation: Fair Trading Act 1987 (NSW)
Federal Court of Australia Act 1976 (Cth)
Trade Practices Act 1974 (Cth)
NSW Uniform Civil Procedure Rules
Cases cited: Andrew Moss v Lowe Hunt & Partners Pty Ltd [2010] FCA 1181
Futuretronics.com.au Pty Ltd v Graphix Labels Pty Ltd [2009] FCAFC 40
Hamod v State of New South Wales (2002) 188 ALR 659, [2002] FCAFC 97
IFTC Broking Services Ltd v Commissioner of Taxation (2010) 268 ALR 1, [2010] FCAFC 31
Nationwide News Pty Ltd v Naidu (2007) 71 NSWLR 471, [2007] NSWCA 377
Port Kembla Coal Terminal v Bravurus Maritime Inc(No 2) (2004) 212 ALR 281, [2004] FCA 1437
South Eastern Sydney Area Health Service v King [2006] NSWCA 2
White v Overland [2001] FCA 1333
Date of hearing: 14 December 2010
Place: Sydney
Division: GENERAL DIVISION
Category: Catchwords
Number of paragraphs: 63
Counsel for the Applicants: Mr M Lee and Ms R Francois
Solicitor for the Applicants: Harmers Lawyers
Counsel for the Respondents: Mr N Rochow SC
Solicitor for the Respondents: Griffin Lawyers

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

GENERAL DIVISION

NSD 873 of 2008
BETWEEN:

ANDREW MOSS
First Applicant

PEGASUS STRATEGIC PLANNING PTY LIMITED
Second Applicant
AND:

LOWE HUNT & PARTNERS PTY LTD
First Respondent

LOWE SYDNEY PTY LTD
Second Respondent

JUDGE:

KATZMANN J

DATE OF ORDER:

20 JANUARY 2011

WHERE MADE:

SYDNEY

THE COURT ORDERS THAT:

1.The respondents pay the second applicant’s costs (including any reserved costs) taxed on a party/party basis up to and including 23 March 2009 and thereafter taxed on an indemnity basis.

Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
The text of entered orders can be located using Federal Law Search on the Court’s website.


IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

GENERAL DIVISION

NSD 873 of 2008
BETWEEN:

ANDREW MOSS
First Applicant

PEGASUS STRATEGIC PLANNING PTY LIMITED
Second Applicant
AND:

LOWE HUNT & PARTNERS PTY LTD
First Respondent

LOWE SYDNEY PTY LTD
Second Respondent

JUDGE:

KATZMANN J

DATE:

20 JANUARY 2011

PLACE:

SYDNEY

REASONS FOR JUDGMENT

  1. On 1 November 2010 I delivered judgment in the proceeding in favour of the second applicant (“Pegasus”), reserving the question of costs at its request.  The dispute between the first applicant, Mr Moss, and the respondents had been resolved earlier:  Andrew Moss v Lowe Hunt & Partners Pty Ltd [2010] FCA 1181 at [4]. The action concerned a claim for damages for misleading or deceptive conduct under the Trade Practices…

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Details
Case
[2011] FCA 18
Decision Date

CaseChat Overview and Summary

In Moss v Lowe Hunt & Partners Pty Ltd (No 2), the plaintiff, Mr Moss, sought costs in relation to proceedings against Lowe Hunt. The case revolved around an offer of compromise and the adequacy of the evidence presented to support the claims. The Supreme Court of Victoria was tasked with determining the appropriate costs order.

The court had to decide whether the offer of compromise made by the plaintiff was sufficient to warrant a costs order on an indemnity basis. The plaintiff argued that the defendant had not provided a proper basis for assessing the offer, while the defendant contended that the plaintiff had failed to substantiate his claims adequately. Additionally, the court had to consider whether the proceedings should have been transferred to the Federal Magistrates Court.

The court found that the defendant had not provided sufficient evidence to substantiate their claims, particularly in relation to the calculation of the damages sought. The defendant's offer of compromise was made without adequate evidence, which undermined the legitimacy of the offer. Furthermore, the court noted that the suggestion of transferring the proceedings to the Federal Magistrates Court was made after the offer of compromise was served, implying it was a response to the size of the offer. The defendant did not take appropriate steps to address the inadequacy of the forum before making the offer.

The court concluded that the plaintiff was entitled to costs on a party-party basis up to the date of the offer of compromise, and on an indemnity basis thereafter. The reasoning was that the offer of compromise was made without a proper basis, and the defendant had failed to provide adequate evidence to support their claims.

The final order was that the defendant pay the plaintiff’s costs, including any reserved costs, on a party-party basis up to 23 March 2009, and thereafter on an indemnity basis.

Orders

Orders of the court

1. The respondents pay the second applicant’s costs (including any reserved costs) taxed on a party/party basis up to and including 23 March 2009 and thereafter taxed on an indemnity basis.

Note:

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

There was also an inconsistency about Lowe Hunt’s position. On the one hand, they argued that at the time the offer of compromise was made there was nothing to compromise because Pegasus had recovered the only amount it sought. On the other, Mr Rochow and Low Hunt did not doubt that this was a true offer to compromise the proceeding. He conceded that it would not be proper to argue otherwise. The dearth of evidence On 24 October 2008 Mr Moss filed an affidavit deposing to the turnover of his business during the 2003, 2004 and 2005 calendar years and in the period between July 2007 and August 2008 but did not set out the basis for the calculation of the claim that appeared in the statement of claim. At a directions hearing before Flick J on 19 November 2008 the parties asked that the proceeding be referred to mediation and his Honour made an order to that effect. Importantly, at that hearing Mr Rochow told his Honour:We expect that they – and I understand what my friend is saying, they don’t want to incur further expense with an expert prior to a mediation. We can see the force in that. Also during the course of that hearing his Honour asked Ms Francois, who was then appearing for the applicants, whether it was possible (noting that it was “obviously desirable”) for some evidence to be put on about how much Mr Moss was actually claiming and how he calculated it. He asked: “Otherwise, how is a mediator going to effectively mediate”. Ms Francois replied: “Because, your Honour, we can extrapolate in a crude form the projected cash flow”. Ms Francois offered, however, to provide before the mediation “a rough document”, not in admissible form, from Mr Moss’s accountant setting out projected earnings. His Honour said he thought that should be done, expressly did not require an expert’s report and noted that Mr Rochow had not sought a direction to that effect. The document that was produced was the Lowenstein report. It is dated 22 December 2008, although for some unexplained reason it was unsigned (or, at least, the copy annexed to Mr Clare’s affidavit was unsigned) and not served until seven days before the mediation. A mediation was held on 23 March 2009 in accordance with Flick J’s order, at the conclusion of which the applicants filed and served their offer of compromise which was expressed to be open for 14 days. On 2 April 2009, some ten days later and four days before the offer would lapse, Mr Clare wrote two letters to Harmers. One dealt with the offer of compromise. The other with the $862,787 figure claimed in the statement of claim. It is not clear which came first. The former was in the following terms: We refer to our clients Offer of Compromise dated 23 March 2009.Our clients have considered the offer on the material currently available to them. On that material, they are unable assess whether or not to accept such offer. Your clients have not provided any evidence or indeed any basis as to the quantum of their alleged loss. If you have any such evidence, please provide the same for the purposes of consideration of the offer.In this regard we confirm that Mr Moss is yet to file and serve any Affidavit evidence as to the basis and calculation of his loss. Further that your clients have not served any Expert Reports as to any alleged loss suffered by them.In the absence of the above, and without some proper basis being provided upon which to assess the offer, our clients will argue that the offer of Compromise should not be taken into consideration when assessing costs, whatever the outcome of the proceedings.[Emphasis added.]

Decision

Reasons for decision

The suggestion that the proceeding could have been brought in the Federal Magistrates Court was not made until after the offer of compromise was served. Indeed, the inference is available that it was conceived as a response to the size of the offer. If Lowe Hunt seriously thought that this Court was an unsuitable (or a less than suitable) forum, it could have applied for the proceeding to be transferred but it did not. It could also have applied for a declaration and sought an order under O 62 r 36A(2) but it did not.Conclusion I am not persuaded that this is a proper case in which to make an order other than that which Pegasus seeks. It should therefore have its costs (including any reserved costs) on a party-party basis up to and including 23 March 2009 when the offer of compromise was made and thereafter on an indemnity basis.

Ratio Decidendi

Legal Principle Established

Full text does not contain this section.