Opals Australia P/L v Opal Australiana P/L

[1994] FCA 196

196 qv

JUDGMENT No. ........ ........ .. I ........ ....

IN THE FEDERAL COURT OF AUSTRALIA	)
)
NEW SOUTH WALES DISTRICT REGISTRY )	NO. NG 348 of 1993

)

GENERAL DIVISION )

BETWEEN : OPALS AUSTRALIA PTY LTD

Applicant

AND :  OPAL AUSTRALIANA PTY LIMITED

Respondent

24 March 1994 S

REASONS FOR JUDGMENT

LOCKHART J.

This is a motion by the applicant for an order that its

costs be ordered and taxed on an indemnity basis from 30 June

1993, that date being selected because it was the date on which

the solicitors for the applicant wrote a letter of offer to the respondents' solicitors. In substance, the letter stated that if the respondents would consent to the relief sought by the applicant in its application which initiatedthe proceeding, then the applicant would pay its own costs and not expect the respondents to pay its costs.

proceeded to trial. The applicant succeeded at the trial in its	in a moment), was not accepted by the respondents and the matter
claim for injunctive relief and the court only granted in~unctions and an order for costs (order No 4 which was made on 3 September 1993), namely, that the first respondent pay the costs of the applicant of the proceeding including any reserved costs.
The motlon that has subsequently been filed by the applicant seeks an order for indemnity costs, as I have mentioned earlier. The basis of the motion is that the letter of offer was made on
30 June last and it is said that the ludgment of the court on 3
September substantially confirmed the orders sought in the initiating application and that in those circumstances there ought to be an order for indemnity costs. The first respondent, who is the only relevant respondent for present purposes because it is the only respondent against whom an order for costs was made on 3 September 1993, opposes the motion on a number of grounds.
First, it is said by counsel for the first respondent that the relief obtained by the applicant was not all the relief
sought in the initiating application. Indeed, it was argued that
there was a substantial difference between the relief sought and the relief granted. Secondly, it was argued by counsel for the respondent that the offer of 30 June 1993 was made at a stage when the case was still in the course of preparation and that a considerable amount of further evidence later emerged including the oral evidence at the trial.
Third, it was argued that this is not a case where the first respondent behaved so unreasonably as to warrant an order for indemnity costs being made against it. Finally, it was argued on behalf of the first respondent that this court has no jurisdictional power now to make an order of the kind sought in the motion.

In the letter the applicant said that should its offer not be accepted it intended to tender the letter to the court with respect to any application that it might make for indemnity costs. In the result, the offer, if it may be so characterised (which is in itself an arguable question to which I will return

The relief sought by the applicant in its initiating

application was for injunctive relief against the first

respondent (see paragraphs 1, 2, 3, 4, 5, 6, 7 and 8 of the application which is a mixture of injunctions in the customary negative form together with certain mandatory orders). Order 9 sought an order for damages against all three respondents on account of profits. Order 10 sought costs. Order 11 sought the usual order for such further or other orders as the court may see fit to make.

The relief granted by the court on 3 September was, leaving

costs aside, solely injunctive relief. Damages were not ordered

against any respondent, nor was an account of profits ordered against any respondent, as the applicant's counsel abandoned the	claim for damages or account of profits on the last day of the
trial. There is perhaps some room for argument that those claims were not abandoned, but were simply not persisted in, but nothing turns on whatever it was. I think it is accurate to categorise the course taken by the applicant as one of abandonment of those claims.
Also, order 4 as sought in the application was for delivering up by the first respondent of certain advertising and other material; that order was not made on 3 September 1993. In my opinion, it is not a case where any offer that the applicant may be said to have made in its letter of 30 June 1993 was an offer to accept relief which was substantially granted on 3 September 1993 after the trial. Certainly much of the injunctive relief was granted; but the order for delivery up was not, nor were damages or accounts of profits or whatever, and they were not minor issues in the proceeding.
At the time the offer was made on 30 June the case was reasonably well advanced in its preparation, but it still had a long way to go. Affidavits were filed after other interlocutory steps were taken, and the trial commenced where cross-examination of witnesses ensued. It is not a case, in my opinion, where it could be said that it was so unreasonable for the respondents to contest the proceeding that it should be the subject of an order for indemnity costs against it. This is so especially when it is remembered that the respondents declining the offer of 30 June was made so well before the hearing in circumstances where much remained to be done to prepare the case for trial.

I have considerable reservations about whether the offer of

30 June 1993 can be properly characterised as an offer at all in

the sense in which that expression is used in cases in this area of the law, in particular Calderbank v Calderbank [l9751 3 WLR

586, Messiter v Hutchinson (1987) 10 NSWLR 525, Smallacombe v

Lockyer Investment CO Pty Limited (1993) 42 FCR 97. I have already characterised the substance of the alleged offer earlier in my reasons, it is really a letter that says:

"Give us everything we seek and we will accept those orders by consent against you and not press for any order for costs against you".

I need not finally decide that question, but I have considerable

doubt about whether it is a relevant offer in this branch of the
law of costs.

I have been referred to a number of cases dealing with indemnity costs orders. All but one seem to deal with a quite different situation, namely, where a respondent makes an offer to a plaintiff in the context of a claim for damages against the respondent of the kind to which Calderbank v Calderbank is directed. Messiter v Hutchinson and Smallacombe are cases of this kind, and it seems they have little, if any, bearing on the question before the court today.

However, there is authority for supporting the proposition that a Calderbank letter of offer may give rise to an entitlement to an indemnity costs order in circumstances where the offer is made not by the defendant but by the plaintiff, but in circumstances of the kind to which Quirk v Bawden (1992) 112 ACT Reports 1 is directed, see in particular the judgment of Higgins

J at 6.

Although that case concerned an accident for damages for personal injury with an offer being made by the plaintiff to compromise the claim in a flgure where he was later awarded a figure in excess of the figure for which he was prepared to settle. It is not a case which, in my opinion, supports any claim for indemnity costs in an action of the kind before the court today, especially in the light of the circumstances as I have already found them.

In these circumstances I am of the opinion that this is not a case that is appropriate for the award of indemnity costs. I have taken into account the ordinary rule that applies in applications for indemnity costs; the ordinary rule is that where the court orders the costs of one party to be paid by another they should be paid and taxed on a party and party basis.

The court ought not usually make an order for the payment of costs on some other basis unless the circumstances of the case warrant departure from that course. The relevant tests justifying such departure are well known. They have been

CO v Cussons Pty Limited (1993) 118 ALR 248. I need not repeat	recently referred to by Mr Justice Sheppard in Colgate Palmolive
them. See also my judgment given in Ferrier V Civil Aviation Authority (24 March 1994) and the cases referred to at 6; but there is no dispute in this case between counsel as to the relevant principles to apply in respect of indemnity costs.
There remains the question of whether the court has jurisdiction or power to make any order, even if it were otherwise disposed to do so. I need not decide this question in view of the findings I have already made. It is a sensitive area of law and does raise complex questions, better left for another case and for another day.
Accordingly, the court orders that the motion be dismissed and the applicant pay the costs of the first respondent of the motion.

I certify that this and the preceding six (6) pages are a a true copy of the reasons for judgment herein of the Honourable Mr. Justice Lockhart.

Associate

Dated 21 April 1994

Counsel for the Applicant Mr S Burley

Solicitors for the Applicant :  Cowley Hearne

Counsel for the Respondent	Mr D M Yates
Solicitors for the Respondent :	Ferrier and Associates
Date of Hearing	24 March 1994
Date of Judgment	24 March 1994