Palis Victoria Pty Ltd and Ors v Gelare International Pty Ltd and Ors (No.2)

[2015] FCCA 3247

FEDERAL CIRCUIT COURT OF AUSTRALIA

PALIS VICTORIA PTY LTD & ORS v GELARE INTERNATIONAL PTY LTD & ORS (No.2) [2015] FCCA 3247

Catchwords:
COSTS – Whether costs should be awarded to the successful party – whether costs should be awarded on the scale of this court or on the scale of the Federal Court – whether indemnity costs should be awarded – whether costs should be apportioned or reduced.

INTEREST – Whether application for interest on interest – whether interest should be reduced because of delay.

Legislation:
Federal Circuit Court of Australia Act 1999 (Cth) ss.76, 76(4)(a)
Federal Circuit Court Rules 2001 r.21.02(2)(c)

Cases cited:
Burns v Director General of the Department of Education (No 2) [2015] FCCA 2293
Facton Ltd (formerly G-Star Raw Denim KFT) v Seo (2011) 91 IPR 135; [2011] FCA 344
Hazeldene’s Chicken Farm Pty Ltd v Victorian WorkCover Authority (No 2) (2005) 13 VR 435; [2005] VSCA 298
Molloy v Shell UK Limited [2002] PIQR P7, [2001] EWCA Civ 1272
Palis Victoria Pty Ltd & Ors v Gelare International Pty Ltd & Ors [2015] FCCA 2785
Washington v QANTAS Airways Limited (2014) 107 IPR 144; [2014] FCCA 1413

First applicant:

PALIS VICTORIA PTY LTD

(ACN 147 615 754)

Second applicant: PAUL GLASGOW

Third applicant: LISA STARK

First respondent:

GELARE INTERNATIONAL PTY LTD

(ACN 060 171 851)

Second respondent: FARID TORABI

Third respondent: MINA TAKLA

File number: MLG 2088 of 2013

Judgment of: Judge Riley

Hearing dates: 20 November 2015

Date of last submission: 20 November 2015

Delivered at: Melbourne

Delivered on: 9 December 2015

REPRESENTATION

Solicitor advocate for the applicants: Roland B Müller

Solicitors for the applicant: Parke Lawyers

Solicitor advocate for the respondents: Phillip Colman

Solicitors for the respondents: MST Lawyers

THE COURT ORDERS THAT:

1. The respondents pay the applicants interest of $166,719.11.

2. The applicants pay the respondents’ costs thrown away by reason of the amendment to the application and statement of claim and of and incidental to the applicants’ request for the respondents’ consent to the filing and serving of the amended applications and statements of claim filed on 5 September 2014 and 10 March 2015, such costs to be calculated on a party/party basis on the Federal Court scale.

3. Otherwise, the respondents pay the applicants’ costs of the proceeding, including reserved costs, on a party/party basis on the Federal Court scale, such costs to be taxed if not agreed.

4. Pursuant to r.21.15 of the Federal Circuit Court Rules 2001, it is certified that it was reasonable for each of the parties to employ an advocate.

FEDERAL CIRCUIT
COURT OF AUSTRALIA
AT MELBOURNE

MLG 2088 of 2013

PALIS VICTORIA PTY LTD

(ACN 147 615 754)

First applicant

PAUL GLASGOW

Second applicant

LISA STARK

Third applicant

And

GELARE INTERNATIONAL PTY LTD

(ACN 060 171 851)

First respondent

FARID TORABI

Second respondent

MINA TAKLA

Third respondent

REASONS FOR JUDGMENT

Introduction

1. This matter concerns a claim for costs and interest arising from judgment in the matter of Palis Victoria Pty Ltd & Ors v Gelare International Pty Ltd & Ors [2015] FCCA 2785. That judgment was handed down on 13 October 2015. The questions of costs and interest were not determined on that day. Rather, the court made orders for the parties to file written submissions on those issues, and adjourned those matters for further hearing.

Interest

1. Section 76 of the Federal Circuit Court of Australia Act 1999 (Cth) (“the Act”) relevantly provides that:

   Application for interest order

   (2)     A party to proceedings that are:

   (a)     in the Federal Circuit Court of Australia; and

   (b)  for the recovery of any money (including any debt or damages or the value of any goods) in respect of a particular cause of action;

   may apply to the Federal Circuit Court of Australia or a Judge for an order under subsection (3).

   Interest order

   (3)    If:

   (a)  an application is made under subsection (2); and

   (b)  the Federal Circuit Court of Australia or the Judge is not satisfied that good cause has been shown for not making an order under this subsection;

   the Federal Circuit Court of Australia or the Judge must either:

   (c)  order that there be included in the sum for which judgment is given interest at such rate as the Federal Circuit Court of Australia or the Judge thinks fit on the whole or any part of the money for the whole or any part of the period between:

   (i)  the date when the cause of action arose; and

   (ii)  the date as of which judgment is entered; or

   (d)  without proceeding to calculate interest in accordance with paragraph (c), order that there be included in the sum for which judgment is given a lump sum in lieu of any such interest.

   Exceptions

   (4)  Subsection (3) does not:

   (a)  authorise the giving of interest upon interest or of a sum in lieu of such interest … .

2. The principal proceedings were for the recovery of damages in the trade practices context.  The applicants applied for interest from the date the cause of action arose until judgment.

3. The respondents opposed interest being awarded on the amount of $61,807 that was included in the amount of $788,980 that was awarded as damages. The $61,807 was for interest paid by the applicants on borrowings in the 2011, 2012 and 2013 financial years of $7,218, $27,226 and $27,363 respectively. The respondents argued that to award interest on the sum of $61,807 would be to award interest on interest, contrary to s.76(4)(a) of the Act.

4. I reject that submission.  The sums totalling $61,807 were amounts of interest that the applicants had to pay.   The amount of $61,807 was simply another business expense that the applicants incurred as a result of the respondents’ actions.  Consequently, I do not accept that the sum of $61,807 should be excluded from any amount that the applicants are awarded by way of interest.

5. The respondents then argued that they should not be obliged to pay interest for the whole of the period claimed by the applicants because the applicants had delayed in bringing the proceedings. 

   
   

   The respondents said that the applicants had delayed notifying the respondents of their claim for 18 months after becoming aware of it, then delayed for a further 16 months before issuing the proceedings, and then stalled the proceedings for a further 10 months by re-pleading their claims.

6. I do not accept that there should be any reduction in the interest payable by the respondents for reasons of delay.  Clearly, the respondents have had the benefit of the amount awarded during the period of the delay.  There was no suggestion of any particular prejudice to them.  In all the circumstances of this case, the delay, such as it was, does not seem to me to warrant any reduction in the amount of interest payable. 

7. I see no reason in this case to not award interest as calculated by the applicants. Interest was calculated by the applicants up to

   
   

   20 November 2015 based on Federal Court Practice Note CM 16.  That provides for a rate of interest 4% above the Reserve Bank Cash Rate Target.  That rate has not changed since 6 May 2015, according to the Reserve Bank’s website.  As this judgment will be handed down on

   
   

   9 December 2015, interest is calculated up to that date.  The total will be $166,719.11.

Costs

1. The applicants in their written submissions sought orders that:

   The Respondents pay the costs of the Applicants of and incidental to the proceeding (including the First Respondent’s cross-claim), including all reserved costs:

   a.  up to and including 13 May 2015 (alternatively up to and including 5 June 2015) on a party and party basis, to be agreed or taxed in accordance with Part 40 of the FederalCourt Rules2011 and the Federal Court Scale of Costs (alternatively up to and including 13 May 2015 (alternatively up to and including 5 June 2015) on a party and party basis, fixed in accordance with Schedule 1 to the FederalCircuitCourtRules 2001); and

   b.  thereafter on the indemnity basis, to be agreed or taxed in default of agreement.

2. The applicants submitted that the principal proceeding was a complex matter that warranted costs on the Federal Court scale.  They also argued that the respondents had unreasonably refused two Calderbank offers, and those offers were bettered in the judgment.  In those circumstances, the applicants argued that indemnity costs were warranted from the dates of the refusals. 

3. The respondents accepted that they had not accepted two valid Calderbank offers.  Nevertheless, the respondents’ primary submission was that there should be no order as to costs.  That was put on the basis that:

   a)the applicants failed in their claim for damages for five breaches of the Franchising Code;

   b)

   they failed to establish either the making of, or reliance upon,

   
   

   18 of 31 pleaded representations;

   c)they made numerous and substantial amendments to the statement of claim; and

   d)significant adverse findings were made against the second and third applicants in the principal judgment.

4. However, the respondents also argued that they should get the costs of the breaches of the Franchising Code, on which they were successful, and their costs thrown away by reason of two of the amendments to the statement of claim.

5. The respondents emphasised the case of Molloy v Shell UK Limited [2002] PIQR P7, [2001] EWCA Civ 1272. In that case, a scaffolder claimed damages for injuries suffered at work. He said he had been unable to work since his accident. However, shortly before the trial, it emerged that he had been working for years in his previous occupation as a scaffolder. He reduced his claim very substantially and succeeded on the reduced claim. The court at first instance ordered him to pay 75% of the respondent’s costs. On appeal, he was ordered to pay 100% of those costs.

6. The respondents in the present case said that the conduct of the second and third applicants was not as gross as the conduct of Mr Molloy but was nevertheless very serious.  It consisted of the second applicant lying about her attendance at a critical meeting and the third applicant adopting her lies in his evidence.  It should be noted that counsel for the applicants urged the court to find that one side or the other had lied and submitted that this was not a case in which the court could find that a party was merely mistaken.  In these circumstances, the respondents submitted that there should be no order as to costs, or the costs payable to the applicants should be significantly reduced.

7. In the alternative, the respondents submitted that the respondents should pay the applicants’ costs calculated under the scale of this court.  In the further alternative, the respondents submitted that they should pay 50% of the applicants’ costs on a party/party basis calculated in accordance with the Federal Court scale.

8. The applicants noted that the second and third respondents were not found to be entirely honest witnesses.  The applicants also noted that the applicants had succeeded in their entire claim for damages, although they had not succeeded in establishing all of the representations they had alleged, or reliance on all of the representations that were found to have occurred, or reliance on the various breaches of the Franchising Code.  The respondents, on the other hand, failed on all of their cross-claims.

9. The principles relating to the awarding of costs are well established.  There is a broad discretion in relation to costs, which must be exercised judicially.

10. This court has specific power in r.21.02(2)(c) of the Federal Circuit Court Rules 2001 to order costs on the Federal Court scale.  This court has considered the exercise of that power in a number of cases, including Washington v QANTAS Airways Limited (2014) 107 IPR 144; [2014] FCCA 1413 and Brewer v Martin [2013] FMCA 239. The basic position is that, where a case in this court has been particularly complex such that the event based scale of this court would not adequately compensate a successful litigant for costs, it may be appropriate to award costs on the Federal Court scale. The present case was undoubtedly significantly more complex than the type of case for which the event based scale of this court was intended.

11. This court considered the principles relevant to the apportionment of costs in Burns v Director General of the Department of Education
    (No 2) [2015] FCCA 2293 as follows:

    7. The discretion to award costs is “absolute and unfettered”, but must be exercised judicially: Colgate Palmolive Co v Cussons Pty Ltd [1993] FCA 536; (1993) 46 FCR 225; (1993) 46 FLR 225; (1993) 118 ALR 248; (1993) 28 IPR 561; FCR at 230 per Sheppard J; Bluechip Development Corporation (Gladstone) Pty Ltd v Sunstruct Pty Ltd (No. 2) [2013] FCCA 1898 at [74] per Burnett J. The High Court has recently stated that the discretion as to costs:

    [W]ill be exercised so that costs are awarded to the successful party, but other factors may have a significant claim on the discretion of the court. The disposition which is ultimately to be made in any case where there are competing considerations will reflect a broad evaluative judgment of what justice requires.

    Gray (by her tutor Gray) v Richards (No. 2) [2014] HCA 47; (2014) 89 ALJR 113; (2014) 315 ALR 1 at [2] per French CJ, Hayne, Bell, Gageler and Keane JJ (“Gray (No. 2)”).

    8. There are no special provisions for proceedings regarding costs under the Disability Discrimination Act 1992 (Cth) (“DD Act”). The absence of special provision confirms that the “usual principles” as to whether costs are awarded apply: Fetherston v Peninsula Health (No. 2) [2004] FCA 594; (2004) 137 FCR 262: (2004) 79 ALD 424 at [9] per Heerey J.

    9. The ultimate aim of any costs order is to do substantial justice between the parties, based on the outcomes of the various issues in the proceeding: Howards Storage World Pty Ltd v Haviv Holdings Pty Ltd [2010] FCAFC 5; (2010) 182 FCR 84; (2010) 182 FLR 84; (2010) 84 IPR 432 at [17] per Gray J (Lindgren and Edmonds JJ agreeing).

    10. In BHP Billiton Iron Ore Pty Ltd v National Competition Council (No. 2)[2007] FCA 557 at [27] per Middleton J (“BHP Billiton (No. 2)”) the Federal Court summarised the usual principles in respect of costs as follows:

    1.A successful litigant is ordinarily entitled to its costs even if the losing party had good legal grounds for its position and conducted itself in the litigation reasonably and appropriately;

    2. The successful litigant will be so entitled to its costs unless some good reason connected to the case is shown to the contrary;

    3. Without limiting the general discretion available, a good reason to the contrary may arise:

    3.1    Where the conduct of the successful litigant in connection with the case was unreasonable or inappropriate;

    3.2    Where no such unreasonable or inappropriate conduct of the successful litigant is found, but nevertheless there were clearly distinct and severable issues or inquiries that were lost by the successful litigant;

    4. If the conduct of a successful litigant was inappropriate or unreasonable in connection with the case, the successful litigant will usually be denied all or part of its costs;

    5. Where the court is considering the question of costs in respect of a lost distinct or severable issue or inquiry, which can clearly be treated as distinct and severable, then to determine whether the successful party will lose some or all of its costs, it will be necessary to consider and weigh up case management principles, the significance of the issue or inquiry in proportion to the proceeding as a whole, and whether the issue or inquiry had any relative strength or merit;

    6. The court has the discretion to apportion costs even if it cannot identify separate costs in respect of distinct or severable issues or inquiries on which the successful litigant failed, but the matters on which the party failed must be at least capable of separation from the matters on which the litigant was successful.

    11. While parties should be encouraged to consider carefully what matters they put in issue, justice may not be served if, by too ready a resort to deciding questions of costs according to success on particular issues, parties are dissuaded by the risks of costs from canvassing all issues which might be material to the decision in the case: Doric Products Pty Ltd v Lockwood Security Products Pty Ltd [2002] FCA 282; (2002) 54 IPR 495; NRMA Ltd & Ors v Morgan & Ors (No. 3)[1999] NSWSC 768 at [24] per Giles J.

    12. As indicated in BHP Billiton (No. 2) and in Bowen v Alsanto Nominees Pty Ltd [2011] WASCA 39 (S) at [6] per McLure P, Newnes and Murphy JJA (“Bowen”) the Court may, in the exercise of its discretion, order that a successful party recover only a portion of its costs where that party has been unsuccessful in respect of certain discrete issues. This exercise is one based largely on impression, rather than as a matter of arithmetic but the apportionment of costs should not be seen as the usual outcome when both parties have been partly successful: see generally G Dal Pont, Law of Costs (3^rd Edn) (Chatswood: LexisNexis Butterworths, 2013) 199-203 at [8.5]-[8.7] (“Dal Pont, Costs”), and Bowen at [6]-[7] per McLure P, Newnes and Murphy JJA.

    13. In Motium Pty Ltd v Arrow Electronics Australia Pty Ltd[2011] WASCA 65 (S) (“Motium”) the Supreme Court of Western Australia, Court of Appeal, in the context of deciding that an award of nominal damages is no longer a peg upon which to hang an application for costs, has stated that “it would be contrary to modern notions of the efficient and cost-effective use of judicial resources to enable a party to recover its costs for a pyrrhic victory, having substantively failed in the action”: Motium at [10] per McLure P, Newnes and Murphy JJA.

    14. Where both parties have enjoyed a measure of success, the parties’ relative successes and failures may be reflected by the making of an order that each party bear their own costs: Apostolidis & Ors v Kalenik & Ors (No. 2)[2011] VSCA 329 [59]-[60] per Nettle, Ashley and Tate JJA, applied in Burbank Australia Pty Ltd v Owners Corporation (No. 2) [2015] VSC 200 [5]-[6] per McDonald J.

    15. This Court, in dealing with an application for apportionment of costs, observed in Fortron Automotive Treatments Pty Ltd v Jones & Ors (No. 6)[2013] FCCA 2045 (“Fortron (No. 6)”) at [11] per Judge Lucev (citing Dodds Family Investments Pty Ltd (formerly Solar Tint Pty Ltd) & Anor v Lane Industries Pty Ltd & Ors[1993] FCA 259; (1993) 26 IPR 261 at 271 per Gummow, French and Hill JJ) as follows:

    Ordinarily, costs follow the event, but may be apportioned, and where a considerable part of a hearing is occupied in dealing with and determining issues on which a party fails, there may be a proportionate reduction in an award of costs. Apportionment is not a mathematical exercise, but an exercise of the Court’s discretion, and a matter of impression and evaluation.

    16.  The Court observes that in Hockey v Fairfax Media Publications Pty Limited (No. 2)[2015] FCA 750 at [88] per White J (“Hockey”) the Federal Court observed as follows:

    However, courts are now more ready to apportion the costs awarded to a party who succeeds in only some of the claims he or she brings. This may reflect the increasing factual and legal complexity of modern litigation and the multiplicity of factual and legal issues it entails, and the tendency of applicants to pursue multiple claims involving different factual enquiries in the one proceeding. It may also reflect an encouragement by the courts to applicants to exercise some discrimination in their selection of the claims they litigate. ...

    17. The Federal Court also observed in Hockey that apportionment exercises are “inherently evaluative in nature”: Hockey at [116] per White J.

1. The principles that apply to Calderbank offers were addressed by Gordon J in Facton Ltd (formerly G-Star Raw Denim KFT) v Seo (2011) 91 IPR 135; [2011] FCA 344 at [55] as follows:

   1.the Court’s power to award costs is contained in s 43 of the Federal Court of Australia Act 1976(Cth). The Court has a wide discretion in the award of costs. It is, of course, a discretion which must be exercised judicially and in accordance with well-established principles: Alpine Hardwoods (Aust) Pty Ltd v Hardys Pty Ltd (No 2)[2002] FCA 224; (2002) 190 ALR 121 at [8] – [10];

   2.the usual course is to order costs on a party and party basis: Colgate-Palmolive Company v Cussons Pty Limited [1993] FCA 536; (1993) 46 FCR 225 at 233 per Sheppard J;

   3.indemnity costs can properly be awarded where the circumstances of the case warrant the Court departing from the usual course of ordering costs on a party and party basis. Those circumstances have been variously described as “some special or unusual feature” and include “an imprudent refusal of an offer to compromise”: Alpine Hardwoods at [11] and the authorities cited;

   4.Order 23 of the Rules headed “Offer of Compromise and Payment into Court” provides a structure which encourages parties to make and consider fair and reasonable offers to settle proceedings: Alpine Hardwoods at [12] and the authorities cited. It is not however a code: Alpine Hardwoods at [18] and [19]. Parties are also able to rely upon the common law principles in relation to Calderbank letters: Calderbank v Calderbank [1975] 3 All ER 333. A Calderbank letter can be considered by the Court in deciding whether to make an order displacing the usual costs order even if O 23 of the Rules has not been followed: Alpine Hardwoods at [18] and the authorities cited;

   5.refusal of an offer which satisfies the requirements of a Calderbank letter does not itself warrant an order for indemnity costs: Alpine Hardwoods at [20], [21], [27] and [28]; Black v Lipovac (by his next friend Lipovac) [1998] FCA 699; (1998) 217 ALR 386 at [217]. The onus is on the offeror to show that the conduct of the offeree was unreasonable: Alpine Hardwoods at [21], [27] and [28]. The reasonableness of the conduct is viewed in light of the circumstances which existed at the time the offer was rejected;

   6.if, however, the central requirements of a Calderbank letter (that it is clear, precise and certain: Perry v Comcare [2006] FCA 33; (2006) 150 FCR 319 at [55] – [57]) are not met, it does not mean that the offer cannot be considered by the Court in the exercise of its general costs discretion. Courts will be prepared to pay some regard to an offer of compromise which purports to be in accordance with the Rules but which for some reason is technically deficient if the terms of the offer are such as to leave the offeree in no reasonable doubt as to the nature and extent of what is being offered: Grbavac v Hart [1997] 1 VR 154 at 155. The offer must be certain: Duncan & Weller Pty Ltd v Mendelson [1989] VicRp 36; [1989] VR 386 at 401 and Grbavac at 155 and 160. It must be capable of acceptance which, if accepted, would have brought the dispute between the parties to an end: Grbavac at 164; and

   7.in determining whether an offer should have been rejected, a Court looks at the “reasonableness of the conduct of the offeree, [when] viewed in the light of the circumstances which existed when the offer was rejected”: Black at [218]. It has also been described as whether the rejection of the offer was “imprudent” or “unreasonable” (Black at [52] and [216]) or “imprudent, reckless or unreasonable”: United Salvage Pty Ltd v Louis Dreyfus Armateurs SNC[2006] FCA 1611 at [18].

2. The Victorian Court of Appeal also addressed the question of Calderbank offers in Hazeldene’s Chicken Farm Pty Ltd v Victorian WorkCover Authority (No 2) (2005) 13 VR 435; [2005] VSCA 298 as follows:

   18 One of the seminal contributions to the law on indemnity costs was the judgment of Sheppard, J. in Colgate Palmolive Company v Cussons Pty Ltd. Amongst the circumstances listed by his Honour as having been thought to warrant the exercise of the discretion to award indemnity costs was –

   "an imprudent refusal of an offer to compromise".

   So widely has this been accepted that the proposition has been advanced that a Calderbank offer gives rise to a presumption that the party rejecting the offer should pay the offeror’s costs on an indemnity basis if the offeree receives a less favourable result.

   19 In Aljade and MKIC v OCBC, however, Redlich, J. rejected the notion of any such presumption, holding that the weight of authority –

   "strongly points to an approach that involves no preconceptions about when the rejection of a Calderbank offer should lead to the making of a special costs order. It will do so where it is concluded that the rejection of the offer was unreasonable."

   We respectfully agree with his Honour’s conclusion. We note, as did his Honour, that the notion of such a presumption has been decisively rejected by the New South Wales Court of Appeal (most recently in Brymount Pty Ltd v Cummins (No.2)), by the Federal Court and by the Queensland Court of Appeal.

   20 The correct approach, in our view, is to treat the rejection of a Calderbank offer as a matter to which the Court should have regard when considering whether to order indemnity costs. As Gyles, J.A. stated in SMEC Testing Services Pty Ltd v Campbelltown City Council–

   "In the end the question is whether the offeree’s failure to accept the offer, in all the circumstances, warrants departure from the ordinary rules as to costs..."

   Encouraging settlement

   21 In Grbavac v Hart, Hayne, J.A. cited with approval what the New South Wales Court of Appeal had said in Maitland Hospital v Fisher (No.2) about the policy rationale underlying the availability of special orders for costs where offers of compromise are rejected. Like his Honour, we think that what was there said is equally relevant to the exercise of the costs discretion where a Calderbank offer has been made. The policy objectives were said to be:

   "(1) To encourage the saving of private costs and the avoidance of the inherent risks, delays and uncertainties of litigation by promoting early offers of compromise by defendants which amount to a realistic assessment of the plaintiff’s real claim which can be placed before its opponent without risk that its ‘bottom line’ will be revealed to the court;

   (2) To save the public costs which are necessarily incurred in litigation which events demonstrate to have been unnecessary, having regard to an earlier (and, as found, reasonable) offer of compromise made by a plaintiff to a defendant; and

   (3) To indemnify the plaintiff who has made the offer of compromise, later found to have been reasonable, against the costs thereafter incurred. This is deemed appropriate because, from the time of the rejection or deemed rejection of the compromise offer, notionally the real cause and occasion of the litigation is the attitude adopted by the defendant which has rejected the compromise. In such circumstances that party should ordinarily bear the costs of litigation."

   22 At the same time, as Redlich, J. said in Aljade, there are other competing objectives of equal importance.

   "Potential litigants should not be discouraged from bringing their disputes to the Courts. It is such considerations which underlie the general rule that an order for special costs should only be made in special circumstances."

   The test of unreasonable rejection

   23In our view, these competing considerations can be sufficiently accommodated by applying a test of (un)reasonableness. The critical question is whether the rejection of the offer was unreasonable in the circumstances. We see no justification for a more stringent test such as "manifestly" or "plainly" unreasonable.

   24 Of course, deciding whether conduct is "reasonable" or "unreasonable" will always involve matters of judgment and impression. These are questions about which different judges might properly arrive at different conclusions. As Gleeson, C.J. said recently, "unreasonableness is a protean concept". But a test of reasonableness is, we think, entirely appropriate to the exercise of a discretion such as this.

   
   Factors relevant to assessing reasonableness

   25 The discretion with respect to costs must, like every other discretion, be exercised taking into account all relevant considerations and ignoring all irrelevant considerations. It is neither possible nor desirable to give an exhaustive list of relevant circumstances. At the same time, a court considering a submission that the rejection of a Calderbank offer was unreasonable should ordinarily have regard at least to the following matters:

   (a) the stage of the proceeding at which the offer was received;

   (b) the time allowed to the offeree to consider the offer;

   (c) the extent of the compromise offered;

   (d) the offeree’s prospects of success, assessed as at the date of the offer;

   (e) the clarity with which the terms of the offer were expressed;

   (f) whether the offer foreshadowed an application for an indemnity costs in the event of the offeree’s rejecting it.

   26 It has been argued on occasion that the maker of a Calderbank offer should not be entitled to costs unless the offer sets out, with some reasonable specificity, the basis for the offeror’s contention that the offeree should accept the compromise – for example, because the offeree’s case was hopeless or because the offeree had no reasonable prospects of doing better in the proceeding than was being offered in advance.

   27 Once again, we think it neither necessary nor desirable to lay down any general rule in this regard. We agree with what Redlich, J. said in Aljade, as follows:

   "Any attempt to prescribe the reasoning which must accompany [a Calderbank] offer should be resisted. Whether there is a need for the offeror to descend to specificity as to why the offer should be accepted must depend upon a consideration of all of the circumstances existing at the time of the offer. The extent to which the weakness of a party’s position is exposed through the pleadings, affidavits and the various communications between the parties during the course of the litigation may bear upon the significance of the absence of specificity in the informal offer."

   28 As we said at the outset, the unreasonable refusal of an offer of compromise is, by itself, a proper ground for the award of indemnity costs or - in the present case - the award of solicitor-client costs. It follows that it is not necessary for the applicant for such an order to establish matters which might be relevant to other, well-recognised, grounds for indemnity costs. Once again we would adopt what Redlich, J. said in Aljade, as follows:

   "It is not necessary to establish misconduct by the offeree before the rejection of the offer can be viewed as unreasonable. Lack of merit in the way a party has conducted its case is not a pre-requisite for the making of an indemnity costs order [on this ground]."

   29 Nor is it necessary for the applicant offeror to show that the offeree acted with "wilful disregard of known facts or clearly established law", or that it acted with "high-handed presumption". We agree with Redlich, J. that such conduct is not a prerequisite for a finding that the rejection of a Calderbank offer was unreasonable. (citations omitted)

3. I consider that it is a straightforward and uncontroversial application of the usual principles that the applicants pay the respondents’ costs thrown away by reason of the amendments to the statement of claim on 5 September 2014 and 10 March 2015.  I consider that the amendment on the first day of the trial would not have appreciably added to the respondents’ costs so I make no order about it.

4. I consider that the costs of the proceeding should be assessed on the Federal Court scale.  It seems to me that this was a complex case and well outside the range of cases for which the scale of this court was intended.  As such, I consider that it is appropriate to award costs on the Federal Court scale.

5. Although the applicants ultimately were awarded all that they had claimed in damages, they did not succeed on substantial components of their claim.  The applicants were unsuccessful in all of their claims about the breaches of the Franchising Code.  Those claims took up a very large amount of the court’s time, and the respondents’ time, for no purpose.  The applicants also raised a multitude of misrepresentations which were either found not to have been made or were found not to have been relied upon. 

6. In such circumstances, it would be open, on the authorities, to apportion the costs in some manner.  However, an additional factor in this case is that each of the parties was a less than honest witness. I particularly note that the second applicant was found to have lied to the court about matters that were very significant to the case, and the third applicant was found to have adopted her lies.  A yet further factor is that the respondents failed to accept two Calderbank offers which the applicants ultimately bettered.

7. Weighing up all of these matters, and in the exercise of my broad discretion, I do not consider it appropriate to order indemnity costs for any part of the proceeding.  Rather, taking into account all of the circumstances of the case, it seems to me that the appropriate costs orders are that:

   a)

   The applicants pay the respondents’ costs thrown away by reason of the amendment to the application and statement of claim and of and incidental to the applicants’ request for the respondents’ consent to the filing and serving of the amended applications and statements of claim filed on 5 September 2014 and

   
   

   10 March 2015, such costs to be calculated on a party/party basis on the Federal Court scale.

   b)Otherwise, the respondents pay the applicants’ costs of the proceeding, including reserved costs, on a party/party basis on the Federal Court scale, such costs to be taxed if not agreed.

8. The applicants have also asked the court to certify for advocacy. That is appropriate. There will be orders accordingly.

I certify that the preceding twenty-seven (27) paragraphs are a true copy of the reasons for judgment of Judge Riley.

Associate: 

Date: 9 December 2015