Re Coshott and Coshott; Principal Strategic Options Pty Limited v Coshott
[2003] FCA 932
•31 JULY 2003
FEDERAL COURT OF AUSTRALIA
Re Coshott and Coshott; Principal Strategic Options Pty Limited v Coshott [2003] FCA 932
COSTS – assessment of compensation to be paid following the giving to the Court an undertaking as to damages – offer of compromise purportedly made pursuant to O 23 of the Federal Court Rules – whether the offer of compromise complies with O 23 – O 23 not a code - the exercise of the Court’s discretion to award costs where the offer of compromise exceeds the amount of compensation awarded by the Court
Federal Court of Australia Act 1976 (Cth) s 43
Federal Court Rules O 3 r 2, O 7 r 4(3)(c), O 23Re Coshott and Coshott; Principal Strategic Options Pty Limited v Coshott [2003] FCA 736 cited
Alpine Hardwood (Aust) Pty Ltd v Hardys Pty Ltd (No 2) [2002] FCA 224 referred toRE COSHOTT AND COSHOTT; PRINCIPAL STRATEGIC OPTIONS PTY LIMITED v ROBERT GILBERT COSHOTT
N 7559 of 2000
BRANSON J
4 SEPTEMBER 2003
SYDNEY
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
N 7559 of 2000
IN THE MATTER OF AN ASSESSMENT OF COMPENSATION PAYABLE TO ROBERT GILBERT COSHOTT AND TO LJILJANA COSHOTT
BETWEEN:
PRINCIPAL STRATEGIC OPTIONS PTY LIMITED
APPLICANTAND:
ROBERT GILBERT COSHOTT
RESPONDENTJUDGE:
BRANSON J
DATE OF ORDER:
31 JULY 2003
WHERE MADE:
SYDNEY
THE COURT ORDERS THAT:
1.Principal Strategic Options pay Mr R Coshott the sum of $6 119.66 plus interest of $1 293.85.
2.Principal Strategic Options pay Mr R Coshott’s costs of and incidental to the notice of motion filed on 28 May 2001 up to and including 4 March 2002.
3.Mr R Coshott to pay Principal Strategic Options’ costs of and incidental to Mr R Coshott’s notice of motion filed on 28 May 2001 from 5 March 2002.
4.Mrs L Coshott to pay Principal Strategic Options’ costs of and incidental to the notice of motion filed on 5 September 2002.
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
N 7559 of 2000
IN THE MATTER OF AN ASSESSMENT OF COMPENSATION PAYABLE TO ROBERT GILBERT COSHOTT AND TO LJILJANA COSHOTT
BETWEEN:
PRINCIPAL STRATEGIC OPTIONS PTY LIMITED
APPLICANTAND:
ROBERT GILBERT COSHOTT
RESPONDENT
JUDGE:
BRANSON J
DATE:
4 SEPTEMBER 2003
PLACE:
SYDNEY
REASONS FOR JUDGMENT
On 21 July 2003 I published reasons for judgment in respect of the respective applications of Robert Gilbert Coshott and Ljiljana Coshott (‘Mr and Mrs Coshott’) for an assessment of the compensation to which he or she was entitled by reason of an undertaking as to damages given by Principal Strategic Options Pty Limited (‘Strategic Options’) (see Re Coshott and Coshott; Principal Strategic Options Pty Limited v Coshott [2003] FCA 736). These reasons for judgment should be read together with those published on 21 July 2003.
On 21 July 2003 I made orders as follows:
‘1.The proceedings be stood over to 9.30 am on 31 July 2003 for the purpose of making of orders giving effect to these reasons, including orders as to costs.
2.The parties provide to the Associate of the Hon Justice Branson by 12.00 noon on 30 July 2003 an agreed minute of the orders to be made (including the orders to be made as to costs) and if agreement has not by then been reached, the minutes of orders for which they will respectively contend and brief outlines of submissions in support of the orders.’
The parties reached agreement as to the appropriate orders to be made except in respect of orders for costs. It was agreed that Mr Coshott was entitled to an order that Strategic Options pay him compensation in the amount of $6 119.66 plus interest of $1 293.85.
During the course of argument on 31 July 2003 it was agreed between the parties that Strategic Options was entitled to an order that Mrs Coshott pay its costs of and incidental to her notice of motion to the extent that the filing and serving of her notice of motion resulted in costs additional to the costs of and incidental to the notice of motion filed by Mr Coshott.
The issue which required to be determined by the Court was the order as to costs to be made in respect of Mr Coshott’s notice of motion. After hearing the parties on 31 July 2003 I made the following orders in respect of Mr Coshott’s notice of motion:
‘1.Principal Strategic Options pay Mr R Coshott the sum of $6 119.66 plus interest of $1 293.85.
2.Principal Strategic Options pay Mr R Coshott’s costs of and incidental to the notice of motion filed on 28 May 2001 up to and including 4 March 2002.
3.Mr R Coshott to pay Principal Strategic Options’ costs of and incidental to Mr R Coshott’s notice of motion filed on 28 May 2001 from 5 March 2002.’
The reasons set out below are my reasons for making order 2 and 3 above.
Mr Coshott contended that he was entitled to an order that Strategic Options pay his costs of the inquiry by the Court as to his losses in connection with the undertaking as to damages given by Strategic Options. He argued that he had been found by the Court to have suffered loss as a consequence of the interlocutory order in respect of which the undertaking as to damages had been given for which he was entitled to be compensated. Consequently, he argued, he was entitled to a costs order in his favour.
Strategic Options opposed the making of the costs order sought by Mr Coshott. It placed reliance on an offer made by it on 18 February 2002. That offer was in the following terms:
‘The Applicant, Principal Strategic Options Pty Ltd offers to compromise the Respondent’s motion for damages arising from the orders made by Beaumont J on 29 June 2000 by payment of $15,000.00 exclusive of both interest and costs.
This is an offer of compromise made pursuant to Order 23 and pursuant to Order 23 Rule 5(3) is open to be accepted within 14 days from today’s date.
Dated: 18 February 2002.’
Strategic Options contended that the appropriate orders as to costs were:
1.Strategic Options pay Mr Coshott’s costs up until 11.00am on 19 February 2002; and
2.Mr Coshott pay Strategic Options’ costs after 11.00am on 19 February 2002.
Order 23 of the Federal Court Rules is concerned to encourage parties to make and to consider fair and reasonable offers of compromise. It applies, however, only in respect of a ‘proceeding’ as defined by O 23 r 1. Order 23 r 1 relevantly provides:
‘In this Order, unless the contrary intention appears:
…
proceeding means a proceeding in the Court (except an interlocutory application), not being an application that is capable of:
(a) substantially disposing of the proceeding or of the whole or any part of any claim for relief in the proceeding; or
(b) rendering unnecessary any trial or further trial in the proceeding or of the whole or any part of any claim for relief in the proceeding;
….’
I note, incidentally, that there would appear to be a drafting error in O 23 r 1. It seems likely that the exclusion of an interlocutory application from the definition of a ‘proceeding’ is not intended to reach to an interlocutory application of the kind referred to in paragraphs (a) and (b) above. Read in any other way the definition does not seem to make sense. However, I did not hear argument on this question and I take the matter no further.
Despite my expression of doubt on the issue, both Mr Coshott and Strategic Options proceeded on the basis that O 23 had an application in the present circumstances. I shall therefore proceed on the basis that an offer of compromise may be made pursuant to O 23 on an application to the Court for an assessment of the compensation, if any, to be paid following the giving to the Court of an undertaking as to damages. However, my doubt that the Order properly construed in fact has any direct application in such circumstances remains unabated.
Mr Coshott contended that the offer of compromise made by Strategic Options does not comply with O 23 of the Federal Court Rules and should have no costs consequences for him. The basis upon which the offer of compromise was said not to comply with O 23 was expressed in Mr Coshott’s outline of submissions as follows:
‘a.The Offer was expressed to be open for acceptance “within fourteen (14) days from today’s date”. The date of the “Offer” was stated to be 18 February 2002.
b.Order 23 Rule 5 (3) provides that any limitation of the time in which an offer can be accepted “must not be less than fourteen (14) days beginning on the day after it is made”.
c.Order 7 Rule 4 provides that service of a document by facsimile is deemed to occur on the date after dispatch which is deemed to occur on 19 February 2002.’ (emphasis in original)
Order 3 r 2 of the Federal Court Rules relevantly provides:
‘(1)Any period of time fixed by … any judgment or order or by any document in any proceeding, shall be reckoned in accordance with this rule.
(2)Where a time of one day or a longer time is to be reckoned by reference to a given day … the given day … shall not be counted.’
In my view, O 3 r 2 applies to a notice of offer of compromise made under O 23 of the Federal Court Rules. An offer of compromise is made to a party by serving a notice of the offer on the party (O 23 r 3(1)). The notice of offer in this case was served by facsimile transmission on 18 February 2002 and it bears the date 18 February 2002. The statement contained in the notice that the offer was open to be accepted ‘within 14 days from today’s date’ indicated that the offer was open to be accepted within fourteen days from 18 February 2002. However, O 7 r 4(3)(c) of the Federal Court Rules provides that the time of service of any document for the purpose of any proceeding shall, where the copy of the document is sent by facsimile transmission, be one day after the copy is transmitted excluding Saturdays, Sundays and public holidays. That is, for the purpose of any proceeding, the notice of offer of compromise was not served, and therefore not made, until 19 February 2002.
Order 23 r 5(3) of the Federal Court Rules provides:
‘An offer may be expressed to be limited as to the time that it is open to be accepted, but the time expressed must not be less than 14 days beginning on the day after it is made.’
I accept Mr Coshott’s contention that the time expressed in the notice of offer of compromise as the time that the offer was open to be accepted was one day less than O 23 r 5(3) required.
I do not consider that it is self‑evident that the above deficiency in the notice of offer of compromise took the offer of compromise outside the scheme for which O 23 of the Federal Court Rules provides. It seems to me to be at least arguable, although it was not here argued, that it was open to Mr Coshott, notwithstanding the time limit expressed in the notice, to accept the offer of compromise made to him within the minimum time period to which O 23 r 5(3) refers; that is, within fourteen days beginning on the day after the offer of compromise was made. Indeed, it may be arguable that the offer of compromise was one which, in view of the illegitimate time limit for acceptance expressed in the notice, was to be regarded as one not limited as to the time that it was open to be accepted. For the reasons given below there is no necessity for me to reach a concluded view on these questions.
No evidence has been placed before the Court which suggests that Mr Coshott’s failure to accept the offer of compromise made to him by the notice dated 18 February 2002 was in any way influenced by the time within which the offer was expressed to be open to be accepted. Indeed, nothing before me suggests that the technical defect in the notice was even drawn to Mr Coshott’s attention during February or March 2002.
Section 43 of the Federal Court of Australia Act 1976 (Cth) gives the Court a very wide discretion to award costs. Order 23 guides the exercise of that discretion in circumstances that fall within its terms. However, O 23 of the Federal Court Rules is not a code for the making of offers of compromise. It does not limit the discretion vested in the Court by s 43.
In Alpine Hardwood (Aust) Pty Ltd v Hardys Pty Ltd (No 2) [2002] FCA 224 Weinberg J at [10] and [18] said:
‘It is clear that 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.
…The fact that O 23 provides a detailed regime governing offers of compromise does not mean that it constitutes a code which prevents parties from being able to rely upon the principles developed at common law in relation to what are known as “Calderbank letters”: Calderbank v Calderbank [1975] 3 All ER 333. A Calderbank letter (offering an amount which exceeds that ultimately awarded) can be considered by the Court in deciding whether to make an order displacing the usual order that costs follow the event, even though the mechanism under O 23 has not been followed: Smallacombe v Lockyer Investment Co Pty Ltd (1993) 42 FCR 97. A party is entitled to rely upon a Calderbank letter even though it has not complied with the form required by O 23 r 3.
Mr Coshott was well aware of the policy of the Court to encourage litigating parties to undertake genuine settlement negotiations. Not only did I urge on Mr Coshott and Strategic Options the desirability of reaching an agreement between themselves as to the amount of compensation to which Mr Coshott was justly entitled, I directed that they attend a case conference before a Registrar. That conference, which was held on 11 March 2002, proved useful in identifying the heads of claim advanced by Mr Coshott but regrettably did not result in an agreement as to the amount of compensation to which Mr Coshott was justly entitled. The Registrar reported that he discussed with the parties’ representatives prospects of settlement of the issues in dispute without a hearing and was satisfied that ‘all reasonable steps to achieve a negotiated outcome had been taken’.
In my view the offer of compromise made by Strategic Options was a serious and sensible offer and Mr Coshott acted unreasonably in not accepting it. While the offer was expressed to be “exclusive of costs and interest” this did not deprive it of the character of an offer of compromise. The plain meaning of the offer was that Strategic Options was willing to pay to Mr Coshott, as compensation under the undertaking as to damages, the offered sum of money, and that, in addition, Strategic Options was willing to pay to him the costs and interest to which he was entitled. Any subsequent dispute about the costs and interest to which Mr Coshott was entitled could have been resolved, if necessary, by the Court.
Strategic Options did not seek an order that Mr Coshott pay any part of its costs on an indemnity basis or on a solicitor and client basis. I therefore concluded that the appropriate orders for costs in the circumstances were the costs orders made by me on 31 July 2003.
I certify that the preceding twenty-four (24) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Branson. Associate:
Dated: 4 September 2003
Advocate for the Applicant: Mr K Tapsell Solicitor for the Applicant: Watkins Tapsell Advocate for the Respondent: Mr S Barry Solicitor for the Respondent: CKB Partners Date of Hearing: 31 July 2003 Date of Judgment: 31 July 2003
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