FEDERAL COURT OF AUSTRALIA
Richards v Han (Costs) [2023] FCA 211
File number(s): ACD 71 of 2019 Judgment of: HALLEY J Date of judgment: 13 March 2023 Catchwords: COSTS – where parties could not reach agreement on costs – where applicant sought order that respondents pay costs on a party and party basis – where respondents sought orders for applicant to pay respondents’ costs on a party and party basis up to 13 October 2021 and thereafter on an indemnity basis and in the alternative on a party and party basis up to 25 June 2022 and thereafter on an indemnity basis – order made for respondents to pay 50% of the applicant’s costs of the proceedings, as agreed or taxed Legislation: Federal Court of Australia Act 1976 (Cth) s 43
Federal Court Rules 2011 (Cth) rr 1.35, 25.14
Cases cited: Australian Skills Quality Authority v Western Institute of Technology Pty Ltd [2017] FCAFC 183
Calderbank v Calderbank [1975] 3 All ER 333; [1976] Fam 93
Clifton v Kerry J Investment Pty Ltd (No 2) (2020) 277 FCR 382; [2020] FCAFC 112
InterPharma Pty Ltd v Hospira, Inc (No 4) [2018] FCA 45
Gladstone Park Shopping Centre Pty Ltd v Ross Wills and Others (1984) 6 FCR 496
Lodestar Anstalt v Campari America LLC (No 2) [2016] FCAFC 118
Richards v Han [2022] FCA 1539
Ritter v Godfrey [1920] 2 KB 47
Ruddock and Others v Vadarlis and Others (No 2) (2001) 115 FCR 229; [2001] FCA 1865
Summers v Repatriation Commission (No 2) [2015] FCAFC 64
Trade Practices Commission v Nicholas Enterprises Pty Ltd and Others (No 3) (1979) 42 FLR 213; [1979] FCA 143
Division: General Division Registry: New South Wales National Practice Area: Commercial and Corporations Sub-area: Commercial Contracts, Banking, Finance and Insurance Number of paragraphs: 39 Date of last submission/s: 13 January 2023 Date of hearing: Determined on the papers Counsel for the Applicant: Mr P Walker SC with Mr A Opas Solicitor for the Applicant: Bradley Allen Love Lawyers Counsel for the Respondents: Mr MA Karam with Mr QM Noakhtar Solicitor for the Respondents: McInnes Wilson Lawyers ORDERS
ACD 71 of 2019 BETWEEN: DAVID RICHARDS
Applicant
AND: WILLIAM ZI WEN HAN
First Respondent
WHITE HORSE AUSTRALIA LINDEMAN PTY LTD ACN 152 242 610
Second Respondent
ORDER MADE BY:
HALLEY J
DATE OF ORDER:
13 MARCH 2023
THE COURT ORDERS THAT:
1.Judgment for the applicant in the sum of $338,500 plus interest in the sum of $60,747.85.
2.The respondents are to pay 50% of the applicant’s costs of the proceedings, as agreed or taxed.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
REASONS FOR JUDGMENT
HALLEY J:
INTRODUCTION
On 19 December 2022, I made orders for the parties in these proceedings and in ACD 89 of 2019 (Shareholder proceedings) to provide draft orders, including as to costs, to give effect to the reasons for judgment that I published on that date: see
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- AGLC
- Richards v Han (Costs) [2023] FCA 211
- Case
- [2023] FCA 211
- Decision Date
CaseChat Overview and Summary
The legal issues before the court included whether the failure of the applicant to accept the offer of compromise made by the respondents entitled them to an award of indemnity costs under r 25.14 of the Federal Court Rules and on Calderbank principles. The court also needed to consider whether the operation of r 25.14 was subject to any "unless the Court otherwise orders" qualification and whether the court retained a residual discretion to make an order inconsistent with the Rules in special circumstances.
The court found that the operation of r 25.14 of the Federal Court Rules was not subject to any "unless the Court otherwise orders" qualification, but the court retained a residual discretion if special circumstances could be established to make an order that was inconsistent with the Rules pursuant to r 1.35. The court held that the failure of the applicant to accept the offer of compromise made by the respondents did not entitle them to an award of indemnity costs. However, the court made an order for the respondents to pay 50% of the applicant's costs of the proceedings, as agreed or taxed.
The final orders made by the court were that judgment was to be entered for the applicant in the sum of $338,500 plus interest in the sum of $60,747.85 and that the respondents were to pay 50% of the applicant's costs of the proceedings, as agreed or taxed.
Orders
Orders of the court
1. Judgment for the applicant in the sum of $338,500 plus interest in the sum of $60,747.85.
2. The respondents are to pay 50% of the applicant’s costs of the proceedings, as agreed or taxed.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
Background
Background to the litigation
Full text does not contain this section.
Evidence
Evidence Before The Court
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Decision
Reasons for decision
Full text does not contain this section.
Ratio Decidendi
Legal Principle Established
The operation of r 25.14 of the Rules is not subject to any “unless the Court otherwise orders” qualification but the Court retains a residual discretion if special circumstances can be established to make an order that is inconsistent with the Rules pursuant to r 1.35: Lodestar Anstalt v Campari America LLC (No 2) [2016] FCAFC 118 at [23], [27] (Allsop CJ, Greenwood, Besanko, Nicholas and Katzmann JJ); Australian Skills Quality Authority at [23] (Tracey, Griffiths and Charlesworth JJ).CONSIDERATIONIndemnity costs It is convenient to address first, the claim made by the respondents for indemnity costs. On 18 December 2020, Thawley J made orders dismissing a summary judgment application made by the applicant in both these proceedings and the Shareholder proceedings, and ordered the applicant to pay the costs of the respondents on a party and party basis up to and including 1 September 2020 and thereafter on an indemnity basis (December 2020 costs order). On 11 October 2021, the respondents made an offer of compromise to the applicant in the these proceedings in an amount of $450,000, inclusive of costs, payable in three instalments of $110,000 by 20 December 2021, 20 February 2022 and 20 May 2022, respectively, and a final instalment of $120,000 by 10 July 2022 (October 2011 offer). The October 2011 offer was stated to be open for acceptance for 28 days. On 8 April 2022, Thawley J made orders in both these proceedings and the Shareholder proceedings dismissing an interlocutory application filed by the respondents on 4 April 2022 seeking to rely on an affidavit of an expert witness, Mr Dean Dransfield, affirmed on 22 February 2022 and ordered that the respondents pay the applicant’s costs (April 2022 costs order). On 23 June 2022, the respondents made a further offer of compromise to the applicant in these proceedings in an amount of $520,000 payable on or before 31 January 2023, inclusive of costs in a fixed sum of $60,000 and on the basis that the parties waive any entitlement that they might have to earlier costs orders, including for reserved costs (June 2022 offer). The June 2022 offer included a term that the applicant must remove the caveat that he had placed on the second respondent’s Lindeman Island property within 2 days of the earlier of the applicant’s receipt of the settlement sum and the receipt by the applicant of a notice from the respondents that it was necessary for the caveat to be removed to facilitate a sale of the property in which case the settlement sum would be paid from the sale proceeds. The June 2022 offer was stated to be open for acceptance until 5pm on 30 June 2022. The hearing of these proceedings, which were heard together with the Shareholder proceedings, commenced on 4 July 2022 and concluded on 15 July 2022. The respondents submit that the failure of the applicant to accept the October 2011 offer and in the alternative, the June 2022 offer, entitle them to an award of indemnity costs pursuant to r 25.14 of the Rules and on Calderbank principles: see Calderbank v Calderbank [1975] 3 All ER 333; [1976] Fam 93.