FEDERAL COURT OF AUSTRALIA
Ringshaug v Comcare (No 2) [2017] FCA 349
File number: ACD 19 of 2016 Judge: BROMWICH J Date of judgment: 4 April 2017 Catchwords: COSTS – application for costs following success in proceedings – application for costs in part on party and party basis – application for costs in part on indemnity basis – where offer to compromise and Calderbank offer made – principles of indemnity costs – held: costs awarded on party and party basis and indemnity basis to successful party in proceedings Legislation: Federal Court Rules 2011 (Cth), rr 1.35, 25.14 Cases cited: Calderbank v Calderbank [1975] 3 All ER 333
Comcare vMartin [2016] HCA 43; (2016) 339 ALR 1
Comcare v Martin [2016] HCATrans 116
Dye v Commonwealth Securities Limited (No 2) [2012] FCA 407
Martin v Comcare [2015] FCAFC 169; (2015) 238 FCR 373
Date of hearing: 21 September 2016 Registry: Australian Capital Territory Division: General Division National Practice Area: Administrative and Constitutional Law and Human Rights Category: Catchwords Number of paragraphs: 24 Counsel for the Applicant: Mr M A Robinson SC with Mr A Anforth Solicitor for the Applicant: Capital Lawyers Pty Ltd Counsel for the Respondent: Mr P G Woulfe Solicitor for the Respondent: Comcare ORDERS
ACD 19 of 2016 BETWEEN: SUE RINGSHAUG
Applicant
AND: COMCARE
Respondent
JUDGE:
BROMWICH J
DATE OF ORDER:
4 APRIL 2017
THE COURT ORDERS THAT:
1.Ms Ringshaug pay Comcare its costs of the application in this Court:
(a)before 11.00 am on 22 April 2016, on a party and party basis; and
(b)after 11.00 am on 22 April 2016, on an indemnity basis.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
REASONS FOR JUDGMENT
BROMWICH J:
On 3 February 2017, the applicant, Ms Ringshaug, failed in her appeal on questions of law under s 44(1) of the Administrative Appeals Tribunal Act 1975 (Cth), in relation to a decision of the Administrative Appeals Tribunal to affirm determinations of the respondent, Comcare: Ringshaug v Comcare [2017] FCA 48. Ms Ringshaug, while accepting that in the ordinary course she would be ordered to pay Comcare’s costs, contended that in the particular circumstances of this appeal the appropriate costs order would be that each party bear its own costs. Comcare disagreed, not only seeking costs, but in part seeking indemnity costs. The parties each provided written submissions and this adjudication has taken place on the papers without either party seeking an oral hearing.
The reasons for dismissing the appeal to this Court provide the background for this determination, and in particular the context for consideration of the issues raised by Ms Ringshaug in seeking to resist costs orders in Comcare’s favour. That background includes the timing, relevance and impact of the Full Court’s decision in Martin v Comcare [2015] FCAFC 169; (2015) 238 FCR 373 by which Ms Martin’s appeal…
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- AGLC
- Ringshaug v Comcare (No 2) [2017] FCA 349
- Case
- [2017] FCA 349
- Decision Date
CaseChat Overview and Summary
The Court held that Comcare was entitled to rely on its 20 April 2016 offer to compromise, which effectively meant that the rejection of the offer by Ms Ringshaug was unreasonable. The Court found that even if the High Court had refused special leave to appeal or dismissed Comcare’s appeal, and even if the Tribunal had not corrected the errors in its decision, the appeal in the Federal Court would have failed, and the application would have been dismissed. This conclusion led the Court to determine that there was no reason to depart from the ordinary effect of the offer under r 25.14(2) of the Federal Court Rules. Consequently, the Court awarded costs to Comcare on a party and party basis for the period before 11.00 am on 22 April 2016 and on an indemnity basis for the period after 11.00 am on 22 April 2016.
The Court’s reasoning was grounded in the principles of the Federal Court Rules, particularly r 1.35, which provides a broad discretion to the Court to relieve against injustice or to prevent injustice. The Court emphasized the presumptive nature of the entitlement to indemnity costs if an offer is not accepted, as per r 25.14(1). However, the Court also acknowledged its power under r 1.35 to make an order that is inconsistent with what r 25.14 prescribes, to meet the justice of the case. In this instance, the Court found that the rejection of the offer was unreasonable, and thus, the ordinary effect of the offer should apply. The Court concluded that the grounds for Ms Ringshaug’s appeal were not compelling enough to warrant a departure from the standard cost-awarding principles.
The final orders of the Court required Ms Ringshaug to pay Comcare's costs of the application on a party and party basis before 11.00 am on 22 April 2016, and on an indemnity basis thereafter. This decision underscores the importance of considering the reasonableness of rejecting an offer to compromise when determining the appropriate basis for awarding costs in litigation.
Orders
Orders of the court
1. Ms Ringshaug pay Comcare its costs of the application in this Court:
(a) before 11.00 am on 22 April 2016, on a party and party basis; and
(b) after 11.00 am on 22 April 2016, on an indemnity basis.
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
Full text does not contain this section.
Decision
Reasons for decision
Ratio Decidendi
Legal Principle Established
The operation of r 1.35 of the Federal Court Rules to relieve a party from the ordinary effect of an offer to compromise was considered in Sydney Equine Coaches Pty Ltd v Gorst [2017] FCAFC 34. In particular, the following observations were made at [19], emphasising the presumptive nature of the entitlement to indemnity costs if an offer is not accepted:The provisions of r 1.35 are remedial in character. They, like r 1.34, enable the Court to make an order that is inconsistent with the Rules. The purpose of the broad power in a provision such as r 1.35 is to relieve against injustice: FAI 165 CLR at 283. Parties can expect that r 25.14(1) provides for the costs consequences that in the ordinary course of litigation will flow from the non‑acceptance of an offer of compromise made under Pt 25 of the Rules where the offeree obtains a less favourable result than the one made in the offer. Nonetheless, the purpose of r 1.35 is to allow the Court to make an order that is inconsistent with what r 25.14 prescribes would otherwise occur, so as both to meet the justice of the case or to prevent injustice and to give effect to the Court’s broad discretion to make orders for costs conferred in s 43(2) of the Federal Court Act.Consideration on indemnity costs In resisting an indemnity costs order, Ms Ringshaug asserted that her decision to reject Comcare’s offer and make a counter offer was reasonable because at that time the Tribunal’s decision contained clear errors which must have been conceded to be so because those errors were corrected at Comcare’s instigation. Ms Ringshaug submitted those corrections had the effect of addressing some of her grounds of appeal by rendering those errors benign and undermining her prospects of success in the appeal. Ms Ringshaug submitted that it was relevant that the errors were “real” and present in the Tribunal’s decision at the time her appeal was commenced. Comcare characterised the Tribunal’s errors as “obvious” and “immaterial”. Comcare’s characterisation should be accepted because those errors would not have produced any different result had they not been corrected. Moreover, the ground of appeal that depended upon those errors was not formally abandoned until the hearing of the appeal, even if that may have been seen as inevitable. Comcare was entitled to rely upon its 20 April 2016 offer to compromise, although I most likely would also have found in its favour upon the basis of the Calderbank offer had that been necessary. In reaching this conclusion, it is plain that the basis upon which Ms Ringshaug’s case failed in the Tribunal meant that even if the High Court had refused special leave from the Full Court decision in Martin v Comcare, or had dismissed Comcare’s appeal, and even if the Tribunal had not corrected the errors in its decision, the appeal in this Court would have failed and the application would have been dismissed. In all the circumstances, it was unreasonable for Ms Ringshaug to refuse the 20 April 2016 offer to compromise. There is no reason, let alone any compelling reason, for the terms of r 25.14(2) to be departed from pursuant to r 1.35.