Spliethoff Transport BV v LEISURE FREIGHT and Import Pty Limited (No.2)

[2013] FCCA 443

FEDERAL CIRCUIT COURT OF AUSTRALIA

SPLIETHOFF TRANSPORT BV v LEISURE FREIGHT & IMPORT PTY LIMITED (NO.2) [2013] FCCA 443

Catchwords:
PRACTICE AND PROCEDURE – Costs – where Calderbank letter inclusive of costs issued – where offer of compromise not less than amount ordered to be paid – whether to set aside original costs order.

Cases cited:
University of Western Australia v Gray (No21) (2008) 249 ALR 360[1]
GEC Marconi Systems Pty Ltd v BHP Information Technology Pty Ltd (2003) 201 ALR 55

[1] “UWA v Gray”

Applicant: SPLIETHOFF TRANSPORT BV

Respondent: LEISURE FREIGHT & IMPORT PTY LIMITED

File Number: SYG 1907 of 2012

Judgment of: Judge Raphael

Hearing date: 22 April 2013

Date of Last Submission: 22 April 2013

Delivered at: Sydney

Delivered on: 22 April 2013

REPRESENTATION

Counsel for the Applicant: Mr P. Coady

Solicitors for the Applicant: M + K Lawyers

Solicitors for the Respondent: Biddle Lawyers

ORDERS

1. Application for costs dismissed.

FEDERAL CIRCUIT COURT OF AUSTRALIA
AT SYDNEY

SYG 1907 of 2012

SPLIETHOFF TRANSPORT BV

Applicant

And

LEISURE FREIGHT & IMPORT PTY LIMITED

Respondent

REASONS FOR JUDGMENT

1. In my judgment in these proceedings I concluded that the proper order in relation to costs was that there be no order as to costs for the reasons given in paragraph 79 of that judgment.  I stayed that order so that any party who might have reason to request a different order because of the existence of some offer of compromise or Calderbank letter could do so.  The applicant has taken advantage of that stay and has asked that the matter be restored for a hearing upon that point.  The respondent has appeared by telephone but has kindly provided the court with a written outline of submissions.

2. The case that the applicant brings is that on 21 December 2012 it made a written offer and a notice of offer to compromise in Form 45 to the respondent in the following form:

   “The Defendant pay to the Plaintiffs [sic] US$70,000 inclusive of costs and interest in full and final settlement;

   The claim and cross-claim be dismissed:  and

   Payment is made within 28 days after acceptance of the offer.”

3. Mr Coady who appears for the applicant has reminded me that the respondent had made a very substantial cross-claim in the sum of approximately $210,000.00 which was withdrawn on the first day of hearing.  The withdrawal of the cross-claim was no doubt instigated by the fact that there was no admissible evidence as to it.  Mr Coady says that the court should take into consideration when considering the Calderbank letter that at the time it was issued there was a substantial cross-claim on foot and so that should be borne in mind when looking at whether or not the figure of $70,000.00 inclusive of costs overtook the sum of approximately $29,000.00 that the respondent was eventually ordered to pay.

4. I do understand where the applicant comes from in making that submission.  It is not an unreasonable one to make, but I do not believe that it is one that is appropriate in this particular case.  That is because when the cross-claim was eventually withdrawn an order was made that the costs of the cross-claim be the applicant’s.  The existence of that order and its reasonableness have been affirmed today by Ms Robson for the respondent.  So therefore, the element of costs which relates to the cross-claim has in fact been dealt with in the applicant’s interest.  That leaves only the amount of the actual award.

5. The Calderbank letter which was issued was a Calderbank letter inclusive of costs and this is always a problematic thing because nobody actually knows what the costs may or may not have been.  It is always difficult for a party on the other end of a Calderbank letter to respond appropriately to it: University of Western Australia v Gray (No21) (2008) 249 ALR 360[2] per French J as he then was, GEC Marconi Systems Pty Ltd v BHP Information Technology Pty Ltd (2003) 201 ALR 55. In UWA v Gray, French J opined at [34] –[35]:

   “[34] I accept that the making of a rolled up offer inclusive of costs and interest may detract from the weight to be given to its refusal in the exercise of the discretion. Finn J referred to authorities on the point in GEC Marconi Systems Pty Ltd v BHP Information Technology Pty Ltd (2003) 201 ALR 55 ; [2003] FCA 688 at [34]. His Honour cited single judge decisions to the effect that such offers ought not to be a relevant consideration on the question of costs and would not be considered in the same way as a Calderbank letter. His Honour was invited to depart from that line of first instance authority. However he was not prepared to say it was clearly wrong. Notwithstanding that, in the circumstances of the case he had to decide, his Honour found that:

   [37] … The fact that the offer gave no indication at all of the breakdown … between the claim, interest and costs blunts significantly the weight to be given the offer.

   [35]While respecting the general approach to rolled up offers reflected in the cases to which Finn J referred, such approaches cannot be calcified into rules of law which fetter a general discretion. They simply reflect a common sense proposition that generally speaking such an offer is not unreasonably refused.

   There may, however, be circumstances where a rolled up offer, refused by an applicant who is unsuccessful, may support a claim for indemnity costs.”

   [2] “UWA v Gray”

6. Thus whilst such an offer alone might make the letter itself invalid as a proper Calderbank letter, assuming that that is not the case, I am of the view that the offer does not represent a figure less than the amount which the applicant has been ordered to pay.  In those circumstances I am not prepared to alter my original order that each side pay its own costs. 

I certify that the preceding six (6) paragraphs are a true copy of the reasons for judgment of Judge Raphael.

Associate: 

Date:  4 June 2013