Vijayakumar v Qantas Airways Limited (No.2)
[2009] FMCA 966
•8 October 2009
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| VIJAYAKUMAR v QANTAS AIRWAYS LIMITED (No.2) | [2009] FMCA 966 |
| HUMAN RIGHTS – COSTS – Respondent successful – whether parties should pay their own costs – whether indemnity costs justified – “Calderbank” offer – whether costs should be stayed until the outcome of an application for leave to appeal. |
| Disability Discrimination Act 1992 (Cth) Human Rights and Equal Opportunity Commission Act 1986 (Cth) s.46PO Health and Other Services (Compensation) Act 1955 (Cth) s.33A Federal Magistrates Court Rules 2001, r.21.15, Schedule 1 |
| Vijayakumar v Qantas Airways Limited [2009] FMCA 736 Vijayakumar v Qantas Airways Limited [2008] FMCA 339 Hollingdale v North Coast Area Health Service (No.2) [2006] FMCA 585 Wilczak v Alpine Refrigeration & Anor (No.3) [2006] FMCA 554 Messiter v Hutchinson (1987) 10 NSWLR 525 Maitland Hospital v Fisher [No.2] (1992) 27 NSWLR 721 Microsoft Corporation & Ors v Mayhew (No.2) [2008] FMCA 252 Eastern Sydney Area Health Service and Anor v King [2006] NSWCA 2 Calderbank v Calderbank [1975] 3 All ER 333; 3 WLR 586 Ruddock v Vadarlis (No.2) [2001] FCA 1865 Dr Martens Australia Pty Ltd v Figgins Holdings Pty Ltd (No.2) [2000] FCA 602 Evans Shire Council v Richardson (No.2) [2006] NSWCA 61 Dais Studio Pty Ltd v Bullet Creative Pty Ltd [2008] FCA 42 Jacomb v Australian Municipal Administrative Clerical & Services Union [2004] FCA 1600 Brannigan v Commonwealth of Australia (2001) 110 FCR 566; [2000] FCA 1591 |
| Applicant: | TONY MAHESPARAM VIJAYAKUMAR |
| Respondent: | QANTAS AIRWAYS LIMITED |
| File Number: | SYG 1812 of 2007 |
| Judgment of: | Scarlett FM |
| Hearing date: | 25 September 2009 |
| Date of Last Submission: | 25 September 2009 |
| Delivered at: | Sydney |
| Delivered on: | 8 October 2009 |
REPRESENTATION
| Counsel for the Applicant: | Mr Batley |
| Solicitors for the Applicant: | Legal Aid NSW (Mr Tan) |
| Counsel for the Respondent: | Ms Eastman |
| Solicitors for the Respondent: | Minter Ellison (Ms Patterson) |
ORDERS
The Applicant and the Respondent are to pay their own costs occasioned by the hearing of the application by the Acting Disability Discrimination Commissioner to intervene as amicus curiae on 11 March 2008.
Subject to Order 1, the Applicant is to pay the Respondent’s costs of this proceeding as follows:
(a)Up to and including 12 May 2008 calculated in accordance with the scale set out in Schedule 1 to the Federal Magistrates Court Rules 2001; and
(b)From and after 13 May 2008 calculated on an indemnity basis.
Certified under Rule 21.15 that it was reasonable for the Respondent to employ an advocate to appear for the Respondent.
The Applicant is to pay the Respondent’s costs of this application in accordance with the scale set out in Schedule 1 to the Federal Magistrates Court Rules 2001.
The costs are to be taxed by a Registrar of the Court.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT SYDNEY |
SYG 1812 of 2007
| TONY MAHESPARAM VIJAYAKUMAR |
Applicant
And
| QANTAS AIRWAYS LIMITED |
Respondent
REASONS FOR JUDGMENT
Application
This is an application for costs by the Respondent, Qantas Airways. It arises as a result of my decision in Vijayakumar v Qantas Airways Limited,[1] where I refused an application to amend the Application filed on 8th June 2007 dismissed the application. The application had been made under s.46PO of the Human Rights and Equal Opportunity Commission Act 1986.
[1] [2009] FMCA 736
The Respondent seeks costs:
a)In accordance with the scale in Schedule 1 to the Rules up to 21st September 2007; and
b)Indemnity costs from that day on.
The Applicant submits primarily that it would be appropriate to make no order as to costs.
In the alternative, if the Court were to be minded to make an order for costs, the Applicant submits that the appropriate costs orders would be:
a)Each party pay their own costs occasioned by the application by the Acting disability Discrimination Commissioner to intervene in the proceedings and of the hearing on 4th June 2008;
b)The Court certify under Rule 21.15 that it was reasonable for the Respondent to employ an advocate to appear for the Respondent;
c)The Applicant pay the Respondent’s costs of the proceedings, other than the costs referred to in 4(a) above, calculated in accordance with the scale of costs in Schedule 1 to the Rules; and
d)The cost should not become payable until after the conclusion of the Applicant’s appeal to the Federal Court of Australia from the judgment and orders made on 6th August 2009.
The Respondent’s Submissions
Counsel for the Respondent, Ms Eastman, submitted that:
a)There are no special provisions for proceedings under the Human Rights and Equal Opportunity Commission Act;[2]
b)There is no reason to depart from the general rule that a successful party should receive an order for costs;
c)For the purposes of Rule 21.15 the Respondent was properly represented by counsel and should receive an advocacy certificate.
d)The Court’s discretion in relation to costs includes making an order for costs on an indemnity basis;[3]
e)Indemnity costs may be ordered where a party has imprudently refused an offer to compromise;[4]
f)Whilst the rejection of an offer to compromise does not automatically attract an indemnity costs order,[5] where a reasonable offer has been rejected, the starting point should be that costs are awarded on an indemnity basis unless the Applicant can demonstrate a good reason why the offer was rejected; and
g)The onus is on the Applicant of persuading the Court that he should not be required to pay costs on an indemnity basis having regard to the offers made on 21st September 2007, 20th December 2007 and 12th May 2008.[6]
[2] Hollingdale v North Coast Area Health Service (No.2) [2006] FMCA 585 at [10]
[3] Wilczak v Alpine Refrigeration & Anor (N0.3) [2006] FMCA 554
[4] Messiter v Hutchinson (1987) 10 NSWLR 525; Maitland Hospital v Fisher [No.2] (1992) 27 NSWLR 721 at 724
[5] Microsoft Corporation & Ors v Mayhew (No.2) [2008] FMCA 252 at [6]
[6] See Eastern Sydney Area Health Service and Anor v King [2006] NSWCA 2 at [83]
As to the application for a stay in respect of any costs order, Ms Eastman submitted that an appeal does not automatically operate as a stay in respect of any costs order. The Applicant’s application for leave to appeal was heard on Friday 18th September and the decision was reserved. There was no application made for a stay in those proceedings.
As to the applicant’s submission that the parties should pay their own costs because the issue was one of general public interest, Ms Eastman submitted that the case did not raise any such issue. The Applicant had not endeavoured to show that Qantas Airways’ terms and conditions of carriage were generally discriminatory. The Applicant had been able to take more than the 20 kg baggage limit out of Australia. Whilst he had been asked to pay excess baggage charges on his return flight to Australia, there was no evidence that he was required to leave behind any of his disability aids.
Further, it was submitted that the Applicant’s lack of success before this Court was because he did not have legal advice before he made his claim to the Human Rights and Equal Opportunity Commission (HREOC). There was no evidence as to why he did not seek legal assistance earlier.
Ms Eastman submitted that after the Applicant’s claims had been terminated by HREOC, he did not proceed further with his complaint about the way Qantas dealt with him when he boarded the flight in Sydney or his complaint that Qantas had not dealt properly with his claim when he returned. He proceeded only on his claim about the events that occurred at Mumbai which was, it was submitted, doomed to fail.
Turning to the issue of the parties paying their own costs in respect of the application by the Acting Disability Discrimination Commissioner to intervene in the proceedings, Ms Eastman submitted that the Applicant had supported the application whilst the Respondent had opposed it. Mr Batley of counsel, who appeared for the Applicant, clarified that this application only related to costs of the day of the intervention application.
The third issue to which counsel for the Respondent referred was the application for costs on an indemnity basis. This was on the basis of a “Calderbank” offer made by the Respondent, of a type dating back to the English decision in Calderbank v Calderbank[7]. Ms Eastman submitted that Qantas had made two offers to the Applicant to settle the matter. The first was met with a request for extra time to consider, which was granted. The Applicant did not seek an extension of time to consider the second offer. It was submitted that the Applicant’s refusal of the offers was unreasonable, as the issues had been crystallised when the offers were made. There was no evidence from the Applicant as to why the offers were rejected.
[7] [1975] 3 All ER 333; 3 WLR 586
The Applicant’s Submissions
Counsel for the Applicant, Mr Batley, submitted that:
a)In the normal course, costs follow the event but the power to award costs is a judicial discretion to be exercised having regard to all the circumstances of the case, and circumstances may justify departure from the usual course.[8]
[8] Ruddock v Vadarlis (No.2) [2001] FCA 1865 at [22]-[25]
b)An order for costs is compensatory and not punitive, and consideration of all the circumstances of the case includes consideration of the public interest element of the case;
c)The Court should depart from the normal course and order that each party pay their own costs because the Applicant’s application had a significant public interest element and his lack of success was a result of the way in which his complaint was characterised in the AHRC, the Australian Human Rights Commission, which is the new name for the Human Rights and Equal Opportunity Commission;
d)Any finding regarding Qantas Airways’ standard practices and its terms and conditions of travel would potentially have a substantial effect on a large number of people with disabilities who use mobility aids or palliative or therapeutic aids;
e)The Applicant was unsuccessful because the Court found that those issues had not been raised by the Applicant in his complaint to the AHRC[9] and, because of s.46PO the Applicant was precluded from raising those issues in Court;
f)The Applicant did not have the benefit of legal advice or representation when he lodged his complaint with the AHRC;
g)The Acting Disability Discrimination Commissioner applied for leave to appear as amicus curiae because he formed the view that:
i)The orders sought by the Applicant might have a significant effect on the human rights of persons who are not parties to the proceedings;
ii)The proceedings had significant implications for the administration of the Disability Discrimination Act 2002 and the Human Rights and Equal Opportunity Act 1986[10]; and
iii)The Acting Disability Discrimination Commissioner was satisfied that it would be in the public interest to assist the Court as amicus curiae;
h)The Court granted leave to the Commissioner on the ground that the intervention was likely to assist the Court;[11]
i)The above factors, taken together, support a departure from the usual course and an order that there be no order as to costs.
[9] Formerly HREOC
[10] Now known as the AHRC Act
[11] Vijayakumar v Qantas Airways Limited [2008] FMCA 339 at [8]-[10]
In the alternative, it was submitted that any costs awarded should be in accordance with the Federal Magistrates Court scale and that those costs should not include:
a)The costs occasioned by the intervention of the Acting Disability Discrimination Commissioner; and
b)The adjournment of the matter to enable the Respondent to make submissions in reply.
Mr Batley noted that it was the Respondent who opposed the intervention of the Commissioner and the day originally allocated for the hearing of the parties’ interlocutory applications was taken up with consideration of the Respondent’s opposition to the Commissioner’s application. He submitted:
Given that the Commissioner was successful, it might fairly be said that it was the conduct of the Respondent in opposing the Application that caused the hearing to be adjourned.[12]
[12] Applicant’s Submissions on Costs 3 Sep 2009 at paragraph [16]
Quite properly, counsel for the Applicant accepted that it was appropriate for the Respondent to brief counsel and, if a costs order were to be made, the Respondent would be entitled to an order under Rule 21.15.
As to the settlement offers, Mr Batley submitted that it was not unreasonable of the Applicant to reject the offers contained in the Respondent’s solicitors’ letters of 20th December 2007 and 12th May 2008. He referred the Court to the decision of Goldberg J in Dr Martens Australia Pty Ltd v Figgins Holdings Pty Ltd (No. 2)[13], where his Honour summarised the principles relating to Calderbank offers, also referred to as “without prejudice except as to costs” offers:
It does not automatically follow that the making of an offer of compromise or settlement, whether by way of a Calderbank letter of offer or otherwise, and its non-acceptance followed by a result less favourable to the offeree than that contained in the offer, will lead to an order for the payment of costs on an indemnity basis…
Thus, whenever a Calderbank offer is made, and is enlivened by a result more favourable to the offeror and less favourable to the offeree, it is necessary to look at all the surrounding circumstances and not simply the fact that an offer was made and rejected and the offeree has achieved a less favourable result than the offer. It is necessary to look at the genuineness of the offer, whether it was realistic, the point of time at which it was made and that whether, in all the circumstances, it was such a reasonable offer as required the offeree to give careful consideration to it. If, in all the circumstances, it was unreasonable for the offeree to reject the offer and not accept it then there are strong grounds for the Court ordering indemnity costs on the basis that the offeror has made a fair and reasonable attempt to resolve the proceeding and has given the offeree the opportunity at a relevant point of time in the proceedings to consider the reasonableness of the offer.[14]
[13] [2000] FCA 602
[14] [2000] FCA 602 at [16] and [17]
Mr Batley submitted that the Respondent has the onus of establishing that it was unreasonable for the Applicant to reject the offers (see Evans Shire Council v Richardson (No.2)[15] at [26]. The mere refusal of a Calderbank offer does not of itself warrant an order for indemnity costs, and the offeror needs to show that the conduct of the offeree was unreasonable (see Dais Studio Pty Ltd v Bullet Creative Pty Ltd[16] at [9]).
[15] [2006] NSWCA 61
[16] [2008] FCA 42
It was submitted that the Respondent’s offer of 12th May 2008 repeated an offer that had been made to the Applicant’s counsel on 7th May 2008, but the Applicant’s lawyers were not able to contact him to obtain his instructions until 13th May 2008, the day before the hearing. The submission is that the Applicant had not had sufficient time to consider the offer so it was, therefore, not unreasonable for him to reject it.
In any event, it was submitted that the case raised legal issues about the interpretation of the Disability Discrimination Act and s.46PO of the Human Rights and Equal Opportunity Commission Act. Mr Batley referred the Court to the decision in Jacomb v Australian Municipal Administrative Clerical & Services Union[17], where Crennan J refused to make an indemnity costs order where an offer was rejected in circumstances where there was an unresolved issue of statutory construction and the proceedings “had consequences going beyond the individual applicant” in the public interest.
[17] [2004] FCA 1600
It was also relevant that the Applicant has lodged an application for leave to appeal, which has been heard but judgment has been reserved. Thus, the order should be stayed pending determination of:
a)The leave application; and
b)The appeal
The Sequence of Events
On 11th May 2007 a Notice of Termination of the Applicant’s claim was issued by a delegate of the President of the Human Rights Commission.
The Applicant commenced proceedings in this Court on 8th June 2007.
The Applicant’s solicitors, the Legal Aid Commission of New South Wales, wrote to the Respondent’s solicitors about proposed amendments to the Applicant’s application.
On 21st September 2007, the Respondent’s solicitors replied, advising that the Respondent did not consent to the filing of the amended application. The Respondent’s solicitors advised that the Respondent was proposing to file and serve an application for summary dismissal of the application. The letter went on to say:
We invite your client to consider the attached draft Application for Summary Dismissal and to withdraw the application and Points of Claim, and undertake that he will not seek to file the Amended Application, by no later than 28 September 2007. We are instructed that if the Application and Points of Claim are withdrawn, and the undertaking is provided, by no later than close of business on Friday 5 October 2007, the Respondent will not seek any orders as to costs.
If your client does not withdraw the Application and Points of Claim and provide the undertaking described above by close of business on Friday 5 October 2007, we are instructed to file the Application for Summary Dismissal and request that it be listed before Federal Magistrate Turner[18] for determination as a matter of urgency.
We confirm that if the Respondent is successful in its Application for summary dismissal, our client will rely on this letter on the question of costs.[19]
[18] In whose docket the matter was then listed
[19] Affidavit of Jessica Kate Farah filed 3 Sept 2009, Annexure JF2
On 24th September 2007 the Applicant filed the Points of Claim.
On 5th October 2007 the Applicant’s solicitor wrote to the Respondent’s solicitors advising that:
a)The Applicant declined the invitation to withdraw the Application and Points of Claim and would not be providing the undertaking demanded; and
b)Would be filing the Amended Application.
On 8th October 2007 the Applicant filed an Application to amend the application that had been filed on 8th June 2007.
The parties attended mediation on 12th December 2007 before a Registrar but the matter was not resolved.
On 20th December 2007 the Respondent made an offer of settlement in the following terms:
a)A payment of $2,000.00;
b)The provision of a statement of regret;
c)An agreement to review the Respondent’s Excess baggage Policy and to consider the carriage of disability aids in the review;
d)The provision of a written acknowledgment that he could travel on international flights with an additional 10 kilograms of mobility aids and/or palliative aids without attracting an excess baggage fee.
The offer was said to be open until 5:00pm on Friday 4th January 2008. The letter was marked “Without prejudice except as to costs”.[20]
[20] Affidavit of J.K Farah filed 3.9.2009 Annexure JF4
The Applicant wrote directly to the Respondent’s solicitors on 28th December 2007, seeking an extension of fourteen days from 4th January 2008 to discuss the matter with his lawyers.[21]
[21] Affidavit of J.K. Farah filed 3.9.2009 Annexure JF5
On 4th January 2008 the Respondent agreed to leave the offer open until 18th January 2008.[22]
[22] Affidavit of J.K. Farah filed 3.9.2009 Annexure JF6
On 24th January 2008 the Respondent’s solicitor took a file note showing a telephone conversation with the Applicant’s solicitor in which he advised that the settlement offer was refused and he had no instructions to make a counter offer.[23]
[23] Affidavit of J.K. Farah filed 3.9.2009 Annexure JF8
The application by the Acting Disability Discrimination Commissioner for leave to appear as amicus curiae was heard and decided on 11th March 2008. The application was granted.[24]
[24] Vijayakumar v Qantas Airways Limited [2008] FMCA 339
On 12th May 2008, the Respondent’s solicitors made a further written offer of settlement to the Applicant’s solicitor. That letter referred to telephone conversations between the Respondent’s counsel and the Applicant’s counsel on 10th April, 1st May and 7th May 2008 and an email exchange on 9th May 2008.
The offer of settlement was either:
a)A payment of $10,000.00 less tax and any sum required to be remitted to Medicare under s.33A of the Health and Other Services (Compensation) Act 1955 (Cth) and, for representatives of Qantas to meet with the Applicant and his legal representatives to discuss how Qantas’ Excess baggage Policy might be changed in relation to disability aids; or
b)A payment of $15,000.00 less tax and any sum required to be remitted to Medicare.
The offer was open for acceptance until midday on Tuesday 13th May 2008.[25] This letter was also marked “Without Prejudice except as to costs”.
[25] Affidavit of Jessica Kate Farah filed 4 September 2009 Annexure JKF1
The Applicant’s solicitor, Mr Tan, deposed in an affidavit sworn on 24th September 2009 deposed that he received a text message on his mobile phone from the Respondent’s solicitor, Ms Patterson, advising him that a letter of compromise was being forwarded to him. He was in court at the time. He telephoned Ms Patterson at about 11:45am that day and was advised that the offer had been sent by email. He asked for it to be faxed so that he could courier it to the Applicant.[26]
[26] Affidavit of J. Tan sworn 24 September 2009 at paragraph [6]
The faxed letter duly appeared, and it appears to have been sent at 11:59am.[27]
[27] Affidavit of J. Tan 24.9.2009 at Annexure JT1
Mr Tan deposed that he arranged for the faxed letter to be sent to the Applicant by urgent courier that same day.[28] He also deposed that he had been attempting to contact the Applicant on a number of occasions without success. He later ascertained that the Applicant had been admitted to Royal Prince Alfred Hospital on 6th May 2008.[29]
[28] Affidavit of J. Tan 24.9.2009 at [8]
[29] Affidavit of J. Tan 24.9.2009 at [5]
The Applicant did not reply to the offer of settlement.
The interlocutory application was heard on 14th May and 4th June 2008.
Conclusions
The Respondent seeks costs in accordance with the Court Scale until 21st September 2007 and on an indemnity basis from then on, on the basis that the Applicant unreasonably and imprudently:
a)Failed to accept the invitation to withdraw the application and points of claim and undertake not to file the amended application, made on 21st September 2007;
b)Rejected the Respondent’s offer of settlement made on 20th December 2007; and
c)Failed to accept the Respondent’s offer of settlement made on 12th May 2008.
The Applicant’s claim was subsequently unsuccessful.
The Applicant’s primary submission is that there should be no order for costs because, whilst he was unsuccessful, his application:
a)had a significant public interest element; and
b)his lack of success was a result of the way in which his complaint was characterised in the Human Rights and Equal Opportunity Commission.
I do not accept either argument.
The application did not have a significant public interest element. The application to HREOC was terminated, insofar as the Applicant’s claim about the events at Mumbai Airport was concerned, on the basis that the Disability Discrimination Act does not apply extra-territorially. The Applicant’s claim that the decision to that effect in Brannigan v Commonwealth of Australia[30] was not a settled principle was not accepted by HREOC. In my decision of 6th August 2009 I stated that I was satisfied that the decision in Brannigan[31] clearly showed that the Court had no jurisdiction and the Disability Discrimination Act has no extra-territorial effect.[32]
[30] (2001) 110 FCR 566; [2000] FCA 1591
[31] supra
[32] [2009] FMCA 736 at [136]
The Applicant’s claim that his lack of success was a result of the way in which his complaint was characterised in HREOC does not establish any ground for not making an order for costs. The Applicant may not have had legal advice, let alone legal representation, at that stage, but that is not an uncommon situation.
I am satisfied that there should be an order for costs in favour of the Respondent.
The Applicant’s alternative submission is that the Applicant should pay part of the Respondent’s costs. The Applicant submits that each party pay their own costs occasioned by the application of the Acting Disability Discrimination Commissioner to appear as amicus curiae and the cost of the adjourned hearing on 4th June 2008.
The Respondent opposed the application of the Acting Disability Discrimination Commissioner and the Applicant supported it. The application was successful. As counsel for the Applicant submitted, because the Respondent opposed the intervention of the Commissioner, the day originally allocated for the hearing of the Applicant’s and Respondent’s interlocutory applications was taken up with consideration of the Respondent’s opposition to the Commissioner’s application. Thus, it was submitted that it was the conduct of the Respondent in opposing the application that caused the hearing to be adjourned.
There is force in that submission. The interlocutory application was originally listed for hearing on 11th March 2008, but that day was effectively taken up by the Court’s consideration of the Commissioner’s application. As a result, the interlocutory application was not able to be heard until 14th May and 4th June.
In my view, the parties should pay their own costs of the hearing on 11th March 2008, which was a day devoted to the Commissioner’s application.
The Applicant also submitted that the parties should pay their own costs of the adjourned hearing on 4th June 2008. The essence of that submission is that counsel for the Respondent apparently took too long, so that the hearing of the application had to go into a second day.
That, with respect, is an overly-optimistic submission. It does occur from time to time that matters take longer to dispose of than the time the Court originally allocates for that purpose. Clearly, if the Court forms a view that one party is unnecessarily prolonging proceedings, that is a matter that may well sound in costs.
This is not such a case. There was a considerable amount of material to be covered and I did not find it necessary to warn counsel that the submissions were unnecessarily lengthy. The costs of the hearing on 4th June 2008 should not be treated differently from those applicable to the first day, 14th May 2008.
As to whether the Court should order a stay of any costs order until the application for leave to appeal, and any subsequent appeal, can be finalised, I am not satisfied that there is any evidence that would justify such a course.
I now turn to the question of whether the Court should order that the Applicant should pay the Respondent’s costs on an indemnity basis with effect from 21st September 2007.
In my view, the approach that the Court should take is that set out by Goldberg J in Dr Martens Australia Pty Ltd v Figgins Holdings Pty Ltd (No.2)[33] at [16]-[17]. That is, it does not automatically follow that costs will be ordered on an indemnity basis after an offer of compromise or settlement has been rejected. The Court must look at all the surrounding circumstances, which include:
a)The genuineness of the offer;
b)Whether the offer was realistic;
c)When the offer was made; and
d)Whether, in all the circumstances, it was such a reasonable offer that it required the offeree to give careful consideration to it.[34]
[33] supra
[34] [2000] FCA 602 at [16]-[17]
The Respondent submits that costs should be payable on an indemnity basis from 21st September 2007, the date of the invitation to withdraw the Application and Points of Claim.
I do not agree with this contention. As counsel for the Applicant submitted during the hearing, this was not an offer of compromise at all. It was a demand by the Respondent that the Applicant should withdraw the Application and Points of Claim and undertake not to file the Amended Application. Unless the applicant agreed by 5th October 2007, the Respondent would apply for summary dismissal.
This was not an offer of compromise. It was an ultimatum. It was rejected on 5th October 2007. It does not lead to an order for costs on an indemnity basis.
In my view, the first offer of compromise was that made by the Respondent on 20th December 2007. It offered a modest sum of money, a statement of regret, a review of the Respondent’s Excess Baggage policy with respect to the carriage of disability aids, and an acknowledgement that the Applicant could fly internationally with an additional 10 kilograms of mobility aids or palliative aids without attracting a fee for excess baggage.
The offer of compromise was worth considering, even if it was only seen by the Applicant’s lawyers as “testing the water”. The timing of the offer was inconvenient, being the 20th December, only five days before Christmas, and the time for acceptance was originally 4th January 2008.
Not unreasonably, the Applicant sought an extension of time so that he could consult his lawyers, and the Respondent, not unreasonably, extended the time for acceptance for a fortnight, until 18th January 2008.
The offer appears to me to be a genuine offer, although a modest one, which could have led to settlement negotiations. However, the Applicant instructed his solicitor to reject the offer and did not give instructions for a counter-offer. This was communicated to the Respondent’s solicitors on 24th January 2008.
Whilst this may have been an unfortunate decision, as the Applicant went on to be unsuccessful in his claim, the rejection of the offer at that stage in the proceedings does not appear to be so unreasonable, if it were unreasonable at all, that costs on an indemnity basis from that point.
The second and final offer of compromise was made by the Respondent in writing on 12th May 2008, although there is no issue that an offer in terms of that offer was discussed between counsel for the Respondent and the Applicant from 7th May 2008 onwards.
This offer was for either $10,000.00 less tax and any refund to Medicare plus a discussion about how the Respondent’s Excess Baggage policy might be changed in relation to disability aids, or the sum of $15,000.00 less tax and any refund to Medicare. It was made on 12th May 2008, two days before the interlocutory hearing, and was to be open until 12:00 midday on 13th May, the day before the hearing.
I am satisfied that this was a genuine offer of compromise. It was worth considering. The Applicant’s solicitor clearly took it seriously and made efforts to communicate it to his client as a matter of urgency.
It is not uncommon in litigation for parties, seemingly intractable in their opposition to each other, to compromise their claims within a few days, or even a few hours, of a hearing. Many matters are settled “on the courthouse steps”. A looming hearing can often have the effect of concentrating the parties’ minds on the issues.
It was not unreasonable for the Respondent to produce a genuine settlement offer only two days out from the start of the hearing. The minds of both parties, and of their lawyers, would have clearly been focused on the matter.
However, the Applicant was unavailable to his lawyers in the critical few days before the hearing. Mr Tan’s affidavit shows that he had made several unsuccessful attempts to contact his client between 7th (A Wednesday) and 11th May (the following Sunday). He explained that:
I was later informed by the Applicant that on 6 May 2008, he was admitted to the Royal Prince Alfred Hospital and suffered from a number of health complications during the relevant period.[35]
[35] Mr Tan’s affidavit at paragraph [5]
This evidence was not challenged by the Respondent’s counsel. However, it is unsatisfactory as to what it does not say. There is no evidence from the Applicant as to:
a)How unwell he was;
b)The length of his hospitalisation;
c)When he was discharged from hospital;
d)Whether he was a t home convalescing; or
e)What efforts he made to contact his solicitor.
All the Court knows is that the Applicant told his solicitor that he was admitted to hospital on 6th May. There was no application for an adjournment of the hearing on 14th May due to the Applicant’s illness.
The Respondent had made a serious offer of settlement and had communicated it to the Applicant’s solicitor. There is no evidence of any counter offer, or even of a request to keep the offer open for a short time longer to enable some discussions to take place.
The answer, in my view, appears in paragraph 9 of Mr Tan’s affidavit:
The Applicant seeks, in order to resolve these proceedings, the implementation by the Respondent of concrete measureable steps to ensure its Terms and Conditions of Carriage, particularly in relation to baggage allowance limits, applies[36] in a non-discriminatory manner towards persons with disabilities. Neither of the Respondent’s letters of compromise dated 20 December 2007 and 12 May 2008, referred to in paragraphs 3 and 4 respectively, meet the Applicant’s condition.[37]
[36] sic
[37] Affidavit of J. Tan 24.9.2009 at [9]
This was the point upon which the Applicant was not prepared to compromise. The hearing proceeded and the Applicant was unsuccessful in his claim.
The terms of the Respondent’s letter of 12th May 2008 are clear. The Applicant was represented by solicitor and counsel. It is inconceivable that he was not made aware of the possible consequences of rejecting the Respondent’s final offer. He chose to reject.
I am satisfied that the Applicant took an imprudent approach and took the risk that his claim would be unsuccessful, with a costs order, and even an order for costs on an indemnity basis, as a not unlikely consequence. As Goldberg J said in Dr Martens v Figgins Holdings:
If, in all the circumstances, it was unreasonable for the offeree to reject the offer and not accept it then there are strong grounds for the Court ordering indemnity costs on the basis that the offeror has made a fair and reasonable attempt to resolve the proceedings and has given the offeree the opportunity at a relevant point of time in the proceeding to consider the reasonableness of the offer.[38]
[38] [2000] FCA 602 at [17]
I am satisfied that the Respondent made a genuine and realistic attempt to settle the manner at a reasonable time before the hearing. On the evidence before me, there is nothing to show that the time given for consideration was unreasonable. It was unreasonable for the Applicant not to accept the Respondent’s second and final offer of compromise.
The offer was expressed to be open until midday on 13th May 2008. In my view, costs should be awarded on an indemnity basis from that day onwards.
The Applicant should pay the Respondent’s costs occasioned by this costs application in accordance with the scale set out in Schedule 1. I see no reason why those costs should be paid on an indemnity basis.
I certify that the preceding eighty-three (83) paragraphs are a true copy of the reasons for judgment of Scarlett FM
Associate: V. Lee
Date: 1 October 2009
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