Wilson Parking Australia 1992 Pty Ltd (ACN 052 475 911) v Leda Holdings Pty Ltd (ACN 001 404 557)
[1997] FCA 121
•28 FEBRUARY 1997
CATCHWORDS
PRACTICE and PROCEDURE - COSTS - application for indemnity costs - whether offer of compromise reasonably rejected - whether offer was a genuine compromise - whether non-discovery affected reasonableness of rejection of offer - totality of claim must be considered.
Federal Court Rules O23 r11(4)
Calderbank v Calderbank [1975] 2 WLR 586, cited
Tickell v Triflesk Pty Limited (1990) 25 NSWLR 353, cited
Hobartville Stud Pty Ltd v Union Insurance Co Ltd (1991)
25 NSWLR 358, cited
Australian Federation of Consumer Organisations v Tobacco
Institute of Australia Ltd (1991) ATPR 41-114, cited
Quirk v Bawden (1992) 111 FLR 115, cited
Williams v Commonwealth Bank of Australia (unreported, 29 November 1995 and 30 November 1995, NG 898 of 1992), distinguished
WILSON PARKING AUSTRALIA 1992 PTY LIMITED (ACN O52 475 911) v
LEDA HOLDINGS PTY LIMITED (ACN 001 404 557), NATIONAL MUTUAL TRUSTEES LIMITED (ACN 004 029 841), NATIONAL MUTUAL TRUSTEES LIMITED (ACN 004 029 841) and WILSON PARKING AUSTRALIA 1992 PTY LIMITED (ACN 052 475 911)
No NG 939 of 1993
Tamberlin J
Sydney
28 February 1997
IN THE FEDERAL COURT OF AUSTRALIA )
NEW SOUTH WALES DISTRICT REGISTRY ) No. NG 939 of 1993
GENERAL DIVISION )
BETWEEN: WILSON PARKING AUSTRALIA 1992
PTY LIMITED (ACN O52 475 911)
Applicant
AND LEDA HOLDINGS PTY LIMITED
(ACN 001 404 557)
First Respondent
NATIONAL MUTUAL TRUSTEES
LIMITED (ACN 004 029 841)
Second Respondent
NATIONAL MUTUAL TRUSTEES
LIMITED (ACN 004 029 841)
Cross-Claimant
WILSON PARKING AUSTRALIA 1992
PTY LIMITED (ACN 052 475 911)
Cross Respondent
CORAM: TAMBERLIN J
PLACE: SYDNEY
DATED: 28 February 1997
MINUTE OF ORDERS
THE COURT ORDERS THAT:
The applicant pay the costs of the respondents and cross-claimant from 14 July 1995 on an indemnity basis.
The applicant pay the costs of the respondents and the cross-claimant prior to 14 July 1995 on a party/party basis.
The applicant pay the costs of this application on a party/party basis.
NOTE: Settlement and entry of orders is dealt with in accordance with Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA )
NEW SOUTH WALES DISTRICT REGISTRY ) No. NG 939 OF 1993 GENERAL DIVISION )
BETWEEN: WILSON PARKING AUSTRALIA 1992
PTY LIMITED (ACN O52 475 911)
Applicant
AND LEDA HOLDINGS PTY LIMITED
(ACN 001 404 557)
First Respondent
NATIONAL MUTUAL TRUSTEES
LIMITED (ACN 004 029 841)
Second Respondent
NATIONAL MUTUAL TRUSTEES
LIMITED (ACN 004 029 841)
Cross-Claimant
WILSON PARKING AUSTRALIA 1992
PTY LIMITED (ACN 052 475 911)
Cross Respondent
CORAM: TAMBERLIN J
PLACE: SYDNEY
DATED: 28 February 1997
REASONS FOR JUDGMENT
TAMBERLIN J:
This is an application by the successful respondent/cross-claimant ("National Mutual") for indemnity costs in the action and cross-claim.
Reasons for judgment were delivered by me on 13 November 1996 when I dismissed the application and found for National Mutual. Orders were then made that the application be
dismissed with costs and that the applicant ("Wilson Parking") pay National Mutual's costs of the cross-claim.
After making the initial orders I directed the parties to bring in Short Minutes as to the exact quantum. Subsequently judgment was entered for National Mutual in the amount of $1,278,104.62 which comprised an amount of $177,259.82 by way of interest. Accordingly, the principal awarded on the cross-claim was in the order of $1.1 million.
The basis for the application for indemnity costs is that on 14 July 1995, Mr Vrisakis, the then solicitor for the respondents and cross-claimant, served a Notice of Offer of Compromise said to be pursuant to O23 of the Federal Court Rules. The offer was:
"1.By consent and without admission of liability, judgment is entered for the Respondents in respect of the Applicant's claim.
The Applicant pays the Cross-Claimant the sum of $800,000 in full and final satisfaction of the cross-claim within 7 days of acceptance of this offer.
No interest is payable unless, following acceptance of the offer, payment is not made as provided in 2.
The Applicant pays the Respondents' party/party costs on the Applicant's claim and the Cross-Claimant's costs on the cross-claim as agreed or taxed.
This offer is open for acceptance for a period of 21 days from the date of this Notice of Offer of Compromise.
This offer is without prejudice except as to costs."
In response, on 18 July 1995, Mr Robertson, acting for Wilson Parking wrote:
"We acknowledge receipt of the document. We do not admit that the document amounts to a valid offer of compromise under Order 23 of the Federal Court Rules. The document contains no element of compromise at all. The amount referred to in the document, together with the conditions attached to it, amount to a complete payment of the claim made by your client in these proceedings..."
Mr Vrisakis, on behalf of National Mutual, replied on 27 July 1995 as follows:
"Our clients' claim as it currently stands is in the vicinity of
Damages $1.13 million
Costs to date on a
party/party basis $360,000
Interest to date $ 38,000
These figures take into account our clients' best efforts to mitigate its damage by having Secure Parking Management Pty Ltd operate the car park on a management basis. Our client is making every effort to re-lease the carpark at a commercial rate. We enclose for your information a copy of the letter dated 20 July 1995 from Leda Holdings Pty Limited on this matter.
Even if our client enters into a new lease on more favourable terms, thereby reducing its damages as currently quantified, based on the best tender received to date, the existing Notice of Offer of Comprise would still constitute a genuine compromise of our clients' valid claim against your client."
The Offer of Compromise was not accepted.
General principles
The principle underlying the award of indemnity costs in circumstances such as the present, is that the Court should be astute to ensure so far as it can that litigation be brought to finality as quickly as possible with the consequential reduction in costs, time, and no doubt in many cases, anxiety. This purpose is furthered by requiring parties to focus on the inevitable wastage which will otherwise result if a result is obtained which is not substantially more favourable than that which could have been reasonably negotiated at an earlier point in time. The making of a realistic offer of compromise at an early stage in litigation is a practice to be encouraged in the public interest. The general principles are well settled. See Calderbank v Calderbank [1975] 2 WLR 586; Tickell v Triflesk Pty Limited (1990) 25 NSWLR 353; HobartvilleStud Pty Ltd v Union Insurance Co Ltd (1991) 25 NSWLR 358, Australian Federation of Consumer Organisations v Tobacco Institute of Australia Ltd (1991) ATPR 41-114, Quirk v Bawden (1992) 111 FLR 115; Colgate Palmolive Co Pty Ltd v Cussons Pty Ltd (1993) 46 FCR 225.
Reference was made in argument to a decision of mine in Williams v Commonwealth Bank of Australia & Ors (unreported - 29 November 1995 and 30 November 1995 - NG 898 of 1992). In that case I expressed the view that it was artificial to consider an application for indemnity costs arising from an offer of compromise on the basis of a cross-claim alone. My view was and remains that it was necessary to have regard to the totality of the claim, both application and cross-claim, and also to the relevant circumstances of each particular case. In that case, on facts which were quite different from the present case and which involved multiple applicants, I concluded that the Offer of Compromise there made did not offer any substantial benefit to the offerees and therefore costs on an indemnity basis should not be awarded.
In the present case there was a significantly greater benefit offered to Wilson Parking than that which was offered to the applicants/cross-respondents in the Williams case. Accordingly, reliance on that decision does not advance the position of Wilson Parking in the present circumstances.
Order 23 r11(4) of the Federal Court Rules provides that:
"(4) If:
(a) an offer is made by an applicant and not accepted by the respondent; and
(b) the applicant obtains judgment on the claim to which the offer relates not less favourable than the terms of the offer, then, unless the court otherwise orders, the applicant is entitled to an order against the respondent for costs incurred in respect of the claim,
(c) up to and including the day the offer was made - taxed on a party and party basis; and
(d) after that day - taxed on an indemnity basis."
In O23 the term "applicant" includes "cross-claimant".
In substance, the defence to the cross-claim was by way of a set off of the amount claimed in the application in respect of which Wilson Parking was unsuccessful. Accordingly, it is appropriate, when considering the question of costs, to look at the matter as a whole. That is to say, taking into account the issues raised both in the application and the cross-claim. In my view r11(4) is the relevant clause under which to consider this application.
National Mutual, in support of its application for indemnity costs submits that the offer was substantially less than the amount awarded and that therefore costs should be on an indemnity basis. This is both on the basis that O23 r11(4) applies, or alternatively, that as a matter of the Court's general discretion as to costs, such an order should be made.
For Wilson Parking, the following submissions are made:
•The Offer of Compromise should be considered as two separate offers, namely judgment for the respondent on the application and a separate offer to settle the cross-claim in return for payment of $800,000.
•In respect of the Offer to Compromise, O23 r11(4) cannot apply because it only applies to the offer to compromise the claim by Wilson Parking.
•The offer by National Mutual to compromise the claim of the applicant called for complete capitulation and therefore did not propose a "compromise".
•In relation to the Natural Mutual offer to compromise the cross-claim, the Court should as a matter of discretion, decline to make an indemnity order.
I do not accept that O23 r11(4) cannot apply in view of the definition of "applicant" to include a "cross-claimant". In any event, the Court has a general discretionary power, which would enable it to award indemnity costs in an appropriate case.
Nor is there any substance in the submission that the offer in respect of Wilson Parking's claim sought a capitulation and that there was no compromise at all. As mentioned earlier, it is necessary to examine the substance of the offer and not to artificially split the offer into a number of parts and consider each in isolation. The question raised is whether the Court should otherwise order under r11(4) or, in the exercise of its general discretion as to costs, decline to make an indemnity award.
The offer was a single offer not expressed to be capable of acceptance as to any of its component parts independently and therefore it was not open to Wilson Parking to accept National Mutual's offer in respect of the cross-claim without also accepting the offer in respect of the application.
It is well settled that the appropriate time at which to consider the matter is at the time when the offer was made. The discretionary matters relied on by Wilson Parking to resist indemnity costs are:
•the no real compromise submission referred to above;
•the assertion that as at July 1995, Wilson Parking had not been given discovery of all relevant documents necessary to place it in a position to make an informed decision as to the amount of damages which could reasonably be claimed. In particular it is said that the respondents failed to discover a facsimile transmission dated 26 April 1995 which evidenced an "accepted" proposal for a further lease of the carpark at a rental in the order of $112,000 per month. As a result of non-disclosure it is said that the alleged loss, as understood by Wilson Parking in July 1995, was excessive.
However, in relation to the second argument and as National Mutual points, out the lease eventually entered into with Kings Parking did not commence until 1 July 1996, a little less than one year after the offer of compromise.
Wilson Parking's submission is that if it had been aware of the April facsimile in July 1995 it could have assumed that a future rent in excess of $92,000 per month would have been obtained by the respondents. This would have substantially reduced National Mutual's damages claim as perceived by Wilson Parking in July 1995.
However, although it tendered affidavits by an accountant and solicitors from Freehill Hollingdale & Page, there was no evidence from anyone on behalf of Wilson Parking that it would have accepted the offer had it been aware of the April facsimile. In addition, the evidence on the hearing as to the circumstances in which a decision was made to repudiate the lease leads me to doubt whether an awareness of the April letter would have affected the response of Wilson Parking to the offer.
The real substance of this claim for indemnity costs is that an offer was made to settle for $800,000 inclusive of interest to 14 July 1995, plus costs on a party to party basis. In the final result the verdict obtained ($1,278,104, inclusive of interest), even discounted back to July 1995, was substantially in excess of that offer and it is evident that a large amount of additional costs was incurred after that date, both prior to and in the course of the hearing and subsequent argument. These costs would have been avoided if the offer had been accepted.
In these circumstances, after having regard to the material placed before me and the purpose underlying O23, I am not satisfied that the Offer of Compromise was reasonably rejected.
Wilson Parking therefore should pay the costs of the respondents, including the costs of the counter-claim on an indemnity basis, under r11(4) or alternatively as a matter of general discretion, on and from the expiry of the offer of compromise made on 14 July 1995 up to the entry of judgment. Prior to that date costs should be on a party/party basis.
Wilson Parking should pay the costs of this application for indemnity costs on a party/party basis.
I certify that this and
the preceding nine (9)
pages are a true copy of the
Reasons for Judgment herein of
his Honour Justice Tamberlin.
Associate:
Date: 28 February 1997
Counsel for Applicant: Mr A Leopold
Solicitor for Applicant: Freehill, Hollingdale & Page
Counsel for Respondent: Mr L G Foster SC
Solicitor for Respondent: Baker & McKenzie
Date of Hearing: 19 February 1997
Date Judgment Delivered: 28 February 1997
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