FEDERAL COURT OF AUSTRALIA

CCL Secure Pty Ltd v Berry (No 2) [2019] FCAFC 92

ORDERS

THE COURT ORDERS THAT:

1.    In place of Order 2 made by the primary judge on 17 August 2018, an order that there be judgment for the applicants below against the respondent below in the sum of $1,780,858 (with such judgment to take effect from 17 August 2018).

2.    The respondents pay 25% of the appellant’s costs of the appeal as agreed or taxed.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

THE COURT:

1    In CCL Secure Pty Ltd v Berry [2019] FCAFC 81 (principal judgment) the appeal of the appellant (Securency) was allowed in part, reducing the statutory compensation payable to the respondents from an amount of approximately $65 million to an amount of approximately $1.8 million.

2    Three issues remain outstanding:

(1)    First, whether the costs order made by the primary judge in the proceeding below should be disturbed?

(2)    Secondly, what costs order should be made in relation to the appeal proceeding?

(3)    Thirdly, the form of order to be made in lieu of order 2 made by the primary judge on 17 August 2018, so as to reflect the Full Court’s reasons.

3    As to the first issue, Securency seeks vacation of the order of the primary judge requiring it to pay the respondents costs below with the consequence that “each party is to bear its own costs” of the trial and of the appeal; in the alternative, it seeks an order that Securency pay no more than 50% of the respondents’ costs of the trial and the appeal. The respondents resist disturbing the costs order made by the primary judge. The bases upon which Securency seeks this relief are that: (a) the respondents have had only partial success after persisting with an exaggerated claim for damages; and (b) following a mediation and just prior to the commencement of the hearing, on 7 August 2017, Securency, in a detailed letter identifying problems with the respondents’ damages case, offered to pay the respondents €2.15 million (inclusive of costs) to settle both the proceeding below and another proceeding, arising out of the same factual substratum, commenced in the High Court of Nigeria (Settlement Letter).

4    We do not consider that the order of the primary judge should be set aside. Although the Settlement Letter was prescient in identifying the correct approach to damages, there was no express concession as to liability and the respondents obtained the benefit of a declaration of right vindicating its contention that the termination letter had been procured by seriously wrongful conduct on behalf of Securency (left undisturbed on appeal). Moreover, the Settlement Letter, sent four years after the proceeding was commenced, was not an orthodox letter relying on the principles explained in Calderbank v Calderbank [1976] Fam 93. It required, as a condition of any settlement, the resolution of the Nigerian proceeding for no additional consideration, which the evidence discloses involves further defendants (the Reserve Bank of Australia and Innovia Films Limited), in which the respondents seek, among other things, over €1.5 billion in damages (see the Nigerian Summons at DBS-2) jointly and severally. The Nigerian claim relates to the failure to construct an opacification plant in that country, for which no damages for loss of opportunity were particularised or sought against Securency in the proceeding below. Although the respondents may have been overly optimistic as to the quantum of damages, given that no offer of compromise or orthodox Calderbank offer (relating only to the opposing party and claims made in the proceeding below) was served by Securency, the costs order below should remain undisturbed.

5    The second issue as to the costs of the appeal also divides the parties. Securency’s position is as noted above, while the respondents contend that Securency pay 75% of the respondents’ costs of the appeal. In our view, neither approach best reflects the interests of justice in the overall circumstances.

6    As we noted in the principal judgment at [233], although Securency has been largely successful in relation to the damages aspect of the appeal, it was unsuccessful in its attempts to have the primary judge’s ultimate finding on liability reversed and the unnecessarily complex notice of appeal increased the time taken to hear and dispose of the appeal. Section 37M(3) of the Federal Court of Australia Act 1976 (Cth) (Act) provides that the civil practice and procedure provisions (including the costs discretion conferred by s 43 of the Act) are to be exercised in the way that best promotes the overarching purpose, being the just resolution of this dispute according to law and as quickly, inexpensively and efficiently as possible.

7    Although we do not consider that the conduct of the appeal by Securency amounted to a breach of the overarching purpose obligations requiring some form of costs sanction (in which case s 37N(4) of the Act would be relevant), and the success on the damages appeal was very significant, the appeal did require extensive focus on a large number of peripheral issues which, even if arguably exposing some error, could not have been determinative of the ultimate issue as to liability. Further, a large number of grounds of appeal were unsuccessful. Securency asserts it did what was required by r 36.01(2) of the Federal Court Rules (FCR), that is, to state “briefly but specifically the ground relied on in support of the appeal”. But such an obligation is subject to the requirement to focus on the grounds truly necessary for the disposition of the appeal and, as we already observed in the principal judgment, a number of the grounds were unnecessary or repetitive. Notwithstanding the highly competent way the appeal was argued and presented, it should have been more narrowly focussed.

8    Contrary to the submissions of the respondents, we do not consider that there is a basis upon which an order for costs should be made in their favour. Although successful on liability, the respondents’ submissions as to damages were rejected resulting in significant overall success for Securency on the appeal.

9    Given the overall outcome and the other factors to which we have made reference, we consider the justice of the case requires that the respondents pay 25% of Securency’s costs of the appeal.

10    As to the third issue, both Securency and the respondents proposed orders in the following terms:

1    In place of Order 2 made by the primary judge on 17 August 2018, order that the appellant pay the respondents AUD 1,205,579 together with AUD 575,279 interest thereon pursuant to s 51A of the Federal Court of Australia Act 1976 (Cth).

2    Order 1 takes effect from 17 August 2018.

11    Orders should not be made in these terms. It is fundamental, albeit occasionally overlooked, that a judgment at common law is just that – a judgment. It is not an order (expressed in mandatory terms) that a party pay another party a sum of money. Upon any non-payment, enforcement of a judgment occurs in accordance with FCR 41.10 and s 53 of the Act, and a range of other remedial responses that arise upon the failure of a party to comply with other types of final or interlocutory orders of the Court are inapposite (see FCR 41.04). The order that should be made in place of Order 2 made by the primary judge on 17 August 2018, is that there be judgment for the applicants below against the respondent below in the sum of $1,780,858 (with such judgment to take effect from 17 August 2018).

Associate:

Dated:    4 June 2019