Federal Court of Australia
Hastie Group Limited (in liq) v Multiplex Constructions Pty Ltd (Formerly Brookfield Multiplex Constructions Pty Ltd) (Costs) [2024] FCAFC 74
ORDERS
DATE OF ORDER: | 12 June 2024 |
THE COURT ORDERS THAT:
1. The application by the first and second respondents for indemnity costs be dismissed with costs.
2. The applicants pay the first and second respondents’ costs of the application for leave to appeal.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
THE COURT:
1 On 21 May 2024, the Court dismissed the application for leave to appeal and ordered that the applicants pay the respondents’ costs, save for the costs of the first and second respondents (Multiplex). Multiplex had foreshadowed an application for indemnity costs based on a settlement offer which was not yet before the Court. The Court thus provided for the filing of any evidence and submissions on costs and directed that the application would be dealt with on the papers.
2 The application for leave to appeal was commenced in January 2023. On 12 December 2023, Multiplex served a notice of offer of compromise on Form 45 under r 25.01(1) of the Federal Court Rules 2011 (Cth).
3 The terms of the offer were that the proceeding be dismissed as against Multiplex and that the applicants pay Multiplex’s costs in the amount of $150,000 excluding GST. The offer was stated to be inclusive of costs. It was explained in the letter accompanying the offer that the sum of $150,000 represented Multiplex’s party and party costs calculated on the basis of a 25% discount on its actual costs to date although no supporting documentation was provided, or offered, to support that figure.
4 The offer of compromise was not accepted by the applicants. The proceeding was ultimately dismissed after the conclusion of the hearing.
5 Multiplex now seeks an order that the applicants pay its costs on a party/party basis up to 11.00 am on 14 December 2023 and thereafter on an indemnity basis. The indemnity costs are sought in reliance on r 25.14(2) which provides that if an offer is made by a respondent and an applicant “unreasonably fails to accept the offer” and the applicant’s proceeding is dismissed, the respondent is entitled to costs on a party and party basis before 11.00 am on the second business day after the offer was served and thereafter on an indemnity basis.
6 Multiplex’s entitlement to indemnity costs under the rule, by its terms, rests on the Court being satisfied that the applicants’ failure to accept the offer was unreasonable. That directs attention to whether the offer amounted to a genuine compromise of the dispute: cf, Sydney Equine Coaches Pty Ltd v Gorst [2017] FCAFC 34 at [24] (Rares, Flick and Bromwich JJ).
7 The offer did not amount to any form of compromise on the substantive question in the proceeding other than a complete capitulation. That means, for it to have been a genuine offer of compromise the sum of $150,000 for costs must have been meaningfully less than the party and party costs that the applicants would in any event have been liable for had they simply discontinued the proceeding at that stage. However, it is not possible on the evidence before the Court to make any assessment as to what the applicants’ liability for party and party costs might have been at that time. Moreover, Multiplex itself did not contend that $150,000 represented a discount on the party and party costs liability, but rather said that it reflected the party and party liability at that time – loosely calculated as 25% less than the actual costs incurred by Multiplex.
8 For those reasons, the offer was not a genuine offer of compromise but was rather a total capitulation. Indeed, it may have involved more than a total capitulation because $150,000 may be more than the applicants’ liability for party and party costs had they simply discontinued the proceeding.
9 The applicants’ failure to accept the offer of compromise cannot therefore be said to be unreasonable. The applicants were not in a position at the time of the offer of compromise to reasonably assess whether the offer amounted to a genuine compromise of the proceeding. As explained, their liability for party and party costs at that time may actually have been less than $150,000.
10 In the circumstances, Multiplex’s application for indemnity costs should be dismissed. The applicants did not oppose an order that they pay Multiplex’s costs of the application for leave to appeal on the ordinary basis. There should therefore be such an order, save that Multiplex should pay the costs of its application for indemnity costs.
I certify that the preceding ten (10) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justices Perram, Stewart and Button. |
Associate:
Dated: 12 June 2024
SCHEDULE OF PARTIES
VID 41 of 2023 | |
ACN 121 276 168 PTY LTD (IN LIQUIDATION) (FORMERLY HEYDAY GROUP LTY LTD) | |
Fifth Applicant: | ACN 129 953 733 PTY LIMITED (IN LIQUIDATION) (FORMERLY BEAVIS & BARTELS PTY LTD) |
Sixth Applicant: | AFA AIR CONDITIONING PTY LTD (IN LIQUIDATION) ACN 132 180 584 |
Seventh Applicant: | HASTIE AIR CONDITIONING (ACT) PTY LTD (IN LIQUIDATION) ACN 125 173 659 |
Eighth Applicant: | HASTIE AIR CONDITIONING PTY LTD (IN LIQUIDATION) ACN 122 613 647 |
Ninth Applicant: | HASTIE AUSTRALIA PTY LTD (IN LIQUIDATION) ACN 072 744 248 |
Tenth Applicant: | M&H AIR CONDITIONING PTY LTD (IN LIQUIDATION) ACN 115 325 089 |
Eleventh Applicant: | MEDICAL GASES PTY LTD (IN LIQUIDATION) ACN 121 276 079 |
Twelfth Applicant: | NISBET & DURNEY PTY LTD (IN LIQUIDATION) ACN 131 810 896 |
Thirteenth Applicant: | OPTIMUS PTY LTD (IN LIQUIDATION) ACN 001 847 785 |
Fourteenth Applicant: | SHARP & PENDREY PTY LTD (IN LIQUIDATION) ACN 006 378 123 |
Fifteenth Applicant: | WATTERS ELECTRICAL (AUST) PTY LTD (IN LIQUIDATION) ACN 128 370 570 |
Sixteenth Applicant: | ACN 112 124 919 PTY LTD (IN LIQUIDATION) (FORMERLY D&E AIR CONDITIONING PTY LTD) |
Seventeenth Applicant: | COOKE & CARRICK PTY LIMITED (IN LIQUIDATION) ACN 126 114 556 |
LENDLEASE CONSTRUCTION (SOUTHERN) PTY LTD (FORMERLY LENDLEASE BUILDING CONTRACTORS PTY LIMITED) ACN 002 625 130 | |
Fifth Respondent: | ACCIONA INFRASTRUCTURE PROJECTS AUSTRALIA PTY LTD (FORMERLY LENDLEASE ENGINEERING PTY LTD AND ABIGROUP CONTRACTORS PTY LTD) ACN 000 201 516 |
Sixth Respondent: | LENDLEASE CONSTRUCTION (QLD/WA) PTY LTD (FORMERLY LENDLEASE BUILDING (QLD/WA) PTY LIMITED AND BAULDERSTONE QLD PTY LTD) ACN 006 505 559 |
Ninth Respondent: | CPB CONTRACTORS PTY LIMITED (FORMERLY LEIGHTON CONTRACTORS PTY LIMITED) ACN 000 893 667 |
Twelfth Respondent: | HANSEN YUNCKEN PTY LTD ACN 063 384 056 |
Thirteenth Respondent: | JOHN HOLLAND PTY LTD ACN 004 282 268 |
Fourteenth Respondent: | LAING O'ROURKE AUSTRALIA CONSTRUCTION PTY LTD 112 099 000 |
Fifteenth Respondent: | THIESS PTY LTD ACN 010 221 486 |
Sixteenth Respondent: | WATPAC CONSTRUCTION PTY LTD (FORMERLY WATPAC AUSTRALIA PTY LTD AND WATPAC CONSTRUCTION (QLD) PTY LTD) ACN 010 462 816 |
Seventeenth Respondent: | WATPAC CONSTRUCTION (NSW) PTY LTD ACN 103 211 141 |
Eighteenth Respondent: | WATPAC CONSTRUCTION (SA) PTY LTD ACN 128 657 956 |
Nineteenth Respondent: | WATPAC CONSTRUCTION (VIC) PTY LTD ACN 104 451 130 |
Twentieth Respondent: | SCENTRE DESIGN & CONSTRUCTION PTY LTD ACN 000 267 265 |
