Federal Court of Australia

The Game Meats Company of Australia Pty Ltd v Farm Transparency International Limited (Costs) [2025] FCAFC 134

ORDERS

THE COURT ORDERS THAT:

1.    The respondent pay the appellant’s costs:

(a)    of the proceedings at first instance on a party-party basis until 5 June 2024; and

(b)    of the proceedings at first instance and the costs of the appeal and cross-appeal on the indemnity basis after 5 June 2024.

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

REASONS FOR JUDGMENT

BURLEY AND JACKMAN JJ:

1    In The Game Meats Company of Australia Pty Ltd v Farm Transparency International Limited [2025] FCAFC 104, we allowed an appeal from the decision of the primary judge in The Game Meats Company of Australia Pty Ltd v Farm Transparency International Limited [2024] FCA 1455 (the Primary Judgment or PJ). We granted an injunction against the respondent (FTI) restraining it from publishing (other than to the Commonwealth Department of Agriculture, Fisheries and Forestry) any of the images (and copies thereof) obtained or captured by FTI between 9 January 2024 and 13 April 2024 at the premises of the appellant (GMC), together with ancillary relief, pursuant to a finding that FTI held the copyright in the images which it had obtained from GMC’s premises on constructive trust for GMC. We dismissed a cross-appeal concerning the assessment of exemplary damages in the amount of $100,000. There was no cross-appeal against the award of $30,000 in compensatory damages. It was noted (at [51]) in the Full Court decision that the primary judge had deferred the question of costs of the proceedings at first instance pending determination of the appeal. We set a timetable for the exchange of affidavits and written submissions on the question of costs of the proceedings at first instance and on appeal.

2    GMC seeks an order that FTI pay its costs of the proceedings at first instance on a party-party basis until 5 June 2024, and that FTI pay its costs of the trial and the appeal on the indemnity basis after 5 June 2024.

3    FTI submits that costs should be awarded on the following basis:

(a)    GMC’s award of costs should be reduced by 50% of the costs of the proceeding at first instance;

(b)    GMC’s award of costs should be reduced by 50% of the costs of the appeal;

(c)    GMC be awarded its costs of the cross-appeal; and

(d)    the costs orders be on the ordinary basis.

4    Before dealing with the issue of indemnity costs, it is appropriate to consider first FTI’s proposed reduction of 50% of the costs to which GMC is entitled for the proceedings at first instance and on appeal (noting that the reduction is not sought for the cross-appeal). FTI submits that it is unjust for GMC to be awarded costs without some deduction to account for what it says is:

(a)    its failure to succeed on the misleading or deceptive conduct and injurious falsehood claims before the primary judge; and

(b)    its failure to succeed on the grounds of appeal relating to trespass.

5    We reject the submission that a deduction is appropriate in relation to GMC’s failure on the misleading or deceptive conduct and injurious falsehood claims at first instance. There was substantial overlap between those claims and the constructive trust issue on which GMC succeeded. At a general level, the primary judge described the “main game” in the proceeding being the footage that FTI obtained of GMC’s premises, saying that FTI wants to be able to publish it, whereas GMC wants the Court to prevent it from doing so: PJ at [22]. That fundamental controversy lay at the heart of all four causes of action alleged by GMC. We understand the reference to the “main game” as referring to the real contest between the parties.

6    At a more specific level, the allegations of falsity relied on by GMC for misleading or deceptive conduct and injurious falsehood were to the effect that the publications made by FTI represented that GMC condoned cruelty to animals, was systematically cruel to the animals that it slaughters at the abattoir, was reckless as to the welfare of those animals, and was uncaring as to their welfare. FTI opened at the trial in relation to those causes of action by alleging that the 14-minute Footage depicted illegal conduct and breaches of the criminal law, and although those allegations were not ultimately maintained, the final submissions by FTI alleged that the events depicted in the 14-minute Footage involved non-compliance with applicable regulatory standards: PJ at [106]–[108]. In relation to GMC’s constructive trust case, FTI maintained the allegation that the 14-minute Footage showed illegal conduct by GMC in support of a discretionary defence of unclean hands: PJ at [185]. The primary judge did not accept that the nature of the events depicted in FTI’s footage should serve as a discretionary basis upon which to deny GMC relief in equity, but said that if it had been possible to conclude that the footage depicted unlawful conduct (whether criminal or otherwise) then that would have been a consideration which would have guided the exercise of the Court’s discretion whether to grant injunctive relief: PJ at [185]–[186].

7    Putting aside those areas of overlap, it does not appear that the other aspects of the claims for misleading or deceptive conduct and injurious falsehood occupied a sufficiently substantial amount of time by the Court or the parties to warrant a reduction in the costs to which GMC is otherwise entitled.

8    As to the contention that GMC failed on the grounds of appeal relating to trespass, we reject the submission. We simply declined to deal with those grounds given that GMC had succeeded on its argument for a constructive trust over the copyright: at [44].

9    Accordingly, we do not regard any reduction in the costs to which GMC is otherwise entitled to be appropriate.

10    Turning then to GMC’s claim for indemnity costs, GMC’s contention is based on an offer of compromise which it made on 22 May 2024, which was expressed to be open for acceptance for 14 days (thus expiring on 5 June 2024). The offer expressly referred to the principles in Calderbank v Calderbank [1976] Fam 93. The offer was in the following terms:

1.    Your client offer to the Court a permanent undertaking in the form given to the court yesterday before Justice Snaden; and

2.    Both parties agree to the following orders:

i.    The proceedings be dismissed

ii.     Each party bear their own costs.

The undertaking given the previous day was as follows:

Until 5pm on Friday 24 May 2024, Farm Transparency International Limited undertakes not to publish (other than to the Australian Government Department of Agriculture, Fisheries and Forestry) any video images depicting events at the premises of The Game Meats Company of Australia, 319 Hughes Lane, Eurobin, 3739 between 29 January 2024 and 11 April 2024.

11    The outcome for GMC is substantially better than that offer, particularly in that it has been awarded damages in the total amount of $130,000, as well as the costs order which we make today. We note that the dates in the undertaking as to when the video images were taken differ slightly from those referred to in Orders 5 to 8 made by the Full Court, but no issue is taken by FTI in that regard.

12    One of the well-established cases justifying the award of indemnity costs is an imprudent refusal of an offer of compromise: Anchorage Capital Partners Pty Ltd v ACPA Pty Ltd (No 2) [2018] FCAFC 112 (Anchorage) at [6] (Nicholas, Yates and Beach JJ), citing Black v Lipovac (1998) 217 ALR 386 at 432 (Miles, Heerey and Madgwick JJ). The question whether rejection of an offer was unreasonable must be assessed in light of the circumstances existing at the time the offer was rejected: Anchorage at [6]–[7]. A non-exhaustive list of factors which may be relevant to the assessment of whether or not the rejection was unreasonable was set out in Anchorage at [7], namely:

(a)    the stage of the proceeding at which the offer was received;

(b)    the time allowed to the offeree to consider the offer;

(c)    the extent of the compromise offered;

(d)    the offeree’s prospects of success, assessed as at the date of the offer;

(e)    the clarity with which the terms of the offer were expressed; and

(f)    whether the offer foreshadowed an application for an indemnity costs order in the event of the offeree rejecting it.

13    No issue was taken by FTI in its written submissions in relation to any of those factors (with the exception of (d), which we deal with below), despite them having been expressly referred to in GMC’s written submissions. We note that there is a further relevant factor, namely whether the offer gave reasons as to why it should be accepted. The offer by GMC of 22 May 2024 did not itself give a reasoned explanation as to why GMC contended that FTI would fail in the proceedings and thus why it should accept the offer. In Dukemaster Pty Ltd v Bluehive Pty Ltd [2003] FCAFC 1 at [8], Sundberg and Emmett JJ said that ordinarily, an offer made outside the provisions of the Court rules will be unlikely to attract an indemnity costs order unless the offer is a reasonable one and contains a statement as to why the offeree’s case will fail. However, in Hardingham v RP Data Pty Ltd (No 2) [2021] FCAFC 175 at [22], Greenwood, Rares and Jackson JJ said that there is no inflexible rule that an offeror must give a reasoned explanation as to why the offeree ought accept an offer to settle. We accept that proposition, particularly bearing in mind that there may well be communications between the parties during the course of the litigation which sufficiently expose the weakness of a party’s position so as to obviate the need for the other party to set out in detail the reasons why the offer should be accepted. In the absence of any submission by FTI concerning this aspect of the offer, despite the point having been expressly raised in GMC’s written submissions in referring to material which had been provided by GMC to FTI, it is not necessary for us to deal with the point further.

14    FTI submits that its rejection of GMC’s offer was not imprudent or unreasonable, and submits that the litigation was relatively novel in relation to the claim for a constructive trust over the copyright. FTI submits that it was not unreasonable or plainly unreasonable for it to defend the copyright claim and not accept the offer. The submission relates to FTI’s prospects of success, assessed at the date of the offer. We do not accept FTI’s submission. As is apparent from the Full Court’s decision, the case for a constructive trust over the copyright was based on the dicta of four judges in Australian Broadcasting Corporation v Lenah Game Meats Pty Ltd [2001] HCA 63; (2001) 208 CLR 199, which were referred to with apparent approval by three further judges in Smethurst v Commissioner of the Australian Federal Police [2020] HCA 14; (2020) 272 CLR 177. We expressed the view that it is difficult to think of a clearer case than the present for the application of that principle: see [37].

15    In our view, having regard to each of the factors identified in Anchorage at [7] to which we have referred in (a) to (f) above, the rejection of GMC’s offer of 22 May 2024 was imprudent and unreasonable. Accordingly, it is appropriate to award costs on the indemnity basis as sought by GMC.

Associate:

Dated:    24 September 2025

REASONS FOR JUDGMENT

HORAN J:

16    I have had the benefit of reading in draft the reasons for judgment of Burley and Jackman JJ. I agree that the costs awarded to the appellant (GMC) at first instance and on appeal should not be reduced by reference to the grounds or issues on which it was not successful. However, I consider that GMC should be entitled to costs as between party and party, rather than on an indemnity basis.

17    The discretion to award costs must be exercised judicially, having regard to relevant facts and circumstances connected with the litigation, and consistently with the purpose of the power, which is to compensate the successful party rather than to punish the unsuccessful party: Bob Brown Foundation Inc v Commonwealth (No 2) (2021) 286 FCR 160 at [4] (Griffiths, Moshinsky and SC Derrington JJ); PKT Technologies Pty Ltd (formerly known as Fairlight.au Pty Ltd) v Peter Vogel Instruments Pty Ltd (No 2) [2020] FCAFC 46 at [14] (Besanko, Banks-Smith and Stewart JJ). The usual approach is that costs follow the event, that is, the successful party is ordinarily entitled to an award of costs against the other party, by way of compensation for or indemnity against the expense of litigation, unless such an outcome is displaced by the conduct of the successful party or some other relevant factor: Northern Territory v Sangare (2019) 265 CLR 164 at [25] (Kiefel CJ, Bell, Gageler, Keane and Nettle JJ); see also Re Wilcox; Ex parte Venture Industries Pty Ltd (No 2) (1996) 72 FCR 151 at 152–153 (Black CJ), 158 (Cooper and Merkel JJ).

18    While in some circumstances a successful party who has failed on particular issues may face costs consequences, including the reduction or apportionment of costs, the mere fact that a court does not accept all of a successful party’s arguments does not necessarily make it appropriate to deal with costs on an issue-by-issue basis: PKT Technologies at [14]–[15] (Besanko, Banks-Smith and Stewart JJ); Commissioner of Taxation v Bosanac (No 2) [2022] FCAFC 5 at [16] (Kenny, Davies and Thawley JJ); Cretazzo v Lombardi (1975) 13 SASR 4 at 16 (Jacobs J); see also Caporaso Pty Ltd v Mercato Centrale Australia Pty Ltd [2025] FCAFC 29 at [15] (Katzmann, Wheelahan and Hespe JJ). As Goldberg J observed in Dr Martens Australia Pty Ltd v Figgins Holdings Pty Ltd (No 2) [2000] FCA 602 at [54], “[a] court should not be too ready to disallow costs simply because a party has failed upon an issue, unless it be quite a separate and distinct issue from the issues in respect of which it succeeded or unless there be some element of unreasonableness or inappropriate conduct in relation to that issue”.

19    In the present case, there is no warrant for any issues-based apportionment of costs either at first instance or on appeal. As is explained by Burley and Jackman JJ (at [5]–[7]), the misleading or deceptive conduct and injurious falsehood claims raised by GMC at first instance overlapped with, and were in many respects subsidiary to, the issues concerning the grant of equitable relief in relation to the copyright in the footage or in respect of the trespasses committed by the respondent (FTI). In relation to the appeal, it is not correct to suggest that GMC “failed to succeed” on its grounds relating to the trespass claim — rather, it was unnecessary for the Court to determine those grounds of appeal: see The Game Meats Company of Australia Pty Ltd v Farm Transparency International Ltd [2025] FCAFC 104 at [44] (Jackman J, with whom Burley J agreed), [58] (Horan J). Accordingly, GMC is entitled to be awarded its costs at first instance and on appeal by reference to its ultimate success in the matter.

20    GMC submits that its costs of the proceedings at first instance from 5 June 2024 and its costs of the appeal should be paid on an indemnity basis, relying on a “Calderbank” offer dated 22 May 2024 by which it offered to resolve the proceeding on the basis that FTI give an undertaking on a permanent basis not to publish the relevant video images (other than to the Commonwealth Department of Agriculture, Fisheries and Forestry), and that the proceeding be dismissed with each party to bear its own costs. That offer was open for acceptance for a period of 14 days, that is, until 5 June 2024.

21    While the primary judge refused to grant a permanent injunction in terms reflecting such an undertaking, the Full Court allowed GMC’s appeal and granted relief including a declaration that FTI holds the copyright in the images on a constructive trust for GMC and a permanent injunction restraining FTI from publishing the images other than to the Commonwealth Department.

22    GMC’s Calderbank offer was not made as an offer to compromise in accordance with r 25.01 of the Federal Court Rules 2011 (Cth), and its consequences are therefore not governed by r 25.14. However, a party may rely upon a Calderbank offer notwithstanding that the party has not complied with the procedure set out in Part 25: Wills v Chief Executive Officer of the Australian Skills Quality Authority (Costs) [2022] FCAFC 43 at [22] (Logan, Griffiths and Perry JJ).

23    The question is whether FTI’s failure to accept the offer made by GMC was unreasonable in all of the circumstances, such as to warrant departure from the ordinary rule as to costs: Hazeldene’s Chicken Farm Pty Ltd v Victorian WorkCover Authority (No 2) (2005) 13 VR 435 at [20], [23]–[24] (Warren CJ, Maxwell P and Harper AJA); SMEC Testing Services Pty Ltd v Campbelltown City Council [2000] NSWCA 323 at [37] (Giles JA). This inevitably involves “matters of judgment and impression”: Hazeldene’s Chicken Farm at [24]. There is no presumption that a party who has rejected a Calderbank offer should pay costs on an indemnity basis in the event that the ultimate outcome is less favourable to that party: Hazeldene’s Chicken Farm at [19]. In other words, the mere fact that the offeree is ultimately worse off does not automatically establish that the rejection of the offer was unreasonable. The onus is on the offeror to satisfy the Court that it should exercise the discretion to order costs on an indemnity basis: Evans Shire Council v Richardson (No 2) [2006] NSWCA 61 at [26] (Giles, Ipp and Tobias JJA).

24    The matters to be taken into account in deciding whether the rejection of a Calderbank offer was unreasonable include those identified in Hazeldene’s Chicken Farm at [25] and adopted by this Court in Anchorage Capital Partners Pty Ltd v ACPA Pty Ltd (No 2) [2018] FCAFC 112 at [7] (Nicholas, Yates and Beach JJ), namely:

(a)    the stage of the proceeding at which the offer was received;

(b)    the time allowed to the offeree to consider the offer;

(c)    the extent of the compromise offered;

(d)    the offeree’s prospects of success, assessed as at the date of the offer;

(e)    the clarity with which the terms of the offer were expressed;

(f)    whether the offer foreshadowed an application for an indemnity costs in the event of the offeree’s rejecting it.

25    Whether and to what extent an offer should set out the reasons why the other party should accept the compromise will depend on the circumstances, including the extent to which the weakness of the party’s position has been exposed through the pleadings, affidavits and any communications between the parties during the course of the litigation: Hazeldene’s Chicken Farm at [26]–[27], referring to Oversea-Chinese Banking Corporation v Richfield Investments Pty Ltd [2004] VSC 351 at [87] (Redlich J).

26    It can be accepted that the Calderbank offer made by GMC was expressed in clear terms, that it foreshadowed an application for indemnity costs if it was rejected, and that FTI was given sufficient time to consider the offer.

27    In the present case, the Calderbank offer was made by GMC at an early stage of the proceeding, accompanied by service of the originating application. In the days preceding the offer, GMC had obtained an ex parte interim injunction restraining publication of the video images by FTI, which was followed by an interlocutory undertaking given on behalf of FTI to the same effect. In the letter dated 22 May 2024, GMC’s solicitors asserted their view “that our client has good prospects of success in obtaining a permanent injunction similar to that made by Wheelahan J on 17 May 2024” (referring to the initial ex parte interim injunction). On the following day, GMC filed and served a draft statement of claim. While the legal and factual basis on which GMC claimed injunctive relief was articulated at the time that its offer was being considered by FTI, the pleadings had not been completed and there was further evidence to be filed. The parties had not yet filed their outlines of submissions.

28    FTI filed its defence on 14 June 2024. After admitting liability in tort for the alleged trespass, the defence relevantly denied the allegation that it was inequitable and against good conscience for FTI to assert ownership of the copyright against GMC or to publish the video images by reason of the circumstances in which they were made, and pleaded that “the outcome urged by [GMC] is not supported by any known legal, equitable or statutory rule or principle, is an outcome of uncertain or impossible application, would produce unworkable results and would result in disharmony in the legal system”.

29    On 19 June 2024, FTI made a counter-offer to resolve the proceeding, also invoking the principles in Calderbank v Calderbank [1976] Fam 93 and Hazeldene’s Chicken Farm. FTI admitted liability for the trespass, and offered to pay $100,000 to GMC in full and final settlement of all issues in the litigation, including costs. FTI’s solicitors asserted that GMC “will not obtain an injunction to restrain the publication of the footage”, observing that there was no basis in trespass for the grant of such relief and that none of the other pleaded causes of action were tenable. In relation to the specific claim that FTI held the copyright in the video images on trust for GMC, FTI’s solicitors stated:

We understand why your client is raising the copyright claim, having regard to passages in Lenah Game Meats which invite the claim. However, these comments do not establish a cause of action in copyright and an attempt has been made to establish this kind of action and failed: Windridge Farm Pty Ltd v Grassi [2011] NSWSC 196. For the reasons set out in our client’s defence, the copyright claim is misconceived.

30    In their letter dated 19 June 2024, FTI’s solicitors stressed that “[f]or the avoidance of doubt, under no circumstances will our client entertain any settlement which involves destruction of the films or restriction on FTI’s right to publish the footage”.

31    On 8 July 2024, FTI made a further Calderbank offer to settle only the trespass claim for payment of $100,000, repeating its position that GMC would not obtain an injunction to restrain the publication of the footage.

32    In relation to the extent of the compromise offered, GMC was prepared to forego its entitlement to damages in respect of the trespasses committed (and later admitted) by FTI, and not pursue its legal costs of the proceedings. This represented a significant compromise on the part of GMC. The offer otherwise required FTI to accept the restraint claimed by GMC on further publication of the video images.

33    FTI’s prospects of success must be viewed objectively as at the date of the offer. This Court has ultimately found that the circumstances of the present case provide a clear basis on which to declare a constructive trust in favour of GMC over the copyright owned by FTI in the video images, in accordance with the observations made by Gummow and Hayne JJ in Australian Broadcasting Corporation v Lenah Game Meats Pty Ltd (2001) 208 CLR 199 at [102]. Nevertheless, while Gaudron J (at [58]) agreed generally with the judgment of Gummow and Hayne JJ, and Callinan J in dissent (at [309]) agreed specifically with the relevant dicta, the decision in Lenah Game Meats did not amount to a binding authority that was fatal to FTI’s defence of the proceeding. Nor was the position definitively resolved in Smethurst v Commissioner of the Australian Federal Police (2020) 272 CLR 177, where Kiefel CJ, Bell and Keane JJ (at [84]) referred with apparent approval to the dicta of Gummow and Hayne JJ in Lenah Game Meats, but distinguished such an approach on the facts of that case.

34    In such circumstances, GMC’s claims to injunctive relief based on its beneficial ownership of the copyright in the video images raised legal and factual issues that were not without some complexity, or even novelty. The primary judge did not accept those claims at first instance, largely on the basis of an “absence of authority” or precedent to support the grant of such relief: The Game Meats Company of Australia Pty Ltd v Farm Transparency International Ltd [2024] FCA 1455 (PJ) at [177], [181]. The fact that GMC ultimately succeeded on its claims on appeal does not itself mean that FTI’s rejection of the Calderbank offer was unreasonable at the time that the offer was made.

35    The relevant question is not whether the offer made by GMC was genuine or reasonable. Rather, the question is whether the failure by FTI to accept the offer was unreasonable in all of the circumstances, having regard to the matters set out in paragraph [8] above. It is not necessary for GMC to demonstrate that FTI acted with wilful disregard of known facts or clearly established law: Hazeldene’s Chicken Farm at [29]. Nevertheless, it is not suggested that FTI’s prospects of defending the claim for injunctive relief were so hopeless or without merit as to warrant an order for indemnity costs irrespective of the Calderbank offer made by GMC. In other words, the submission by GMC that it should be awarded costs on an indemnity basis rests entirely on its submission that FTI’s failure to accept that offer was “imprudent or unreasonable”: cf. Hardingham v RP Data Pty Ltd (No 2) [2021] FCAFC 175 at [19], [33] (Greenwood, Rares and Jackson JJ); Dukemaster Pty Ltd v Bluehive Pty Ltd [2003] FCAFC 1 at [7] (Sundberg and Emmett JJ).

36    In my view, taking into account all of the circumstances, it was not unreasonable or imprudent in the relevant sense for FTI not to accept the Calderbank offer made by GMC. This is not to deny the importance of encouraging parties to engage in genuine settlement negotiations and promoting the settlement of disputes. Nor is it necessarily sufficient for a party to avoid the consequences of its rejection of a genuine compromise by saying that the outcome of the litigation was uncertain: Premier Building & Consulting Pty Ltd v Spotless Group Ltd (No 13) [2007] VSC 516 at [13] (Byrne J). However, in the particular circumstances of the present case, the rejection by FTI of the Calderbank offer made by GMC does not warrant an award of costs on an indemnity basis.

37    For completeness, I do not accept the submission made by FTI that the disposition of costs should be deferred until after the outcome of its application for special leave to appeal to the High Court, or the outcome of any appeal in the event that special leave is granted. However, with the parties’ consent, the Court has already made orders that the operation of any costs orders should be stayed for such a period.

Associate:

Dated:    24 September 2025