FEDERAL COURT OF AUSTRALIA

Jordan v HLB Mann Judd Wealth Management (NSW) Pty Ltd (No 2) [2013] FCA 381

THE COURT ORDERS THAT:

1.    The costs awarded pursuant to Order 3 made on 9 April 2013 be taxed and paid:

(a)    For costs incurred prior to 24 May 2012, on the party/party basis; and

(b)    For costs incurred on and after 24 May 2012, on an indemnity basis.

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

REASONS FOR JUDGMENT

1    On 9 April 2013, I published Reasons for Judgment in this proceeding in support of orders dismissing the whole of the proceeding with costs (Jordan v HLB Mann Judd Wealth Management (NSW) Pty Ltd [2013] FCA 315). The order for costs which I made when I published my reasons was in the following terms:

THE COURT:

…

3.    ORDERS that the applicant pay the respondents’ costs of and incidental to the said proceeding.

    …

2    On 9 April 2013, after I pronounced the orders of the Court, Counsel for the respondents indicated to me that his clients wished to apply for a special costs order. I then made the following orders and directions designed to deal with the respondents’ application:

THE COURT:

    DIRECTS that, by 16 April 2013, the respondents file and serve Written Submissions of not more than four (4) pages in length in support of an application to vary the costs order made in paragraph 3 above.

    DIRECTS that, by 16 April 2013, the solicitors for the respondents lodge with the Associate to Foster J, for the purposes of tender, any correspondence relied upon by the respondents in support of their application to vary the said costs order.

    DIRECTS that, by 23 April 2013, the applicant file and serve Written Submissions in answer.

    ORDERS that the question of whether costs will be ordered on a basis different from the Order made in paragraph 3 above thereafter be decided on the papers.

3    On 16 April 2013, the respondents filed Written Submissions dated that day in support of the following additional costs orders, namely:

An order that the costs awarded pursuant to Order 3 made on 9 April 2013 be paid:

(a)    as between party and party for costs incurred prior to 21 May 2012; and

(b)    on an indemnity basis for costs incurred on and after 21 May 2012.

4    The respondents lodged with their Written Submissions a copy of the following letters passing between the parties’ respective solicitors:

(i)    Letter dated 9 December 2011 from Norton Rose, the solicitors for the respondents, and Slater & Gordon Ltd, the law corporation representing the applicant.

(ii)    Letter dated 21 May 2012 from Norton Rose to Slater & Gordon Ltd.

(iii)    Letter dated 23 May 2012 from Slater & Gordon Ltd to Norton Rose.

5    The three letters referred to at [4] above will together be marked as Exhibit DX-2 in the respondents’ indemnity costs application.

6    The letter dated 21 May 2012 from Norton Rose to Slater & Gordon Ltd was a Calderbank letter in which the respondents offered to pay to the applicant $150,000 plus costs as agreed or taxed in return for a release from all relevant claims and upon certain other more detailed terms. Had that offer been accepted by the applicant, the proceeding would have been dismissed with no order as to costs.

7    The settlement offer contained in Norton Rose’s letter dated 21 May 2012 was expressed to be available for acceptance until 4.00 pm on 24 May 2012.

8    On 23 May 2012, by letter dated that day, Slater & Gordon Ltd informed Norton Rose that the applicant had instructed it to reject the offer made by the respondents in Norton Rose’s letter dated 21 May 2012. Slater & Gordon Ltd went on to make a counter-offer and explained the applicant’s thinking behind her rejection of the respondents’ offer and her decision to propound a counter-offer in the terms set out in the letter from Slater & Gordon Ltd.

9    The applicant did not require until 4.00 pm on 24 May 2012 in order to consider the respondents’ offer. She was obviously able to do so and to obtain appropriate advice, by the time Slater & Gordon Ltd sent its letter dated 23 May 2012.

10    The respondents seek indemnity costs from the date of Norton Rose’s letter dated 21 May 2012.

11    The applicant does not oppose an indemnity costs order in relation to work done for some part of the latter stages of this litigation. The applicant submits that indemnity costs should only be awarded for that period which post-dates the applicant’s rejection of the respondents’ offer. The reason advanced by the applicant that this is the appropriate order may be shortly stated: A settlement offeror wishing to secure an indemnity costs order based upon the offeree’s unreasonable rejection of its settlement offer must first allow to the offeree a reasonable time within which to consider the offer and, if appropriate, to obtain advice about its terms. The offeror must be taken to accept that, subject to any earlier response from the offeree, at the very least, the time during which the offeror’s offer is expressed to remain open is a reasonable time to allow to the offeree to consider the offer and to obtain advice in relation to it (see generally GM Holden Ltd v Paine (No 3) [2011] FCA 693 at [5]–[9] per Gordon J). This approach is consistent with the relevant provision of the Federal Court Rules 2011 in respect of offers of compromise made under those rules by a respondent. Rule 25.14(2) of the Federal Court Rules 2011 provides:

(2)    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 an order that the applicant pay the respondent’s costs:

(a)    before 11.00 am on the second business day after the offer was served – on a party and party basis; and

(b)    after the time mentioned in paragraph (a) – on an indemnity basis.

12    In the present case, the offer was expressed to be open until 4.00 pm on 24 May 2012. It was rejected before that time. That rejection is now conceded to have been imprudent and unreasonable. Indemnity costs should be awarded in respect of the period after the offer was rejected.

13    I do not know the specific time on 23 May 2012 when Slater & Gordon Ltd despatched its letter dated that day. There is no evidence about this. Therefore, I think that indemnity costs should be ordered from and including 24 May 2012.

14    There will be orders accordingly.

Associate:

Dated:    29 April 2013