FEDERAL COURT OF AUSTRALIA

Murphy v Westpac Banking Corporation (No 2) [2015] FCA 266

THE COURT ORDERS THAT:

1.    Judgment for the applicant in the amount of $34,000 plus interest from 14 November 2008 to 2 April 2012 in the amount of $9,758.28.

2.    Vacate all previous costs orders.

3.    The originating application otherwise be dismissed.

4.    The respondent is to pay 50 per cent of the applicant’s costs for the period up to and including 11 am on 6 December 2011.

5.    The applicant is to pay the respondent’s costs on an indemnity basis for the period after 11 am on 6 December 2011.

6.    Within six weeks hereof, the respondent is to file and serve an interlocutory application seeking an order that its costs under order (5) be paid in a fixed and specific sum rather than be quantified by taxation, together with any supporting affidavits.

7.    The respondent’s liability under orders (1) and (4) be offset against the applicant’s liability under order (5).

8.    Liberty to apply on the giving of 48 hours’ notice.

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

THE COURT ORDERS THAT:

1.    Judgment for the applicant in the amount of $67,825.57 plus interest from 11 May 2010 to 27 March 2015 in the amount of $25,025.09.

2.    Vacate all previous costs orders.

3.    The originating application otherwise be dismissed.

4.    The respondent is to pay the applicant’s cost of and incidental to the proceedings for the period up to and including 11 am on 6 December 2011.

5.    The applicant is to pay the respondent’s costs on an indemnity basis for the period from 11 am on 6 December 2011.

6.    Within six weeks hereof, the respondent is to file and serve an interlocutory application seeking an order that its costs under order (5) be paid in a fixed and specific sum rather than be quantified by taxation, together with any supporting affidavits.

7.    The respondent’s liability under orders (1) and (4) be offset against the applicant’s liability under order (5).

8.    Orders (1) and (4) be stayed pending the earlier of a further order or if the Court orders that costs be awarded on a lump sum basis, the making of such determination.

9.    Liberty to apply on the giving of 48 hours’ notice.

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

THE COURT ORDERS THAT:

1.    Judgment for the applicant in the amount of $185,288.45 plus interest from 4 December 2009 to 27 March 2015 in the amount of $74,473.90.

2.    Judgment for the applicant in the amount of $80,000 plus interest from 4 December 2009 to 27 March 2015 in the amount of $32,154.81.

3.    Vacate all previous costs orders.

4.    The originating application otherwise be dismissed.

5.    The respondent is to pay the applicant’s costs of and incidental to the proceedings, to be taxed in default of agreement and subject to (6) and (7) below.

6.    If the applicant proposes to seek a lump sum costs order, she should file and serve within six weeks hereof an interlocutory application and all supporting affidavits.

7.    Order (5) be stayed pending the earlier of a further order or if the Court orders that costs be awarded on a lump sum basis, the making of such determination.

8.    Liberty to apply on the giving of 48 hours’ notice.

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

THE COURT ORDERS THAT:

1.    Judgment for the applicant in the amount of $50,000 plus interest from 14 November 2008 to 2 April 2012 in the amount of $14,350.41.

2.    Judgment for the applicant in the amount of $228,337.50 plus interest from 27 February 2009 to 27 March 2015 in the amount of $105,007.89.

3.    Vacate all previous costs orders.

4.    The originating application otherwise be dismissed.

5.    The respondent is to pay 75 per cent of the applicant’s costs of and incidental to the proceeding, to be taxed in default of agreement and subject to (6) below.

6.    If the applicant proposes to seek a lump sum costs order, he should file and serve within six weeks hereof an interlocutory application and all supporting affidavits.

7.    Liberty to apply on the giving of 48 hours’ notice.

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

THE COURT ORDERS THAT:

1.    Judgment for the applicant in the sum of $45,000 plus interest from 14 November 2008 to 2 April 2012 in the amount of $12,915.37.

2.    Vacate all previous costs orders.

3.    The originating application otherwise be dismissed.

4.    There be no order as to costs for the period up to and including 11 am on 13 December 2011.

5.    The applicant is to pay the respondent’s costs on an indemnity basis for the period after 11 am on 13 December 2011.

6.    Within six weeks hereof, the respondent is to file and serve an interlocutory application seeking an order that its costs under order (5) be paid in a fixed and specific sum rather than be quantified by taxation, together with any supporting affidavits.

7.    Liberty to apply on the giving of 48 hours’ notice.

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

THE COURT ORDERS THAT:

1.    The originating application be dismissed.

2.    Vacate all previous costs orders.

3.    There be no order as to costs for the period up to and including 11 am on 13 December 2011.

4.    The applicant is to pay the respondent’s costs on an indemnity basis for the period after 11 am on 13 December 2011.

5.    Within six weeks hereof, the respondent is to file and serve an interlocutory application seeking an order that its costs under order (4) be paid in a fixed and specific sum rather than be quantified by taxation, together with any supporting affidavits.

6.    Liberty to apply on the giving of 48 hours’ notice.

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

THE COURT ORDERS THAT:

1.    Judgment for the applicant in the sum of $42,000 plus interest from 14 November 2008 to 2 April 2012 in the amount of $12,054.34.

2.    Vacate all previous costs orders.

3.    The originating application otherwise be dismissed.

4.    There be no order as to costs for the period up to and including 11 am on 13 December 2011.

5.    The applicant is to pay the respondent’s costs on an indemnity basis for the period after 11 am on 13 December 2011.

6.    Within six weeks hereof, the respondent is to file and serve an interlocutory application seeking an order that its costs under order (5) be paid in a fixed and specific sum rather than be quantified by taxation, together with any supporting affidavits.

7.    Liberty to apply on the giving of 48 hours’ notice.

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

REASONS FOR JUDGMENT

1    Reasons for judgment in these proceedings were delivered on 14 October 2014 (Murphy v Westpac Banking Corporation [2014] FCA 1104) (the primary reasons). The parties have been unable to reach agreement in relation to the orders to be made to give effect to that judgment, including as to costs.

2    The parties have filed outlines of written submissions – both in chief and in reply – in support of their respective proposed final orders. They have also filed supporting evidence. At their request, an oral hearing was conducted. Terms defined in the primary reasons have the same meaning in these reasons unless otherwise indicated.

3    Before turning to the relevant details of each of the applicants’ cases, it is desirable to set out some general principles and guidance on the subject of costs.

Costs following the event

4    It is uncontroversial that the power to order costs under s 43 of the Federal Court of Australia Act 1976 (Cth) (Federal Court Act) is a broad discretionary one. Section 43 relevantly provides:

Costs

(1)    Subject to subsection (1A) and section 570 of the Fair Work Act 2009, the Court or a Judge has jurisdiction to award costs in all proceedings before the Court (including proceedings dismissed for want of jurisdiction) other than proceedings in respect of which this or any other Act provides that costs shall not be awarded.

…

(2)    Except as provided by any other Act, the award of costs is in the discretion of the Court or Judge.

(3)    Without limiting the discretion of the Court or a Judge in relation to costs, the Court or Judge may do any of the following:

(a)    make an award of costs at any stage in a proceeding, whether before, during or after any hearing or trial;

(b)    make different awards of costs in relation to different parts of the proceeding;

(c)    order the parties to bear costs in specified proportions;

(d)    award a party costs in a specified sum;

(e)    award costs in favour of or against a party whether or not the party is successful in the proceeding;

(f)    order a party's lawyer to bear costs personally;

(g)    order that costs awarded against a party are to be assessed on an indemnity basis or otherwise;

(h)    do any of the following in proceedings in relation to discovery:

(i)    order the party requesting discovery to pay in advance for some or all of the estimated costs of discovery;

(ii)    order the party requesting discovery to give security for the payment of the cost of discovery;

(iii)    make an order specifying the maximum cost that may be recovered for giving discovery or taking inspection.

Note:    For further provision about the award of costs, see subsections 37N(4) and (5) and paragraphs 37P(6)(d) and (e).

5    Generally, the discretion to order costs is exercised in favour of the successful party, however, there is no rule or requirement that costs must always follow the event: see Foots v Southern Cross Mine Management Pty Ltd [2007] HCA 56; (2007) 234 CLR 52 at [25]-[26] per Gleeson CJ, Gummow, Hayne and Crennan JJ. The position was helpfully described by Greenwood and Rares JJ in Kazar v Kargarian [2011] FCAFC 136; (2011) 197 FCR 113 at [5] (which statement was referred to approvingly in Renshaw v Queensland Mining Corporation Limited [2014] FCAFC 172 at [40] per Rares, Griffiths and Gleeson JJ):

Although the discretion is said to be unconfined, absolute and unfettered, the public interest in the quelling of controversies and the administration of justice is secured by recognising that the discretion ought to be exercised according to settled principle. Settled principle guides the exercise of the discretion and recognises that the modern embodiment of the post Judicature Act discretion as to costs has escaped “arterial hardening” (Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72 per Gaudron and Gummow JJ at [38]) and has avoided elevating guiding principles into narrow legal rules controlling the exercise of the discretion (Norbis v Norbis [1986] HCA 17; (1986) 161 CLR 513 at 537 per Brennan J; Wilson and Dawson JJ at 533). Because settled principle merely guides the exercise of the discretion, there is no automatic or absolute rule controlling the exercise of the discretion to the effect that costs always follow the event. Nor is there an automatic or absolute rule that in the absence of disentitling conduct, a successful party is to be compensated by an unsuccessful party. Moreover, the jurisdiction conferred by s 43(1), exercised by reference to the broad discretion conferred by s 43(2), is not constrained by any rule that there is no jurisdiction to order a successful party to bear the costs of the unsuccessful party (Oshlack v Richmond River Council (supra) per Gaudron and Gummow JJ at [40] and [41]). As their Honours observe at [41] in Oshlack, there is nothing surprising or remarkable about the absence of hard arterial propositions in construing the scope of the discretion as the discretion must take account of the “… myriad circumstances presenting themselves in the institution and conduct of litigation, and to the very nature of litigation” within the scope of the Court's jurisdiction. See also Probiotic Ltd and Others v University of Melbourne and Others [2008] FCAFC 5; (2008) 160 FCR 30 per Finn J at [1]; Rares J at [45] to [52] and Besanko J at [82] subject to the observations at [83] to [92].

6    The following rules from the Federal Court Rules 2011 (2011 FCRs) should also be noted.

7    Rule 40.01 provides that, in the absence of an order specifying a different basis for assessment, costs are to be assessed on a party and party basis:

40.01    If an order is made that a party or person pay costs or be paid costs, without any further description of the cost, the costs are to be costs as between party and party.

8    Rule 40.02 deals with the situation where a party seeks an order for costs other than on a party and party basis:

40.02    A party or person who is entitled to costs may apply to the Court for an order that costs:

    (a)    awarded in their favour be paid other than as between party and party; or

    (b)    be awarded in a lump sum instead of, or in addition to, any taxed costs; or

    (c)    be determined otherwise than by taxation.

    Note 1    The Court may order that costs be paid on an indemnity basis.

    Note 2    The Court may order that the costs be determined by reference to a cost assessment scheme operation under the law of a State or Territory.

9    Part 25 of the 2011 FCRs deals with offers to compromise. Rule 25.01 is relevant to each of the applicants for reasons which will shortly emerge:

25.01    (1)    A party (the offeror) may make an offer to compromise by serving a notice, in accordance with Form 45, on another party (the offeree).

    (2)    The notice must not be filed in the Court.

(Emphasis in original).

10    It might be noted that Form 45 stipulates that if an offer is for a sum of money, the offeror may add: “The amount of the offer in respect of the claim is $ and the amount of interest (if any) is $ ”. That is to be contrasted with the position under the pre-2011 Federal Court Rules. Order 23, rule 3(2) provided that an offer of compromise must be prepared in accordance with Order 41. The issue of interest in any such offer was dealt with in Order 23, rule 4(2), which provided:

4(2)    If:

    (a)    a sum of money is offered; and

    (b)    that sum is inclusive of interest;

    the notice of offer must specify the amount that is in respect of interest and how it is calculated.

(Emphasis added.)

11    Rule 25.14 of the 2011 FCRs is relevant where an offer made by a respondent is not accepted by an applicant. It relevantly provides:

25.14    Costs where offer not accepted

    (1)    If an offer is made by a respondent and not accepted by an applicant, and the applicant obtains a judgment that is less favourable than the terms of the offer:

    (a)    the applicant is not entitled to any costs after 11.00 am on the second business day after the offer was served; and

    (b)    the respondent is entitled to an order that the applicant pay the respondent’s costs after that time on an indemnity basis.

…

    (3)    If an offer is made by an applicant and not accepted by a respondent, and the applicant obtains a judgment that is more favourable than the terms of the offer, the applicant is entitled to an order that the respondent pay the applicant’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.

Note 1    Costs on an indemnity basis is defined in the Dictionary.

Note 2    The Court may make an order inconsistent with these rules—see rule 1.35.

(Emphasis in original.)

Offers to compromise

12    It is convenient to say something more concerning an offer to compromise under rule 25.01 because such offers were made by Westpac to each of the applicants. Any such offer is to be distinguished from a “Calderbank offer”. The distinction was described by the Full Court (Stone, Edmonds and Jagot JJ) in IFTC Broking Services Ltd v Federal Commissioner of Taxation [2010] FCAFC 31; (2010) 268 ALR 1 (IFTC) at [12]:

Futuretronics exposes the difference between a Calderbank offer and an offer of compromise. In respect of a Calderbank offer, characterisation of the refusal to accept the offer as reasonable or not is significant, even potentially determinative. In respect of an offer of compromise, the reasonableness of the refusal to accept the offer is not, of itself, sufficient to displace the consequence of indemnity costs. The appellants' reliance on various circumstances said to make their refusal of the offer reasonable fails to confront this difference of principle.

13    In Futuretronics.com.au Pty Ltd v Graphix Labels Pty Ltd [2009] FCAFC 40 (Futuretronics), Tamberlin, Finn and Sundberg JJ stated at [5] that the refusal of a Calderbank offer will not always attract indemnity costs. Their Honours emphasised that the offeror “must show that the rejection was unreasonable in the circumstances of the case”. Their Honours then discussed the relevant approach to an offer made under Order 23, rule 11(6) of the then Federal Court Rules, which was in the following terms:

If:

(a)    an offer is made by a respondent and not accepted by the applicant; and

(b)    the respondent obtains an order or judgment on the claim to which the offer relates as favourable to the respondent, or more favourable to the respondent, than the terms of the offer;

then, unless the Court otherwise orders:

(c)    the respondent is entitled to an order that the applicant pay the respondent's costs in respect of the claim incurred up to 11 am on the day after the day the offer was made, taxed on a party and party basis; and

(d)    the respondent is entitled to an order that the applicant pay the respondent's costs in respect of the claim incurred after that time, taxed on an indemnity basis.

14    The following statements by the Full Court at [10] in respect of that previous rule are applicable to an offer of compromise under rule 25.01 of the 2011 FCRs:

In dealing with rule 11(4), which also uses the expression appearing in rule 11(6) - “unless the Court otherwise orders” - Hely J in Port Kembla Coal Terminal Ltd v Braverus Maritime Inc (No 2) (2004) 212 ALR 281 at [17], after referring to Heerey J's observation in an earlier case that “compelling and exceptional circumstances” must exist before the Court would “otherwise order”, said:

Once an offer is made, and a judgment no less favourable obtained, a rebuttable presumption in favour of indemnity costs is created. It then becomes incumbent on the defendant to show reason why the presumption should not crystallise. Correctly understood, Heerey J was explaining the operation of the Rule, rather than impermissibly attempting to place a fetter on the exercise of the court's discretion. … [H]is Honour was not seeking to do more than to convey that the prima facie position should only be departed from for proper reasons which, in general, only arise in an exceptional case …

We agree with these remarks about rule 11(4) which in our view are applicable to rule 11(6).

15    In Merost Pty Ltd v CPT Custodian Pty Ltd (No 2) [2014] FCA 594 (Merost), North J considered that the principles established in these Full Court decisions were applicable to rule 25.14(3) of the 2011 FCRs. In Merost, the applicant had made an offer of compromise to receive $300,000 plus costs in satisfaction of its claim. Judgment was obtained for the applicant in the sum of $312,339.42, comprising an award of $260,000 plus interest of $52,339.42. Consequently, the judgment was more favourable than the terms of the offer.

16    Justice North rejected the respondent’s submission that the applicant had to show that the respondent’s conduct in refusing the offer was unreasonable when viewed in the light of the circumstances which existed when the offer was refused. His Honour identified some relevant principles which guide the exercise of the discretions under the relevant current rules:

11.    Under a rule such as r 25.14(3), when an offer is made and a judgment no less favourable is obtained, a rebuttable presumption in favour of indemnity costs is created. The prima facie position should only be departed from for proper reasons, which generally only arise in an exceptional case: see Port Kembla Coal Terminal Ltd v Braverus Maritime Inc (No 2) (2004) 212 ALR 281; [2004] FCA 1437 at [17] per Hely J; and Futuretronics.com.au Pty Ltd v Graphix Labels Pty Ltd [2009] FCAFC 40 at [10] per Tamberlin, Finn and Sundberg JJ.

12.    In its supplementary written submissions the respondent first contended that the reference in the rule to the “terms of the offer” means that the offer must be construed as at the time it was made. By this reasoning, as at 23 July 2012, the principal amount necessary to produce $300,000 after the addition of interest would have been about $280,000. The judgment sum of $260,000 was less favourable to the applicant and hence the rule did not require the respondent to pay indemnity costs.

13.    There is however no warrant in the text of the rule to support this approach. What is required in this case is a comparison between the amount of the offer of $300,000 and the amount of the judgment of $312,339.42. On this analysis the judgment was more favourable than the offer which the applicant made.

…

15.    The considerations advanced by the respondent do not justify departure from the prima facie entitlement of the applicant to indemnity costs. They do not provide proper reasons for departure from the ordinary operation of the rule. There was nothing exceptional about the position of the respondent. It was faced with an offer inclusive of interest. It had to assess the likely outcome of the proceedings. Part of the assessment was a calculation of the interest which would be payable on the judgment under s 51A(1) of the Act. In that exercise it miscalculated so that the judgment was more favourable to the applicant than the offer. This is an example of the ordinary circumstances in which the prima facie entitlement to indemnity costs arises.

17    Westpac expressly challenged North J’s statement in [13] of Merost that the current rule requires a simple comparison between the total amount of the offer (in that case $300,000) and the amount of the judgment (in that case $312,339.42). Westpac argued that North J’s approach is flawed in failing to take into account the time value of money and the extent to which both the offer and the judgment, made as they are at different times, include interest. In support of that submission, Westpac made the following contentions:

(a)    under Order 23, rule 11(7) of the pre-2011 Federal Court Rules, express provision was made to cover the contingency where a judgment included interest or damages in the nature of interest and directed that, for the purpose of applying Order 23, rule 11(4) and (5) (which were broadly similar to rule 25.14(2) and (3) of the 2011 FCRs), the Court must disregard so much of the interest as relates to the period after the day the offer was made;

(b)    that previous rule, which mirrored the rules in all but one of the State Supreme Courts, and required interest awarded in relation to the period after an offer was made to be disregarded, is consistent with “common sense” because:

    otherwise the reasonableness of an offer in comparison to judgment would be eroded by the passage of time and potentially encourage an applicant to delay prosecuting the proceeding; and

    the only way a respondent could make an otherwise reasonable offer would be to build into the offer an amount for interest which reflected an estimate of interest to the date of judgment (Westpac referred to Davies and Nicol as Joint and Several Liquidators of Harris Scarfe Ltd v Chicago Boot Co Pty Ltd [2011] SASC 197 at [30] per Sulan J);

(c)    North J’s construction undermined the overarching purpose of the rules and s 37M of the Federal Court Act; and

(d)    the Explanatory Statement to the 2011 FCRs described rule 25 as not substantially altering the existing practice and providing more flexibility on the structure of offers, including in relation to interest. Westpac submitted that this last reference should be read as referring to the fact that Order 23, rule 4 required the amount of interest and how it was calculated to be specified if an offer was for a sum of money that was inclusive of interest. That is to be contrasted with rule 25.03 of the 2011 FCRs which merely permits the offer of compromise to specify the amount which represents interest.

18    Westpac contended that Merost is distinguishable and should be confined to its own facts or, alternatively, the relevant passage in [13] is plainly wrong. Neither contention should be accepted. The facts in Merost are not relevantly distinguishable and it is clear that North J was enunciating a general principle based on the plain text of the provision, which is substantially similar to rule 25.14(1). Secondly, I am not persuaded that North J’s statement in [13] is “clearly wrong”, such that I should not follow it. In my respectful view, his Honour’s approach is correct and I propose to apply it here. As his Honour emphasised, that approach is consistent with the text of rule 25.14(3). The text of rule 25.14(1) is relevantly the same. Significance must also attach to the fact that the 2011 FCRs do not include an express equivalent provision to that in the earlier Order 23, rule 11(7). I do not accept Westpac’s submissions that his Honour’s construction undermines the policy of the rule or is contrary to “common sense”, as manifested in comparable provisions in various Supreme Court jurisdictions. The text of the provision is paramount and should not be displaced by commentary in the Explanatory Statement. The practical difficulties of estimating an amount for interest, upon which Westpac relied in support of its position, may well arise depending upon when in the litigation cycle an offer of compromise is made but it is notable that there is no obligation under the current rule to specify an amount which represents interest.

19    As noted above, Westpac made an offer of compromise to each of the applicants in two tranches – on 2 and 9 December 2011. The offers were expressed to be made under rule 25.01(1) and in the form of Form 45. Each notice of offer to compromise specified a monetary amount. No express reference was made to that amount including or excluding interest. Each notice also stated that the offer was in addition to costs as agreed or assessed. Each offer was expressed to be open for acceptance for 14 days, being the minimum period permitted under the rule.

20    The applicants acknowledged that they had the onus of showing why an indemnity costs order should not be made under rule 25.14(1). While acknowledging that existing authorities state that the prima facie position created by rule 25.14 should only be departed from for proper reasons which “in general, only arise in an exceptional case”, they submitted that the expression “exceptional case” should be understood as requiring that the case needs in some way to be exceptional and that there is no requirement for “exceptional circumstances” of any type in the sense of being extraordinary, rare, unprecedented or unexpended. In circumstances where at least two Full Courts (Futuretronics at [10] and Richardson v Oracle Corporation Australia Pty Ltd (No 2) [2014] FCAFC 139 (Oracle) at [11]) have expressly approved Hely J’s statement in Port Kembla Coal Terminal Ltd v Braverus Maritime Inc (No 2) [2004] FCA 1437; (2004) 212 ALR 281(Port Kembla) to the effect that it is appropriate to depart from the presumptive position under the earlier but similarly-worded rule for proper reasons “which, in general, only arise in an exceptional case”, I am bound to apply the guidance which is provided by that formulation while also acknowledging the importance of taking into account all relevant circumstances in any individual case.

21    The applicants submitted that, having regard to the following circumstances, “there could be no unreasonableness – assessed as at the date of making the Offers – in the applicants not accepting the Offers”:

(a)    at the date the offers were made, the only evidence served by Westpac were the affidavits of Mr Fegan and Mr Edie and those of Ms Elliott and Ms Silvera;

(b)    orders had been made for Westpac to file the evidence upon which it proposed to rely (in the Murphy, Wittenberg, Lavars, Lawson and Moore proceedings) by, respectively 28 July 2011, 30 September 2011 and 16 November 2011;

(c)    after the offers had been served and had expired, and in alleged breach of the Court orders referred to in (b) above, Westpac served additional affidavits from the following people during the period 19 January 2012 to 19 September 2012: Mr Boulaevski; Ms Clarke; Mr Doyle; Ms Ward; Mr Eggins; Ms Burgess; Mr Barbour; Ms Silvera; Mr Bartlett; Mr Edie; Mr Harvey and Ms Gilbert-Davies;

(d)    “critically”, so the applicants submitted, Ms Gilbert-Davies’ affidavit was served only 14 days before the trial began and it “was her evidence of an alleged mistaken ‘error’ which was central to the Court’s finding that the causes of action in deceit and negligent misstatement had not been made out”. The applicants further submitted that if Ms Gilbert-Davies’ evidence had been available at the time the offers were made, “the balancing task for the applicants would have been fundamentally different”;

(e)    Westpac’s late-served evidence came from witnesses whose identity must have been known to it at the time the offers of compromise were made; and

(f)    in the Poulos and Smith proceedings, Westpac had not filed a defence at the time when the offers were made in those proceedings.

22    In oral address, Mr Pritchard SC (who appeared with Mr Shariff for the applicants) also raised some additional factors in support of the applicants’ contention that rule 25.14(1) should not be applied. I will deal with those matters below.

23    The applicants further submitted that, in the light of all these matters, they were not in a position at the relevant time to make an informed assessment of the relevant strengths and weaknesses of the parties’ respective cases, nor of the risks of not accepting the offers of compromise. Furthermore, the applicants submitted that there was an impression that the offers of compromise “were only intended by the respondent to found an indemnity costs order and not to achieve a genuine, mutually informed resolution of the disputes the subject of the proceedings”. They also submitted that, at the time the offers were made, the applicants’ claims in contract concerning their retention incentive payments were denied, but Westpac subsequently conceded liability on that issue after service of the offers of compromise, thus the “belated capitulation by the respondent of such a significant issue in the proceedings negates any effect the Offers might otherwise have had”. They relied on evidence given by their instructing solicitor, Mr Gillis (who was not cross-examined), who deposed that if Westpac had conceded the retention incentive scheme claim in contract prior to the service of the offers to compromise, that would have made “a significant difference” to his assessment of those offers and to the advice he gave to each of the applicants. Mr Gillis also deposed that the affidavits which were served by Westpac after 19 January 2012 would have made “a significant difference” to his assessment of the offers to compromise.

24    The applicants also submitted that, at the time the offers were made, none of the applicants contemplated that the seven proceedings would be heard concurrently, which order was said by them to “fundamentally alter the nature, extent and expense of each applicant’s trial”.

25    In the case of Ms Murphy, it was submitted that it was only during the course of the trial that Westpac abandoned its defence on the deed of release issue because it could not produce a signed copy of the deed, a fact which ought to have been known to it well before the trial. It was also submitted that the majority of preparatory work on Ms Murphy’s case was directed to that issue.

26    Westpac did not oppose an order that it pay the costs of Ms Lavars and Mr Moore up to the date of the offers of compromise made to them in December 2011, but it sought indemnity costs against both of them for the period thereafter. As will emerge below, there is an issue relating to the applicability of the offer of compromise which was made to Ms Lavars, which turns on whether or not the award of damages in relation to her case is less than the offer of compromise which was made to her.

27    Westpac contended that, apart from Mr Wittenberg, none of the other remaining applicants received a judgment which was more favourable than the offer which was given under the various offers of compromise and that, in those circumstances, rule 25.14(1) applies and Westpac is presumptively entitled to its costs on an indemnity basis from the relevant date.

28    In the case of Mr Wittenberg, Westpac accepted that it should be ordered to pay Mr Wittenberg’s costs on a party and party basis, save that it sought an apportionment in relation to his failed claims in deceit, misleading or deceptive conduct and negligence (noting that Westpac accepts that the offer of compromise made to Mr Wittenberg in December 2011 was less favourable than the award of damages in his favour).

29    It is convenient to first address the position in respect of Ms Lavars arising from her non-acceptance of the offer of compromise. Westpac’s contention that its offer of compromise to Ms Lavars in the amount of $375,000 plus costs as agreed or assessed was greater than the judgment in her favour is predicated on its contention that Ms Lavars should not receive an award of damages in respect of the TIP for 2008/2009 or any interest thereon. For reasons given below, I do not accept Westpac’s submissions on this matter. Mr Lawson is entitled to an award of damages plus interest which includes her TIP for 2008/2009. Accordingly, Westpac’s reliance on rule 25.14(1) in claiming costs on an indemnity basis against Ms Lavars is rejected.

30    Different considerations arise in respect of Ms Murphy and Messrs Moore, Lawson, Smith and Poulos. Some of the submissions made on their behalf as to why they should not have to pay any of Westpac’s costs on an indemnity basis appear to have been made on the basis that Westpac had made Calderbank offers, as opposed to offers of compromise under rule 25.14. As noted above, different tests apply depending upon whether an applicant has received a Calderbank offer or an offer of compromise under that rule. Whether or not the non-acceptance of an offer was “reasonable” is a relevant consideration in relation to a Calderbank offer, but it does not determine the position concerning an offer of compromise under rule 25.14. As noted in [14] above, the rebuttable presumption which arises under rule 25.14(3) is not readily displaced. Merely because non-acceptance of an offer of compromise was “reasonable” is unlikely to provide a sufficient basis for displacing the presumption. As Hely J observed in Port Kembla at [18]:

Even if an unsuccessful litigant acted reasonably in rejecting an offer of compromise… the authorities establish this of itself is not a sufficient reason to displace the presumptive or prima facie operation of the Rules.

31    Moreover, the relevant applicants’ reliance on unforeseen developments in the course of litigation needs to be approached with considerable caution in assessing whether the presumption is rebutted having regard to the policy and rationale underlying a provision such as rule 25.14, which is to oblige the parties to give serious thought to the risk involved in non-acceptance on the basis that “litigation is inescapably chancy” (see the observations of the Full Court in IFTC at [9(4)]).

32    The following observations of the Full Court (Kenny, Besanko and Perram JJ) in Oracle at [11]-[12], while directed to a similar presumptive position under rule 11(6), are also apposite:

It will be appropriate to depart from the presumptive position under rule 11(6) (and hence rule 11(4)) for proper reasons ‘which, in general, only arise in an exceptional case’: Port Kembla Coal Terminal Ltd v Braverus Maritime Inc (No 2) [2004] FCA 1437; (2004) 212 ALR 281 at 284 [17]. In assessing what is exceptional in the relevant sense it is useful to keep in mind, as the New South Wales Court of Appeal put it in Maitland Hospital v Fisher (No 2) (1992) 27 NSWLR 721 at 725, that ‘[l]itigation is inescapably chancy’ and that it was precisely to encourage meditation upon that unsettling truth that court rules such as Order 23 providing for offers of compromise were introduced. In the words of Mason P, rules such as rules 11(4) and 11(6) encourage the parties ‘to give serious thought to the risk involved in non-acceptance’: Morgan v Johnson (1998) 44 NSWLR 578 at 581-2.

Thus the mere fact that something unexpected or unforeseen has happened during the course of the litigation is unlikely, in a usual case, to provide the kind of proper reasons for which Order 23 rules 11(4) and 11(6) call. The litigation landscape is littered with the wreckage of unforeseeable events and unexpected circumstances.

33    In addition to the relevant guidance provided by those observations, which I consider apply here, I also reject the relevant applicants’ evidence and claim that, because further evidence was served after the offers, they were not in a position to make an informed assessment.

34    First, I do not accept that all the evidence relied upon by the applicants in support of this contention was served in defiance of Court orders as alleged or that the evidence could not have been reasonably foreseen at the time the offers were being considered. The offers of compromise were made in early December 2011 and were open for acceptance for 14 days. The orders for service of Westpac’s evidence were amended on 13 December 2011 to take into account that Westpac had only received Mr Poulos’ evidence in chief on 7 December 2011 and had not then received Mr Smith’s evidence in chief, which was served only on 3 February 2012. Moreover, I accept Westpac’s submission that the evidence which was subsequently served was of no particular significance in circumstances where:

(a)    the three brief affidavits served in January and February 2012 by Mr Boulaevski, Ms Ward and Mr Eggins merely formally proved previously discovered spreadsheets from the HR database;

(b)    a brief affidavit from Ms Clarke served in February 2012 merely corroborated a minor detail of Mr Harvey’s evidence in relation to Ms Murphy’s proceedings, and that brief affidavit ultimately was not read;

(c)    an affidavit of Mr Doyle served in March 2012 was not served earlier because it responded in part to the evidence in chief of Mr Smith, which was not served on Westpac until February 2012;

(d)    six short further affidavits served in July 2012 addressed new factual issues raised in the applicants’ evidence in reply and three of these further affidavits ultimately were not read; and

(e)    the brief affidavit of Ms Gilbert-Davies supported evidence which had already been given by Ms Elliott, was served in August 2012 and was filed with leave and without objection from the applicants.

35    Secondly, I consider that the applicants have greatly overstated the significance of the late filing of Ms Gilbert-Davies’ evidence and its importance in the Court’s decision to reject the relevant applicants’ claims in deceit etc. Ms Gilbert-Davies’ evidence substantially confirmed that of Ms Elliott (whose affidavit had been served on 6 November 2011) concerning the circumstances surrounding the failure to distribute the scripts containing the internal target which had to be achieved for the retention incentives to be paid. In addition, in an affidavit sworn by Mr Paul Harvey on 16 November 2011, which was served on the applicants but ultimately not read, Mr Harvey described his involvement in the steps taken around 16 June 2008 to distribute the retention incentive letters and the proposal to use a script in the proposed meetings. He deposed that he never considered that the 10.1 per cent EPS target was deliberately withheld from scheme participants.

36    The submission that Ms Gilbert-Davies’ evidence regarding her mistake in not including the scripts was “central” to the Court’s finding that the claims in deceit and negligent misstatement had not been made out is exaggerated. The primary reasons speak for themselves, but it is evident from [909] to [959] of those reasons that, while Ms Gilbert-Davies’ evidence was relevant in rejecting the claims, the Court’s acceptance of the evidence of both Mr Fegan and Ms Elliott, who were the central targets of the claims, was far more important.

37    Nor do I accept that, at the time the offers of compromise were made, the relevant applicants could not have contemplated that the seven proceedings would be heard concurrently or that the Court order made on 10 August 2012 to that effect fundamentally altered the nature, extent and expense of each applicants’ trial. It ought to have been readily apparent to each of the applicants and those who advised them that there was a substantial overlap of issues and common witnesses such that the cases would probably be heard together. Indeed, in December 2011, when the offers of compromise were made, the Court had already listed five of the seven proceedings for hearing on certain dates in April and July 2012. On 9 November 2011, the Smith and Poulos proceedings were also listed for hearing on those dates and an order was then made that, in relation to all the proceedings, evidence in one was to be evidence in the others. Furthermore, at a directions hearing on 10 October 2011, the possibility of the proceedings being all heard together was discussed.

38    As noted above, Mr Pritchard SC also raised a number of additional factors and submitted that these factors, together with the other factors set out above, cumulatively provided a basis for not enforcing rule 25.14. Dealing with those additional factors in turn, I do not consider that they provide an adequate basis to deny the operation of the rule, whether considered individually or collectively with the others factors described above.

39    First, it was contended that an exception should be made to the prima facie rule because the offers to compromise were only expressed to be open for the minimum possible 14 day period, no reason has been given for Westpac for that limitation and the offers were made in a period which is notorious for being “professionally busy for litigants and natural persons” and in circumstances where no hearing date had been allocated. It is evident, however, that the offers to compromise were made in the context of mediations, involving each of the applicants, which took place on either 30 November, 1 December or 8 December 2011. Each of those mediations having been unsuccessful, it is not surprising that Westpac determined to make offers to compromise shortly thereafter with a view to avoiding further costly litigation. It was not unreasonable for Westpac to utilise the minimum period stipulated under the rule. The applicants did not complain or seek any extension during that period.

40    Secondly, the applicants relied on the fact that during the period the offers were open for acceptance, Westpac was responsible for sending “distracting correspondence” to the applicants’ solicitors which drew attention to their professional ethical duties in raising serious allegations of deceit and asked that copies of the correspondence be forwarded to counsel. Westpac sought to have the allegations of fraud withdrawn. In my view, it was entirely appropriate for Westpac to instruct its solicitors to send such correspondence. The correspondence highlighted the evidence of Mr Fegan, Ms Elliott, Mr Harvey and Mr Bartlett, each of whom denied that there was any deliberate or fraudulent intention to mislead the applicants as to the true target figure. Nor do I accept the contention that Westpac’s evidence which was served as at the date of the offers to compromise involved a difficult evaluative assessment of the creditworthiness of Westpac’s material witnesses. This contention may have had more force if it were not the fact that the contemporaneous documentation which was produced to the applicants supported the evidence of those material witnesses.

41    Thirdly, I do not consider that particular weight should attach to the fact that the offers to compromise were available for acceptance before Westpac conceded the claims in contract regarding the retention incentive scheme. It was open to the applicants at the relevant time to consider whether or not to accept those offers having regard to their many other claims. It is also relevant that Mr Gillis did not descend into any detail as to how his assessment of the offers would have been significantly different if the concession had been made beforehand.

42    Fourthly, as to the submission that Ms Gilbert-Davies was an employee of Westpac and her evidence could have been served earlier, this contention is predicated on an erroneous view as to the relevant significance of Ms Gilbert-Davies’ evidence in the findings made in the primary judgment regarding the claims in deceit, misleading or deceptive conduct and negligent misstatement.

43    Mr Pritchard SC also raised several other factors in support of his submission the circumstances here warranted an exception being made to the prima facie rule, including the fact that the offers were never repeated or extended. He submitted that the applicants did not expressly reject the offers to compromise and their non-acceptance was not imprudent or unreasonable in the circumstances. None of those matters strengthens the applicants’ position. Indeed, the last mentioned factor would appear to be more appropriate to a Calderbank offer.

44    For these reasons, I consider that the relevant applicants have not established a sufficient basis for departing from the presumptive position that Westpac is entitled to have its costs paid on an indemnity basis for the relevant period in respect of each relevant applicant. For similar reasons, nor am I satisfied that they have established that it is appropriate under rule 1.34 of the 2011 FCRs to dispense with rule 25.14(1).

Apportionment

45    One of the few matters upon which the parties were able to agree was that the proceedings involved complex and intertwined issues. They also agreed that it would be too difficult to separate the costs into individual matters having regard to the extent of the overlapping and intertwined issues. Mr Gillis gave evidence that he estimated that 80 per cent of the work in the proceedings related to the intertwined and common issues, leaving 20 per cent for each individual applicant’s claims for loss and damage, figures which were not contested by Westpac. The parties were unable to agree, however, on who should have the benefit of any apportionment which, necessarily, has to be conducted on a broad evaluative basis. The applicants contended that, because they had enjoyed success in respect of their retention incentive claims, the starting point should be that they ought to have the costs of, and incidental to, the trial as a whole, but the level of costs payable for some applicants could be subject to some apportionment to reflect their success or failure on various issues.

46    The applicants did not invite a “minute determination” of apportionment of costs based on the parties’ relative success over various issues, but rather submitted that the Court should exercise a broad evaluative judgment. It was submitted that in both the Lavars and Wittenberg proceedings, Westpac should be ordered to pay their costs of and incidental to the proceedings and that there should be no apportionment because both these applicants enjoyed substantial success in key aspects of their claims.

47    As to the other five proceedings, and after noting that each had succeeded in their retention incentive contractual claim, the applicants relied on the following table which was prepared by Mr Gillis as reflecting his estimate of the time and effort applied by the applicants by reference to issues across all seven proceedings, rather than by individual applicant:

48    As noted above, Mr Gillis was not required for cross-examination. The five relevant applicants submitted that it would be appropriate that Westpac pay 70 per cent of their costs. They added that, even if the issue was approached differently and by reference to each applicant’s success, a similar figure would be arrived at.

49    Westpac submitted that the Court should hesitate to depart from the general rule that costs follow the event and that there should be an apportionment of costs in a case involving multiple issues only where there was a particular issue or group of issues which was clearly dominant or separable (citing, for example, Elite Protective Personnel Pty Ltd v Salmon (No 2) [2011] NSWCA 373 at [6] and New South Wales Lotteries Corporation Pty Ltd v Kuzmanovski (No 2) [2001] FCAFC 152 at [14]-[15]).

50    Westpac also submitted that the Court should less readily order a successful respondent to bear or pay the costs of a severable claim in contrast with the case of a successful applicant (citing Griffith v Australian Broadcasting Corporation (No 2) [2011] NSWCA 145 at [20] per Hodgson JA and Australian Competition and Consumer Commission v Australian Safeway Stores Pty Ltd (No 3) [2002] FCA 1294 at [55] per Goldberg J).

51    While acknowledging that it had not succeeded on every issue, Westpac submitted that the issues on which it failed were complex and were interrelated with the issues on which it ultimately succeeded. Westpac relied on several affidavits sworn by its solicitor, Ms Nygh. Ms Nygh was not required for cross-examination. She estimated that, based on her review of the transcript of the hearing and the written submissions, approximately 30 per cent of the hearing time was taken up with the claims in deceit, negligence and misleading or deceptive conduct. She also estimated that approximately 30 per cent of the total costs and disbursements incurred by Westpac from February 2011 related to these claims. These figures were not contested by the applicants.

52    Westpac’s position concerning costs insofar as Ms Lavars and Messrs Moore and Wittenberg are concerned are summarised in [26] and [28] above.

53    In the case of the other four applicants (i.e. Ms Murphy and Messrs Lawson, Smith and Poulos), Westpac submitted that their only success in the proceedings was in respect of the “relatively modest amounts of their retention incentives (ranging from $29,000 for Mr Poulos to $45,000 for Mr Lawson)”, which flowed from Westpac’s concession in April 2012. Westpac emphasised that all the other claims brought by these four applicants failed at trial and that any costs incurred in relation to their retention incentive contract claims up to April 2012 would have been incurred in any event in respect of the deceit claims (it might be interpolated at this point that Mr Poulos did not have a claim in deceit). Westpac submitted that it should have all its costs of the proceeding against these four applicants.

54    Another matter upon which Westpac placed particular emphasis was the fact that four of the applicants (Ms Murphy and Messrs Wittenberg, Lawson and Smith), made serious allegations of fraud and dishonesty against St. George Bank and two of its senior officers, including its managing director and chief executive officer, which issues occupied a significant part of the proceeding and were ultimately rejected. It submitted that these serious allegations impugned the integrity and honesty of Mr Fegan, Ms Elliott and the bank itself and involved claims for exemplary damages. Westpac drew attention to the fact that its solicitors had written to the applicants’ solicitors in December 2011 pointing out that the allegations were without proper foundation and should be withdrawn. When they were not, Westpac had no alternative but to mount a strong defence to those serious allegations. Westpac relied on the following observations by a Full Court of the Victorian Supreme Court in Thorne v Doug Wade Consultants Pty Ltd [1985] VR 433 at 500, where the Court was considering the making of an order for costs under a Bullock order:

The courts have long so viewed the seriousness of allegations of dishonesty as to compel an unsuccessful plaintiff making the same to pay the costs of the defendant against whom the allegations are made, notwithstanding that the plaintiff might have succeeded on other issues…

Lump sum costs application and stay

55    Westpac indicated that it proposed at the appropriate time, i.e. after any costs order was made in its favour, to seek a lump sum costs order in respect of any costs payable to it. It relied on an expert report dated 6 February 2015 of Ms Deborah Vine-Hall. Ms Vine-Hall has approximately 25 years’ experience as a legal costs consultant. Her expertise in the area is well known. Her conclusions may be summarised as follows:

(a)    if any or all of the cost orders were taxed, the process would likely take up to three years and the parties involved would incur substantial costs;

(b)    an award of costs on a percentage basis might avoid the difficulties of adjusting mixed attendances to identify work on specific issues but there would still be potential disputes regarding the apportionment of work/costs between parties;

(c)    the awarding of costs on an issue by issue basis would render the process of preparing bills of costs and taxation time consuming, expensive and, possibly in some cases, lead to the need for Court intervention to resolve disputes; and

(d)    the awarding of costs on a lump sum basis would be a cost effective and timely method of bringing the disputes to finality.

56    Ms Vine-Hall drew attention to relevant authorities regarding lump sum costs and how such an award could avoid the expense, delay and aggravation involved in protracted and complex litigation, of the kind here. She described one major advantage in a lump sum award being that “in a complex case, the judicial officer with the best knowledge of the issues and how the litigation was conducted by the parties, makes the final decision on costs”.

57    Ms Vine-Hall stated that the presentation of evidence in support of a lump sum costs order usually required an affidavit deposing to the manner in which the costs have been incurred and the identification of the costs billed to and/or paid by the claiming party. She added that the parties usually also serve an affidavit by an expert to address issues which would be raised as to the reasonableness of the costs claimed. While she acknowledged that costs would be associated with preparing such evidence, she stated that, based on her experience, the cost of this work is substantially less than the costs of preparing an item by item bill of costs. She identified as another cost advantage associated with a lump sum costs order being that there is no interest payable on costs orders in the Court until the costs are determined by the issuing of a certificate of taxation. Since an orthodox taxation of costs in these proceedings could take up to three years the benefitting parties could lose another three years’ interest, thereby reducing the value of any costs awarded on taxation by the amount of the lost interest.

58    The applicants resisted Westpac’s proposal to seek a lump sum costs order on the basis that it effectively invited the Court to assume the position of a costs or taxation specialist.

59    In my view, Westpac should be given an opportunity to seek a lump sum costs order. It is in the interests of all the parties in these proceedings, not least the applicants (who are individual litigants and who must have incurred significant expenses to date, not to mention the personal distress created by any litigation), to have the proceedings brought to finality as soon as is practicable and fair. The individual applicants will have an opportunity to participate in the process regarding the possible making of lump sum costs orders, which is likely to be significantly less protracted and expensive than adopting any other course of assessment. Indeed, I consider that the relevant applicants who have costs orders in their favour should also consider making similar applications rather than have the costs taxed if agreement cannot be reached.

60    Accordingly, I propose to make directions that, within six weeks, Westpac and the relevant applicants file any interlocutory application seeking an order that their costs be fixed in a specific sum rather than be quantified by taxation, together with any evidence in support.

61    Westpac also seeks orders for set off in the Lavars and Moore proceedings and that any orders that it pay damages, interest and costs be stayed pending the outcome of its foreshadowed application for lump sum costs. I consider that it is appropriate to make those orders. Ms Nygh gave uncontested evidence that Ms Lavars appears to be still employed with the Commonwealth Bank, but she sold her property in October 2014 and a search conducted at that time did not reveal any other property owned by her. Although there was no similar evidence in respect of Mr Moore’s position, it is anticipated that there should only be a short delay before these two applicants receive the fruits of their victories.

62    It is now convenient to address the relevant issues by reference to each of the individual applicants, reflecting the fact that, although the proceedings were heard concurrently and that there were some overlapping issues, there were also several potentially significant differences. As is also apparent from the primary reasons, the applicants experienced varying degrees of success. Needless to say, having regard to the character of the proceedings, any exercise of apportionment is necessarily evaluative and impressionistic.

Ms Lavars

63    Ms Lavars’ proceedings were commenced on 15 January 2010. On 2 April 2012, Westpac admitted liability in respect of the contractual aspect of her retention incentive claim. Accordingly, an order was made on 2 April 2012 for judgment to be entered in her favour in the amount of $24,000 plus interest from 14 November 2008.

64    Ms Lavars now submits that the following additional orders should be made in her proceeding:

(a)    judgment for the applicant against the respondent for $185,288.45 plus interest from 8 December 2009 to the date of this order at the rates prescribed by s 51A of the Federal Court Act; and

(b)    judgment for the applicant against the respondent for $80,000 plus interest from 1 October 2009 to the date of this order at the rates prescribed by s 51A. (It should be noted, however, that in a further submission received on 26 March 2015 the Court was informed the parties were agreed that the relevant date is 4 December 2009.)

65    Westpac did not dispute the making of order (a), save that it submitted that the relevant date is 4 December 2009, being the effective date on which Ms Lavars’ employment was terminated, and not 8 December 2009. Westpac is plainly correct in taking this position, which is supported by Ms Lavars’ letter of termination dated 8 December 2009.

66    Westpac disputed the non-parenthesised part of proposed order (b), which relates to the bonus amount of $80,000 awarded to Ms Lavars for 2008/2009. Westpac submitted that:

(a)    Ms Lavars’ entitlement to that bonus in two instalments of $40,000 depended upon her remaining in the employ of either St. George Bank or the Westpac Group on the first payday in May and November 2010;

(b)    Ms Lavars made no pleaded claim in respect of this matter, nor was it the subject of argument, thus no such claim was either heard or determined by the Court; and

(c)    Ms Lavars’ case was conducted on the basis that the measure of her damages was that she would have received if she had been retrenched in December 2009.

67    These submissions should not be accepted for the following reasons. First, while it is indisputable that Ms Lavars’ entitlement to receive the bonus in two equal tranches in May and November 2010 was subject to her continuing employment with the Westpac Group, this condition has no relevant application in circumstances where Ms Lavars had a contractual entitlement to be paid a pro rata amount in the event of her retrenchment. As recorded in [984] of the primary reasons, while the only written terms of the TIP were confined to the year 2005/2006 and related only to Mr Wittenberg, those terms broadly accorded with the other evidence concerning the terms and operation of the TIP for the other relevant applicants and for other relevant years. At [996], it was noted that the written TIP rules in relation to Mr Wittenberg included an entitlement to be paid a pro rata incentive in the event of retrenchment. And at [1039] of the primary reasons, the Court accepted Ms Lavars’ claim that she was contractually entitled to receive a TIP award for 2008/2009.

68    Secondly, Westpac’s contention that Ms Lavars’ claim for damages in respect of the bonus for 2008/2009 was neither pleaded nor argued must be rejected having regard to:

(a)    [4], [5], [5A], [5B], [33A] and [33B] of her second further amended statement of claim;

(b)    her closing written submissions included contentions that Mr Ling had assessed her under the Westpac scheme for a bonus of $80,000 and that she “never received that bonus as she was summarily dismissed on 8 December 2009 (sic)” and that, consequently her contractual rights to participate in the TIP in 2008/2009 were breached. Moreover, the Damages Schedule which was submitted on Ms Lavars’ behalf indicated that she had not received any amount for a bonus for 2008/2009; and

(c)    in oral address, however, senior counsel for Westpac made the following submissions relating to Ms Lavars’ TIP bonus for 2008/2009:

Ms Lavers (sic) got $80,000. She lost it because she was dismissed, but set that aside. That’s tender bundle 5, 745A Mr Lawson got $60,000, tender bundle 5, 750, Mr Moore, $53,280, and that’s from the affidavit of Mr Edie… And Mr Smith got $80,000 tender bundle 5, page 754. So they got it.

(Emphasis added.)

69    Senior counsel for Westpac then submitted that, one of the reasons why no damages should be awarded to Ms Lavars or other relevant applicants in relation to the TIP for 2008/2009 was that, if the Westpac managers who determined the bonuses for 2008/2009 on behalf of St. George were acting beyond their authority “then their conduct was subsequently ratified and adopted by St. George when it made the payment of the bonuses in question”, so “the point goes nowhere” (emphasis added).

70    The relevant findings in the primary reasons relating to this matter are at [1079]-[1083]. Those findings substantially reflect Westpac’s submissions and the Court’s then understanding that, based on those submissions, Ms Lavars had in fact been paid the disputed bonus. It is plain from [1081] that the Court understood that Ms Lavars had “actually received” a $80,000 bonus for 2008/2009 (and, to similar effect, see [1082] where reference is made to “I consider that his conduct was ratified by SGB when Ms Lavars was paid a bonus in that amount” (emphasis added)). These findings were based on a misunderstanding of Westpac’s submissions, which erroneously led the Court to believe that Ms Lavars had been paid her $80,000 bonus. The Court’s intention was that Ms Lavars should receive her TIP bonus for 2008/2009 in the amount of $80,000 plus interest.

71    Having regard to these matters, Ms Lavars is entitled under the slip rule to an award of damages in an amount of $80,000 plus interest from 1 October 2009. As the Full Court recently observed, the purpose of the slip rule is to avoid injustice to litigants by ensuring that the Court’s judgment or orders reflect its intention at the time the judgment or orders were published or reflects the intention that the Court would have had but for the failure that caused the accidental slip or omission (see Flint v Richard Busuttil & Co Pty Ltd [2013] FCAFC 131; (2013) 216 FCR 375 at [26] per Allsop CJ, Katzmann and Perry JJ).

72    Westpac’s primary opposition to such an order was based on its contention that Ms Lavars neither pleaded nor argued any such claim, a contention which I have rejected. In its reply submissions, Westpac also appeared to challenge the applicability of the slip rule in the circumstances here. It referred to rule 39.05 of the earlier Federal Court Rules and to Lockhart J’s observations on that rule in Elyard Corporation Pty Ltd v DDB Needham Sydney Pty Ltd (1995) 61 FCR 385 at 389-392, and, in particular, to his Honour’s statement that the slip rule does not apply where the amendment “is a matter of controversy”. Those submissions should be rejected for the following reasons. First, it is significant that rule 39.05 applied to the varying or setting aside of a judgment or order after it had been entered. Secondly, Westpac’s submission selectively quoted from Lockhart J’s observations. In fact, his Honour’s comments support the slip rule being applied here. At 391 Lockhart J stated:

It is well settled that the application of the slip rule is not confined to giving effect to the intention of the judge at the time when the court’s order was made, or judgment given. It extends to the intention which the court would have had, but for the failure that caused the accidental slip or omission… The rule also extends to permit the correction of an order or decree where the omission results from the inadvertence of a party’s legal representative… .

73    As noted above, the relevant findings in the primary reasons relating to Ms Lavars’ claim in respect of the TIP bonus for 2008/2009 were based on a misunderstanding of Westpac’s submission whether the bonus had in fact been paid.

74    For these reasons, I consider that orders should be made to the following effect:

(1)    Judgment for the applicant in the amount of $185,288.45 plus interest from 4 December 2009 to 27 March 2015 in the amount of $74,473.90.

(2)    Judgment for the applicant in the amount of $80,000 plus interest from 4 December 2009 to 27 March 2015 in the amount of $32,154.81.

(3)    Vacate all previous costs orders.

(4)    The originating application otherwise be dismissed.

(5)    The respondent is to pay the applicant’s costs of and incidental to the proceedings, to be taxed in default of agreement and subject to (6) and (7) below.

(6)    If the applicant proposes to seek a lump sum costs order, she should file and serve within six weeks hereof an interlocutory application and all supporting affidavits.

(7)    Order (5) be stayed pending the earlier of a further order or if the Court orders that costs be awarded on a lump sum basis, the making of such determination.

(8)     Liberty to apply on the giving of 48 hours’ notice.

Mr Wittenberg

75    As noted above, there is no issue regarding the inapplicability of rule 25.14(1) to Mr Wittenberg. Westpac should be ordered to pay his costs on a party and party basis, but I consider that an allowance should be made for Mr Wittenberg’s failed claims in deceit, misleading or deceptive conduct and negligence, for which exemplary damages were sought. These matters represented a substantial part of the proceedings and, in the case of his claim in deceit, involved most serious allegations of fraud and dishonesty which were without foundation. While acknowledging the difficulties which confronted the relevant applicants in relation to this matter arising from the fact that the true circumstances surrounding the failure to communicate the true target were within Westpac’s knowledge and domain, such a serious allegation of deceit and dishonesty must only be made responsibly and with careful attention to the possible ramifications. As I have already indicated, the relevant circumstances were described at some length in the affidavits filed on behalf of Westpac which contained express denials of any deceit or dishonest intention. Ms Gilbert-Davies’ affidavit simply served to corroborate those matters. Yet the allegations were pursued with some vigour, which was manifested in lengthy cross-examinations of relevant witnesses and lengthy closing submissions in which the Court was asked to make a series of serious adverse findings. I consider these to be relevant matters notwithstanding that there is no object of retribution or punishment. In my view, any costs orders in favour of the relevant applicants need to be significantly discounted to, in effect, provide some relief to Westpac in respect of these serious and totally unfounded claims, which were prominent in the proceedings and hearing and were entirely unsuccessful.

76    As noted above, the parties were agreed that the relevant applicants’ claims in deceit, negligence and misleading or deceptive conduct as well as their claim for damages involved approximately some 30 per cent of the work in the proceedings. Mr Wittenberg also abandoned his claim for psychological injury. He succeeded in some of his claims in contract, including in relation to the failure to give him reasonable notice and his TIP bonus. Taking all these matters into account, as well as other relevant matters set out above, I consider that Westpac should pay 75 per cent of Mr Wittenberg’s costs of and incidental to the proceedings on a party and party basis.

77    Accordingly, orders will be made to the following effect:

(1)    Judgment for the applicant in the amount of $50,000 plus interest from 14 November 2008 to 2 April 2012 in the amount of $14,350.41.

(2)    Judgment for the applicant in the amount of $228,337.50 plus interest from 27 February 2009 to 27 March 2015 in the amount of $105,007.89.

(3)    Vacate all previous costs orders.

(4)    The originating application otherwise be dismissed.

(5)    The respondent is to pay 75 per cent of the applicant’s costs of and incidental to the proceeding, to be taxed in default of agreement and subject to (6) below.

(6)    If the applicant proposes to seek a lump sum costs order, he should file and serve within six weeks hereof an interlocutory application and all supporting affidavits.

(7)    Liberty to apply on the giving of 48 hours’ notice.

Mr Lawson

78    Mr Lawson’s only substantive success in the proceedings related to Westpac’s concession made on 2 April 2012 concerning his retention incentive claim which I accept involved significant preparation. He failed on all his other claims, including his serious allegations concerning deceit etc (see above in respect of Mr Wittenberg). Although Mr Lawson succeeded in establishing some elements of his claim relating to his bonus entitlements in respect of the TIP and the MTIP he was ultimately unsuccessful in obtaining an award of damages in relation to these matters. Given the difficulties of apportioning any particular amount to Mr Lawson in respect of the unsuccessful claims by four of the applicants in deceit etc, the appropriate course in the light of this and the other relevant factors set out above is to make no order as to costs for the period up to and including 11 am on 13 December 2011 and to pay Westpac’s costs on an indemnity basis for the period thereafter. Orders will be made to the following effect:

(1)    Judgment for the applicant in the sum of $45,000 plus interest from 14 November 2008 to 2 April 2012 in the amount of $12,915.37.

(2)    Vacate all previous costs orders.

(3)    The originating application otherwise be dismissed.

(4)    There be no order as to costs for the period up to and including 11 am on 13 December 2011.

(5)    The applicant is to pay the respondent’s costs on an indemnity basis for the period after 11 am on 13 December 2011.

(6)    Within six weeks hereof, the respondent is to file and serve an interlocutory application seeking an order that its costs under order (5) be paid in a fixed and specific sum rather than be quantified by taxation, together with any supporting affidavits.

(7)    Liberty to apply on the giving of 48 hours’ notice.

Mr Smith

79    Mr Smith’s only substantive success in the proceedings related to Westpac’s concession made on 2 April 2012 concerning his retention incentive claim (see above in respect of Mr Lawson). He failed in all his other claims, including his serious allegations concerning deceit (see above in respect of Mr Wittenberg). Although Mr Smith succeeded in establishing some elements of his claim relating to his bonus entitlements in respect of the TIP, he was ultimately unsuccessful in obtaining an award of damages in relation to this claim. Taking these and other relevant matters identified above into account, and noting that Mr Smith is generally in a similar position to Mr Lawson, I consider that there should be no order as to costs for the period up to and including 11 am on 13 December 2011 and that Mr Smith pay Westpac’s costs on an indemnity basis for the period thereafter. Orders will be made to the following effect:

(1)    Judgment for the applicant in the sum of $42,000 plus interest from 14 November 2008 to 2 April 2012 in the amount of $12,054.34.

(2)    Vacate all previous costs orders.

(3)    The originating application otherwise be dismissed.

(4)    There be no order as to costs for the period up to and including 11 am on 13 December 2011.

(5)    The applicant is to pay the respondent’s costs on an indemnity basis for the period after 11 am on 13 December 2011.

(6)    Within six weeks hereof, the respondent is to file and serve an interlocutory application seeking an order that its costs under order (5) be paid in a fixed and specific sum rather than be quantified by taxation, together with any supporting affidavits.

(7)    Liberty to apply on the giving of 48 hours’ notice.

Ms Murphy

80    As noted above, Ms Murphy’s success in the proceedings was limited to Westpac’s concession on 2 April 2012 of her claim in contract concerning the retention incentive scheme (see above in respect of Mr Lawson). Account also needs to be taken of the fact that Westpac ultimately capitulated in respect of the issue concerning the deed of release, which I accept involved significant time and resources. Ms Murphy was one of the four applicants who alleged deceit etc and failed (see above in respect of Mr Wittenberg). Taking these and other relevant matters identified above into account, orders should be made to the following effect:

(1)    Judgment for the applicant in the amount of $34,000 plus interest from 14 November 2008 to 2 April 2012 in the amount of $9,758.28.

(2)    Vacate all previous costs orders.

(3)    The originating application otherwise be dismissed.

(4)    The respondent is to pay 50 per cent of the applicant’s costs for the period up to and including 11 am on 6 December 2011.

(5)    The applicant is to pay the respondent’s costs on an indemnity basis for the period after 11 am on 6 December 2011.

(6)    Within six weeks hereof, the respondent is to file and serve an interlocutory application seeking an order that its costs under order (5) be paid in a fixed and specific sum rather than be quantified by taxation, together with any supporting affidavits.

(7)    The respondent’s liability under orders (1) and (4) be offset against the applicant’s liability under order (5).

(8)    Liberty to apply on the giving of 48 hours’ notice.

Mr Moore

81    As noted above, Westpac did not oppose an order that it pay Mr Moore’s costs up to 6 December 2011. Mr Moore did not bring a claim in deceit etc. Taking these and other relevant matters identified above into account, the following orders are appropriate.

(1)    Judgment for the applicant in the amount of $67,825.57 plus interest from 11 May 2010 to 27 March 2015 in the amount of $25,025.09.

(2)    Vacate all previous costs orders.

(3)    The originating application otherwise be dismissed.

(4)    The respondent is to pay the applicant’s cost of and incidental to the proceedings for the period up to and including 11 am on 6 December 2011.

(5)    The applicant is to pay the respondent’s costs on an indemnity basis for the period from 11 am on 6 December 2011.

(6)    Within six weeks hereof, the respondent is to file and serve an interlocutory application seeking an order that its costs under order (5) be paid in a fixed and specific sum rather than be quantified by taxation, together with any supporting affidavits.

(7)    The respondent’s liability under orders (1) and (4) be offset against the applicant’s liability under order (5).

(8)    Orders (1) and (4) be stayed pending the earlier of a further order or if the Court orders that costs be awarded on a lump sum basis, the making of such determination.

(9)    Liberty to apply on the giving of 48 hours’ notice.

Mr Poulos

82    Mr Poulos’ only substantive success in the proceedings related to Westpac’s concession on 2 April 2012 concerning his retention incentive claim (see above in respect of Mr Lawson), which amounted to $29,000. Mr Poulos did not bring a claim in deceit etc. Although Mr Poulos established that the DIP had contractual force he failed to establish any breach. Taking these and other relevant matters identified above into account, appropriate orders in his case are as follows:

(1)    The originating application be dismissed.

(2)    Vacate all previous costs orders.

(3)    There be no order as to costs for the period up to and including 11 am on 13 December 2011.

(4)    The applicant is to pay the respondent’s costs on an indemnity basis for the period after 11 am on 13 December 2011.

(5)    Within six weeks hereof, the respondent is to file and serve an interlocutory application seeking an order that its costs under order (4) be paid in a fixed and specific sum rather than be quantified by taxation, together with any supporting affidavits.

(6)    Liberty to apply on the giving of 48 hours’ notice.

Associate:

Dated:    27 March 2015