FEDERAL COURT OF AUSTRALIA

Heldberg v Rand Transport (1986) Pty Ltd (No 2) [2018] FCA 1224

ORDERS

THE COURT ORDERS THAT:

1.    Judgment be entered for the Applicant in the sum of $38,058.30.

2.    The Respondent is to pay the Applicant’s costs of the proceeding on a party and party basis save that each party is to bear his and its own costs with respect to the Interlocutory Application of 12 June 2018 and with respect to today’s hearing (including the costs of the Affidavits filed on 7 and 8 August 2018 and the Submissions filed by the Respondent today).

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

EX TEMPORE REASONS FOR JUDGMENT

WHITE J:

1    On 2 August 2018, I delivered judgment in this action finding that the Applicant was entitled to judgment in the sum of $34,000 on his claim for breach of his employment contract but dismissing his claim for damages for contraventions of ss 18 and 31 of the Australian Consumer Law (the ACL). I informed the parties that I would hear from them with respect to costs and interest before entering judgment and adjourned the matter to today for submissions on those topics.

2    The parties agreed on the calculation of the Applicant’s entitlement to interest in the figure of $4,058.30 and, accordingly, I entered judgment for the Applicant in the sum of $38,058.30.

3    With respect to costs, the Applicant seeks an order that the Respondent (Rand) pay his costs on a party and party basis. Rand, however, contends that account should be taken of a Calderbank offer which it submits was unreasonably rejected by the Applicant. For this purpose, Rand relies on a letter which its solicitors sent to the Applicant’s solicitors on 19 October 2017 offering to settle the Applicant’s claim by payment of the sum of $40,000 inclusive of costs and interest.

4    The affidavits filed by Rand’s solicitors in relation to today’s hearing also indicated that Rand intended to an offer of compromise filed on 13 February 2018 by which it had offered to settle the proceedings for $45,000 inclusive of costs and interest. However, Rand did not rely on that offer at the hearing.

5    Rand contends that an appropriate order is that the Applicant have party and party costs until 19 October 2017 and that he pay its costs thereafter, either on an indemnity basis or on a party and party basis. It contends that, if it is unsuccessful with that submission, the Court ought to allow the Applicant only a portion of his costs given his failure on some of the issues which he pursued at trial. Those issues, Rand submits, can be separated out from the other issues on which the Applicant succeeded.

6    I will deal with those two aspects of Rand’s submissions separately.

7    The Applicant’s position with respect to the Calderbank letter is that, when account is taken of the interest accrued and the costs incurred by him to 19 October 2017, the effect of the judgment is that he bettered the offer contained in the 19 October letter.

8    Rand is correct in submitting that the appropriate figure with which to compare its offer is the judgment sum with the interest accrued on it to the date of the offer: Westpac Banking Corporation v Wittenberg [2016] FCAFC 33; (2016) 242 FCR 505 at [325].

9    Rand faces the difficulty that its offer was expressed to be inclusive of costs. The difficulties which offers of that kind can cause in a context like the present are well known. See Dr Martens Australia Pty Ltd v Figgins Holdings Pty Ltd (No 2) [2000] FCA 602 at [22]-[25] (Goldberg J); DSE (Holdings) Pty Ltd v InterTAN Inc [2004] FCA 1251, (2004) 51 ACSR 555 at [12]-[13] (Allsop J); and Semco Developments Pty Ltd v Graham [2005] VSCA 268 at [28]-[29] (Eames JA, with whom Chernov and Ashley JJA agreed). A principal problem with an all-inclusive offer is that it can make it difficult for a recipient to assess its effect and, in particular, the net amount after costs have been deducted. Another problem is the difficulty for a court later in making an assessment on whether the offer has been bettered without receiving detailed evidence concerning the costs incurred to the date of the offer by the recipient.

10    However, these difficulties ought not to be overstated. As Basten JA pointed out in Elite Protective Personnel Pty Ltd v Salmon [2007] NSWCA 322 at [143], the practice by solicitors of recording costs electronically on a progressive basis means that a recipient’s solicitor-client costs incurred at any one point in time can often be readily ascertained, even in retrospect. The circumstances of the present case provide an illustration because the Applicant’s solicitors have been able to provide evidence of the solicitor-client costs incurred by the Applicant in a manner which enables the quantum of those costs at any relevant date to be identified. This means that the uncertainty in the present case, to the extent to which it exists, lies in ascertaining the Applicant’s party and party costs at the time of the offer.

11    I do not consider it appropriate to proceed on the basis that the all-inclusive nature of Rand’s offer means that it ought not to be taken into account in the assessment of Rand’s claim for indemnity costs after 19 October 2017 or for its party and party costs after that date. Instead, I consider that the uncertainty which has been created by Rand’s choice as to the form of its offer is one matter to be considered when assessing whether the Applicant’s rejection of the offer was unreasonable so as to justify making some order other than an order that the Applicant have his costs on a party and party basis.

12    The Applicant’s solicitors have provided evidence indicating that, as at 19 October 2017, on the basis of the Court’s findings, the Applicant would have been entitled to judgment on terms which exceeded Rand’s offer. For this purpose, the Applicant’s solicitors have calculated interest to the date of the offer and outlined the costs incurred by the Applicant to 19 October 2017. The calculations indicate that, as at that date, the Applicant would have been entitled to interest of $2,546.93 and that he had incurred solicitor-client costs of $11,408. This is a total of $47,954.93, a sum which well exceeds Rand’s all-inclusive offer of $40,000.

13    As the costs figure is a figure for solicitor-client costs, it is reasonable to suppose that some downward adjustment should be made to it in order to obtain party and party costs. The Court does not have the information allowing it to make a precise assessment of the Applicant’s party and party costs as at 19 October 2017. However, it is apparent that, even if one assumes generously to Rand, that the Applicant’s party and party costs were half the solicitor-client costs as at 19 October 2017, the aggregate of the judgment sum, interest and costs as at that date still exceeds the offer by a significant amount. That being so, I consider that Rand’s offer as at that date was inadequate in the sense that the position which the Applicant would have obtained as at 19 October 2017 would have been appreciably superior to that offered by Rand. On that basis, I do not consider that it should be held that the Applicant acted unreasonably in failing to accept the offer of 19 October 2017.

14    I turn to the second issue, that being whether the Applicant should receive only a portion of his costs given that he failed altogether on some issues in the trial. It can be appropriate in some circumstances for an apportionment of costs to be made having regard to the successful party’s failure on some issues. I referred to some of the authorities bearing on this issue in Hockey v Fairfax Media Publications Pty Ltd (No 2) [2015] FCA 750; (2015) 237 FCR 127, at [84]-[92] and it is not necessary to repeat the references now.

15    In the present case, I am not satisfied that it is appropriate for there to be any apportionment based on those aspects of his breach of contract claims upon which the Applicant failed. It is true, as counsel for Rand has pointed out, that the Applicant pursued those claims without moderating them at all. On the other hand, I think it fair to say that Rand defended them also without making any concessions. Perhaps more fundamentally, however, it seems to me that the breach of contract claims can appropriately be regarded arising from the same substratum of facts. That being so, this is not a claim in which an apportionment of the costs on those claims would be appropriate.

16    The same cannot be said, however, with respect to the Applicant’s claims of misleading or deceptive conduct in contravention of ss 18 or 31 of the ACL. This was a separate and distinct claim and arose out of a different substratum of fact. That consideration has given me some pause in relation to Rand’s application for an apportionment of costs. Ultimately, I have decided that an apportionment is not appropriate, principally for pragmatic reasons. They are that the ACL claim was a very confined claim occupying relatively little time in the trial and, as I understand it, relatively little time in the pre-trial preparation. I accept the submission of counsel for the Applicant that the trial was conducted efficiently and that, in that trial, as I have said, relatively little time was taken up with the consumer law claim.

17    I think it was obvious to everyone at the trial that the ACL claim could not succeed because, even if there had been misleading or deceptive conduct as the Applicant alleged, he was not able to show that he had suffered any loss by reason of that conduct. It is puzzling, I have to say, that the Applicant chose to pursue that claim. Had I had the sense that the pursuit of the claim had contributed in a material way to the costs incurred at the trial, my conclusion about an apportionment of costs on that issue may have been different.

18    Rand has not submitted that this is a case in which it is appropriate for the Court to invoke r 40.08 of the Federal Court Rules 2011 (Cth) and the position under that rule need not be considered presently.

19    Accordingly, there will be orders that:

(1)    Judgment be entered for the Applicant in the sum of $38,058.30.

(2)    The Respondent is to pay the Applicant’s costs of the proceedings on a party-party basis other than that each party is to bear its own costs with respect to the interlocutory application of Rand dated 12 June 2018 and with respect to the hearing this afternoon including the costs of the affidavits filed on 7 and 8 August 2018 and the submissions filed by the respondent today.

Associate:

Dated:    16 August 2018