FEDERAL COURT OF AUSTRALIA

Sealed Air Australia Pty Limited v Aus-Lid Enterprises Pty Ltd [2020] FCA 388

ORDERS

THE COURT ORDERS THAT:

1.    There be judgment for the applicant against the first respondent in the sum of $1,756,740.88, being damages in the amount of $1,316,971 for breach of contract with the applicant, together with interest pursuant to s 51A of the Federal Court of Australia Act 1976 (Cth) in the sum of $439,769.88.

2.    There be judgment for the applicant against the fourth respondent in the sum of $2,152,400.21, being damages in the amount of $1,635,417 for procuring and inducing the first and second respondents to breach their contract with the applicant, together with interest pursuant to s 51A of the Federal Court of Australia Act 1976 (Cth) in the sum of $516,983.21.

3.    The first respondent pay the applicant’s costs of the proceeding including reserved costs, on a party and party basis from the commencement of the proceeding until 11:00 am on 30 March 2017, and on an indemnity basis from 11:00 am on 30 March 2017, such costs to be taxed in default of agreement.

4.    Save for the costs of:

(a)    the case management hearing on 29 March 2016,

(b)    the applicant’s interlocutory application dated 4 July 2017,

(c)    the applicant’s interlocutory application dated 26 April 2018,

(d)    the applicant’s interlocutory application dated 26 July 2017,

(e)    the third respondent’s interlocutory application dated 25 October 2017, and

(f)    submissions relating to the liability of the first to third respondents,

the fourth respondent pay the applicant’s costs of the proceeding including reserved costs, on a party and party basis from the commencement of the proceeding until 11:00 am on 30 March 2017 and on an indemnity basis from 11:00 am on 30 March 2017, such costs to be taxed in default of agreement.

5.    The proceeding as against the first respondent and the fourth respondent be otherwise dismissed.

6.    The applicant’s claims against the second respondent be dismissed.

7.    There be no order as to costs against the second respondent.

8.    On or before 31 March 2020, the applicant serve the first respondent with a copy of these orders and a copy of the reasons for judgment delivered today, 25 March 2020.

9.    On or before 1 April 2020, the applicant file an affidavit setting out the manner of compliance with order 8 above.

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

REASONS FOR JUDGMENT

KENNY J:

Introduction

1    On 24 January 2020, the Court published reasons for judgment and made the following orders:

1.    On or before 6 February 2020 the applicant file and serve:

(a)    a proposed minute of orders giving effect to these reasons for judgment; and

(b)    written submissions on costs and/or interest (not exceeding 5 pages).

2.    On or before 18 February 2020 the fourth respondent file and serve any submissions (not exceeding 5 pages) in response to:

  (a)    the applicant’s proposed minute of orders; and

  (b)    the applicant’s written submissions on costs and/or interest.

3.    On or before 18 February 2020 the first respondent file and serve any submissions (not exceeding 5 pages) in response to:

  (a)    the applicant’s proposed minute of orders; and

  (b)    the applicant’s written submissions on costs and/or interest.

4.    On or before 10 February 2020 the applicant file and serve on the first respondent:

  (a)    a copy of these orders; and

  (b)    a copy of the reasons for judgment delivered today.

2    In conformity with these orders, the applicant filed a proposed minute of orders and written submissions on costs and interest.

3    The applicant also filed an interlocutory application seeking:

as against the first respondent – indemnity costs up to and including 4 June 2018 and pre-judgment interest from June 2014 until the entry of judgment;

as against the fourth respondent – the costs of the proceeding (save for a case management hearing on 29 March 2016 and the applicant’s interlocutory applications dated 4 July 2017 and 24 April 2018) up to and including 15 October 2015, on the party-party basis, and from and including 16 October 2015, on an indemnity basis, as well as pre-judgment interest from September 2014 until the entry of judgment. I interpolate here that the applicant’s reference to an interlocutory application dated 24 April 2018 is apparently intended to be a reference to its interlocutory application dated 26 April 2018.

4    The applicant filed the affidavit of Catherine Louise Ashby-Koppens affirmed on 6 February 2020 (the Koppens affidavit) in support of its interlocutory application.

5    Also in conformity with the Court’s orders, the fourth respondent filed written submissions on costs. The fourth respondent did not comment on the applicant’s proposed minute of orders.

6    The first respondent has not filed any written submissions in response to the applicant’s written submissions on costs and interest or otherwise.

7    These reasons principally concern the disposition of costs and interest.

The parties’ submissions

The applicant’s submissions as against the fourth and first respondents

8    As indicated, the applicant seeks an order that the fourth respondent pay its costs on the party-party basis up to 15 October 2015, and thereafter on a solicitor and client (or indemnity) basis. The applicant sought indemnity costs on three bases:

(1)    the fourth respondent had imprudently refused an offer of compromise made by letters dated 6 and 11 November 2015 and/or by a letter dated 28 March 2017;

(2)    by no later than 15 October 2015, the fourth respondent should have known that its primary defence was foredoomed to fail and it was unreasonable for it to have put the applicant to the continuing costs of litigation by persisting with defending the claims against it; and

(3)    the applicant obtained a judgment more favourable than the terms of the offer of compromise dated 28 March 2017.

9    In support of the second limb of its argument, the applicant relied on the fact that the fourth respondent was served with its Further Amended Statement of Claim (FASC) on 15 October 2015; and that this pleading set out its case against the fourth respondent in tort, for inducing the first and second respondents to breach their contract with the applicant (the tort claim). The applicant particularly relied on the fact that, in its pleading dated 14 October 2015 (and served on 15 October 2015):

... it was alleged that on acquiring the information contained in several warning letters [dated 4 September 2014, 15 October 2014 and 27 November 2014] from the applicant’s solicitors, [the fourth respondent] had continued to have dealings with Aus-Lid “when it had actual knowledge, or was at least recklessly indifferent or wilfully turned a blind eye to the possibility, that such dealings were a breach, or at least a substantial prospect of a breach, of the sublicence by [the first and second respondents]”.

10    In written submissions, the applicant emphasised the fourth respondent’s subsequent denial in its amended defence of 30 October 2015 and some of the findings of the Court relating to the outcome of the applicant’s tort claim.

11    As to the first claimed basis for indemnity costs, the applicant contended that the fourth respondent’s failure to accept its settlement offer, made by letters dated 6 and 11 November 2015, was unreasonable. The applicant submitted that the fourth respondent’s failure to accept this offer of settlement was unreasonable because: (1) the fourth respondent knew at the time, based on its own knowledge, admissions and evidence, that the primary defence was ill-founded and unlikely to succeed; (2) the proposed settlement amount represented a substantial discount to the potential damages for lost sales or royalties; (3) it would have enabled the fourth respondent to further amortise its sunk costs, by allowing the fourth respondent to continue to produce and supply the patented goods until at least 31 March 2016, and potentially beyond that time by licence of the applicant; and (4) the additional time, costs and inconvenience of carrying the proceeding to a final hearing could have been avoided.

12    The applicant contended, further and alternatively, that the fourth respondent’s refusal to accept the offer of settlement made on 28 March 2017 was unreasonable.

13    As to the third basis, the applicant contended that it had obtained a judgment that was more favourable than the terms of the 28 March 2017 offer to compromise and that it was therefore entitled to indemnity costs under r 25.14(3) of the Federal Court Rules 2011 (Cth).

14    As against the first respondent, the applicant submitted that it was entitled to indemnity costs on the bases discussed below: see, in particular, below at [80].

15    The applicant also sought pre-judgment interest under s 51A(1)(a) of the Federal Court of Australia Act 1976 (Cth) (the Act) and post-judgment interest under s 52(2)(b) of the Act and r 39.06 of the Federal Court Rules on the judgment debts from the date of entry of the judgment. The applicant submitted:

17.    The “date when the cause of action arose”:

    (a)    in respect of [the first respondent], was not later than about June 2014;

   (b)    in respect of [the fourth respondent], was on or about 9 September 2014.

18.    Each of [the first respondent] and [the fourth respondent] are liable for causally related losses for different periods, which are set out below (together with the corresponding interest for the principal losses suffered in that period, calculated to 24 January 2020);

    (a)    June to August 2014 (First Period of Loss) – interest $15,541.21;

   (b)    September 2014 to September 2017 (Second Period of Loss) – interest $257,389.63 against [the first respondent] and $257,987.08 against [the fourth respondent];

   (c)    October 2017 to April 2018 (Third Period of Loss) – interest $42,476.81.

19.    On the foregoing basis, the interest on the principal amounts for which [the first respondent] and [the fourth respondent] are respectively liable are (noting the overlap in the Second Period of Loss):

(a)    For [the first respondent] (First and Second Periods of Loss) – total $272,930.92;

(b)    For [the fourth respondent] (Second and Third Periods of Loss) – total $300,463.89.

(Italics in original, citations omitted)

The fourth respondent’s submissions in response to the applicant

16    The fourth respondent submitted that the Court should order that it bear 70% of the applicant’s costs incurred in relation to the allegations made against it, on a party-party basis. It said that the discount of 30% reflected the fact that the misleading or deceptive conduct claim was not made out and the fact that an allegation of patent infringement was originally made but abandoned in October 2015 (when the tort claim was introduced).

17    The fourth respondent further submitted that it should not be required to bear the costs incurred in relation to the allegations against the first, second and third respondent (the Aus-Lid parties). In this connexion, the fourth respondent referred to the submissions relating to the issue of whether the applicant should have leave to proceed against the second respondent; the default judgment application against the first respondent; Mr de Souza’s application to represent the first respondent; and the submissions relating to the Aus-Lid parties’ liability more generally.

18    The fourth respondent accepted that it should pay interest on the pre-judgment amount but argued that this amount properly arose from 16 October 2015, when the tort claim was introduced. It submitted that its liability for pre-judgment interest should only arise for the period from October 2015 to January 2018.

19    The fourth respondent also accepted that it should pay post-judgment interest but argued that the applicant had miscalculated the amount properly payable.

20    The fourth respondent contended that indemnity costs should not be awarded against it. This was because: the settlement offers expressly related to damage arising from June 2014 and the damage caused by all parties; there were insufficient particulars to allow it to understand the basis on which an offer was calculated; and the offers were made before any expert evidence was filed. In any event, so the fourth respondent submitted, the expert evidence filed in July, August and September 2017 was overtaken by Mr Morris’s memorandum filed in June 2018 (during the hearing). The fourth respondent contended that, in circumstances where the Court found that its liability arose from September 2014, and where the calculations of loss relied upon by the applicant were not undertaken until trial, it was reasonable for the fourth respondent not to accept any of the offers.

21    The fourth respondent also submitted that it could not be said that the terms of the November 2017 [sic] offer of compromise were more favourable than the judgment, since the terms of that offer contemplated that the fourth respondent was liable for the period from June to September 2014.

22    The fourth respondent submitted that, when the first Calderbank offer was made on 6 November 2015, the offer was made to all respondents; the pleading had only just been amended to include the tort claim; and no detailed explanation as to the calculation of the alleged loss was provided, even after the fourth respondent requested more detail.

23    The fourth respondent argued that it was reasonable for it to refuse the first Calderbank offer where: the items for damages and costs appeared to relate in part to the first and second respondents’ breaches (for which the fourth respondent was not liable) and to the misleading or deceptive conduct allegation (which failed); and “the [applicant] refused to provide particularisation of the calculations”.

24    Further, the fourth respondent submitted that, to the extent that the offer was premised on the basis that the fourth respondent’s liability arose from June 2014, the offer was no more favourable than “the Calderbank offer”. Here, I would infer the reference to “the Calderbank offer” was a mistake and that the fourth respondent intended to say “the judgment the applicant in fact obtained”.

25    The fourth respondent submitted that offer of compromise made in March 2017 also provided an estimate based on a cumulative calculation of the damage suffered by the applicant and did not provide any basis to identify damages arising after September 2014. It further submitted that the March 2017 offer of compromise did not set out a detailed calculation of damages or costs. (It may be helpful to note at this point that there were in fact two identical offers made on the same day in March 2017: one was made pursuant to the principles of Calderbank v Calderbank [1976] Fam 93; [1975] 3 All ER 333, and the other, under the Federal Court Rules.)

26    The fourth respondent contended that, because the March 2017 offer was made before the provision of expert evidence, it was not in a position to test the calculations. The fourth respondent argued that:

13.    It was not apparent from the offer of compromise what [the applicant’s] total costs were, and what proportion of its costs related to the case against the Auslid parties, or the allegation of misleading or deceptive conduct (which did not succeed) or the allegation of patent infringement (which had been abandoned).

14.    Nor was it clear what [the applicant] proposed in relation to the ongoing supply to Chobani. Clause 9.1(c) proposed that the parties coordinate with each other and Chobani in relation to ongoing supply (a proposal which, on its face, raised competition issues). The offer was too indefinite to accept.

27    The fourth respondent also contended that it was apparent from the terms of the offer that the estimated loss included loss arising from June 2014, whereas the Court found that the fourth respondent’s liability arose from September 2014. The fourth respondent submitted that, in these circumstances, it could not be said that the applicant had obtained relief in terms more favourable than the offer because the terms of the offer of compromise involved the fourth respondent accepting liability for a period before September 2014.

28    In summary, the fourth respondent accepted it should bear 70% of the applicant’s costs in relation to the allegations against it, on a party-party basis. It accepted that it should pay interest on the pre-judgment sum from 16 October 2015, and that it should pay post-judgment interest costs at a rate which reflected the annual rate of 6.75%.

Consideration

Indemnity costs

29    The applicant has succeeded in its application against the first respondent for damages for breach of contract, with damages assessed in the amount of $1,316,971. The applicant has also succeeded in its application against the fourth respondent for damages for procuring and inducing the first and second respondents to breach their contract with the applicant, with damages assessed in the amount of $1,635,417.

30    Under s 43(2) of the Act, the disposition of costs is at the discretion of the Court, although this discretion must be exercised judicially: see Ruddock v Vadarlis (No 2) [2001] FCA 1865; 115 FCR 229 at [9]. In the ordinary course costs will follow the event. If a party succeeds in an application, then the Court will ordinarily order the respondent to pay the costs of the application, assessed on a party and party basis, unless there are special circumstances justifying some other order. If, however, a party is successful on a portion of the claim only, then depending on the circumstances it may be reasonable that that party bear the expense of litigating the part on which it failed: Ruddock v Vadarlis (No 2) at [11].

31    Pursuant to s 43(3)(g) of the Act, the Court may order that costs awarded against a party be assessed on an indemnity basis, rather than the party and party basis. Costs will be payable on the party and party basis, however, unless the circumstances of the case justify a departure from the normal course: see Re Wilcox; ex parte Venture Industries Pty Ltd (No 2) (1996) 72 FCR 151 at 152-153 (Black CJ), 156-157 (Cooper and Merkel JJ); and Colgate-Palmolive Company v Cussons Pty Limited (1993) 46 FCR 225 at 233 (Sheppard J). Black CJ said in Re Wilcox at 152 that “indemnity costs may properly be awarded where there is some special or unusual feature in the case justifying the Court exercising its discretion in that way”: see also 156-157 (Cooper and Merkel JJ). This continues to be the accepted position. The question is whether the facts and circumstances of a particular case warrant the making of an order for the payment of costs on the solicitor and client (or indemnity) basis, rather than on the usual party and party basis.

32    Reference to some of the circumstances in which costs on an indemnity basis have been ordered illustrates the kinds of occasions that have attracted indemnity costs, although the categories in which indemnity costs may be ordered are not fixed: see generally Colgate-Palmolive at 233 and Yates v Boland [2000] FCA 1895 at [66]-[68] (O’Loughlin, North and Weinberg JJ). It has been held, for example, that indemnity costs may be awarded where an application is wholly untenable and misconceived (Henke v Carter [2002] FCA 492 at [22] (Goldberg J)); where there is “evidence of particular misconduct on the part of a party that causes loss of time to the Court and to other parties” (Tetijo Holdings Pty Ltd v Keeprite Australia Pty Ltd [1991] FCA 225 at [22] (French J)); and where there is an imprudent refusal of an offer of compromise (Colgate-Palmolive at 233-234).

33    The purpose of indemnity costs was explained in Hamod v State of New South Wales [2002] FCAFC 97; [2002] FCA 424; 188 ALR 659 at [20] by Gray J (with whom Carr and Goldberg JJ agreed) as follows:

Indemnity costs are not designed to punish a party for persisting with a case that turns out to fail. They are not awarded as a means of deterring litigants from putting forward arguments that might be attended by uncertainty. Rather, they serve the purpose of compensating a party fully for costs incurred, as a normal costs order could not be expected to do, when the Court takes the view that it was unreasonable for the party against whom the order is made to have subjected the innocent party to the expenditure of costs.

34    The outcome of an application for indemnity costs depends on whether the particular facts and circumstances of the case are capable of warranting the making of an order for indemnity costs and the Court, having regard to these facts and circumstances and the applicable principles, concludes that such an order should be made: see Colgate-Palmolive at 234.

Indemnity costs and the fourth respondent

35    In support of its argument for indemnity costs against the fourth respondent, the applicant relied, first, on the fact that the fourth respondent was served with its FASC on 15 October 2015 and that the FASC specifically alleged that, having received the letters of 4 September 2014, 15 October 2014 letter and 27 November 2014 (the three warning letters) from the applicant’s solicitors (as well as a copy of the Patent Licence Agreement of 9 January 2011 (PLA) and 31 May 2012 deed of amendment in December 2014) the fourth respondent knew that the applicant had entered into an irrevocable, exclusive sublicence with the first and second respondents to exploit the Patent in the field in, relevantly, Australia.

36    The FASC was significant for the applicant’s argument because the FASC was the first occasion in which the applicant pleaded its (successful) tort claim against the fourth respondent. The applicant’s claim for damages against the fourth respondent (as pleaded in a statement of claim dated 6 January 2015) was originally said to arise from the fourth respondent’s alleged patent infringement and/or alleged misleading or deceptive conduct. There was no material change in the applicant’s case against the fourth respondent in the applicant’s amended statement of claim of 5 February 2015. The applicant significantly amended its case in October 2015, however, as set out in the FASC, abandoning its claim of alleged patent infringement and claiming instead that the fourth respondent had procured and induced the first and second respondents to breach their contract with the applicant. This claim remained substantially the same until the end of the hearing and was the claim on which the applicant succeeded. At the same time, the applicant continued to allege that the fourth respondent was liable in damages for misleading or deceptive conduct, a claim that did not succeed.

37    In its amended defence of 30 October 2015, in response to the applicant’s FASC, the fourth respondent admitted that, as the applicant alleged, in June 2014 it began to produce, manufacture and sell the offending product for Chobani in Australia and continued to do so. It also acknowledged that the applicant’s solicitors had sent the three warning letters. In addition, it also referred to various other communications, including: its responsive letter of 12 September 2014; Mr Stein’s subsequent telephone conversation with Mr Kortian (the applicant’s solicitor); a conversation between Mr Kaye, for the fourth respondent, with Mr Mitton, for the applicant; a letter of 17 December 2014 sent by Mr Stein to Mr Kortian; Mr Kortian’s provision of documents to Mr Stein on 23 December 2014; Mr Stein’s response of 24 December 2014; and the amended statement of claim alleging patent infringement. Importantly, however, for present purposes, the fourth respondent specifically denied that it had intentionally procured or induced the first and second respondents to breach their contract with the applicant:

… on the basis that [the fourth respondent] did not know, and could not have known from the information provided to it, that [the applicant, the first respondent and the second respondent] had entered into a sublicence by which Auslid granted to [the applicant] an irrevocable, exclusive sublicence to exploit the Patent in the Field in Australia.

38    This defence failed. As I have found at [225] of my reasons for judgment:

[O]n the balance of probabilities in September 2014 [the fourth respondent] knew of the contract between the applicant and [the first and second respondents] and that it contained terms to the effect of clauses 4.1 and 7.1(c) of the Patent Licence Agreement. This knowledge was sufficient to ground an intention on [the fourth respondent’s] part to procure [the first and second respondents’] breach of that contract.

39    I also found at [228] that Mr Stein appreciated at the time he received the 4 September 2014 letter that if the applicant’s agreement with the first and second respondents was on foot, then their granting rights to manufacture and supply the patented product to the fourth respondent meant that they were in breach of that agreement. Further, I held, at [248], that I was not persuaded that an experienced commercial solicitor, such as Mr Stein, would have believed at any point that the contract between the applicant and the first and second respondents had been repudiated, or that there were reasonable grounds for believing that it had been, on the basis of what Mr de Souza had communicated to him.

40    I also found at [249] and [262]-[263], having regard to the matters I discussed at [250]-[261], that:

[The fourth respondent] was wilfully blind (or recklessly indifferent) to the fact that [the first and second respondents’] grant to [the fourth respondent] of the right to manufacture and supply Chobani with [the] patented spoon-in-lid meant that [the first and second respondents were] in breach of [their] contract with the applicant. I would infer from this that [the fourth respondent] intended to procure [the first and second respondent] to breach its contract with the applicant.

41    It does not follow from this, however, that the fourth respondent’s defence was so weak that in persisting with it the fourth respondent acted so unreasonably as to warrant an award of indemnity costs.

42    In Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397 at 401, Woodward J held that indemnity costs might be justified where “the applicant, properly advised, should have known that he had no chance of success”. Other courts and judges have made statements to the same or similar effect, extending this proposition to a respondent advancing an untenable defence (as opposed to an applicant said to have an untenable application): see, for example, Krueger Transport Equipment Pty Ltd v Glen Cameron Storage & Distribution Pty Ltd (No 3) [2008] FCA 1592 at [15]; Walker v Citigroup Global Markets Pty Ltd [2005] FCA 1866 at [28]-[30]; and Currie v Currie [2018] WASC 306 at [8]. It is, however, worth bearing in mind Lindgren J’s observations in NMFM Property Pty Ltd v Citibank Ltd (No 11) [2001] FCA 480; 109 FCR 77 at [72] that:

It might be suggested, with the benefit of hindsight, that in every case “proper advice” would be advice in accordance with the reasons for judgment delivered by the Court. … Clearly, this is not what Woodward J had in mind. On the other hand, his Honour’s expression “properly advised” was intended to introduce an objective notion: it would “set the bar too high” to insist that the party have actually known that there was no chance of success.

43    In the present case, there were numerous arguable factual and legal issues in contest between the applicant and the fourth respondent at the hearing. It should be borne in mind that the applicant failed to make out its claim against the fourth respondent for misleading or deceptive conduct. Apart from the three warning letters, there were, moreover, numerous evidentiary considerations contributing to the findings mentioned above and that led to the success of the applicant’s claim in tort against the fourth respondent, including (but not limited to) the evidence concerning Mr de Souza and his communications with Mr Shale and Mr Stein. It is, I think, also fair to say that, prior to the hearing, neither the applicant nor the fourth respondent could have been confident about the evidence that Mr de Souza might give and about its impact on the case overall.

44    I appreciate that I have rejected critical parts of Mr Stein’s evidence. I have given my reasons for doing so in my reasons for judgment. For example, I held at [246] that Mr Stein’s evidence was, in some respects, a reconstruction of what had happened several years earlier to justify his conduct at the time. Having regard to the entirety of the proceeding, however, it does not seem to me that Mr Stein’s conduct takes this case so far beyond the ordinary range of cases as to justify an award of indemnity costs: compare Harrison v Schipp [2001] NSWCA 13 at [136]-[137], Currie v Currie at [19], Walker at [32]; and contrast Krueger at [16]-[20].

45    The applicant submitted that, by no later than 15 October 2015 when the FASC was served, the fourth respondent should have known that its defence was “foredoomed to fail” and that it was so unreasonable for it to have persisted with its defence and to have put the applicant to the continuing costs of litigation that the applicant should be awarded indemnity costs. I would reject this submission. Bearing in mind the matters mentioned above, it does not seem to me that, as at 15 October 2015, when the fourth respondent was served with the FASC, the fourth respondent should have known that its defence to the applicant’s tort claim was untenable.

46    It is convenient to consider next the applicant’s argument that it was entitled to indemnity costs because the fourth respondent’s refusal to accept an offer of compromise was imprudent and unreasonable.

47    The following facts and circumstances appear from the Koppens affidavit. None of the respondents have sought to dispute what appears in this affidavit.

1.    The first Calderbank offer

48    On 6 November 2015, the applicant’s then solicitors (Spruson & Ferguson) sent a letter in identical terms to all of the respondents. In this letter, the applicant offered to settle on terms that the respondents pay a total amount of $240,000 in damages in respect of the claims set out in the FASC (and further amended application), plus $60,000 towards the applicant’s legal costs. There were to be: (1) an inter partes undertaking that the fourth respondent would not produce or supply any goods made under the Patents in Australia or New Zealand after 31 March 2016 without the express licence of the applicant (while the Patents were on foot); and (2) an undertaking to the Court by the Aus-Lid parties that they would refrain from licencing the Patents in Australia or New Zealand during the term of the Patents. This offer provided for a deadline for response of 5:00 pm on 23 November 2015, 17 days from the date it was sent. It identified itself as a Calderbank offer (stating it was made under the principles in Calderbank) and further stated that if the offer was not accepted and the applicant was successful at trial, the applicant would seek costs on an indemnity basis. This was the first Calderbank offer.

49    On 10 November 2015, the solicitors for the fourth respondent sent an email to Spruson & Ferguson. Referencing the offer of 6 November 2015, the email requested clarification as to how the applicant had calculated damages in the figure of $240,000, and how much of that sum was attributable to the tort claim and how much to the misleading and deceptive conduct claim. It sought the same details in respect of the calculation of costs in the sum of $60,000.

50    On 11 November 2015, Spruson & Ferguson sent a further letter to all the respondents in which they clarified that the figure of $240,000 related to all of the claims made by the applicant against the respondents, and that the figure of $60,000 did not relate to the discontinued elements of the proceeding. It advised that the figure of $240,000 was “based on either lost sales or a royalty of 2.5 cents per lid calculated on the estimated sales of the patented lids to date in breach of the [applicant’s] Exclusive Sub-licence”. The letter added:

It is the Applicant’s position that it would [be] unreasonable for the Respondents to reject this offer. In the event the Respondents do not accept the Calderbank offer, we propose to rely on this and our earlier correspondence in seeking indemnity costs against the Respondents (and each of them).

51    None of the respondents responded to the first Calderbank offer in the period up to 5:00 pm on 23 November 2015.

52    Whether the making of a Calderbank offer justifies the award of costs on an indemnity basis from the date of rejection of the offer is governed by well-established principles: see, for example, Kiefel v State of Victoria [2014] FCA 411 at [37]-[40]. In Carey v Freehills [2013] FCA 1258, I said at [15]-[16]:

A Calderbank offer is a “well recognised means of making offers of settlement in circumstances where the party making the offer ultimately seeks a costs advantage if the offer is not accepted”: see Jones v Bradley (No 2) [2003] NSWCA 258 at [5], quoted with approval by Finkelstein J in Brookfield Multiplex Limited v International Litigation Funding Partners Pte Ltd (No 4) [2009] FCA 803 (“Brookfield Multiplex”) at [9].

Mere refusal of a Calderbank offer followed by a result more favourable to the offeror than that represented by the offer does not of itself warrant an order for indemnity costs: see Black v Lipovac (1998) 217 ALR 386 (“Black v Lipovac”) at 432. To justify an order for indemnity costs in favour of the party who made the Calderbank offer, the offeror must show that the refusal to accept it was unreasonable in all the circumstances: see Black v Lipovac at 432-433; Brookfield Multiplex at [11] and the authorities there cited. The reasonableness of the conduct of the offeree is to be viewed in the light of all the circumstances as they existed when the offer was rejected. The fact that the offeree ultimately failed to make out its case does not of itself mean that it acted unreasonably in rejecting an offer: Alpine Hardwoods (Aust) Pty Ltd v Hardys Pty Ltd (No 2) (2002) 190 ALR 121 at 127 [28].

53    The first Calderbank offer was made less than a month after the applicant had served its FASC on the fourth respondent on 15 October 2015. As already described, the FASC significantly altered the applicant’s pleaded case against the fourth respondent. Although it may be inferred that the fourth respondent had considered the nature of its defence to the claim by 30 October 2015 when it filed its amended defence, I accept that the fourth respondent would in all likelihood have been continuing to assess the strengths and weaknesses of the applicant’s newly pleaded case against it and of its defence by reference to the potential evidence it had available to it. This would have included the three warning letters but not other evidence that the applicant (or other respondents) might adduce. I am not persuaded that by, 23 November 2015, the fourth respondent would have had a sufficient opportunity to have made a reasonable assessment of its prospects of success.

54    It may be recalled that orders were being made on 5 November 2015 for discovery (with further orders on 29 March 2016). The 5 November 2015 orders were to the effect that the applicant’s evidence in chief in support of the FASC was to be filed early the following year (on 19 February 2016). Under the 5 November 2015 orders, the respondents were not due to file their answering affidavits until 1 April 2016. Subsequent orders extended this timetable.

55    In the circumstances in which the first Calderbank offer was made to the fourth respondent, it does not seem to me that the applicant has shown that the fourth respondent acted unreasonably and imprudently by not accepting it.

2.    The second Calderbank offer

56    On 28 March 2017, the applicant’s solicitors sent two letters to the respondents, one letter to the fourth respondent’s solicitors and another letter in similar terms to the solicitors for the Aus-Lid parties. The letter made a detailed analysis of the case for the Aus-Lid parties (including the first respondent) and of the fourth respondent’s defence.

57    The applicant also foreshadowed amending its pleadings and filing expert evidence. With respect to this evidence, the letter stated:

The proposed expert report will address matters of loss and damage that go to existing particulars of loss and the foreshadowed amended particulars including that:

(a)        [The applicant] has suffered direct losses by reason of the matters set out above     in terms of net margins of sales to Chobani for Combo-Lids and associated     tubs from at least June 2014 (or alternatively by no later than December 2014)     to 18 September 2018;

(b)        [The applicant] has suffered loss by reason of the loss of Chobani as a client     the value of which is quantifiable beyond the expiry of the PLA.

[The applicant’s] evidence will show that on the most conservative view of the loss that it has suffered by reason of [the first to third respondents’] and [the fourth respondent’s] conduct, namely that [the applicant’s] loss is only in respect of Combo-Lids sold to Chobani with adhesive labelling for the period of the Patent, its loss is estimated at $800,000.

58    In their letters to the solicitors for the first, second and third respondents and the solicitors for the fourth respondent, the applicant offered to settle on terms that the respondents pay the applicant a total amount of $600,000 comprising:

(i)    $470,000 in damages on lost sales to Chobani from June 2014 to [the] date of this offer; and

(ii)    $130,000 as a contribution towards [its] legal costs …

59    There were further proposed terms that:

(b)    all parties acknowledge that [the applicant] and [the first and second respondents] entered into the PLA on or about 9 January 2011 by which [the first and second respondents] granted to [the applicant] an irrevocable exclusive sublicense to Exploit the Patent in the Field in Australia and New Zealand and their respective territories in accordance with the terms and conditions of the PLA;

(c)    [The applicant] will notify Chobani of the effect of any settlement of the Proceedings. [The fourth respondent] will coordinate with [the applicant] and Chobani in relation to the ongoing supply to Chobani of any products the subject of the PLA in accordance with its terms; and

(d)    points (a), (b) and (c) above are to be recorded in a deed of release between the parties.

60    The offer provided for a deadline for response of 5:00 pm on 11 April 2017, 14 days from the date it was sent. This was the second Calderbank offer.

61    The letters containing the second Calderbank offer added that:

If your client fails to accept this offer, and if the court determines this claim on equal or less favourable terms than those comprising this offer, we will rely on this letter in support of an application for an order that your client pay the costs we incur from the date of this letter on an indemnity basis.

62    This letter ended with the following statement:

10    Offer is reasonable and rejection would be imprudent

10.1    The foregoing offer is reasonable, and rejection of it would be imprudent because, inter alia:

(a)    the offer involves a sum for damages which is considerably less than the total amount claimed; and

(b)    the offer foregoes any claim for interest.

63    On 7 April 2017, the fourth respondent’s solicitors advised the applicant by email that the fourth respondent did not accept either the second Calderbank offer or the notice of offer to compromise (discussed below: see [71] and following). There is no direct evidence before the Court concerning any response made by the first, second and third respondents. Subsequent events indicate that none of them accepted either the second Calderbank offer or the notice of offer to compromise.

64    In the previous year, on 2 December 2016, Jessup J had made orders contemplating that the matter be set down for a hearing not before 5 July 2017. Other orders were made in anticipation of what was seen to be the forthcoming hearing. It was against this background that the second Calderbank offer was made to the respondents.

65    On 16 June 2017, after that second Calderbank offer had been made, the December 2016 orders were vacated. Orders were made on 16 June 2017 with respect to pleading amendments; the filing of additional evidence; and a mediation on 27 September 2017. At the same time, a hearing date was fixed for 29 January 2018, which later became 4 June 2018, concluding in October 2018. As stated above, however, the applicant did not make any substantial amendment to its tort claim after 15 October 2015.

66    The second Calderbank letter contained a detailed analysis of the fourth respondent’s defence and the evidence respecting it. By this time, there had been ample time for the fourth respondent to consider its prospects of success in light of the evidence, a great deal of which had by then been filed. The applicant itself allowed sufficient time for the fourth respondent to consider the offer. It seems to me that, properly advised, the fourth respondent would have appreciated the nature of the risks it ran in pressing on with its defence, particularly against the applicant’s claim that it had induced the first and second respondents to breach its contract with it. The second Calderbank letter clearly warned that the applicant would make an indemnity costs application in the event that the offer was rejected.

67    As with the first Calderbank offer, the proposed settlement amounts for damages and costs were in respect of all the applicant’s claims against all the respondents. Notwithstanding the fourth respondent’s submissions to the contrary, it does not seem to me that the second Calderbank offer suffered from such a lack of clarity that the fourth respondent could not readily compare the settlement amounts for damages and costs with the relief the applicant sought. Nor does it seem to me that cl 9.1(c) of the second Calderbank offer introduced a fatal lack of clarity. While the fourth respondent did not have the benefit of the applicant’s expert evidence in March 2017, the second Calderbank letter advised it that the applicant estimated its loss at $800,000 “on the most conservative view of [the applicant’s] loss”, and explained the basis for that estimate. I reject the proposition that the fourth respondent could not have made a relevantly informed commercial evaluation of the proposed settlement amount for damages. The fourth respondent was a commercial entity, with internal and external legal advisers, and was engaged in the same, or a similar, business to the applicant. I also reject the proposition implicit in the fourth respondent’s submissions that the fourth respondent could not make a relatively informed assessment of the applicants’ costs up to the time the offer was rejected.

68    In these circumstances, I am very much inclined to the view that the fourth respondent acted unreasonably and imprudently in not accepting the second Calderbank offer. In choosing not to accept the offer and pressing on, the fourth respondent ran the risk that its defence would in substance fail and that it would incur responsibility not only for its own solicitor’s costs but also for the costs incurred by the applicant. It seems to me too that it chose to accept the risk that the Calderbank principles might operate to its detriment. It is, however, unnecessary to reach a firm conclusion as to whether the fourth respondent should be ordered to pay indemnity costs in accordance with those principles because, in my view, the provisions of r 25.14(3) of the Federal Court Rules apply in this case (see below).

3.    Notice of offer to compromise under r 25.01 of the Federal Court Rules

69    I turn to the third basis for the applicant’s claim that it is entitled to indemnity costs, namely that it obtained a judgment more favourable than the terms of the offer of compromise dated 28 March 2017.

70    On 28 March 2017, contemporaneously with the second Calderbank letter, the applicant’s solicitors served relevantly identical notices of offer to compromise on all the respondents, pursuant to r 25.01 of the Federal Court Rules. These notices mirrored the terms of settlement in the second Calderbank offer.

71    As already noted, the fourth respondent’s solicitors advised the applicant by email on 7 April 2017 that the fourth respondent did not accept the notice of offer to compromise.

72    Part 25 of the Federal Court Rules concerns offers to settle. Rule 25.01(1) provides that a party may make an offer to compromise by serving a notice, in accordance with Form 45, on another party. Rule 25.03 prescribes the content of an offer to compromise and requires that it must state whether the offer is inclusive of costs or if costs are in addition to the offer.

73    Rule 25.05 concerns the timing of any offer and provides as follows:

(1)    An offer may be made at any time before judgment is given.

(2)    A party may make more than one offer.

(3)    An offer may be limited in time for which it is open to be accepted, however the time must not be less than 14 days after the offer is made.

(4)    Unless the notice provides otherwise, an offer is taken to have been made without prejudice.

74    Rule 25.14 sets out the costs consequences where an offer made in accordance with the Rules is not accepted. It relevantly provides:

(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 then 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.

75    It has been said r 25.14 creates a rebuttable presumption in favour of an order for indemnity costs: see, for example, Basetec Services Pty Ltd v Leighton Contractors Pty Ltd (No 8) [2017] FCA 258 at [101]. The party resisting an order for indemnity costs must prove that there is some proper reason why it should not pay such costs: compare Futuretronics.com.au Pty Ltd v Graphix Labels Pty Ltd [2009] FCAFC 40 at [10]. Notwithstanding the fourth respondent’s submissions to the contrary, I accept that the applicant obtained a judgment that is more favourable than the terms of the offer to compromise dated 28 March 2017 and that the fourth respondent has not shown any proper reason why it should not pay such costs. It follows that, subject to any particular exceptions, the fourth respondent should pay the applicant’s costs of the proceeding on a party and party basis from the commencement of the proceeding until 11:00 am on 30 March 2017 and thereafter on an indemnity basis.

Indemnity costs and the first respondent

76    As stated above, the applicant also sought indemnity costs against the first respondent. The first respondent has not, however, made any submissions in answer, notwithstanding that by its orders of 24 January 2020, the Court made provision for the applicant to file and serve the first respondent with a copy of the orders made that day and a copy of the reasons for judgment delivered at the same time. The applicant subsequently filed an affidavit, which was affirmed by Sophie Caitlin Donaghey on 20 February 2020, evidencing that service had been effected in accordance with these orders on 6 February 2020. Ms Donaghey deposed that a copy of the relevant orders and of my reasons for judgment had been sent by express post to the first respondent’s registered office. In addition, the applicant also served on the first respondent, in the same way, a copy of the applicant’s interlocutory application dated 6 February 2020 (seeking indemnity costs up to 4 June 2018 and interest), the Koppens affidavit, the applicant’s proposed minute of orders and its submissions concerning costs and interest.

77    In addition to this, Chambers staff made numerous attempts, both before and after February 2020, to contact a representative of the first respondent. On 20 December 2019 and 20 January 2020, staff sent a letter to the first respondent at its registered office (which had also been the address notified to the Court when its legal representatives filed their notice of ceasing to act on 25 October 2017) regarding the delivery of judgment. On 23 January 2020, another letter regarding the delivery of judgment was sent to the first respondent at an alternate address notified by the first respondent in its notice of termination of lawyer’s retainer filed on 17 October 2017 (the alternate address).

78    On 6 February 2020, Chambers received a telephone call from Mr George Long of GW Long & Co Accountants and Auditors, advising that he had received the letter of 23 January 2020 and that he represented one of the directors of the first respondent. He requested a copy of the reasons for judgment delivered on 24 January 2020 be sent to the alternate address. Chambers staff subsequently sent a copy of the reasons (which included the orders made the same day) as requested.

79    No further communication has been received from the first respondent. It would appear, however, that all reasonable steps have been taken to inform its representatives of the progress of the proceeding and of the opportunity being afforded to the first respondent to make submissions on costs and interest.

80    The applicant’s submissions regarding the first respondent consisted of the following paragraph:

Indemnity costs should also be awarded against the first respondent, Aus-Lid, because: (1) properly advised, it should have known that its defence to the applicant’s claims for breach of contract was never seriously arguable, and it acted unreasonably in refusing the applicant’s offers of settlement made on 6 November 2015 and 28 March 2017; and (2) the Applicant obtained a judgment more favourable than the terms of the offer to compromise dated 28 March 2017.

81    At the time of the first Calderbank offer, in November 2015, the applicant’s claims against the first respondent were set out in its FASC. In substance, the applicant’s first claim against the first respondent was for breach of the PLA, by granting or purporting to grant the fourth respondent certain right to exploit the Patent. Other claims as against the first respondent were for misleading or deceptive conduct and for unconscionable conduct. The first, second and third respondents had filed an amended defence to the applicant’s FASC dated 30 October 2015 in which they pleaded the applicant’s repudiation of the PLA and the respondents’ acceptance of that repudiation. They denied that, in granting a non-exclusive licence to the fourth respondent, they had breached the PLA. They also denied the other claims against them. They indicated that they would seek to set off against any liability to the applicant, such amount as might be awarded to it under its cross-claim. In a cross-claim dated 14 April 2015, the first, second and third respondents sought damages against the applicant for the loss it suffered through the lost opportunity of making and selling the patented lid to Dean Foods and other customers. This claim was contested by the applicant in a defence to cross-claim filed on 5 May 2015.

82    Although the first respondent was not represented and did not appear at the hearing in June and October 2018, the first respondent was retaining lawyers at the time it filed its cross-claim and amended defence. It should be assumed that its lawyers believed that the first respondent had reasonable basis for the claims it made: see, for example, Professional Conduct and Practice Rules 2005 (Vic), rr 16 and 28 (repealed 1 July 2015) and the subsequent Legal Profession Uniform Law Australian Solicitors’ Conduct Rules 2015 rr 21 and 34 (given application by sch 1 of the Legal Profession Uniform Law Application Act 2014 (Vic)).

83    The applicant and the first, second and third respondents made no relevant change to their pleadings setting out the claims and defences to one another prior to 28 March 2017. The applicant filed its Second Further Amended Statement of Claim dated 30 March 2016 in this period but the amendments had no obvious effect on the first respondent’s position. The first respondent continued to retain lawyers at the time of the second Calderbank offer in March 2017, although the identity of its lawyers changed from time to time. On 6 July 2016, the solicitors who had up until then been acting for the first, second and third respondents filed a notice of ceasing to act. On 23 August 2016, these three respondents retained a new solicitor, who, though changing her own employment, continued to act for them until 10 April 2017 (at around the time the second Calderbank offer closed for non-acceptance). The first respondent retained a new solicitor on 20 July 2017. This retainer ended on 17 October 2017, and Mr de Souza, who was at that point representing himself, subsequently sought unsuccessfully to represent the first respondent thereafter.

84    The difficulty confronting the applicant’s present application for indemnity costs is that there has been no substantive hearing of the first respondent’s claims, at which the parties presented evidence and made submissions about the first respondent’s claims, in order that the Court could make findings about them. This is because the applicant made a successful application for judgment in default against the first respondent, pursuant to r 5.23 of the Federal Court Rules. Orders were made on 21 May 2018 including that there be judgment in default against the first respondent (with damages to be assessed, as they now have been); and that the cross-claim be dismissed. The making of these orders required the Court to be satisfied of different issues to those raised by the first respondent’s pleadings against the first respondent: see Sealed Air Australia Pty Limited v Aus-Lid Enterprises Pty Ltd [2018] FCA 716. There has been no other interlocutory application in the proceeding that called for close examination of the first respondent’s claims. In these circumstances, I cannot be satisfied that, properly advised, the first respondent should have known in late November 2015 or in March/April 2017 that its defence to the applicant’s claims for breach of contract were never seriously arguable. Nor can I be satisfied in these circumstances that the first respondent acted imprudently and plainly unreasonably in refusing the applicant’s offers of settlement made on 6 November 2015 and on 28 March 2017, in the form of the first Calderbank offer and the second Calderbank offer.

85    The position is different with respect to the notice of offer to compromise that the applicant’s solicitors served on the first respondent on 28 March 2017, contemporaneously with the second Calderbank letter, pursuant to r 25.01 of the Federal Court Rules. In the circumstances of the case, since the first respondent did not accept the offer, its position is governed by r 25.14 of the Federal Court Rules, which, as I have said, creates a rebuttable presumption in favour of an order for indemnity costs. I accept that the applicant will have obtained a judgment that is more favourable than the terms of the offer to compromise dated 28 March 2017. The first respondent has not shown any proper reason why it should not pay indemnity costs as provided in r 25.14. It follows that the first respondent should pay the applicant’s costs of the proceeding on a party and party basis from the commencement of the proceeding until 11:00 am on 30 March 2017 and thereafter on an indemnity basis.

Discounted costs award

86    As noted above, the fourth respondent argued that it should bear 70% of the applicant’s costs, the 30% discount reflecting the applicant’s failure to make out its case of misleading or deceptive conduct and the applicant’s abandonment of a patent infringement claim in October 2015.

87    As stated above, where a party is successful on only part of its claim, the Court may order that that party bear the expense of litigating the part on which it failed. Whether it does so depends on the circumstances, and in particular, whether it concludes that this is a reasonable disposition of the costs in the circumstances of the case: see Hughes v Western Australian Cricket Association (Inc) [1986] ATPR 40-748 at 48-136; Firebird Global Master Fund II Ltd v Republic of Nauru (No 2) [2015] HCA 53; 327 ALR 192 at [6]; and Les Laboratoires Servier v Apotex Pty Ltd [2016] FCAFC 27; 247 FCR 61 at [297]-[298].

88    The fact that an applicant has succeeded on only part of its claim does not mean that it is appropriate in every case to make some reduction in the award of costs in its favour. Relevant factors may include the reasonableness or otherwise of the applicant’s pursuit of the failed claim or issue, the extent to which the evidence and submissions concerning the failed claim or issue overlapped with those on which it succeeded, the time and effort taken up by the failed claim or issue compared with the successful claim, and the complexity of the case in general: Australian Competition and Consumer Commission v The Construction, Forestry, Mining and Energy Union (No 4) [2018] FCA 684 at [107]; Chevron Australia Holdings Pty Ltd v Commissioner of Taxation (No 5) [2015] FCA 1310 at [15]; Playgro Pty Ltd v Playgo Art & Craft Manufactory Ltd (No 2) [2016] FCA 478 at [33]; Valcorp Australia Pty Ltd v Angas Securities Limited (No 2) [2012] FCAFC 52 at [7].

89    A party who causes a significant increase in the length or cost of proceedings by unsuccessfully pursuing claims and issues may be deprived of the whole or part of its costs. That is not this case, however. The applicant’s claim of misleading or deceptive conduct was not improperly made; it did not significantly extend the length of the proceeding; and there is no evidence to suggest that it had a disproportionate effect on costs. The applicant withdrew its claim of patent infringement relatively early in the proceeding, and well before the substantive hearing. The parties’ focus at the hearing was on the applicant’s claim in tort, and it was to this claim that they principally directed their evidence and submissions. In the circumstances of the case, it does not appear to me appropriate to discount the costs payable to the applicant on account of the applicant’s lack of success in its misleading or deceptive conduct claim and/or its withdrawn patent infringement claim.

Excluded matters

90    I accept that, as the fourth respondent submitted, the fourth respondent should not be required to pay the costs of the submissions relating to whether the applicant should have leave to proceed against the second respondent (addressed in Cryovac Australia Pty Ltd v Aus-Lid Enterprises Pty Ltd [2017] FCA 1027). As the applicant itself accepted, the fourth respondent should not be required to bear the costs of the application (dated 26 April 2018) for default judgment against the first respondent (addressed in Sealed Air Australia Pty Limited v Aus-Lid Enterprises Pty Ltd [2018] FCA 716). Nor should it be required to bear the costs of Mr de Souza’s application to represent the first respondent (addressed in Sealed Air Australia Pty Limited v Aus-Lid Enterprises Pty Ltd [2018] FCA 31). More generally, the fourth respondent should not be required to bear the costs of the submissions relating to the Aus-Lid parties’ liability.

91    In addition, the applicant accepted that the fourth respondent should not bear the costs of the case management hearing on 29 March 2016 and the applicant’s interlocutory application dated 4 July 2017.

Interest

Pre-judgment interest

92    Section 51A of the Act enables the Court to award interest on damages of the kind in question here. Relevantly, s 51A provides:

(1)    In any proceedings for the recovery of any money (including any debt or damages or the value of any goods) in respect of a cause of action that arises after the commencement of this section, the Court or a Judge shall, upon application, unless good cause is shown to the contrary, either:

(a)    order that there be included in the sum for which judgment is given interest at such rate as the Court or the Judge, as the case may be, thinks fit on the whole or any part of the money for the whole or any part of the period between the date when the cause of action arose and the date as of which judgment is entered; or

(b)    without proceeding to calculate interest in accordance with paragraph (a), order that there be included in the sum for which judgment is given a lump sum in lieu of any such interest.

…

93    The applicant has made an application for an award of pre-judgment interest, in respect of the first respondent, from about June 2014. The applicant has made an application for an award of interest, in respect of the fourth respondent, from on or about 9 September 2014. By virtue of s 51A(1), there is a presumption that interest will be awarded on damages of the kind dealt with in this case for the whole or any part of the period between the date when the cause of action arose and the date as of which judgment is entered unless good cause is shown to the contrary. Neither the first respondent nor the fourth respondent has shown good cause why an award of pre-judgment interest should not be made. Awards of interest in respect of the first respondent and the fourth respondent are therefore appropriate, although issues have arisen as to the appropriate dates and calculations.

94    The applicant has correctly identified that the relevant cause of action, in the case of the fourth respondent, arose around 9 September 2014. It would appear that the relevant cause of action, in the case of the first respondent, arose prior to June 2014: see, for example, my previous reasons at [342]. Nonetheless, as I said in my previous reasons for judgment, I accepted that June 2014 was the relevant date from which damages should be assessed and, in this case, even though the relevant cause of action arose before June, “good cause to the contrary” has been shown to fix 1 June 2014 as the date from which interest is to be calculated under s 51A(1): see my previous reasons at [344]. I reject the fourth respondent’s submission that pre-judgment interest should be calculated from October 2015, since not only is that date clearly not the date on which the cause of action arose, it also has a more tenuous connection with that date than 1 June 2014. It should be borne in mind that an interest award is intended to be compensatory and it is for this reason that s 51A(1)(a) provides that interest runs from the date when the cause of action arose.

95    In my previous reasons for judgment, I held that, in respect of the first respondent, damages should be assessed from June 2014 to 18 September 2017. I fixed these damages at $1,316,971 as representing fair and adequate compensation for the loss sustained by reason of the first respondent’s breach of the PLA. An award of pre-judgment interest should be made on that sum for the period from 1 June 2014 to the date when judgment is entered. This should be calculated in accordance with the Court’s Interest on Judgments Practice Note (GPN-INT) dated 18 September 2017 and the table on Pre-judgment & Post-judgment Interest Rates (both of which are available on its website).

96    Also in my previous reasons for judgment, I held that, in respect of the fourth respondent, damages should be assessed from September 2014 to April 2018. I fixed these damages as $1,635,417. An award of pre-judgment interest should be made on that sum from 9 September 2014 to the date when judgment is entered. This should also be calculated in accordance with the Court’s Interest on Judgments Practice Note (GPN-INT) dated 18 September 2017, having regard to the Court’s table on Pre-judgment & Post-judgment Interest Rates.

97    Some guidance as to how this should be done may be obtained from Management 3 Group Pty Ltd (In Liq) v Lenny’s Commercial Kitchens Pty Ltd (No 2) [2012] FCAFC 92; 203 FCR 283; and Colin R Price & Associates Pty Ltd v Four Oaks Pty Ltd (No 2) [2016] FCA 883. The calculation of pre-judgment interest set out in the Koppens affidavit is not entirely clear; and in any event the award of pre-judgment interest should run to the date when judgment is entered. This is today, 25 March 2020.

98    The pre-judgment interest payable by the first respondent has been calculated in accordance with the Court’s Interest on Judgments Practice Note (GPN-INT) dated 18 September 2017, as appears in the following table.

99    The pre-judgment interest payable by the fourth respondent has been calculated in accordance with the Court’s Interest on Judgments Practice Note (GPN-INT) dated 18 September 2017, as appears in the following table.

100    Accordingly I shall order that there be judgment for the applicant against the first respondent in the sum of $1,756,740.88, being the principal sum of $1,316,971 together with interest pursuant to s 51A of the Act in the sum of $439,769.88. I shall order that there be judgment against the fourth respondent in the sum of $2,152,400.21, being the principal sum of $1,635,417 together with interest pursuant to s 51A of the Act in the sum of $516,983.21.

Post-judgment interest

101    Section 52(1) of the Act provides that a judgment debt under a judgment of the Court carries interest from the date judgment is entered. Section 52(2) further provides that interest is payable at such rate as is fixed by the Rules of Court; or, if the Court in a particular case thinks that justice so requires, at such lower rate as the Court determines. Rule 39.06 of the Federal Court Rules fixes the rate at which interest is payable under s 52(2).

102    In General Manager of the Fair Work Commission v Thomson (No 4) [2015] FCA 1433, the applicant also sought an order requiring the respondent to pay post-judgment interest to the Health Services Union, intervening. Jessup J did not make this order because he considered that the section operated of its own force. No application has been made to determine that interest be paid at a lower rate than that fixed by r 39.06. I agree with Jessup J that s 52 otherwise operates of its own force and no further order to this effect is required by that provision. This approach is in conformity with that of the Full Court in Management 3 Group at [38]-[40].

Disposition

103    In its proposed minute of order, the applicant sought an order that its claims against the second respondent be dismissed, with no order as to costs. It appears appropriate to make such an order: see my previous reasons for judgment at [24].

104    Orders will be made to give effect to these reasons and to my previous reasons.

Associate:

Dated:    25 March 2020

SCHEDULE OF PARTIES