Federal Court of Australia

Lehrmann v Network Ten Pty Limited (Reference Costs) [2025] FCA 225

ORDERS

THE COURT ORDERS THAT:

1.    There be no order as to costs.

2.    Ms Wilkinson pay Network Ten’s costs of today, and the quantum of those costs be taxed together with the other two extant costs orders as between the parties.

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

REASONS FOR JUDGMENT

(Delivered ex tempore)

LEE J:

A    INTRODUCTION

1    This costs judgment resolves the residuum of the dispute between Network Ten Pty Limited (Network Ten) and Ms Wilkinson as to the scope of indemnity required to be provided by Network Ten to Ms Wilkinson. The substantive dispute (to the extent it can be described as such) was explained and resolved in Lehrmann v Network Ten Pty Limited (Cross-claims) [2024] FCA 102.

2    More particularly, the remaining dispute concerns the costs of the reference conducted by a referee pursuant to order 1(a) of the Court’s orders made on 28 June 2024 (Reference).

3    Ms Wilkinson contends she should be awarded her costs of the Reference and Network Ten submits each party should bear their own costs.

B    APPLICABLE PRINCIPLES

4    The applicable legal principles do not require elaboration, save as to make three, partly related, points.

5    First, this is a case where, following the judgment on the cross-claim, I expressed a preference (embraced by both parties) to proceed to determine the quantum of the liability arising by reason of the indemnity by initially appointing a referee to inquire into, and report upon the reasonableness of the costs incurred by Ms Wilkinson which were said to fall within the scope of the indemnity. Following the conduct of the Reference and the production of the report of the referee (Report), but prior to the resolution of an application concerning the adoption of the Report, the substantive issue of quantum was resolved by agreement.

6    Consistently with the requirements of Chapter III of the Constitution, the referee was not exercising any form of judicial power to resolve any part of the controversy between Network Ten and Ms Wilkinson. It is fundamental in federal jurisdiction that any report of a referee is of no legal consequence unless and/or until it is adopted by a Court exercising judicial power and it is the court which makes findings of fact in law, either explicitly or implicitly, by adopting the report: see Multicon Engineering Pty Ltd v Federal Airports Corporation [1997] NSWCA 214; (1997) 47 NSWLR 631 (per Mason P with whom Gleeson CJ and Priestley JA agreed); CPB Contractors Pty Ltd and Another v Celsus Pty Ltd and Others (No 2) [2018] FCA 2112; (2018) 268 FCR 590 (at 605–606 [59]–[62] per Lee J). Put simply, the task that has been completed by the referee in this case lacks the most basic characteristic of the exercise of judicial power, that is, quelling a controversy between parties by determining rights or liabilities in a manner that is authoritative, conclusive or binding (although, if adopted, the Report would have been the basis of the ultimate judgment or orders of the Court): see Najjar v Haines (1991) 25 NSWLR 224 (at 246G per Clarke JA, 269C per Rogers AJA).

7    Secondly (and relatedly), and notwithstanding the existence of the Report, because the underlying dispute was resolved and there has been no final adjudication on the merits, the general rule that costs follow the event cannot apply: see Re Minister for Immigration & Ethnic Affairs; Ex parte Lai Qin [1997] HCA 6; (1997) 186 CLR 622 (at 624–625 per McHugh J). Without being too prescriptive, in such cases, the parties usually bear their own costs, subject to two general exceptions: (a) where one of the parties has behaved unreasonably such that it is appropriate that that party ought pay the costs of the other party; and (b) where the Court is confident that, although both parties have acted reasonably, one party was almost certain to have been successful had the matter been litigated.

8    Thirdly, in this Court, in exercising the discretion to order costs, the Court: (a) must take into account any failure to conduct the proceeding in a way that is consistent with the overarching purpose of facilitating the just resolution of disputes according to law, and as quickly, inexpensively and efficiently as possible: s 37N(4) of the Federal Court of Australia Act 1976 (Cth) (FCA Act); LFDB v SM (No 2) [2017] FCAFC 207 (at [7] per Besanko, Jagot and Lee JJ); and (b) more generally, any power to award costs must be exercised in a way “that promotes the overarching purpose”: see s 37M(3); Bellamy’s Australia Limited v Basil [2019] FCAFC 147; (2019) 372 ALR 638 (at 643 [24] per Murphy, Gleeson and Lee JJ).

C    CONSIDERATION

9    Both parties embraced the position and agreed orders by consent as to the appropriate questions to be asked of the referee. The reference was necessitated by the parties’ inability to agree a sum based on the invoices issued, despite my entreaties that they attempt to do so.

10    This was a simple dispute calling out for compromise: one party said all the claimed costs were reasonable; the other asserted a proportion was not. Cognisant of this, and consistent with facilitating the efficient, prompt and cost-effective resolution of this dispute, I made it plain to those acting for the parties, more than once, that my ultimate discretion as to costs of the reference would be informed by the reasonableness of the approach taken by each party to resolving the dispute.

11    The evidence discloses that Network Ten made numerous offers to reach a compromise between May 2024 and January 2025. By the time of the receipt of the Report, by letter from its solicitors dated 9 January 2025, Network Ten offered to settle the issue for $900,000 “in full and final settlement of Ms Wilkinson’s claims, past, present and future, under the indemnity”. This offer was expressed to be inclusive of the costs of the Reference. Like previous offers, this offer was rejected by Ms Wilkinson. Eventually, however, on 23 January 2025, Ms Wilkinson made her first offer in the amount of $1,500,000, however, as Network Ten points out, this offer did not purport to finally resolve the question of the indemnity and left open “costs of the proceeding after 9 May 2024”.

12    As noted above, the offer finally accepted was in the amount of $1,150,000 inclusive of GST, being an offer made initially by Network Ten’s solicitors on 7 February 2025 and then remade on 18 February 2025. Notably, and perhaps inevitably, this result is in the middle of the two initial positions taken by the parties, as articulated to the Court on 27 June 2024 (although slightly closer to Network Ten’s position than Ms Wilkinson’s position).

13    In short, Ms Wilkinson asserts that although Network Ten made numerous offers both before and after the Reference process, all of them, save the last two offers, were properly rejected by Ms Wilkinson. Ms Wilkinson, it is submitted, did not unreasonably fail to accept any of those offers, and “the Reference vindicated her position” because the earlier offers were of “an order of magnitude less than the amount which the Referee had determined”. The effect is that Ms Wilkinson acted “entirely reasonably in relation to the Reference” and consensus was reached only because of the Reference. Hence, she is entitled to her costs.

14    Although it was modified orally, this written submission is inaccurate in that it rests on a foundation that the referee determined something (although the review of the Report by the parties plainly influenced the settlement approach adopted by Network Ten and the eventual compromise reached). The broader and more important point is that Network Ten properly sought to engage in resolving the dispute by making (albeit, with the benefit of hindsight, insufficient) offers of settlement over a relatively long period. This engagement with the settlement process, in trying to resolve the dispute quickly and efficiently, was not met, on the evidence, with counteroffers being made on terms which would resolve the entire controversy. During this period, costs continued to be incurred by both parties.

15    I do not find either party acted unreasonably but this is not the same as concluding each party acted equally reasonably in engaging with the process. Given the nature of the dispute, it is regrettable it took so long for Ms Wilkinson to make an offer which, even when it came, would, even if accepted, have perpetuated an aspect of disputation. Mr Klineberg, during the course of his oral submissions, placed great emphasis on the fact that it was “necessary” for Ms Wilkinson to go through the reference process, but this is somewhat speculative in circumstances where the evidence reveals that prior to the reference, she made no counteroffer, let alone any realistic counteroffer.

16    In the cross-claim judgment (at [53] onwards) I explained that disputes about the reasonableness of costs incurred as between solicitor and client (including when a “non-associated third party payer” is involved) would be usually resolved through the costs assessment process provided under the Uniform Law. But with that said, the existence of such a regime is not inconsistent with this Court’s implied power to control legal costs incurred in relation to proceedings before the Court. Although, consistently with Pt VB of the FCA Act, I appointed a referee to report on quantum, I have not formed a view as to adoption (and now never will). I did not, and have not, expressed any views concerning distinguishing between reasonable and unreasonable costs incurred by Ms Wilkinson when, for the purposes of the cross-claim, it was sufficient that I found it was reasonable for Ms Wilkinson to have engaged separate legal representation. I am not certain the Report would have been adopted, at least in full, had the matter been litigated.

D    CONCLUSION

17    In the above circumstances, given agreement has been reached at the heel of the hunt on quantum, and the conduct of the parties in reaching that consensus, it is difficult to see a clearer case where each party should bear their own costs. Although Ms Wilkinson was successful in her claim for an indemnity, this result as to this aspect of the dispute best promotes the overarching purpose and recognises neither party acted unreasonably.

18    The only order I will make is that there be no order as to costs. Given this result, and after hearing from the parties, it follows that Network Ten should have its costs of today. The three extant costs orders as between Network Ten and Ms Wilkinson can be quantified through the usual processes of taxation in the event that common sense does not prevail and the parties fail to reach some sensible resolution.

Associate:

Dated: 19 March 2025