FEDERAL COURT OF AUSTRALIA Maniotis v J H Lever & Co Pty Ltd ACN 008 220 666 (No 2) [2006] FCAFC 28 COSTS – Appeal allowed in part – Calderbank letter sent to respondent – whether unreasonable to reject letter. Maniotis v J H Lever & Co Pty Ltd ACN 008 220 666 [2006] FCAFC 7 Alpine Hardwood (Aust) Pty Ltd v Hardys Pty Ltd (No 2) (2002) 190 ALR 121 GEC Marconi Systems Pty Ltd v BHP Information Technology Pty Ltd [2003] FCA 688 CON MANIOTIS, TASTE MASTER PTY LTD (ACN 066 595 944), ANDREW FOTHERINGHAM & BRETT COPPING v J H LEVER & CO PTY LTD (ACN 008 220 666) No SAD 63 of 2005 FINN, EMMETT AND BENNETT JJ 20 MARCH 2006 ADELAIDE IN THE FEDERAL COURT OF AUSTRALIA SOUTH AUSTRALIA DISTRICT REGISTRY SAD 63 OF 2005 ON APPEAL FROM A SINGLE JUDGE OF THE FEDERAL COURT OF AUSTRALIA BETWEEN: CON MANIOTIS FIRST APPELLANT TASTE MASTER PTY LTD (ACN 066 595 944) SECOND APPELLANT ANDREW FOTHERINGHAM THIRD APPELLANT BRETT COPPING FOURTH APPELLANT AND: J H LEVER & CO PTY LTD (ACN 008 220 666) RESPONDENT JUDGES: FINN, EMMETT & BENNETT JJ DATE OF ORDER: 20 MARCH 2006 WHERE MADE: ADELAIDE THE COURT ORDERS THAT: 1. There be no order as to costs of the appeal. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA SOUTH AUSTRALIA DISTRICT REGISTRY SAD 63 OF 2005 ON APPEAL FROM A SINGLE JUDGE OF THE FEDERAL COURT OF AUSTRALIA BETWEEN: CON MANIOTIS FIRST APPELLANT TASTE MASTER PTY LTD (ACN 066 595 944) SECOND APPELLANT ANDREW FOTHERINGHAM THIRD APPELLANT BRETT COPPING FOURTH APPELLANT AND: J H LEVER & CO PTY LTD (ACN 008 220 666) RESPONDENT JUDGES: FINN, EMMETT & BENNETT JJ DATE: 20 MARCH 2006 PLACE: ADELAIDE REASONS FOR JUDGMENT 1 When the Court made its orders in this matter allowing the appeal in part and varying costs orders made by the primary judge (see Maniotis v J H Lever & Co Pty Ltd ACN 008 220 666 [2006] FCAFC 7), it intimated that it considered that the appeal was one in which no order should be made as to the costs of the appeal. Nonetheless, it gave the parties the opportunity to submit submissions on the question of costs and they have responded to it. 2 The appellants seek orders that the costs of the appeal be awarded to them in any event but they seek costs on an indemnity basis. The basis upon which an award of costs is sought is that they were respondents in the original application and were partly successful in the appeal. They contend that, as their success was significantly greater than that of the respondent and in that the overall circumstances they were the successful party, costs should follow the event. The basis for the indemnity costs sought was a Calderbank letter sent to the respondent on 16 August 2006 (i.e. two days before the date of hearing of the appeal) which was rejected by the respondent on the following day. 3 The respondent's submission is that there should be no order as to costs. It contends that the appellants succeeded in part and failed in part so that they could not be characterised legitimately as the successful party. Having regard to all of the circumstances of the matter, the costs order the Court intimated that it was minded to make was clearly within its discretion and was appropriate having regard to the circumstances of this matter. The respondent also says that it did not behave at all unreasonably in rejecting the Calderbank letter at the time it did, given that that letter was seemingly premised on complete success by the appellants and the appellants' costs that formed the basis of their proposals were calculated on the basis of solicitor and client costs, rather than party and party costs. In any event, the offer was made after the bulk of the costs of the appeal had been incurred. It was also made at a time when the appellants were still prosecuting a motion to this Court to admit further evidence. That application was only abandoned on 17 August 2005. 4 The submissions of the appellants have not affected the tentative view we communicated to the parties noted above. The matter is one in which each party was partially successful. 5 The costs position of the appellants, moreover, is not to be measured simply by their partial success on the appeal. They still were prosecuting a notice of motion to produce further evidence which they had abandoned the day before the trial. We consider that the case is an appropriate one in which to make no order as to costs rather than to engage in some form of dissection of the relevant costs for particular periods (especially as the submissions on costs did not address directly the costs consequences of the orders made by this Court that varied the costs orders of the primary judge). We consider, having regard to the conduct of the appeal and its outcome, such an order is an appropriate one. 6 We do not consider that, even if a costs order were available to the appellants, it should be made on an indemnity basis. Given the time, context and premise of the Calderbank letter, we do not consider it was in any way unreasonable for the respondent to reject it. 7 It is accepted in this Court that the policy of promoting sensible compromise of disputes does not require that a party be at risk of indemnity costs merely because that party has received an offer and has rejected it. The offeror needs to show that the conduct of the offeree was unreasonable in the circumstances: see Alpine Hardwood (Aust) Pty Ltd v Hardys Pty Ltd (No 2) (2002) 190 ALR 121 at 20 ff; GEC Marconi Systems Pty Ltd v BHP Information Technology Pty Ltd [2003] FCA 688 at [35]. 8 Accordingly there will be no order as to costs. I certify that the preceding eight (8) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justices Finn, Emmett & Bennett. Associate: Dated: 20 March 2006 Written submissions of Appellant dated 24 February 2006. Written submissions of Respondent dated 3 March 2006. Date of Judgment: 20 March 2006