FEDERAL COURT OF AUSTRALIA Vass v Commonwealth of Australia [2000] FCA 234 CEDRIC BOHRSMANN VASS & ORS v THE COMMONWEALTH OF AUSTRALIA NG 96 of 1997 BURCHETT J 25 FEBRUARY 2000 SYDNEY IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY NG96 of 1997 BETWEEN: CEDRIC BOHRSMANN VASS, MICHAEL ANTHONY BOWYER, CHRISTOPHER BRUCE BRIERLEY, JOHN MICHAEL CHURCHILL, MICHAEL FRANCIS PAUL DANIEL, EDWARD MALCOLM WYNDHAM DAVIES, JOHN DAVID LATIMER FABIAN, GRAHAM ARUNDEL FRANCIS, DOUGLAS JAMES HAMILTON, IAN GEORGE JOHNSTON, ROBERT CARLYLE JORDAN, STEVEN HOWARD KLOTZ, JULIAN PATRICK McGRATH, BRUCE NEIL McLEAN, JOHN NELSON MILLER, PHILIP STUART DOUGLAS PURCELL, ANDREW SPEARRITT, ANASTASIA TSEKOURAS, HAROLD WERKSMAN AND MICHAEL BRUCE YATES Applicants AND: THE COMMONWEALTH OF AUSTRALIA Respondent JUDGE: BURCHETT J DATE: 25 FEBRUARY 2000 PLACE: SYDNEY EX TEMPORE REASONS FOR JUDGMENT 1 On the bringing in of short minutes in this matter, I have been asked to make an order for indemnity costs, pursuant to Order 23 rule 11(4), on the basis of an offer of compromise, made by letter dated 9 April 1998 which referred specifically to Order 23. There is a textual argument arising out of the somewhat inelegant manner in which the offer was framed, but, in substance there could have been little doubt about the intended meaning in the context, and if the intention is plain, as Lord Hoffmann made clear in an article "The Intolerable Wrestle with Words and Meanings" (1997) 114 S Af LJ 656 at 673-674, merely textual difficulties do not matter. The offer expressly stated that it "may be accepted by the respondent at any time prior to 4 pm Tuesday 5 May 1998." 2 Counsel for the Commonwealth points out that, during the relatively brief period of less than one month which was allowed for acceptance, the state of affairs in the litigation was that the pleadings had substantially closed, but discovery was not complete, and perhaps more importantly, the applicants' witness statements had not been filed or served. The authorities that I must apply are conveniently gathered together in Coshott v Learoyd [1999] FCA 276, a decision of Wilcox J, in which, amongst other decisions, his Honour refers to the decision of the Full Court in Black v Lipovac (4 June 1998, unreported). Wilcox J stated at paragraph 46 of Coshott v Learoyd: "As the Full Court suggested in Black, the difference between the approach propounded by Rolfe J - he was referring to certain authorities in the Supreme Court - ... and that adopted in this Court may be more apparent than real. Everybody agrees there can be no fixed rule; a proposition established for this Court by the terms of s 43 of the Federal Court of Australia Act 1976 conferring on the Court a discretionary jurisdiction in relation to costs. Everybody also agrees that, while the ordinary practice is to award costs on a party-party basis, it is sometimes appropriate to take a different course, including ordering indemnity costs against a party who has acted unreasonably. His Honour went on to say that the difference seemed to turn on whether there should be a prima facie presumption of indemnity costs, or whether an unaccepted offer is only a factor to be taken into account in determining whether the offeree acted reasonably. He said: "On either view, the Court has to look at the whole situation, including the circumstances that applied at the time of non-acceptance of the offer." He also made it clear that the non-acceptance should be given considerable weight, having regard to the rule, but he said (at 48): "As Black itself demonstrates, it does not follow that non-acceptance of a Calderbank offer (or even an Order 23 offer) must lead to an order for indemnity costs; the Court must still consider the whole of the circumstances. However, whether or not it is correct to talk about a "prima facie presumption," non-acceptance of an Order 23 offer should at least be regarded as providing the offeror a good start in the task of persuading the Court to award more than party-party costs." 3 Senior counsel on both sides in the present case were content to argue the case on the basis of the correctness of that last proposition, and I accept it. The question is, what is the consequence in the particular circumstances of this case? In my opinion, the relatively brief time allowed, in circumstances where a significant amount of material bearing on the prospects of the action was expected to become available in the not distant future, must be regarded as a very important factor pointing towards the failure to accept the offer not being regarded as a failure which should lead to an order for costs on an indemnity basis. That is so notwithstanding the prima facie presumption or good start - however one phrases it – on which the applicants rely. 4 When one adds the particular feature of this case that the executive of the Commonwealth had to cope with the existence of legislation which appeared, to put the matter at its lowest, to place an obstacle in the way of the acceptance of any such offer, I think the scales come down firmly on the side of awarding simply the normal measure of party and party costs. Accordingly, I shall make orders in terms of the short minutes of order brought in by Mr Robertson SC, with the small additions to which I have already adverted in the discussion with counsel, so that order one will now read "Judgment for the applicants in the sum of $761,594.13 being $515,661.67 together with statutory pre-judgment interest in accordance with s 51A of the Federal Court of Australia Act 1976 in the sum of $245,932.46 to 25 February 2000." I delete order two, and I make order three, as drafted, which I renumber as two. I certify that the preceding four (4) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Burchett. Associate: Dated: 7 March 2000 Counsel for the Applicants: Mr R.J. Ellicott QC Mr R.F. Margo Solicitors for the Applicants: Allen Allen & Hemsley Counsel for the Respondent: Mr A. Robertson SC Mr S.J. Gageler Solicitors for the Respondent: Deacons Graham & James Date of argument re short minutes: 25 February 2000 Date of Judgment: 25 February 2000