FEDERAL COURT OF AUSTRALIA Kelrit Investments Pty Limited v Transform Composites Holdings Pty Limited (No 2) [2003] FCA 807 KELRIT INVESTMENTS PTY LIMITED ACN 002 623 065 v TRANSFORM COMPOSITES HOLDINGS PTY LIMITED ACN 066 929 158, RALPH ASQUITH, BRIAN NESS N613 of 2001 FINN J 1 AUGUST 2003 CANBERRA (HEARD IN SYDNEY) IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY N613 OF 2001 BETWEEN: KELRIT INVESTMENTS PTY LIMITED ACN 002 623 065 APPLICANT AND: TRANSFORM COMPOSITES HOLDINGS PTY LIMITED ACN 066 929 158 FIRST RESPONDENT RALPH ASQUITH SECOND RESPONDENT BRIAN NESS THIRD RESPONDENT JUDGE: FINN J DATE OF ORDER: 1 AUGUST 2003 WHERE MADE: CANBERRA THE COURT ORDERS THAT: 1. There be judgment for the applicant against the first respondent in the sum of $406,402.00 together with interest from 1 April 2003 to 15 July 2003 in the sum of $10,622.12. 2. The proceedings be otherwise dismissed. 3. The first respondent pay the applicant's costs of the proceedings. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY N613 OF 2001 BETWEEN: KELRIT INVESTMENTS PTY LIMITED ACN 002 623 065 APPLICANT AND: TRANSFORM COMPOSITES HOLDINGS PTY LIMITED ACN 066 929 158 FIRST RESPONDENT RALPH ASQUITH SECOND RESPONDENT BRIAN NESS THIRD RESPONDENT JUDGE: FINN J DATE: 1 AUGUST 2003 PLACE: CANBERRA REASONS FOR JUDGMENT 1 In my reasons for judgment in this matter I directed the applicant to make an election between its damages award for breach of contract and that under the Trade Practices Act 1974 (Cth) and to bring in appropriate short minutes of order to give effect to that election: Kelrit Investments Pty Ltd v Transform Composites Holdings Pty Ltd [2003] FCA 662. Minutes have now been filed. The only matter of contention between the parties is the predictable one of costs. 2 First, the applicant seeks an order that "the respondents pay the applicant's costs of the proceeding". The respondents contend that judgment is being entered only in the contract claim against the first respondent and that it alone should bear the costs order. The second and third respondents were held liable in the Trade Practices Act claim as accessories but the damages were assessed at only $5,000. On 19 February 2003 the respondents made an offer of $100,000 inclusive of costs. 3 In my view, the proper order is that proposed by the respondents and it flows properly from the election made in the circumstances. If the applicant had elected to enter judgment for the Trade Practices Act claim any costs order would have been sharply reduced: see O 62 r 36A of the Federal Court Rules; although such an order would properly have been made against all three respondents. For obvious reasons the applicant made the election it did. I see no reason in the circumstances for making what is in effect a third party costs order. The final comment I would make in light of the settlement offer made is that, in this Court, an offer "inclusive of costs" is not one regarded as a relevant consideration of the question of costs and it is not considered in the same way as a Calderbank letter: see generally GEC Marconi Systems Pty Ltd v BHP Information Technology Pty Ltd [2003] FCA 688 at [29]-[38]. 4 Secondly, the respondent seeks that the costs awarded (a) should not include the applicant's costs in respect of the retainer of Ms Maybury; and (b) should be for part only of Mr Parsons' costs. Ms Maybury gave expert accounting evidence; Mr Parsons, expert valuation evidence. 5 The respondents did not tender any expert evidence, although it filed and served a report of a valuer in response to Mr Parson's report. 6 It is the case that Ms Maybury's calculations required extensive rework in light of the cross examination of her. It equally is the case that the first criticisms made of her evidence were ventilated in cross examination. Earlier notification could well have resulted in a different course being taken by the applicant to Ms Maybury's evidence. In the circumstances I consider the applicant properly characterised the course taken by the respondents as "an ambush". That course contributed to the incurring of costs. It would be inappropriate to qualify the costs order in the way the respondents seek in relation to Ms Maybury's retainer. 7 I take a similar view in relation to the costs qualification sought in relation to Mr Parson's retainer and for like reasons. 8 Thirdly, the respondent contends that the costs order in any event should only be a percentage of party and party costs. I disagree. I have referred above to the inefficacy of the offer of settlement. Though the contract claim only emerged on day five of the hearing it did not significantly alter the substance of the matters that were in dispute between the parties. And it was reasonable to prosecute both the Trade Practices Act claim and the contract claim in the same proceeding. Furthermore I am satisfied that the conduct of the respondents in the evidence they gave and in their manner of giving it added to the costs and duration of the hearing. The usual order should be made. 9 Accordingly I will order that: 1. There be judgment for the applicant against the first respondent in the sum of $406,402.00 together with interest from 1 April 2003 to 15 July 2003 in the sum of $10,622.12. 2. The proceedings be otherwise dismissed. 3. The first respondent pay the applicant's costs of the proceedings. I certify that the preceding nine (9) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Finn. Associate: Dated: 1 August 2003 Counsel for the Applicant: J V Nicholas SC, with C Dimitriadis Solicitor for the Applicant: M Trisley Counsel for the Respondent: T Lynch Solicitor for the Respondent: Sparke Helmore Date of Hearing: 10-14, 24, 25, 31 March 2003 Date of Judgment: 1 August 2003