FEDERAL COURT OF AUSTRALIA Walker v New South Wales Bar Association (No 2) [2016] FCA 1051 File number: NSD 1060 of 2015 Judge: BESANKO J Date of judgment: 30 August 2016 Catchwords: COSTS – whether applicant should have to pay multiple sets of costs – where second and third respondents indemnified by first respondent - where respondents had similar interests but separate representation – where there was a possibility of a conflict between the respondents COSTS – whether third respondent entitled to indemnity costs following an offer of compromise – whether terms of offer sufficiently certain – whether offer involved an element of compromise Cases cited: Calderbank v Calderbank [1975] 3 All ER 333 South Sydney District Rugby League Football Club Ltd v News Ltd [2001] FCA 384 Statham v Shephard (No 2) (1974) 23 FLR 244 Walker v New South Wales Bar Association [2016] FCA 799 Dal Pont GE, Law of Costs (3rd ed LexisNexis Butterworths, Australia, 2013) Date of hearing: Heard on the papers Date of last submissions: 28 July 2016 Registry: New South Wales Division: General Division National Practice Area: Commercial and Corporations Sub-area: Regulator and Consumer Protection Category: Catchwords Number of paragraphs: 21 Counsel for the Applicant: Mr D Williams SC with Mr M Costello Solicitor for the Applicant: Johnson Winter & Slattery Counsel for the First Respondent: Mr J Potts Solicitor for the First Respondent: Hicksons Counsel for the Second and Third Respondents: Mr N Owens with Ms E Bathurst Solicitor for the Second and Third Respondents: Colin Biggers & Paisley Pty Ltd ORDERS NSD 1060 of 2015 BETWEEN: MARY WALKER Applicant AND: NEW SOUTH WALES BAR ASSOCIATION ACN 000 0033 652 First Respondent JANE NEEDHAM SC Second Respondent NOEL HUTLEY SC Third Respondent JUDGE: BESANKO J DATE OF ORDER: 30 August 2016 THE COURT ORDERS THAT: 1. Subject to order 2 below, the applicant pay the respondents' costs of the proceeding to be taxed in default of agreement. 2. There be no order as to the costs of the second respondent's application for costs on an indemnity basis on and from 13 January 2016. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. REASONS FOR JUDGMENT BESANKO J: 1 On 12 July 2016, I made an order in this matter that the applicant's proceeding be dismissed (Walker v New South Wales Bar Association [2016] FCA 799). These reasons deal with the issue of the costs of the proceeding. There were three respondents to the proceeding and they have applied for costs. The New South Wales Bar Association is represented by Hicksons and was represented at trial by senior counsel and junior counsel. Ms Jane Needham SC and Mr Noel Hutley SC are represented by Colin Biggers & Paisley Pty Ltd and they were represented at trial by a senior junior and junior counsel. The effect of a general order for costs in favour of the respondents will be that the applicant will have to pay two sets of costs. The applicant submits that she should have to pay only one set of costs. 2 There are two other issues relating to the question of costs. First, the applicant submits that she should not have to pay the costs of Ms Needham and Mr Hutley because they have been indemnified as to their costs by the Association. Secondly, Ms Needham claims that she is entitled to costs assessed on an indemnity basis from 13 January 2016 because on that date she made an offer of compromise which the applicant should have accepted. 3 The applicant is represented by Johnson Winter & Slattery. Mr Robert Johnson, a partner in that firm, swore an affidavit on 25 July 2016 to which he annexes part of the correspondence which passed between the parties prior to the trial. It is necessary to refer to that correspondence. 4 This proceeding was commenced on 7 September 2015. On 24 July 2015, the Association's solicitors wrote to the applicant's solicitors and referred to the applicant's proposal to bring proceedings. They identified matters which (in their contention) should dissuade her from doing so. One of the points the Association made was that the actions of the President and the 2014 Senior Counsel Selection Committee were not the actions of the Association. Another point made by the Association was that if the applicant was to commence proceedings seeking relief directed to controlling the manner in which an application for appointment as senior counsel was to be dealt with, then the President and any selection committee members (past or present) who were to be restrained or directed by any relief sought, would be necessary and proper parties to any proceedings. The Association's solicitors advised the applicant that whilst the Association had no wish to multiply the parties to any proceeding, if the applicant intended to bind the actions of such additional parties, they would be necessary and proper parties. 5 The applicant filed her Points of Claim on 25 November 2015 and Defences were filed in December 2015. 6 On 13 January 2016, Ms Needham's solicitors wrote to the applicant's solicitors and provided advice as to the amount of legal costs Ms Needham had incurred to that point should the applicant wish to accept an invitation to discontinue the proceeding against her. The costs were calculated on the basis of 70% of half the costs incurred. While the terms of the offer are not entirely clear (see [20] below), I understand the proposal to have been that the proceeding against Ms Needham be discontinued and that she be paid her costs at the conclusion of the proceeding on condition that Mr Hutley was successful in defending the proceeding. Ms Needham's solicitors went on to say that if the offer was rejected and the matter proceeded to hearing and Ms Needham achieved an outcome equal to or better than the offer, then the letter would be tendered and indemnity costs would be sought pursuant to the principles in Calderbank v Calderbank [1975] 3 All ER 333. 7 On 18 February 2016, the applicant's solicitors wrote to the Association's solicitors and the solicitors for Ms Needham and Mr Hutley and advised that they had perused the Defences filed and that they had formed the opinion that subject to some minor matters the Defences of all three respondents were identical in all material respects. The applicant's solicitors set out reasons in support of the applicant's view that separate representation of the three respondents was not warranted. 8 On 22 February 2016, the solicitors acting for Ms Needham and Mr Hutley wrote to the applicant's solicitors taking issue with the statement that there was no need for separate representation. The solicitors pointed to the relief sought by the applicant and stated that their clients were not aware of all of the facts and circumstances which were to be relied upon by the applicant in support of the allegations that there was conduct which was oppressive, unfairly prejudicial to, and unfairly discriminatory against her. The solicitors said that they therefore did not know whether such allegations were being made only against the Association, Ms Needham and/or Mr Hutley. The solicitors said that until such time as they were able to understand what was being asserted against the respondents, their clients were not in a position to change their position with respect to their legal representation. 9 On 4 March 2016, the applicant's solicitors wrote to the Association's solicitors and the solicitors for Ms Needham and Mr Hutley and advised them that the claim of oppression was made only against the first respondent and that the applicant remained of the view that separate legal representation of the three respondents was not warranted. 10 On 7 March 2016, the solicitors for Ms Needham and Mr Hutley responded to the letter from the applicant's solicitors dated 4 March 2016 stating that in their view the letter did not address the concerns their clients had to the effect that acts of oppression, unfair prejudice and unfair discrimination were "at the heart" of the applicant's allegations in the proceeding and that there was no particularisation of those allegations. 11 On 21 March 2016, the applicant's solicitors wrote a detailed letter to the Association's solicitors and to the solicitors for Ms Needham and Mr Hutley. The applicant's solicitors set out further and better particulars of the applicant's claim. 12 The trial proceeded on 21 and 22 April 2016. The applicant tendered three affidavits which she had sworn, a statement of agreed facts and a number of documents. The Association tendered a small number of documents and Ms Needham and Mr Hutley did not put forward any evidence. 13 On 22 July 2016, the Association's solicitors advised the applicant's solicitors (after the applicant's solicitors had made a request for the information) that the Association had indemnified Ms Needham and Mr Hutley with respect to their legal costs. 14 I discussed the relief sought by the applicant at trial in my earlier reasons (at [6]). There has been a progressive narrowing of the relief sought from the Originating Application to the Amended Originating Application and then at trial. At all times, there has been a claim for relief against each respondent. The Amended Defences were substantially the same, although the Association pleaded in paragraph 97 of its Defence that the actions of the Selection Committee were not those of the Association. In paragraph 82 of my earlier reasons, I addressed two arguments, including an argument that none of the relief should be granted because the relevant acts were those of the President acting persona designata. 15 The Court will not normally allow more than one set of costs to defendants where there is no possible conflict of interest between them in the presentation of their cases. In Statham v Shephard (No 2) (1974) 23 FLR 244 at 246-247 ("Statham v Shephard") Woodward J identified this proposition and then added the following three provisos: [First], if a conflict of interest appears possible but unlikely, the defendants should make any necessary inquiries from the plaintiff as to the way in which his case is to be put if this would resolve the possibility of conflict between defendants. … Secondly, there could be circumstances in which, although the defendants were united in their opposition to the plaintiff, their relationship to each other might be such that they would be acting reasonably in remaining at arm's length during the general course of litigation. Thirdly, even if defendants are acting reasonably in maintaining separate representation for some time or for some purposes, they may still be deprived of part of their costs if they act unreasonably by duplicating costs on any particular matter or at any particular time. 16 In South Sydney District Rugby League Football Club Ltd v News Ltd [2001] FCA 384 ("South Sydney") at [7] Finn J considered the application of the principle identified by Woodward J in Statham v Shephard and said: Even if it could be said that in the end no actual conflict of interests actually emerged at the hearing, the case was one in my view in which the respondents reasonably could have apprehended that possible conflicts could have arisen. In this I agree with the News and ARL submissions. It is not to the point that my findings in the end may have negatived the bases for such apprehensions. I also refer to Professor Dal Pont's discussion of the issue (Dal Pont GE, Law of Costs (3rd ed LexisNexis Butterworths, Australia, 2013) at 11.52 – 11.57). 17 The argument that the President and the Selection Committee were acting independently of the Association raised the possibility of a conflict between the position of Ms Needham and Mr Hutley on the one hand, and the Association on the other. Does it make any difference that the possibility of a conflict arises because of a matter raised by a respondent (i.e., the Association)? A judgment as to the reasonableness of the respondent's conduct is required. Whilst the matter might have been difficult to argue as I said in my earlier reasons, I do not think it was unreasonable for the Association to raise the matter. 18 I see no reason to restrict the respondents to one set of costs. The point made by Finn J in South Sydney that it is the possibility of conflict at the relevant time not how the matter is finally determined is significant. 19 The fact that Ms Needham and Mr Hutley were entitled to be indemnified by the Association pursuant to cl. 21 of the Association's Constitution and have had their costs paid by the Association does not mean that an order for costs should not be made in their favour. There is no suggestion that under no circumstances did they have an obligation to their solicitors to pay costs (Dal Pont (2013) at 7.11 – 7.14). 20 I do not think Ms Needham is entitled to indemnity costs from 13 January 2016 because of the offer made in the letter of that date. There are two points raised by the letter. First, the applicant submits that the offer contained in the letter is not sufficiently certain. The letter refers to a previous oral offer that payment of Ms Needham's legal costs be deferred until the conclusion of the proceedings and were payable only if Mr Hutley was successful. It is unclear whether those terms are incorporated into the offer outlined in the 13 January 2016 letter. Secondly, even if those terms did form part of the offer, it seems to be that there was no real prospect of a different result as between Ms Needham and Mr Hutley and therefore it cannot said that the offer that the costs would only be payable if Mr Hutley succeeded involved an element of compromise. The other relevant term, being the term that the costs would only be payable at the conclusion of the proceeding did not, in my opinion, involve a sufficient element of compromise to justify an order for costs on an indemnity basis. 21 For these reasons, I will make an order that the applicant pay the respondents' costs of the proceeding to be taxed in default of agreement. Ms Needham has not succeeded in her application for indemnity costs on and from 13 January 2016 and, as it was a relatively minor part of the argument, I think that the appropriate order is that there be no order as to the costs of that application. I certify that the preceding twenty (21) numbered paragraph is a true copy of the Reasons for Judgment herein of the Honourable Justice Besanko. Associate: Dated: 30 August 2016