Industrial Relations Commission of New South Wales in Court Session CITATION : Cavacuitti & Anor v XTMCA Ltd (Toyota Motor Corporation Australia Pty Ltd) No 2 [2002] NSWIRComm 224 FIRST APPLICANT PARTIES : Anthony Andrew Cavacuitti SECOND APPLICANT Berridale Investments Pty Ltd FILE NUMBER: IRC 666 of 1999 CORAM: Marks J CATCHWORDS : Rejection by applicants of costs - Offer of compromise - Proceedings dismissed - Respondent not entitled to order for indemnity costs but entitled to costs as assessed. LEGISLATION CITED : Industrial Relations Act 1996 Legal Profession Act CASES CITED : Hairman v FileNET Corporation Pty Ltd (2002) NSWIRComm 76 HEARING DATES: 08/28/2002 DATE OF JUDGMENT: 10/08/2002 APPLICANTS Mr J S Van Aalst of counsel SOLICITORS Gates Moffitt LEGAL REPRESENTATIVES: RESPONDENT SOLICITORS Mr C Barton Freehills JUDGMENT: INDUSTRIAL RELATIONS OF NEW SOUTH WALES IN COURT SESSION CORAM: MARKS J Tuesday 8 October 2002 Matter No IRC 666 of 1999 ANTHONY ANDREW CAVACUITTI & ANOR v XTMCA LTD (TOYOTA MOTOR CORPORATION AUSTRALIA LTD). Application under s106 of the Industrial Relations Act 1996 JUDGMENT RE COSTS 1 On 5 June 2002 I published a judgment in these proceedings in which I dismissed an application by the first and second applicants against the respondent for relief under s 106 of the Industrial Relations Act 1996. Costs were reserved and this judgment deals with the issue of costs. 2 The factual background and the issues raised in the proceedings are set out in my judgment. Although there was a finding of one element of unfairness, I determined that in the circumstances no consequential relief should be granted. 3 The applicants submitted that they should not be required to bear the respondent's costs even though overall they had been unsuccessful in the proceedings. It was suggested that an inordinate amount of court time and preparation had been taken up because the respondent had raised issues and taken up court time proportionately which were ultimately found to be without merit. Without traversing the matter in any detail I reject any such suggestion. The respondent, in my opinion conducted its defence of the proceedings in an appropriate and responsible manner having regard to the way in which the applicants had originally framed their case by reference to the summons and the different manner in which the case was opened by their counsel at the commencement of the hearing. 4 This leaves for consideration the principal controversy between the parties namely whether by reason of an offer made by the respondent which was rejected by the applicants, the applicants should be ordered to pay the respondent's costs on an indemnity basis as opposed to a party/party basis. 5 By letter dated 30 April 1999 the respondent's solicitors wrote to the applicants' solicitors referring to the proceedings in this Court and to proceedings which had also been commenced in the District Court of New South Wales. The respondent offered on an ex gratia basis to pay to the applicants the sum of $40,000 "and to buy back Toyota parts at invoice cost, in return for your client returning all machinery, workshop and office equipment and furniture." The offer was made on the basis that there would be mutual releases and discharges and on the basis of other terms normally associated with the settlement of proceedings. The letter concluded: "If the matter is not resolved on the basis set out above, we reserve the right to tender this as a Calderbank letter to the Court and to the Commission in the context of an application for appropriate costs orders at the appropriate time." 6 The letter of offer was responded to on the basis that the applicants' solicitors had some difficulty in understanding the offer. Clarification was sought that the position was as follows: "Our understanding of the offer is your client will buy back Toyota parts at invoice cost, pay our client $40,000 at which time our client will return to your client all machinery, workshop, office equipment and furniture." The respondent's solicitors confirmed that this understanding was correct. Subsequently on 17 May 1999 the applicants' solicitors wrote rejecting the offer stating, in part, "Our client is prepared to sell all Toyota parts together with machinery, workshop and office equipment to your client for its current market rate to be determined by an independent valuer however that will not be a condition upon resolution of these proceedings." 7 No details of the District Court proceedings were given during the course of argument save that, from the bar table, it was asserted that the respondent was plaintiff. Presumably, the applicants were defendants. It was said on behalf of the respondent that the offer involved an abandonment of the claim made against the applicants. It was also said from the bar table that the machinery, workshop and office equipment belonged to the respondent in any event. However, this was rejected by the applicants. Certainly, the correspondence from the applicants' solicitors is equivocal about ownership of the machinery, workshop and office equipment. 8 The relevant principles and authorities were discussed at some length in a recent judgment in this Court of Schmidt J in Hairman v FileNET Corporation Pty Ltd (2002) NSWIRComm 76. It is not necessary that I repeat what was set out by her Honour in that judgment. I respectfully agree with the principles and approach therein enunciated. 9 In my opinion the circumstances in these proceedings are not as clear cut as those found to be the case by Schmidt J in Hairman. The situation is complicated by the existence of the concurrent proceedings in the District Court and the controversy about whether or not the applicants or the respondent owned the machinery, workshop and office equipment which was an integral part of the respondent's offer. These circumstances detract from the offer made as constituting a "compromise". In all of the circumstances I am not prepared to visit the applicants with an order for indemnity costs by reason of their failure to accept the respondent's offer. 10 Nevertheless, the applicants must pay the respondent's costs of the proceedings as assessed under the provisions of the Legal Profession Act in default of agreement. 11 In view of the fact that neither party was successful in maintaining the position contended for in connection with the costs argument, I propose that the parties bear their own costs of this aspect of the proceedings. ORDER 12 I make the following order: The applicants are to pay the costs of the respondent as assessed under the Legal Profession Act in default of agreement, save for the costs of the proceedings before the Court on 28 August 2002 when the matter of costs was argued. ___________________________ DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.