Case: Colgate-Palmolive Company v Cussons Pty Limited (1993) 46 FCR 225
Outcome: discussed
The relevant principles relating to the imposition of indemnity costs were summarised by Sheppard J in Colgate-Palmolive Company v Cussons Pty Limited (1993) 46 FCR 225 (at 233-4): "In consequence of the settled practice which exists, the Court ought not usually make an order for the payment of costs on some basis other than the party and party basis. The circumstances of the case must be such as to warrant the Court in departing from the usual course. That has been the view of all judges dealing with applications for payment of costs on the indemnity or some other basis whether here or in England. The tests have been variously put. The Court of Appeal in Andrews v. Barnes (supra) at 141 said the Court had a general and discretionary power to award costs as between solicitor and client "as and when the justice of the case might so require." Woodward J in Fountain Selected Meats appears to have adopted what was said by Brandon LJ (as he was) in Preston v. Preston (supra) at 637; namely, there should be some special or unusual feature in the case to justify the Court in departing from the ordinary practice. Most judges dealing with the problem have resolved the particular case before them by dealing with the circumstances of that case and finding in it the presence or absence of factors which would be capable, if they existed, of warranting a departure from the usual rule. But as French J said (at p 8) in Tetijo , "The categories in which the discretion may be exercised are not closed". Davies J expressed (at p 6) similar views in Ragata (supra). Notwithstanding the fact that that is so, it is useful to note some of the circumstances which have been thought to warrant the exercise of the discretion. I instance the making of allegations of fraud knowing them to be false and the making of irrelevant allegations of fraud (both referred to by Woodward J in Fountain and also by Gummow J in Thors v Weekes (1989) 92 ALR 131 at 152; evidence of particular misconduct that causes loss of time to the Court and to other parties (French J in Tetijo ); the fact that the proceedings were commenced or continued for some ulterior motive (Davies J in Ragata ) or in wilful disregard of known facts or clearly established law (Woodward J in Fountain and French J in J-Corp (supra)); the making of allegations which ought never to have been made or the undue prolongation of a case by groundless contentions (Davies J in Ragata ); an imprudent refusal of an offer to compromise (eg Messiter v Hutchinson (1987) 10 NSWLR 525, Maitland Hospital v Fisher (No. 2) (1992) 27 NSWLR 721 at 724 (Court of Appeal), Crisp v Keng (unreported, Court of Appeal, NSW, Kirby P, Priestly JA, Cripps JA, No 40744/1992, 27 September 1993) and an award of costs on an indemnity basis against a contemnor (eg Megarry V-C in EMI Records (supra)). Other categories of cases are to be found in the reports. Yet others to arise in the future will have different features about them which may justify an order for costs on the indemnity basis. The question must always be whether the particular facts and circumstances of the case in question warrant the making of an order for payment of costs other than on a party and party basis. It remains to say that the existence of particular facts and circumstances capable of warranting the making of an order for payment of costs, for instance, on the indemnity basis, does not mean that judges are necessarily obliged to exercise their discretion to make such an order. The costs are always in the discretion of the trial judge. Provided that discretion is exercised having regard to the applicable principles and the particular circumstances of the instant case its exercise will not be found to have miscarried unless it appears that the order which has been made involves a manifest error or injustice." (emphasis added) 173 Although the second respondent submits that the facts going to causation were entirely matters within the knowledge of the applicant, and about which it had the onus to adduce evidence, I do not consider that its case was "hopeless", or, in the words of Sheppard J in "wilful disregard of known facts or clearly established law". This is a very high bar indeed to meet. 174 Nor do I consider that the applicant imprudently rejected an offer of compromise. The second respondent's offer can hardly be described as generous. It was an offer for each party to walk away and bear their own costs. Moreover, the offer was made very early in the proceeding, prior to discovery being given by the parties. In addition, the offer appears to have been open for, at most, 24 hours. The 16 February 2004 offer requested a response to the offer no later than 10 am the following day. One can hardly be critical of the applicant rejecting an offer in these circumstances. 175 I also do not consider that the applicant's failure to withdraw the claim at an earlier time constitutes a basis for indemnity costs to be awarded in relation to the entire claim against the second respondent. I am not prepared to infer that it was incorporated in the proceeding in order to prejudice the Court against the respondents. Nor was the deceit claim "irrelevant" in the sense in which the authorities on indemnity costs use that term. An "irrelevant" claim is one that has nothing to do with the matters in dispute between the parties. That can hardly be said to be true in the present case. The arrangements between the first and second respondent with respect to the leasing of the premises are important, given that the second respondent provided a rental assessment to the first respondent, and that assessment was central to the first respondent's attempt to increase the rent. 176 The second respondent does have an arguable case for being paid its costs on an indemnity basis with respect to the deceit claim alone. As previously indicated, the claim should have been withdrawn, at the very latest, following the cross-examination of Mr Allen. An explanation for the internal Colliers email which pricked the applicant's attention was given in the defences of the respondents. No affidavit material was adduced by the applicant to meet those denials. 177 However, I am not inclined to make an order that the applicant pay the second respondent's costs of the deceit claim on an indemnity basis. Those costs, in the context of the entire proceeding, are likely to be insubstantial. Moreover, separating out these costs from those of the rest of the proceeding is likely to be a difficult process which is unwarranted in the circumstances, particularly given that the applicant is already paying those costs on a party/party basis.