Case: Dr Martens Australia Pty Ltd v Figgins Holdings Pty Ltd (No 2) [2000] FCA 602
Outcome: applied
The amount to which I have found the applicant to be entitled is significantly more than the sum mentioned in the letter of 31 July and is sufficient to raise the Calderbank principles as a live issue. It does not follow, however, that the applicant is automatically entitled to the indemnity costs it seeks. As Goldberg J pointed out in Dr Martens Australia Pty Ltd v Figgins Holdings Pty Ltd (No 2) [2000] FCA 602 at [17] , it is necessary to look at all the surrounding circumstances and not just at the fact that an offer has been made and rejected. The issue is whether it was reasonable in all the circumstances for the respondents to reject the offer, bearing in mind the competing principles in favour of sensible compromises of disputes and in favour of parties being able to pursue claims to which they reasonably believe they are entitled. 17 In opposing the applicant's claim for indemnity costs from the above date, the respondents relied on a letter dated 27 September 2005, also without prejudice except as to costs, sent by their solicitor to the applicant's solicitor. The letter, in which the respondents offered to settle for a total of $300,000, was one in an exchange of letters between the parties before the commencement of proceedings attempting to settle their dispute. The history of these offers is set out in the applicant's response to the letter of 27 September. It is not necessary for me to recount that history other than to say it appears that the second respondent had accepted an offer to settle for $350,000 and had failed to make the payment by the agreed date. The offer of 27 September was rejected and a counter-offer made in the applicant's solicitor's response of 28 September. 18 In my view, the offers and counter-offers made in 2005 fall into a different category from the offer made in the letter of 31 July 2006. Mr Sahade, counsel for the respondents, submitted that the fact that the offer of 27 September was made before the commencement of proceedings should not preclude the application of Calderbank principles. That may well be so, although it is not necessary for me to decide the point. In September 2005 the issues in the case had not crystallised and it is difficult to say that refusal of the offer at that stage was unreasonable. By the time of the letter of 31 July 2006 the position was quite different. This much is made clear in the opening paragraphs of the letter: We refer to the unsuccessful mediation on Thursday, 27 July conducted by the Hon Morton Rolfe QC. It is a mater [sic] of regret to our client that these proceedings have not been resolved. Given the amount of dispute we do not believe that the parties should be in a position where their differences cannot be resolved but through recourse to the court system. On 28 September 2005 we made, on behalf of our client, an offer which effectively provided for the dispute to be resolved in circumstances where our client would surrender all interest in the business for a payment by your client of $300,000 (including the $50,000 already paid to him). This offer was rejected. Two things have now occurred. First, the issues in the dispute have been defined by way of pleadings and evidence has been served. Accordingly, there can be no suggestion that all parties have not had access to sufficient material to make an informed decision about the resolution of proceedings. Secondly, our client has incurred and continues to incur significant legal costs that will escalate as the matter progresses to hearing. Against this background, we are instructed to make one final effort to resolve the proceedings. ...