Case: Calderbank v Calderbank [1975] 3 All ER 333
Outcome: applied
parties have now put on extensive submissions in relation to costs. It emerges that Hamilton on 29 February 2008 made an offer of compromise of the entire action which it says was in accordance with the principle stated in Calderbank v Calderbank [1975] 3 All ER 333. That offer was rejected by AMC on 7 March and a counter-offer made. On 18 March 2008 Hamilton made an offer of compromise of AMC's claim in compliance with O 23 of the Federal Court Rules . It was not accepted. A subsequent O 23 offer was made on 17 June 2008. It likewise was not accepted. I am now asked to consider the appropriate incidence of costs in light of the offers to which I have referred. It is necessary to consider them seriatim. Before so doing I should refer briefly to the breach of confidence cross-claim. Hamilton was entirely successful in its claim against AMC in establishing liability. An account of profits has been ordered. I dismissed a like claim made against Dr Keung. Hamilton's claim was a small, self contained and, in my view, routine breach of confidence matter. As will be seen from my reasons the liability question could be dealt with shortly. I am satisfied that, in relation to it, it should be ordered that AMC should pay Hamilton's costs of the claim on a party and party basis and that Hamilton should pay Dr Keung's costs in relation to its unsuccessful claim against him. 1. The Calderbank, "Entire Action Offer" of 29 February 2008 This offer was made by Hamilton to resolve "all issues in dispute" with AMC. The offer made was that, in consideration for the termination of the Distribution Agreement and in return for AMC (a) discontinuing its claim in the action and (b) providing an all-encompassing deed of release ("on terms to be agreed") in respect of any past or future claim whatsoever against Hamilton, Hamilton would take all steps necessary (and available to it) to affirm ownership of the Fuyunhon and Tuotoning marks by your client; release your client from its obligations pursuant to the restrictive covenant imposed upon your client by Clause 41.1.7 of the Distribution Agreement (thereby allowing your client to lawfully sell its competing "Fuyunhon" products in Hong Kong); discontinue its cross-claim in the Action (including the proposed amendments to our client's cross-claim as advised in our 11 February 2008 letter); forgive and write off the sum of $35,091.12 owed by your client to our client and subject of invoice no EXP 1768; provide your client with any reasonable assistance that it requires to prosecute its litigation against Forward Company currently on foot in Hong Kong; grant your client a limited licence to sell its inventory of Hamilton products in Hong Kong; provide your client with an all-encompassing release (on terms to be agreed in a Deed) in respect of any present or future claim against your client; pay your client the sum of $250,000 AUD (inclusive of any GST payable) which amount is inclusive of any claim for costs and interest by your client; and As is well accepted, the non-acceptance of a Calderbank offer can be a relevant matter for consideration on the question whether the discretion to order costs should be exercised on an indemnity basis rather than in accordance with the Court's usual practice of ordering party and party costs, if its non-acceptance is followed by a result to the offeree which is less favourable than the offer made: see MGICA (1992) Pty Ltd v Kenny &amp; Good Pty Ltd (1996) 70 FCR 236 ; on the primacy of the ordinary practice see Re Wilcox; Ex parte Venture Industries Pty Ltd (No 2) (1996) 72 FCR 151 ; and see generally on Calderbank offers, Dal Pont, Law of Costs , [13.46]-[13.69] (2 nd ed, 2009). The significance for costs purposes to be attributed to a rejected Calderbank offer falls, increasingly, for determination by reference to criteria of reasonableness: Was the offer a reasonable one in the circumstances? Was its rejection unreasonable when viewed in light of the circumstances existing at the time of its rejection? See eg University of Western Australia v Gray (No 21) [2008] FCA 1056 ; (2008) 249 ALR 360 at 361; Dal Pont at [13.58]. In making that determination, the circumstances of the litigation and the parties' understanding of the strengths and weaknesses of their respective cases can be relevant considerations: see GEC Marconi Systems Pty Ltd v BHP Information Technology Pty Ltd [2003] FCA 688 ; (2003) 201 ALR 55 at [34] . In its Calderbank letter Hamilton indicated that, if AMC did not accept its offer, Hamilton would deliver a formal offer of compromise in accordance with the Federal Court Rules . It went on to indicate that the offer would be for a monetary sum only.