Approach to compromise ought adhere to the “over-arching purpose”

In Palmer v McGowan (No 6) [2022] FCA 927 (11 August 2022), involving claims and cross-claims for damages for defamation, Lee J awarded indemnity costs of the proceeding against the cross-respondent who neither responded to a ‘walk away’ offer made by the cross-applicant, nor make a counter-offer.

A brief and useful explanation of the principles is provided. 

Of particular note, despite acknowledging the force of the argument  that the offer did not afford the benefit the cross-respondent gained by him succeeding in gaining a modest damages award after trial (as did the cross-applicant), his Honour stated (at [31]): 

All parties must conduct negotiations for settlement in a way that is consistent with the overarching purpose: see s 37N(1) of the Act. Mr Palmer may not be unduly troubled about spending his money on litigation, but he had an obligation to facilitate the just resolution of the dispute according to law, and as quickly, inexpensively and efficiently as possible. The interests at stake go beyond the individual parties and extend to the responsible use of the Court system generally. The cost of the litigation was disproportionate to any benefit it was likely to produce, and this should have been evident in December last year. Failing even to respond to, or engage with, the Offer is not a pointer to reasonableness. 

The relevant provisions of the Federal Court Act 1976 (Cth) were these: 

37M  The overarching purpose of civil practice and procedure provisions 

(1)  The overarching purpose of the civil practice and procedure provisions is to facilitate the just resolution of disputes: 

                     (a)  according to law; and 

                     (b)  as quickly, inexpensively and efficiently as possible. 

(2)  Without limiting the generality of subsection (1), the overarching purpose includes the following objectives: 

                     (a)  the just determination of all proceedings before the Court; 

                     (b)  the efficient use of the judicial and administrative resources available for the purposes of the Court; 

                     (c)  the efficient disposal of the Court’s overall caseload; 

                     (d)  the disposal of all proceedings in a timely manner; 

                     (e)  the resolution of disputes at a cost that is proportionate to the importance and complexity of the matters in dispute. 

             …… 

37N  Parties to act consistently with the overarching purpose 

(1)  The parties to a civil proceeding before the Court must conduct the proceeding (including negotiations for settlement of the dispute to which the proceeding relates) in a way that is consistent with the overarching purpose. 

(2)  A party’s lawyer must, in the conduct of a civil proceeding before the Court (including negotiations for settlement) on the party’s behalf: 

                     (a)  take account of the duty imposed on the party by subsection (1); and 

                     (b)  assist the party to comply with the duty. 

…… 

The Austlii reference to the case is: 

http://www.austlii.edu.au/cgi-bin/viewdoc/au/cases/cth/FCA//2022/927.html