Background
Kerry Colgrave successfully appealed a decision of the Administrative Review Tribunal concerning compensation under s 38(2) of the Seafarers Rehabilitation and Compensation Act 1992 (Cth). The Federal Court set aside the Tribunal’s decision and remitted the matter to the Tribunal with a direction that compensation was payable.
On costs, Mr Colgrave sought indemnity costs. He argued that TT-Line had maintained a hopeless case and had unreasonably rejected an earlier Calderbank offer. Alternatively, he relied on a formal offer to compromise made under Pt 25 of the Federal Court Rules 2011 (Cth) on 17 June 2026.
The Court’s Holding
Horan J rejected the contention that TT-Line’s conduct itself warranted indemnity costs for the whole proceeding. Although the Court had found the respondent’s statutory construction wrong, the Tribunal had accepted that construction, and the Court was not satisfied that TT-Line’s case had been so hopeless that indemnity costs were justified without more. The earlier Calderbank offer also did not justify that result: it required capitulation, was made before the Tribunal’s decision, and its rejection was not shown to have been unreasonable in the relevant circumstances.
The formal Pt 25 offer produced a different result. Its substantive terms matched the appeal orders ultimately obtained, and Mr Colgrave had offered to pay TT-Line’s party-and-party costs. The judgment was therefore more favourable to him than the offer. Rule 25.14(3) presumptively entitled him to party-and-party costs before 11.00 am on 19 June 2026 and indemnity costs thereafter; TT-Line identified no proper reason to displace that outcome. The Court also refused TT-Line’s undeveloped request to stay the costs order pending a foreshadowed appeal.
Key Takeaways
- An unsuccessful case is not, by itself, enough to establish that it was hopeless for indemnity-cost purposes.
- A compliant formal offer to compromise can trigger indemnity costs even if rejecting it was not unreasonable.
- A party seeking to displace the Pt 25 costs consequence must show a proper reason for doing so.
- A proposed appeal alone does not justify staying a costs order.
Why It Matters
The decision illustrates the distinct roles of Calderbank and formal rules-based offers. A Calderbank costs claim turns on unreasonable rejection in context, while r 25.14(3) creates a presumptive costs consequence once an applicant obtains a better judgment than a qualifying offer.
For litigants in Federal Court appeals, the case underscores the value of carefully structured formal offers and the need to address their costs consequences directly. It also confirms that a party seeking a stay must provide evidence and argument directed to the discretionary criteria, not merely announce an intention to appeal.