Bignaches Pty Ltd v Access Strata Management Pty Ltd (Costs) - [2022] VSC 793

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE
COMMERCIAL COURT
CORPORATIONS LIST

S ECI 2021 00355

IN THE MATTER OF ACCESS STRATA MANAGEMENT PTY LTD (ACN 605 929 039)

BETWEEN:

BIGNACHES PTY LTD (ACN 105 959 126)	Plaintiff
and
ACCESS STRATA MANAGEMENT PTY LTD (ACN 605 929 039) AND OTHERS	Defendants

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JUDGE:	Riordan J
WHERE HELD:	Melbourne
DATE OF HEARING:	16 December 2022
DATE OF RULING:	16 December 2022
CASE MAY BE CITED AS:	Bignaches Pty Ltd v Access Strata Management Pty Ltd (Costs)
MEDIUM NEUTRAL CITATION:	[2022] VSC 793

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COSTS — Whether defendants capitulated on the allegation of oppression — Whether Calderbank offer represented a better result for the offeree than the judgment — Whether rejection of the Calderbank offer was unreasonable — Effect of Calderbank offer on the general discretion as to costs — Order for plaintiff to pay the defendant’s costs on a standard basis from the date of Calderbank offer.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr D Williams KC	Sinisgalli Foster
For the Second and Third Defendants	Mr L Molesworth	Holding Redlich

HIS HONOUR:

On 21 October 2022, I made orders relevantly including:
1.By a settlement date of 6 December 2022, the second defendant and/or third defendant purchase the shares of the plaintiff in the first defendant based on a valuation of $666,135.
2.If the second defendant and/or third defendant fail to complete the purchase of the shares of the plaintiff in the first defendant by 6 December 2022, the plaintiff purchase the shares of the second and third defendants in the first defendant based on a valuation of $666,135 by a settlement date of 23 December 2022.
3.If the shares are not purchased in accordance with either paragraph 1 or 2 of these Orders, the matter is listed for directions on a date to be fixed.
The orders were subject to a condition recorded in Other Matters being:
The purchase of the shares in the plaintiff to be undertaken pursuant to paragraph 1 of these orders is to be (and will not be effective as compliance with that order unless it is) accompanied by:
A.A release of the mortgage security provided by the plaintiff to National Australia Bank Limited (‘NAB’) as security for the borrowings of the first defendant from NAB;
B.A release of the guarantee provided by Peter Morey to NAB for the borrowings of the first defendant from NAB; and
C. Payment to Access Mercantile Services Australia Pty Ltd in full of the then balance of the loan from Access Mercantile Services Australia Pty Ltd to the first defendant, which balance as at 28 October 2022 stood at $97,500.
The reasons for judgment[1] in substance consisted of answers to the questions posed by the parties as follows:
[1][2022] VSC 639 (‘the Principal Reasons’).
The Parties’ Agreed Orders
(a)The second defendant and/or third defendant purchase the plaintiff’s shares in Access Strata Management Pty Ltd (‘the Company’) based on a valuation of $666,135, less allowances…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2022] VSC 793
Decision Date: 16 December 2022

CaseChat Overview and Summary

In this case, the plaintiff, Bignaches Pty Ltd, brought proceedings against the defendants, Access Strata Management Pty Ltd and others, seeking relief on the basis of alleged oppressive conduct. The court had to decide the legal issues surrounding the costs of the proceedings, including whether the defendants capitulated on the allegation of oppression, whether the Calderbank offer represented a better result for the offeree than the judgment, whether the rejection of the Calderbank offer was unreasonable, and the effect of the Calderbank offer on the general discretion as to costs.

The court concluded that the plaintiff should pay the defendants' costs of the proceeding to be assessed on a standard basis from the date of the First Open Offer. The court found that the plaintiff's disputed claims were a significant part of the plaintiff's claim for oppression and were the only matters determined at trial. Each of the claims was dismissed at trial, and the court considered that an order for costs to follow that event was appropriate. The court also found that the First Open Offer provided reasonable detail as to the proposed terms and that the plaintiff should have made a constructive response to the offer to avoid cost consequences.

The court rejected the plaintiff's submission that the parties' agreement to limit the issues at trial was inferentially a concession or capitulation on a question of oppression. The court held that it was a sensible and practical basis to narrow the issues between the parties and facilitate the just and efficient resolution of the dispute. The court did not consider an order for indemnity costs appropriate, as it was unable to conclude that the plaintiff knew or should have known, on proper consideration, that each of the Rent Claim, the Consultancy Fee Claim, and the Interest Claim was hopeless.

The final orders of the court were that the plaintiff pay the second and third defendants' costs of the proceeding to be assessed on a standard basis from the date of the First Open Offer. The court did not propose to make an order under r 63.07 of the Supreme Court (General Civil Procedure) Rules 2015 (Vic) as it was not satisfied that an appropriate sum could be determined fairly between the parties on the materials available.

Orders