Bowesco Pty Ltd v Westpoint Management Ltd [No 2]

[2014] WASC 207 (S)

BOWESCO PTY LTD -v- WESTPOINT MANAGEMENT LTD [No 2] [2014] WASC 207 (S)

Jurisdiction:	SUPREME COURT OF WESTERN AUSTRALIA	Citation No:	[2014] WASC 207 (S)
Case No:	CIV:2092/2012	Heard:	20 JUNE 2014
Coram:	CHANEY J	Delivered:	3/07/14
No of pages:	7	Judgment Part:	1 of 1
Result:	Plaintiff ordered to pay costs of the defendant and former defendant to be taxed if not agreed
Category:	B
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Parties:	BOWESCO PTY LTD WESTPOINT MANAGEMENT LTD
Catchwords:	Costs Whether costs should be awarded on an indemnity basis Plaintiff not accepting Calderbank offer Whether rejection of Calderbank offer unreasonable
Legislation:	Nil
Case References:	Bowesco Pty Ltd v Read [2012] WASC 340 Bowesco Pty Ltd v Westpoint Management Ltd [No 2] [2014] WASC 207 Calderbank v Calderbank [1975] 3 WLR 586 Eccles v Koolan Iron Ore Pty Ltd [2013] WASC 418 (S) Ford Motor Co of Australia Ltd v Lo Presti [2009] WASCA 115; (2009) 41 WAR 1

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

IN CIVIL

CITATION : BOWESCO PTY LTD -v- WESTPOINT MANAGEMENT LTD [No 2] [2014] WASC 207 (S) CORAM : CHANEY J HEARD : 20 JUNE 2014 DELIVERED : 3 JULY 2014 FILE NO/S : CIV 2092 of 2012 BETWEEN : BOWESCO PTY LTD

Plaintiff

AND

WESTPOINT MANAGEMENT LTD
Defendant

Catchwords:

Costs - Whether costs should be awarded on an indemnity basis - Plaintiff not accepting Calderbank offer - Whether rejection of Calderbank offer unreasonable

Legislation:

Nil

Result:

Plaintiff ordered to pay costs of the defendant and former defendant to be taxed if not agreed

Category: B

Representation:

Counsel:

Plaintiff : Mr A Metaxas
Defendant : Mr J C Vaughan SC

Solicitors:

Plaintiff : Metaxas & Hager
Defendant : Clayton Utz

Cases referred to in judgment:

Bowesco Pty Ltd v Read [2012] WASC 340
Bowesco Pty Ltd v Westpoint Management Ltd [No 2] [2014] WASC 207
Calderbank v Calderbank [1975] 3 WLR 586
Eccles v Koolan Iron Ore Pty Ltd [2013] WASC 418 (S)
Ford Motor Co of Australia Ltd v Lo Presti [2009] WASCA 115; (2009) 41 WAR 1




1 CHANEY J: On 12 June 2014, I delivered reasons in this matter in which I found that the plaintiff was not entitled to the declaration which it sought, and that its claim should be dismissed.1

2 Following delivery of those reasons, the defendant moved for orders dismissing the action, and sought orders for costs in the following terms:

2. The plaintiff pay the costs of the action of the defendant and the former defendant (namely, Simon Andrew Read in his capacity as liquidator of the defendant) on the basis that there be only one set of costs for the defendant and the former defendant, to be taxed in accordance with par 3 below and paid forthwith (if not agreed).

3. The defendant and the former defendant's costs of the action:


(a) to 15 October 2012, be taxed and paid on a party and party basis; and

(b) from 16 October 2012, be taxed and paid on an indemnity basis, namely, that the plaintiff pay all of the costs incurred by the defendant and the former defendant except in so far as they are of an unreasonable amount or have been unreasonably incurred so that, subject to those exceptions, the defendant and the former defendant are completely indemnified by the plaintiff for their costs.

3 The plaintiff opposes the order for costs, and submits that there should be an order that the plaintiff pay the costs of the action of the defendant and the former defendant, as one set of costs to be taxed. The issue for determination is, therefore, whether or not the defendant's costs after 16 October 2012 should be taxed and paid on an indemnity basis, or on a party and party basis.

4 The defendant's position is based on the plaintiff's rejection of an offer made on 15 October 2012 without prejudice save as to costs, invoking the well-known principles contained in Calderbank v Calderbank.2 The defendant's offer was as follows:

1. The defendant pay the plaintiff $25,000 in full and final satisfaction of claims made in the action (such payment compromising all such claims as against both the defendant and Westpoint Management Pty Ltd (In Liq) (Receivers and Managers Appointed). The $25,000 will be paid within 7 days after acceptance of this offer.

2. The defendant pay the plaintiff's costs of the action, to be taxed if not agreed.

5 That offer was expressed to remain open for a period of 28 days, but was not accepted within that time, or at all. In the event, the result achieved by the plaintiff following trial was clearly less favourable than the defendant's offer of 15 October 2012.

6 The offer specified that, should the plaintiff not accept the offer and obtain a less favourable outcome following trial, the defendant reserved its right to produce the offer to the Court on the questions of costs, and advised that, in that event, the defendant would be seeking an order for full indemnity costs from the date of the offer.

The applicable principles

7 The principles applicable to an award of indemnity costs in the context of a Calderbank offer were considered by Buss JA, with whom Wheeler JA agreed, in Ford Motor Co of Australia Ltd v Lo Presti.3 Le Miere J, in Eccles v Koolan Iron Ore Pty Ltd,4 helpfully summarised the principles explained by Buss JA in the following way:

(1) a Calderbank offer will not justify an award of indemnity costs unless its rejection was unreasonable;

(2) all of the relevant facts and circumstances must be considered in determining whether a party's rejection of a Calderbank offer was unreasonable;

(3) the mere fact that the recipient of a Calderbank offer is ultimately worse off than he or she would have been had the offer been accepted, does not mean that its rejection was unreasonable;

(4) whether conduct is reasonable or unreasonable always involves matters of judgement and impression;

(5) it is not possible nor desirable to enumerate exhaustively all circumstances which must be taken into account, in a particular case, in deciding whether the rejection of a Calderbank offer was unreasonable, but, ordinarily, regard should be had to, at least, the following:


(a) the stage of the proceeding in which the offer was received;

(b) the time allowed to the offeree to consider the offer;

(c) the extent of the compromise offered;

(d) the offeree's prospects of success, assessed as at the date of the offer;

(e) the clarity with which the terms of the offer were expressed; and

(f) whether the offer foreshadowed an application for indemnity costs in the event of the offeree's rejecting it;


(6) the party who makes a Calderbank offer that is rejected bears the onus of satisfying the court that it should make an award of indemnity costs in his or her favour; and

(7) the standard to be applied in awarding indemnity costs should not be allowed to diminish to the extent that an unsuccessful party will be at risk of an order for costs assessed on an indemnity basis absent some blameworthy conduct on its part - a test of unreasonableness should not be upheld on other than clear grounds.

8 The central question is, therefore, whether having regard to all relevant facts and circumstances, the plaintiff's rejection of the defendant's offer in this case was unreasonable.

The circumstances of the offer

9 The offer was made on 15 October 2012. On 18 September 2012, Master Sanderson delivered reasons refusing a summary judgment application by the then defendant, who was the liquidator of Westpoint Management Ltd (In Liq) (Receivers and Managers Appointed). (The company itself was subsequently substituted as defendant.) At that stage, the plaintiff's claim was not limited to the sum of $550,000 which was the amount of the claim as it eventually went to trial. At the time of the application to the Master, the plaintiff was claiming for additional amounts, one of which was not included in the re-amended statement of claim filed on 9 December 2013, and the other three of which were abandoned at the conclusion of the plaintiff's opening at trial. It is clear from the Master's reasons5 that each of the amounts claimed were claimed on the basis of the plaintiff's right to subrogation of Suncorp's securities. The learned Master considered the claims and concluded:

To enter judgment for the defendant I would have to be satisfied the plaintiff's position is not arguable. There are no cases, it would seem, where a similar argument has been raised. It may be equity will adapt remedies to cover losses such as those allegedly sustained by the plaintiff. In any event, I am not satisfied the position is so clear as to allow judgment to be entered for the defendant on the plaintiff's claim.6

10 The defendant submits that:

• its offer was made at a stage in the proceedings where the issues had crystallised;

• the offer was made after comprehensive submissions had been filed in the application before the Master so the defendant's position was abundantly clear;

• at trial, the plaintiff did not seek to develop or expand principles of equity as the Master suggested would be necessary; and

• three of the plaintiff's heads of damage were abandoned at trial without prior notice.

11 The defendant also submits, having regard to the factors set out in par 5 of Le Miere J's summary, that:

• 28 days was provided for acceptance of the offer which was a sufficient period;

• the offer was for $25,000 plus costs to be taxed which constituted a real compromise of the action;

• the defendant's prospects of success were clearly identifiable from the detailed submissions made to the Master;

• the offer was in clear terms; and

• the offer expressly foreshadowed an application for indemnity costs in the event that the offer was rejected.

Was rejection of the offer unreasonable?

12 Save for one matter, the defendant's submissions as to the circumstances surrounding the offer can be accepted. The exception relates to characterisation of the learned Master's decision rejecting summary judgment for the defendant. I do not take the Master's observation (which is set out above) as indicating that the defendant would need to 'develop the law of equity' to succeed. Rather, the Master was, as I apprehend his reasons, simply indicating that the reach of a remedy of subrogation may arguably extend to payments or losses of the type pleaded. In the result, of course, I concluded that, in relation to the one head of claim which remained at trial, that was not the case.

13 In light of the rejection of the defendant's summary judgment application, I do not consider that can be said that the plaintiff should have accepted that its case was unarguable, or that to pursue its claim was unreasonable. Certainly, it is fair to conclude that the plaintiff faced significant difficulties in establishing its claim. In the end, as Buss JA recognised in Ford Motor Co of Australia Ltd v Lo Presti,7 the question of whether conduct is reasonable or unreasonable necessarily involves matters of judgment and impression. Whilst this case comes close to one in which indemnity costs might be ordered, the relevant facts and circumstances render it, in my judgment, short of those which would justify an indemnity costs order.

Conclusion

14 The parties agree that I should pronounce final orders by way of judgment on the action in light of these reasons, without the need for a further attendance by counsel. Accordingly, judgment will be entered in the following terms:

1. The action be and is hereby dismissed.

2. The plaintiff pay the costs of the action of the defendant and the former defendant (namely, Simon Andrew Read in his capacity as liquidator of the defendant) on the basis that there be only one set of costs for the defendant and the former defendant to be taxed if not agreed.

______________________________________

1Bowesco Pty Ltd v Westpoint Management Ltd [No 2] [2014] WASC 207.
2Calderbank v Calderbank [1975] 3 WLR 586.
3Ford Motor Co of Australia Ltd v Lo Presti [2009] WASCA 115; (2009) 41 WAR 1.
4Eccles v Koolan Iron Ore Pty Ltd [2013] WASC 418 (S) [9].
5Bowesco Pty Ltd v Read [2012] WASC 340.
6Bowesco Pty Ltd v Read [2012] WASC 340 [15] (Master Sanderson).
7Ford Motor Co of Australia Ltd v Lo Presti [2009] WASCA 115; (2009) 41 WAR 1 [19].