Dr Leo Shanahan v Jatese Pty Ltd [No 2]
[2018] NSWSC 1306
•23 August 2018
Supreme Court
New South Wales
- Amendment notes
Medium Neutral Citation: Dr Leo Shanahan v Jatese Pty Ltd [No 2] [2018] NSWSC 1306 Hearing dates: Written Submissions Decision date: 23 August 2018 Jurisdiction: Equity - Commercial List Before: Hammerschlag J Decision: The plaintiffs are to pay the defendants’ costs of the proceedings
Catchwords: COSTS – claim of oppression – plaintiffs establish oppression but fail on relief because they failed to establish any economic consequences from the conduct complained of – whether costs should follow the event or an apportionment made – offers of compromise made at an early stage that there be judgment for the defendants with no order as to costs; HELD costs should follow the event – no order for indemnity costs based on the offers of compromise because they did not involve a genuine offer of compromise Legislation Cited: Civil Procedure Act 2005 (NSW)
Uniform Civil Procedure Rules 2005 (NSW)Cases Cited: Dr Leo Shanahan v Jatese Pty Ltd [2018] NSWSC 1088 Category: Costs Parties: Dr Leo Shanahan - First Plaintiff
Jatese Pty Ltd ACN 105079436 - First Defendant
Michael Shanahan - Second Plaintiff
Joan Shanahan - Third Plaintiff
Dr Stuart Saunders - Fourth Plaintiff
Christine Saunders - Fifth Plaintiff
Optident Pty Ltd - Second Defendant
Canberra Eye Services Pty Ltd - Third Defendant
Dr Iain Dunlop - Fourth Defendant
Dr Martin Duncan - Fifth Defendant
Dr Gagan Khannah - Sixth DefendantRepresentation: Counsel:
Solicitors:
I. M. Jackman SC with S. A. Goodman SC - Plaintiffs
M. Ashhurst SC with D. F. Villa - Defendants
Thomson Geer - Plaintiffs
Snedden Hall & Gallop - Defendants
File Number(s): 2014/317132
Judgment
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HIS HONOUR: On 16 July 2018, I delivered judgment in the principal case: Dr Leo Shanahan v Jatese Pty Ltd [2018] NSWSC 1088.
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This judgment deals with costs. Definitions used in the principal judgment are used here.
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By agreement, costs are to be dealt with on the papers. I received written submissions.
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The majority says that costs should follow the event and that they should have their costs.
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On 20 July 2015 they made a written offer of compromise in simple terms that there be judgment in their favour and there be no order as to costs. They made another offer on 21 September 2015 in the same terms, with the addition of a proposal that the parties enter into a deed providing for mutual releases which would act as a bar to further proceedings.
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They argue that the minority have done no more favourable to them than the terms of the offers made. They seek an order that their costs be on an indemnity basis from 21 July 2015 or 21 September 2015. They suggest no basis for selection between the two.
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The minority says that the majority should pay 75% of their costs because the minority succeeded on the ‘overwhelming dominant issue of whether there was oppressive conduct, but not on relief, and the majority engaged in conduct which should disentitle them to a costs order and that they pay some of the minority’s costs.’
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Costs are in the discretion of the Court. They will follow the event unless it appears to the Court that some other order should be made as to the whole or any part of the costs: Civil Procedure Act (2005) NSW s 98; Uniform Civil Procedure Rules 2005 (NSW) Pt 42 r 42.1 (UCPR).
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The discretion must be exercised in light of the particular circumstances of each case.
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The Court does not generally apportion or divide costs on an issue by issue basis. However, there are cases where this is appropriate. Apportionment is a matter of discretion. Mathematical precision is not possible.
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As to offers of compromise, UCPR r 42.15 has the effect that if a party obtains an order or judgment on the claim no more favourable to it than the terms of the offer, unless the Court otherwise orders, the opponent is entitled to an order for costs assessed on an indemnity basis from the beginning of the day following the day on which the offer was made.
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In my view, there is no good reason why costs should not follow the event. There is also no good reason for the Court to depart from the general position that no apportionment should be made.
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On 24 June 2015, under the Share Sale Agreement, the minority received from the majority $1,776,000 plus 43% of the value of the stock. Once this happened, the minority would never get any relief unless they showed that they had sold their shares under pressure and had received less than what those shares were worth.
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Although the minority made out oppression, the only aspect of that oppression which was relied upon as having relevant economic consequences was the non-accreditation of Dr Frumar.
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The minority failed to establish the critical factor that Dr Frumar’s presence would have made any relevant economic difference. The majority succeeded in displacing the suggestion that he would have.
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The entire factual matrix was relevant to the consideration of whether Dr Frumar and other doctors might be attracted to CEH.
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Indeed, one of the factors militating against a finding that other doctors might join was the existence of the state of warfare between the minority and the majority which was canvassed in the proceedings (see para [339] of the principal judgment).
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There is no good reason why, in these circumstances, the majority should not have their costs. Even less is there a reason why the majority should pay to the losing minority any of their costs. Apportionment is neither justified nor practical.
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As to the offers of compromise, in my view, this is a case where the Court should not order indemnity costs because they did not involve genuine offers of compromise, but called for capitulation. The offers called for a verdict for the majority and no order as to costs at an early stage of the proceedings before defences were on and at a time at which one would not expect any significant expenditure on costs legitimately or reasonably to have been incurred. Also, it could in no way fairly be said that the minority’s claim lacked merit (indeed, their claim of oppressive conduct was ultimately made out).
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The plaintiffs are to pay the defendants’ costs of the proceedings.
Amendments
23 August 2018 - para 17 amendment
Decision last updated: 23 August 2018
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