In the matter of Featherston Resources Limited (Receiver and Manager Appointed) (Administrators Appointed) (New Zealand Company Number 887809) (No 2)

[2014] NSWSC 1887

Supreme Court

New South Wales

Medium Neutral Citation:	In the matter of Featherston Resources Limited (Receiver and Manager Appointed) (Administrators Appointed) (New Zealand Company Number 887809) (No 2) [2014] NSWSC 1887
Hearing dates:	22 August 2014
Date of orders:	22 August 2014
Decision date:	22 August 2014
Jurisdiction:	Equity Division - Corporations List
Before:	Brereton J
Decision:	Proceedings dismissed; plaintiffs to pay defendants’ costs; ninth defendant’s costs on indemnity basis from date of Calderbank offer.
Catchwords:	PROCEDURE – costs – Calderbank offer – where more favourable to plaintiff than outcome - where offer not made in accordance with the Rules - whether costs should be paid on indemnity basis PROCEDURE – costs – deferral of costs - order – where issues may be litigated in foreign proceedings – whether to defer making costs order
Legislation Cited:	(Cth) Trans-Tasman Proceedings Act 2010
Cases Cited:	Calderbank v Calderbank [1975] 3 All ER 333
Category:	Costs
Parties:	Glenn Tetley (first plaintiff) Lyndsey Banfield (second plaintiff) Douglas Best (fourth plaintiff) AXL Limited (fifth plaintiff) Jacqueline and Quentin Partis (seventh plaintiff) Toby Iaccarino (eighth plaintiff) William Godfrey (tenth plaintiff) S Harold Koppe (eleventh plaintiff) Julian Management Services P/L (twelfth plaintiff) Josephine Gregan and John Percival (fourth defendants plaintiff) Charlene and Christopher Watts (fifteenth plaintiff) Thiry-Three Trading Pty Limited (sixteenth plaintiff) Emma Weston (first defendant) Simon Kember (second defendant) Timothy Goodacre (third defendant) FRCN Pty Ltd (fourth defendant) Featherston Resources Limited (fifth defendant) Adveco Fertilisers Pty Ltd (sixth defendant) James Mollison (seventh defendant) Driftwood Capital Pty Ltd (eighth defendant) Plaman Group Pty Ltd (ninth defendant)
Representation:	Counsel: C Botsman w P Meagher (plaintiffs) T Faulkner (first and fourth defendants) A W Smith (second and third defendants) J Svelha (seventh and eighth defendants) M Izzo (ninth defendants) Solicitors: Ashlaw Legal Services (plaintiffs) HWL Ebsworth (first and fourth defendants) ELaw Legal Services (second and third defendants) Hicksons (seventh and eighth defendants) King & Wood Mallesons (ninth defendant)
File Number(s):	2013/377035

Judgment (ex tempore)

1. HIS HONOUR: The ninth defendant Plaman Group Pty Limited applies for an order that the costs, which I propose to order that the plaintiffs pay of the proceedings should, in the case of Plaman be assessed on the indemnity basis from 18 June 2014, upon which date its solicitors, by letter entitled "without prejudice save as to costs" made a so-called Calderbank offer to the effect that the proceedings be dismissed with no order as to costs to the intent that each party to bear its own costs.

2. That is a so-called "walk away" offer. Self-evidently, it would have provided for the plaintiffs a superior result to that which they have obtained, since they will in any event be ordered to pay the defendants’ costs of the proceedings.

3. However, the offer, while expressed to be made in accordance with the principles set out in Calderbank v Calderbank [1975] 3 All ER 333, was not made in the form of an offer of compromise under the Rules. If parties wish to attract the benefits of making offers of compromise in the context of costs, the Rules provide a mechanism for doing that, and certain protections that surround the making and acceptance of such offers. Ordinarily, I am reluctant to act on Calderbank offers not made in accordance with the Rules. However, there is an exception where the offer is a "walk away" offer that does not involve a costs order, since there are difficulties in complying with the requirements of the Rules, which visit costs consequences on the acceptance of an offer. For that reason, it might well be argued that in this case it was necessary and at least appropriate to resort to a Calderbank offer rather than including an offer of compromise under the Rules.

4. The other consideration that might tell against acting on the Calderbank offer is that the argument it set out was largely focused on the merits of the application for leave and the proposed derivative proceedings, rather than on the legal issues which have been determinative on the outcome. That said, it in no way involved abandoning those legal issues, and indeed at the outset referred to the forum non conveniens argument.

5. Accordingly, it seems to me that the ninth defendant was justified in not resorting to the offer of compromise provisions of the Rules and instead making a Calderbank offer.

6. Plainly it has bettered that offer as a result of the hearing. The fact that the arguments advanced by the plaintiffs were not unreasonable, and that the plaintiffs have not been shown in any way to have acted unreasonably in the prosecution of the proceedings is beside the point. What attracts the discretion to make an indemnity costs order in these circumstances is simply that there has been a failure to accept an offer which the ninth defendant has bettered at the hearing.

7. In those circumstances, it seems to me that the ninth defendant's costs should be assessed on an indemnity basis from the date of the offer, namely 18 June 2014.

8. The plaintiffs submitted that I should defer making a costs order on the basis that the claims for such order might better be considered by the New Zealand court if proceedings are instituted there or, alternatively, if it transpires that proceedings are not instituted there, then subsequent to that decision being made.

9. The proceedings in this Court were an application for leave either under s 236 or alternatively in the inherent jurisdiction, to bring proceedings in this Court. The proper Court to deal with the costs of that application is the Court that considers and, as has happened here, determines and dismisses that application. It may be that some of the work done in connection with these proceedings will ultimately be of benefit in any proceedings brought in New Zealand, and it may be that the plaintiffs will be able to claim them if ultimately successful in New Zealand in some way, but that does not seem to me to be any reason at all for this Court not to deal with the costs of the proceedings before it.

10. In that respect, it needs to be observed that the ratio of my decision is not founded on the forum conveniens point under the (Cth) Trans-Tasman Proceedings Act 2010, in which event it might be arguable that different considerations might prevail, but on the want of jurisdiction of this Court under s 236 and in the inherent jurisdiction.

11. For those reasons, it seems to me that there is no occasion to defer making a costs order.

12. Costs have been reserved by Black J when dealing with aspects of the proceedings on earlier occasions. As I have indicated, in the absence of any submissions as to why they should not be included in the order I propose to make, I propose to treat them as costs of the proceedings and deal with them accordingly.

13. Accordingly, the Court orders that:

1. The proceedings be dismissed.

2. The plaintiffs pay the defendants costs of the proceedings, including reserved costs.

3. The ninth defendant's costs be assessed and payable on the indemnity basis from 18 June 2014.

4. The above orders are without prejudice to any right of the administrator to apply to the Court in respect of the reserved costs of the occasion on which they appeared before the Court.

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Decision last updated: 23 January 2015