Kipoi Holdings Mauritius Ltd (C141778) v Taurus Mining Finance Fund L.P. (74565)
[2024] WASC 270
•29 JULY 2024
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: KIPOI HOLDINGS MAURITIUS LTD (C141778) -v- TAURUS MINING FINANCE FUND L.P. (74565) [2024] WASC 270
CORAM: HILL J
HEARD: ON THE PAPERS
DELIVERED : 29 JULY 2024
PUBLISHED : 29 JULY 2024
FILE NO/S: CIV 1206 of 2022
BETWEEN: KIPOI HOLDINGS MAURITIUS LTD (C141778)
Plaintiff
AND
TAURUS MINING FINANCE FUND L.P. (74565)
First Defendant
QMETCO LTD
Second Defendant
THE LAW DEBENTURE TRUST CORPORATION P.L.C. (01675231)
Third Defendant
LAW DEBENTURE TRUSTEES LTD (00625705)
Fourth Defendant
JINJI RESOURCES FINANCE PTY LTD
Fifth Defendant
TIGER RESOURCES LTD (ACN 077 110 304)
Sixth Defendant
Catchwords:
Practice and procedure - Costs - Plaintiff previously given leave to discontinue proceedings - Whether any order for costs should be made on two applications - Whether parties acted reasonably in commencing and defending applications - Turns on own facts
Legislation:
Rules of the Supreme Court 1971 (WA) O 18 r 13(2), O 23 r 2
Result:
Plaintiff pay the fifth and sixth defendants' costs of the summons dated 1 June 2022 on an indemnity basis from 7 October 2022 (including costs of hearing on 19 October 2022)
No order as to costs of the application dated 28 November 2022
Category: B
Representation:
Counsel:
| Plaintiff | : | No appearance |
| First Defendant | : | No appearance |
| Second Defendant | : | No appearance |
| Third Defendant | : | No appearance |
| Fourth Defendant | : | No appearance |
| Fifth Defendant | : | No appearance |
| Sixth Defendant | : | No appearance |
Solicitors:
| Plaintiff | : | Clayton Utz |
| First Defendant | : | HWL Ebsworth Lawyers (Perth) |
| Second Defendant | : | HWL Ebsworth Lawyers (Perth) |
| Third Defendant | : | Allens |
| Fourth Defendant | : | Allens |
| Fifth Defendant | : | Lavan |
| Sixth Defendant | : | Barry Nilsson Lawyers (WA) |
Cases referred to in decision:
ACN 116 149 092 Pty Ltd v Coopers Brewery Ltd [2006] FCA 1119
Frigger v Professional Services of Australia Pty Ltd [No 2] [2016] WASCA 68
IBN Corporation Pty Ltd v Banjyma Aboriginal Corporation [2009] WASC 279
Insurance Commission of Western Australia v Antony Leslie John Woodings as Liquidator of The Bell Group Ltd (in liq) [No 4] [2018] WASC 186
McClure v Mayor and Councillors of the City of Stirling [No 3] [2009] WASC 247; (2009) 170 LGERA 138
One.Tel Ltd v Deputy Commissioner of Taxation [2000] FCA 270; (2000) 101 FCR 548
Re The Minister for Immigration and Ethnic Affairs of the Commonwealth of Australia; Ex parte Lai Qin [1997] HCA 6; (1997) 186 CLR 622
Vagg v McPhee [No 2] [2013] NSWCA 126
Walter v Buckeridge [No 4] [2011] WASC 313
HILL J:
On 8 March 2022, the plaintiff commenced these proceedings against the first to fifth defendants. The plaintiff's claim arose out of the transfer by the first and second defendants to the fifth defendant of all of their rights under financing agreements to which the plaintiff and Societe D'Exploitation de Kipoi SA (SEK) (the borrower) were parties. The plaintiff contended, for various reasons, that the transfer was invalid and sought a declaration to this effect.
On 1 December 2022, the plaintiff was given leave to discontinue the proceedings. The only issue that remains is whether costs orders should be made in respect of two applications filed by the plaintiff in the proceedings. The fifth and sixth defendants say that the plaintiff should pay their costs of these applications on an indemnity basis. The plaintiff opposes any order for costs being made and says the appropriate order is that there be no order as to costs in respect of both applications.
For the reasons which follow, I consider that:
(a)the plaintiff should pay the fifth and sixth defendants' costs of the Summons on an indemnity basis from (and including) 7 October 2022, including the costs of the hearing on 19 October 2022, except in so far as those costs have been unreasonably incurred, such costs to be taxed if not agreed; and
(b)there be no order as to costs of the plaintiff's application by letter dated 28 November 2022.
Relevant procedural history
The third and fourth defendants did not play an active part in the proceedings. At an early stage, each gave a notice to abide the decision of the court.
On 1 June 2022, the plaintiff filed a chambers summons seeking orders for the joinder of the sixth defendant and for the sixth defendant to be appointed as representative for nine different corporate entities (Tiger Group Entities), including SEK (Summons). The basis for the application was the contention that each of the Tiger Group Entities was a subsidiary of the sixth defendant, and it would therefore be efficient and minimise the cost and complexity of the proceedings to make the orders sought.
On 26 July 2022, orders were made by consent that the sixth defendant be joined as a defendant to the proceedings.
The remainder of the Summons was opposed by the fifth and sixth defendants. On 10 August 2022, directions were made to program the Summons through to a hearing on 24 October 2022. On 27 September 2022, the timeframes for the filing of documents were extended by consent.
On 18 October 2022, the plaintiff filed a minute of proposed orders to vacate the hearing of the Summons. The basis for the minute was the receipt on or about 30 September 2022 of a prepayment notice foreshadowing the payment of all amounts due and payable to the plaintiff under the financing documents by 31 October 2022. If this prepayment was received, the plaintiff (save any other change in circumstance) indicated it intended to discontinue the proceedings.
On 19 October 2022, orders were made vacating the hearing of the Summons and relisting it for hearing on 1 December 2022.
On 3 November 2022, the plaintiff was repaid all amounts owing to it under the financing agreements. Following repayment, between 3 November 2022 and 8 November 2022, the solicitors for the fifth defendant invited the plaintiff to discontinue the proceedings.
Between 24 October 2022 and 8 November 2022, the plaintiff sought further information as to whether the financing agreements had come to an end. The other parties refused to provide any further information and confirmed this on 12 November 2022.
On 18 November 2022, the plaintiff instructed its solicitors to file an application for leave to discontinue the proceedings. The application was filed on 28 November 2022. The application was based on a material change in the repayment of all amounts owed to the plaintiff under the financing agreements on 3 November 2022. In conferral, two issues were raised by the defendants: first, whether any conditions should be imposed on the plaintiff's grant of leave to discontinue; and second, whether costs orders should be made.
On 29 November 2022, the plaintiff filed a minute of proposed orders in which it sought to adjourn the hearing of the Summons sine die, vacate the existing directions and program its application for leave to discontinue the proceedings.
Following a relatively short hearing on 1 December 2022, orders were made giving the plaintiff leave to discontinue the proceedings against the third to sixth defendants with no order as to the costs of the proceedings. The question as to what costs orders should be made in respect of the Summons, as well as the plaintiff's application for an adjournment (by way of a minute of proposed orders dated 29 November 2022), were reserved to be determined on the papers, with leave for the plaintiff to file responsive submissions to the fifth and sixth defendants' application for costs.
On 6 December 2022, orders were made by consent giving leave to the plaintiff to discontinue the proceedings against the first and second defendants. Following these orders, all issues between these parties have been resolved.
Legal principles
Pursuant to O 23 r 2(3) of the Rules of the Supreme Court 1971 (WA) (Rules), the court may grant leave to a plaintiff to discontinue an action on such terms as it thinks fit, including as to the costs of the action.
Where the court orders an action to be discontinued under O 23 r 2(3) of the Rules, it is not automatic that the plaintiff will be ordered to pay the costs of the other parties to the proceeding.[1] O 23 r 2(3) of the Rules is wide enough to enable the court to make any order for costs which is required by the justice of the case. In considering the appropriate order as to costs, relevant facts include the conduct of the parties in the matter and the reasons for discontinuing the proceedings.[2]
[1] IBN Corporation Pty Ltd v Banjyma Aboriginal Corporation [2009] WASC 279 [15].
[2] McClure v Mayor and Councillors of the City of Stirling [No 3] [2009] WASC 247; (2009) 170 LGERA 138 [4].
If both parties have acted reasonably in commencing and defending the proceedings and continued to act reasonably until the discontinuance of the proceedings, the proper exercise of the court's discretion will usually mean that it makes no order as to costs. As was stated by McHugh J in Re The Minister for Immigration and Ethnic Affairs of the Commonwealth of Australia; Ex parte Lai Qin, where there has been no hearing on the merits of the case:[3]
The court cannot try a hypothetical action between the parties. To do so would burden the parties with the costs of a litigated action which by settlement or extra-curial action they had avoided. …
If it appears that both parties have acted reasonably in commencing and defending the proceedings and the conduct of the parties continued to be reasonable until the litigation was settled or its further prosecution became futile, the proper exercise of the cost discretion will usually mean that the court will make no order as to the cost of the proceedings. (footnotes omitted)
[3] Re The Minister for Immigration and Ethnic Affairs of the Commonwealth of Australia; Ex parte Lai Qin [1997] HCA 6; (1997) 186 CLR 622, 624 - 625.
However, even if a party acts reasonably in commencing proceedings, it does not follow there should be no order for costs in the event the proceedings are discontinued. The question must be looked at from the perspective of both the plaintiff and the defendant.[4]
[4] Walter v Buckeridge [No 4] [2011] WASC 313 [13] - [14], [19].
In considering the appropriate costs order, it is necessary to consider the reasons for discontinuing the proceedings. As was noted by Burchett J in One.tel Ltd v Deputy Commissioner of Taxation:[5]
In my opinion, it is important to draw a distinction between cases in which one party, after litigating for some time, effectively surrenders to the other, and cases where some supervening event or settlement so removes or modifies the subject of the dispute that, although it could not be said that one side has simply won, no issue remains between the parties except that of costs. In the former type of case, there will commonly be lacking any basis for an exercise of the Court's discretion otherwise than by an award of costs to the successful party. It is the latter type of case which more often creates problems, since there may be difficulty in discerning a clear reason why one party, rather than the other, should bear the costs.
[5] One.Tel Ltd v Deputy Commissioner of Taxation [2000] FCA 270; (2000) 101 FCR 548 [6].
In ACN 116 149 092 Pty Ltd v Coopers Brewery Ltd,[6] Finn J granted leave to the plaintiff to discontinue the proceedings but ordered it to pay the defendant's costs. His Honour stated:[7]
As I foreshadowed, I am satisfied that an order for costs is appropriate. While it cannot be said that the institution of this proceeding was in any way unreasonable - it was one of a complex of legal manoeuvres in a hostile takeover bid ‑ it was done in the full knowledge that, consequent upon the decision of Perry ACJ, Coopers would act to alter its constitution to remove Lion Nathan Australia's pre‑emptive rights and exemptions unless either that decision was reversed on appeal or the holding of the necessary extraordinary general meeting could be prevented. Neither of these contingencies eventuated. From its inception this matter contained the seeds of its own futility, yet ACN was prepared to proceed and to put Coopers to its defence. In so doing ACN assumed the risk of the proceedings becoming futile. It cannot escape the consequences of that by the assertion that it nonetheless conducted itself reasonably. It gambled and it lost. It is entirely appropriate that it pay Coopers' costs occasioned by the discontinued claim including reserved costs and its costs of this motion.
[6] ACN 116 149 092 Pty Ltd v Coopers Brewery Ltd [2006] FCA 1119.
[7] ACN 116 149 092 Pty Ltd v Coopers Brewery Ltd [22].
In my view, these principles apply equally to the costs of an application that is discontinued by reason of the discontinuance of the proceedings.
There is no dispute that the court, in an appropriate case, has the power to make an indemnity costs order. The circumstances in which an indemnity costs order will be made were summarised by the Court of Appeal in Frigger v Professional Services of Australia Pty Ltd [No 2] in the following terms:[8]
There must be some special or unusual feature of a case to warrant an award of indemnity costs. The categories of cases in which an indemnity costs order may be made are not closed. In Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd, Woodward J said that indemnity costs were appropriate where an action 'has been commenced or continued in circumstances where the applicant, properly advised, should have known that he had no chance of success'. As Pullin J observed in Flotilla Nominees Pty Ltd v Western Australian Land Authority, an order for indemnity costs may be seen as a 'mark of disapproval on the part of the court about the improper or unreasonable conduct of litigation'. It is sufficient to enliven the discretion to award indemnity costs that, for whatever reasons, a party persists in what should, on proper consideration, seem to be a hopeless case. (footnotes omitted)
[8] Frigger v Professional Services of Australia Pty Ltd [No 2] [2016] WASCA 68 [81] (Buss and Murphy JJA).
What costs order should be made in relation to the Summons?
The fifth and sixth defendants sought orders for the plaintiff to pay their costs of the Summons on an indemnity basis. In relation to the sixth defendant, indemnity costs are sought from 10 August 2022. These parties advance three primary reasons in support of their contention that indemnity costs orders should be made.[9] First, the plaintiff's application to appoint the sixth defendant to be the representative of Tiger Group Entities had no reasonable prospects of success. Second, the plaintiff's conduct in refusing the proposals put forward by the fifth and sixth defendants and Yingkou Yangzhou Trade Co Ltd[10] (YYT) to resolve the Summons was unreasonable. Third, the plaintiff unreasonably and unnecessarily increased their costs of the Summons by their delay in advising the fifth and sixth defendants and the court that it may discontinue the proceedings.
[9] The plaintiff's submissions contend the fifth defendant does not rely on the third reason. I do not accept this as the fifth defendant's submissions expressly refer to the sixth defendant's submissions in support of its application for indemnity costs. See [32] Fifth Defendant's submissions filed 1 December 2022.
[10] The ultimate holding company of Tiger and its subsidiaries.
The plaintiff opposed any order for costs being made, primarily on the basis that the Summons was not heard and will now not be determined given the discontinuance of the proceedings. The plaintiff also denied that it acted unreasonably in the proceedings and emphasised that a court 'will not lightly depart from awarding costs on the ordinary basis'.[11]
Did the plaintiff act unreasonably in proceeding with the Summons?
[11] Vagg v McPhee [No 2] [2013] NSWCA 126 [30] (Ward JA).
The fifth and sixth defendants submitted the Summons had no reasonable prospects of success. This was because the application was opposed by both the sixth defendant and SEK, who had advised the plaintiff it would represent itself in any proceedings.
As noted by Pritchard J in Insurance Commission of Western Australia v Antony Leslie John Woodings as Liquidator of The Bell Group Ltd (in liq)[No 4], a proposed representative's consent to their appointment is a relevant but not determinative factor of the application to do so.[12] Its consent is not a pre-condition of an exercise of the discretion to make the orders sought. Pursuant to O 18 r 13(2) of the Rules, an order can be made by the court where it appears, in all the circumstances, to be expedient to exercise the power for the purpose of 'saving expense'.
[12] Insurance Commission of Western Australia v Antony Leslie John Woodings as Liquidator of The Bell Group Ltd (in liq)[No 4] [2018] WASC 186 [125].
In circumstances where the only matter relied upon by the fifth and sixth defendants in support of their submission is a factor that is relevant to but not determinative of the application, I do not accept the Summons had no reasonable prospects of success or that it was unreasonable for the plaintiff to proceed with the Summons.
Did the plaintiff act unreasonably in failing to accept the offers to resolve the Summons?
The fifth and sixth defendants adduced evidence of a number of offers which were made both before and after the filing of the Summons in order to resolve the application.
Before the Summons was filed, the sixth defendant advised the plaintiff that it would be 'willing to explore' the option of acting as the representative for each Tiger Group Entity other than SEK. This was on the basis that there was a dispute between the parties as to whether SEK was in liquidation. This offer was repeated prior to the sixth defendant filing any documents in relation to the Summons.
On 25 August 2022, the fifth defendant's solicitors wrote to the plaintiff's solicitors offering to resolve the Summons. Under the offer, the sixth defendant would act as the representative of all Tiger Group Entities other than SEK and would file a notice of intention to abide by the decision of the court, and that another party would procure SEK to enter an appearance by no later than 23 December 2022. This offer was expressed to be a Calderbank offer and was open for acceptance until 7 September 2022. On 6 September 2022, the sixth defendant confirmed its preparedness to resolve the Summons on this basis.
On 14 September 2022, the plaintiff's solicitors responded and expressed the view that the offer was incapable of acceptance as it did not address the requirements of the Rules for leave to serve the writ out of the jurisdiction or personal service on SEK.
On 16 September 2022, the fifth and sixth defendants made a further offer to resolve the Summons. They proposed that the fifth and sixth defendants would consent to the joinder of SEK as a defendant and that YYT would procure the entry of an unconditional appearance by SEK in the proceedings by no later than 23 December 2022 (which would waive any irregularity in relation to the service of the writ). This offer was open for acceptance until 23 September 2022. On 29 September 2022, this offer was also rejected by the plaintiff because it did not address the previous issues raised by them, particularly as there was a dispute as to who was authorised to give instructions on behalf of SEK.
At the time each of these offers was made, there was a dispute as to whether SEK was in liquidation and who had authority to give instructions on its behalf. In these circumstances, I accept there was a real question as to the capacity in which YYT could procure the entry of any unconditional appearance by SEK.
Given these matters, I do not consider it was unreasonable for the plaintiff to reject the offers made by the fifth and sixth defendants and to proceed with the Summons.
Did the plaintiff unreasonably increase the costs of the Summons?
On 30 September 2022, the plaintiff received a notice foreshadowing the payment of all amounts due to it under the financing agreements. Despite this, no notice was given to the solicitors for the fifth and sixth defendants of the plaintiff's intention to seek an adjournment of the hearing of the Summons until 14 October 2022. The application to vacate the hearing of the Summons (by way of minute) was not filed until 18 October 2022.
On 4 and 12 October 2022, the fifth and sixth defendants filed their materials in opposition to the Summons.
Given the impending hearing on 24 October 2022, in my view, it was unreasonable for the plaintiff to wait until 14 October 2022 to advise the other parties of its intention to seek an adjournment of the hearing. No explanation was proffered by the plaintiff's solicitors for this delay. While I accept that the plaintiff needed to consider its position and seek advice after receipt of the notice, I consider this should have occurred within seven days. In my view, the plaintiff should have advised the parties and the court that it intended to apply for an adjournment by no later than 7 October 2022. It was unreasonable for it not to have done so.
However, this finding, in and of itself, does not mean that these costs should be paid on an indemnity basis. While I accept that the court should not lightly find that a party's conduct was so unreasonable as to warrant an award of indemnity costs, for the following reasons, it is my view that it is appropriate in this case for such an order to be made.
First, on receipt of the notice foreshadowing prepayment of all amounts due under the financing agreements, the plaintiff, properly advised, should have known that the proceedings would need to be discontinued. This is because, upon payment, the plaintiff would not have any relevant interest in the agreements to enable it to obtain declaratory relief.
Second, in failing to inform the fifth and sixth defendants of its intention to seek an adjournment, time was spent and costs were incurred by the fifth and sixth defendants in preparing for the hearing. These costs were entirely wasted as a consequence of the plaintiff's conduct.
Third, no explanation has been given for the delay.
Fourth, in my view, the plaintiff's failure to promptly inform the court and the parties of its intention to seek an adjournment of the hearing was unreasonable and led to wasted court time. The court should mark its disapproval of this conduct.
Fifth, while I accept that the plaintiff's application for an adjournment was opposed, significant basis for this was the wasted time and costs that had been spent preparing for the hearing. If the plaintiff's application had been made earlier, these costs would not have been incurred.
On this basis, I consider that the plaintiff should pay the fifth and sixth defendants' costs of the Summons on an indemnity basis from (and including) 7 October 2022 except in so far as those costs have been unreasonably incurred, with such costs to be taxed if not agreed. These costs should include the costs of the hearing on 19 October 2022.
What costs order should be made in relation to the orders sought on 28 November 2022?
In respect of the plaintiff's application on 28 November 2022, the fifth defendant sought orders for the plaintiff to pay their costs of the application to adjourn the Summons on an indemnity basis. The sixth defendant sought slightly different orders; namely, that the plaintiff pay its costs of its application for leave to discontinue the proceedings, to be taxed if not agreed.
The plaintiff opposed any orders being made as to the costs of this application.
The plaintiff's application filed on 28 November 2022 sought leave to discontinue the proceedings. It was not in dispute that leave was required. While the defendants did not oppose leave being granted, the memorandum of conferral records that there were disputes between the parties as to whether any conditions should be imposed on the plaintiff's grant of leave, as well as the appropriate orders as to costs.
Prepayment of all amounts payable to the plaintiff under the financing agreements occurred on 3 November 2022. I accept that it was not unreasonable for the plaintiff to seek further information and advice as to the consequences of this prepayment before making a final decision on whether to seek leave to discontinue the proceedings.
By 12 November 2022, the plaintiff had been informed that no further information would be forthcoming from the defendants. No evidence has been filed to explain why the plaintiff's solicitors did not inform the court or the other parties of its intention to seek leave to discontinue the proceedings until 28 November 2022.
This delay prevented the application for special costs being heard and determined at the hearing on 1 December 2022. While I consider the plaintiff should have taken steps well before 28 November 2022 to advise the other parties of its position, for the following reasons, I am not satisfied that any additional costs have been incurred because of this delay or that the plaintiff's conduct was unreasonable.
First, the hearing on 1 December 2022 would have been required in any event for the fifth and sixth defendants' applications for special costs orders and the plaintiff's application for leave to discontinue.
Second, the hearing on 1 December 2022 proceeded. Prior to the hearing, the fifth and sixth defendants filed all necessary material for their applications. No additional material was filed by these parties.
Third, there is no evidence as to what, if any, additional costs have been incurred by the fifth and sixth defendants as a consequence of this delay.
Given this conclusion, the appropriate costs order for the plaintiff's application dated 28 November 2022 is that there be no order as to costs.
Conclusion
For these reasons, the orders for costs will be as follows:
1.The plaintiff should pay the fifth and sixth defendants' costs of the Summons on an indemnity basis from (and including) 7 October 2022, including the costs of the hearing on 19 October 2022, except in so far as those costs have been unreasonably incurred, such costs to be taxed if not agreed.
2.There be no order as to the costs of the plaintiff's application by letter dated 28 November 2022.
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
JN
Associate to the Honourable Justice Hill
29 JULY 2024
0
8
1