Owston Nominees No 2 Pty Ltd v Clambake Pty Ltd
[2011] WASCA 76 (S)
•1 APRIL 2011
OWSTON NOMINEES NO 2 PTY LTD -v- CLAMBAKE PTY LTD [2011] WASCA 76 (S)
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2011] WASCA 76 (S) | |
| THE COURT OF APPEAL (WA) | |||
| Case No: | CACV:34/2009 | 19-21 OCTOBER 2010 & ON THE PAPERS | |
| Coram: | McLURE P PULLIN JA MURPHY JA | 1/04/11 | |
| 1/06/11 | |||
| 13 | Judgment Part: | 1 of 1 | |
| Result: | CACV 34 of 2009 Leave to proceed in the appeal granted First appellant's appeal dismissed First appellant and first appellant's receiver to pay first, second and third respondents' costs of the appeal First and second appellants to pay the first, second and third respondents' costs of action CIV 2093 of 2003 CACV 53 of 2009 Leave to proceed in the appeal granted Appeal upheld Appellant to pay the respondent's costs of the appeal Remaining matters as to costs or otherwise in action CIV 2093 of 2003 remitted to trial judge CACV 6 of 2010 Appeal dismissed | ||
| B | |||
| PDF Version |
| Parties: | OWSTON NOMINEES NO 2 PTY LTD TIPPERARY PROJECTS PTY LTD WARREN PERRY ANDERSON CLAMBAKE PTY LTD LAND CAPITAL PTY LTD IVOR FREDERICK COHEN |
Catchwords: | Costs Calderbank offer Where litigation conducted by receiver Whether appropriate to order costs against non-party secured creditor who appointed the receiver Practice and procedure Where appellant failed to challenge factual finding on which outcome of appeal depended Whether appropriate to correct error by upholding appeal under the 'slip' rule |
Legislation: | Corporations Act 2001 (Cth), s 419, s 471B Supreme Court Act 1935 (WA), s 37 |
Case References: | Clambake Pty Ltd v Tipperary Projects Pty Ltd [No 3] [2009] WASC 52 Clambake Pty Ltd v Tipperary Projects Pty Ltd [No 5] [2009] WASC 141 Clambake Pty Ltd v Tipperary Projects Pty Ltd [No 7] [2009] WASC 390 Ford Motor Company of Australia Ltd v Lo Presti [2009] WASCA 115 Knight v FP Special Assets Ltd [1992] HCA 28; (1992) 174 CLR 178 Owston Nominees No 2 Pty Ltd v Clambake Pty Ltd [2011] WASCA 76 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA TITLE OF COURT : THE COURT OF APPEAL (WA) CITATION : OWSTON NOMINEES NO 2 PTY LTD -v- CLAMBAKE PTY LTD [2011] WASCA 76 (S) CORAM : McLURE P
- PULLIN JA
MURPHY JA
DECISION : 1 JUNE 2011 FILE NO/S : CACV 34 of 2009 BETWEEN : OWSTON NOMINEES NO 2 PTY LTD
- First Appellant
TIPPERARY PROJECTS PTY LTD
Second Appellant
WARREN PERRY ANDERSON
Third Appellant
AND
CLAMBAKE PTY LTD
First Respondent
LAND CAPITAL PTY LTD
Second Respondent
IVOR FREDERICK COHEN
Third Respondent
(Page 2)
FILE NO/S : CACV 53 of 2009 BETWEEN : CLAMBAKE PTY LTD
- Appellant
AND
OWSTON NOMINEES NO 2 PTY LTD
Respondent
- Appellant
AND
TIPPERARY PROJECTS PTY LTD
First Respondent
WARREN PERRY ANDERSON
Second Respondent
(Page 3)
ON APPEAL FROM:
For File No : CACV 6 of 2010
Jurisdiction : SUPREME COURT OF WESTERN AUSTRALIA
Coram : EM HEENAN J
Citation : CLAMBAKE PTY LTD -v- TIPPERARY PROJECTS PTY LTD [No 7] [2009] WASC 390
File No : CIV 1707 of 2003, CIV 2093 of 2003
For File No : CACV 34 of 2009
Jurisdiction : SUPREME COURT OF WESTERN AUSTRALIA
Coram : EM HEENAN J
Citation : CLAMBAKE PTY LTD -v- TIPPERARY PROJECTS PTY LTD [No 3] [2009] WASC 52
File No : CIV 1707 of 2003, CIV 2093 of 2003
For File No : CACV 53 of 2009
Jurisdiction : SUPREME COURT OF WESTERN AUSTRALIA
Coram : EM HEENAN J
Citation : CLAMBAKE PTY LTD -v- TIPPERARY PROJECTS PTY LTD [No 3] [2009] WASC 52
File No : CIV 1707 of 2003, CIV 2093 of 2003
Catchwords:
Costs - Calderbank offer - Where litigation conducted by receiver - Whether appropriate to order costs against non-party secured creditor who appointed the receiver
Practice and procedure - Where appellant failed to challenge factual finding on which outcome of appeal depended - Whether appropriate to correct error by upholding appeal under the 'slip' rule
(Page 4)
Legislation:
Corporations Act 2001 (Cth), s 419, s 471B
Supreme Court Act 1935 (WA), s 37
Result:
CACV 34 of 2009
Leave to proceed in the appeal granted
First appellant's appeal dismissed
First appellant and first appellant's receiver to pay first, second and third respondents' costs of the appeal
First and second appellants to pay the first, second and third respondents' costs of action CIV 2093 of 2003
CACV 53 of 2009
Leave to proceed in the appeal granted
Appeal upheld
Appellant to pay the respondent's costs of the appeal
Remaining matters as to costs or otherwise in action CIV 2093 of 2003 remitted to trial judge
CACV 6 of 2010
Appeal dismissed
Category: B
Representation:
CACV 34 of 2009
Counsel:
First Appellant : No appearance (On the papers)
Second Appellant : No appearance (On the papers)
Third Appellant : No appearance (On the papers)
First Respondent : No appearance (On the papers)
Second Respondent : No appearance (On the papers)
Third Respondent : No appearance (On the papers)
(Page 5)
Solicitors:
First Appellant : Lavan Legal
Second Appellant : No appearance
Third Appellant : No appearance
First Respondent : Minter Ellison
Second Respondent : Sparke Helmore
Third Respondent : Minter Ellison
CACV 53 of 2009
Counsel:
Appellant : No appearance (On the papers)
Respondent : No appearance (On the papers)
Solicitors:
Appellant : Minter Ellison
Respondent : Lavan Legal
CACV 6 of 2010
Counsel:
Appellant : No appearance (On the papers)
First Respondent : No appearance (On the papers)
Second Respondent : No appearance (On the papers)
Solicitors:
Appellant : Minter Ellison
First Respondent : No appearance
Second Respondent : No appearance
Case(s) referred to in judgment(s):
Clambake Pty Ltd v Tipperary Projects Pty Ltd [No 3] [2009] WASC 52
Clambake Pty Ltd v Tipperary Projects Pty Ltd [No 5] [2009] WASC 141
Clambake Pty Ltd v Tipperary Projects Pty Ltd [No 7] [2009] WASC 390
Ford Motor Company of Australia Ltd v Lo Presti [2009] WASCA 115
Knight v FP Special Assets Ltd [1992] HCA 28; (1992) 174 CLR 178
Owston Nominees No 2 Pty Ltd v Clambake Pty Ltd [2011] WASCA 76
(Page 6)
1 JUDGMENT OF THE COURT: On 1 April 2011 the court delivered its reasons for judgment in these three appeals: Owston Nominees No 2 Pty Ltd v Clambake Pty Ltd [2011] WASCA 76. The parties who participated in the appeals have filed written submissions as to the orders that should be made to give effect to the reasons.
2 On 12 November 2010 the Federal Court ordered that Owston Nominees No 2 Pty Ltd (Owston) be wound up and that Jeffrey Laurence Herbert be appointed the liquidator. Under s 471B of the Corporations Act 2001 (Cth), a litigant cannot proceed with a proceeding against a company in liquidation or in relation to its property except by leave of the court. Clambake Pty Ltd (Clambake) seeks leave under that section to proceed with the appeal in CACV 53 of 2009. Clambake, Land Capital Pty Ltd (Land Capital) and Mr Cohen seek leave to proceed with appeal CACV 34 of 2009. The liquidator of Owston does not oppose the grant of leave. No party who participated in the appeals opposes the grant of leave. If leave is not given the court will be unable to make orders disposing of the appeals which are the culmination of over eight years of contested litigation. The appropriate course is to make orders in both appeals granting leave to proceed under s 471B of the Corporations Act.
Appeal CACV 53 of 2009 (the first appeal)
3 Clambake filed a minute of proposed orders, three out of 10 of which are opposed. They are as follows:
6. The Respondent pay the Appellant's costs of action CIV 2093 of 2003, including all counterclaims and other cross-claims:
6.1 up to 13 October 2008, including any costs reserved and the costs of administering and answering interrogatories, as agreed or taxed on a party/party basis without regard to the applicable scale limits; and
6.2 incurred subsequent to 13 October 2008, including any costs reserved, as agreed or taxed on an indemnity basis and, if appropriate, without regard to the applicable scale limits.
5 The other opposed orders are:
(Page 7)
- 7. The Respondent pay the Appellant's costs of its counterclaim against Warren Anderson, the Defendant to Counterclaim in CIV 2093 of 2003 for an indemnity pursuant to the guarantee.
8. Orders 6 and 8 of the Honourable Justice EM Heenan of 14 December [2009] be set aside and in lieu thereof there be an order that 'The Respondent pay the costs of Warren Anderson, the Defendant to Counterclaim in CIV 2093 of 2003 in relation to the counterclaim for an indemnity pursuant to the guarantee'.
6 Owston objects to so much of proposed order 6 that requires it to pay the costs of all counterclaims and cross-claims in CIV 2093 of 2003 and to the claim for indemnity costs.
7 It can be inferred that the costs referred to in proposed orders 7 and 8 are not intended to be the subject of proposed order 6. The only other relevant counterclaim (or cross-claim) in the fire claim affecting Clambake was its counterclaim for an indemnity against Tipperary Projects Pty Ltd (Tipperary) for the full amount that Clambake owed Owston. The trial judge had previously ordered that Tipperary pay Clambake's costs of Tipperary's application for relief preventing Clambake from enforcing its judgment against Tipperary on Clambake's counterclaim. There is no application for that order to be set aside.
8 Owston's claim against Clambake in the fire claim had the inevitable consequence that Clambake would claim against Tipperary for an indemnity under the lease. In the circumstances, it is appropriate that Owston pay the costs of Clambake's counterclaim against Tipperary. Proposed order 6 should be amended to read 'including all counterclaims and other cross-claims against the respondent and Tipperary'.
9 The principles governing an award of indemnity costs on the basis of a Calderbank offer are set out in Ford Motor Company of Australia Ltd v Lo Presti [2009] WASCA 115 [16] - [32]. In summary, they are:
• a Calderbank offer will not justify an award of indemnity costs unless its rejection was unreasonable;
• all the relevant facts and circumstances must be considered in determining whether a party's rejection of a Calderbank offer was unreasonable;
• 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 its rejection was unreasonable;
(Page 8)
- • relevant circumstances in assessing reasonableness include:
(a) the stage of the proceeding at 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 it being rejected.
11 By letter dated 20 October 2008, Clambake offered to settle the fire claim for $1,250,000 plus costs and disbursements (the second offer). The second offer remained open for acceptance until 10.00 am on Thursday 23 October 2008.
12 By letter dated 19 March 2009, Clambake offered to settle the fire claim for the sum of $1 million inclusive of costs and disbursements (the third offer). The third offer remained open for acceptance until 10.00 am Friday 20 March 2009. The reasons for judgment were published on 9 March 2009 and the offer was made the day before the orders were to be made. The offer was for slightly less than the judgment sum.
13 The timing of the offers, the amount of the offers compared with the amount in issue or awarded in the fire claim, the significant legal costs that would already have been incurred, the fact that the offers were confined to the fire claim and the very short periods for which the offers remained open, rather suggests that the offers were made primarily with costs in mind rather than as genuine attempts to settle one part of the
(Page 9)
- litigation between the parties. However, it is unnecessary to determine what was Clambake's purpose in making the offers.
14 The appellant has not discharged its onus of establishing that Owston acted unreasonably in the circumstances in rejecting the offers. The fact that Owston was successful at first instance supports the proposition that it was not unreasonable for it to predict that it and the other plaintiffs may be successful in the fire claim. A very large sum was at stake (Owston was awarded more than $20 million). The other factors listed above also weigh against a conclusion that the rejection of the offers was unreasonable. Indemnity costs should be refused.
15 Proposed orders 7 and 8 relate to orders made by the trial judge on 14 December 2009 (the December orders) which were the subject of Clambake's appeal in CACV 6 of 2010. By order 5 of the December orders, the trial judge dismissed Clambake's claim against Mr Anderson under the guarantee for him to indemnify Clambake in relation to Clambake's liability to Owston. Order 6 of the December orders provides that Clambake pay Mr Anderson's costs of and incidental to the claim the subject of order 5. Order 7 of the December orders provides:
On Mr Anderson's cross-claim against Clambake for relief under s 87 of the Trade Practices Act it is declared and ordered that by reason of the misleading and deceptive conduct of Clambake, the contractual liability which Mr Anderson otherwise had under the guarantee and clause 4.01 of the lease to indemnify Clambake for its liability to Owston as adjudged by the judgments of 20 March 2009 and 20 May 2009 totalling $20,102,111.43 shall not be enforced.
16 Order 8 of the December orders provides that Clambake pay Mr Anderson's costs of and incidental to the claim the subject of order 7.
17 Clambake's counterclaim against Mr Anderson and Mr Anderson's responsive cross-claim (the post judgment claims) were made after the trial judge had handed down his reasons for decision on 9 March 2009 in Clambake Pty Ltd v Tipperary Projects Pty Ltd [No 3] [2009] WASC 52. The trial judge delivered his reasons for decision on the post judgment claims in December 2009: Clambake Pty Ltd v Tipperary Projects Pty Ltd [No 7] [2009] WASC 390. Owston was separately represented and took no part in the post judgment proceedings. The post judgment claims could and should have been litigated with all of the other claims, with little if any increase in costs. Clambake was responsible for that failure. Moreover, it is apparent from the trial judge's reasons that Clambake's unsuccessful reliance on res judicata, issue estoppel and Anshun estoppel
(Page 10)
- figured prominently in the post trial proceedings. Against that background, we would not in the exercise of the costs discretion require Owston to pay Clambake's costs of the post judgment claims between Clambake and Mr Anderson.
18 The appellant in the first appeal and the respondents in appeal CACV 34 of 2009 seek general costs orders for action CIV 2093 of 2009. To avoid confusion there should be only one order. As Clambake is also a respondent in CACV 34 of 2009, the costs order will be made in that appeal.
19 Accordingly, we hereby make the following orders in CACV 53 of 2009:
1. Leave be granted to the appellant to proceed in this appeal pursuant to s 471B of the Corporations Act.
2. The appeal is upheld.
3. The judgment in favour of the respondent in action CIV 2093 of 2003 in the sum of $20,102,111.43 be set aside and in lieu thereof, judgment be entered in favour of the appellant.
4. The sum of $10 million paid by the appellant pursuant to the orders of EM Heenan J made on 18 November 2009 be repaid to the appellant together with any accrued interest.
5. The respondent pay the appellant's costs of the appeal, including any reserved costs, as agreed or taxed without regard to the applicable scale limits.
6. All remaining outstanding matters as to costs or otherwise in action CIV 2093 of 2003 be remitted to EM Heenan J for determination on a date to be fixed.
7. The parties have liberty to apply on seven days' notice in relation to these orders.
Appeal CACV 6 of 2010 (the second appeal)
20 Clambake was unsuccessful in its second appeal. The court foreshadowed its intention to order that the appeal be dismissed. However, Clambake seeks orders in the following terms:
1. Appeal upheld.
(Page 11)
- 2. Judgment of the court below given on 14 December 2009 in favour of the second respondent (Mr Anderson) set aside.
3. Declaration and orders in favour of Mr Anderson made by EM Heenan J on 14 December 2009 set aside, in lieu thereof judgment in favour of the appellant.
4. The second respondent to pay the appellant's costs in the court below from 20 March 2009.
21 The basis for the orders sought by Clambake is this court's conclusion in the first appeal that Clambake did not engage in misleading or deceptive conduct. The respondents in the second appeal, Tipperary and Mr Anderson, were not parties to the first appeal.
22 Clambake did not in the second appeal challenge the trial judge's finding in the post judgment proceedings that Clambake engaged in misleading or deceptive conduct. As noted by the trial judge, the misleading or deceptive conduct relied on by Mr Anderson in entering into the guarantee was the same conduct relied on by Owston in the fire claim.
23 The respondents did not participate in the second appeal. Clambake contends this court should make its proposed orders either under the slip rule or in its inherent jurisdiction, relying on the inadvertence or mistake of Clambake's legal advisers. Such a course is inappropriate. Before this court can consider making the orders now sought, Clambake would need to apply for leave to amend its grounds in the second appeal to challenge the finding of misleading or deceptive conduct, personally serve that application on the respondents and the court would be obliged to provide the respondents with an opportunity to be heard, if they so required. No such application has been made.
24 Clambake is in a strikingly similar position to that in which it found itself after the trial judge handed down his reasons for judgment on 9 March 2009. Clambake does not point to, or rely on, any prejudice to it arising from orders 5 and 7 of the December orders. None is obvious. Moreover, setting aside those orders would not alter the position in relation to proposed orders 7 and 8 in the first appeal. For the same reasons, we would not be disposed to order that Mr Anderson pay Clambake's costs of the trial from 20 March 2009. Having regard to the long history of the litigation, significant weight should be attached to the need for finality. We hereby order that the second appeal be dismissed.
(Page 12)
Appeal no CACV 34 of 2009 (the third appeal)
25 The third appeal was commenced on behalf of Owston, Tipperary and Mr Anderson by appeal notice dated 27 March 2009. The appeal notice was prepared and filed by Solomon Bros who had the conduct of the rent and fire claims for those parties.
26 Around May 2009 Owston appointed its present solicitors, Lavan Legal, to act on its behalf in the fire claim. The change of solicitors resulted from a secured creditor of Owston, Balanced Securities Ltd, having appointed a receiver. The receiver appointed by Balanced Securities was appointed only in respect of Owston's interest in the judgment it had obtained against Clambake in the fire claim and in respect of all associated interests which Owston had or may have in those proceedings including interests arising from any appeal or appeals: Clambake Pty Ltd v Tipperary Projects Pty Ltd [No 5] [2009] WASC 141 [89].
27 The decision-making process and the financial interests of Owston became different to those of Tipperary and Anderson as from the appointment of the receiver. On 16 September 2009, Lavan Legal filed a notice of change of solicitor and assumed the conduct of the third appeal on behalf of Owston.
28 Clambake, Land Capital and Mr Cohen seek an order that Owston, Owston's receiver, Mr Kim Wallman of HLB Mann Judd and Balanced Securities, jointly and severally pay their costs of the appeal. There is no opposition to the order sought in respect of the receiver, Mr Wallman. However, the order against Balanced Securities is opposed.
29 Section 37 of the Supreme Court Act 1935 (WA) empowers the court to make an order for costs against a person who is not a party to the action. It is in the interests of justice in this case that the costs order extend to the receiver: see Knight v FP Special Assets Ltd (1992) 174 CLR 178, 192 - 193. There is nothing in the material before the court to suggest that the interests of justice will not be fully protected by the costs order against the receiver. In particular, there is no suggestion that Clambake will be disadvantaged if the scope of the order is not broadened to also include the secured creditor who appointed the receiver. To limit the order to the receiver who had the conduct of the appeal on behalf of Owston is consistent with the approach in s 419 of the Corporations Act which makes a receiver liable for the debts incurred in the course of the receivership rather than the creditor appointing the receiver. We would decline to make a costs order against Balanced Securities.
(Page 13)
30 Proposed order 4 is in substantially the same terms as proposed order 6 in the first appeal. For the same reasons, we would confine the counterclaims to those against Owston and Tipperary and decline to make an order for indemnity costs. We hereby make the following orders in the third appeal:
1. Leave be granted to the first, second and third respondents to proceed in this appeal pursuant to s 471B of the Corporations Act.
2. The first appellant's appeal is dismissed.
3. The first appellant and the first appellant's receiver, Mr Kim Wallman of HLB Mann Judd, jointly and severally pay the first, second and third respondents' costs of the appeal, including any costs reserved, to be taxed without regard to the applicable scale limits.
4. The first and second appellants (Owston and Tipperary respectively) jointly and severally pay the first, second and third respondents' (Clambake, Land Capital and Mr Cohen respectively) costs of action CIV 2093 of 2003, including all counterclaims and cross-claims against Owston and Tipperary, any reserved costs and the costs of administering and answering interrogatories, as agreed or taxed without regard to the applicable scale limits.
5. There be liberty to apply on seven days' notice in relation to these orders.
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