Prospect Resources v Molyneux (No.2)

The case of Prospect Resources v Molyneux (No.2) involved a dispute between Prospect Resources, the plaintiff, and Molyneux, the defendant. The primary issue was the assessment of costs, specifically whether the trial judge departed from the general rule of awarding costs on an indemnity basis. The case came before the court after a Calderbank offer was made by the defendants, which was subsequently ignored by the plaintiff. The court was required to determine whether the plaintiff's failure to engage with the Calderbank offer was unreasonable and whether it was unreasonable for the plaintiff to have commenced proceedings without first engaging with the defendants' reasoning outlined in a letter sent prior to the Calderbank offer.

The court considered the principle that a party who rejects a Calderbank offer may be ordered to pay the other party's costs on an indemnity basis if the rejection was unreasonable. In this instance, the court examined whether the plaintiff's decision not to engage with the Calderbank offer was unreasonable, given the content of the defendants' letter sent before the offer was made. The court also assessed whether it was unreasonable for the plaintiff to have commenced proceedings without first considering the defendants' reasoning in the letter. Ultimately, the court found that the plaintiff's failure to engage with the Calderbank offer was unreasonable, and that it was also unreasonable for the plaintiff to have commenced proceedings without first engaging with the defendants' reasoning in the letter.

Based on these findings, the court concluded that the trial judge did not depart from the general rule in ordering costs on an indemnity basis. The court found that the plaintiff's failure to engage with the Calderbank offer was unreasonable, and that the plaintiff's decision to commence proceedings without first engaging with the defendants' reasoning in the letter was also unreasonable. As a result, the court upheld the trial judge's order for costs on an indemnity basis. The defendants were therefore entitled to recover their costs from the plaintiff, including the costs of the Calderbank offer.