JUDGE:	Button J
WHERE HELD:	Melbourne
DATE OF HEARING:	31 August 2022
DATE OF JUDGMENT:	7 September 2022
CASE MAY BE CITED AS:	Re Skytraders Pty Ltd (No 2)
MEDIUM NEUTRAL CITATION:	[2022] VSC 523

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COSTS – Offers of compromise – Where plaintiff wholly unsuccessful in making out its shareholder oppression case at trial – Where earlier offers to purchase the plaintiff’s shares in the company applied a minority discount without sufficient justification – Where later offer to purchase the plaintiff’s shares in the company made shortly before trial offered a price within the range of competing expert valuations without the application of a minority discount – Where weakness of aspects of the plaintiff’s case should have been apparent to it at the time of the later offer – Whether rejection of offers of compromise unreasonable – Rejection of earlier offers reasonable – Rejection of later offer unreasonable – Supreme Court (General Civil Procedure) Rules 2015 (Vic) O 26 - Hazeldene’s Chicken Farm Pty Ltd v Victorian WorkCover Authority (No 2) (2005) 13 VR 435.

COSTS – Indemnity or standard basis – Where principal judgment found that it was not necessary to determine allegations made against a specific defendant – Where defendant joined to allow plaintiff to respond to a defence not ultimately taken by the primary defendants – Where defendant made a ‘walk away’ offer that the plaintiff discontinue the proceeding against him shortly after the proceeding commenced – Whether joinder of the defendant for ulterior purposes such as to warrant the award of indemnity costs in the defendant’s favour – Whether ‘walk away’ offer sufficient to ground an indemnity costs order – Neither joinder nor ‘walk away’ offer sufficient to ground an indemnity costs order.

COSTS – Indemnity or standard basis – Where plaintiff made allegations that impugned certain defendants’ honesty and conduct – Where evidence at trial tended to support the allegations, but it was not necessary to make findings – Where those defendants prepared witness statements, but were not called to give evidence – Whether those defendants should be denied their costs, or alternatively the costs of preparing their witness statements – No basis to deny the defendants’ costs.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	G Bigmore QC S Rubenstein	Colin Biggers & Paisley
For the First, Second and Eighth Defendants	P Collinson QC D Gration	William James
For the Third and Seventh Defendants	C van Proctor	McCullough Robertson Lawyers

TABLE OF CONTENTS

Introduction........................................................................................................................................ 1

The parties’ positions........................................................................................................................ 1

Mackay parties’ position.............................................................................................................. 1
Sallab and Mr Sharp’s position................................................................................................... 2
Premier’s position......................................................................................................................... 2
Other defendants........................................................................................................................... 3

The offers............................................................................................................................................. 3

The August Offer.......................................................................................................................... 3
The January Offer.......................................................................................................................... 4
The February Offer.......................................................................................................................…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Re Skytraders Pty Ltd (No 2)

Details

AGLC: Re Skytraders Pty Ltd (No 2) [2022] VSC 523
Case: [2022] VSC 523
Decision Date: 7 September 2022

CaseChat Overview and Summary

The case of Re Skytraders Pty Ltd (No 2) involved a shareholder oppression dispute. The plaintiff, who was wholly unsuccessful in making out its case at trial, sought to recover costs associated with the proceedings. The defendants had made two offers to purchase the plaintiff's shares in the company. The first offer applied a minority discount without sufficient justification, while the second offer made shortly before the trial offered a price within the range of competing expert valuations without applying a minority discount. The court was required to determine whether the rejection of these offers was reasonable and whether the costs should be awarded on an indemnity or standard basis.

The court examined the nature of the offers of compromise and the circumstances under which they were made. It found that the rejection of the first offer was reasonable as it applied a minority discount without adequate justification. However, the rejection of the second offer, which offered a price within the range of competing expert valuations without applying a minority discount, was deemed unreasonable. The court also considered the joinder of a defendant for ulterior purposes and a 'walk away' offer made by the defendant shortly after the proceedings commenced. It concluded that neither the joinder nor the 'walk away' offer were sufficient to warrant the award of indemnity costs.

In determining the basis of costs, the court found that the plaintiff's allegations impugned certain defendants' honesty and conduct. Although the evidence tended to support these allegations, it was not necessary to make findings. The defendants had prepared witness statements but were not called to give evidence. The court held that there was no basis to deny the defendants their costs or the costs of preparing their witness statements. Therefore, the costs were to be awarded on a standard basis.

The final orders of the court were that the plaintiff's costs were to be assessed on a standard basis, and the defendants were to receive their costs and the costs of preparing their witness statements. The court found that the rejection of the second offer was unreasonable, and the joinder of the defendant and the 'walk away' offer were not sufficient to warrant the award of indemnity costs.

Orders