Re Vibe-Tastic Pty Ltd (No 2) - [2024] VSC 582

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMERCIAL COURT

CORPORATIONS LIST

S ECI 2023 00493

IN THE MATTER of VIBE-TASTIC PTY LTD (ACN 656 981 636)

BETWEEN:

PRIYANKA PRIYANKA	Plaintiff
v
SHWETA JAIN	Defendant

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JUDGE:	Waller J
WHERE HELD:	Melbourne
DATE OF HEARING:	On the papers following submissions filed on 4 and 6 September 2024
DATE OF JUDGMENT:	19 September 2024
CASE MAY BE CITED AS:	Re Vibe-Tastic Pty Ltd (No 2)
MEDIUM NEUTRAL CITATION:	[2024] VSC 582

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COSTS – Plaintiff’s offer of compromise – Defendant’s Calderbank offer – Whether plaintiff’s failure to accept offer was unreasonable – No order as to costs.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr M Black	Nevile & Co
For the Defendant	In person

HIS HONOUR:

A. INTRODUCTION

I published my reasons for judgment in this proceeding on 30 August 2024 (‘Principal Judgment’)[1] and final orders were made on 6 September 2024, except in relation to costs.
[1]Re Vibe-Tastic Pty Ltd [2024] VSC 529.

I concluded that both parties had, to some extent, made out their claims of oppressive conduct against the other.

I ordered that Ms Jain purchase Ms Priyanka’s interest in Vibe-Tastic Pty Ltd (‘Company’) for a total sum of $170,282.90 comprising $30,387.50 for Ms Priyanka’s 50% interest in the shares in the Company, $132,608 for Ms Priyanka’s capital contribution to the Company and $7,287.40 representing half the sum of $14,574.81 which Ms Jain caused the Company to overpay herself. If Ms Jain failed to pay that amount within 30 days of the Court’s order then Ms Priyanka had the opportunity to purchase Ms Jain’s interest in the Company within 60 days of the Court’s order by paying her $153,709.10 comprising $30,387.50 for Ms Jain’s 50% interest in the shares, $130,609 for Ms Jain’s capital contribution less $7,287.40 representing half the sum of $14,574.81 which Ms Jain caused the Company to overpay herself. If neither party purchased the other’s interest in the Company within the time provided, then the Company would be wound up.

On 12 September 2024, the Court was informed that Ms Jain had paid Ms Priyanka the sum of $170,282.90 as ordered by the Court.

B. PARTIES’ SUBMISSIONS

The parties have filed submissions identifying the costs orders they seek.

Ms Priyanka contends that Ms Jain should pay Ms Priyanka’s costs on a standard basis up to 12 July 2023 and thereafter on an indemnity basis. She relies on an offer of compromise dated 10 July 2023, made pursuant to Order 26 Part 2 of the Supreme Court (General Civil Procedure) Rules 2015 (‘Offer of Compromise’). The Offer of Compromise proposed that Ms Priyanka pay Ms Jain $220,000 inclusive of costs to acquire all of Ms Jain’s shares and interest in the Company.

Ms Priyanka argues that she obtained a result no less favourable than that set out in the Offer of Compromise, in accordance with r 26.08(2). She contends that while the Court’s determination gave…

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.

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Details

Case: [2024] VSC 582
Decision Date: 19 September 2024

CaseChat Overview and Summary

In the matter of Re Vibe-Tastic Pty Ltd (No 2), the court was tasked with determining the costs associated with the proceedings between the plaintiff and the defendant. The plaintiff, who had initiated the litigation, made an offer of compromise under the rules governing such matters. Subsequently, the defendant responded with a Calderbank offer, which is a form of settlement offer made without admitting liability but on the condition that if the offer is not accepted and the offeror prevails in the litigation, the costs of the proceedings will be awarded against the offeree. The central issue before the court was whether the plaintiff's decision not to accept the defendant's Calderbank offer was unreasonable, thereby justifying an order for the plaintiff to bear the defendant's costs.

The court considered the factors relevant to determining whether the plaintiff's rejection of the offer was unreasonable. These factors included the strength of the plaintiff's case, the terms of the offer, the stage at which the offer was made, and the likelihood of the plaintiff succeeding at trial. The court found that the plaintiff's case had merits and that the defendant's offer did not sufficiently account for the plaintiff's position. The offer was made relatively late in the proceedings, and the court concluded that the plaintiff's decision not to accept the offer was not unreasonable given the circumstances.

Given the court's findings, it determined that there were no grounds to make an order for the plaintiff to bear the defendant's costs. The court emphasised that while Calderbank offers can influence the outcome of cost orders, they are not absolute determinants. The plaintiff's decision not to accept the offer was considered reasonable in light of the strengths of the plaintiff's case and the timing of the offer. Consequently, the court declined to make an order as to costs in favour of the defendant.

Orders