Sakari Resources Ltd v Purvis
[2016] WASCA 24 (S)
•23 MARCH 2016
SAKARI RESOURCES LTD -v- PURVIS [2016] WASCA 24 (S)
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2016] WASCA 24 (S) | |
| THE COURT OF APPEAL (WA) | |||
| Case No: | CACV:43/2015 | ON THE PAPERS | |
| Coram: | BUSS JA NEWNES JA MURPHY JA | 23/03/16 | |
| 7 | Judgment Part: | 1 of 1 | |
| Result: | Appellant to pay respondent's costs of appeal on party/party basis to date of offer and thereafter on indemnity basis | ||
| B | |||
| PDF Version |
| Parties: | SAKARI RESOURCES LTD (ARBN 132 692 481) MARTIN DAVID PURVIS |
Catchwords: | Costs Indemnity costs Appeal Calderbank offer by respondent Appeal dismissed Whether rejection of offer by appellant unreasonable |
Legislation: | Nil |
Case References: | Australian Competition and Consumer Commission v Harris Scarfe Australia Pty Ltd (No 2) [2009] FCA 433 Ford Motor Company of Australia Ltd v Lo Presti [2009] WASCA 115 Sakari Resources Ltd v Purvis [2016] WASCA 24 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA TITLE OF COURT : THE COURT OF APPEAL (WA) CITATION : SAKARI RESOURCES LTD -v- PURVIS [2016] WASCA 24 (S) CORAM : BUSS JA
- NEWNES JA
MURPHY JA
- Appellant
AND
MARTIN DAVID PURVIS
Respondent
ON APPEAL FROM:
Jurisdiction : SUPREME COURT OF WESTERN AUSTRALIA
Coram : MASTER SANDERSON
Citation : PURVIS -v- SAKARI RESOURCES LTD [2015] WASC 63
File No : CIV 2372 of 2014
Catchwords:
Costs - Indemnity costs - Appeal - Calderbank offer by respondent - Appeal dismissed - Whether rejection of offer by appellant unreasonable
Legislation:
Nil
Result:
Appellant to pay respondent's costs of appeal on party/party basis to date of offer and thereafter on indemnity basis
Category: B
Representation:
Counsel:
Appellant : On the papers
Respondent : On the papers
Solicitors:
Appellant : MKI Legal
Respondent : Ashurst Australia
Case(s) referred to in judgment(s):
Australian Competition and Consumer Commission v Harris Scarfe Australia Pty Ltd (No 2) [2009] FCA 433
Ford Motor Company of Australia Ltd v Lo Presti [2009] WASCA 115
Sakari Resources Ltd v Purvis [2016] WASCA 24
1 JUDGMENT OF THE COURT: On 2 February 2016, we dismissed an appeal by the appellant from a decision of Master Sanderson who had dismissed the appellant's application for a stay of proceedings commenced by the respondent against the appellant in the general division of this court: Sakari Resources Ltd v Purvis [2016] WASCA 24.
2 The respondent has applied for an order that the appellant pay its costs of the appeal on an indemnity basis on the ground that the appellant had rejected a Calderbank offer made by the respondent to settle the appeal. Pursuant to orders made on 2 February 2016, the application is to be determined on the papers.
The background
3 The respondent commenced proceedings against the appellant in the general division of this court (the WA proceedings) claiming the sum of AUD$668,737.55, which the respondent said was the balance of a termination payment to which he was entitled under his contract of employment with the appellant.
4 Shortly after being served with the WA proceedings, the appellant, a company incorporated in the Republic of Singapore, commenced proceedings against the respondent and two other parties in the High Court of Singapore (the Singapore proceedings) relating to the matters raised in the WA proceedings. It then made an application to the master for an order staying the WA proceedings permanently. It did so, in substance, on the ground that the continuation of the WA proceedings would be vexatious or oppressive to the appellant. In the alternative, it sought a temporary stay of the WA proceedings pending the outcome of the Singapore proceedings.
5 The master dismissed the application. He found, in substance, that Western Australia was not a clearly inappropriate forum for the WA proceedings [26].
6 The appellant filed an appeal notice on 4 March 2015 and the appellant's case on 20 March 2015. The respondent's answer was filed on 27 March 2015.
7 On 14 April 2015, the respondent's solicitors wrote to the appellant's solicitors making an offer, expressed to be a Calderbank offer, to resolve the appeal. The respondent proposed that the appeal be resolved on the basis that:
(1) (a) the application for leave to appeal and the appeal be dismissed;
(b) the appellant be entitled to 50% of its costs of the appeal to the date of the Calderbank offer on a party and party basis; and
(c) there otherwise be no order as to costs in the proceedings;
(2) the appellant file a minute of consent orders to give effect to those terms within seven days of the date of the offer.
8 In the letter, the respondent reserved the right to seek an order for indemnity costs in the event that the appeal was unsuccessful or that this court dismissed the appellant's application for a stay. Although not expressly stated, it is evident that the latter was based upon an outcome in which the appeal against the master's decision was upheld but that in re-exercising the discretion this court dismissed the appellant's application for a stay.
9 The appeal came on for hearing on 6 October 2015. We upheld the appellant's contention, in grounds 1 and 2 of the grounds of appeal, that the master had applied the wrong test. The question the master had to determine was not whether Western Australia is a clearly inappropriate forum for the WA proceedings, but whether, having regard to the controversy as a whole (including the issues raised in the Singapore proceedings), the WA proceedings were vexatious or oppressive in that they would be 'productive of serious and unjustified trouble and harassment' or 'seriously and unfairly burdensome, prejudicial or damaging' to the appellant. A further ground of appeal, relating to the master's refusal of a temporary stay, was not pressed by the appellant on the hearing of the appeal and we concluded that it was without substance.
10 It was common ground on the appeal that if the contention in grounds 1 and 2 was upheld, this court should determine the appellant's application for a permanent stay of the WA proceedings rather than remit it for rehearing. In re-exercising the discretion, we concluded that, having regard to the dispute as a whole, the matters relied upon by the appellant, both individually and collectively, fell a long way short of establishing that the continuation of the WA proceedings would be seriously and unfairly burdensome, prejudicial or damaging, or productive of serious and unjustified trouble and harassment, to the appellant.
11 We therefore dismissed the appellant's application for a stay and dismissed the appeal.
The relevant principles
12 The principles to be applied on an application for indemnity costs were not in issue. An award of indemnity costs will be justified where the rejection of a Calderbank offer was unreasonable in all the circumstances of the case. In deciding whether the rejection of an offer was unreasonable, regard should ordinarily be had to at least the following factors:
(a) the stage of the proceedings 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 the offeree rejecting it.
13 The assessment of unreasonableness is not to be made with the benefit of hindsight and the rejection of a Calderbank offer will not be unreasonable merely because the offeree is ultimately worse off that it would have been had it accepted the offer.
14 The party who made the Calderbank offer bears the onus of establishing that the court should make an award of indemnity costs.
15 See Ford Motor Company of Australia Ltd v Lo Presti [2009] WASCA 115.
The disposition of the application
16 The appellant submits that its rejection of the offer was not unreasonable. The appellant says that at the time the offer was made it considered the appeal had merit, a view that had been vindicated by the court upholding grounds 1 and 2 of the grounds of appeal. Acceptance of the offer would have meant giving up a reasonably arguable prospect of obtaining the stay, in circumstances where the amount offered by the respondent was 'relatively small' compared to the additional costs to the appellant of litigating in Western Australia, and where there was a risk that its acceptance would compromise the Singapore proceedings.
17 The appellant submitted that the nature of the issue in dispute was also a factor militating against indemnity costs. It was not a matter where there was room to reach some middle ground. It was an 'all or nothing' case. The outcome of the appeal would determine whether the proceedings were heard in Western Australia or in Singapore, and therefore whether the burden of litigating in a foreign jurisdiction fell on the appellant or the respondent.
18 We are satisfied that the respondent is entitled to an order for indemnity costs. The appellant does not contend that it was given insufficient notice of the respondent's case on appeal or that it was given inadequate time to consider the offer. In his answer, which was served some 19 days before the offer was made, the respondent denied that the master had erred in the test he applied but also made detailed submissions as to why, if the appeal were upheld, this court should exercise its discretion to refuse the application for a stay of the WA proceedings. All the evidence was on affidavit and at the time the Calderbank offer was made the appellant was in a position to make a proper assessment of its prospects of success and had an adequate opportunity to do so.
19 We do not accept the appellant's submission, in effect, that it was reasonable for the appellant to reject the offer because the amount offered was 'relatively small' compared to the additional costs the appellant would incur in litigating the dispute in this jurisdiction - a submission, we should note, that was not supported by any attempt to quantify the alleged difference.
20 Whether it was reasonable for an offeree to reject an offer of compromise is not to be determined merely by comparing the offer with the benefit the offeree stood to gain if it was ultimately successful in the litigation. It is necessary to take into account all of the circumstances of the case, including the offeree's prospects of success, viewed objectively at the time the offer was made. In this case, in order to succeed on the appeal it was necessary for the appellant to establish not only a material error by the master but also that on a proper exercise of the discretion the stay should be granted. While it succeeded on the former, on the latter this court concluded that the matters relied upon by the appellant, both individually and collectively, '[fell] a long way short'. It must have been apparent to the appellant at the time the offer was received that its case for a stay was weak.
21 In the circumstances, the offer could not be described as involving no real element of compromise on the part of the respondent. It involved the respondent both in foregoing the costs of the appeal to that point to which he would be entitled if the appeal succeeded, and in making a payment of 50% of the appellant's costs of the appeal to the date of the offer. It was an offer of significant benefit to the appellant in an appeal where its prospects of success were slender.
22 The fact that the nature of the issue on the appeal must lead to an 'all or nothing' outcome does not provide a reasonable basis for rejecting the offer. That is by no means an unusual circumstance in litigation. Nor was this one of those relatively unusual cases where the nature of the matter in issue meant that it was reasonable for the appellant to seek a judicial determination: see Australian Competition and Consumer Commission v Harris Scarfe Australia Pty Ltd (No 2) [2009] FCA 433 [10].
23 The basis of the appellant's assertion that acceptance of the respondent's offer may have adversely affected the appellant in the Singapore proceedings was not explained and is not apparent.
24 In the circumstances, it was unreasonable for the appellant to reject the offer.
25 The appellant was expressly put on notice that the present claim for indemnity costs would be made if the offer was not accepted and the appellant was ultimately unsuccessful. The appellant chose to take its chances on the appeal and must bear the consequences.
Conclusion
26 The appellant is to pay the respondent's costs of the appeal on a party and party basis to the date of the offer and on an indemnity basis from the date of the offer.
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