Stewart v ATCO Controls Pty Ltd (In Liq) (No 2)

Case [2014] HCA 31

HIGH COURT OF AUSTRALIA

CRENNAN, KIEFEL, BELL, GAGELER AND KEANE JJ

JAMES HENRY STEWART (IN HIS CAPACITY AS
LIQUIDATOR OF NEWTRONICS PTY LTD (IN
LIQUIDATION)) & ANOR  APPELLANTS

AND

ATCO CONTROLS PTY LTD (IN LIQUIDATION)                   RESPONDENT

Stewart v Atco Controls Pty Ltd (in Liquidation) [No 2]

[2014] HCA 31

15 August 2014

M141/2013

ORDER

1.Vary the order of this Court made on 7 May 2014 so that paragraph 2 of that order reads as follows:

"Set aside the order of the Court of Appeal of the Supreme Court of Victoria made on 25 June 2013 and, in its place, order that the appeal to that Court be dismissed with costs, such costs to be on an indemnity basis."

2.Respondent to pay the appellants' costs of this application.

On appeal from the Supreme Court of Victoria

Notice:  This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports.

CATCHWORDS

Stewart v Atco Controls Pty Ltd (in Liquidation) [No 2]

Procedure – Costs – Calderbank offer – Where appeal determined, and order for costs made, in favour of appellants – Whether respondent's non-acceptance of Calderbank offer reasonable – Whether respondent should pay costs on indemnity basis.

Words and phrases – "Calderbank offer", "indemnity costs".

  1. CRENNAN, KIEFEL, BELL, GAGELER AND KEANE JJ.   The appeal in this matter was determined in favour of the appellants and an order for costs, of both the appeal to this Court and the appeal to the Court of Appeal of the Supreme Court of Victoria, was also made in their favour[1].  They now seek an order that the respondent pay those costs on an indemnity basis, relying upon the non-acceptance by the respondent of a Calderbank offer[2].

    [2]Calderbank v Calderbank [1976] Fam 93.

  2. The relevant facts may be stated shortly.  The issue between the parties when the respondent commenced proceedings in the Supreme Court of Victoria was whether the first appellant, as the liquidator of the second appellant, was entitled to an equitable lien over a fund in the liquidation (referred to in the proceedings as "the settlement sum") for the costs and charges he had incurred in obtaining that fund in proceedings brought against another party.  Shortly after the respondent commenced proceedings, the first appellant offered to claim only nominal costs if the respondent discontinued the proceedings.  It did not.  The respondent was initially successful before Efthim AsJ, but on an appeal by way of hearing de novo, Davies J held that the principle in In re Universal Distributing Co Ltd (In Liq)[3] applied and that the first appellant was entitled to an equitable lien over the settlement sum.  That sum was of the order of $1.25 million and the first appellant's claim exceeded that sum.

  3. A second offer was made by the first appellant prior to the…

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Details
AGLC
Stewart v ATCO Controls Pty Ltd (In Liq) (No 2) [2014] HCA 31
Case
[2014] HCA 31
Decision Date

CaseChat Overview and Summary

Stewart and others appealed to the High Court of Australia against a decision of the Court of Appeal of the Supreme Court of Victoria concerning costs. The dispute arose from the respondent's (ATCO Controls Pty Ltd (In Liq)) failure to accept a Calderbank offer made by the appellants, despite the appellants ultimately succeeding in their appeal to the High Court. The core issue was whether the respondent's rejection of the Calderbank offer was reasonable, and consequently, whether the respondent should be ordered to pay the appellants' costs on an indemnity basis.

The High Court was required to determine whether the respondent's refusal to accept the appellants' Calderbank offer was reasonable in the circumstances, particularly in light of the subsequent successful appeal by the appellants. This determination would then inform whether the court should exercise its discretion to award costs on an indemnity basis, rather than the usual party and party basis.

The Court reasoned that the respondent's non-acceptance of the Calderbank offer was unreasonable. The offer had been made in circumstances where the appellants had a strong prospect of success on appeal, and the terms of the offer were ultimately more favourable to the respondent than the outcome achieved by the appellants. Applying the principles governing Calderbank offers, the Court concluded that the respondent's failure to accept the offer meant it should bear the consequences of that decision, including the costs of the litigation on a more generous basis.

Consequently, the High Court varied its previous order of 7 May 2014. The order of the Court of Appeal of the Supreme Court of Victoria made on 25 June 2013 was set aside, and in its place, the appeal to that Court was dismissed with costs to be paid on an indemnity basis. The respondent was also ordered to pay the appellants' costs of the application to the High Court.

Orders

Orders of the court

1. Vary the order of this Court made on 7 May 2014 so that paragraph 2 of that order reads as follows:

"Set aside the order of the Court of Appeal of the Supreme Court of Victoria made on 25 June 2013 and, in its place, order that the appeal to that Court be dismissed with costs, such costs to be on an indemnity basis."

2. Respondent to pay the appellants' costs of this application.

Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

CRENNAN, KIEFEL, BELL, GAGELER AND KEANE JJ

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Ratio Decidendi

Legal Principle Established

Established by: CRENNAN, KIEFEL, BELL, GAGELER AND KEANE JJ

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