Hudson Resources Limited v AceA Resources Pte Ltd

No reasonable prospects of success?

1. The Court may make an order for indemnity costs where a claim has been commenced or continued in circumstances where the plaintiff should have known that there was no chance of success [5] or where a party maintains proceedings, having no reasonable prospects of success. [6]
2. The discretion to award indemnity costs arises when "for whatever reason, a party persists in what should on proper consideration be seen to be a hopeless case". [7]
3. Indemnity costs will not be ordered simply because a party has been unsuccessful. [8] More than mere lack of success is required for an order for indemnity costs to be made. [9] Some "special or unusual feature of the particular case" is necessary before an order is made for indemnity costs. [10]
4. Mr Hughes and Ms Thrift, for Mr Juay, Mr Aw and Ace A, submit that Hudson Resources' case was "hopeless".
5. It has been said that "… whether or not a case was hopeless is not to be determined with the benefit of hindsight". [11]
6. Mr Hughes and Ms Thrift accepted that, accordingly, the question of whether Hudson Resources' case was hopeless must be approached assuming, in favour of Hudson Resources, that the 27 June 2014 conversation [12] between Mr Tan and Mr Juay did not occur.
7. I found the conversation did occur [13] and held that this finding was fatal to Hudson Resources' misleading or deceptive conduct claim. [14]
8. On the assumption that the conversation did not occur ("the Counterfactual"), Mr Juay's 9.27 pm email to Mr Tan on 27 June 2014, [15] in which he stated "Please ignore earlier attachments and use the attached SPAs instead" [16] represented a unilateral and unheralded proposal from Mr Juay rather than, as I found, confirmation of his agreement with Mr Tan.
9. Contrary to Mr Condon SC's and Mr Bender's submissions in reply, Mr Juay's email did not, on the Counterfactual, and could not constitute a representation that the amended SPA "reflected the parties' agreement", notwithstanding the fact that Mr Juay had "recycled" the Hudson Resources' execution page. Mr Juay invited Mr Tan to "ignore" the earlier "attachments" (obviously a reference to the SPAs attached to his 7.54 pm email) [17] and to use the attached SPAs "instead". Mr Juay did not say, in this email, that the "attachments" had been changed as a result of an agreement. On my findings, it was not necessary for Mr Juay to say this because he had just had the critical conversation with Mr Tan. But, on the Counterfactual, there is nothing in Mr Juay's email to suggest that what he was proposing had been agreed.
10. And the form of the Payment Instruction, that Mr Juay sent Mr Tan a few minutes later at 9.38 pm, could not have given any reader the impression that it was "something that had already been agreed". [18] It was obvious, from the form of the Payment Authority, that the payment arrangements contemplated in the form of the First SPA executed 18 June 2014 were to be changed. [19]
11. Further, as I also held, [20] the subsequent exchange of emails between Mr Juay, Mr Kinstlinger, Mr Tan and Mr Rockett made clear that the terms of the First SPA had been changed and that Mr Kinstlinger understood that the change had occurred since Mr Amzalak and Mr Rockett executed the document. That conclusion follows on the Counterfactual, as surely as it does on the basis that, as I have found, the 27 June 2014 conversation between Mr Juay and Mr Tan did take place.
12. Thus, on the documents, and quite apart from Mr Juay's conversation with Mr Tan, Hudson Resources' misleading or deceptive claim was bound to fail. It was, truly, a hopeless claim.
13. Its claim that it relied on any misleading or deceptive conduct was bound to fail for the same reasons and was, in any event, irreconcilable with Hudson Resources' ratification of both forms of the First SPA on 14 October 2014. [21] Hudson Resources adduced no evidence to explain, consistently with the case it sought to make out before me, how this ratification occurred.
14. Nor did Hudson Resources adduce any evidence to show how the letters written on its behalf by Allen and Gledhill [22] could be reconciled with the case that was sought to be made out before me.
15. Hudson Resources' loss case was equally unsustainable as a debt was recorded in its favour from Hudson Corporate which debt was actually paid off. [23]
16. In these circumstances I am persuaded that Hudson Resources should have known that it could not win this case and that it maintained a case which had no reasonable prospects of success.
17. I find this sufficient reason to order that Hudson Resources pay Mr Juay's and AceA's costs on an indemnity basis.
18. In relation to Mr Aw, the case that Hudson Resources sought to make against him was based upon the Payment Instruction and its contention that it had executed the Payment Instruction in the mistaken belief that it was validly issued in accordance with the First SPA. I found that there was no such mistake. [24]
19. In any event, Mr Aw was bound to defeat the claim because, as Hudson Resources well knew, he had transferred to Hudson Corporate the shares the subject of the Second SPA on receiving the $1,050,000 from Hudson Resources. Mr Aw was therefore bound to make out a change of position defence.
20. I am satisfied, for these reasons, that each of the defendants should have their costs on an indemnity basis.
21. It is therefore not necessary for me to consider Mr Hughes' and Ms Thrift's submissions that the proceedings were brought for an ulterior purpose.
22. Mr Hughes and Ms Thrift also relied on an offer of compromise sent on 14 September 2018 on behalf of AceA and Mr Juay.
23. That offer was made in accordance with, and complied with, the Uniform Civil Procedure Rules 2005 (NSW) r 20.26.
24. It offered to compromise the proceedings on the basis that they be dismissed, there be no order as to costs and that AceA pay Hudson Resources $100.
25. The defendants have achieved a result no less favourable than this offer and, accordingly, are entitled to indemnity costs from 15 September 2018, unless I order otherwise. [25]
26. In the circumstances of this case, I would not have been inclined to "otherwise" order.
27. It is true that an offer by a party must "give something away" [26] in order to be regarded properly as a compromise such as to warrant a special order as to costs. There must be a genuine element of compromise. Determination of that question can involve "an instinctive synthesis of the factors" [27] at play in the case.
28. The 14 September 2018 offer was, in effect, a "walk-away" offer and an invitation to Hudson Resources to abandon its claim.
29. The offer was made early in the proceedings, shortly after Mr Juay and AceA had entered an appearance, and at a point where they were unlikely to have incurred substantial costs. The offer to pay $100 was, in the context of the amount claimed by Hudson Resources, nominal.
30. But the offer was made in the context that, on 20 July 2018, Mr Juay's and AceA's solicitors had sent Hudson Resources' solicitors a lengthy letter (some 17 pages together with 183 pages of enclosures) which foreshadowed, almost completely, the conclusions to which I came in the judgment. That letter referred to the 27 June 2014 conversation between Mr Juay and Mr Tan but also to the email communications to which I have referred and which, alone, were destructive of Hudson Resources' case.
31. A "walk-away" offer can, in a particular case, be a "genuine offer of compromise". [28]
32. Such a case is where the offer is made in the context of a detailed explanation of the weaknesses of the offeree's case and where, as here, the weakness should have been obvious to the offeree and the offeror's analysis of the merits of the case has been vindicated in the result.
33. Accordingly, had I not reached the conclusion set out at [26], I would have ordered Hudson Resources to pay AceA's and Mr Juay's costs on an indemnity basis from 15 September 2018.
34. I make the following orders: 1. The amended statement of claim is dismissed. 2. The plaintiff is to pay the defendants' costs on an indemnity basis.

Endnotes

1. Hudson Resources Pty Ltd v AceA Resources Pte Ltd [2020] NSWSC 1771.
2. At [260].
3. I also found that Mr Aw had, in any event, changed his position on the faith of the receipt of the $1,050,000.
4. Mr Aw was not then a party to the proceedings.
5. Eg Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397 at 401; [1988] FCA 202 (Woodward J).
6. Chaina v Alvaro Homes Pty Ltd [2008] NSWCA 353 at [108] (Basten JA; with whom Giles JA and Young CJ in Eq agreed).
7. J-Corps Pty Ltd v Australian Builders Labourers Federated Union of Workers (WA Branch) (No 2) [1993] FCA 70; 46 IR 301 at 303 (French J).
8. Eg Bookarelli Pty Ltd v Katanga Developments Pty Ltd (No 2) [2017] NSWCA 94 at [13] (Macfarlan and Payne JJA, Sackville AJA).
9. Eg Harrison v Schipp [2001] NSWCA 13 at [138]-[139] (Giles JA; with whom Handley and Fitzgerald JJA agreed).
10. The Pilbara Infrastructure Pty Ltd v BGC Contracting Pty Ltd [2007] WASC 257 S at [5] (Pullin and Buss JJA, Newnes AJA)' cited with apparent approval in Chaina v Alvaro (supra) at [109].
11. Civil Properties Pty Ltd v Miluc Pty Ltd [2011] WASCA 195 at [85] (Newnes JA, with whom Murphy JA relevantly agreed and Hall J agreed).
12. Dealt with from [103] to [145] of the main judgment.
13. At [145].
14. At [146].
15. Adopting, as I did in the main judgment, Australian Eastern Standard Time, rather than Singapore time.
16. See [96].
17. See [84].
18. Cf Mr Condon's and Mr Bender's submissions at [9].
19. As I found at [230].
20. At [225]-[239].
21. At [185]-[186].
22. At [201]-[206].
23. At [251].
24. At [254]-[257].
25. UCPR 42.14.
26. To adopt of the words of Giles J in Hobartville Stud Pty Ltd v Union Insurance Co Ltd (1991) 25 NSWLR 358 at 368.
27. See McDougall J in Rickard Constructions Pty Ltd v Rickard Hails Moretti Pty Ltd [2005] NSWSC 481 at [38] - [47].
28. See Evans v Braddock (No 2) [2015] NSWSC 518 at [57] per Hallen J and the cases cited therein. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 03 February 2021