Thompson Land Ltd v Lendlease Shopping Centre Development Pty Ltd [2000] VSC 140

Thompson Land Ltd v Lendlease Shopping Centre Development Pty Ltd [2000] VSC 140 - VSC 2000 case summary — Zoe

[17]

On behalf of the defendant it was submitted that the Court should conclude that from the outset of these proceedings the plaintiffs should have known that they had no chance of success against the defendant. It was submitted that the plaintiffs' claim in the proceedings that the payments by the third party to the defendant of each of the four subject bank cheques totalling $3.8m. constituted a disposition of the first defendant's property and were void pursuant to s.368(1) of the Companies (Victoria) Code, completely ignored the fact that the defendant was the possessor of a bank guarantee furnished to it by the third party, for a total sum of $3.8m., as security for the performance of the first plaintiff's obligations to the defendant pursuant to a contract of sale entered into between the first plaintiff and the defendant. It was submitted that in so far as the plaintiffs sought to rely on the fact that on each occasion that the third party paid a bank cheque to the defendant it debited the account of the first plaintiff with it in a like amount, as evidence that the property in each bank cheque was that of the first plaintiff, which it had "purchased" from funds provided to it by the third party, by way of a loan, ignored totally the existence of the agreement between the first plaintiff and the third party which entitled the third party to debit the account of the first plaintiff on it making a payment under the bank guarantee. It was further submitted on behalf of the defendant that the plaintiffs' case as advanced at trial that the payments made by the third party to the defendant by bank cheque could not have been payments made by the third party pursuant to the bank cheque as there had been failure at least on behalf of the defendant to make written demand against the third party for payment under the bank guarantee, ignored the fact that at no time had the third party contended that it was not bound by the bank guarantee and the fact that at all times the third party had purported to make the payments pursuant to the bank guarantee. In substance it was submitted that by the plaintiffs ignoring the matters referred to they instituted and prosecuted proceedings which were destined to fail from the outset and which in the result did fail against the defendant.

[19]

- On 25 May 1993 the second plaintiff made demand against the defendant for payment of $1,011,567.7 (the amount of the first bank cheque paid by the third party to the defendant) claiming that the payment was void. The second plaintiff also sought an acknowledgment of the defendant's receipt of the other three payments and sought reasons why there should not be repayment of the amounts of such moneys to the second plaintiff. - On 8 March 1994 the second plaintiff wrote a letter to the solicitors for the defendant requesting that they advise the defendant that he had demanded payment of the sum of $3.8 million and further advising that in the event of such payment not being forthcoming within 14 days proceedings would be issued. - On 26 November 1996 the then solicitors for the plaintiffs wrote a letter to the solicitors for the defendant again making demand against the defendant for payment of the sum of $3.8 million. - On 12 December 1996 in a letter from the defendant's solicitors to the plaintiffs' then solicitors it was stated in part 'Our client considers that the liquidator's claim is misconceived. Our client's reasons were explained to your client and its former solicitor in a meeting at Cornwall Stodart in March 1994. As discussed at that time the payments made to our client were payments made by ANZ pursuant to obligations owed by ANZ to our client under a bank guarantee. Whatever may have been the arrangement for ANZ to recoup money from Thompson Land Ltd. is a matter between the bank and its customer.' - Again on 24 March 1997 the solicitors for the defendant wrote to the solicitors for the plaintiffs rejecting the plaintiffs' claim against the defendant. At this time a copy of an opinion provided to the plaintiffs by senior counsel had been furnished to the solicitors for the defendant. The letter of the defendant's solicitors to the plaintiffs' solicitors dealt in detail with that opinion rejecting a number of conclusions expressed therein. In that letter the defendant's solicitors further stated that should the proceedings that had been issued against the defendant, but not served, be not discontinued then application would be made to strike out the statement of claim or to move for summary judgment. - On 3 July 1998 the solicitors for the defendant against wrote to the solicitors for the plaintiffs stating in part - 'In the event the plaintiff is unsuccessful at trial the defendant will be seeking its costs and any costs for which it might be liable to the third party ...' - Further on 28 February 2000 (which was the second day of the trial of these proceedings) the solicitors for the defendant wrote a letter to the solicitors for the plaintiffs making a 'Calderbank Offer' to the plaintiffs. In that letter it was stated that the defendant and the third party each regarded the plaintiffs' claim as being 'totally without merit'. By the letter it further stated that the defendant and the third party invited the plaintiffs to discontinue the proceedings immediately and to pay their respective party-party costs up to the conclusion of the hearing that day. The letter further stated 'Alternatively, we are instructed to offer on behalf of our client and ANZ that they will accept $100,000 each in lieu of their entitlement to taxed party costs. We consider that this represents a substantial discount on the defendant's and the third party's entitlement to party-party costs. This will remain open for acceptance until 12 noon on 29 February 2000.' Neither offer was accepted as the trial of the proceedings continued to judgment."

[40]

It is next necessary to have regard to the letter written by the defendant's solicitors on behalf of the defendant and third party to the plaintiffs' solicitors on 28 February 2000. At the end of the day on 28 February 2000, the plaintiffs' case was still proceeding and the plaintiffs' last witness was being cross-examined. The plaintiffs' case closed during the morning of 29 February 2000. In substance the defendant and third party each offered to accept party-party costs up to the conclusion of 28 February if the plaintiff discontinued the proceedings or alternatively each offered to accept $100,000 in lieu of taxed party and party costs if the proceedings were discontinued by the plaintiffs. It was asserted that the latter offer provided a substantial discount to the plaintiffs as to costs in the event of them discontinuing the proceedings at that time. Whether that is so or not I cannot determine on the material placed before the Court on these applications. Other than an assertion to that matter by counsel no material was placed before the Court on which I could determine this matter. By the terms of the letter it provided that in the event of the offer not being accepted the offer would be used by the defendant and third party to support its application from full indemnity costs from 29 February 2000 to the conclusion of the proceedings. On being unable to assess whether the offer of the defendant and third party to each accept $100,000 in lieu of their entitlement to taxed party and party costs was a substantial discount on their respective entitlement to party and party costs had the plaintiffs discontinued the proceedings at that time, such offers cannot be had regard to in determining whether as and from 29 February 2000 there existed a fact or circumstance which ought to dictate that in justice the defendant and third party should recover costs against the plaintiff other than on a party and party basis. Further, the alternate offer to the plaintiff inviting it to discontinue the proceedings and offering to accept costs on a basis no less then they otherwise would have been entitled to receive had the Court granted leave to the plaintiffs to discontinue the proceedings, is in my view a fact or circumstance which, when such offer is made during the course of a trial, as in this case, does not warrant or give rise to a proper basis for the Court in the exercise of its discretion to award costs from that time to the successful defendant and third party on a basis other than on a party and party basis.

At a glance

Court

Decision date

Before

Source

Judgment (52 paragraphs)

Parties

Cases Cited (3)