Aistrope v South Australian Housing Trust - [2019] SASC 214

SUPREME COURT OF SOUTH AUSTRALIA
(Civil)
AISTROPE & ANOR v SOUTH AUSTRALIAN HOUSING TRUST
[2019] SASC 214
Judgment of The Honourable Justice Kelly
20 December 2019
PROCEDURE - CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS - COSTS - INDEMNITY COSTS - PARTICULAR CASES - UNREASONABLE CONDUCT OR DELINQUENCY RELATING TO PROCEEDINGS
PROCEDURE - COSTS - DEPARTING FROM THE GENERAL RULE - ORDER FOR COSTS ON INDEMNITY BASIS
Where all of the plaintiffs’ claims against the defendant for negligence and breach of contract were dismissed – where encroachment orders made – where encroachment orders vacated – where defendant seeks the whole of its costs on an indemnity basis because the plaintiffs’ conduct throughout the proceedings gives rise to multiple special and unusual features to justify the Court departing from the usual practice.
Held:
1. The defendant has established its entitlement to recover indemnity costs against the plaintiffs in the period of 29 March 2018 (non-inclusive) to 13 September 2019 (inclusive), to be awarded in the sum of $60,000 by way of indemnity lump sum costs.
2. The defendant's costs of the trial up to and inclusive of 29 March 2018 are to be paid by the plaintiffs on a party and party basis. Those costs are to be assessed as a lump sum by a Master of this Court in accordance with the principles laid down in Cornwall v Rowan (No 4).
Encroachments Act 1944 (SA) s 4; Supreme Court Civil Rules 2006 (SA) r 264(5)(c), referred to.
Cornwall v Rowan (No 4) [2006] SASC 11; Northern Territory v Sangare (2019) 93 ALJR 959; [2019] HCA 25, applied.
Knight v FP Special Assets Ltd (1992) 174 CLR 178, considered.

AISTROPE & ANOR v SOUTH AUSTRALIAN HOUSING TRUST
[2019] SASC 214
Civil
KELLY J.
Introduction

On 20 March 2018, I delivered reasons for dismissing all of the plaintiffs’ claims in tort and contract against the defendant.[1]
[1] Aistrope v South Australian Housing Trust [2018] SASC 33.
As the successful party, the defendant submits that it should be entitled to the whole of its costs on an indemnity basis because the plaintiffs’ conduct throughout the proceedings gives rise to multiple special and unusual features to justify the Court departing from the usual practice.
The defendant points to the plaintiffs’ conduct in commencing and maintaining the proceedings in wilful disregard of known facts and established law, the fact that the plaintiffs’ unreasonably rejected settlement offers made by the defendant and the fact that there was little prospect of success on any of the plaintiffs’ claims. In making that submission, the defendant asserted that the plaintiffs had, in particular:
●pursued a case contrary to the documentary evidence by, inter alia, asserting that the first plaintiff was not aware that a substantial fire had occurred at the premises prior to purchase, arguing that statutory warranties under s 27 of the Builders Licensing Act 1986 (SA) had been incorporated into the contract between the parties;
●tendered little evidence in support of the second plaintiff’s claim and did not lead evidence at all from the second plaintiff or provide any evidence as to the purported inability of him to give evidence;
●brought claims well out of time in negligence, contract and for breach of statutory warranties in circumstances where an application for an extension of time was unlikely to succeed;
●pursued claims they ought to have been aware would be rejected as the plaintiffs failed to provide any authority supporting their assertions that:
○the time limitation on statutory warranties under the Builders Licensing Act 1986 (SA) could be extended despite s 27(6) of that Act which provides explicitly that the time limit shall not be extended;
○that a duty of care would be owed for consequential economic loss caused by damage properly characterised as economic loss;
○that a vendor owes a duty of care to a purchaser to prevent physical injury;
○that a vendor owes a duty of care to a purchaser to prevent mental harm arising from building work;
●tendered evidence from a witness not sufficiently expert on the relevant subject matter of his report;
●tendered evidence from a medical expert who was not in a forensic relationship with the plaintiffs and consequently could not assist the Court;
●tendered no expert medical evidence or any evidence at all supporting the plaintiffs’ assertion that they had suffered physical injuries including asthma and croup, or that those injuries were caused by the defendant;
●tendered no evidence to support their assertion that the sale of 13B Lynette Avenue to them was a unique and special transaction outside the usual practice of the defendant;
●pursued a case in circumstances in which they led no evidence to support the assertion that the asserted defects were caused by the defendant;
●failed to quantify the amount they sought for pain and suffering and failed to lead any sufficient evidence to allow the Court to quantify those claims;
●pursued an assertion that the Building Code of Australia 1990 applied to the construction of the property only to concede at trial to the defendant’s submission that the Building Regulations 1973 (SA) in fact applied.
Further complaints made by the defendant were that in the conduct of the proceedings the plaintiffs also unnecessarily prolonged the pretrial processes by: refusing to provide copies of records held by their general practitioner to the defendant or provide an authority enabling the defendant to obtain those records; failing to attend at medical appointments arranged by the defendants for the plaintiffs to be examined, resulting in a delay of nine months; seeking extensions of time to comply with pretrial orders requiring numerous amendments to orders made; and failing to provide the defendant with a formulation of their claim for pain and suffering despite orders of the Court to the contrary.
In all of these circumstances, the defendant seeks an award by way of a lump sum in accordance with r 264(5)(c) of the Supreme Court Civil Rules 2006 (SA).
In anticipating the defendant’s application, on 13 April 2018, the plaintiffs filed an application that any costs against them “be redirected as orders for costs against Tim Campbell or Campbell Law”, their former solicitor. With that application, the two plaintiffs filed lengthy affidavits making various complaints against their former lawyer including that he had not followed their instructions with regard to a number of issues, alleged he was out of his depth and negligent in the conduct of the trial, and was generally incompetent. The plaintiffs said that they had lodged complaints with the Legal Profession Conduct Commissioner in respect of their former lawyer’s conduct. As far as I understand it, those complaints are still outstanding.
On 28 June 2018, the plaintiffs filed further affidavits in support of their application in which the plaintiffs made further allegations of malpractice on the part of Mr Campbell insofar as a former solicitor at Campbell Law, Ms Hartvigsen-Power, who was named as one of the solicitors in the retainer agreements between the plaintiffs and Mr Campbell in 2015, later commenced employment in the Office of the Crown Solicitor for the State of South Australia. The first plaintiff made complaints as to the conduct of Ms Hartvigsen-Power alleging breach of confidence in the handling of their matter on account of her subsequent employment by the Crown Solicitor.
The plaintiffs repeated various matters in a further 38 page affidavit. Many, if not most, of the matters raised in that affidavit were the subject of the litigation before me in respect of which judgment was delivered on 20 March 2018.
The plaintiffs continue to assert that, as the case was brought by them in the public interest, they should be immune from any costs order being awarded against them.
In making this submission, the plaintiffs relied on Knight v FP Special Assets Ltd,[2] in support of the submission that, at the very least, any costs awarded against them should be redirected to Mr Campbell, their former lawyer.
[2] (1992) 174 CLR 178.
On 25 June 2019, I heard further argument as to costs and gave each party further time to file supplementary written submissions in respect of costs incurred since the date of judgment. On 7 August 2019, the defendant provided further written submissions on costs. On 13 August 2019, the plaintiffs filed their further written submissions on costs in affidavit form.
On 13 September 2019, the solicitor with the conduct of this matter on behalf of the defendant, wrote to the Court drawing the Court’s attention to a recent High Court decision of Northern Territory v Sangare.[3] By email of the same date, the plaintiffs objected to that communication from the Crown Solicitor as it was after the date set for the filing of further supplementary submissions as to costs.
[3] (2019) 93 ALJR 959; [2019] HCA 25.
I shall deal with that allegation briefly. As it happens, it was not necessary for the Crown Solicitor to have notified the Court of the decision in Sangare. I had already read it. However, there was no impropriety on the part of the Crown Solicitor in drawing to the Court’s attention an important and relevant authority on the very question which had been agitated during the argument. In this respect, the Crown Solicitor was doing no more and no less than his duty as an officer of the Court to provide the Court with relevant current authority.
The Sangare decision reaffirms the general principles with regard to the Court’s discretion as to costs:[4]
[24]It is well established that the power to award costs is a discretionary power, but that it is a power that must be exercised judicially, by reference only to considerations relevant to its exercise and upon facts connected with or leading up to the litigation. While the width of the discretion “cannot be narrowed by a legal rule devised by the court to control its exercise”, the formulation of principles according to which the discretion should be exercised does not “constitute a fetter upon the discretion not intended by the legislature”. Rather, the formulation of principles to guide the exercise of the discretion avoids arbitrariness and serves the need for consistency that is an essential aspect of the exercise of judicial power.
…
[26]Prior to the decision of the Court of Appeal in this case, the proposition that the impecuniosity of an unsuccessful party, without more, is not a sufficient reason for depriving a successful party of its costs had been accepted in every other Australian jurisdiction. On 10 April 2019, the day before the hearing of the appeal in this Court, the Court of Appeal of the Northern Territory (Southwood J, Riley and Graham A-JJ) decided JB v Northern Territory (No 2). The Court noted that the Court of Appeal’s decision in the present case is inconsistent with the authorities referred to above, and declined to follow it.
…
[32]Whether a party is rich or poor has, generally speaking, no relevant connection with the litigation. It may be said, by way of qualification to that general proposition, that a party’s financial position may be relevant to the extent that it may inform the structure of a costs order. For example, impecuniosity may justify providing for the payment of costs over time in order to avoid inflicting unnecessary hardship while at the same time improving the likelihood of compliance with the order. That said, any such qualification was not invoked in the present case.
[33]For the sake of completeness, it may be observed that in Oshlack this Court, by majority (Gaudron, Gummow and Kirby JJ, Brennan CJ and McHugh J dissenting), set aside the decision of the Court of Appeal of the Supreme Court of New South Wales and restored the decision of the Land and Environment Court of New South Wales that there be no order as to costs in respect of the appellant’s unsuccessful challenge to the local authority’s consent to a development application. The majority in this Court held that it was open to the Land and Environment Court to conclude that the litigation was motivated by a desire to ensure obedience to environmental law and to preserve the habitat of endangered fauna, and that there was, objectively speaking, a “‘public interest’ in the outcome of the litigation”. It could also be said in favour of the order made by the Land and Environment Court that it was not unfair to require the local authority to bear its own costs of litigation where it had an interest in resolving uncertainty attending the valid exercise of its powers, and wide standing provisions facilitated the bringing of such litigation. None of these considerations can be said to be relevant in this case. The litigation here was brought to vindicate the respondent’s private interest in his reputation by the recovery of damages.
[4] Northern Territory v Sangare (2019) 93 ALJR 959, [24], [26], [32]-[33].
Chronology of events since 20 March 2018
Before dealing with the application of both the plaintiffs and the defendant, it is necessary to set out what has occurred since 20 March 2018.
On 20 March 2018, I delivered judgment[5] dismissing all of the plaintiffs’ claims. On 29 March 2018, I made an order pursuant to s 4 of the Encroachments Act 1944 (SA) that the defendant carry out certain remedial work on the properties at 13A and 13B Lynette Avenue, Hectorville, and remove the encroachment of part of 13A from 13B and vice versa (‘the encroachment works’).
[5] [2018] SASC 33.
The whole of my orders as made on that day were in the following terms:
1.The plaintiffs’ claims are dismissed.
2.The defendant’s application for costs:
a.     be listed for hearing on a date to be set.
b.    the defendant file any affidavits upon which it intends to rely by 23 April 2018.
c.     the plaintiffs file any responding affidavits by 30 April 2018.
3.On the defendant’s application under section 4 of the Encroachments Act 1944 (the Act):
a.     The Court notes the defendant’s undertaking to engage a structural engineer to certify specifications (including drawings, layouts, plans and details of materials) for and to engage a builder to perform, the following works (the encroachment works):
i.remove the roof timbers and eaves that encroach:
1.from the property at 13A Lynette Avenue Hectorville onto the property at 13B Lynette Avenue Hectorville (including the fire damaged valley boards at the south eastern corner of 13B); and
2.from the property at 13B Lynette Avenue Hectorville onto the property at 13A Lynette Avenue Hectorville.
ii.install a dividing parapet wall to separate the properties at 13A and 13B Lynette Avenue Hectorville. The parapet wall will be exposed above the roof line and follow the rake of the roof by approximately 150mm in height and extend past the front western most and rear eastern most gutter by approximately 150mm, with appropriate footings;
iii.repair and modify the existing roof framing and install new roof framing on the property on both sides of the parapet wall as required to support the ceilings, roof cover, gutter and eaves of both properties;
iv.install a box gutter in an east/west direction at the front south west corner of the dwelling on the property at 13B Lynette Avenue;
v.install a box gutter in an east/west direction at the rear north east corner of the dwelling on the property at 13A Lynette Avenue;
vi.install a downpipe attached to each of those two box gutters which connects to the pre-existing stormwater drainage system (which discharges to the street) at each of the properties; and
vii.incidental works as specified as required by the structural engineer and/or builder.
b.    The Court notes the defendant’s undertaking that it will:
i.Obtain all applicable planning and building approvals and provide a copy of these approvals to the plaintiffs before the encroachment works are carried out;
ii.provide a copy of the specifications referred to in 3(a) to the plaintiffs;
iii.ensure that the builder obtain necessary insurances for the encroachment works;
iv.obtain a dilapidation survey of the property at 13A and 13B Lynette Avenue Hectorville before the encroachment works commence;
v.make good any buildings and structures, including pergolas and fences which are damaged by the encroachment works;
vi.pay the plaintiffs the sum of $3,500 (all inclusive) in respect of any costs incurred whilst the encroachment works are carried out.
vii.The defendant will supply any compliance certificates and any certificate of occupancy issued by the council for 13B Lynette Avenue Hectorville when the encroachment works are completed.
c.     Upon 5 days notice to the plaintiffs, the plaintiffs will provide reasonable access to the defendant, its consultants and/or its contractors to enable the works listed at paragraph 3(a) above to be performed.
d. The plaintiffs have until 30 April 2018 to make an application for compensation under section 4 of the Encroachments Act 1944.
e. Any application for compensation under section 4 of the Encroachments Act 1944 is adjourned sine die.
f.     Liberty to apply for directions as to the encroachment works.
4.Liberty to apply.
5.Adjourned sine die.
On 13 April 2018, the plaintiffs filed an interlocutory application seeking an order that Mr Campbell, their former solicitor, pay any costs awarded against them. These affidavits contained various complaints about Mr Campbell. On 23 April 2018, the defendant filed an application seeking its costs on an indemnity basis. On 28 June 2018, the plaintiffs filed affidavits opposing the defendant’s application for costs and making further allegations of malpractice on the part of Mr Campbell.
On 20 July 2018, Mr Campbell, the plaintiffs and a representative from the Crown Solicitor’s Office attended a directions hearing before me. A determination was made to proceed with the defendant’s application for costs before any consideration of the plaintiffs’ application that Mr Campbell pay any costs awarded against the plaintiffs.
On 4 September 2018, there was a hearing where all parties made oral submissions in respect of the costs application. The first plaintiff handed up a marked copy of an affidavit previously filed on 28 June 2018 in support of her submissions on costs.
On 18 December 2018, the plaintiffs filed a further interlocutory application making various complaints about the defendant’s conduct with regard to the encroachment works. On 16 December 2019, the defendant filed the affidavit of Emma Kate Ferguson in response to the plaintiffs’ complaints. On 17 January 2019, there was a hearing of the interlocutory application, as filed on 18 December, which was adjourned sine die.
On 19 March 2019, the plaintiffs filed a further interlocutory application making additional complaints about the defendant’s conduct with regard to the encroachment works. Each plaintiff also filed an affidavit, both dated 19 March 2019, in support of that interlocutory application.
On 9 April 2019, the defendant filed the second affidavit of Emma Kate Ferguson in response to the plaintiffs’ further complaints outlined in the 19 March interlocutory application.

Argument on the 19 March interlocutory application occurred on 11 April 2019 and the matter was deferred until 27 May 2019 to allow the parties one further opportunity to make arrangements for the encroachment works to take place.
On 20 May 2019, the defendant filed an interlocutory application complaining that the plaintiffs were refusing to allow access to the property and thereby preventing the defendants from complying with the orders with respect to the encroachment works. The defendant filed the affidavits of Simon Richards and Chloe Caruana in support of that application.
On 27 May 2019, the defendant’s interlocutory application came on for hearing and the matter was referred to mediation before Blue J on 4 June 2019. The mediation took place on that date but the issues between the parties were not able to be resolved.
On 25 June 2019, I made an order vacating the 29 March 2018 orders relating to the encroachment works. The parties were given one month to file supplementary submissions with regard to all outstanding costs. I reserved my decision on costs.
On 7 August 2019, the defendant filed the third affidavit of Emma Kate Ferguson setting out the defendant’s further costs incurred since the date of judgment. On the same date, the defendant also electronically supplied a document outlining further submissions on costs.
On 13 August 2019, the plaintiffs filed a further interlocutory application and supporting affidavits, requesting that the supporting affidavits be regarded as supplementary submissions on costs.
On 13 September 2019, the counsel for the defendant sent an email to the Court, carbon copied to the plaintiffs, directing the Court’s attention toward the High Court decision of Northern Territory v Sangare,[6] handed down on 14 August 2019. Later that same day, the plaintiffs sent an email to the Court, carbon copied to the defendant, complaining that the earlier email sent by counsel for the defendant concerning the Sangare decision amounted to “further extra submissions”.
[6] (2019) 93 ALJR 959; [2019] HCA 25.
Discussion
While the plaintiffs are now unrepresented, they were represented at trial and during the lengthy conduct of the matter prior to trial. In fact, they had a series of legal representatives who represented them at various stages during the last 15 years.
I note it has been 14 years since the plumber fell through the roof tiles, which was the initial catalyst of the dispute. Following the commencement of proceedings by the plaintiffs, it took another eight years for the matter to reach trial.
The defendant argues that having availed themselves of legal advice, the plaintiffs ought never to have prosecuted a case which was always foredoomed to fail. Notwithstanding the complete failure of all of the plaintiffs’ claims against the defendant and the offer of the defendant to consent to an encroachment order mainly for the benefit of the plaintiffs on 29 March 2018, I find that the plaintiffs have failed to cooperate at every step of the way. In the end, it was the plaintiffs’ continued refusal to allow the defendant’s contractors access to the property that caused me, against the opposition of the defendant, to vacate the orders I made on 29 March 2018, to which the defendant had consented. My reasons for making that order are contained in the judgment of 20 March 2018. In essence, that order reflected the defendant’s undertaking to carry out certain remedial works and remove the encroachments from 13A by 13B and 13B by 13A. It represented the last opportunity for the plaintiffs, notwithstanding the complete failure of their action against the defendant, to have some of their ongoing complaints about the state of their property resolved at the expense of the defendant.
For reasons beyond the control of the defendant, those works were never carried out.
The two most recent affidavits filed by the plaintiffs in support of their own application against the defendant for costs since the date of judgment purport to provide some explanation for their ongoing opposition to the encroachment works. The plaintiffs assert that the costs incurred since 20 March 2018 should be borne by the defendant on the basis that they have taken no responsibility for their actions and inactions in this matter.
I acknowledge the cogency of the defendant’s arguments in support of its application for indemnity costs. However, in the end, I am not able to draw any inferences one way or another from the frequent changes of legal representatives during the conduct of the trial, either in respect as to what advice was given or received or what advice was accepted or not. In my view, it would be inappropriate for me to draw any inferences from the history alone.
Therefore, in all of the circumstances, with respect to the costs of the proceedings up to and including 29 March 2018, I have not been persuaded that I should depart from the usual procedure which is that the successful party is entitled to its costs on a party and party basis.
There is, however, a proper basis to depart from that usual practice with respect to the events subsequent to 29 March 2018. I consider that the plaintiffs’ behaviour in that period of time, by the bringing of many interlocutory applications and many objections, to be unconscionable. In my view, their conduct throughout the whole of that period is unreasonable and amounts to misconduct in the relevant sense contended for by the defendant.
Notwithstanding the lifeline held out to them in the form of the offer to remove the encroachment and carry out the necessary repairs at the property, the plaintiffs continued to march, lemming‑like, towards the cliff. Now they have fallen into an abyss solely of their own making.
In my view, the defendant has established its entitlement to recover indemnity costs against the plaintiffs in the period of 29 March 2018 (non-inclusive) to 13 September 2019 (inclusive).
In my view, those costs should be awarded on the basis of the documentary material filed on behalf of the defendant. On the basis of that material, I am satisfied that it is just and reasonable to award the defendant the sum of $60,000 by way of indemnity lump sum costs from 29 March 2018 (non-inclusive).
Before making an award in relation to the costs of the trial, I note the position of Mr Campbell who is the subject of one of the plaintiffs’ interlocutory applications in respect of costs. Mr Campbell in fact appeared at the directions hearing on 20 July 2018 in response to the plaintiffs’ application that he pay any costs awarded against them.
The allegations made by the plaintiffs against their former solicitor are currently the subject of a complaint before the Legal Profession Conduct Commissioner. I acknowledge that Mr Campbell at some stage in the future may be entitled to be heard on the issue of the quantum of costs if that should become relevant.
However, I have determined that that outstanding complaint should not delay the resolution of the costs issue as between the plaintiffs and the defendant and it is for that reason that I have determined that the defendant should have its costs to the date of judgment on a party and party basis.
Those costs are to be a lump sum assessed by a Master of this Court in accordance with the principles laid down in Cornwall v Rowan (No 4)[7] and in accordance with the documentary material filed by the defendant’s solicitors evidencing their overall costs in this matter.
[7] [2006] SASC 111.
Whilst I do not suggest that Mr Campbell is precluded from filing any submissions before the Master at this stage, his failure to do so will not in my view prejudice any submissions he wishes to put subsequent to the date of any order made by the Master in respect of the application of the defendant for costs against the plaintiffs.