Allan v Fletcher (No 2) No. DCCIV-98-1364
[2000] SADC 116
•6 September 2000
ALLAN v FLETCHER (NO. 2)
[2000] SADC 116
Judge Vanstone
Civil
On the 18th May, 2000 I entered judgment in the sum of $21,931.27 for the plaintiff in an action for damages arising out of a motor vehicle accident. I heard submissions on the question of costs on the 26th July, 2000, and further submissions on the 1st September, 2000.
Counsel for the defendant, Mr Alex Ward, raised three issues in relation to costs. The first was whether the plaintiff should be prevented from recovering her costs, pursuant to s.42(2) of the District Court Act, because the judgment sum fell short of the $30,000 limit prescribed by Rule 101.02A(c) for personal injury actions arising out of the use of a motor vehicle. The second application was for an order that the plaintiff pay the defendant’s costs from the 17th February, 2000, pursuant to Rule 40.05, as a consequence of not having bettered offers made fourteen days earlier in accordance with District Court Rule 40.01. In addition, Mr Ward submitted that an informal offer exceeding the judgment sum having been made prior to the service of proceedings, the defendant should have his costs from 14 days after that offer. This last submission appears to address the exercise of the court’s general discretion in relation to costs.
Briefly, the pre-trial history of this matter is as follows:
25th September, 1998.................. Summons filed by plaintiff.
5th November, 1998..................... Defendant sends (second) letter of offer to the plaintiff for $26,520 (inclusive of interest) plus costs (based on 15 per cent contribution for not wearing a seat belt).
20th January, 1999....................... Summons served on defendant.
5th February, 1999....................... Plaintiff rejects offer of 5th November, 1998.
12th February, 1999..................... Defendant files appearance and lodges Rule 40 offer of $26,520 (inclusive of interest) plus costs.
1st September, 1999.................... Defendant withdraws Rule 40 offer lodged on 12th February, 1999.
3rd February, 2000....................... Defendant lodges and serves two Rule 40 offers; firstly $24,607 (inclusive of interest) plus party/party costs, and secondly 55 per cent of damages to be assessed.
For the purpose of Rule 40.05, the relevant date from which the plaintiff would be liable to pay the defendant’s costs is 17th February, 2000.
Section 42(2): penalty for wrong jurisdiction
The relevant provisions of section 42 of the District Court Act are as follows:
“Costs
42. (1) Subject to subsection (2) and the rules, costs in any proceedings in the Civil Division will be in the discretion of the Court and may be awarded against any person (whether a party to or a witness in the proceedings or not).
(2) If -
(a).... an action for the recovery of damages or any other monetary sum is brought in the Court; and
(b) the action might have been brought in the Magistrates Court; and
(c)... the plaintiff recovers less than an amount fixed by the rules for the purposes of this paragraph,
no order for costs will be made in favour of the plaintiff unless the Court is of the opinion that it is just in the circumstances of the case that the plaintiff should recover the whole or part of the costs of action.”
The amount fixed for this purpose by Rule 101.02A of the District Court Rules is $30,000, which is one half of the jurisdictional limit for damages actions in the Magistrates Court (s.8(1) of the Magistrates Court Act). The damages recovered by the plaintiff fell well below this limit, at least in percentage terms. But that is not a particularly persuasive matter: Stevens v Chandler (1988) 46 SASR 541,545.
Certain other factors are acknowledged to be relevant to the exercise of the discretion. They include whether at issue was some principle of importance, whether there were difficult questions of law to be resolved, and the length and complexity of the matter: Scott v Municipal Tramways Trust [1920] SALR 442; Bunker v James (1980) 26 SASR 286 at 294.
In Silverblade v Nelson (1980) 24 SASR 310 Cox J suggested that issues of contributory negligence could be a sufficiently strong reason for exercising the discretion not to deny the plaintiff costs. His Honour said at 313:
“There may well be cases - for instance, where a plaintiff has had his assessed damages reduced by reason of his own contributory negligence, or where there are neurotic complications in the plaintiff’s own temperament which would obviously make a settlement, or even a realistic appreciation of the worth of his claim, difficult - where a judge could find his way to relieving the plaintiff of the severe consequences of the section’s operation. It may also be relevant to consider the material before the plaintiff and his advisers at the time the proceedings are commenced.”
This approach was followed by Olsson J in Leal v Mocatta Judgment No. S4537, 10/5/94, unreported.
In the present case, contributory negligence was an important issue both in terms of the plaintiff’s manner of driving and her failure to wear a seat belt. While the strict penalty imposed by s.35A(1)(j) of the Wrongs Act (as it applied at the time of the accident) meant that at best the plaintiff could hope to recover 85 per cent of damages as assessed, the actual apportionment of 50 per cent liability against her was plainly unforeseen. The circumstances surrounding the accident included criminal conduct on the part of the defendant driver. In addition, there were difficult issues in respect of the plaintiff’s loss (if any) of earning capacity.
Section 8(1) of the Magistrates Court Act defines the relevant jurisdictional limit of that court as follows:
“8..... (1) The Court has jurisdiction -
(a) to hear and determine an action (at law or in equity) for a sum of money where the amount claimed does not exceed -
(i).... if the claim is for damages or compensation for injury, damage or loss caused by, or arising out of, the use of a motor vehicle - $60,000;
...........”
In my view, in all the circumstances, it was not unreasonable of the plaintiff and her solicitors to have anticipated that the range within which the assessed damages might fall included a figure in excess of $60,000, so justifying their bringing the action in the District Court. In addition, it is worth noting that I found the plaintiff to be an honest witness whose evidence of her symptoms was supported by the weight of medical opinion.
In these circumstances, I am satisfied that it is just that the plaintiff not be deprived of her costs by operation of section 42, District Court Act.
Rule 40
The second issue was whether the defendant should recover his costs from the plaintiff from the 17th February, 2000 due to the plaintiff not having bettered offers to consent to judgment made in accordance with Rule 40.
Two offers to consent to judgment were lodged by the defendant on 3rd February, 2000 under Rule 40. These offers were made within the time constraint of 21 days prior to the trial which was listed for and commenced on 10th April, 2000. The first offer was of $24,607 (inclusive of interest) plus party and party costs. The second offer was of 55 per cent of the plaintiff’s damages to be assessed. Both offers were greater than the award ultimately made, and were “adequate”, as required by Rule 40.05.
The well established approach to this rule is that prima facie the court will make a costs order in favour of the defendant unless there are proper grounds arising out of the litigation or its conduct to vary such an order. Notwithstanding the difficult factual issues referred to above, I can find no grounds arising out of the litigation in this case that could justify varying the usual order. In Stevens v Chandler (1988) 46 SASR 541, King CJ, referring to the equivalent Supreme Court rule of the time, said:
“The purpose of r 40.07 is to encourage the settlement of cases and to enable a defendant to protect himself against the costs of litigation by making an offer to consent to judgment.”
The defendant, having taken advantage of the rule, is entitled to his costs from the 17th February, 2000.
Informal offer
Mr Ward, made a further submission in reference to the informal offer made by letter of the 5th November, 1998 by the Third Party insurer. As I understood his submission, it was that the court should take this informal offer into account in exercising its general discretion as to costs. He sought an order that the plaintiff be precluded from recovering her costs from a date 14 days after the service of this offer, presumably some time in December, 1998. The basis of such an order, he submitted, would be the policy underlying the “90-day rule” in R101.01(1)(b), which encourages early settlement of claims, together with the consideration that the offer exceeded the judgment sum and the defendant was put to unnecessary expense from that time onwards.
In relation to this issue, the plaintiff filed and tendered an affidavit of Mr John Dempster, of Messrs Mellor Olsson, the solicitor who throughout had conduct of the matter of behalf of the plaintiff. Annexed to the affidavit was an opinion of Mr. Peter Day, in-house counsel for Messrs Mellor Olsson, dated the 13th August, 1998 which expressed views as to the plaintiff’s prospects at trial on the questions of liability and quantum. It was on the basis of this opinion that the plaintiff was advised to (and did) reject the defendant’s offer of the 5th November, 1998.
Having considered all aspects of the plaintiff’s claim, Mr Day forecast that damages would be assessed within the range $38,520-$52,860. In fact the assessment was within that range. It was on the question of liability where Mr Day’s opinion departed from what turned out to be the final determination. Whereas the information he had caused him to conclude that the plaintiff would suffer only the minimum reduction of damages for failing to wear her seat belt (then 15 per cent), and that nothing further would be deducted to reflect the quality of her driving, in the result I found her to be liable for her damages to the extent of 50 per cent.
The opinion makes plain the origin of the discrepancy. It is clear that Mr Day did not have available to him the Police Department materials analysing the accident scene and the nature of accident damage to both vehicles. Consequently, he accepted (but I did not) that the plaintiff had completed her U-turn at the time of collision. That finding had an important bearing on the question of the extent to which her manoeuvre was a dangerous one. Further Mr Day could not have known at the time of forming his views that Mr Cornish, orthopaedic surgeon, would express an opinion that the plaintiff’s injuries would have been of less severity had she been wearing her seat belt. The report of Mr Cornish which Mr Day had was silent on this issue. But on the basis of his view given in evidence, I determined that it was appropriate to reduce the damages on this score by an amount greater than 15 per cent.
The consequence of these matters is that I do not consider that either the plaintiff or her advisers can be criticised for failing to accept the defendant’s offer of the 5th November, 1998. As I have said, they were not at that earlier stage in as good a position to assess the claim as they would have been after discovery had occurred.
Accordingly, I consider that the plaintiff should have her costs of action until the 17th February, 2000, being 14 days after the Rule 40 offers were lodged with the Registrar; and the defendant should have his costs from the 18th February, 2000 up to and including the day when judgment was handed down.
Since that time I have heard argument on two occasions in respect of costs. Neither party was wholly successful in their applications for costs. In those circumstances I consider it just that no order for costs be made for the period following judgment.
The orders are:
1...... Defendant to pay plaintiff’s costs of action on District Court scale up to and including the 17th February, 2000.
2...... Plaintiff to pay defendant’s costs of action from the 18th February, 2000 to the 18th May, 2000.
3...... No order as to costs after the 18th May, 2000.
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