Anwar v Mondello Farms Pty Ltd (No 2)

[2015] SASCFC 136

SUPREME COURT OF SOUTH AUSTRALIA

(Full Court: Civil)

ANWAR v MONDELLO FARMS PTY LTD (NO 2)

[2015] SASCFC 136

Judgment of The Full Court

(The Honourable Chief Justice Kourakis, The Honourable Justice Gray and The Honourable Justice Stanley)

17 September 2015

PROCEDURE - COSTS - GENERAL RULE - COSTS FOLLOW THE EVENT

TORTS - NEGLIGENCE

Application for costs.

In this matter the Court allowed the appellant’s appeal and increased the award of damages. The Chief Justice and Stanley J increased the award from $18,042.30 to $1,331,870.17. Gray J would have increased the damages to $1,679,415.77. The Court accepted the appellant’s submission that the trial judge had erred in applying s 33 of the Civil Liability Act 1936 (SA). In consequence, the appellant was entitled to an assessment of damages that included the loss he had suffered by reason of psychiatric injury. The Chief Justice and Stanley J, however, accepted the submission of the respondent on the notice of contention that the trial judge’s assessment of future losses, in the event that the appellant’s psychiatric injury was to sound in damages, should have been reduced by more than 30 per cent for the chance that the appellant would have suffered schizophrenia in any event. Gray J did not accept this submission.

The appellant seeks orders that he have the costs of the appeal and, in lieu of the orders made by the trial judge, the costs of the action below, and that the costs of the action should be allowed on a solicitor/client basis. The respondent submits that the appropriate orders are that the orders made by the trial judge be set aside and the appellant have his costs of the action and 90 per cent of his costs of the appeal.  The respondent opposes an order that it pay the costs of the action on a solicitor/client basis. 

Held per The Court:

1. The respondent’s failure to accept the Calderbank offer of 16 April 2013 does not justify an award of costs on anything other than the usual party/party basis. 

2. On the appeal the appellant was successful. However, the appellant did not succeed completely. The respondent was partly successful. In these circumstances the appropriate award in respect of the costs of the appeal is that the respondent should pay the appellant 90 per cent of his costs.

Civil Liability Act 1936 (SA) s 33; Supreme Court Act 1935 (SA) s 40(1); Supreme Court Civil Rules 2006 (SA) r 264(1), r 263(3), r 263(1), referred to.
Allen v Chadwick (No 2) [2014] SASCFC 130, considered.

ANWAR v MONDELLO FARMS PTY LTD (NO 2)
[2015] SASCFC 136

Full Court:  Kourakis CJ, Gray and Stanley JJ

1. THE COURT:      In this matter the Court allowed the appellant’s appeal and increased the award of damages.  The Chief Justice and Stanley J increased the award from $18,042.30 to $1,331,870.17.  Gray J would have increased the damages to $1,679,415.77. 

2. The Court accepted the appellant’s submission that the trial judge had erred in applying s 33 of the Civil Liability Act 1936 (SA). In consequence, the appellant was entitled to an assessment of damages that included the loss he had suffered by reason of psychiatric injury. The Chief Justice and Stanley J, however, accepted the submission of the respondent on the notice of contention that the trial judge’s assessment of future losses, in the event that the appellant’s psychiatric injury was to sound in damages, should have been reduced by more than 30 per cent for the chance that the appellant would have suffered schizophrenia in any event. Gray J did not accept this submission.

3. The Court invited submission from the parties on the question of costs.  The appellant seeks orders that he have the costs of the appeal and, in lieu of the orders made by the trial judge, the costs of the action below, and that the costs of the action should be allowed on a solicitor/client basis.  The respondent submits that the appropriate orders are that the orders made by the trial judge be set aside and the appellant have his costs of the action and 90 per cent of his costs of the appeal.  The respondent opposes an order that it pay the costs of the action on a solicitor/client basis. 

4. The basis of the appellant’s application for costs of the action on a solicitor/client basis is a Calderbank offer made by letter dated 16 April 2013 to settle for the sum of $1.1 million in addition to costs. That offer was made at a time after the trial had been underway for six weeks and only six sitting days before the trial judge reserved his decision. At that stage of the trial the respondent’s principal psychiatric witness was still to give evidence. The issue of causation of the appellant’s schizophrenia was very much a live issue. Moreover, the alleged liability of the respondent for the appellant’s psychiatric losses turned on the construction of s 33. At that time the interpretation of s 33 had not been authoritatively determined by this Court.

   Costs

5. Pursuant to s 40(1) of the Supreme Court Act 1935 (SA), subject to the express provisions of the Act and to the Rules of Court, costs are in the discretion of the Court. 6SCR 264(1) provides that the Court may award costs on any basis it considers appropriate. As a general rule, however, costs follow the event.[1] In exercising the Court’s discretion as to costs 6SCR 263(3) relevantly provides that the Court is empowered to have regard to any offer to consent to judgment or other attempts to settle the action. In considering the effect of any offer on the question of costs, the issue for the Court is whether the unsuccessful party has acted unreasonably. It is well established that the fact the offeror betters the offer at trial does not necessarily mean that its rejection of the offer by the offeree was unreasonable.[2] 

   The Calderbank offer

   [1] 6SCR 263(1).

   [2]    Allen v Chadwick (No. 2) [2014] SASCFC 130 at [36].

6. In our view, the respondent’s failure to accept the Calderbank offer of 16 April 2013 does not justify an award of costs on anything other than the usual party/party basis.  The offer was made late, long after the trial had commenced and the appellant had closed his case.  The trial was long and complex and raised difficult factual and legal issues.  The rejection of the offer was not unreasonable as to penalise the respondent by an award against it of costs of the action on a solicitor/client basis. 

   The costs of the appeal

7. On the appeal the appellant was successful.  However, the appellant did not succeed completely.  The respondent was partly successful in its contention that the trial judge erred in his alternate assessment by only reducing the award of damages for future losses by 30 per cent for the contingency that the appellant would have suffered schizophrenia in any event.  This was a substantial argument occupying a not insignificant part of the hearing of the appeal. 

8. We accept the respondent’s submission that in these circumstances the appropriate award in respect of the costs of the appeal is that the respondent should pay the appellant 90 per cent of his costs.