Anwar v Mondello Farms Pty Ltd (No 2) - [2014] SADC 155

DISTRICT COURT OF SOUTH AUSTRALIA
(Civil)
ANWAR v MONDELLO FARMS PTY LTD (No 2)
[2014] SADC 155
Judgment of His Honour Judge Cuthbertson
10 September 2014
DAMAGES - GENERAL PRINCIPLES - RECOVERY OF COSTS
- COSTS OF THE TRIAL. Judgment for Plaintiff for $18042.00. Defendant filed offer in excess of judgment sum.
Costs awarded to Plaintiff at 50% of District Court scale to be agreed or taxed.
Civil Liability Act 1936 s 33; District Court Civil Rules 2006 R 263(1), R 253(2)(h); Statutes Amendment (Courts Efficiency Reforms) Act 2012 s 23, s 24, s 27; District Court Act 1991 s 42(2); Supreme Court Rules 1947 R 6A(1), referred to.
Whitehead v Maas (No 2) (1991) 56 SASR 362; Lacey v Schneider (1988) 46 SASR 519; Lacey v Schneider (No 2) (1988) 46 SASR 519; Lacey v Schneider (FC) BC 8900178; Re Wells [1903] 1 Ch.848; Clement v Bassett (1987) 46 NTR 36, considered.

ANWAR v MONDELLO FARMS PTY LTD (No 2)
[2014] SADC 155

In a trial that lasted for approximately 10 weeks the plaintiff was ultimately awarded damages in the sum of $18042.
The plaintiff had made a substantial claim on the basis that a relatively minor hand injury resulted in schizophrenia with a concomitant inability to work for the rest of his life. It was held that the schizophrenia, the cause of his disability, was not compensable as there existed no duty of care pursuant to s 33 of the Civil Liability Act 1936.
Rule 263(1) of the District Court Civil Rules 2006 provides that as a general rule costs are to follow the event.
Rule 263(2)(h) provides an exception that,
(h) in an action founded on a claim for damages or any other monetary sum (other than a motor accident claim or a claim for defamation), general costs of action are not to be awarded in favour of the successful plaintiff unless the amount awarded exceeds $40000.
In 2008 when proceedings were filed in the matter the relevant figure was $15000 not $40000. District Court Civil Rules 2006 (Amendment No 23) to the Rules which effected the relevant amendment stated that the amendments were to,
come into effect immediately after Sections 23 and 24 of the Statutes Amendment (Courts Efficiency Reforms) Act 2012 are brought into operation.[1]
[1] SA Gazette 6 June 2013, p2489.
These sections came into operation on 1 July 2013.[2]
[2] SA Gazette 16 May 2013, p1541.
Section 27 of the Statutes Amendment (Courts Efficiency Reforms) Act states that the amendments made by s 23 and 24 do not apply to actions commenced before the commencement date of those sections (namely 1 July 2013) and that such actions commenced before the commencement date continue as if the Statutes Amendment (Courts Efficiency Reforms) Act had not been enacted.
The amendment to Rule 263(2)(h) therefore only applies to actions commenced after 1 July 2013 and not this action which was commenced in 2008[3] and completed in virtually all respects before 1 July 2013.
[3] Statement of Claim filed 4 April 2008.
Accordingly, in my view Rule 263(2)(h) does not apply in its amended form and the relevant amount is $15000, lower than the award achieved by the plaintiff.
Section 42(2) of the District Court Act 1991 provides as follows,
42—Costs
(1) …
(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.
Rule 263 must be the relevant Rule to be considered in conjunction with s 42(2)(e) of the Act.
It is true that this action might have been brought in the Magistrates Court but the use of the conjunctive “and” requires also that the plaintiff recover less than the amount fixed by the Rules “for the purposes of the paragraph” for there to be no award for costs to be made in the favour of the plaintiff.
The plaintiff has not recovered less than an amount fixed by the Rules prior to the amendment of 1 July 2013.
Accordingly, in my view, the ordinary Rules that costs normally follow the event should apply.
In any event, I am of the view that given the complexity of the issues raised at the trial and a fairly novel point concerning s 33 of the Civil Liability Act 1936, it would have been appropriate for the plaintiff to have brought the proceedings in the District Court.
I note also that an offer by the defendant was filed on 8 February 2013 pursuant to Rule 187 of the District Court Rules.
The consequence of a filed offer by the defendant is as provided in Rule 188(6) as follows,
(6)If a formal offer of settlement so far as it relates to principal relief is not accepted by the party to whom the offer is made and the Court determines the relevant action or claim on terms (as to principal relief) that are no more favourable to the party than the terms of the offer, then, subject to the Court's order to the contrary—
(a)the party to whom the offer was made is not to be entitled to costs referable to the period falling after the relevant date; and
(b)the party that made the offer—
(i)if a defendant—is entitled to costs referable to the period falling after the relevant date; …
The offer filed was considerably in excess of the amount ultimately awarded to the plaintiff at trial.
It is clear that the intention of Rule 188 is penal and it is to be applied as an incentive to settlements.[4] Different consideration may apply however, in respect of parties under a disability.
[4] See Whitehead v Maas (No 2) (1991) 56 SASR 362.
By application filed 15 July 2011 application was made that the Public Trustee be appointed as litigation guardian.
The grounds given for the application included as follows,
1The plaintiff’s claim is for damages arising out of an injury as a result of which he sustained an injury to his hand and severe schizophrenia as a result of his trauma.
2A report from Professor Alexander McFarlane, psychiatrist, indicated that the plaintiff did not have the capacity to instruct nor to handle any settlement funds.
In consequence an order was made whereby the Public Trustee was appointed as litigation guardian. The order was made by consent (see FDN 30).
Rule 188(6)
The predecessor to Rule 188(6) was order 22, Rule 6A(1) of the 1947 Supreme Court Rule. It required for there to be an exercise of the discretion to excuse the consequence of a plaintiff obtaining an award of damages less than the filed offer the establishment of “special reasons”.
The requirement of special reasons is no longer in the Rule.[5]
[5] See Lacey v Schneider (1988) 46 SASR 519 at [521]
I accept, however, that notwithstanding the elimination of the requirement for special reasons there must be, in order for there to be a favourable exercise of the discretion, some onus on the party who has received less than the filed offer to establish some proper reasons for the exercise of the discretion in that party’s favour.
In this matter the plaintiff is under a disability through mental illness and as the issues of schizophrenia both as to its causation and on the s 33 duty of care issue are complex, he would have been in no position to have meaningfully accepted the filed offer.
Moreover, Rule 257 of the District Court Rules[6] requires the approval of the Court of the terms of any settlement of proceedings where the plaintiff is under a disability. The plaintiff is not to be penalized in costs where he recovers less than the amount offered if the Court would not have approved the acceptance of the offer.[7]
[6] District Court Civil Rules, Rule 257(1).
[7] See Lacey v Schneider (No 2) (1988) 46 SASR 519 at 525 (and on appeal to the Full Court); Lacey v Schneider BC 8900178.
On considering whether to approve a compromise the Court is required to consider whether or not the compromise would be beneficial to the person under disability Re Wells [1903] 1 Ch.848 at 853; Clement v Bassett (1987) 46 NTR 36.
I have decided that leaving aside a reduction on the basis that at some stage the plaintiff would have sustained schizophrenia in any event and assuming there was a duty of care under s 33 of the Civil Liability Act the plaintiff would have been entitled to damages of $1.5 million.
Here the filed offer is for $465000 plus costs and disbursements, about one third of the award that I suggested was appropriate if the plaintiff’s schizophrenia was attributable to the accident and was compensable.
It was obvious that the plaintiff, due to his schizophrenia, would be unlikely to be able to look after himself and sustain employment.
A figure of $460000 would have been entirely inadequate as full compensation.
It would have been entirely speculative to have determined that the amount of $460000 was beneficial to the plaintiff without being in a position to resolve more firmly the questions of causation of the schizophrenia and the duty of care under s 33, issues which would have required extensive examination of the relevant witnesses.
In my view a combination of the complexity of the issues, the disability of the plaintiff and the amount of the filed offer means that there are proper grounds for me to order “to the contrary” of the ordinary position provided in Rule 188(6).
As it was put by Mohr J in Lacey v Schneider,[8]
But this is not an ordinary case, not merely because the plaintiff was a person under disability, but because of the perplexing uncertainties which would have attended any attempt to obtain approval to compromise on the terms offered. In short I believe that the plaintiff really had no option but to go to trial in the face of this offer…
[8] (FC) BC 8900178 at 9.
The plaintiff won the issues of liability and causation both of which were in dispute. The defendant won the issue of whether there was as duty of care in respect of the mental injury.
In all the circumstances it is fair that the plaintiff have 50% of his costs on the District Court scale until the end of the trial.
Orders
The plaintiff to have 50% of costs on the District Court scale to be agreed or taxed.