Australian Rail Track Corporation Ltd v Twentieth Super Pace Nominees Pty Ltd

[2007] SASC 284

Supreme Court of South Australia

(Civil: Application)

AUSTRALIAN RAIL TRACK CORPORATION LTD v TWENTIETH SUPER PACE NOMINEES PTY LTD & ORS

[2007] SASC 284

Judgment of The Honourable Justice Debelle (ex tempore)

26 July 2007

PROCEDURE - SUPREME COURT PROCEDURE

PROCEDURE - SUPREME COURT PROCEDURE – SOUTH AUSTRALIA - PROCEDURE UNDER RULES OF COURT - OFFER OF COMPROMISE

Multi-party litigation all parties other than second third party willing to compromise – all parties seek recovery from second third party – application to permit parties to file and serve offer on second third party – with consequences of Rules 40 and 41 of Supreme Court Rules 1987 – whether consequences prescribed in Rule 41.04 should apply if offer not accepted.

Supreme Court Rules 1987 R 40, R 41, referred to.

AUSTRALIAN RAIL TRACK CORPORATION LTD v TWENTIETH SUPER PACE NOMINEES PTY LTD & ORS
[2007] SASC 284

Civil

1. DEBELLE J.        This action follows a rail derailment. The plaintiff is the owner of the rail track. The defendant is the operator of the train which was travelling on the track when the derailment occurred.

2. The first third party owned the rolling stock which it leased to the defendant. The second third party (“EDI Rail”) had contractual arrangements with the first third party for the maintenance of that rolling stock. The fourth third party is an insurer broker engaged by the defendant.

3. There are a number of issues in the action.  The central issue, however, is what caused the derailment to occur. Experts’ reports have been exchanged.  There is a real question whether the cause of the derailment was a failure by EDI Rail adequately to maintain and service the rolling stock involved in this derailment. That is likely to be the central issue at the trial.

4. The parties have already conducted a settlement conference.  It failed to produce a resolution of the issues in the action. Notwithstanding the failure of that settlement conference, the parties are agreed that a mediation should be conducted. Orders will be made to give effect to that intention and it is likely the mediation will be conducted in the relatively near future.

5. All parties other than EDI Rail have agreed as between themselves as to the terms upon which they are willing to compromise this action. They seek to recover an amount from EDI Rail, which shall be divided between them according to their agreement. All of those parties seek to avail themselves of the spirit and intent of Rules 40 and 41 of the Supreme Court Rules 1987. An application has been made by the first third party, on behalf of all of those parties, seeking an order that the court dispense with certain provisions of Rules 40 and 41 of the Supreme Court Rules and permit them to file and serve an offer on EDI Rail with the intent that the consequences prescribed in Rule 41.04 should apply if the offer is not accepted.

6. The purpose and intent of Rules 40 and 41 is to require parties to face the reality of litigation and to give serious and close attention to the merits or otherwise of prosecuting or defending the litigation as the case may be. Rules 40 and 41 do not make provision for multi-party litigation.  That is what causes this application to be made.

7. In my view, the spirit and intent of Rules 40 and 41 should be capable of being applied in the case of multi-party litigation. That said, it must be acknowledged that the issues in multi-party litigation differ from the issues in actions where there is but one plaintiff and one defendant in that there may well be issues as between different parties which do not affect a particular party.  In this case, for example, there are issues as between plaintiff and defendant concerning the contractual arrangements between them as to the terms upon which the rail-track would be made available for use by the defendant. There are other contractual issues as between different parties.  These issues do not directly concern EDI Rail.  If the offer is not accepted and the action is prosecuted, time may, therefore, be occupied and costs thereby incurred in agitating issues which do not in any respect concern EDI Rail.  In those circumstances, it would plainly be inequitable if EDI Rail were required to pay costs of all parties on a solicitor and client basis.

8. As the central issue is whether EDI Rail adequately serviced and maintained the rolling stock which caused this derailment, I think it is proper to grant the application.  I do not in any sense overlook the fact that this is a suit in which there are a number of parties and that there are differing issues between them.  Nevertheless, I emphasise that there is essentially one central issue which has emerged as between the parties and for that reason it is proper to grant the application.  However, it is important, to ensure that EDI Rail is not liable to pay costs on a solicitor and client basis in respect of issues on which it is not a party. That situation can be sufficiently addressed by providing in the order that, if the offer is not accepted and the action goes to trial with the parties other than EDI Rail recovering an amount equal to or greater than the offer, the costs will be on a solicitor and client basis with the capacity of the trial judge to determine otherwise.  In that way, the trial judge can give consideration to the manner in which the issues have been agitated at the trial and determine whether it is appropriate that EDI Rail pay the costs of all parties on a solicitor and client basis. At the same time, effect can be given to the purpose and intent of Rules 40 and 41, that is to say, to require EDI Rail closely to consider its position.

9. I will, therefore, make orders to give effect to these reasons.

   1That all parties participate in a mediation which shall be held at a date and time to be appointed.

   2The mediator will be a judge of this Court appointed by the Chief Justice.

   3That, notwithstanding the terms of Rules 40 and 41 of the Supreme Court Rules 1987, leave to the plaintiff, the defendant, the first third party and the fourth third party to file and serve an offer to the second third party to consent to judgment in satisfaction or part satisfaction of their respective claims (“the offer”) provided that the offer shall not be filed until after the mediation the subject of paragraph 1 of this order has been held.

   4That, if the second third party does not accept the offer and the sum recovered by the plaintiff, the defendant, the first third party and the fourth third party as equal or greater than that contained in the offer, the court unless it thinks it proper to order otherwise, shall order the second third party to pay the whole of the costs of the action of the plaintiff, the defendant, the first third party and the fourth third party to be taxed as between solicitor and client.

   5That the offer may be increased, reduced, withdrawn, accepted or varied in the manner prescribed by either Rule 40 or Rule 41.

   6That the executed Deed of Offer to Settle in the form of a deed which is exhibited to the affidavit of Thomas Ramsden Grace sworn 6 June 2007 be confidential and be kept in a sealed envelope which shall not be opened except by order of a judge of this Court.

   7That within 21 days the plaintiff and first defendant deliver any expert’s reports in answer to the second third party’s report.

   8Costs in the cause.

   9Liberty to apply.