Battunga Country Lions Club v Paues (No 2) - [2021] SASCA 98

SUPREME COURT OF SOUTH AUSTRALIA
(Court of Appeal: Civil)
BATTUNGA COUNTRY LIONS CLUB v PAUES (No 2)
[2021] SASCA 98
Judgment of the Court of Appeal
(The Honourable President Kelly, the Honourable Justice Doyle and the Honourable Justice Bleby)
23 September 2021
PROCEDURE - CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS - COSTS - OFFERS OF COMPROMISE, PAYMENTS INTO COURT AND SETTLEMENTS
PROCEDURE - CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS - COSTS - GENERAL RULE: COSTS FOLLOW EVENT
The first and second respondents were successful at trial in achieving awards of damages in their favour for the personal injuries that they suffered as a result of the appellant’s negligence.
On 11 December 2020, the appellant filed a notice of appeal which challenged various components of the damages awarded to both the first and second respondents. On 1 March 2021, it abandoned its appeal against the judgment in favour of the second respondent, and narrowed its appeal against the judgment in favour of the first respondent to a challenge to the award of $330,000 on account of future loss of earning capacity.
Prior to the hearing of the appeal, the parties made a number of formal and informal offers to settle, none of which were ultimately accepted.
On 29 July 2021, the Court of Appeal allowed the appellant’s appeal and reduced the component of damages referable to future loss of earning capacity to $250,000. The parties subsequently filed submissions on the issue of costs.
Held, per the Court:
1.      The appellant is to pay the second respondent’s costs of the appeal up to 1 March 2021 on a party/party basis.
2.      The appellant is to pay the first respondent his costs thrown away by reason of the grounds of appeal abandoned on 1 March 2021.
3.      Subject to order 2, the first respondent is to pay the appellant’s costs of the appeal on a party/party basis.

BATTUNGA COUNTRY LIONS CLUB v PAUES (No 2)
[2021] SASCA 98
Court of Appeal – Civil: Kelly P, Doyle and Bleby JJA

THE COURT: These reasons address the costs of the appeal in Battunga Country Lions Club v Paues.[1]
[1] Battunga Country Lions Club v Paues [2021] SASCA 72.
The first and second respondents were successful at trial in achieving awards of damages in their favour for the personal injuries that they suffered as a result of the appellant’s negligence. The trial judge delivered his reasons for judgment on 20 November 2020.
On 11 December 2020, the appellant filed a notice of appeal. It raised grounds challenging various components of the damages awarded against both the first and second respondent.
At the callover hearing on 19 February 2021, the appeal was listed for hearing on 3 May 2021. During the callover hearing the appellant sought, and was granted, leave to amend its notice of appeal so as to abandon its appeal against the judgment in favour of the second respondent, and to confine its appeal against the judgment in favour of the first respondent to a challenge to the award of $330,000 on account of future loss of earning capacity. The appellant served an amended notice of appeal in these terms on 1 March 2021.
On 6 April 2021, the first respondent made both a formal rules-based offer and an informal Calderbank offer in equivalent terms. The effect of these offers was to offer to settle on the basis that the appeal be allowed so as to reduce the component of the damages referable to future loss of earning capacity from $330,000 to $275,000. However, the offers also contained a condition that the appellant pay the first respondent’s costs of the appeal.
On 21 April 2021, the appellant rejected the formal offer. The appellant did not respond to the informal offer.
Following some without prejudice negotiations between the parties’ counsel, the first respondent made a further informal offer on 30 April 2021. In that Calderbank offer, the first respondent offered to settle on the basis that the appeal be allowed so as to reduce the damages for future loss of earning capacity from $330,000 to $250,000, with the appellant to pay the first respondent’s costs of the appeal.
The appellant rejected this offer but made an informal counter-offer by way of a Calderbank letter dated 1 May 2021. The appellant offered to settle the appeal on the basis that the damages for future loss of earning capacity be reduced from $330,000 to $250,000 but with this sum being inclusive of costs.
The appeal was heard on 3 May 2021, and on 29 July 2021 the Court of Appeal delivered its reasons for allowing the appeal and reducing the damages for future loss of earning capacity to $250,000. The Court invited the parties to file written submissions on the issue of costs, which they did.
Addressing first the costs of the second respondent, there is no dispute that the appellant should pay those costs on a party/party basis. The only issue between the parties was whether that order should be confined to the costs incurred up to 19 February 2021 (being the date of the callover hearing at which the abandonment of that appeal was foreshadowed), or extend to the costs incurred up to the date of that abandonment on 1 March 2021. We consider that the order should extend to the costs incurred up to 1 March 2021, albeit that we would not have thought that any significant costs would have been reasonably incurred (and hence be recoverable upon a taxation) between the callover and 1 March 2021.
Turning to the position of the first respondent, the appellant accepts that it should pay the costs of the first respondent thrown away in respect of the grounds abandoned on 1 March 2021. We agree that such an order is appropriate.
The first respondent also seeks an order for his costs of the appeal. Relying upon his offers to settle, and a submission that the appellant acted unreasonably or imprudently in not accepting these offers, the first respondent contends that the Court should exercise its discretion in relation to costs by ordering that the appellant pay the first respondent’s costs of the appeal on a party/party basis up until close of business on 30 April 2021, and thereafter on an indemnity basis.
The appellant rejects the above submission, pointing out that the first respondent did not better the offer he made. It contends that because the first respondent’s offers required that the appellant pay his costs of the appeal, the appellant in fact achieved a better outcome on the appeal.
Indeed, the appellant contends that because it offered to settle the first respondent’s claim for future loss of earning capacity for an amount of $250,000 inclusive of costs, it bettered its own offer and so ought to receive an uplift in its prima facie costs entitlement as the successful party on the appeal. The appellant thus seeks an order that the first respondent pay its costs of the appeal on a party/party basis up to 1 May 2021, and thereafter on an indemnity basis.
The starting point in considering the costs of the appeal is that the appellant was the successful party, and that costs ordinarily follow the event. However, it is also relevant to have regard, in the exercise of the Court’s discretion as to costs, to the formal and informal offers to settle made by the parties.
The first respondent made three offers, each of which constituted reasonable attempts to resolve the appeal. But as the first respondent did not do better on the appeal than any of these offers, we do not think that they warrant any departure from the ordinary approach to costs. While the third offer did involve an offer to settle for a judgment sum that matched the outcome of the appeal, that offer was conditional upon the appellant paying the first respondent’s costs of the appeal. In circumstances where the offer was predicated upon a successful appeal, which would ordinarily have entailed an order for costs in the appellant’s favour, it cannot be said that the outcome of the appeal was more favourable from the first respondent’s perspective than the terms of the third offer. Nor can it be said that the appellant’s failure to accept the third offer, or indeed any of the offers, was unreasonable or imprudent in the relevant sense.
The appellant, on the other hand, did achieve an outcome that was more favourable than its offer. It offered to pay $250,000, and as this sum was inclusive of costs (rather than involving any order for costs in its favour, despite the successful outcome inherent in the terms of the offer), the appellant achieved a more favourable outcome on the appeal than its offer. While this is a relevant consideration, there are some countervailing considerations. The first is the late timing of the offer. It was made on 1 May 2021, being a Saturday and only two days before the Monday of the appeal. While the first respondent’s advisors were in a position to quickly assess the reasonableness of the offer (given that they had only the day before communicated an offer on behalf of their own client), the late timing of the offer left them with practically no time to advise their client in relation to the offer and its implications. And it left their client with practically no time to consider and reflect upon any such advice. In circumstances where the offer was for an amount that merely matched the outcome on appeal (rather than exceeding the outcome on appeal), we are not satisfied that the first respondent’s failure to accept this offer was unreasonable or imprudent.
For these reasons, while we accept that the appellant, as the successful party, should have an order for costs in its favour, those costs should be payable on the ordinary party/party basis. We do not think the appellant has established a basis for an uplift in its costs entitlement.
The orders of the Court will be:
1.   the appellant is to pay the second respondent’s costs of the appeal up to 1 March 2021 on a party/party basis;
2.   the appellant is to pay the first respondent his costs thrown away by reason of the grounds of appeal abandoned on 1 March 2021; and
3.   subject to order 2, the first respondent is to pay the appellant’s costs of the appeal on a party/party basis.