Brennan v Kangaroo Island Council (No 2)

[2013] SADC 106

DISTRICT COURT OF SOUTH AUSTRALIA

(Civil)

BRENNAN v KANGAROO ISLAND COUNCIL (No 2)

[2013] SADC 106

Judgment of Her Honour Judge Cole

15 August 2013

ADMINISTRATIVE LAW

Application for costs by defendant following judgment being delivered by the Court - order that the plaintiff pay the defendant's costs of the action on a party/party basis.

Brennan v Kangaroo Island Council [2013] SADC 99, considered.

BRENNAN v KANGAROO ISLAND COUNCIL (No 2)
[2013] SADC 106

1. This is a decision in relation to a claim for costs. 

2. The plaintiff was employed by the Kangaroo Island Council (“the Council”).  The plaintiff claimed an entitlement to a payment in lieu of reasonable notice upon her position with the Council becoming redundant.  Following the trial of the matter, on 1 July 2013, the Court determined that the plaintiff had been paid all of the entitlements due to her from the Council, except for one weeks pay ($2,290.10) for which the Council was liable under the South Australian Municipal Salaried Officers Award, which applied to the plaintiff’s employment relationship with the Council.[1]

   [1]    Brennan v Kangaroo Island Council [2013] SADC 99

3. An application for costs has now been made on behalf of the Council.  Mr Lazarevich handed up an offer of settlement which was filed in the Court on 20 August 2012.  The offer made was $30,000 “inclusive of interest and costs”.  I have not been provided with the quantum of costs as they were at any stage.  I therefore do not know how much of the offer was attributable to damages.  However, having regard to the nature of the matter, the stage of the proceedings at which the offer was made, and all of the material before the Court, I assume that the filed offer is considerably in excess of the sum which has been awarded. 

4. Mr Lazarevich also pointed to a letter, dated 20 March 2012, from the Council to the plaintiff, offering her an “enhanced separation package” at a time prior to the final decision by the Council which made her position redundant.  Had the plaintiff accepted the “enhanced separation package”, she would have been paid considerably more than the amount awarded at trial.

5. The District Court Civil Rules 2006 (“the Rules”), in Rule 188, deal with the consequences of filing an offer of settlement in Court.  Rule 188(6) says:

   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; and

   (ii)     if a plaintiff – is entitled to the whole of the party’s costs of action on a solicitor/client basis and the defendant is not entitled to any costs not otherwise ordered.

6. The ‘relevant date” is the date falling 14 days after the service of the order.[2]

   [2]    Rule 188(8).

7. Rule 33 deals with offers of settlement before action.  Rule 33(7) says:

   In awarding costs of the action, the Court may take into account –

   (a)     whether the parties have complied with their obligations under this rule; and

   (b)the terms of any offer or counter-offer, or of any response to an offer or counter-offer, made under this rule and the extent to which it was reasonable, or unreasonable in the circumstances.

8. The offer of an “enhanced separation package” was not an offer of settlement before action within the meaning of Rule 33.  The cause of action pleaded on the plaintiff’s behalf was a breach of contract.  The breach of contract pleaded was a breach of an implied term of the plaintiff’s employment contract, namely a term that the plaintiff would be given a payment in lieu of reasonable notice in the event that her position became redundant.  The offer of an “enhanced separation package” pre dated the redundancy, and therefore pre dated any breach of contract in relation to the redundancy.  I do not take the offer of the “enhanced separation package” into account under Rule 33.  I take it into account as part of the events giving rise to the action and the application for costs in the exercise of my general discretion. 

9. I assume that the filed offer was served within a day of being filed.  The relevant day is therefore 5 September 2012.  Pursuant to Rule 188, the defendant is entitled to an order for costs incurred subsequent to 5 September 2012.  In all of the circumstances of this case, including the negotiations which preceded the redundancy, the defendant should also have an order for costs incurred prior to that date. 

10. Mr Lazarevich sought costs for at least the period subsequent to the relevant date, on a solicitor/client or indemnity basis.  Having regard to all of the circumstances of this case and, in particular, the complexity of the legal context of the plaintiff’s employment contract, I do not consider that this is an appropriate case in which to order costs on a solicitor client or indemnity basis.  There will be an order that the plaintiff pay the defendant’s costs of the action on a party/party basis.