Burton v Grocke (No 2) - [2015] SADC 15

DISTRICT COURT OF SOUTH AUSTRALIA
(Civil)
BURTON v GROCKE & ORS (No 2)
[2015] SADC 15
Ruling of His Honour Judge Chivell
20 February 2015
PROCEDURE - COSTS - RECOVERY OF COSTS
Calderbank letter offer not accepted - plaintiff to pay third defendant's costs on a party-party basis from the date that offer expired to the date the filed offer expired.
Filed offer not accepted - issues of imprudence and 'misconduct' - plaintiff to pay third defendant's costs on an indemnity basis from the date that offer expired.
Calderbank v Calderbank [1975] 3 All ER 333; Nominal Defendant v Dighton (No 2) [2012] SASCFC 97; Hazeldene's Chicken Farm Pty Ltd v Victorian WorkCover Authority (2005) 13 VR 435; Morris v McEwen (2005) 92 SASR 281; Colegate-Palmolive v Cussons Pty Ltd (1993) 118 ALR 248; Brymount Pty Ltd v Cummins (No 2) [2005] NSWCA 69; Essential Beauty Franchising (WA) Pty Ltd v Pilton Holdings Pty Ltd (2014) 120 SASR 433, considered.

BURTON v GROCKE & ORS (No 2)
[2015] SADC 15

In this matter, I gave judgment for the plaintiff on 28 November 2014 in the sum of $374,995.00. I indicated that I would hear the parties as to any consequential orders as to interest and costs.
The parties have now agreed that the plaintiff should also be awarded interest in the total sum of $27,089.00. The total judgment sum is therefore $402,084.00, and I enter judgment for that amount.
As to costs, the third defendant concedes that the plaintiff is entitled to her costs on a party-party basis up to and including 9 October 2013, which is 14 days after service of a ‘Calderbank letter’[1] on 25 September 2013. That letter offered to compromise the action by payment of $430,000.00 plus costs, the offer to remain open for 14 days. The letter (Annexure ‘A’ to the third defendant’s written submissions) contained a detailed assessment of the plaintiff’s claim on the evidence then available.
[1] Calderbank v Calderbank [1975] 3 All ER 333
The offer was not accepted.
The third defendant submits that the plaintiff should pay her costs on an indemnity basis from 10 October 2013. The Calderbank letter gave notice of such an application ([54] – the letter referred to payment of those costs from the date of the letter, rather than 14 days later, but that is of no significance). The plaintiff opposes the making of such an order.
The third defendant filed an offer in this Court on 17 February 2014, pursuant to DCR 187, to compromise the action by payment of $600,000.00 plus costs. In the alternative to the above, the third defendant submits that the plaintiff should pay her costs on an indemnity basis from 3 March 2014, when that offer expired (DCR 188(7)). The plaintiff concedes that she is liable to pay the third defendant’s costs from that date, but says that she should only be liable to pay costs on a party-party basis.
I accept the third defendant’s submission that although other offers were made on both sides, they are the only relevant offers for the purpose of this ruling.
The third defendant accepts that the refusal of a Calderbank offer does not give rise to a presumptive entitlement to costs. It is a relevant and important consideration in the exercise of the discretion as to costs.
The third defendant referred to Nominal Defendant v Dighton (No 2),[2] in which the Full Court adopted the five factors, identified in Hazeldene’s Chicken Farm Pty Ltd v Victorian WorkCover Authority,[3] which might usually be considered in these circumstances:
·the stage of the proceedings when the offer was received – the third defendant points out correctly that the offer was made at an advanced stage, after it was clear that there was an assessment of damages only and after the claims against the first and second defendants had been discontinued; the offer was made after a mediation;
·the time allowed to consider the offer – there can be no suggestion that the 14 days allowed was unreasonable, that is the same time allowed by the Rules to consider a filed offer. The plaintiff argued that the 14-day limitation was invalid, quoting Morris v McEwen.[4] However, I agree with the submission of Mr Roder SC for the third defendant that Morris v McEwen is of uncertain authority because it dealt with a rule which did not require the court to take into account such an offer, unlike DCR 263(3). In any event, at no stage did the plaintiff seek to accept the offer, either before or after the 14-day period, so the period allowed for acceptance of the offer is somewhat academic in any event;
·the extent of the compromise offer – the offer was comprehensive and, if accepted, would have disposed of the entire action;
·the prospects of success from the date of the offer. I have not had detailed submissions on this topic. I note that the judgment sum is less than the offered amount by a relatively small margin;
·the clarity with which the terms of the offer were expressed – there was no lack of clarity in the offer. The offer was made after the third defendant’s solicitors gave a comprehensive and reasonable assessment of the plaintiff’s claim based on the evidence then available;
·whether the offer foreshadowed an application for indemnity costs if rejected – the letter foreshadowed such an application, see [54].
[2] [2012] SASCFC 97
[3] (2005) 13 VR 435 at [25]
[4] (2005) 92 SASR 281 at [68-70]
The third defendant further argued that:
24. … the Plaintiff relevantly engaged in misconduct related to the litigation by giving deliberately false evidence to advance her case on important matters which was deliberately false in an attempt to increase her damages.
25. Indeed, the likely difference between the Plaintiff exceeding or failing to exceed the Calderbank offer and the Filed Offer, was the rejection of the Plaintiff’s deliberately false evidence as to her current condition.
(Submissions on the Question of Costs [24-25])
It is true that I found that certain parts of the plaintiff’s evidence were false, particularly as to the extent of her disability since the last of her surgical operations, and that such falsehoods were deliberate. However, there was some psychological and psychiatric evidence as to the plaintiff’s mental state at various times during the period when she was undergoing prolonged and very painful treatment. Her false evidence was not the product of mental illness, nor was it necessarily driven by greed, but rather, I think, by anxiety about her future and anger at her predicament.
In all the circumstances, although her refusal of the Calderbank offer was ‘imprudent’ (see Colegate-Palmolive v Cussons Pty Ltd;[5] Brymount Pty Ltd v Cummins (No 2)[6]), having regard to those circumstances and the fact that the Calderbank offer was not grossly in excess of the judgment sum, I decline to award costs on an indemnity basis from 10 October 2013. For the reasons expressed earlier as to the five factors outlined in Hazeldene, I rule that the plaintiff should pay the third defendant’s costs on a party-party basis from 10 October 2013.
[5] (1993) 118 ALR 248
[6] [2005] NSWCA 69 at [98-99]
The same considerations do not apply to the filed offer. That was grossly in excess of the judgment sum, and the plaintiff’s refusal to accept it was grossly imprudent. I note the submissions of Mr Whitington, solicitor for the plaintiff, that the plaintiff’s ‘misconduct’ during the hearing was not such that she was wholly unsuccessful in bringing the action. The cases cited by the third defendant in footnote 14 of her initial submissions referred to fraudulent conduct of a high order. I accept that the plaintiff’s misconduct was not of the same order. However, when considered along with the imprudence of her rejection of the filed offer, it justifies an order that she pay the third defendant’s costs on an indemnity basis from 3 March 2014 (see Essential Beauty Franchising (WA) Pty Ltd v Pilton Holdings Pty Ltd [7]). I so order.
[7] (2014) 120 SASR 433
Further, I certify that the trial was fit for senior and junior counsel. I note that both parties were so represented at trial. I accept Mr Roder’s submissions about the reasons why two counsel were necessary.