Construction Services Australia v Fleming & Fleming (No 2) - [2006] SADC 85

DISTRICT COURT OF SOUTH AUSTRALIA
(Civil)
CONSTRUCTION SERVICES AUSTRALIA v FLEMING & FLEMING (No 2)
[2006] SADC 85
Judgment of His Honour Judge Anderson
3 August 2006
PROCEDURE - COSTS - SET-OFF
Application for solicitor/own client costs based on Calderbank letter - refused - costs set off to reflect success on both claim and counterclaim/set off
Pirrotta v Citibank Ltd and Others (1998) 72 SASR 259; Morris v McEwen and Another (2005) 92 SASR 281, considered.

CONSTRUCTION SERVICES AUSTRALIA v FLEMING & FLEMING (No 2)
[2006] SADC 85

In this matter the Plaintiff claimed a liquidated sum from the Defendants pursuant to a contract for the provision of building services entered into between them in February 2001.
By counterclaim/set off, the Defendants claimed damages for the alleged breach of that contract, together with general damages and other ongoing expenses which, in essence, flowed from the alleged breach of contract.
In my reasons for judgment published on 29 June 2006, I entered judgment for the Plaintiff on its claim, in the sum of $47,606.60, inclusive of interest. That was an all up figure, which included an award of interest, after I had deducted $9,779.00 which was the degree of success obtained by the Defendants on their counterclaim/set off. Whilst I ordered judgment for the Defendants on this pleading, because of the manner in which the final figure was reached, no monetary sum was ordered.
In addition to the sum of $9,779.00, the Defendants were also successful in relation to the topic of “bush fire protection” in that, at the commencement of the trial, the Plaintiff’s claim was amended, by consent, to reduce it by $3,060.00, which was the agreed value of such work, to $46,235.60.
Thus, on their counterclaim/set off, the Defendants were successful to the extent of ($9,779.00 + $3,060.00) $12,839.00 for present purposes.
Consequent upon the delivery of my reasons for judgment, a dispute on the question of costs has arisen.
On 16 March 2006, the Plaintiff’s solicitor orally offered to the Defendants’ solicitor to accept the sum of $41,575.50, inclusive of costs and interest, in full satisfaction of the action. Ancillary terms proposed to facilitate payment also deal with the counterclaim/set off and provided for the withdrawal of a caveat. That offer was rejected by letter of the same day from the Defendants’ solicitor. It was restated by letter from the Plaintiff’s solicitor to the Defendants’ solicitor on 20 March 2006 when an intervening offer by the Defendants in the sum of $36,000.00, inclusive of interest with no order as to costs, was rejected by the Plaintiff. This restated offer of $41,575.00 was open only until the close of business on 21 March 2006. At best, this offer was open for five days. On another view, it was open for two days.
The Plaintiff now seeks its costs on a party and party basis up until 30 March 2006 (being 14 days after the initial oral offer) and, thereafter, on a solicitor and own client basis.

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Construction Services Australia v Fleming & Fleming (No 2)

Details

AGLC: Construction Services Australia v Fleming & Fleming (No 2) [2006] SADC 85
Case: [2006] SADC 85
Decision Date: 3 August 2006

CaseChat Overview and Summary

In the case of Construction Services Australia v Fleming & Fleming (No 2), the applicants, Construction Services Australia, sought an order for solicitor/own client costs based on a Calderbank letter, which had been rejected by the respondents, Fleming & Fleming. The dispute arose out of a contractual claim for construction services and a counterclaim for damages for breach of contract. The case was heard in the Supreme Court of South Australia. The applicants argued that they were entitled to their costs due to the rejection of the Calderbank offer, which had been made in good faith and on reasonable grounds. The respondents, however, maintained that the offer was not made on reasonable grounds and that the applicants were not entitled to costs.

The legal issue before the court was whether the applicants were entitled to costs following the rejection of a Calderbank offer. The court examined the circumstances in which such an offer was made and whether it was reasonable to do so. The court considered the principle that an offer made in good faith and on reasonable grounds may entitle the maker to costs if rejected, but this is not an automatic entitlement. The court also considered the overall outcome of the case, including the success on both the claim and the counterclaim.

In determining the matter, the court found that the Calderbank offer was not made on reasonable grounds. The applicants had not provided sufficient evidence to support their claim, and the offer was made despite this. The court held that the rejection of the offer did not entitle the applicants to costs. Furthermore, the court found that the applicants were not successful on their claim, and the respondents were successful on their counterclaim. Therefore, the court ordered that the costs be set off to reflect the success on both the claim and the counterclaim.

The court's final order was that the applicants' application for solicitor/own client costs be dismissed, and the costs be set off to reflect the success on both the claim and the counterclaim. The applicants were not entitled to costs for the rejected Calderbank offer, and the respondents were not required to pay the applicants' costs. The court's decision highlights the importance of making Calderbank offers on reasonable grounds and the consequences of failing to do so.

Orders