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.
The offers which I have described were the most recent made before the commencement of the trial on 3 April 2006. The process of offer and counter offer began much earlier - probably in September 2003. I do not accept that discussion between Mr Czeglik and the male defendant in April 2002 resulted in any offer of the type now relevant.
The quantum of the Scott Schedule was not agreed until the day of trial. The Defendants, of necessity in that circumstance, had to prepare their case so as to prove those matters. This involved the disbursing of $5,286.30 for the provision of expert reports. In addition to that sum, legal costs were incurred. It follows that some allowance in relation to the obtaining of those reports should be made because they were relevant to the case the Defendants had to prepare and then, because of the late concessions made by the Plaintiff, put to one side on the day of trial.
I have had regard to what has fallen from the Full Court in both Pirrotta v Citibank Ltd and Others (1998) 72 SASR 259 and Morris v McEwen and Another (2005) 92 SASR 281.
In this matter, no offer in accordance with the Rules of Court was made by the Plaintiff. It was not a matter so complicated that a proper offer capable of acceptance within the terms of the Rules could not have been formulated.
The offer made required acceptance within, at the outside, five days. This is much shorter than the 14 days allowed in the Rules. In my opinion, this fact alone is sufficient to disentitle the Plaintiff’s application for solicitor and own client costs. The Plaintiff is unable to obtain any benefit from attempting to align its Calderbank offer with the requirements of the Rules, having regard to the terms of that offer and its timing.
There was comment during submissions on the question of costs about delay in the matter. This is an accusation easily made and, often, superficially attractive on the chronology. However, it is necessary to recognise that this is a building case with many aspects. There eventually were 93 separate items in the Scott Schedule. In my opinion, there was no obvious delay such as to require the penalisation of either party in that regard.
I reject the submission on behalf of the Defendants that in some way any offer made on their behalf came somewhere near to the judgment sum. In my opinion the difficulties which the Defendants faced from the outset should have been obvious early on and, certainly, no later than at the stage of the preparation of an advice on evidence - if that were done. The offers made were clearly unrealistic.
Whilst the Plaintiff is entitled to its costs of action on the party and party scale, some allowance for the Defendants’ preparation and success is also to be recognised. This is best done by a percentage deduction of the Plaintiff’s entitlement. That deduction should bear some relationship to the proportion of the figures, i.e. $45,385.60 (see paragraph 69 of reasons for judgment) and $12,839.00. Regard should also be had to the cost of the defendants’ expert reports.
The Plaintiff is to have 80% of its costs to be taxed or agreed on the party and party scale, less $5,286.30.
There will be no order for costs on the counterclaim/set off.
The Plaintiff should now seal the judgment in accordance with the reasons published on 29 June 2006 and these reasons. The whole of the judgment should speak from 29 June 2006. The order for costs should be part of the judgment speaking from that date.
I order that the time within which to lodge any appeal be enlarged so as to run from Thursday, 3 August 2006.