Corrado v La Starza (No 2) - [2016] SADC 51

DISTRICT COURT OF SOUTH AUSTRALIA
(Civil)
CORRADO v LA STARZA (No 2)
[2016] SADC 51
Judgment of His Honour Judge Tilmouth
27 May 2016
CONTRACTS - GENERAL CONTRACTUAL PRINCIPLES - FORMATION OF CONTRACTUAL RELATIONS - CONTRACT IMPLIED FROM CONDUCT OF PARTIES
Determination of interests, costs and other consequential orders following judgment in favour of the plaintiff.
District Court Act 1991 (SA) s 39, s 39(3); District Court Civil Supplementary Rules 2014 DCSR 208, DCSR 263(1); Enforcement of Judgments Act 1991 (SA) s 8, s 8(2); District Court Civil Rules 2006 DCR 263(1), 15R 187, 15R 187(2), 6R 187(3)(d), 6R 188(1)(b), 15R 188F(3), 6R 181(1), (2) & (3); Basbuild v Hall & Anor [2014] SASC 44, referred to.
Hall v Basbuild Pty Ltd [2013] SADC 132, applied.
Corrado v La Starza [2016] SADC 45; Sparalis v BMD Construction Pty Ltd (No 2) [2015] SASCFC 28; CP (Adelaide) v Hartford (Holdings) (No 9) (2002) 221 LSJS 46; McNamara Business and Property Law v Kasmeridis (No 2) [2006] SASC 167, considered.

CORRADO v LA STARZA (No 2)
[2016] SADC 51
The issues

This action returns to the court following judgment entered in favour of the plaintiff Mrs Corrado, against the defendant Mr La Starza, in the respective sums of $50,000 and $23,000, enforcing loans made by her to him. The remaining issues are interest on judgment, costs and an application for enforcement.
The primary judgment
In the primary judgment, the court found Mrs Corrado lent Mr La Starza an initial sum of $50,000, so as to provide financial support to a business previously operated jointly by him in partnership with her late husband and which had fallen into financial difficulty.[1] Subsequent cash loans totalling $23,000 were made in pressing personal circumstances to assist Mr La Starza through financial difficulty.[2] In each instance he promised to repay upon receiving an expected insurance payout.[3]
[1] Corrado v La Starza [2016] SADC 45, [1],[7], [11], 26 April 2016.
[2] Ibid, [8], [16]-[17].
[3] Ibid, [11], [16].
Although the original loans date back to around November 2003 and July 2004 respectively, the evidence was conclusive that Mr La Starza received payments for a total and permanent disablement claim in January and March 2009 of over $700,000.[4] Mrs Corrado confronted him when learning about this, inquiring when she would be repaid, only to be told he had no money left.[5] Eventually she had a letter of demand served on 9 September 2011. Proceedings for enforcement were instituted on 30 November 2012.
[4] Ibid [27].
[5] Ibid [18].
Interest
The court is vested with a wide discretion to order pre-judgment interest by s 39 of the District Court Act 1991 (SA). This provides that the ‘Court will … include in the judgment an award of interest … unless good reason is shown to the contrary’. Pursuant to DCSR 208 of the District Court Civil Supplementary Rules 2014, the appropriate calculation of interest is a matter for determination of the trial judge, guided by the ‘costs scale of interest last set by the Reserve Bank of Australia’, plus 4 per cent. An appropriate rate of interest at present is 6 per cent: Spartalis v BMD Constructions Pty Ltd (No 2).[6]
[6] [2015] SASCFC 28, [2]-[4], [9]-[10].
Calculations submitted on behalf of the plaintiff based on the published Reserve Bank Rates reproduced in Lunn, Civil Procedure South Australia,[7] on alternative bases, ranging from of the date of making the loans, the receipt of the insurance monies, as from the letter of demand and when proceedings were issued. In the end counsel for the plaintiff pressed only for interest calculated from the receipt of insurance monies to judgement.[8] A short period of time should be allowed thereafter in which to give the defendant a reasonable time to respond.
[7] At pp 6161-6162.
[8] T4.1-.12, 28 April 2016.
Accordingly, it is proposed to allow interest from the beginning of April 2009 to judgment delivered to the parties on 28 April 2016 in the lump sums of $26,000 and $12,000 allocated to the respective loans, pursuant to s 39(3) of the District Court Act.
Costs
Ordinarily costs follow the event on a party/party basis: DCR 263(1) of the District Court Civil Rules 2006. A formal offer was made by the plaintiff in writing filed with the court on 29 February 2016. This read:
The plaintiff, Marta Maria Corrado OFFERS pursuant to Rule 187 to settle the proceedings as follows:
1.To accept a judgment in her favour in the sum of $85,000 inclusive of interest plus her costs to be adjudicated on the District Court Scale if not agreed.
Rule 15R 187 of the District Court Civil Rules provides for making formal offers, replacing the former rules as from 1 December 2015, and so applies to the above offer as it was made after that date. So far as presently relevant, 15R 187(2) provides:
Making a formal offer
(2)A formal offer is to be expressed—
(a)in terms of a judgment to be entered upon acceptance (a judgment offer); or
Note—
The judgment the subject of a judgment offer might be expressed as a money judgment; a judgment for or for a proportion of damages to be assessed; for declaratory, injunctive or other special relief; for costs in a fixed amount or to be adjudicated; for a combination of such matters or any other judgment which the Court could enter.
(3)A formal offer that does not comply with sub rule (2) is incapable of acceptance for the purposes of this Part and is void for the purposes of this Part.
…
(6)A formal offer—
(a)may be expressed to be an open offer but if silent will be taken to be made on the basis that it is without prejudice save as to costs;
(b)may include any terms as to costs (including that the offer is inclusive of costs or that the parties will submit to any order the Court may make in the exercise of its discretion) but if silent will be taken to include a term that the defendant to the relevant claim is to pay the plaintiff’s costs of the relevant claim on a party and party basis up to the time of acceptance;
…
The present offer is compliant with these rules as it specifies judgment is to be entered in the sum of $85,000 if accepted, and in terms of the manner in which costs were to be determined.
A similar but not identical offer was considered in Hall v Basbuild Pty Ltd.[9] The precise terms of the offer in that case were as follows:[10]
[9] [2013] SADC 132.
[10] Ibid, [11].
FORM 23
Offer of Settlement
The Plaintiff’s (sic) OFFER pursuant to Rule 187 to Settlement (sic) the action as follows:
Payment in the sum of $40,000.00 inclusive of GST plus costs fixed in the sum of $3,500.00.
Judge Beazley held this offer failed to state that it could be accepted as to the principal sum, without accepting the component as to costs, and therefore did not comply with 6R 187(3)(d) as it then stood, a conclusion upheld on appeal in Basbuild Pty Ltd v Hall & Anor.[11] This rule provided that:[12]
… if the offer relates both the principal relief and costs – the offer must state whether the party to whom the offer is made may accept the offer of principal without also accepting the offer as to costs ...
[11] [2014] SASC 44, [19] Blue J.
[12] Ibid, [105].
Judge Beazley determined however that the defect did not render the offer a nullity because it was open to acceptance in its entirety, or alternatively limited to acceptance of the principal relief, pursuant to 6R 188(1)(b) as it then stood.[13] This second conclusion was equally upheld on appeal.[14] Accordingly the offer was effective even if governed by the repealed rules.
[13] Ibid, [119]-[120].
[14] Ibid, [33]-[37].
As to these proceedings the present rule 15R 188F(3) provides:
Costs when complying offer not accepted
(3) When a complying offer is made by a plaintiff and not accepted by a defendant and the plaintiff obtains judgment on the claim to which the offer relates no less favourable to the plaintiff than the terms of the offer-
(a)the costs incurred in respect of the claim up to 14 days after service of the formal offer are unaffected by the making of a formal offer;
(b)the plaintiff is entitled to an order against the defendant for the plaintiff’s costs of action in respect of the claim to which the complying offer relates thereafter on an indemnity basis.
On the basis of these authorities, albeit in respect of the Rules of Court now repealed, and applying the current rules, the offer in this matter was clearly capable of acceptance in whole, or in part. Accordingly on any view of the facts once interest is allowed, as Mrs Corrado has secured a judgment on ‘no less favourable to [her] than the terms of the offer’, she is entitled to an order for indemnity costs of the action after 14 days of service of the offer on Mr La Starza, pursuant to 15R 188F(3) of the District Court Civil Rules.
Charging Order
The final issue for determination as between the parties is an application by Mrs Corrado for a Charging Order over the property owned by Mr La Starza at 376 Magill Road, Kensington Park. This is the property jointly owned by him with her late husband, out of which they operated their business. The distinct purpose of the initial loan of $50,000 was for the keeping the business afloat, after it had fallen into financial difficulties.
Section 8 of the Enforcement of Judgments Act 1991 (SA) provides as follows:
8—Charging orders
(1)A court may, on application by a judgment creditor, charge property of a judgment debtor with a judgment debt or part of a judgment debt.
(2)Where the court makes an order under subsection (1), it may make ancillary or consequential orders—
(a)requiring registration of the charge; or
(b)prohibiting or restricting dealings with the property subject to the charge; or
(c)providing for the sale of the property and the application of the proceeds of sale; or
(d)relating to any other incidental or consequential matters.
The effect of a Charging Order as expressed in general terms, is to provide security for the enforcement of judgment by the judgment debtor, subject to prior securities and priority interests. Subsection 8(2) of the Enforcement of Judgments Act provides various mechanisms giving effect to Charging Orders, including a provision for sale.
It is difficult in the current circumstances to know what effect a Charging Order will have on the business, or on Mr La Starza personally, because he has not participated in the post-trial proceedings. His history of attendance to this litigation is a poor one. At the commencement of the trial on 21 March 2016 he arrived an hour late. On 28 April Mr La Starza did not appear due to illness. He was sent a transcript of the proceedings and provided with an adjournment date. He again failed to appear on 10 May 2016. A transcript of those proceedings was also emailed to him, receipt of which he acknowledged when he appeared on 20 May 2016.
The court has discretion to make a charging order. It will do so when it is equitable to between the competing interests of the opposing parties: CP (Adelaide) v Hartford (Holdings) (No 9).[15] The enforcement mechanism does not extend to the satisfaction of orders for costs, at least where they are not quantified by taxation or agreed, and no such order is sought in this instance: McNamara Business and Property Law v Kasmeridis (No 2).[16]
[15] (2002) 221 LSJS 46.
[16] [2006] SASC 167.
The precise terms of the Charging Order sought and which the court is prepared to grant is expressed to cover the principal debt together with interest as assessed, to be entered on the requisite Certificate of Title and to remain in force until the judgment debt (as well as costs) are paid in full. The plaintiff does not go so far as to seek sale of the property for very good reason that the court simply does not know anything of the effect of sale on Mr La Starza. On 20 May 2016 the court made a Charging Order substantially in the terms sought, but not so as to secure the enforcement of costs.
Miscellaneous
It remains to note that during the course of the trial, Mr La Starza who was at all times unrepresented, was given liberty to subpoena a Business Insurance Broker Mr Anderson, to give evidence in support of his case.[17] Mr Anderson responded to the subpoena promptly, attended court on short notice to give evidence, which the court ultimately accepted and which did not assist Mr La Starza.[18] The question of his remuneration pursuant to 6R 181(1) and (2) of the District Court Civil Rules remains for consideration.
[17] Corrado v La Starza above, [23].
[18] Ibid, [25]-[27].
Mr Anderson spent some seven hours endeavouring to retrieve dated documents to comply with the subpoena, and put off attending to work in his own business. He is therefore clearly entitled to an order for ‘reasonable loss or expense incurred in complying with the subpoena’: 6R 181(1). There was only a brief discussion of the loss of expenses involved.[19] Without going into the details, the court orders Mr La Starza to pay the sum of $1,400 to Mr Anderson by reason of responding to the subpoena issued to him, in addition to and separately from any conduct money or other out of pocket expenses incurred in complying therewith: 6R 181(3).
[19] T212.4-.27.
Conclusion and Orders
For the above reasons pre-judgment interest on the principal judgments of $28,000 and $13,000 respectively is awarded to the plaintiff. Mrs Corrado will have costs of the action on a party/party basis up to and including 14 March 2016, and thereafter on an indemnity basis. There will be an order that Mr La Starza pay Mr Anderson his reasonable costs and expenses for submitting to a subpoena in the sum of $1,400.
The orders of the court are therefore:
1.Pre-judgment interest of $26,000 is awarded on the judgment sum of $50,000;
2.Pre-judgment interest of $12,000 is awarded on the judgment sum of $23,000.
3.The defendant pay the plaintiff’s costs to be agreed or taxed on a party/ party basis and on an indemnity basis as and from 15 March 2016.
4.The defendant pay Timothy Mark Anderson $1,400 for his reasonable loss and expense incurred in complying with the subpoena served upon him.
5.The order for an injunction made on 28 April is discharged.
6.The charging order made on 20 May 2016 is affirmed.