Crossley v The State of South Australia (No. 3) - [2020] SADC 89

District Court of South Australia
(Civil)
CROSSLEY v THE STATE OF SOUTH AUSTRALIA (NO. 3)
[2020] SADC 89
Judgment of His Honour Judge Tilmouth
10 July 2020
PROCEDURE - CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS - COSTS - OFFERS OF COMPROMISE, PAYMENTS INTO COURT AND SETTLEMENTS - INFORMAL OFFERS AND CALDERBANK LETTERS
PROCEDURE - CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS - COSTS
PROCEDURE - CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS - COSTS - GENERAL MATTERS
Consideration of the principles applicable to an order for costs in light of a Calderbank offer proposing to settle proceedings.
District Court (Civil) Rules 2006 (SA) R 33, 263, 264 (1), (2), (5), referred to.
Trustee for the Salvation Army (NSW) Property Trust v Becker (No. 2) [2007] NSWCA 194; Monie v Commonwealth of Australia (No. 2) [2008] NSWCA 15, applied.
Crossley v The State of South Australia [2020] SADC 14; Crossley v The State of South Australia [2020] SADC 56; Latoudis v Casey (1990) 170 CLR 534; Oshlack v Richmond River Council (1998) 193 CLR 72; Copping v ANZ McCaughan (1995) 63 SASR 523; Andrews v Barnes (1888) 39 Ch D 133; Australian Trade Commission v Disktravel [2000] FCA 62; Bowen Investments Pty Ltd v Tabcorp Holdings Ltd (No. 2) [2008] FCAFC 107; Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Ltd (1988) 81 ALR 397; Preston v Preston [1982] 1 All ER 41; Messiter v Hutchinson (1987) 10 NSWLR 525; Maitland Hospital v Fisher (No, 2) (1992) 27 NSWLR 721; Essential Beauty Franchising (WA) Pty Ltd v Pilton Holdings Pty Ltd (2014) 120 SASR 433; Stewart v Atco Controls Pty Ltd (in liq) (No. 2) (2014) 252 CLR 331; Pirrotta v Citibank Ltd (1998) 72 SASR 259; Hartford (Holdings) Pty Ltd v CP (Adelaide) Pty Ltd (2004) 234 LSJS 66; Morris v McEwen & Anor (2005) 92 SASR 281; BHP Billiton Ltd v Parker (2012) 113 SASR 206, considered.

CROSSLEY v THE STATE OF SOUTH AUSTRALIA (NO. 3)
[2020] SADC 89
Outstanding issues

In reasons for judgment delivered by the court on 25 February this year, issues of liability in this action were determined favourably to the applicant, Mr Crossley.[1] In a second judgment delivered on 15 May 2020, the court undertook an assessment with respect to most heads of damages claimed.[2] This third judgment finalises the assessment of damages by dealing with outstanding assessment issues concerning superannuation losses, special damage, interest and costs, before proceeding to enter final judgment in the action.
[1] Crossley v The State of South Australia [2020] SADC 14, the ‘Liability Judgment’.
[2] Crossley v The State of South Australia (No 2) [2020] SADC 56.
The court sought written submissions from the parties with respect to those issues, which it has now received.[3] By letter dated 29 May 2020, the court was informed the parties had in the meantime agreed upon the measure of damage under the following heads, as follows:
·superannuation calculated at 11% of $12,512.50 for past loss and a sum of $23,812.25 for future loss;
·interest applied to past pain and suffering at 4% pa over 7 years of $16,800.00;
·interest applied to past economic loss at 6% pa over 7 years, halved to reflect the fact that the loss accumulated over time, of $23,887.50;
·interest applied to past gratuitous services at 6% over 7 years, halved to reflect damages suffered over time, of $33,788.16;
·special damage in the sum of $18,291.50.
[3] Applicant’s Written Submissions 12 June 2020, Respondent’s Written Submissions 17 June 2020.
It follows that the sole remaining issue for curial resolution is that of costs.
Legal costs of the proceedings
A successful party holds a reasonable expectation of obtaining a favourable order for costs, unless for some reason connected with the litigation itself, a different order is warranted: Latoudis v Casey,[4] Oshlack v Richmond River Council.[5] As the successful party, Mr Crossley is as a general proposition, entitled to an award of costs assessed ‘as between party and party’ pursuant to DCR 264(1) and (2) of the District Court Civil Rules 2006 (SA).
[4] (1990) 170 CLR 534, 557, 569.
[5] (1998) 193 CLR 72, [66].
The issue at which the parties are at odds so far as costs are concerned, stems from offers exchanged between them and because the proposed award of damages exceeds an informal ‘Calderbank’ offer made by Mr Crossley on 7 May 2018, which was to accept $190,000 in full settlement, in addition to costs.[6] As a consequence, he now seeks costs awarded on an indemnity, or alternatively solicitor-client basis from 10 May 2018.
[6] The level of damages proposed came to over $700,000, without adding the above further awards: Crossley v State of South Australia (No 2) [2020] SADC 56, [98].
Proceedings in the within action claiming damages for illegal assault, were issued on 9 March 2016 but were not served until 29 August 2016. No notice of the claim was given in accordance with DCR 33 of the District Court Civil Rules. In a Second Statement of Claim filed on 26 April 2018, the claim was expanded by adding a complaint that in arresting Mr Crossley, the Police ‘used more force than was reasonably necessary’ during which he was ‘further assaulted’. This second Claim abandoned the allegation that the fracture of his left leg was caused by a kick, inserting instead that it was ‘pressure’ from a Police Officer’s knee that caused the fracture and alleging additional assaults in the use of capsicum spray and by placing him in a ‘leg lock’.
In its Defence filed on 24 October 2016, the State of South Australia pleaded simply that ‘the actions of the Police Officers were reasonable and necessary to effect the arrest’. The second defence dated 7 May 2018, alleged that Mr Crossley ‘continued to show aggressive behaviour’ before his arrest, during which he was alleged to be ‘yelling, kicking and resisting the arrest’, and claiming that the police ‘used no force than was reasonably necessary to effect the arrest’.
In the Liability Judgment, the court found Mr Crossley was unlawfully arrested by Police on 10 March 2013 in Bank Street Adelaide, because he was not told in clear terms the reasons for his arrest, was unlawfully sprayed twice with capsicum spray, and that the action of executing a ‘Figure Four Leg Lock’ during the course of that arrest resulting in a spiral ‘comminuted fracture of the left femoral shaft, was unnecessary and excessive’.[7]
[7] Crossley v The State of South Australia [2020] SADC 14, [80], [101], [116], [118], [130].
Offers to settle the proceedings on the basis put forward by the State of South Australia of discontinuance with each party bearing its own costs, were rejected by Mr Crossley on 19 October and 5 December 2017. In between times, it rejected a suggestion put forward on his behalf to participate in mediation on 22 November 2017. A week before the trial was scheduled to commence on 14 May 2018, an informal ‘Calderbank’ offer was made by Mr Crossley to accept the sum of $190,000, in addition to costs to be adjudicated if not agreed, an offer expressed to remain open until 5pm on 9 May 2018. Unfortunately, the trial date was vacated due to the illness of defence counsel, but in any event no further offers were proffered on either side. The trial in fact commenced before me on 3 June 2019.
An unfettered discretion to award costs was conferred by R 263 of the District Court Civil Rules 2006 (SA): Copping v ANZ McCaughan.[8] However DCR 264(1) thereof, provides that the court ‘may, in the exercise of its discretion as to costs, award costs on any basis the Court considers appropriate’. This rule mirrors the common law position which holds that the courts retain a general discretionary power to award costs as between solicitor and client ‘as and when the justice of the case might so require’: Andrews v Barnes.[9]
[8] (1995) 63 SASR 523, 527-528.
[9] (1888) 39 Ch D 133, 141.
Rule 264(5) of the District Court Civil Rules 2006 proceeded to allow for higher levels of costs above the general rate, in these terms so far as relevant to this case:
In exercising its general discretion as to costs, the Court may—
(a)award costs as between solicitor and client (that is, on the basis that the party will be fully reimbursed for costs incurred by the party in the conduct of the litigation to the extent that the party entitled to the costs shows them to have been reasonably incurred); or
(b)award costs on the basis of an indemnity (that is, on the basis that the party will be fully reimbursed for costs incurred by the party in the conduct of the litigation except to the extent that the party liable for the costs shows them to have been unreasonably incurred) ...
Note—
The difference between solicitor and client costs and indemnity costs is as to the onus of proof and persuasion: that onus lies on the party entitled to costs when solicitor and client costs are ordered and lies on the party liable for costs when indemnity costs are ordered
Exemptive orders departing from the general rule are more likely to be made when a successful party unreasonably pursues a particular issue or conducts its case unreasonably in respect of that issue: Australian Trade Commission v Disktravel[10] and Bowen Investments Pty Ltd v Tabcorp Holdings Ltd (No 2),[11] or otherwise when there are ‘special or unusual features in the case to justify the court exercising its discretion in that way’: Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Ltd[12] and Preston v Preston.[13] An imprudent or unreasonable refusal to accept an offer to compromise is capable of engaging the discretion to make an order for the payment of costs on some other basis than the party and party standard: Messiter v Hutchinson[14] and Maitland Hospital v Fisher (No 2).[15]
[10] [2000] FCA 62, [3].
[11] [2008] FCAFC 107, [3]–[6].
[12] (1988) 81 ALR 397, 400-401.
[13] [1982] 1 All ER 41, 58.
[14] (1987) 10 NSWLR 525.
[15] (1992) 27 NSWLR 721, 724.
The position of Mr Crossley is that as the respondent unreasonably rejected the offers to settle or mediate, there are sufficient grounds for ordering it to pay his costs of the proceedings on a solicitor and client or even an indemnity basis, particularly as the offer to settle for $190,000 was considerably less than the level of damages the court proposes to award him.
The defence resistance to such approaches founds largely on the contention that too little time was given to adequately respond in the circumstances. For instance, the offer to mediate was rejected because it was too close to the commencement of trial set for 14 May 2018, and as it was expressed to be open for just two days, it did not allow reasonable time to assess whether to accept it.
This offer was made very soon after the Second Statement of Claim of 26 April 2018, which changed the nature of the claim to the extent referred to above. At this time, the defence was in the process of preparing a second defence and then responding to a written opening produced by Mr Crossley’s counsel. This was filed on 7 May 2018 and the response on 10 May 2018. The respondent was further in the process of preparing subpoenas directed to Drs Williams and Hapuarachchi returnable for Monday 14 May 2018, because the solicitors for Mr Crossley failed to disclose his medical records as requested by the defence. It was in addition, engaged in proofing witnesses in relation to the fresh allegation as to the cause of the leg fracture Mr Crossley sustained during the course of his arrest.
It appears that before November 2018, the opinion of the expert witnesses as to the cause of the leg fracture differed. Dr Guirguis considered it was caused by the application of blunt force, whereas Dr Marshall considered it arose from torsional forces. In the event Dr Marshall was not called to give evidence in the trial, so the court relied on the unchallenged evidence of Dr Guirguis to the effect that it was difficult to reconcile the police officer’s account of the mechanism causing the leg fracture, and found the probabilities were to the contrary. Still further, amended Claims were filed on 3 April 2019 and again on 6 June 2019, the latter during trial and which raised the allegation of unlawful arrest for the first time.
The State of South Australia submits that in these combined circumstances it was not unreasonable to decline the offers, coupled with the fact that there were significant factual issues in dispute. The latter proposition can be readily accepted given similar observations to that effect in the Liability Judgment.[16] Accordingly, the defence submits there are no special or unusual features of the case warranting departure from the general rule that costs are awarded to a successful party on a party and party basis.
[16] Crossley v State of South Australia [2020] SADC 14, [3], [28] - [30].
It is authoritatively established that the refusal of an informal offer made outside the Rules of Court may, depending on the circumstances, provide a sufficient basis for departing from the general rule and the mere fact that an offer is expressed to remain open for a short period of time is not of itself fatal to an application for a departing costs order: Essential Beauty Franchising (WA) Pty Ltd v Pilton Holdings Pty Ltd.[17] Indeed as the High Court observed in Stewart v Atco Controls Pty Ltd, (in liq) (No 2), the ‘non-acceptance of a Calderbank offer is a factor, in some cases a strong factor, to be taken into account on an application for indemnity costs’.[18]
[17] (2014) 120 SASR 433, [56].
[18] (2014) 252 CLR 331, [4].
It would appear the failure to better a Calderbank offer does not afford an automatic entitlement to an exemptive order either, a proposition said to have the support of a substantial body of authority in Pirrotta v Citibank Ltd,[19] but one left open in Hartford (Holdings) Pty Ltd v CP (Adelaide) Pty Ltd.[20] On the other hand, the Full Court in Morris v McEwen & Anor,[21] considered an offer effectively open for two days ‘departed in a significant way from the regime established by the courts to encourage parties to settle their differences without the need of litigation’. The Full Court further considered in BHP Billiton Ltd v Parker[22] that the court ‘should focus its attention fairly carefully on the period of time during which the offer was open’.
[19] (1998) 72 SASR 259, 262.
[20] (2004) 234 LSJS 66, [85].
[21] (2005) 92 SASR 281, [79].
[22] (2012) 113 SASR 206, [270].
In this particular instance, the application of the principles referred to in the above authorities, leads to the conclusion that whilst the informal offers and the failure to better the monetary offer are relevant, the context was such that it was impracticable and hence unreasonable to expect the respondent to respond in such short periods of time. The respondent was under considerable forensic pressure in complying with a plethora of pre-trial issues in close proximity to the hearing date, generated largely by the manner in which the case for Mr Crossley was then conducted.
There is on the other hand, another consideration. The South Australia Police, who were effectively the respondent party in these proceedings, had in its possession the CCTV footage of the incident since the incident itself. Its defence was mounted on the back of the proposition that no more than reasonable force was used in effecting a lawful arrest: Crossley v State of South Australia.[23] This proposition in turn stemmed from the evidence of the Police Officers involved, who considered at various times that Mr Crossley was aggressive and might attack them, that he struggled and kicked at them, thus justifying the application of capsicum sprays, his forceful arrest and the application of the Figure Four Leg Lock that resulted in the fractured femur.[24] Based substantially on the CCTV vision of the incident,[25] the court drew the conclusion that none of those characteristics in his behaviour were evident in that footage.[26] Having the opportunity to view and consider the footage carefully, it was quite obvious that the position of the defence was a precarious one, calling for reasonable steps to be taken to endeavour to resolve the proceedings. This SAPOL did not do. Ordinarily that consideration counts as a proper basis on which to award something more than conventional costs to Mr Crossley.
[23] [2020] SADC 14, [3].
[24] Crossley v State of South Australia [2020] SADC 14, [14], [21] - [24].
[25] Exhibit P1.
[26] Crossley v State of South Australia [2020] SADC 14, [83] – [84], [87] - [90], [101] – [102], [108] – [109], [125].
Unfortunately as noted above, there were no offers on foot at the time of trial and for a significant period beforehand. In those circumstances, despite the temptation to order otherwise, there was no extant offer for the defence to accept and consequently there was no failure on its part that could found an order for solicitor/client or indemnity costs: Stewart v Atco Controls Pty Ltd, (in liq) (No 2).[27] As observed in Trustee for the Salvation Army (NSW) Property Trust v Becker (No. 2)[28] and Monie v Commonwealth of Australia (No. 2),[29] the failure to renew that offer once it lapsed in the period before trial, tends against an award of costs on other than the conventional basis.
[27] (2014) 252 CLR 331, [7].
[28] [2007] NSWCA 194, [8]-[9].
[29] [2008] NSWCA 15, [71].
The formal orders of the court are as follows:
Past pain and suffering  $ 60,000.00
         Interest thereon  $ 16,800.00
         Future pain and suffering  $ 30,000.00
         Past economic loss  $113,750.00
         Interest thereon  $ 23,887.50
         Future economic loss  $216,475.00
         Special damages  $ 18,291.50
         Future medical expenses  $ 60,000.00
         Future medication treatment  $    7,200.00
         Past domestic care  $    2,514.00 (grandmother)
  $158,382.00 (Ms Lithgow)
         Interest thereon  $ 33,788.16
         Future care  $ 66,900.00
         Aggravated damages  $    7,000.00
         Exemplary damages  $    3,000.00
         Past superannuation  $ 12,512.50
         Future superannuation  $ 23,812.25
Final judgment is entered in favour of Mr Crossley against the respondent in the sum of $854,312.91. For the above reasons, Mr Crossley is to have his costs of and incidental to the proceedings on a party and party basis.