Davies v Gertig (No 2)

Case [2002] SASC 257

DAVIES v GERTIG  (NO 2)
[2002] SASC 257

Civil

  1. PERRY J.               This is an application by the defendant following the trial of the plaintiff’s claim for damages arising out of a road accident. The substance of the application is to seek an order that certain costs to which the defendant is entitled be set off against the damages awarded to the plaintiff.

  2. A complication which gives rise to somewhat difficult questions which will need to be addressed in order to dispose of the application, is that during the period which has intervened between the delivery of the trial judgment and now the plaintiff’s estate has been sequestrated in bankruptcy.

  3. A further complication is that the plaintiff’s former solicitors assert an entitlement to a lien over the judgment sum for a substantial amount said to be due with respect to unpaid fees and expenses.

    Background

  4. The plaintiff claimed damages for injuries suffered by him in a road accident which occurred on 5 May 1996. The plaintiff was riding his motor cycle on a country road when it came into collision with an oncoming motor car driven by the defendant.

  5. The defendant admitted liability and the trial proceeded as an assessment of damages.

  6. I presided over the trial, which ran for several weeks last year. I delivered judgment on 23 August 2001.[1] I assessed damages, including interest but less pre-payments of $60,000, in the total sum of $314,124.30. I directed that judgment be entered for the plaintiff against the defendant for that amount. At the same time I stood over the question of the costs of the proceedings for argument at a later date.

    [1]    Davies v Gertig (2001) 215 LSJS 298.

  7. When the argument as to costs came on for hearing, my attention was drawn to the fact that on 14 December 2000, the defendant had filed a Rules of Court offer in the sum of $350,000 inclusive of interest, plus party and party costs. The offer was in addition to the pre-payments to which I have referred.[2]

    [2]    See SCR r 84.05(2).

  8. After hearing argument as to the application of SCR r 40.05, I ordered that the plaintiff recover against the defendant his costs of action to be taxed down to fourteen days after 14 December 2000, and that the defendant recover his costs against the plaintiff to be taxed for the period thereafter.

  9. The defendant further contended that given the course of the proceedings, the costs to which the defendant would be entitled pursuant to that order would very substantially exceed the costs recoverable by the plaintiff. In those circumstances, I was asked to order a set-off in favour of the defendant, that is, to set-off the costs payable to the plaintiff from those payable to the defendant, by exercising my power to do so under SCR r 101.01(1)(c).

  10. While I had no reason to doubt the defendant’s assertion that its costs entitlement would exceed that of the plaintiff, rather than pre-empt that question, I ordered that the lesser…

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AGLC
Davies v Gertig (No 2) [2002] SASC 257
Case
[2002] SASC 257
Decision Date

CaseChat Overview and Summary

In Davies v Gertig, the plaintiff claimed damages for injuries sustained in a motor vehicle accident on 5 May 1996, where his motorcycle collided with the defendant’s car. The defendant admitted liability, and the trial focused on the assessment of damages. The court found in favour of the plaintiff and assessed damages at $314,124.30, less pre-payments of $60,000, with interest included. The defendant had previously made a Rules of Court offer of $350,000, which was inclusive of interest, and party and party costs, in addition to the pre-payments. The case raised issues around the defendant's entitlement to set-off costs against the judgment sum, and the plaintiff’s former solicitors' claim to a lien over the judgment for unpaid fees and expenses.

The court examined the applicability of South Coast Rules of Court rules, particularly rule 40.05, to determine the defendant's entitlement to set-off costs against the judgment. The court considered the implications of setting off the costs against the judgment sum, including the potential for creating a preference for the defendant over other creditors. Additionally, the plaintiff's former solicitors, Tindall Gask Bentley, sought a declaration that they were entitled to a lien over the judgment moneys to secure payment of their outstanding legal fees and expenses. The court had to decide whether the set-off could proceed and whether the solicitors had a valid lien.

The court determined that the defendant's application for a set-off of costs against the judgment should be postponed to allow for a more accurate estimation of the costs. The court also needed to resolve the issue of the solicitors' lien over the judgment. The court ordered that the matter be heard further to address these issues, including the defendant’s interim lump sum application and the costs of the defendant’s set-off application. The final outcome would depend on the detailed calculations of the costs and the validity of the lien claim.

Orders

Orders of the court

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Background

Background to the litigation

A further complication is that the plaintiff’s former solicitors assert an entitlement to a lien over the judgment sum for a substantial amount said to be due with respect to unpaid fees and expenses.Background The plaintiff claimed damages for injuries suffered by him in a road accident which occurred on 5 May 1996. The plaintiff was riding his motor cycle on a country road when it came into collision with an oncoming motor car driven by the defendant. The defendant admitted liability and the trial proceeded as an assessment of damages. I presided over the trial, which ran for several weeks last year. I delivered judgment on 23 August 2001.[1] I assessed damages, including interest but less pre-payments of $60,000, in the total sum of $314,124.30. I directed that judgment be entered for the plaintiff against the defendant for that amount. At the same time I stood over the question of the costs of the proceedings for argument at a later date.[1] Davies v Gertig (2001) 215 LSJS 298. When the argument as to costs came on for hearing, my attention was drawn to the fact that on 14 December 2000, the defendant had filed a Rules of Court offer in the sum of $350,000 inclusive of interest, plus party and party costs. The offer was in addition to the pre-payments to which I have referred.[2][2] See SCR r 84.05(2). After hearing argument as to the application of SCR r 40.05, I ordered that the plaintiff recover against the defendant his costs of action to be taxed down to fourteen days after 14 December 2000, and that the defendant recover his costs against the plaintiff to be taxed for the period thereafter. The defendant further contended that given the course of the proceedings, the costs to which the defendant would be entitled pursuant to that order would very substantially exceed the costs recoverable by the plaintiff. In those circumstances, I was asked to order a set-off in favour of the defendant, that is, to set-off the costs payable to the plaintiff from those payable to the defendant, by exercising my power to do so under SCR r 101.01(1)(c). While I had no reason to doubt the defendant’s assertion that its costs entitlement would exceed that of the plaintiff, rather than pre-empt that question, I ordered that the lesser amount of costs be off-set against the greater amount of costs payable pursuant to the costs orders. The defendant then went one stage further and sought an order that the balance of the costs which he asserted would be payable to him following the working out of the set-off of costs, should in turn be set-off against the judgment moneys otherwise payable to the plaintiff. The defendant indicated that he estimated that if such a set-off against the judgment was to be allowed, there would be nothing payable to the plaintiff. At that stage, counsel for the plaintiff indicated that the plaintiff owed money to a number of creditors, and to allow the defendant to set-off any balance of costs against the judgment would be to create a possible preference in favour of the defendant. I considered that in those circumstances, the question of a set-off against the judgment should be argued at a later date, after the parties had had an opportunity of estimating the costs payable under the orders which I had made.

Evidence

Evidence Before The Court

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Decision

Reasons for decision

PERRY J
I will hear the parties:(a)as to whether the defendant still wishes to proceed with his application to award an interim lump sum in lieu of taxed costs;(b)as to the disposal of the application by Tindall Gask Bentley for a declaration that they are entitled to a lien over the judgment moneys to secure payment of their outstanding legal fees and expenses; and(c)as to the costs of the defendant’s application for a set-off.JUDGMENT CITATIONSLISTED IN ORDER OF APPEARANCE IN JUDGMENT1. Davies v Gertig (2001) 215 LSJS 298.2. See SCR r 84.05(2).3. See Bankruptcy Act 1966 (Cth) s 55 and s 115.4. Written outline of submissions, para 19.5. [1876] 3 Ch D 494.6. See per James LJ ibid 497.7. Ibid 497.8. (1990-1991) 171 CLR 609 per Mason CJ, Brennan, Deane, Dawson, Toohey, Gaudron, McHugh JJ at 621-622.9. Ibid.10. (1993) 171 LSJS 290.11. [1976] VR 268.12. (1985) 35 NTR 27.13. [1973] VR 221.14. Ibid at 222.15. (1899) 25 VLR 464 at 468; 6 ALR 122.16. (1907) 5 CLR 418 at 439-40; 14 ALR 253.17. (1941) 58 WN (NSW) 146.18. [1942] QWN 19.19. [1946] QWN 37.20. [1911] VLR 249 at 260; 17 ALR 201.21. (1985) 35 NTR 27 at 39.22. Ibid 42.23. (1994) 175 LSJS 282.24. Insolvent Debtors Relief Act 1729 2 Geo II c 22 (Imp) s 1 and s 13.25. Insolvent Debtors Relief Amendment Act 1735 8 Geo II c 24 (Imp) s 4 and s 5. It was conceded by counsel on both sides that both Acts are in force in South Australia by force of the Australian Courts Act 1828 9 Geo IV c 83 (Imp) s 24.26. [1882] 9 QBD 648.27. Ibid 660-661.28. Ibid 664.29. (1881) 8 QBD 147.30. Ibid 150.31. (1978) 33 FLR 39.32. Ibid 41.33. McDonald Henry & Meek Australian Bankruptcy Law and Practice 5th ed, vol 1, page 3140, para 58.3.15, citing Clyne v Deputy Commissioner of Taxation (No 3) (1984) 154 CLR 589, 594-595; Re Cole: ex p Richards (1966) 9 FLR 190, 191.34. 2nd ed, 1996, Clarendon Press - Oxford p 34.35. Ibid 35.36. The relevant “proceeding” in this case is a “legal proceeding in respect of a provable debt”, which must be the defendant’s application for a set-off rather than the principal proceedings brought by the plaintiff.37. See s 5 definition of “the property of the bankrupt” (b)(ii).38. Having regard to the manner in which I have reasoned to these conclusions, it has not been necessary to refer to the decision of the Full Court in Rex v Ray; Ex parte Chapman [1936] SASR 241, but I note that none of my findings are inconsistent with my understanding of that case. That case, however, does turns on its special facts, notably the existence of moratorium legislation in force during the Great Depression.39. (1998) FCA 1474.40. (2001) 164 FLR 82.41. Ibid 1.

Ratio Decidendi

Legal Principle Established

Established by: PERRY J

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