Deb v City of Burnside (No 2)

Supreme Court of South Australia
(Civil)
DEB v CITY OF BURNSIDE (No 2)
[2023] SASC 33
Judgment of the Honourable Chief Justice Kourakis
PROCEDURE - CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS - COSTS
PROCEDURE - CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS - COSTS - INDEMNITY COSTS
PROCEDURE - CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS - COSTS - OFFERS OF COMPROMISE, PAYMENTS INTO COURT AND SETTLEMENTS - OFFER OF COMPROMISE OR OFFER TO SETTLE OR CONSENT TO JUDGMENT PURSUANT TO RULES
On 3 February 2023 this Court dismissed the applicant’s claim for damages for wrongful dismissal from the respondent council.
The respondent now seeks an order for costs on a standard costs basis until 14 days after the filing of the respondent’s formal offer and thereafter on an indemnity basis.
Held:
1.The applicant is to pay the respondent’s costs on a standard costs basis until 14 days after the filing of the formal offer on 8 July 2020 and on an indemnity basis thereafter save for those costs in respect of which separate orders have been made.

Supreme Court Civil Rules 2006 (SA) rule 188F; Uniform Civil Rules 2020 (SA) rules 132; 132.1; 132.4; 132,6; 132.10, referred to.

DEB v CITY OF BURNSIDE (No 2)
[2023] SASC 33
Civil

KOURAKIS CJ: On 3 February 2023 I dismissed an action (the primary judgment) brought by Mr Deb claiming damages for wrongful dismissal from the City of Burnside (Burnside).
Burnside now seeks an order for costs on an indemnity basis from 14 days after it filed a formal offer on 8 July 2020 offering to consent to judgment against it in an amount not very different from the damages I would have awarded if I had found that Mr Deb had been wrongfully dismissed. I summarised my grounds for finding that the summary dismissal of Mr Deb was justified and for dismissing his action in the primary judgment as follows:
187The management of conflicts of interest is critical if a relationship requiring high levels of trust and confidence is to be sustainable. Mr Deb’s failure to fully and promptly disclose his conflicting personal interest in the disciplinary proceedings he undertook against Messrs Cooper and Cant had the following consequences. First, he jeopardised their employment and future prospects of advancement by prosecuting those proceedings without disclosing, and transparently weighing in their favour, his own part in the email exchange. Secondly, he denied Mayor Monceaux the opportunity to object to his conduct of the proceeding if she so chose after disclosure of his involvement. Thirdly, he made a decision which was vulnerable to administrative challenge thus creating uncertainty.
188I have stopped short of inferring that Mr Deb’s instructions not to disclose the disciplinary files, including in particular Mr Cooper’s submissions, manifest a consciousness of his impropriety in personally exercising his disciplinary powers. However, I have found that Mr Deb deliberately chose not to delegate his function and not to acknowledge his role in the email exchange in order protect himself from criticisms and possible sanctions. In so doing he subordinated the interests of the Council, and Messrs Cooper and Cant who were dependent on him to conduct the disciplinary proceedings fairly, to his own.
189Mr Deb, as Burnside’s Chief Executive, was duty bound to encourage respectful working relationships and effective co-operation between the Council and Burnside employees, and senior executives in particular. Instead, he promoted division in his comments at the executive meeting, and about Mayor Monceaux in the shower conversation he did not engender respect for councillors. They instead were calculated to breed contempt.
190For the above reasons Burnside had reasonable grounds to summarily dismiss Mr Deb. I dismiss his action.
Rule 132 of the Uniform Civil Rules 2020 (SA) (the Rules) provides:
Part 2—Settlement offers
Division 1—Introduction
132.1—Definitions
In this Part, unless the contrary intention appears—
formal offer—see rule 132.4;
formal offer document means a formal offer, formal acceptance, formal withdrawal or formal response.
…
Division 2—Offers and responses
132.4—Formal offer
(1)     A party (the offeror) may file a document making a formal offer to another party (the offeree) in the prescribed form to resolve a proceeding or any part of a proceeding (formal offer)—
(a)in terms of a judgment to be entered upon acceptance (a judgment offer); or
(b)in terms of a contract to come into existence upon acceptance including terms for the disposition of the proceeding (a contract offer).
…
(5)     A formal offer—
(a)may include any term as to principal relief whether or not sought or obtainable in the proceeding;
(b)     must include a term as to costs of the proceeding;
…
(6)     A formal offer may include or annex reasons why it would be unreasonable for the offer not to be accepted.
(7)     A party may make multiple formal offers at the same time or over time.
…
132.6—Response to offer
(1)     Unless an offeree accepts an offer under rule 132.7, an offeree must file a response to formal offer (a formal response) in the prescribed form within 14 days after service of a formal offer—
(a)     not accepting the offer;
(b)contending that the offer does not comply with rule 132.4 and identifying why; or
(c)contending that the offeree requires a specified number of additional days to decide whether to accept the offer and identifying why.
…
(2)     A formal response must be served on each other party to the proceeding as soon as practicable after being filed.
(3)     The making of a formal response that does not accept a formal offer does not prevent later acceptance of the offer by the offeree provided that the offer is still open for acceptance.
(4)     Unless the Court otherwise orders, an offeree is not entitled on an application for costs under Division 4 to contend that an offer does not comply with rule 132.4 or did not give the offeree a reasonable time to decide whether to accept the offer other than on a ground identified in a formal response filed in compliance with this rule.
…
Division 4—Costs
132.10—Relevant offer not accepted
(1)     In this rule—
relevant offer means a formal offer in compliance with rule 132.4 that—
(a)was filed and served on the offeree at least 21 days before the commencement of the trial or final hearing of the proceeding or such later date as the Court orders on an application made before the expiration of that period;
(b)     was and remained open for acceptance at least 14 days after service;
(c)     relates to an entire action and not merely to part of it;
(d)     involves genuine compromise;
(e)contains a term that the respondent to the action is to pay the costs of the applicant on the standard costs basis up to acceptance of the offer or 14 days after service of the offer (whichever is earlier) or that the parties will submit to any order that the Court may make in the exercise of its discretion; and
…
(3)     When—
(a)     a relevant offer is made by a respondent in an action;
(b)     the offer is not accepted by an applicant; and
(c)     either—
(i)    the respondent obtains judgment dismissing the action; or
(ii)the applicant obtains judgment that is less favourable to the applicant than the terms of the offer,
then—
(d)the costs incurred in respect of the action up to 14 days after service of the formal offer are unaffected by the making of the formal offer; and
(e)subject to the overriding discretion of the Court, the respondent is entitled to an order against the applicant for the respondent’s costs of the action to which the relevant offer relates thereafter on an indemnity basis.
(4)     When a party makes a relevant offer for damages to be assessed or a proportion of damages to be assessed, this rule does not apply to costs incurred in relation to the assessment of the damages.
…
In the context of Part 11 of Chapter 7 of the Supreme Court Civil Rules 2006 (SA), the predecessor to rule 132 of the Rules, I made the following observations in O’Brien v Cowie (No 2):[1]
47The approach contended for by the respondents would undermine the purpose of filed offers in their application to litigation in which a party is under a disability. The object of the formal offer rules and r 188F in particular is to encourage the earliest possible resolution of litigation. It should be observed that an offer might be made at any stage of the proceedings. The state of knowledge of a party as to its own case, and the case put against it, will change as litigation progresses. However, r 188F proceeds on the premise that at every stage of the litigation the parties are equally well equipped to make and evaluate offers. Rule 188F also operates on the premise that each party will gain an understanding of the other’s case, sufficient to make or evaluate an offer, through the operation of the rules providing for pre-action and pre- trial discovery. It should also be observed that r 188A expects that in the ordinary course the offeree should be in a position to respond to a formal offer within 14 days of receiving it, and if the offeree contends that it cannot reasonably decide whether to accept the offer in that time, must identify how long is needed and explain why the ‘additional’ time is required. In the ordinary course, therefore, it will not be a sufficient reason that the offeree would prefer to consider the offer at a much later state of the proceedings, when more is known of the respective cases of the parties. The overall effect of the rules as to formal offers is therefore to encourage the parties to make their best assessment on what is known of the case at any point in the litigation when making or considering whether to accept an offer. In that way, the rules encourage the early settlement of litigation.
…
49I turn to the respondents remaining grounds. The complexity in fact and law of a claim cannot, in itself, exclude or modify the operation of the formal offer rules. The early resolution of complex claims is as desirable as the resolution of small claims. They are likely to consume substantial public and private resources. Moreover, the dollar amount of a claim is not necessarily an indication of its complexity. This case was not of such complexity, in fact or law, so as to cause the respondents any significant difficulty in deciding whether or not to accept the offer.
50A claim that there is a gap in the rules, in the sense that one or both parties would prefer to have greater disclosure and more information, will seldom be a reason, in itself, for excusing a party from the cost consequences of not accepting an offer. As I earlier observed, the formal offer rules are premised on the operation of the rules governing the conduct of litigation and, in particular, those rules providing for discovery and the exchange of evidential material before trial.
[1] [2021] SASC 52 (Cowie).
The burden, accordingly, falls on Mr Deb to persuade me that the overriding discretion conferred by rule 132.10(3)(e) of the Rules should be exercised in his favour and that an order departing from the ordinary consequence of rule 132.10(3) of the Rules should be made.
The burden of Mr Deb’s submissions in that respect is that:
·the Offer was made early in the proceedings;
·the strength of Burnside’s case only became clearer as a result of amendments made to its defence after the Offer was filed; and
·discovery of further documents, which ought already to have been discovered, was only made after the Offer was filed.
The defence was amended to particularise Mr Deb’s failure to disclose his conflict in respect of the emails. It was inevitable, therefore, that the factual matrix in which that issue would be decided would encompass Mr Deb’s reasons for failing to disclose his conflicts. The further discovered documents were largely records of investigations undertaken by Burnside’s solicitors into whether Mr Deb’s conduct warranted dismissal. They might, in that sense, be referred to, loosely, as secondary documents in the sense that they contain narratives of the misconduct on which Burnside relied rather than directly evidencing that misconduct.
Mr Deb’s submissions fall well short of persuading me to exercise the overriding discretion in his favour for three reasons.
First, as I observed in Cowie, the Rules are premised on the parties being equally well equipped to make and/or re-evaluate offers at every stage of the proceedings. Even though non-compliance with the rules of litigation may justify, alone, or with other circumstances, a departure from the ordinary rule the breach must be balanced against the practicalities of litigation in which procedural disputes over relevance and production are common place.
Secondly, Mr Deb was aware within the period of 14 days for which Burnside’s offer was limited that Burnside proposed to amend its defence. Moreover, within that same period Mr Deb filed an interlocutory application seeking further and better discovery. Mr Deb, therefore, understood the nature and potential significance of the documents which he contended Burnside had wrongly failed to discover. However, Mr Deb did not avail himself of rule 132.6(1)(c) of the Rules to seek any additional time in which to respond because of the impending interlocutory applications.
Thirdly, all of the facts and circumstances concerning the emails exchanged between Mr Deb and other members of Burnside’s senior executive team, making trenchant criticisms of some councillors were well known to Mr Deb. Mr Deb had peculiar knowledge of his conduct of the investigation into Messrs Cooper and Cant. He knew that he had not recused himself and that he had not disclosed his involvement to the then Mayor. No-one better knew why he failed to do so than Mr Deb. Equally Mr Deb, at all times, well knew that he made disparaging remarks of councillors at a meeting of Burnside’s executive soon after the first Council meeting following the election.
I must determine the question of costs consistently with my findings of fact in the primary judgment. True it is that Mr Deb only knew for certain after the primary judgment was delivered that his evidence was rejected and that adverse findings were made that he deliberately chose to conceal his involvement in the emails and that he had made the disparaging comments related by Ms Reynolds. However, the effect of those findings is that Mr Deb must be taken, on this application for indemnity costs, to have always known he acted as I found he did. It is of little weight in that context that Mr Deb may have hoped that Burnside would not better hone its defence, or that the further documents might in some way help his case or at least not harm it. Nor is it of much weight that Mr Deb may have hoped that his testimony might nonetheless be accepted. The point I am seeking to make is that neither the amendments nor the further discovery were likely to have surprised, in a procedural sense, Mr Deb.
Accordingly, I make an order that Mr Deb pay Burnside’s costs on a standard costs basis until 14 days after the filing of the formal offer on 8 July 2020 and on an indemnity basis thereafter save for those costs in respect of which separate orders have been made.

[2023] SASC 33

9 March 2023