DIMELLA v RUDAKS - [2008] SADC 123

DISTRICT COURT OF SOUTH AUSTRALIA
(Civil)
DIMELLA v RUDAKS
[2008] SADC 123
Reasons for Decision of Her Honour Judge McIntyre
25 September 2008
PROCEDURE - COSTS
Defendant seeks indemnity costs - consideration of discretion in relation to costs - defendant awarded party/party costs.
District Court Civil Rules 1987 R264(5), referred to.
Colgate Palmolive Co & Anor v Cussons Pty Ltd (1993) 118 ALR 248; Casley-Smith v F S Evans & Sons Pty Ltd (No 6) (1989) 148 LSJS 483 at 487; Pirrotta v City Bank Ltd (1998) 72 SASR 259, considered.

DIMELLA v RUDAKS
[2008] SADC 123

On 18 September 2008 the plaintiff’s claim was formally dismissed. The first defendant now seeks costs on an indemnity basis or, failing that, on a solicitor/client basis pursuant to Rule 264(5) of the District Court Civil Rules 2006 (DCCR).
The factual basis for this application is set out in the Affidavit of Kym David Ryder sworn on 3 September 2008 (“Mr Ryder’s affidavit”).
The plaintiff does not dispute that the first defendant is entitled to party/party costs but resists an order for indemnity or solicitor/client costs.
DCCR 264 vests discretion in the court as to what costs orders ought to be made in a particular case. The discretion must however be exercised judicially. Generally costs would be awarded on a party/party basis[1]. There must be special or unusual features to justify the departure from that practice.[2]
[1] DCCR 264(2)
[2] Casley-Smith v F S Evans & Sons Pty Ltd (No 6) (1989) 148 LSJS 483 at 487
In Colgate Palmolive Co & Anor v Cussons Pty Ltd[3] Sheppard J considered the principles relating to an award of solicitor/client costs. He set out a number of principles relating to the exercise of the discretion[4]. This list is not exhaustive and it is plain that the categories are not closed.
[3] (1993) 118 ALR 248
[4] Casley-Smith v F S Evans & Sons Pty Ltd at pp 256 - 257
The first defendant contends that a number of special features apply in this case. It was conceded that individually these features might not be sufficient but in combination it was said that they provided compelling grounds for the exercise of the discretion to award indemnity or solicitor/client costs. These factors were:
·The plaintiff’s imprudent refusal of several offers of compromise
·The plaintiff’s refusal to mediate
·Properly advised, the plaintiff should have been aware that she had little prospect of success
·The claim was not genuine
Offers of settlement
The first defendant made three offers of settlement as follows:
·An offer by letter dated 21 September 2006 which letter forms exhibit ‘KDR5’ to the affidavit of Mr Ryder;
·Letter dated 24 October 2006. Exhibit ‘KDR6’ to the affidavit of Mr Ryder; and
·Letter dated 22 October 2007 which letter is exhibit is ‘KDR7’ to the affidavit of Mr Ryder.
The first two offers were offers of payment to the plaintiff conditional upon the sale of the property for at least $70,000 and some further conditions. The third offer was an offer to transfer the disputed property to the plaintiff in return for a payment by the plaintiff to the first defendant of $50,000. All offers were rejected.
Plaintiff’s refusal to mediate
On 8 November 2007 the first defendant’s solicitors sent a letter to the plaintiff’s solicitors suggesting mediation. This letter is exhibit ‘KDR8’ to the Affidavit of Mr Ryder. The suggestion was rejected. There is no information before me as to the circumstances of the rejection. I note the submissions made on behalf of the plaintiff that there were negotiations concerning the possibility of mediation but that these proved fruitless.
Plaintiff’s prospects of success
The first defendant pointed to the concession by the plaintiff at trial that the agreement between Ms Raymond and Westpac was not an assignment of debt. It is said in those circumstances that the plaintiff had little or no prospect of success. In answer to this the plaintiff says that the area of law involved was complex and that there was little guidance by way of precedent. It is argued that it was not therefore unreasonable for the plaintiff to proceed to trial.
Genuineness of claim
The first defendant says that the claim is not genuinely brought because the plaintiff’s husband, instructing the same solicitors, issued proceedings in District Court action no. 1020 of 2005 in which it was alleged that Mrs Raymond held no equitable mortgage. This was quite different to the position adopted by the plaintiff in these proceedings. The plaintiff however says that her husband discontinued his proceedings on receipt of further information and documents from Ms Raymond. Whatever position the plaintiff and her husband may originally have taken in relation to the existence of an equitable mortgage that position had been abandoned by the time the current proceedings were issued. It is asserted that there is no lack of genuineness in the proceedings.
Ruling
In order to displace the usual costs order of party/party costs the first defendant must demonstrate special or unusual features to justify departure from that practice. The onus is upon the first defendant to show that the plaintiff’s conduct in not accepting the offers, refusing mediation and pursuing the claim was unreasonable or imprudent.[5] I do not consider the defendant has discharged this onus.
[5] Pirrotta v City Bank Ltd (1998) 72 SASR 259
Whilst in hindsight it would have been prudent of the plaintiff to have accepted one or other of the first defendant’s offers this does not, without more, warrant an order for indemnity costs. It must be shown that she acted unreasonably in rejecting the offers. I note that the offers were all conditional and that some of the conditions were outside the plaintiff’s control. The time frame for consideration of each of the offers was short, in each case about 7 days, and the offers were complex. I do not feel able to say, in the circumstances, that the plaintiff acted unreasonably in rejecting the offers.
It is similarly the case with the issue of mediation. Of itself this does not stand as a basis for the order of indemnity or solicitor/client costs. Even taken in conjunction with the rejection of the offers and the other features pointed to by the first defendant I do not consider this provides sufficient warrant for the exercise of my discretion in favour of the first defendant.
Finally, in relation to the issue of the genuineness of the claim and the plaintiff’s decision to proceed to litigation I do not consider that the position adopted by her husband in previous proceedings, subsequently abandoned, reflects upon the genuineness of the plaintiff’s claim. Further, I do not consider that the outcome of the proceedings was so certain, even given the concession at trial concerning the assignment of debt, that it was unreasonable of the plaintiff to proceed to trial.
Given the relatively limited amount of money at stake when viewed against the costs of proceeding it is most unfortunate that the first defendant’s efforts to resolve this matter did not bear fruit. The first defendant, in my view, attempted most properly to bring the matter to a commercial resolution. From the material before me it appears that the plaintiff has not made similar efforts. Notwithstanding this I do not think that there is sufficient basis to justify departure from the normal practice of awarding party/party costs.
I therefore order that the first defendant have his costs of action on a party/party basis to be agreed or taxed.