Elliott v The State of South Australia (No 2) - [2014] SADC 100

DISTRICT COURT OF SOUTH AUSTRALIA
(Civil)
ELLIOTT v THE STATE OF SOUTH AUSTRALIA AND ORS (No 2)
[2014] SADC 100
Judgment of His Honour Judge Slattery
6 June 2014
PROCEDURE - COSTS - DEPARTING FROM THE GENERAL RULE
Defendants claim costs against the plaintiff on a solicitor and client basis.
Principal action involved claims by the plaintiff against the defendants of negligence, malicious prosecution and the tort of misfeasance in a public office. The Court found that there was no case to answer by any of the defendants. Plaintiff’s claim struck out including on the basis that it was hopeless and without any prospect of success.
Whether the circumstances of the case warrant departure from the general rule in the exercise of the Court’s discretion.
Held: Plaintiff to pay the defendants’ costs on a solicitor/client basis.
District Court Civil Rules 2006 r 264(5)(a); Australian Road Rules r 59; Road Traffic Act 1961 s 79B; Road Traffic (Miscellaneous) Regulations 1999 reg 15; Evidence Act 1929 s 67C; District Court Act 1991 s 42(1), referred to.
Northern Territory v Mengel (1995) 185 CLR 307; Re Wilcox (1996) 72 FCR 151; Calderbank v Calderbank [1975] 3 All ER 333; Colgate-Palmolive Company and Anor v Cussons Pty Ltd [1993] FCA 536; Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd [1988] FCA 202; Board of Examiners v XY (2006) 25 VAR 193; Yilan v Minister for Immigration & Multicultural Affairs [1999] FCA 1212, considered.

ELLIOTT v THE STATE OF SOUTH AUSTRALIA AND ORS (No 2)
[2014] SADC 100

I delivered judgment on this matter on 31 May 2013.[1] I found there was no case to answer and struck out the plaintiff’s claim. I then reserved the question of costs for further consideration.
[1] Elliott v The State of South Australia & Ors [2013] SADC 140.
Following the delivery of my judgment, the defendants have made an application that the plaintiff pay the defendants’ cost on a solicitor and client basis pursuant to rule 264(5)(a) of the District Court Civil Rules 2006. That rule reads as follows:
264- Basis for awarding costs
...
(5)     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 reasonably incurred by the party in the conduct of the litigation); 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); or
(c)     …
(d)     …[2]
[2] District Court Civil Rules 2006 (SA), r 264(5)(a).
Background
This matter came before this Court after the plaintiff successfully challenged a charge that was decided in the Magistrate’s Court of failing to comply with a traffic light signal pursuant to rule 59(1) of the Australian Road Rules contrary to s 79B of the Road Traffic Act 1961 (SA) and regulation 15 of the Road Traffic (Miscellaneous) Regulations 1999 (SA). Subsequently, the plaintiff brought an action in this Court against seven defendants who were involved in preparing information preparatory to the prosecution and in prosecuting the charge in the Magistrates Court. In his statement of claim, the plaintiff pleaded the following causes of action:
7.1     the defendants or any of them were negligent in the manner in which they prosecuted the action; and/or
7.2     maliciously prosecuted the plaintiff in the Holden Hill Magistrates Court proceedings; and/or
7.3     in pursuing the prosecution in the manner they did, the defendants committed the tort of misfeasance in a public office.
From the outset, there were difficulties involved with the plaintiff’s case, including in particular that the plaintiff’s claims amounted to no more than mere assertions and these were unsupported by evidence. In summary, the plaintiff’s contentions of fact and law were wholly based upon the fact that he had succeeded in the Magistrates Court in defending the prosecution. At the close of the plaintiff’s case, the defendants made a no case to answer submission. I heard that submission and my decision upon it is to be found in my judgment of 31 May 2013.[3]
[3] Elliott v The State of South Australia & Ors [2013] SADC 140.
In regards to the plaintiff’s first cause of action, I found that the alleged tort of negligent prosecution/negligent investigation is unknown to the common law. As such, no duty was owed to the plaintiff by the defendants and therefore the claim was struck out. In regards to the claim of malice or malicious prosecution, the plaintiff failed to lead any evidence or establish a factual basis for these claims; therefore this claim was also struck out. Similarly, in relation to the allegation of misfeasance in public office; having had regard to the elements enunciated by Deane J in Northern Territory v Mengel[4] and the fact that there were no allegations of fact to support any such claims, I found that the allegation was not made out. For those reasons, I found there was no case to answer against any of the defendants and accordingly, made a formal order that the plaintiff’s claim be struck out.
[4] (1995) 185 CLR 307 at 370.
Defendants’ Application for an Order as to Costs
As mentioned, the application before me is that the plaintiff pays the defendants’ costs for this matter on a solicitor and client basis. The submissions put forth by the defendants (FDN48) point to the haphazard and flawed nature of the plaintiff’s case along with his failure to accept two offers put forward by the defendants to discontinue the matter.
Paragraph two of the defendants’ written submissions point to my remarks at paragraph [141] of my judgment where I say “...the case brought by Elliott is hopeless, it is unsupported by any relevant evidence and was always doomed to fail”. The defendants submit that they have been put through “considerable inconvenience in defending this matter since it was instated in 2008 and specifically so at public expense in circumstances where that clearly should not have occurred”. Therefore they submit that the circumstances warrant an exercise of the Court’s discretion to depart from the general rule as to costs and to make an order that the plaintiff pay the defendants’ costs on a solicitor and client basis.
The defendants further point to the fact that they had made genuine and repeated efforts to resolve the matter out of court. I have before me a supporting affidavit of Amanda Jane Young (FDN49) along with two letters attached as exhibits. The letters were written to the plaintiff and proposed that the matter be discontinued and for both parties to bear their own costs. These letters are dated 24 September 2010 (exhibit AJY1) and 22 March 2013 (exhibit AJY2). The defendants read that affidavit for the purposes of this application.
The substance of each letter is the same, namely, that the defendants are not liable to the plaintiff and there is no indication of any negligence or misfeasance on the part of the defendants in prosecuting the case. The 2010 letter stated the offer in the following terms:
‘[T]he only offer my client is prepared to make to resolve this matter is to again repeat its offer that your client discontinue his claim on the basis that each party bear its own costs.’
The letter than goes on to say that if the offer is rejected, they are willing to proceed to trial and if successful, will:
‘...vigorously pursue to recover its costs from your client on a full indemnity basis.’
The 2010 letter is marked ‘without prejudice’ and it therefore attracts the privilege arising under s 67C of the Evidence Act 1929 (SA). Under that section, evidence of a communication made in connection with an attempt to negotiate the settlement of a dispute is not admissible in any civil proceedings (s 67C(1)) and such evidence is only admissible if the parties to the dispute give their consent (each of them) (s 67C(2)(a) Evidence Act 1929). The plaintiff remains unrepresented. In light of the nature of the defendants’ costs application it is presumed that the plaintiff does not give his consent. This is the case even though the plaintiff raised no issue about the content of the affidavit of Ms Young. I will also assume for s 67C(2)(b) of that Act that there has not been disclosure with the consent of (both) parties.
In the circumstances, I put aside from my considerations the content of exhibit AY1 to the affidavit of Ms Young (FDN 49) to the extent that it contravenes s 67C of the Evidence Act 1929. The part of the exhibit that remains in evidence concerns the defendants’ placing the plaintiff on notice that the plaintiff’s case is not supported by any evidence of any breach by any of the defendants. The clear inference in that part of the letter is that the plaintiff’s case is unsustainable. I will treat the balance of the letter as being completely redacted. The ‘unredacted’ portion of the letter will be received into evidence because it does not attract any without prejudice privilege.
The 2013 letter is marked ‘without prejudice save as to costs’. The whole of that letter may be received into evidence because, on my reading of the letter, the only without prejudice aspect of it concerns the offer on costs. This letter was written several weeks before the trial was due to commence and is on much the same terms as the earlier letter. The 2013 letter further elaborates on the subject of costs stating that the defendants have “spent many thousands of dollars defending the claim” and will pursue those costs if successful. Given the circumstances, I am satisfied that this was a genuine and generous offer made to resolve what was, at best, a very unpromising piece of litigation.
Due to the late timing of the sending of this letter, little assistance can be gained from it on the basis that it may otherwise have been viewed as a “Calderbank” style offer.[5] It is not an offer under the Rules of Court and no evidence has been put before me that there has been any offer filed at Court. And the offers made are not offers on costs.
[5] Calderbank v Calderbank [1975] 3 All ER 333.
The importance of both letters in this context is that they point out in very broad terms the very obvious difficulties facing the plaintiff in the event that he decided to pursue the action to and through a trial. In my opinion this was appropriate conduct on behalf of the defendants. It was appropriate for the defendants to attempt to obviate a trial in which the plaintiff had little or no prospects of success against them. In my opinion, this is the area for my consideration in this action.
Principles to be Applied
Under s 42(1) of the District Court Act 1991, the Court has discretion to award costs on any basis it considers appropriate. The discretion is subject to the Rules. Rule 264(1) provides that the Court may, in exercise of its discretion as to costs, award costs on any basis the Court considers appropriate.
In their application, the defendants relied on the principles enunciated in Re Wilcox[6] which affirmed the earlier decision of Colgate-Palmolive Company and Anor v Cussons Pty Ltd,[7] and Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd.[8] These cases confirm the well established principle that as a general rule, an order for costs will usually be made on a party and party basis. The principles to be derived from those cases are well settled and understood.
[6] (1996) 72 FCR 151
[7] [1993] FCA 536.
[8] [1988] FCA 202.
In relation to the principles governing departing from the general rule, the court in Re Wilcox described the following matters that may assist Judges in the exercise of the Court’s discretion:
(a)    The Court ought not to depart from the rule that costs be ordered on a party and party basis unless the circumstances of the case warranted the Court in departing from the usual course;
(b)    The circumstances which may warrant departure from the usual course arise as and when the justice of the case so requires or where there may be some special or unusual feature in the case to justify the Court departing from the usual court;
(c)    While the circumstances in cases in which indemnity costs have been ordered offer a guide, the question must always be whether the particulars and circumstances of the case in question warrant the making of an order for costs other than on a party and party basis.[9]
[9] (1996) 72 FCR 151, 156-157.
Plaintiff’s Submissions
The plaintiff’s submissions (FDN50) rely on the judgment of Woodward J in Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd.[10] While that case does refer to circumstances in which the court may exercise its discretion to award a higher level of costs, it is in no way meant to be a comprehensive guide and the plaintiff has apparently focussed upon the discussion on that decision of awarding costs in regards to matters concerning allegations of fraud. In the matter before me, it has not been submitted either expressly or impliedly by the defendants nor have I made any finding that the plaintiff made allegations of fraud knowing that they were false, nor is there any suggestion that the plaintiff’s action was brought for an ulterior motive. And it must be recalled that Woodward J held that the question of the unfounded allegation of fraud by a party was one example, amongst several, where the Court may consider making an ‘elevated’ order for costs. His Honour also emphasised the Court’s overriding discretion on the question of costs. Therefore, I reject these submissions.
[10] [1988] FCA 202.
I also am unable to accept the submission that the plaintiff’s actions were not unreasonable. The plaintiff’s primary submissions as to the matter of costs appears to be heavily reliant on comments made by me concerning the original contested charge in the Magistrates Court, particularly the approach taken by the learned Magistrate in coming to her decision that the defendant was not guilty of the charge brought against him. It is clear from the plaintiff’s submissions that he believes that those remarks were crucial to my ultimate judgment and while I did express misgivings about the learned Magistrate’s approach (and indicated that I may have found differently if presented with the same evidence), I stated very clearly that those misgivings were immaterial to the question before me.[11] In any event, the defendants are quite correct in their submissions (FDN51) when they say that the plaintiff’s acquittal in respect of the Magistrates Court charge is in no way determinative of the matter heard before me, even though they arise out of the same events.
[11] Elliott v The State of South Australia & Ors [2013] SADC 140, [8].
Lastly, the plaintiff submits that the court must take into account his capacity to pay costs. He states that he is a 68 year old pensioner with minimal savings and does not have capacity to pay a significant award for costs; though, as the defendants’ rightly point out in their reply, the plaintiff has failed to put forward any evidence to support his claims. Putting aside the question of the veracity of these claims, I do not accept this submission. In and of itself, the impecuniosity of the plaintiff does not constitute good reason for why a costs order should not be made. In their reply, the defendants referred to the cases of Board of Examiners v XY[12] and Yilan v Minister for Immigration & Multicultural Affairs[13] and I agree with the principles set out therein.
[12] (2006) 25 VAR 193.
[13] [1999] FCA 1212.
In my opinion the plaintiff’s action was doomed from the outset. He had successfully defended a traffic infringement claim made against him on the basis that the prosecuting authority had failed to produce sufficient evidence to prove its case. There was nothing disclosed on the face of the reasoning of the learned Magistrate to give rise to any of the claims made by the plaintiff against the defendants in this action.
As I have already explained in my reasons for decision in this action, the claims of the plaintiff were hopeless and had no prospects of success. This is an example of the very rare case that suffers such difficulties. The first cause of action pleaded was not known to the law. The second and third causes of action (of malicious prosecution and misfeasance in public office) are, necessarily, difficult of proof and are confined in their application. The level of proof required in respect of these causes of action necessarily means that great care must be taken before embarking on such proceedings. They are serious matters. This is the appropriate position for all the reasons that I have explained in my reasons for decision in this matter.[14] The plaintiff was not able to offer any proof of his case against the defendants except that he had been successful before the learned Magistrate because of a synapse in the evidentiary trail of proof of the prosecution.[15]
[14] Elliott v The State of South Australia & Ors [2013] SADC 140.
[15] Ibid.
In my opinion the justice of this case requires a departure from the usual course because of the special features that I have described. The plaintiff was prepared to make very serious allegations against the defendants based upon no more than the fact that he had been successful before the learned Magistrate. He received an award of costs in that action. The plaintiff then embarked upon this action and made the allegations against the defendants without any evidence to justify the causes of action that he had pleaded. This conduct was tantamount to an abuse of process although I do not need to decide that matter. The maintenance of the proceedings, despite the content of the letters from the defendants’ solicitors, was tantamount to vexatious conduct. It is sufficient to say that this is one of those rare cases where the circumstances of the case warrant the making of an order for costs other than on a party and party basis.
Order
For the reasons mentioned above, in my view there exists special or unusual circumstances in this case that warrant a departure from the usual rule relating to costs. I reiterate that the plaintiff’s case was hopeless and doomed to fail. Accordingly, I order that the plaintiff is to pay the defendants’ costs on a solicitor and client basis.