Geyer v Resi Corporation (No 2) - [2014] SADC 64

DISTRICT COURT OF SOUTH AUSTRALIA
(Civil)
GEYER v RESI CORPORATION (No 2)
[2014] SADC 64
Judgment of His Honour Judge Jennings
29 April 2014
PROCEDURE - COSTS
The plaintiff was employed by the defendant from 14/7/57 to 14/9/98 as a boilermaker/welder, leading hand boilermaker, assistant foreman and mechanical foreman at its Playford Power Stations. Plaintiff awarded total of $327,474 for compensatory damages, exemplary damages and interest. Two offers of settlement filed by plaintiff. Orders sought by the plaintiff that the defendant pay his costs for the whole of the action on solicitor/client basis; and certification that the trial was fit for senior and junior counsel.
Geyer v RESI Corporation [2013] SADC 122; Shaw v Jarldorn (1999) 76 SASR 28; BHP v Parker [2012] SASCFC 73, considered.

GEYER v RESI CORPORATION (No 2)
[2014] SADC 64

This is an application for costs following my delivery of judgment on 30 August 2013 ([2013] SADC 122) in favour of the plaintiff for a total of $327,474. That sum comprised of $305,474 by way of compensatory damages, $20,000 by way of exemplary damages and $2,000 by way of interest.
The plaintiff seeks an order that the defendant pay his costs for the whole of the action on a solicitor/client basis and that the trial be certified fit for senior and junior counsel.
The defendant did not oppose an order for costs. The defendant argued however, that the plaintiff should not be awarded any costs for work done prior to 27 September 2011, being the date when the Statement of Claim was amended to plead that the plaintiff was suffering from mesothelioma. It contends that thereafter I should not depart from the general rule in relation to costs and only order costs on a party/party basis. It submits that this case was not so complex as to justify certification for two counsel. It also takes issue with the fact that the plaintiff briefed interstate counsel. It contends that I should issue a ruling that on taxation the taxing officer should assess counsel fees by reference to what local senior counsel would have charged. The plaintiff contends that these are matters that can be agitated on taxation and that it is not necessary for me to venture into this.
Underpinning the plaintiff’s submission that costs should be awarded on a solicitor/ client basis is that fact of two offers of settlement that he made. On 27 March 2012 the plaintiff filed an offer to settle his claim for $250,000 plus costs. It stated that it was open for acceptance until 16 April 2012.
On 30 April 2012 the plaintiff filed a further offer to settle for $180,000 plus costs. It stated that it was open for acceptance until 14 May 2012.
The trial commenced on 23 April 2012 and continued on various dates up to 30 August 2013.
The relevant legal principles governing the issue of costs following the making of an offer of settlement were discussed by the Full Court in BHP v Parker [2012] SASCFC 73 (at [261].
There appears to be no dispute about the relevant principles. By s 42(1) of the District Court Act 1991 (SA) the Judge had an unfettered discretion as to costs, subject to the provisions of the section (none are relevant) and subject to the Rules. The general rule is that costs follow the event: r 263 of the District Court Civil Rules 2006. Rule 263(3) provides that the court may “have regard to any offer to consent to judgment or other attempt to settle the action ...”. By r 264(1) the court can award costs “... on any basis the Court considers appropriate”. The usual practice is for costs to be awarded on a party and party basis, but as the rule just referred to indicates, that is no more than the usual practice, and the court can adopt some other basis, and from time to time does so. The District Court Civil Rules provide a regime for the making of a “formal offer of settlement” by filing the offer in court: see rr 187 and 188 of the District Court Civil Rules 2006. A formal offer can be filed by a plaintiff or by a defendant. The offer must be in the approved form: r 187(3)(a). Such an offer can be accepted by the party to whom it is made at any time before the date falling seven days before the first or any subsequent date fixed for the trial: r 188(1) and (2). Rule 188(6) provides:
188 Consequences of filing offer of settlement in Court
(6) If a formal offer of settlement so far as it relates to principal relief is not accepted by the party to whom the offer is made and the Court determines the relevant action or claim on terms (as to principal relief) that are no more favourable to the party than the terms of the offer, then, subject to the Court's order to the contrary—
(a) the party to whom the offer was made is not to be entitled to costs referable to the period falling after the relevant date; and
(b) the party that made the offer—
(i) if a defendant—is entitled to costs referable to the period falling after the relevant date; and
(ii) if a plaintiff—is entitled to the whole of the party's costs of action on a solicitor/client basis and the defendant is not entitled to any costs not otherwise ordered.
The application of the predecessor to Rule 188 was discussed by the Full Court in Shaw v Jarldorn (1999) 76 SASR 28. The plaintiff in that case filed an offer under the then Rule 41.01 of the District Court Rules before the trial. The plaintiff obtained a judgment against the defendant in excess of the filed offer. The plaintiff sought an order from the trial Judge that the defendant pay the plaintiff’s costs of the action on a solicitor /client basis. The trial Judge acceded to that request. On appeal the defendant argued that he should have exercised that discretion. The defendant argued that there had been material non-disclosure by the plaintiff and that there had been such a change in circumstances between the offer and the trial that the trial Judge should have otherwise ordered. In rejecting that argument Doyle CJ said (at [8]):
Ordinarily the Court will assess things as at the time of the offer without regard to what has happened earlier. Likewise, events that occur after the offer is made will be of limited weight, unless they demonstrate that the amount of the judgment that the plaintiff ultimately recovers was materially affected by subsequent events that the defendant could not reasonably have anticipated. And, in that context, I emphasise that both the defendant and the plaintiff will be assumed to anticipate the ordinary risks and vicissitudes of litigation. In deciding not to accept an offer a defendant makes the judgment that it will run the risk of the plaintiff equalling or bettering the offer, in the hope that the plaintiff will recover less than the amount of the offer. A defendant who makes that choice cannot reasonably complain if, as a result of the ordinary risks and vicissitudes of litigation, the defendant’s judgment is proven to be unsound. (at p30)
Perry J said (at [36]):
It seems to me that the rule in its present form is likely to have an even narrower scope than the operation accorded its predecessor in Whitehead v Maas. The circumstances which are most likely to arise and which might justify relieving a defendant from the obligation to pay solicitor and client costs, will be those where there is such a significant change in the manner in which the plaintiff’s case is presented at the trial, or the manner in which the evidence emerges at the trial, that it might fairly be said that the full dimensions of the plaintiff’s entitlement could not possibly have been foreseen before the hearing commenced. (at p34)
The defendant submits that notwithstanding the filed offer and the fact that it was beaten it should not be required to pay costs on a solicitor/client basis. It puts forward four reasons. It contends that regard must be had to the complex nature of the case. It submits that the state of the evidence materially changed and that more compelling evidence of the fact that the plaintiff was suffering from mesothelioma, which was critical in him succeeding in his claim did not emerge until after the second offer lapsed. It says that I need to take into account the fact that the plaintiff was unsuccessful in proving or establishing a number of the claimed conditions that were the subject of the statement of claim. Finally it points to the delay occasioned by the late calling of expert evidence by the plaintiffs during the course of the matter that resulted, on three occasions, in the trial being adjourned off to another date.
The plaintiff refutes the suggestion that the state of the evidence changed. He contends that prior to the lapsing of the second offer the parties had nailed their colours to the mast.
In my view that submission must be rejected. Whilst it is true that as at the date of the first filed offer the issue as to whether the plaintiff had mesothelioma was a live issue, the receipt of a later report from Professor Henderson was very significant. Indeed, so much was acknowledged by Mr Russell SC in making the application to adduce that evidence. He said:
Can I start on my submissions by acknowledging the course of what my learned friend says about the importance of the issue of where the tumour is located. When I opened this case I said - and I'm reading from transcript, page 4 at about line 41, "We then come to probably the most vexed medical question in the case, which was the diagnosis of mesothelioma." And I said at page 5 of the transcript at line 10:
There is a dispute between the doctors as to whether that tumour is arising within the lung itself, or the pleura and that's important in diagnosing whether it's a mesothelioma.
Prof Henderson has been, may I say, quite forceful in his report which Mr Roberts called "report B" in stating not only that in his view the tumour does arise in the pleura, but further that means that the opinion that say the tumour arises in the lung - they are opinions expressed on behalf of the defendant's experts - must be wrong.
Your Honour knows straight away that this is - I shouldn't say "the crucial issue in the case," but one of the most crucial issues in the case. As Mr Roberts quite frankly put is it, if the tumour arises in the lung his submission will be the plaintiff loses outright. If the plaintiff proves that the tumour arises in the pleura, that's not the end of the matter, but it's a very important matter.[1]
[1] Tr 171
As it turned out my acceptance of Professor Henderson’s evidence that it was more probable than not that the plaintiff’s tumour was in his pleural cavity was a critical finding. When the defendant was considering whether to accept the plaintiff’s filed offers it did not have the benefit of Professor Henderson’s later report. Prior to the receipt of that report the defendant was entitled to proceed from the premise that the evidence in support of a finding that the plaintiff was suffering from mesothelioma was not especially strong. Doubtless that was a significant factor in its determination to reject the plaintiff’s offer of settlement. Had the offers been made after Professor Henderson’s later report was at hand the position would have been significantly different. I regard the fact of the late change in Professor Henderson’s opinion as sufficiently important to relieve the defendant of the obligation to pay costs on a solicitor/ client basis.
I now turn to the other issues raised.
The issue regarding two counsel can be briefly dealt with. This was an extremely complicated case. In my view it is beyond argument that it was fit for senior and junior counsel.
As to the issue that costs should not be awarded for work undertaken prior to the amendment to the pleadings, in my view the defendant’s argument is a bit simplistic. It was always the plaintiff’s case that the inhalation of asbestos fibres caused him to suffer personal injury. Whist it must be accepted that the injury found by the Court was somewhat different to that which was initially pleaded it was not a new cause of action. It seems to me to be inevitable in these sorts of cases where there is a sense of urgency and diagnosis can be so difficult that the diagnosis might change as further consideration is given by the medical experts. In my view this should be regarded as a general proposition as a normal vicissitude of this sort of litigation and ordinarily ought not to provide a basis to deny a successful plaintiff costs. I am not persuaded that I should limit the plaintiff’s costs to the period after the amendment.
Finally, I deal with the issue of interstate counsel.
The defendant contends that there were local counsel well able to present the plaintiff’s case and had they been retained considerable savings could have been made. Given my ruling that the plaintiff can only recover costs on a party/party basis the defendant is entitled to argue on taxation that the retainer of interstate counsel was an indulgence that it should not have to bear the full cost of.
I express no view on this one way or the other. A taxing officer will be far better versed than I of the rates that local counsel might charge in a case such as this and as to whether in all the circumstances the defendant should pay any additional expenses associated with the retainer of interstate counsel.
My formal order is that the defendant is to pay the plaintiff’s costs of the action on a party/party basis to be agreed or taxed.