Kaza Investments Pty Ltd v Stirnemann (No 2)

[2010] SADC 166

DISTRICT COURT OF SOUTH AUSTRALIA

(Civil)

KAZA INVESTMENTS PTY LTD v STIRNEMANN AND ANOR (NO 2)

[2010] SADC 166

Decision of His Honour Judge Barrett

22 December 2010

PROCEDURE - COSTS

Judgment was entered for the plaintiff on the basis that he had established the enforceability of one of two possible contracts.  The other contract was found to be unenforceable.  It had originally been the only contract on which the plaintiff was suing.  It later amended its pleadings to include the contract on which it sued successfully.  The defendant disputes the plaintiff's entitlement to costs associated with the unsuccessful claim.

Held:  There was too much overlap between the attendances in relation to the two contracts to deny the plaintiff its costs.  The defendant should pay all the plaintiff's costs.

KAZA INVESTMENTS PTY LTD v STIRNEMANN AND ANOR (NO 2)
[2010] SADC 166

Introduction

1. I delivered judgment in this matter on 10 December 2010 in favour of the plaintiff.  I ordered the specific performance on one of two possible contracts for the sale and purchase of a house.  I found that what has been described as the “Fax contract”  was binding.  I found that the so-called “Law Society contract” was not binding.  I found in favour of the third party firm of solicitors that it was not liable to contribute towards the defendant’s liability to the plaintiff.  There has been a dispute about the costs as between the defendant and third party, and between the defendant and plaintiff.  I have already ordered that the defendant pay the third party’s costs.  There remains the question of costs between the plaintiff and defendant. 

   Costs between the plaintiff and the defendant

2. I have determined that, with one exception, the defendant should pay all of the plaintiff’s costs.  I explain why. 

3. As a general rule a successful party is entitled to its costs (6 DCR 263(1))  Notwithstanding the general rule the court has power to deny a successful party its costs of a claim or argument on which it has been unsuccessful. 

4. In this case the plaintiff was unsuccessful in establishing that the Law Society contract was binding.  Essentially it lost that ground because it failed to prove that the principal of the plaintiff company signed the contract on the day shown alongside his signature.  I found that he may have signed it on that day but I was not satisfied on balance that he had.  The reason for the doubt was that in a letter from the third party the solicitor noted that the plaintiff had not signed the contract.  That letter post-dated the purported date of signature.  Neither Dr Fuller (the principal of the plaintiff company) nor Mr Sim (a partner in the third party firm) could distinctly remember signing the contract on the day appearing thereon.  Each assumed he did because of the written date.

5. The defendant happened upon the solicitor’s letter by chance.  It had been accidentally included in the plaintiff’s discovery documents.  Up to that point the plaintiff was suing only on the Law Society contract.  When the plaintiff learned that the defendant had seen the letter it claimed privilege.  A judge ordered that the privilege was waived.  Not knowing of the letter the defendant had admitted in its pleadings that the contract had been executed on date it bore.  I do not accept the plaintiff’s submission that the defendant must take the consequences of admitting something it could not truly have known.  The defendant no doubt admitted the execution of the document because on its face it had been executed by the plaintiff on a given day and witnessed by the third party solicitor.  When he learned of the letter the defendant amended its pleadings to contest the date of execution.  It must be said that the defendant maintained an untenable contention that the contract was not enforceable because the contract disclosed no consideration by the defendant for the promise to transfer the land.

6. The plaintiff acknowledges that it should not only not receive its costs of attendances associated with the failed privilege argument but it should pay the defendant’s costs of those attendances.  The defendant does not dispute the reasonableness of that concession but he seeks to avoid all the costs associated with the Law Society contract.  He submits that the Law Society contract issue took up half the attendances incurred after 23 September 2009 which is the date on which the plaintiff amended it pleadings to rely for the first time on the fax contract as well as the previously pleaded Law Society contract.

7. That contention by the defendant overlooks the inter-relationship of the fax contract and the Law Society contract.  The defendant had always contested the enforceability of the Law Society contract.  It did so on untenable bases until it discovered the solicitor’s letter.

8. Further, the existence of the Law Society contract and the circumstances surrounding its making, were relevant to the determination of the legality of the fax contract.  I found, for example, that the sending of the Law Society contract by the plaintiff to the defendant was one manifestation of its acceptance of the defendant’s offer (if that is what it was) in the fax contract ([54]).

9. In addition, I found that the Law Society contract was the fuller expression of the verbal agreement and the fax contract ([47] and [48]).

10. In my view there is too much of an overlap between the attendances necessary for each issue to deny the plaintiff its overall costs, minus that conceded on the privilege claim.

    Conclusion

11. I order in terms of the Minutes of Order which I have signed today.  For convenience I reproduce those Minutes.

    1.The plaintiff pay the defendant’s costs of and incidental to the defendant’s application by notice for specific directions dated 6 February 2008 and his oral application made on 19 February 2008 for discovery and inspection such costs to be in respect of the period 19, 20 and 21 February 2008 one day’s counsel fee.

    2.Save as aforesaid the defendant pay to the plaintiff its costs of action (including reserved costs) and that such costs as agreed or certified by the Taxing Officer be paid from the purchase price.