Maha-Ashi Pty Ltd v Innes (No 2)
[2010] SADC 131
•22 October 2010
DISTRICT COURT OF SOUTH AUSTRALIA
(Civil)
MAHA-ASHI PTY LTD v INNES (NO. 2)
[2010] SADC 131
Reasons for Decision of Her Honour Judge Davey
22 October 2010
PROCEDURE - COSTS
The defendant seeks costs from the plaintiff on an indemnity basis - relying on Calderbank offers and filed offers - consideration of DCR 263(h) - plaintiff argues defendant's costs should be on a party/party basis - consideration of DCR 187 and 188.
Held: Plaintiff pay the defendant's costs on an indemnity basis on and from 11 July 2008. Costs prior to that date to be on a party/party basis.
District Court Civil Rules 2006 Rules 187, 188 and 263(h), referred to.
Sands v Channel Seven Adelaide Pty Ltd & Anor (No 2) [2009] SASC 365; Olyvaylle Pty Ltd v Flottweg GMBH & Co, KGAA (No 5) [2009] FCA 571; Alpine Beef Pty Ltd v Trycill Pty Ltd (No 2) [2010] FCA 286, considered.
MAHA-ASHI PTY LTD v INNES (NO. 2)
[2010] SADC 131
In this matter judgment was entered for the defendant against the plaintiff and the plaintiff’s claim was dismissed. The defendant seeks an order for costs on an indemnity basis.
In support of her application, the defendant relies upon the Affidavit of Samuel Michael McGrath dated 14 October 2010 together with the annexures thereto. The affidavit details a number of offers to settle the matter on a commercial basis with the defendant maintaining that liability was denied. Without repeating the contents of the affidavit, the defendant alleges that there were six offers made, four were informal ‘Calderbank’ offers and there were two offers filed in accordance with the Rules of Court. The defendant further asserts that it was imprudent and/or unreasonable for the plaintiff to have refused all offers of settlement especially given the objective weakness of the case advanced by the plaintiff. The defendant particularly refers to the matters raised in the correspondence dated 12 June 2008 wherein the defendant raised a number of matters which demonstrated the weakness of the plaintiff’s case and which, in fact, were the subject of adverse findings against the plaintiff after the trial of this matter. Notwithstanding the apparent strength of the defendant’s case, the defendant continued to put offers to the plaintiff until as late as August 2009. It is apparent from the correspondence, submissions and the common sense of the matter that the defendant did so in order to effect a commercial settlement properly reflecting the risks in respect of the matter.
I have been referred to and considered the decisions in Sands v Channel Seven Adelaide Pty Ltd & Anor (No 2)[1], Olyvaylle Pty Ltd v Flottweg GMBH & Co, KGAA (No 5)[2] and Alpine Beef Pty Ltd v Trycill Pty Ltd (No 2)[3] together with the relevant Rules of Court including Rules 187(7), 188(1), (2) and (6) and Rule 263(h).
[1] [2009] SASC 365
[2] [2009] FCA 571
[3] [2010] FCA 286
I accept the submissions made on behalf of the defendant that the six offers made by the defendant were offers of a significant commercial compromise wherein the defendant reasonably attempted to face the risk of the litigation which was caused by the plaintiff. The defendant was wholly successful in defeating the claim.
I note that the original claim commenced in the Magistrates Court and that the plaintiff made a decision to change the calculation of the claim and bring the matter to this court for trial. I also note that even as the plaintiff’s case was ultimately formulated at trial, the claim was below the jurisdictional limit of this court. As I understand the costs argument before me, the defendant points to the plaintiff’s claim as being unrealistic with an inflated quantum and that notwithstanding that the problems of proof of liability were expressly raised with the plaintiff, the plaintiff unreasonably proceeded with the litigation.
The plaintiff resists an order for indemnity costs and says that the order should be for party and party costs. There is no dispute as to the principles discussed in the authorities referred to and, particularly, the plaintiff agrees that the appropriate principles are discussed (and applied to different circumstances) by Bleby J in Sands v Channel Seven Adelaide Pty Ltd & Anor (No 2). The plaintiff argues that this was a case where the claim turned on evidence which was ‘oath against oath’ and in the circumstances it was reasonable that the plaintiff proceeded with the trial in the matter.
The plaintiff further relied upon an argument that the filed offers were withdrawn on the first day of the trial namely 15 March 2010. I do not accept the argument put to me in that regard and refer to the effect of Rule 188. However, in my view there is force in the submission that the plaintiff’s conduct was not unreasonable within the meaning of cases such as Sands v Channel Seven Adelaide Pty Ltd & Anor (No 2) until the offer which was put on 12 June 2008[4] was rejected by the defendant on 11 July 2008.[5] In my view the rejection of that offer of 12 June 2008 and the rejection of all subsequent offers was, in the circumstances, imprudent and unreasonable and did not have regard to the objective weakness of the plaintiff’s claim.
[4] See annexure marked ‘SMM2’ to the Affidavit of Samuel Michael McGrath
[5] See annexure marked ‘SMM3’ to the Affidavit of Samuel Michael McGrath
Having regard to the authorities and all of the circumstances of this matter, I order costs on an indemnity basis on and from 11 July 2008 being the date when the offer of 12 June 2008 was rejected. Costs of the matter prior to that date are to be on a party and party basis.
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