Marshall v Townsend (No 2) - [2008] SADC 59

DISTRICT COURT OF SOUTH AUSTRALIA
(Civil)
MARSHALL & ANOR v TOWNSEND & ORS (No 2)
[2008] SADC 59
Judgment of Her Honour Judge Shaw
14 May 2008
PROCEDURE - COSTS
Plaintiff succeeding against one of five defendants - solicitor/client costs - Sanderson order - contribution notices - exercise of discretion in plaintiff's favour
Forlyle Pty Ltd v Tiver & Anor [2007] SASC 464; Duke Group Ltd (In Liq) v Pilmer & Ors (No 8) [1998] SASC 6699; Shaw v Jarldorn (1999) 76 SASR 28; Fennell v Supervision and Engineering Services Holdings Pty Ltd & Santos Ltd (1988) 47 SASR 6; Gould v Vaggelas (1985) 157 CLR 215; Walker & Anor v Corporation of the City of Adelaide & Ors (No 2) [2004] SASC 139; Skerbec v McCormack [2008] ACTSC 4, considered.

MARSHALL & ANOR v TOWNSEND & ORS (No 2)
[2008] SADC 59
Introduction

On 20 December 2007, I delivered my judgment in this action in relation to liability. I found that the fifth defendants (“Neale”) were liable in damages to the plaintiff (“Marshall”) for injuries suffered by him when he fell from a ladder at a building site. Marshall’s claim against the first, second, third and fourth defendants was dismissed. I made no orders in relation to the contribution notices, which had been exchanged between the defendants. On 15 January 2008, judgment was entered. Subsequently, I heard argument and received affidavits from the parties in relation to costs.
The first and second defendants were owners of the property, which Neale was renovating. The third defendant, a company controlled by the first two defendants, had provided certain labour to Neale for the purpose of assisting him with the work. The fourth defendant (“Telford”) was present at the site at the time of Marshall’s fall in order to meet a representative of Marshall’s employer.
The trial proceeded as to liability alone, as quantum was eventually agreed in the sum of $660,000.00.
Orders Sought by Marshall
Mr Peek QC who appeared for Marshall, submitted that Neale ought to pay Marshall’s costs on a solicitor and client basis. He further submitted that it was a proper case for those costs to be certified as fit for senior and junior counsel. It was submitted in addition, that Neale ought to pay the costs of action of each of the first four defendants, on a party and party basis, which ought to include the respective contribution notices. Finally, it was submitted that Neale ought to pay Marshall interest on the judgment sum of $660,000.00 from 20 December 2007, calculated at the rate of 6.5%.
General Rule
The general rule is that costs follow the event[1]. If the general rule was applied, Marshall is entitled to his costs against Neale. Each of the first four defendants should have their costs against Marshall as he failed against them.
[1] 6 DCR 263(1); Forlyle Pty Ltd v Tiver & Anor [2007] SASC 464 at [29]; Duke Group Ltd (In Liq) v Pilmer & Ors (No 8) [1998] SASC 6699
Contribution Proceedings
On behalf of Neale, it was conceded that Marshall was entitled to an order for costs against him but that it should be on a party and party basis as against the four successful defendants. Neale conceded that the successful defendants each should have their costs against Neale on the contribution proceedings.
Marshall’s Claim for Solicitor/Client Costs Against Neale
Marshall submitted that he ought to be awarded costs on a solicitor and client basis. On 16 September 2006, Marshall lodged an offer notifying inter alia, Neale, that he would be prepared to accept the sum of $600,000.00 inclusive of interest and special damages in full settlement of its claims. The trial was scheduled to commence on 16 October 2006. The offer was in the form prescribed by Rule 41.01 of the District Court Rules[2], and 6R 187. On 13 October 2006, shortly before the trial, the quantum was agreed in the sum of $660,000.00.
[2] 1992 District Court Rules; 6 DCR 8(1)
Neale’s Submissions
Counsel on behalf of Neale submitted that although Marshall had bettered the filed offer, he ought to have his costs against Neale on a party and party basis.
It was submitted that while 6 DCR 264 provides that the court has a discretion “to award costs on any basis the court considers appropriate”, such discretion must be exercised judicially. In this case, it was submitted, Marshall had not established a foundation for solicitor and client costs.
Counsel on behalf of Neale, asked the court to have regard to the attempts to resolve liability between Marshall and the first three defendants and pointed to the agreement as to quantum.
Emphasising that the judgment sum exceeded the filed offer by a relatively small amount, counsel for Neale submitted that the discretion ought to be exercised against making an order for solicitor and client costs.
Marshall’s Submissions
On behalf of Marshall, it was submitted that where a plaintiff’s filed offer had been bettered, the discretion in relation to costs was not unfettered.
It was submitted that Rule 41.04[3] applied. Rule 41.04 provides as follows:
Where a defendant has not accepted a plaintiff’s offer made pursuant to this Rule and the sum recovered or, as the case may be, the proportion of the debt or damages or the relief recovered by the plaintiff is equal to or greater than that contained in the plaintiff’s offer, the Court, unless it thinks proper to order otherwise, shall order the defendant to pay the whole of the plaintiff’s costs of action to be taxed as between solicitor and client.
[3] Ibid
I note that the rule is said to be penal[4].
[4] Shaw v Jarldorn (1999) 76 SASR 28, 29
Conclusion
I have given careful consideration to the submissions made on behalf of Neale. Clearly, there were attempts to settle the proceedings. However, Neale ultimately did not accept the filed offer which would have enabled the action to settle. The purpose of the Rule is to encourage the settlement of the action, not merely quantum.
In my view, there is no basis to find that “there is good reason to order that the rule is not to have its usual effect”[5]. That is, there is simply no basis for an order other than that Marshall should recover his costs from Neale on a solicitor and client basis.
[5] Shaw v Jarldorn supra at p29 [4]
Accordingly, Marshall is entitled to an award of solicitor and client costs as against Neale.
Marshall’s Claim for Certification for Senior Counsel and Two Counsel
Pursuant to section 42 of the District Court Act and 6 DCR 263, Marshall seeks an order certifying that the case was fit for both senior and junior counsel. Counsel on behalf of Neale, submitted that the case was not particularly complex and any difficulties experienced by Marshall were of his own making. It was pointed out that Marshall was not represented by senior counsel until shortly before trial. It was submitted that one set of fees should be allowed and that an allowance for junior counsel would be sufficient and appropriate.
Conclusion
I have regard to the written submissions on behalf of Marshall as to the specific features of the case which are relied upon to support the order sought. In particular, I have regard to the volume of material required to be handled, the number of witnesses, the nature and extent of the cross-examination required, the anticipated length of the case, the complexity of its issues of fact and law and the preparatory work required. I note that the first four defendants were represented by senior counsel. However, none of the defendants were represented by two counsel. In my view, it was appropriate for Marshall to retain senior counsel. I therefore certify that the matter was fit for senior counsel. In all the circumstances, I am not satisfied that the matter was fit for the engagement of both senior and junior counsel.
Marshall’s Claim for a Sanderson Order
Marshall’s Submissions
Counsel on behalf of Marshall, asked the court to order that Neale, the unsuccessful defendant, pay the successful defendants’ costs directly to each of the successful defendants.
Reliance was placed upon the remarks of the Full Court of the South Australian Supreme Court in Fennell v Supervision and Engineering Services Holdings Pty Ltd & Santos Ltd[6] where King CJ stated:
The principle of justice upon which the Bullock order rests may, in my opinion, be stated thus. The unsuccessful defendant has caused the litigation by his wrongful act and by disputing liability for it. He therefore ought to pay all costs reasonably incurred by the plaintiff in connection with the litigation. If it was reasonable, as between the plaintiff and the unsuccessful defendant, for the plaintiff to sue the successful defendant, the unsuccessful defendant ought therefore in justice be liable to indemnify the plaintiff against the costs of so doing, including those which he is ordered to pay to the successful defendant. In many cases the basis for the plaintiff’s claim of reasonableness in joining the successful defendant will be the conduct of the unsuccessful defendant in placing the blame on the successful defendant. That conduct is, however secondary to the underlying principle of justice indicated above.
[6] (1988) 47 SASR 6 at p 2
Counsel also relied upon the remarks of Von Doussa J in the same case,[7] where His Honour stated:
In my opinion the principle to be discerned from Gould v Vaggelas[8] is that a Bullock order may be made where the costs in question have been reasonably and properly incurred by the plaintiff as between him and the unsuccessful defendant; as between them those costs will be so incurred where the conduct of the unsuccessful defendant in relation to the plaintiff’s claim shows that the joinder of the successful defendant was reasonable and proper to ensure recovery.
[7] at p 14
[8] (1985) 157 CLR 215
Neale’s Submissions
Counsel for Neale submitted that it was necessary for there to be something in the conduct of the defendant which meant it was reasonable to make a Sanderson or Bullock order against Neale. It was submitted that Neale had done no more than the other defendants, namely denied liability and issued contribution notices. Neale did not actively encourage Marshall to sue the other defendants.
Further, it was submitted that Marshall was not justified in keeping the first three defendants in the action because of what Marshall alleged was the attitude of Neale to the position of the first three defendants. This was addressed in affidavits filed by the solicitors for Marshall and Neale.
It was submitted that Marshall had ample information upon which to make an informed decision about the appropriate parties to sue in the action. Marshall persisted with his claim against the first three defendants throughout the trial.
Conclusion
It is unnecessary for me to resolve any dispute between Marshall’s solicitor and Neale’s solicitor as to the precise nature and extent of their communications.[9] I find that Marshall commenced the proceedings and conducted his case against all defendants whilst not having a complete appreciation of the full extent of the relationship between the defendants.
[9] I have had regard to the contents of the affidavits of each of the solicitors filed in relation to this issue
At all times, Neale maintained his contribution notices of 12 September 2002, issued against the first, second, third and fourth defendants[10].
[10] cf. Skerbec v McCormack [2008] ACTSC 4
I note the discussion in Fennell v Supervision and Engineering Services Holdings Pty Ltd and Santos Ltd[11], about the significance of such notices in this context. In the present case, I consider that such notices may be “looked upon as ex post facto justification” for Marshall’s action in commencing proceedings against each of the first four defendants.
[11] (1988) 47 SASR 6
In my view, in all the circumstances, it was reasonable and proper for Marshall to sue each of the first four successful defendants.
I note the distinction between a Bullock order and a Sanderson order as discussed by Perry J in Walker & Anor v Corporation of the City of Adelaide & Ors (No 2)[12].
[12] [2004] SASC 139 at [42] – [49]
In the ordinary course of events, a court would make a Bullock order and order that the plaintiff recover the successful defendants’ costs from the unsuccessful defendant. During submissions, the successful defendants did not oppose the making of a Sanderson order. I find that there is a proper foundation for the order sought by the plaintiff. Accordingly, I order that the unsuccessful fifth defendants pay the costs of the successful defendants on a party and party basis.
Interest
On 20 December 2007, at the request of counsel who appeared for Neale, I agreed to adjourn the entry of judgment until 15 January 2008. Counsel who appeared for Marshall submitted that interest on the judgment sum ought to be calculated at the rate of 6.5%, from 20 December 2007. Counsel for Neale submitted that the order for interest should date from 15 January 2008. Having regard to the respective submissions of counsel, it is my view that the order for interest ought to date from 15 January 2008.
Orders
Accordingly, I make the following orders:
(a)That the fifth defendants pay to the plaintiffs their costs on a solicitor and client basis.
(b) That the plaintiffs’ costs be certified for senior counsel.
(c)That the fifth defendants pay to the first, second, third and fourth defendants their costs of action as between party and party including the contribution notices.
(d)That the fifth defendants pay to the plaintiffs, interest on the judgment sum of $660,000.00 from 15 January 2008, calculated at the rate of 6.5%.