McEntee v SJ Berry Pty Ltd - [2021] SADC 122

DISTRICT COURT OF SOUTH AUSTRALIA
(Civil: Application)
MCENTEE & ANOR v SJ BERRY PTY LTD & ORS
[2021] SADC 122
Reasons for Decision of his Honour Judge O'Sullivan
12 November 2021
PROCEDURE - CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS - COSTS - GENERAL MATTERS - GENERALLY
PROCEDURE - CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS - COSTS - INDEMNITY COSTS - RELEVANT CONSIDERATIONS GENERALLY
The applicants were successful in their claims against all four respondents. In the period leading up to trial, the applicants had made a number of formal offers which were bettered by the judgment. The applicants apply for indemnity costs
Held:
1. The respondents jointly and severally pay the applicants’ costs of and incidental to the proceedings for the period up to and including 24 February 2020 on a party-party basis;
2. For the period between 25 February 2020 and 10 April 2020, the first and second respondents jointly and severally pay the applicants’ costs of and incidental to the proceedings on a party-party basis;
3. For the period between 25 February 2020 and 10 April 2020, the third and fourth respondents jointly and severally pay the applicants’ costs of and incidental to the proceedings on an indemnity basis.
4. As from 11 April 2020, the respondents jointly and severally pay the applicants’ costs of and incidental to the proceedings on an indemnity basis.
McEntee & Anor v SJ Berry Pty Ltd & Ors [2021] SADC 102, considered.

MCENTEE & ANOR v SJ BERRY PTY LTD & ORS
[2021] SADC 122
Introduction

On 27 August 2021, I published my reasons in this matter.[1]
[1] McEntee & Anor v SJ Berry Pty Ltd & Ors [2021] SADC 102
On 8 September 2021, I entered judgment for the applicants against the first, second, third and fourth respondents, jointly and severally in the amount of $167,500, together with pre-judgment interest in the amount of $37,743. That day I also heard argument on the question of costs and reserved my decision.
Just prior to delivering my decision on costs, I was asked by the applicants to not deliver my decision on costs whilst they investigated a further issue.
On 11 November 2021, the applicants asked me to proceed to deliver my decision on costs. This is that decision
Documents relied upon
The applicants rely on their written submissions, together with the affidavit of Andrew Nicholas Wesley Bullock sworn 7 September 2021 (“Bullock affidavit”).
The first and second respondents rely on their written and oral submissions.
The third and fourth respondents made oral submissions.
Applicants' application for costs
The applicants seek indemnity costs of the proceedings or part of the proceedings on two bases:
1.First, by achieving an award of damages more favourable than offers made by them; and/or
2.The findings made in relation to the respondents’ conduct insofar as it bears upon their conduct of the litigation.
Offers
The offers made by the applicants are summarised in a table set out in a letter from the applicants’ solicitors to the first and second respondent’s solicitors[2] dated 2 September 2021.
[2] Bullock affidavit; Exhibit ANWB-6
That table shows various offers made between 27 September 2018 and 5 November 2020. There is no dispute those offers were made and I reproduce the table below, setting out the offers made by the applicants:

Table of Offers from the Applicants
Date	To whom	Amount of Offer	Expiry Date	Filed offer (yes/no)
07/09/2018	All Respondents	Total sum of $152,500.00 within 21 days.	13/09/2018	No, by letter
10/09/2019	All Respondents	Total sum of $80,000.00 within 21 days. Respondents to agree to pay costs of Applicants on a party to party basis.	25/09/2019	Yes
20/09/2019	1^st and 2^nd Respondents	Total sum of $75,000 within 21 days. 1^st and 2^nd Respondents to agree to pay costs of Applicants on a party to party basis.	05/10/2019	Yes
20/09/2019	3^rd and 4^th Respondents	Total sum of $65,000 within 21 days. 3^rd and 4^th Respondents to agree to pay costs of Applicants on a party to party basis.	05/10/2019	Yes
10/02/2020	3^rd and 4^th Respondents	Total sum of $40,000 within 21 days. The Parties will submit to any order of costs the Court may make in exercise of its discretion.	25/02/2020	Yes
26/03/2020	1^st and 2^nd Respondents	Total sum of $62,500 within 21 days. 1^st and 2^nd Respondents to agree to pay costs of Plaintiff on a party to party basis.	11/04/2020	Yes
05/11/2020	1^st and 2^nd Respondents	The Respondents pay the 1^st and 2^nd Applicants the sum of $20,000 within 28 days of acceptance. No order as to costs.	12pm 09/11/2020	Yes – by order of the Court.

Submissions

This matter concerned two discrete aspects. The first is an encroachment of the boundary fence and the house over the neighbour’s property. The second concerned issues relating to a Studio on the Property.
The first and second respondents submit:
1.First, in a letter from their solicitors to the applicants’ solicitors dated 6 September 2021,[3] they note that it was not until the second Statement of Claim, dated 31 January 2019 was served, that the Studio was first pleaded. The applicants accept there is some force in that point;
2.Second, the opinion of the valuer Mr Winter, which formed the basis of my assessment of damages was dated 14 October 2019 and not served until 29 October 2019. So it is that they submit the offers made on 20 September 2019 were not able to be considered in the absence of that evidence as to quantum.
In response, the applicants submit that the 10 September 2019 offer was for a much lower figure than that identified by Mr Winter and offers made after Mr Winter’s report was served were also rejected.
The applicants submit further that there were offers for significantly lower amounts between 10 February 2020 (third and fourth respondents) and 5 November 2020 (first and second respondents) which were not accepted. That indicates to me that the question of liability was the key consideration rather than just the question of quantum.
I consider there is some force in the first and second respondents' submission and a clear statement of quantum is an important consideration when considering any offer.
3.Third, the applicants’ offer dated 7 September 2019, which was directed to all respondents did not represent a significant discount compared to the judgment finally obtained and was made before Mr Winter's report. I do not accept that the absence of a significant discount, without more, is sufficient to avoid the consequences of not accepting a filed offer. I have already dealt with Mr Winter’s report.
4.Fourth, the offer dated 7 September was made to all respondents which left the first and second respondents in the impractical position of having to pay the entirety of the offer without the opportunity for recovery against the third and fourth respondents. It repeats the same submission in relation to the offer dated 10 September 2018.
I do not accept that submission. It was always open to any of the respondents to accept the offer and look to the other respondents for contribution, whether that be in the existing proceedings by filing the required claim for contribution or in further proceedings.
[3] Bullock affidavit; Exhibit ANWB-7
The first and second respondents raise two further matters which go to the quantum of costs. I will deal with those later in these reasons.
Date from which indemnity costs are to run
In the course of argument, the applicants submitted that the latest date from which the applicants ought have their indemnity costs is 4/5 October 2019 on the basis that on 20 September 2019 an offer was filed in the court as against the first and second respondents in the total sum of $75,000 payable within 21 days with the first and second respondents to pay the costs of the applicants on a party-party basis. On the same day an offer to the third and fourth respondents was made in the sum of $65,000 payable within 21 days with the third and fourth respondents to pay the applicants their costs on a party-party basis.
Both of these offers were open for acceptance until 5 October 2019.
Consideration
The offers dated 20 September 2019, 10 February 2020 and 26 March 2020 were made under rules 187-188B of the Supreme and District Court Civil Rules 2006 (“2006 Rules”) which were in operation before the Uniform Civil Procedure Rules (“UCR”) came into operation on 20 May 2020.
I note that the transitional provisions in the UCR provide under rule 1.4(1)(b) that the 2006 Rules continue to govern a step in a proceeding taken before the commencement date. Accordingly, I consider the 2006 Rules apply and I proceed on that basis.
The consequences of a failure to accept a complying offer is set out in rule 188F of the 2006 Rules.
There is no suggestion that the offers dated 20 September 2019 were non-complying offers.
Rule 188F(3) provides:
188F—Costs where complying offer not accepted
(1) In this Part complying offer means a formal offer that—
(a) complies with rule 187;
(b) involves a genuine compromise;
(c) contains a term either that the defendant on the relevant claim is to pay the costs of the plaintiff on the relevant claim on a party and party basis or that the parties will submit to any order the Court may make in the exercise of its discretion;
(d) if a contract offer—
(i) is a monetary offer; and
(ii) if made by the party who is to pay the money, the money is payable under the terms of the offer within not more than 28 days after acceptance of the offer and the party is ready, willing and able to pay the money in accordance with the terms of the offer; and
(e) was filed at least 21 clear calendar days before the commencement of the trial of the claim to which it relates or such later date as may be specified by the Court on application for an extension of time made before the formal offer is made.
Note— If the trial is vacated or adjourned without being part heard, the original trial date the subject of the vacation or adjournment order is to be ignored for the purpose of paragraph (e).
monetary offer means a formal offer under which the principal consideration payable by one party to the other (disregarding costs) is the payment of money.
(2) The provisions of this rule are subject to the overriding discretion of the Court.
(3) When a complying offer is made by a plaintiff and not accepted by a defendant and the plaintiff obtains judgment on the claim to which the offer relates no less favourable to the plaintiff than the terms of the offer—
(a) the costs incurred in respect of the claim up to 14 days after service of the formal offer are unaffected by the making of the formal offer;
(b) the plaintiff is entitled to an order against the defendant for the plaintiff's costs of action in respect of the claim to which the complying offer relates thereafter on an indemnity basis.
(4) When a complying offer is made by a defendant and not accepted by a plaintiff and the defendant obtains judgment on the claim to which the offer relates—
(a) the costs incurred in respect of the claim up to 14 days after service of the formal offer are unaffected by the making of the formal offer;
(b) the defendant is entitled to an order against the plaintiff for the defendant's costs of action in respect of the claim to which the complying offer relates thereafter on an indemnity basis.
(5) When a complying offer is made by a defendant and not accepted by a plaintiff and the plaintiff obtains judgment in respect of the claim to which the offer relates less favourable to the plaintiff than the terms of the offer—
(a) the costs incurred in the action up to 14 days after service of the formal offer are unaffected by the making of the formal offer;
(b) the defendant is entitled to an order against the plaintiff for the defendant's costs of action in respect of the claim to which the complying offer relates thereafter on a party and party basis.
(6) When a party makes a complying offer for a proportion of damages to be assessed, the provisions of this rule do not apply to costs incurred in relation to the quantum of damages unless the Court specifically orders.
The applicants submit that the provisions of the Rules create a prima facie entitlement to indemnity costs from the date of their expiry which in this case was 5 October 2019.
Whereas I accept the 2006 Rules create a prima facie entitlement to indemnify costs, subject always to the court’s overriding discretion on costs, I do not accept that indemnity costs should run from 5 October 2019.
In my view, it was an important consideration for the respondents to be able to assess the quantum of the applicants’ claim prior to considering any offers. On that basis, the earliest the first and second respondents were able to consider and if so advised accept an offer which remained open for acceptance given the applicants’ quantum evidence, was 11 April 2020. That date was the latest date the applicants’ filed offer dated 26 March 2020 in the sum of $62,500 could be accepted.
The earliest that the third and fourth respondents could consider and if so advised accept an offer which remained open for acceptance given the applicants' quantum evidence was 25 February 2020. That date was the latest date the applicants’ filed offer dated 10 February 2020 in the sum of $40,000 could be accepted.
The respondent’s conduct of the litigation
The applicants also apply for indemnity costs on a different basis which is the respondents’ conduct of the litigation. The applicants submit that when considered against the findings I have made against the respondents, their underlying conduct warrants an order for indemnity costs of the entire proceedings.
I am not satisfied that the conduct of the litigation by the respondents is such as to warrant an order for indemnity costs for the entirety of the litigation. There were genuine issues to be contested and although I have made serious findings as to the conduct of some of the respondents it seems to me that an order for indemnity costs for the entirety of the proceedings is not warranted. In the exercise of my discretion I decline to make such an order.
Conclusion on the basis of costs payable
In my view, the applicants have established an entitlement to an order for costs as follows:
1.The respondents jointly and severally pay the applicants’ costs of and incidental to the proceedings for the period up to and including 24 February 2020 on a party-party basis;
2.For the period between 25 February 2020 and 10 April 2020, the first and second respondents jointly and severally pay the applicants’ costs of and incidental to the proceedings on a party-party basis;
3.For the period between 25 February 2020 and 10 April 2020, the third and fourth respondents jointly and severally pay the applicants’ costs of and incidental to the proceedings on an indemnity basis.
4.As from 11 April 2020, the respondents jointly and severally pay the applicants’ costs of and incidental to the proceedings on an indemnity basis.
For the avoidance of doubt, the applicants are not entitled to both party-party costs for the period of 25 February 2020 to 10 April 2020 from the first and second respondents, as well as indemnity costs from the third and fourth respondents for the same period. The intention is that, for example, the applicants may recover costs from the first and second respondents for this period and if they do so, can only recover the "balance" of indemnity costs from the third and fourth respondents. The intention is that there is to be no double recovery for this period.
Exclusion from costs orders
The first and second respondents raise two further matters in relation to costs.[4] Those matters are:
1.On 3 August 2020, there was a hearing intended to commence for three days. That hearing was unable to proceed on the application of the third respondent because of health issues. The first and second respondents submit that the costs thrown away of both the applicant and the other respondents should be borne by Ms Rosewell, the third respondent.
2.An interlocutory application was brought by the first and second respondents against the applicants in relation to a failure to discover all relevant documents. That interlocutory application was argued, following which the application was dismissed on the first applicant’s assurance that there were no further documents to discover. In consequence, I ordered the first and second respondents pay the applicants’ costs of and incidental to that interlocutory application.
Subsequently, the first applicant produced a relevant email. As a result, the first and second respondents invite the Court to revoke the costs order made against the first and second respondents on the interlocutory application and order the applicants pay the first and second respondent’s costs of that application.
[4] Bullock affidavit; Exhibit ANWB#7
Consideration
Costs thrown away
There was no doubt that the third respondent was ill in the period leading up to the trial listed in August 2020. The trial was able to be relisted within a relatively short time but the health or otherwise of a party is part of the exigencies of litigation.
I do not consider that the costs thrown away by reason of the adjournment can be properly attributable to any party's fault, but rather to the vagaries of human health. Accordingly, I do not consider that the costs thrown away of both the applicants and the first, second and fourth respondents should be borne solely by the third respondent. Those costs are to form part of the costs of the action.
Interlocutory application costs
This issue concerns an email which was disclosed in November 2020. On 12 May 2020 I had heard argument on the first and second respondents’ interlocutory application filed 1 May 2020 for further and better discovery.
Had the applicants made discovery of the email in question, which was between Ms McEntee and Mr Bilby of Beyond Bank, the argument would not have been necessary.
In considering what order should be made in its place, I note that the document ultimately played a role in the proceedings but not a substantive role. The document was an email in which Ms McEntee misdescribed a draftsman as a surveyor and explained that error in the course of her evidence. Ultimately, I did not consider it was a significant matter in the course of the proceedings.
Nonetheless, there is some force in the first and second respondents’ submissions that those costs should not be payable by the first and second respondents given that ultimately a document was discovered and produced.
Accordingly, I revoke my order made 12 May 2020 by which I ordered the first and second respondents to pay the applicants’ costs of and incidental to that interlocutory application.
I consider that the appropriate order in all the circumstances is that there be no order as to the costs of and incidental to that application, it being the intention that the parties should bear their own costs of and incidental to the application.
Orders
1.The respondents jointly and severally pay the applicants’ costs of and incidental to the proceedings for the period up to and including 24 February 2020 on a party-party basis;
2.For the period between 25 February 2020 and 10 April 2020, the first and second respondents jointly and severally pay the applicants’ costs of and incidental to the proceedings on a party-party basis;
3.For the period between 25 February 2020 and 10 April 2020, the third and fourth respondents jointly and severally pay the applicants’ costs of and incidental to the proceedings on an indemnity basis.
4.As from 11 April 2020, the respondents jointly and severally pay the applicants’ costs of and incidental to the proceedings on an indemnity basis.
5.I exclude from the costs payable by the first and second respondents to the applicants the costs of and incidental to the interlocutory application for further and better discovery filed 1 May 2020, such costs to include the costs of the argument held 12 May 2020. There be no order as to the costs of and incidental to that application.