Nominal Defendant v Dighton (No 2)
[2012] SASCFC 97
•9 August 2012
SUPREME COURT OF SOUTH AUSTRALIA
(Full Court)
NOMINAL DEFENDANT v DIGHTON (No 2)
[2012] SASCFC 97
Judgment of The Full Court
(The Honourable Justice Sulan, The Honourable Justice Anderson and The Honourable Justice David)
9 August 2012
PROCEDURE - COSTS - DEPARTING FROM THE GENERAL RULE - ORDER FOR COSTS ON INDEMNITY BASIS
PROCEDURE - COSTS - GENERAL RULE - COSTS FOLLOW THE EVENT - COSTS OF WHOLE ACTION - WHERE MONEY PAID INTO COURT OR OFFER OF COMPROMISE MADE - OFFER OF COMPROMISE MADE
CALDERBANK LETTERS - EFFECT OF IN RELATION TO INDEMNITY COSTS
The Court dismissed the appellant's appeal and allowed the respondent's cross-appeal - the respondent's award of damages was increased by $152,661.40 - Court entered judgment of $687,743.24 in favour of the respondent on 3 August 2012.
The respondent made two "Calderbank offers" - rejected by the appellant - appellant made counter-offer - counter-offer substantially lower than the amount awarded by the Court.
The respondent applied for an award of indemnity costs - whether the appellant's conduct amounted to an imprudent or unreasonable failure to accept offers - whether the respondent is entitled to an award of indemnity costs.
Held: Respondent's offers by way of Calderbank letters were reasonable - appellant's counter-offer fell far short of the mark - appellant to pay the respondent's costs of the appeal on an indemnity basis.
Hazeldene's Chicken Farm v VWA (No 2) (2005) 13 VR 435, discussed.
Calderbank v Calderbank (1975) 3 WLR 586, considered.
NOMINAL DEFENDANT v DIGHTON (No 2)
[2012] SASCFC 97Full Court: Sulan, Anderson and David JJ
THE COURT: The Full Court disallowed an appeal by the appellant on both liability and quantum and allowed the cross-appeal by the respondent on quantum. As a result the Court entered a judgment of $669,193.24 in favour of Mr Dighton on 3 August 2012. This amount was later amended to $687,743.24 because an error had been made in calculations.
Mr Roberts for the respondent applied for an award of indemnity costs on the basis that it was imprudent of the appellant to not accept the respondent’s offers contained in letters dated 22 June 2012 and 2 July 2012. The appeal was heard on 3 July 2012. The respondent relies on Calderbank v Calderbank (1975) 3 WLR 586. Mr S. Doyle opposed this application.
Mr Roberts relied on both letters as Calderbank offers between the appellant and the respondent. The first of these letters dated 22 June 2012 stated that the respondent was of the view that the appellant had very limited prospects of success on the appeal, and given this matter had already accrued an excessive amount of costs, the respondent was prepared to attempt to resolve the matter and offered to accept an amount of $500,000 plus the costs awarded by the District Court plus costs of appeal on a party-party basis. The letter pointed to the prospects of the cross-appeal succeeding and a likely increase in damages of not less then $150,000.
The letter dated 2 July 2012 made a further offer to the appellant to accept $430,000 plus costs awarded by the District Court plus costs of the appeal on a party-party basis with no order as to costs on the cross-appeal. This offer was rejected by the appellant. This letter repeated the prospect of the cross-appeal succeeding with a consequent increase in damages.
Both letters from the respondent’s solicitors make it clear that they would be relied on should the respondent’s offer be exceeded. Calderbank v Calderbank was specifically referred to in the letters.
Mr Doyle provided the Court with a letter dated 2 July 2012 from the appellant to the respondent outlining its offers. The appellant initially offered a payment of $350,000 plus the trial costs and the dismissal of the appeal with no order as to costs. Three further offers were put forward, with the final offer by the appellant being $410,000.
Mr Doyle argued that it cannot be said that his client’s conduct amounted to imprudent or unreasonable failure to accept an offer and submitted that the commercial negotiations by his client were reasonable.
Mr Roberts relied on the decision of Hazeldene’s Chicken Farm v VWA (No 2) (2005) 13 VR 435. Whilst it is not a binding decision on this Court, it is a helpful summary outlining what considerations a court should consider when making a determination on costs following the making of Calderbank offers. The court in Hazeldene said that the following matters that should be borne in mind. First, what stage the proceedings were at when the offer was received. Secondly, the time allowed to consider the offer. Thirdly, the extent of the compromise offer. Fourthly, the prospects of success from the date of the offer. Fifthly, the clarity in which the terms were expressed and finally, whether the offer foreshadowed indemnity costs in the event the offeree rejected it. We agree that there are the appropriate criteria to consider.
It is the view of the Court that applying each of the above criteria to the offers made by the respondent the respondent is entitled to indemnity costs. Mr Doyle’s argument really relates to the appellant’s reasonableness of rejecting the respondent’s offer. Whilst it is true that the offers were responded to, and genuine attempts were made at settling, the fact remains that the counter offer made by the appellant fell far below the amount ultimately awarded by the Court.
As it turns out, the prediction by the respondent that a successful cross-appeal would mean an increase in damages of not less than $150,000 was accurate. The respondent’s offer was more than reasonable. The appellant’s counter offer fell far short of the mark.
The offers made by both sides were made in an endeavour to avoid further costs. They were made only just before the hearing of the appeal. Negotiations continued on the weekend prior to the hearing. In those circumstances the Court considers that the respondent should have its costs of the appeal on a party-party basis up to the commencement of the hearing in the Full Court. The costs of the actual hearing should be the respondent’s on an indemnity basis.
The Court orders accordingly.
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