PIRROTTA v CITIBANK LIMITED & ORS [1998] SASC 6922
Full Court: Millhouse, Olsson and Debelle JJ
MILLHOUSE J. I agree with the reasons of Debelle J and the order which he proposes.
OLSSON J. I agree with the conclusions arrived at by Debelle J and the order which he proposes.
DEBELLE J. This appeal arises out of proceedings brought by the appellants against Citibank Savings Limited (“Citibank”) and others. The issues in the appeal concern the effect of a Calderbank letter upon the determination of costs.
The appellants instituted proceedings against Citibank seeking to set aside a mortgage, written guarantee and indemnity (“the security documents”) given to the bank. There were four other defendants. They included the respondents, Olson & Co, a firm of solicitors, and an employee of that firm, Melissa Ballantyne. Arrangements had been made with Olson & Co for Ms Ballantyne to explain to the appellants and others the effect of the security to be executed in favour of Citibank. The appellants claimed damages against the respondents for negligence in failing properly to explain the terms and effect of the security documents. In addition, Citibank filed a third party claim against the respondents alleging that they had negligently certified that the appellants and others had understood the nature and effect of the security documents and the consequences of default. The trial began on 2 June 1997 and occupied 15 days.
The appellants failed as against Citibank but succeeded in their claim against the respondents. On 12 November 1997 the trial judge published his reasons for judgment. The trial judge found that the respondents were both liable for the negligent advice which Ms Ballantyne had given to the appellants. He also ordered that damages in favour of Citibank and the appellants be assessed and adjourned the hearing of the assessment of damages.
On 1 December 1997 the judge made orders as to the costs of the trial for liability. He ordered that the appellants pay the costs of Citibank to be taxed as between solicitor and client. He further ordered that the respondents pay the appellants’ costs of the action including the costs payable by the appellants to Citibank. In other words, he made a Bullock order as to costs.
The assessment of damages commenced on 12 January 1998 and occupied three days. On 19 March 1998 the trial judge published his reasons for judgment. The order is complex. As some of the elements could not be quantified at that stage, the trial judge published a formula for the calculation of damages. There is no need to recapitulate the formula. The effect of the order was that the appellants had to contribute $15,000 to the damages payable to Citibank.
On 19 March 1998 the appellants applied for an order that the solicitors should pay their costs of the assessment of damages on a solicitor and client basis. The application was grounded on a so-called “Calderbank letter” from the appellants’ solicitors to the solicitors for the respondents.…
Grounds of appeal
[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.
[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.
[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.
Consideration
[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.
[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.
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AGLC
Pirrotta v Citibank Ltd [1998] SASC 6922
Case
[1998] SASC 6922
Decision Date
CaseChat Overview and Summary
This appeal arises from a case where the appellants sought to set aside security documents given to Citibank Savings Limited. They also brought claims against Olson & Co, a firm of solicitors, and an employee, Melissa Ballantyne, for negligent advice. The appellants failed in their claim against Citibank but succeeded against the respondents. The trial judge ordered that the respondents pay the appellants’ costs of the action, including those payable by the appellants to Citibank, effectively making a Bullock order as to costs. The appellants sought an order for their costs of the assessment of damages on a solicitor and client basis, grounded on a Calderbank letter they had sent to the respondents' solicitors. The respondents did not respond to the offer, which lapsed. The trial judge refused the appellants' application for costs on a solicitor and client basis, and the appellants appealed.
The legal issue before the court was whether the trial judge erred in his discretion in denying the appellants' application for costs on a solicitor and client basis. The court considered whether the trial judge applied the correct principle, whether he took into account all relevant factors, and whether his decision was unreasonable or plainly unjust.
The court reviewed recent decisions on the effect of Calderbank letters and found that while such letters can be taken into account when determining whether to order indemnity costs, there is no uniform rule on their effect. Some courts have held that there should be a prima facie presumption that the rejecting party should pay costs on an indemnity basis, while others have held that a Calderbank letter is just one of many factors to be considered.
In this case, the court found that the trial judge had not erred in his exercise of discretion. Several factors pointed to an award of solicitor and client costs, such as the respondents' failure to properly advise the appellants and their insufficient understanding of the strength of their case. However, other factors pointed against such an award, including the complexity of the litigation, the respondents' entitlement to bring the action to trial, and the fact that the offer did not sufficiently accord with the terms of Rule 41 of the Supreme Court Rules.
Given these factors, the court found that the trial judge had not erred in his discretion and dismissed the appeal. The court emphasized that appellate courts usually defer to the trial judge's exercise of discretion on costs, as the trial judge often has a better understanding of the facts and the manner in which the trial was conducted. In this case, the appellants had not demonstrated any ground on which the court should interfere with the trial judge's decision.