Rivett Arboricultural & Waste Equipment Hire Pty Ltd v Conor Patrick Evans (No 2) - [2007] SASC 197

SUPREME COURT OF SOUTH AUSTRALIA
(Full Court: Application)
RIVETT ARBORICULTURAL & WASTE EQUIPMENT HIRE PTY LTD & ORS v CONOR PATRICK EVANS & ORS (No 2)
[2007] SASC 197
Judgment of The Full Court
(The Honourable Chief Justice Doyle, The Honourable Justice Duggan and The Honourable Justice Gray)
30 May 2007
PROCEDURE - COSTS - AGREEMENTS AS TO COSTS
Application by respondents for an order that unsuccessful appellants pay costs of appeal on solicitor client basis - third respondent/cross appellant relies on letter of offer and applies for orders that first and second appellant alone pay costs of appeal, or indemnify third respondent for costs to appellants, or pay third respondent's costs of appeal on party and party basis - departure from general rule unwarranted - appellants pay respondents' costs of appeal as between party and party.
Held: application dismissed.
Supreme Court Act 1935 (SA) s 40; Supreme Court Civil Rules 2006 (SA) r 263(1), 264(2), referred to.
Pirotta v Citibank Ltd (1998) 72 SASR 259; Tector v FAI General Insurance Co Limited [2001] Qd R 463; Equuscorp Pty Ltd and Anor v Glengallan Investments Pty Ltd & Ors [2006] QCA 414, applied.

RIVETT ARBORICULTURAL & WASTE EQUIPMENT HIRE PTY LTD & ORS v CONOR PATRICK EVANS & ORS (No 2)
[2007] SASC 197
Full Court: Doyle CJ, Duggan and Gray JJ

DOYLE CJ: In an action in the District Court Conor Evans was awarded damages for injuries that he sustained while operating a wood chipping machine. His brother Christopher Evans was awarded damages for psychological injury that he suffered when he witnesses the incident in question. When convenient I will refer to Conor Evans and Christopher Evans together as the plaintiffs.
Damages were awarded against Rivett Arboricultural & Waste Equipment Hire Pty Ltd (“Rivett”), the manufacturer of the machine and against Arbor Products International (Aust) Pty Ltd (In Liquidation) (“Arbor”), the seller of the machine. Damages were also awarded against WMC (Olympic Dam Corporation) Pty Ltd (“WMC”), the purchaser of the machine from Arbor. The wood chipping machine had been made available by WMC to a group of volunteers who used the machine on WMC’s premises. The machine was maintained and serviced by WMC. The plaintiffs were members of the group of volunteers.
Rivett and Arbor appealed, challenging the finding that they are liable to the plaintiffs. They challenged the apportionment of liability as between them and WMC. WMC also appealed, challenging the finding of liability and the apportionment as between it and Rivett and Arbor.
The appeals were dismissed: Rivett Arboricultural & Waste Equipment Hire Pty Ltd & Ors v Conor Patrick Evans & Ors [2007] SASC 108.
The plaintiffs have applied for an order that Rivett, Arbor and WMC pay the plaintiffs’ costs of the appeal on a solicitor client basis.
They rely on a letter sent by their solicitors to the solicitors for Rivett, Arbor and WMC about two months after the appeals were instituted. In the letter the plaintiffs offered to make no claim for costs in relation to the appeals if the appeals were discontinued as against the plaintiffs within seven days. The plaintiffs’ solicitors suggest in the letter that if there were any real issues, they exist only as between the defendants.
WMC has applied for orders that Rivett and Arbor alone pay the plaintiffs’ costs of the appeals. In the alternative, WMC claims an order that Rivett and Arbor indemnify WMC in respect of any liability for costs to the plaintiffs. In the alternative, WMC claims orders that Rivett and Arbor pay WMC’s costs of the appeals on a solicitor and client basis, or at least on a party and party basis.
WMC relies on a letter that its solicitors sent to the solicitors for Rivett and Arbor shortly after their respective appeals were instituted. In that letter WMC’s solicitors propose that both appeals be withdrawn on the basis that each appellant bear its own costs. About two months later, when WMC received the letter from the plaintiffs’ solicitors referred to above, it repeated its proposal to Rivett and Arbor.
The appeals were instituted in the first week of January 2006. WMC made its offer to Rivett and Arbor shortly thereafter. The solicitors for the plaintiff put their offer in early March 2006. The appeals were heard on 12 July 2006 and 13 July 2006.
The writer of each of the above letters stated or indicated clearly enough that the letter might be drawn to the Court’s attention on the question of costs.
The costs of the appeal, like any proceedings, are in the discretion of the Court: s 40 of the Supreme Court Act 1935 (SA). The discretion is a broad one, but is to be exercised in accordance with the principles established by the substantial body of decisions dealing with the award of costs. The general rule, and it is no more than a general rule, is that costs follow the event and that costs are awarded on a party and party basis: r 263(1) of the Supreme Court civil Rules 2006 (SA) and r 264(2) of those Rules.
In Pirotta v Citibank Ltd (1998) 72 SASR 259, in connection with an appeal against a costs order made by a trial Judge, Debelle J considered the relevance of a settlement offer made by letter, as distinct from a settlement offer made pursuant to a regime established by rules of court. Such offers are often referred to as Calderbank offers. Debelle J said that until the impact on the exercise of the Court’s discretion of such a letter was fully argued, such a letter should be treated as one of the factors, “albeit a significant factor”, when the Court considers an application for indemnity costs (that being the application made in that case): at 266-267. In expressing that view he had regard to the regime for the making of offers that was provided by the Supreme Court Rules as they then stood.
The same approach was taken to the issue of costs on appeal by the Court of Appeal of the Supreme Court of Queensland in Tector v FAI General Insurance Co Limited [2000] QCA 426; [2001] Qd R 463 and subsequently in Equuscorp Pty Ltd and Anor v Glengallan Investments Pty Ltdand Ors [2006] QCA 414 at [25]-[26].
I would take the same approach. I respectfully agree with the observations made by Debelle J, with whom the other members of the Court agreed. Those observations apply to an appeal and to a trial. This is not the occasion to consider the matter in any detail. In my opinion the present case is straightforward.
The offer made by the plaintiffs’ solicitors to Rivett, Arbor and WMC was a reasonable and sensible one. The decision of this Court on appeal confirms that. But the appeals against the finding in favour of the plaintiffs were reasonably instituted. They raised some difficult issues of law and of fact. None of the appellants acted unreasonably in appealing. Nor did they act unreasonably in persisting with their appeal after the plaintiffs’ offer was made.
An appellate court must exercise some care when considering the impact, on the question of costs, of an offer such as was made by the plaintiffs here. Too ready a reliance on such an offer as a reason to depart from the usual order as to costs could distort the appeal process. A prompt offer by a respondent to an appeal to bear its own costs, if the appellant abandons the appeal at an early stage, would become a routine procedure, followed no doubt by an application for costs on a solicitor client basis or on an indemnity basis if the appeal were to fail.
Such an offer by a respondent to a recently instituted appeal is not in any real sense an offer to compromise. Such an offer is quite different from the usual kind of offer of settlement made before an action goes to trial.
Indeed, were the Court to place too much reliance on an offer of the kind made in this case, one might also find that shortly after instituting an appeal it became common for an appellant to write to a respondent inviting the respondent to concede the appeal, the appellant offering to forego costs in that event, the appellant reserving the right to bring that offer to the attention of the Court should the appeal succeed.
This merely illustrates that while the offer made by the plaintiffs in this case was a realistic and sensible offer, it cannot have the same effect on the exercise of the Court’s discretion as to costs as is had by a genuine offer of settlement made before trial.
To say this is not to say that the letter written by the plaintiffs’ solicitors is to be disregarded. It is to say no more than that while the offer must be taken into account, it does not have the same weight as an offer of settlement made before the trial of an action.
In the present case there is really nothing to warrant a departure from the general rule that Rivett, Arbor and WMC should pay the plaintiffs’ costs of the appeal as between party and party. As I have already said, I consider that the appeals were reasonably instituted. It was not unreasonable for the appellants to persist with the appeals, notwithstanding the offer made by the plaintiffs to forego a claim for costs should the appeals be abandoned.
Although it is really a matter for the taxing officer, I would certify that the appeal warranted the retainer of two counsel by the plaintiffs.
The application made by WMC is not quite so straightforward. The appeals by Rivett, Arbor and WMC against the apportionment of liability as between defendants did not have the same substance as the appeals against the judgment in favour of the plaintiffs. WMC’s proposal to Rivett and Arbor was, in the circumstances, a reasonable one. It was a sensible response to the offer made by the plaintiffs. But when the offer by WMC was not accepted by Rivett and Arbor, WMC persisted with its own appeal against the judgment for the plaintiffs, and with its own appeal against the apportionment of liability. And, although the appeal against the apportionment of liability did not have the same substance as the appeal against the judgment for the plaintiffs, it cannot be said that the appeal against the apportionment of liability as between defendants was lacking in merit.
In the circumstances, I do not consider that Rivett and Arbor acted unreasonably in appealing against the apportionment of liability as between defendants, and in persisting with the appeal despite the offer made by WMC. In the circumstances, and bearing in mind that the appeals against the apportionment of liability were unsuccessful, I would order that there be no order as to the costs of the appeals against the apportionment of liability.
Conclusions
On the appeal by Rivett and Arbor I would order that the appeal be dismissed; that the appellants Rivett and Arbor pay the costs of the appeal of the respondents Conor Evans and Christopher Evans as between party and party, and that there be no order as to the costs of the appeal as between Rivett and Arbor as appellants and WMC as respondent.
On the appeal by WMC I would order that the appeal be dismissed, that WMC pay the costs of the appeal of the respondents Conor Evans and Christopher Evans as between party and party, and that there be no order as to the costs of the appeal as between WMC and the respondents Rivett and Arbor.
DUGGAN J: I agree with the orders proposed by the Chief Justice and the reasons prepared by him.
GRAY J: I agree with the orders proposed by the Chief Justice. I agree with his reasons.