Sabatini v Kotasek (No 2)
[2014] SADC 127
•15 July 2014
DISTRICT COURT OF SOUTH AUSTRALIA
(Civil)
SABATINI v KOTASEK (No 2)
[2014] SADC 127
Judgment of His Honour Judge Slattery
15 July 2014
PROCEDURE - COSTS
Action for damages for personal injuries arising out of a motor vehicle accident. Overall the plaintiff’s damages assessed in an amount of $60,747.47; after the application of s 50 Civil Liability Act 1936 (SA), Court awarded damages to the plaintiff in an amount of $21,261.67.
Plaintiff does not apply for an order for costs in his favour.
On 3 February 2012 defendant filed an offer in Court to settle the plaintiff’s claim for damages in the sum of $25,000 and for other matters. Plaintiff did not accept the defendant’s offer.
On 10 January 2013 plaintiff filed an offer in Court for (1) $60,000 less a reduction for contributory negligence; and (2) in addition, for costs... as between party and party as adjudicated by the Court having regard to the judgment sum.
Whether the defendant is entitled to an order for his costs from 14 days after the defendant’s offer of 3 February 2012 or whether the costs entitlement of the defendant under his offer of 3 February 2012 is circumscribed to the period ending on 25 January 2013 due to the offer of the plaintiff.
Observations about the operation of rules 187 and 188 District Court Civil Rules 2006 (SA).
Held :
The defendant shall have his costs during the period from 14 days after service on the plaintiff of the offer dated 3 February 2012.
District Court Civil Rules 2006 rr 187, 188, 263(1)(f), referred to.
Liappis v State Government Insurance Commission Raschella v Batt [1992] SASCFC S3604 (15 September 1992), unreported, considered.
SABATINI v KOTASEK (No 2)
[2014] SADC 127
In my judgment in this action[1] at paragraph [290], I made an assessment of damages in favour of the plaintiff (before reduction for contributory negligence by the plaintiff) of an amount of $60, 747.47. After the application of s 50 Civil Liability Act 2936 (SA), I made an award of damages in favour of the plaintiff in the amount of $21,261.67.
[1] [2014] SADC 89.
At the time of delivering judgment, I said that I would hear the parties as to interest and costs. The amount of interest has now been agreed in the sum of $497.25.[2] The question of costs is a matter in contention between the parties.
[2] T2.22 of Transcript of Proceedings, Sabatini v Kotasek (District Court of South Australia, DCCIV-11-1654, Judge Slattery, 1 July 2014).
The plaintiff has made no application for an order for costs in his favour having regard to the judgment sum. The plaintiff’s position in relation to the defendant’s costs was that he accepted that the defendant’s offer filed in the sum of $25,000 by way of assessment of damages (on 3 February 2012) would be effective for the purposes of the operation of rule 187 and 188 of the District Court Civil Rules 2006 (‘DCR 6’). The plaintiff conceded that the defendant was entitled to costs in relation to liability from 18 February 2012 on a party/party basis on the Supreme Court scale. The plaintiff contended that the defendant was only entitled to costs for the period between 18 February 2012 and 25 January 2013 because the plaintiff filed an offer dated 10 January 2013 in which the plaintiff offered to settle for $60,000 and for other matters.
The plaintiff argued that the offer of 8 January 2013 that was filed on 10 January 2013 governed the question of costs. That offer read as follows:-
OFFER OF SETTLEMENT
RE: QUANTUM
The Plaintiff OFFERS pursuant to Rule 187 to settle the action in respect of quantum as follows:-
1.FOR $60,000 LESS A REDUCTION FOR CONTRIBUTORY NEGLIGENCE TO BE AGREED OR ASSESSED;
2.IN ADDITION, FOR COSTS AND DISBURSEMENTS AS BETWEEN PARTY AND PARTY AS ADJUDICATED BY THE COURT HAVING REGARD TO THE JUDGMENT SUM.
A second offer was made by the plaintiff in relation to liability and under that offer, dated the same date namely 8 January 2013, the plaintiff offered pursuant to DCR 6R 187 to settle the action in respect of liability for 90% of the plaintiff’s damages to be assessed.
DCR 6R 187 relevantly reads as follows:-
187—Offers of settlement
(1)A party may, before the relevant date, file an offer of settlement in the Court (a formal offer of settlement).
(2)The relevant date is—
(a)the date falling 21 days before the first, or any subsequent, date fixed for the trial to commence; or
(b)if the offer relates only to costs and is made in proceedings relating only to the adjudication upon costs, the date falling four days before the date appointed for the adjudication.
(3)The offer must—
(a)be in an approved form; and
(b)if the offer relates to some, but not all, of the claims involved in the proceedings—state to which claims it relates; and
(c)state whether the offer relates to costs and, if so, the amount of the offer so far as it relates to costs; and
(d)if the offer relates both to principal relief and costs—state whether the party to whom the offer is made may accept the offer of principal without also accepting the offer as to costs,
and a copy of the offer must be served on all other parties to the action.
(4)A formal offer of settlement must be filed in a suppressed file and must not be disclosed to the trial judge (or the adjudicating officer) unless—
(a)all questions to which the offer is relevant have been determined; or
(b)a defence of tender before action is raised; or
(c)the defendant relies on the offer (together with an apology or apologies) as a defence to an action for defamation and the plaintiff, by pleading, denies the defence; or
(d)a declaratory judgment determining liability has been made and the Court permits the disclosure of the offer.
(5)If a defendant makes an offer of settlement for a specified amount, the offer may be accompanied by a payment into Court of the relevant amount.
(6)An amount paid into Court may be increased but cannot be withdrawn in whole or part unless—
(a)the plaintiff consents; or
(b)the Court permits its withdrawal.
(7)A formal offer of settlement may be withdrawn at any time before it has been accepted by the filing and service on each party to the proceeding of a notice of withdrawal and in such cases, subject to any Court order to the contrary, the offer will be treated as if it had never been made.
The pertinent aspect of the offer in relation to quantum is that it was for the sum of $60,000 which was slightly below the total award of damages that I awarded to the plaintiff before apportionment for contributory negligence.[3] Paragraph 1 of the offer about quantum allows for a reduction for contributory negligence to be agreed or assessed. Paragraph 2 of the offer provides for the payment, in addition, of costs and disbursements as between party and party as adjudicated by the Court having regard to the judgment sum.
[3] Sabatini v Kotasek [2014] SADC 89, [290], [291] – [294].
The offer therefore is an offer pursuant to DCR 6R 187(3)(d) relating to both principal relief and costs. In the event that it was an offer that was acceptable as to quantum without accepting the offer as to costs, then under that sub-rule, it was necessary to state whether such acceptance could be made. There is nothing disclosed on the face of the offer to suggest this could take place.
The argument of the plaintiff was that after I had made an assessment of damages of slightly in excess of $60,000 and because the defendant failed to beat that offer in terms of the quantum and the matter went to trial then there ought to be a limitation on the entitlement of the defendant to costs pursuant to its earlier offer in the sum of $25,000
This is because it was open to the defendant to accept the offer in terms of quantum and for the trial to proceed on the question of liability only. On that basis, according to the argument of the plaintiff, the defendant would have achieved a better result having regard to the liability finding on the question of apportionment. Therefore, the plaintiff does not raise any argument concerning quantum but contends that because of the filed offer there should be a limitation on the entitlement of the defendant to costs for a period from 14 days after that filed offer of the plaintiff. The plaintiff also contended that I should ignore the words “[i]n addition” at the commencement of paragraph 2 of the quantum offer as, the plaintiff argued, it is “abundantly clear” that because the issue of costs could not be determined until after a court has adjudicated the matter, the parties could not know what scale of costs would be applied nor who may be entitled to costs. That would depend upon the court’s adjudication within the actual judgment. Thus, on a proper understanding of the terms of the offer, it really means that costs would need to be determined as between party and party after the determination of what will be the judgment sum. That judgment sum can only be determined after taking into account the apportionment that the court makes in relation to questions of contributory negligence after the court has made an assessment of the total amount of damages that may be awarded to the plaintiff.
The plaintiff also contended that when looked at in this way, no more unfavourable conditions are imposed upon the defendant than it was capable of achieving at trial.
The position of the defendant was that the quantum offer filed by the plaintiff purports to comply with DCR 6R 187(3)(d) which is set out above. This offer includes the words “[i]n addition” at the commencement of paragraph 2 of the offer. It purports to be an offer in relation to quantum and costs. Therefore, to accept the offer, it was necessary to accept the offer on quantum and the offer on costs. There could not be a delineation between those two things. Alternatively, Mr Ericson argued that the offer in its terms was too uncertain to constitute an offer that could be accepted. This was because there was a need for contributory negligence to be agreed or assessed as well as for there to be a court adjudication on costs having regard to a judgment sum. Mr Ericson argued, correctly in my view, that the offer needs to be capable of acceptance in the way in which that expression is understood in the contract sense. That is, upon acceptance of the offer, there needs to be a formalised contract reached about which there is no uncertainty.
The defendant also submitted that the offer of the plaintiff was for $60,000 less some unascertained reduction for contributory negligence. On the assumption that the plaintiff would acknowledge the level of contributory negligence as I found in my judgment, then the judgment sum to which the plaintiff was entitled was always below the sum of $30,000. If that be the case, then any plaintiff who brings an action on a motor accident claim but achieves damages of less than $30,000 is not entitled to any order for costs.[4] This means that, on the first paragraph of the offer, the costs offer was excessive because the offer, properly interpreted, means that there was no liability for costs. That would mean that if the offer was accepted and costs were paid, the position would become unreasonable for the defendant. The defendant would be paying costs in circumstances where there was no entitlement of the plaintiff to claim for costs to be paid as he achieved a judgment sum on a motor accident claim of less than $30,000.
[4] DCR 6R 263(1)(f) (as it then operated).
Thirdly, the defendant submitted that as a matter of construction, when one looks at paragraph 2 of the quantum offer, there is a requirement to seek an adjudication of the court having regard to the judgment sum. In the Magistrates Court, costs are assessed according to percentages of judgment sums and this offer may have operated differently in that Court. However, in the District Court, that is an offer that is not possible of acceptance and it would not be possible for the court to enter a judgment for costs and disbursements to be adjudicated by the court having regard to the judgment sum. This would also lead to a constraint upon the court’s unfettered discretion in relation to costs and perhaps more importantly, it was not possible for the defendant to file an acceptance of the offer so as to terminate the proceedings. What would then occur is that there would be an acceptance but then the court would need to be able to say what costs would be assessed in favour of the defendant. This requires a discretionary ruling by the court and if that be the case, the offer does not amount to an offer at all. There is no limit upon what issues the court may take into account in forming its discretionary judgment. It is discretionary and therefore the court can have regard to a broad range of considerations.
For all of those reasons, the defendant contended that there was no offer capable of precise quantification and therefore there was no offer capable of being accepted to form a binding contract so that a judgment in a certain sum could be entered. Otherwise, the offer is too high and the acceptance of the offer would occur in circumstances where that would be a less favourable position than a refusal to accept the offer because if there was a refusal, damages would have been assessed at the sum of $21,261.61 and therefore DCR 6R 263(1)(f) would operate to disentitle the plaintiff to any costs at all.
I agree with the submissions of the defendant. In my opinion, the following matters are clear and beyond peradventure. The first is that because the plaintiff was awarded damages in the amount of $21,261.61[5] then under DCR 6R 263(1)(f), the plaintiff is not entitled to an award of costs in its favour. So much was conceded by the plaintiff in the submissions of Mr Warren.
[5] Sabatini v Kotasek [2014] SADC 89, [294].
Second, the plaintiff is unable to rely upon the quantum offer dated 8 January 2013 because the offer was not capable of acceptance to form a final position in relation to costs and damages. It is not necessary for me to decide whether or not the offer would have been effective in the absence of paragraph 2 of the offer. The position is that paragraph 2 operates together with paragraph 1 and observes the content of DCR 6R 187(3)(d). In the absence of any statement within the offer that the party to whom the offer was directed could accept the offer of principal without also accepting the costs offer, it was necessary for the defendant to address the matter on the basis of quantum and costs.
Because of the operation of DCR 6R 263(1)(f), the plaintiff was not entitled to an order for costs and therefore in order to accept the plaintiff’s offer, it would have been necessary for there to have been some contested adjudication by the court having regard to the judgment sum. On the terms of the offer, it is not clear what may have been the relevant considerations to be taken into account by the court in adjudicating the question of costs having regard to the judgment sum. It is not necessary for me to deal further with that matter except to say that there is sufficient vagueness about the offer that it could not be said to be a sufficiently certain offer for the purposes of DCR 6R 187 and that no proper assessment of it could be made by the defendant under DCR 6R 188(6), the content of which is set out below.
On 3 February 2012, the defendant filed at Court and delivered to the plaintiff an offer of settlement under DCR 6R 187 in the following terms:-
OFFER OF SETTLEMENT
The Defendant, ZDENEK KOTASEK, OFFERS pursuant to Rule 187 to settle the action as follows:-
1.In the sum of $25,000.00 (which sum is inclusive of general damages and special damages, interest and Medicare Australia and other statutory repayments) but in addition to the plaintiff’s party/party costs and disbursements on the Magistrates Court Costs Scale incurred up to 14 days after this Offer of Settlement is served upon him, less the defendant’s party/party costs and disbursements on the Magistrates Court Costs Scale incurred after the expiration of 14 days from the service of this Offer of Settlement upon the plaintiff to be taxed if not agreed, which sum the defendant says is sufficient to satisfy the plaintiff’s claim.
2.The plaintiff may only accept the offer in relation to principal relief set out in this Offer of Settlement if he also accepts the offer in relation to costs set out in this Offer of Settlement.
The offer as to damages was not exceeded by the plaintiff who was awarded damages in the amount of $21,261.61[6] and because the plaintiff did not obtain an order for damages in excess of the amount of $30,000.00, he was not entitled to any costs.[7]
[6] Ibid, [294].
[7] DCR 6R 263(1)(f).
DCR 6R 188 reads as follows:-
188—Consequences of filing offer of settlement in Court
(1)A party to whom a formal offer of settlement is made may, before the relevant date—
(a)accept the offer; or
(b)if the offer relates to both the principal relief and costs and the offeror has not indicated that the offer may only be accepted in its entirety—accept the offer so far as it relates to principal relief.
(2)In subrule (1), the relevant date is—
(a)the date falling 7 days before the first, or any subsequent, date fixed for the trial to commence; or
(b)if the offer relates only to costs and is made in proceedings relating only to the adjudication upon costs—the date falling two days before the date appointed for the adjudication.
(3)The acceptance of a formal offer of settlement—
(a)must be in an approved form; and
(b)takes effect on the filing of the acceptance in the Court.
(4)A copy of the acceptance of a formal offer of settlement must be served on all other parties to the proceedings as soon as practicable after it is filed in the Court.
(5)If a formal offer of settlement is accepted, judgment may be entered, by consent, determining the relevant action or claim on a basis reflecting the terms of the offer.
(6)If a formal offer of settlement so far as it relates to principal relief is not accepted by the party to whom the offer is made and the Court determines the relevant action or claim on terms (as to principal relief) that are no more favourable to the party than the terms of the offer, then, subject to the Court's order to the contrary—
(a)the party to whom the offer was made is not to be entitled to costs referable to the period falling after the relevant date; and
(b)the party that made the offer—
(i)if a defendant—is entitled to costs referable to the period falling after the relevant date; and
(ii)if a plaintiff—is entitled to the whole of the party's costs of action on a solicitor/client basis and the defendant is not entitled to any costs not otherwise ordered.
(6A)If, after the relevant date, a party accepts a formal offer of settlement insofar as it relates to principal relief, the Court may, on the application of any party, make such order with respect to costs as it considers appropriate.
(7)In subrules (6) and (6A), the relevant date is the date falling 14 days after the date of service of the offer.
(8)If a formal offer of settlement in proceedings relating only to the adjudication upon costs is not accepted by the party to whom the offer is made and the Court determines the proceedings on terms that are no more favourable to that party than the terms of the offer, then, subject to the Court's order to the contrary, the costs of the adjudication upon costs are to be borne on a solicitor/client basis by that party.
I refer in particular to DCR 6R 188(6). The court has determined the relevant action on terms as to principal relief that are no more favourable to the plaintiff than the terms of the offer made by the defendant. Under DCR 6R 188(6)(b)(i) the defendant is entitled to costs referable to the period falling after the relevant date. In my opinion, there is no reason for this Court to make any order to the contrary.
The costs aspect of this offer are more favourable to the plaintiff because the plaintiff concedes that on the orders for principal relief he has no entitlement to costs. I am therefore satisfied that the ‘no more favourable’ aspect of the test under this rule has been satisfied. The defendant is entitled to payment of his costs at a higher scale (than set out in the offer) after the ‘relevant date’.
In those circumstances, the formal orders in relation to the question of costs is as follows:-
1. The defendant shall have his costs during the period from 14 days after the service on the plaintiff of the offer dated 3 February 2012.
The measure of the entitlement of the defendant’s costs will be made in accordance with the scale of the Supreme Court and this does not appear to be in contest between the parties.[8]
[8] Liappis v State Government Insurance Commission Raschella v Batt [1992] SASCFC S3604 (15 September 1992), unreported.
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