Settlement Wine Company Pty Ltd v National and General Insurance Co Ltd (No.2) No. SCGRG 88/956 Judgment No. 4442 Number of Pages 8 Costs Practice and Procedure

[1994] SASC 4442

COURT IN THE SUPREME COURT OF SOUTH AUSTRALIA PERRY J

CWDS
Costs - offer to consent to judgment - Offer by defendant to consent to judgment for $160,000 filed three months before commencement of the trial - judgment (after allowing for payment of $316,000 ordered pursuant to s.30b of the Supreme Court Act to be paid towards the final assessment of damages) for balance of $155,104 - held that the offer was correctly expressed to relate to the balance after allowing for the interim payment and could not properly have been understood by the plaintiff otherwise - further attacks on the efficacy of the offer rejected - plaintiff deprived of costs from 14 days after service of the offer. Suoreme Court Act 1935 s30b and Suoreme Court Rules R 40.

Practice and procedure - discovery and use of documents at the trial - Plaintiff in commercial proceedings which involved lengthy hearing, tendered at the start of the case 23 volumes of documents and subsequently another four volumes, comprising altogether its total discovered documents, together with a separate copy for the use of the trial Judge - held that it is not proper for a party to bring into Court at the trial all of its discovered documents, but that there should be a selection made by counsel of those which the party proposes to rely on to prove its case - discovery is a process which is strictly inter partes and the Court and the trial Judge are not interested in discovered documents, but only in the documents to be tendered at the hearing - order that the Taxing Officer disallow the costs of preparing, collating, copying and tendering the documents other than those reasonably necessary to prove the plaintiff's case.

HRNG ADELAIDE, 2 March 1994 #DATE 2:3:1994

Counsel for plaintiff:     Mr T Gray QC with him
   Mr R Genders

Solicitors for plaintiff:    Genders Wilson and Partners

Counsel for defendant:     Mr J Lunn

Solicitors for defendant:    Stratford and Co

ORDER
Offset made under Rule 101.

JUDGE1 PERRY J In this matter, following the trial I delivered judgment on 28 February 1994. I assessed the plaintiff's damages at $472,000, and after giving credit for the amount paid by way of an interim award, pronounced judgment for the balance of $155,104, inclusive of interest. I then adjourned the matter until today in order to give counsel an opportunity to consider the reasons for judgment before dealing with the question of costs.

2. At the outset of the hearing today, Mr Lunn of counsel for the defendant drew to the attention of the Court the terms of an offer to consent to judgment dated 30 July 1993, and presumably served on the same day. In that offer the defendant offers to consent to judgment for $160,000 'in satisfaction of the plaintiff's claim in this action'. The offer states that it is made pursuant to Rule 40.01 of the Supreme Court Rules.

3. Having regard to the terms of that offer, Mr Lunn contended that effect should be given to Rule 40.05, and in particular, that the plaintiff's entitlement to costs be limited to the costs incurred for the period expiring 14 days after the service of the offer, and that the defendant have costs against the plaintiff thereafter. Fourteen days after the service of the offer leads to 13 August 1993.

4. As to the claim for costs after that date, Mr Lunn further contended that the defendant should have such costs on a solicitor/client basis. As well, he sought an order that the entitlement of the defendant to costs, or at least the difference between what it might owe and what the plaintiff might owe by way of costs, assuming, as is likely, that difference will result in an amount payable to the defendant by the plaintiff, be off-set against the amount of the judgment. In aid of that contention he also sought an order that there be a stay of execution of the judgment until the costs had been taxed, and thereafter until further order.

5. I deal first with the basic entitlement to costs and to the consequences of the filing and service of the offer to consent to judgment on 30 July 1993.

6. Mr Gray QC for the plaintiff contended that the offer was ineffective, for several reasons.

7. In the first place Mr Gray drew attention to s.30b (5) of the Supreme Courts Act which provides:
    "When damages are finally assessed credit should be given in
    the final assessment for all payments which have been made
    under this section and the final judgment shall state the
    full amount of damages, the total of all amounts already
    paid pursuant to this section and the amount of damages then
    remaining payable, and judgment shall be entered for the
    last-named amount".

8. He went on to invite the court to read that section against the requirements of Rule 40, and submitted that the offer was ambiguous and for that reason ineffectual because it failed to refer to an amount representing the final assessment of damages, then to the amount paid pursuant to the order for payment on account of the damages to be assessed, and finally indicating that the offer was to consent to judgment for the difference.

9. In my opinion that criticism of the offer should be rejected. It is clear from Rule 40.03 (a) that if an offer filed pursuant to Rule 40 is accepted the plaintiff may proceed to sign judgment for the amount offered and as well tax his or her costs against the defendant in accordance with the procedures there laid out. It follows, that in preparing and filing an offer to consent to judgment, the defendant should approach the matter on the footing that the consequence of acceptance of it will be a judgment for the plaintiff for the amount offered. So that a defendant, bearing in mind the machinery set out in s.30b (5), when read together with R 40.03a, will have regard to the balance of what he or she perceives to be the likely final assessment and any amounts paid on account of that final assessment, and is entitled to file an offer as to that balance.

10. Considered in that way the plaintiff could not have been under any misapprehension as to the meaning and effect of the offer and as to its entitlement to sign judgment for the amount of the offer. It could only properly be construed as an amount offered over and above the amount already paid towards the damages to be assessed. There is no uncertainty or ambiguity and the offer in this case was not ineffective by reason of any such considerations.

11. Mr Gray QC addressed a separate argument to the effect that the offer was defective in that it was silent as to costs. He pointed out that the plaintiff's claim included a claim for costs, and he suggested, therefore, that given that the offer to consent to judgment was expressed in terms that the amount offered was offered 'in satisfaction of the plaintiff's claim' it should be interpreted to mean the plaintiff's claim including costs. If that was to be so, it would obviously fall short of the total amount of the judgment and such costs of action as the plaintiff would be entitled to.

12. I must say that I have never seen an offer to consent to judgment for a money amount expressed in terms that it is in addition to any costs to which the plaintiff might otherwise be entitled. I think that the reason for this is because of the terms of Rule 40.03 (a) which provides that where the offer to consent is for a "particular sum", the plaintiff may sign judgment for the amount offered and go on to tax his or her costs in addition, that is to say, his or her costs incurred up to 14 days after service of the offer on him or her.

13. It seems to me that the offer to consent to judgment must be regarded as having been made within the framework provided within the rules. It should have been clear to the plaintiff, upon the filing of the offer, the offer being for a "particular sum", that if it was accepted the plaintiff would, in addition, be able to tax costs in accordance with the provisions of Rule 40.03. Further, it was no doubt equally clear to the defendant that that would be a consequence of acceptance of the offer which it was filing and serving.

14. Mr Gray QC then contended that the offer to consent to judgment was uncertain and ineffective by reason of the fact that Rule 40.02 contemplates that an offer may be made with respect to particular specified causes of action, in which case any acceptance must specify the cause or causes of action to which the acceptance relates.

15. Rule 40.02 deals only with acceptance and not with the making of an offer. It is Rule 40.01 which deals with the terms of offers. Rule 40.01(5) provides:
    "(5) Where several causes of action are joined, the offer
    shall specify the cause or causes of action to which the
    offer relates".

16. The offer in question did not specify any cause or causes of action to which it related. It was simply an offer to consent to judgment "in this action ... in satisfaction of the plaintiff's claim in this action".

17. Mr Gray QC put it that:
    "There were several causes of action pleaded by the
    plaintiff. One was for what could be described as specific
    performance of a contract, that it, an action pursuing
    relief pursuant to the terms of the contract. The
    alternative claim was for damages for breach of contract.
    So there were several causes of action pleaded".

18. He did not, however, illustrate the point by taking the Court to the pleadings.

19. I have had much to say about the "pleadings" in this action in the published reasons for judgment following the trial. As I pointed out there (Judgment 28.2.94, No S 4431, pages 8-9), the Full Court ordered, inter alia:
    "3. That the plaintiff do give full particulars of its
    claim for damages for breach of the contract of insurance by
    the defendant within 28 days of the date of this order".

20. The particulars furnished pursuant to that order, which in the reasons for judgment for convenience I called the plaintiff's Statement of Claim, passed through many editions. I do not know what particular edition was in force at the time the Rules of Court offer now in question was filed, and Mr Gray QC did not take me to it.

21. But it seems to me that it could not matter what the Statement of Claim said. The plaintiff was obliged to confine itself to damages for breach of the contract of insurance and that alone. Indeed, the Full Court held that it was not open for the plaintiff to seek damages on any other cause of action, and specifically disallowed an attempt by the plaintiff to plead a cause of action in tort.

22. In any event, even if the particular edition of the Statement of Claim in force at the time the Rules of Court offer was filed did happen to mention more than one cause of action (it should be borne in mind that a pleading does not have to specify any cause of action, only facts), an offer of a money sum in satisfaction of "the plaintiff's claim" could not be regarded as other than applying to the claim as a whole. I cannot believe that the plaintiff was in any doubt what the offer related to. It knew perfectly well that if it related to the claim as a whole, as it clearly did I would not construe the rules in those circumstances to deprive the offer of its effect. If necessary, and I do not think that it is, I would exercise the general discretion as to costs so as to achieve the result contemplated by the rules.

23. Mr Gray then went on to argue that in the exercise of the court's discretion as to costs it should allow for the fact that, as he put it, the plaintiff came to court with statements by Mr Bennett QC, then of counsel for the defendant, made to the Full Court during one of the Full Court hearings before the trial "ringing in its ears", to use Mr Gray's expression.

24. Those statements made by Mr Bennett have been set out in full in the reasons for judgment which I have already delivered. I deal in that judgment with the consequences of those statements. If they were said to be ringing in the ears of the plaintiff when it came to trial, they were ringing in the ears of the Full Court even more loudly at the time it gave judgment. Notwithstanding that, those statements did not divert the Full Court in the judgment which it went on to pronounce from directing the trial judge to proceed with the action as an assessment of damages for breach of contract at large. The Full Court in no way confined the assessment of damages in accordance with the statements which had been attributed to Mr Bennett QC. The plaintiff was obliged to approach the trial in accordance with the terms of the actual order pronounced by the Full Court in mind, and its own pleadings which I go through at length in the reasons for judgment, not with what might have been "ringing in its ears".

25. In the reasons for judgment I draw attention to the fact that the plaintiff did not properly plead any result of Mr Bennett's statement or statements to the effect that the exercise to be performed by the court in assessing damages was to be in any sense confined by anything which Mr Bennett QC might have said.

26. The subject of those statements, in so far as it related to the question of the assessment of the claim for stock, was fully agitated at the trial and, as I commented in the reasons for judgment, was fully canvassed in the evidence and made the subject of a final assessment by me. In those circumstances, nothing which Mr Bennett might have said at some hearing before the trial could possibly have an effect on the exercise of the discretion which I am now called upon to exercise.

27. In all the circumstances, I see no reason to do other than apply Rule 40.05, with the consequences which that rule contemplates. In the result, the plaintiff will have its costs of action down to 13 August 1993 and the defendant will have its costs of action against the plaintiff thereafter.

28. As I have said, Mr Lunn sought an order that the costs which the defendant recovers against the plaintiff be on a solicitor/client basis. In my opinion none of the matters which he advanced in support of that argument, which I do not pause to detail, would properly support such an order.

29. The costs then, which the defendant recovers as from 13 August 1993 against the plaintiff will be costs as between party and party.

30. A further issue arises with respect to costs of various documents brought into court by the plaintiff and tendered at the hearing before me. The trial commenced with the plaintiff having furnished to the Court 23 volumes of documents collated and indexed. Those volumes comprehended, so it seems, all of the documents of which the plaintiff had made discovery. During the course of the trial a further four volumes of what were described as "bank" documents or records were tendered, making a total of 27 volumes of documents. All of the documents required scrutiny by the defendant, and I was called upon to rule on the admissibility of a number of them. Although most of them were admitted in evidence, the fact remains that only a small fraction of them were referred to by any of the witnesses, or otherwise relied upon by the plaintiff in support of its case, at least expressly. The sheer volume of largely irrelevant material made it difficult for me as trial Judge, during the course of preparation of the judgment, to identify and read all relevant material.

31. During the course of the hearing I drew Mr Gray QC's attention to the fact that it is not proper for a plaintiff to simply copy all of its discovered documents and bring them into Court at the trial. On the contrary, it is incumbent upon any party to litigation, particularly where there is a substantial volume of documents, which is often the case where the matter is a commercial matter, to make a careful selection of the documents which it proposes to rely on in Court. In appropriate cases, I commonly direct the preparation of a tender list and stress that the documents to be selected should be selected by counsel who has the responsibility of the carriage of the matter, in the sense of its presentation in Court.

32. This process is important because discovery is essentially a matter inter partes, and is of no interest either to the Court or to the trial Judge. The only interest of the Court in documents is as to those which are put forward at the trial as exhibits. The documents which are relied on at the trial are almost invariably, in long commercial cases, only a small fraction of those which are made the subject of discovery between the parties.

33. Some arguments were addressed to me as to the quantity of the number of documents within the 27 volumes, which were tendered at the trial, as to which the costs ought to be allowed in favour of the plaintiff, on the footing the plaintiff should be deprived of costs with respect to the balance. I am not in a position to go into that aspect of the matter. However, I propose to make an order that the taxing master disallow costs of such of the documents brought into Court by the plaintiff as were not reasonably necessary for the purposes of the trial of the action as opposed to the making of discovery between the parties.

34. Mr Lunn also argued that the plaintiff should be deprived of the costs of what he described as the "pleadings" on the basis that they were effectively abandoned by the plaintiff during the course of the trial. I say "what he described as the pleadings" as, in fact, this case went to trial following the direction from the Full Court which I have already referred to that the plaintiff give full particulars of its claim for damages for breach of the contract of insurance, and that the defendant thereafter file a response stating whether and to what extent, if any, it admitted liability and opposed the claim in damages.

35. Subsequently, directions were made by a master of the Court as to just what documents were to be exchanged pursuant to that order. The documents were effectively treated as pleadings.

36. The plaintiff's claim departed substantially, in many respects, from the particulars which found expression in what I described in my reasons for judgment as the statement of claim. The plaintiff's claim, both before and after the filing of the statement of claim in the form in which it existed at the time the case was heard, underwent many changes in direction and underwent considerable modifications with respect to the amounts which it sought under various heads of alleged loss. It seems to me that the clear direction given by the Full Court was never properly complied with by the plaintiff.

37. In all the circumstances, I think it proper to accede to the request of the defendant, with the result that I will order that the plaintiff, in any event, be deprived of its costs in relation to the pleadings, using that word to describe the documents exchanged in response to the order of the Full Court, and that the defendant have, in any event, its costs of and in relation to those documents.

38. As to the offset claim by the defendant, the only aspect of that which causes me to hesitate is the question whether or not by allowing an offset of costs against the amount otherwise payable by the defendant, the court would be sanctioning a preference should the plaintiff be put into liquidation. It is clearly insolvent. However, express provisions for an offset are to be found in rule 101.01(1)(c). In my opinion, given the express power in the rules to direct that costs are to be set off, the circumstances of this case are such that I should exercise that power, notwithstanding the possibility of a preference. At most, there is only a possibility of a preference arising, and I have not been taken to any authority which would satisfy me that there would be, when an order of the Court is made pursuant to Rule 101 for an offset of costs against a judgment, a preference in the context of any subsequent liquidation.

39. In the final order, I will order that the offset be made. Such an offset would be ineffective without a stay of the kind sought by the defendant, which I will also order.