Skalkos v Gebski (No 3)

[2013] SASC 113

SUPREME COURT OF SOUTH AUSTRALIA

(Land and Valuation Division)

SKALKOS & ANOR v GEBSKI & ORS (No 3)

[2013] SASC 113

Judgment of The Honourable Justice Anderson

11 July 2013

PROCEDURE - COSTS - GENERAL RULE - COSTS FOLLOW THE EVENT - COSTS OF ISSUES

EQUITY - EQUITABLE REMEDIES - INJUNCTIONS - PROCEDURE - UNDERTAKINGS

LUMP SUM ORDERS AS TO COSTS - RULE 264(5)(c)

Argument regarding quantum of costs - plaintiffs made reasonable offer - lump sum awarded.

Defendants sought damages for extra costs incurred as a result of the injunctiion. Argument as to quantum.

Held:

(i)  Plaintiffs to pay to the defendants the sum of $110,000 by way of costs.

(ii)  Plaintiffs to pay to the defendants the sum of $12,000 as compensation for damages incurred pursuant to the undertaking for damages given at the time of the injunction.

Encroachment Act 1944 (SA), referred to.

SKALKOS & ANOR v GEBSKI & ORS (No 3)
[2013] SASC 113

Land and Valuation Division

1. ANDERSON J.     In this matter I gave judgment on 9 December 2011: see Skalkos & Anor v Gebski & Ors [2011] SASC 213. I dismissed the plaintiffs’ claim for a declaration of the boundary as surveyed by their surveyor, and found that the surveyor engaged by the defendants had correctly surveyed the boundary. I therefore allowed the defendants’ counterclaim for the determination of the boundary and ordered that the boundary be re-defined.

2. The successful defendants applied for their costs and I gave a further judgment, Skalkos & Anor v Gebski & Ors (No 2) [2012] SASC 36. In that decision I found that the general rule, that costs follow the event, should prevail in this matter and accordingly awarded costs in favour of the defendants.

3. Two issues now arise. First is the quantum of the costs of the action which I have indicated to the parties I will determine as a lump sum pursuant to r 264(5)(c) of the Supreme Court Civil Rules 2006. In addition the defendants have made claims for damages and compensation as a result of extra costs allegedly incurred following the delay in finalising building work because of the granting of the injunction. The defendants rely upon the undertaking as to damages given by the plaintiffs.

   Costs

4. I invited the parties to attempt to agree costs. The plaintiffs made an offer to pay $110,000. When costs could not be agreed, I ordered that a short form bill of costs be provided. The short form bill from the defendants calculated costs in the sum of $123,651.79. With the additional costs for drawing the claim for costs, the total amount sought was $127,224.79.

5. The plaintiffs then increased their offer to $116,000 but this was not accepted.

6. The plaintiffs have been reasonable in their attempt to agree costs. Their first estimate was within a reasonable range of likely costs. When faced with the short form bill the plaintiffs appropriately increased the offer to $116,000. Had the defendants accepted the first offer, considerable further costs could have been avoided. With a margin for error on a taxation the original offer was within the range of a likely award for costs.

7. In my view both offers by the plaintiffs were reasonable. In the circumstances I award the defendants costs against the plaintiffs in the sum of $110,000 as a lump sum pursuant to rule 264(5)(c).

   Damages

8. The claim originally made by the defendants for damages was an extravagant ambit claim in which, amongst other things, they claimed a capital loss on the sale of 13B Cassie Street in the sum of $145,000. Following argument and after considerable discussion the defendants decided not to pursue this aspect of their claim.

9. The claim for damages is now limited as follows:

1	Response to injunction - amendment to building plans	$490.00
2	Response to injunction - and claim of Hebel to side of roller door	$770.00
3	Injunction lifted - costs to complete construction	$12,180.00
4	Rent at Devon Park during period of delay	$5,580.00
5	Loss of rent on 13B during period of delay	$9,000.00
6	Building cost escalation on account of delay	$1,698.77
Total claimed	$33,266.55    (including GST)

1. Mr Stevens for the plaintiffs has submitted that the assessment of any damages arising from the grant of an injunction comes within the Court’s general discretion. He submits that I should not exercise my discretion and award damages. He submits that there are circumstances which should be taken into account, including the defendants’ conduct at the time the injunction was granted, and whether the defendants had any other form of redress.

2. Mr Stevens submitted that the defendants are in reality plaintiffs by counterclaim in seeking a declaration of the boundary. In my view the counterclaim was an appropriate response by the defendants to the claim made by the plaintiffs and it in fact crystallised the issue for the Court under the provisions of the Encroachments Act 1944 (SA).

3. I would not use the discretion I have to defeat the defendants’ claim for damages arising from the injunction as was suggested by Mr Stevens.

4. In relation to the specifics of the claim for damages it appears that there is no contest in relation to the fact that some amendments to the plans were required. The defendants claim the sum of $490 for this aspect which appears to be reasonable. There is also a claim for Hebel which was applied to the side of the roller door in the sum of $770. I am not convinced on the evidence which has been put before me by way of affidavits that this is an additional cost and I therefore disallow it.

5. There is also a dispute as to the costs of the complete construction after the injunction was lifted. $12,180 is claimed. I have formed the view that much of the work claimed was for work done which had to be performed in any event.

6. In my view, as a matter of commonsense, there must have been some additional building costs incurred as a result of the injunction. Work had to cease, a time of 18 weeks passed and then contractors had to be re-engaged and brought back to the site to modify the work as a result of a different boundary. Clearly extra fees were incurred in the re-commencement and re-arrangement of the work on site.

7. An affidavit was filed by Mr Valentino Fuda who is a director of the third defendant. He deposes as to what happened when the building work ceased as a result of the injunction being granted.

8. He said that further design changes were required when the injunction was lifted, including a change of the roof design and to the carport which ended up with two posts in lieu of the original three. Again there is nothing to show how these items related to a new design covered by the injunction.

9. He also deposes to the fact that the building contracts allowed for rise and fall clauses as a result of delays. He deposes to the fact that the additional work was required. The work has been completed by the third defendant but as yet remains unpaid.

10. In my view, on the basis of the information available, I should make an allowance for the fact that work stopped and then restarted causing some additional building costs. I also make a small allowance for increase in charges due to rise and fall clauses in the contract. I allow the sum of $8,500 for items 3 and 6 in paragraph [9] of these reasons in total.

11. In relation to the claim for rent on alternative accommodation, the defendants claim $5,580. They had to live somewhere while the building work was continuing and could have occupied 13A as soon as it was ready for occupation. I would not allow the total claimed for this item but allow the sum of $1,500 for the delay factor.

12. In relation to the loss of rent on 13B, it was on a separate title and it was not the subject of the injunction and the defendants could have moved to 13A. They could have rented the premises out for at least some of the time that they in fact occupied 13B. I disallow the claim but allow an amount of $1,500 again for the delay factor.

    Orders

13. Accordingly the orders of the Court are that the plaintiffs pay to the defendants the sum of $110,000 by way of costs and in addition the further amount of $12,000 in round figures as compensation for damages incurred pursuant to the undertaking for damages given at the time of the injunction.

14. The defendant has caused additional costs by the extravagant claims it has made, initially by an attempt to extract large amounts from the plaintiff without any proper justification. It was an unreasonable approach.

15. I will hear the parties as to who should bear the costs of all the proceedings necessary to finalise these claims.