Sloan v Service Stream Limited (No 2) - [2020] SADC 120

DISTRICT COURT OF SOUTH AUSTRALIA
(Civil)
SLOAN v SERVICE STREAM LIMITED (NO 2)
[2020] SADC 120
Ruling of Her Honour Judge Schammer
31 August 2020
PROCEDURE - CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS - COSTS - DEPRIVING SUCCESSFUL PARTY OF COSTS
PROCEDURE - CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS - COSTS - OFFERS OF COMPROMISE, PAYMENTS INTO COURT AND SETTLEMENTS - OFFER OF COMPROMISE OR OFFER TO SETTLE OR CONSENT TO JUDGMENT PURSUANT TO RULES
The plaintiff, Eugene Sloan, claimed damages for personal injuries allegedly sustained by him on 13 March 2013, while undertaking pit and pipe installation work for the defendant, Service Stream Limited, under a labour hire contract with the plaintiff’s employer, Skilled Group Limited (Skilled).
The defendant denied liability in its entirety for the plaintiff’s claim on the basis that it had discharged any duty of care owed by it to him, whether pursuant to common law or under statute. Further, the defendant pleaded any injury sustained by the plaintiff was caused or contributed by the plaintiff’s negligence. It pleaded that the injuries claimed to have been suffered by the plaintiff were pre-existing injuries, such that he had not suffered loss or damage.
The action proceeded to trial over seven days commencing 3 February 2020.
On 28 July 2020, I delivered judgment in this action wherein I determined that the defendant had breached the duty of care it owed to the plaintiff, causing harm to the plaintiff. In addition, I determined that the plaintiff’s negligence had contributed to that harm. I assessed damages in the sum of $80,355.06, which sum was reduced by 40% to reflect the plaintiff’s contributory negligence.
The plaintiff was awarded damages in the sum of $48,213.04 as against the defendant. The parties were to be heard on the issue of costs.
On 21 October 2019, the defendant filed a formal offer, expressed as a ‘contract offer’, in the sum of $120,000.00 (all inclusive), in accordance with r 187 of the District Court Civil Rules 2006 (the 2006 Rules). The offer was served the same day. It was not accepted by the plaintiff and was not withdrawn.
The defendant applied for an order that the defendant pay the plaintiff’s costs of action incurred up to and including 4 November 2019 on a party/party basis and the plaintiff pay the defendant’s costs of action incurred as of 5 November 2019 on a party/party basis.
Whether:
1. The Court should exercise its discretion not to apply r 263(2)(g) of the 2006 Rules; and/or
2. The Court should exercise its discretion not to apply r 188F(5) of the 2006 Rules.
Order
The defendant is to pay the plaintiff’s costs of action incurred up to and including 4 November 2019 on a party/party basis and the plaintiff is to pay the defendant’s costs of action incurred as of 5 November 2019 on a party/party basis. In each instance, such costs are to be taxed if not agreed.
Return to Work Act 2014 (SA) s 66; District Court Act 1991 (SA) s 42, referred to.
Calderbank v Calderbank [1975] 3 All ER 333; Macks v Viscariello (No 2) [2018] SASCFC 106; Excelsior Land Holdings Pty Ltd v Alan Sheppard Constructions Pty Ltd [2012] SASCFC 119; Parabanks Shopping Centre Pty Ltd v City of Salisbury (No 2) [2013] SASC 204; Ruddock v Vadarlis (No 2) (2001) 115 FCR 229; Lesses v Maras (No 3) [2017] SASCFC 154, considered.

SLOAN v SERVICE STREAM LIMITED (NO 2)
[2020] SADC 120
Introduction

The plaintiff, Eugene Sloan, claimed damages for personal injuries allegedly sustained by him on 13 March 2013, while undertaking pit and pipe installation work for the defendant, Service Stream Limited, under a labour hire contract with the plaintiff’s employer, Skilled Group Limited (Skilled).
The plaintiff alleged to have suffered a significant injury to his lower back with resulting psychological sequelae, when he attempted to lift a ‘P9’ pit with two other workers, during the course of that employment.
The plaintiff had previously sustained injuries to his lower back while working with different employers on 6 August 2009, 18 April 2011 and 7 January 2013. At the time, he applied for employment with Skilled, the plaintiff had not been certified fit to return to work and was still receiving workers compensation benefits following the injury on 7 January 2013.
The plaintiff did not disclose the fact of any prior back condition in his application for employment with Skilled.
The defendant denied liability in its entirety for the plaintiff’s claim on the basis that it had discharged any duty of care owed by it to him, whether pursuant to common law or under statute. Further, the defendant pleaded any injury sustained by the plaintiff was caused or contributed by the plaintiff’s negligence. It pleaded that the injuries claimed to have been suffered by the plaintiff were pre-existing injuries, such that he had not suffered loss or damage.
The action proceeded to trial over seven days commencing 3 February 2020.
On 28 July 2020, I delivered judgment in this action wherein I determined that the defendant had breached the duty of care it owed to the plaintiff, causing harm to the plaintiff. In addition, I determined that the plaintiff’s negligence had contributed to that harm. I assessed damages in the sum of $80,355.06, which sum was reduced by 40% to reflect the plaintiff’s contributory negligence.
The plaintiff was awarded damages in the sum of $48,213.04 as against the defendant. The parties were to be heard on the issue of costs.
Application
On 19 August 2020, the defendant made an oral application seeking:
1a stay on the execution of the judgment;
2a set-off of its liability to pay the judgment sum and any costs payable to the plaintiff as against any liability the plaintiff has to pay the defendant’s costs; and
3an order that the plaintiff be entitled to his costs of action on a party/party basis until 4 November 2019, but that thereafter the plaintiff pay the defendant’s costs of action on a party/party basis.
Skilled paid the plaintiff compensation under the Return to Work Act 2014 (SA) (RTWA) (and its predecessor legislation) following the incident. It has a right of recovery pursuant to s 66(7) of the RTWA.
The defendant’s application for a set-off and a stay was brought without notice to Skilled. In such circumstances, at this stage I intend to proceed only to determine the defendant’s application for costs. I reserve for further consideration the other orders sought by the defendant.
Costs
Basis for Application
On 21 October 2019, the defendant filed a ‘Formal Offer’ in accordance with r 187 of the District Court Civil Rules 2006 (SA) (the 2006 Rules).
The offer was expressed as a contract offer to settle the action on terms which included payment by the defendant to the plaintiff of the sum of $120,000.00, inclusive of costs, disbursements, interest, outstanding special damages and all statutory charges, in full and final satisfaction of the plaintiff’s claim (the filed offer).
The filed offer was served on the plaintiff, by email to his solicitors, on 21 October 2019. The filed offer was not accepted by the plaintiff. The plaintiff did not file any offer in response. There was no evidence to the effect that the filed offer had been withdrawn at any stage.
By letter dated 20 December 2019 to the plaintiffs’ solicitors, the defendant offered, with no admission of liability, to pay the first plaintiff the sum of $120,000.00, inclusive of interest, but in addition to costs, to resolve the matter. The letter outlined that if the offer was not accepted and the plaintiff received a less favourable result at trial, the letter would be used on the issue of costs in accordance with the principles in Calderbank v Calderbank (the Calderbank offer).[1]
[1] [1975] 3 All ER 333.
The Calderbank offer was not accepted. No further offer was filed by the defendant to reflect the terms of the Calderbank offer.
The Act and Rules
Pursuant to s 42 of the District Court Act 1991 (SA), costs are in the discretion of the court and may be awarded against any person. The discretion is unfettered but must be exercised judicially.[2]
[2] Macks v Viscariello (No 2) [2018] SASCFC 106 at [5].
As a general rule, costs follow the event.[3] In this action, the plaintiff was awarded damages against the defendant and was therefore a ‘successful plaintiff’.
[3] Rule 263(1) of the 2006 Rules.
However, pursuant to r 263(2), that general rule is subject to specific rules to the contrary, again subject to the Court ruling to the contrary. Pursuant to r 263(g), in an action founded on a claim for damages or other monetary sum (other than a claim for defamation), general costs of action are not to be awarded in favour of the successful plaintiff unless the amount awarded exceeds $60,000.00.
Further, pursuant to r 188F(5) of the 2006 Rules, subject to the overriding discretion of the Court:
When a complying offer is made by a defendant and not accepted by a plaintiff and the plaintiff obtains judgment in respect of the claim to which the offer relates less favourable to the plaintiff than the terms of the offer –
(a)the costs incurred in the action up to 14 days after service of the formal offer are unaffected by the making of the formal offer;
(b)the defendant is entitled to an order against the plaintiff for the defendant’s costs of action in respect of the claim to which the complying offer relates thereafter on a party/party basis.
There is no dispute that the filed offer is a ‘complying offer’ and that the judgment sum is less favourable to the plaintiff than the terms of the filed offer.
The defendant did not seek to invoke r 263(g), however submitted that the Court should proceed in accordance with r 188F(5), namely to order the defendant pay the plaintiff’s costs on a party/party basis until 14 days after service of the filed offer, namely 4 November 2019 and that thereafter the plaintiff pay the defendant’s costs of action on a party/party basis.
The plaintiff opposed the application.[4] Counsel for the plaintiff submitted that the costs order made should reflect the fact that the plaintiff succeeded on a number of discrete issues at trial, namely on the fundamental issue of whether the defendant had breached the duty of care it owed to the plaintiff, and insofar as the Court found that the defendant’s negligence had caused the plaintiff harm. These were matters in dispute on the pleadings and at trial, and matters upon which findings were made having regard to oral and written evidence tendered by the defendant. It was submitted that if the defendant had properly considered its own evidence, it should have made concessions on these issues, thus effectively reducing the trial length by approximately half.
[4] By way of both oral and written submissions.
As such, it was submitted that the Court should exercise its discretion not to invoke either r 263(g) or r 188F(5), but rather it should award costs based on the respective successes of the parties at trial and the costs incurred with respect to the same.
Observations
In the exercise of the Court’s discretion as to costs, it has been recognised that an otherwise successful party may, nevertheless, have been unsuccessful with respect to various issues (or ‘events’) as advanced within the claim (or defence) and that in such circumstances, it is appropriate for the Court to treat those distinct issues as distinct events when exercising its discretion as to costs.[5]
[5] Excelsior Land Holdings Pty Ltd v Alan Sheppard Constructions Pty Ltd [2012] SASCFC 119 at [10], Parabanks Shopping Centre Pty Ltd v City of Salisbury (No 2) [2013] SASC 204.
In Ruddock v Vadarlis (No 2),[6] Black CJ and French J held that:
…a successful party who has failed on certain issues may not only be deprived of the costs of those issues but may be ordered as well to pay the other parties’ costs of them. In this sense “issue” does not mean a precise issue in the technical pleading sense but any disputed question of fact or law.
[6] (2001) 115 FCR 229 at 234 [11].
In Lesses v Maras (No 3),[7] the Full Court observed that in dealing with cases where a party had ‘mixed success’:
…a court may in appropriate circumstances reduce the costs ordered in favour of the overall successful party, and further may order that party to pay the opponent’s costs, in respect of such issues. When the court considers that the discretion should be so exercised, it will usually make an order for payment of a proportion of one party’s costs by the other party reflecting a broad axe assessment, even when it considers that the successful party should pay the opponent’s costs in respect of such issues. (citations omitted)
[7] [2017] SASCFC 154 at [82].
In Macks v Viscariello (No 2),[8] the Full Court adopted what was said in Lesses v Maras (No 3),[9] and stated:
Factors to be considered when assessing costs on separate issues include determining whether the issues were separate and distinct, the importance of the issues (including whether they had merit), and the time taken at trial in litigating those issues.
[8] [2018] SASCFC 106 at [32]-[33].
[9] [2017] SASCFC 154 at [82].
In this instance, although the plaintiff established that the defendant had breached its duty of care to the plaintiff, the defendant successfully argued that the plaintiff was contributorily negligent. The witnesses called by the parties on the issue of liability gave evidence relevant not only to the defendant’s alleged breach of duty, but as to contributory negligence. The plaintiff’s damages were reduced by 40% having regard to my findings.
As such, it is not the case that those witnesses who gave evidence at trial on the issue of the defendant’s breach of duty, would not have been required had the defendant admitted its breach. Further, although the defendant denied its breach of duty had caused the plaintiff harm, it did so in the context of a broader case advanced at trial that any ongoing disability suffered by the plaintiff arising from his current back condition was unrelated to the incident, but instead related to the progression of what was a pre-existing degenerative condition.
Until the filed offer was made, the defendant had maintained a complete denial of liability and had not made any settlement offers.
As such, I agree with the submission advanced by the plaintiff’s counsel that in those circumstances the plaintiff should not be penalised for choosing to continue an action wherein he was ultimately successful in being awarded some damages, by invoking r 263(g).
However, in making the filed offer, the defendant acknowledged it was at risk of findings against it as to the issues of breach of duty and causation. The plaintiff elected not to accept the filed offer and to take the considerable risk of proceeding to trial.
The evidence as to the issue of contributory negligence was compelling. Although there was some medical evidence to support aspects of the plaintiff’s claim, the plaintiff’s failure to provide an accurate history to the doctors who examined him caused problems that proved insurmountable at trial. The filed offer was, in my view, a genuine offer, that represented a proper compromise of the action.
In my view, there is no reason for the Court to exercise its discretion not to order costs in accordance with r 188F(5).
Order
The defendant is to pay the plaintiff’s costs of action incurred up to and including 4 November 2019 on a party/party basis and the plaintiff is to pay the defendant’s costs of action incurred as of 5 November 2019 on a party/party basis. In each instance, such costs are to be taxed if not agreed.