South Parklands Hockey & Tennis Centre v Brown Falconer Group P/L [No 2] No. Scciv-97-286

[2004] SASC 107

SOUTH PARKLANDS HOCKEY AND TENNIS CENTRE INC & ORS
V
BROWN FALCONER GROUP PTY LTD & ORS [NO. 2]
[2004 SASC 107

Civil

1. DEBELLE J.        On 24 March 2004 I delivered judgment awarding damages to the plaintiffs in the sum of $622,766.95 and interest thereon in the sum of $21,500.  On 31 March 2004 the parties argued the question of costs.

2. The plaintiffs seek an order for solicitor and client costs on the grounds which will appear in a moment.  The plaintiffs had discontinued his action against the second defendant, Golder Associates.  Golder Associates seeks an order that the plaintiffs pay its costs  on a solicitor and client basis.  I deal first with the plaintiffs’ claim for costs.

3. On 17 June 2001 the plaintiffs filed and served an offer pursuant to Rule 41 offering to consent to judgment in the sum of $450,000.  As the award of damages exceeds that sum the plaintiffs seeks their costs of the action on a solicitor and client basis pursuant to Rule 41.04.  Brown Falconer and Connell Wagner oppose that application.  They point to a letter dated 14 December 2001 sent by the solicitors for the plaintiffs to the solicitors for Brown Falconer indicating a willingness to accept $500,000 in settlement for the claim.  The offer was to remain open for seven days.  Brown Falconer and Connell Wagner say that the letter should be taken as superseding the filed offer so that, at worse, if solicitor and client costs are awarded, they should be payable only from 21 December 2001.  They rely also on the plaintiffs’ conduct of the action.

4. In my view the plaintiffs should have their costs of the whole of the action on a solicitor and client basis.  I do not think that the letter of 14 December 2001 alters the effect of the filed offer.  That letter was written following a mediation.  I do not know what transpired at the mediation.  The offer remained open for seven days only.  The offer was not accepted and therefore lapsed.  There was no counter offer.  Another important factor is that in 2001 Brown Falconer and Connell Wagner continued to deny liability and maintained that position right up until the eve of the trial.  The purpose of Rule 41 is to encourage the parties realistically to face the issues in litigation.  It is designed to promote settlement: Whitehead v Maas (1991) 56 SASR 362. The plaintiffs have received an award substantially in excess of the offer. There is no reason why they should not be entitled to costs on the whole of the action on a solicitor client basis.

   Costs of Second Defendant

5. The plaintiffs sought and obtained leave to discontinue the action against the second defendant Golder Associates on the second day of the trial.  Golder Associates seeks costs from the plaintiff.  It also contends that it is entitled to indemnity costs since 29 January 1998, the day on which it was joined as a defendant, on the ground that on the merits that the plaintiffs never had a cause of action against it.  On 27 June 2001 the solicitors for Golder Associates sent to the plaintiffs’ solicitors a letter asserting that Golder Associates was under no liability to the plaintiffs and offering to compromise the action on the footing that if the plaintiffs discontinued the action and the other defendants withdrew their contribution notices, it would withdraw its contribution notices against the other defendants and would not seek costs against any party.  The letter was a Calderbank letter.  Copies of that letter were sent to the solicitors for Brown Falconer and Connell Wagner.  Neither the plaintiffs nor Brown Falconer responded to that letter.  The solicitors for Connell Wagner replied indicating that it would accept the offer.  It appears that the fact that the other two parties did not accept the offer precluded any compromise between Golder Associates and Connell Wagner.  A mediation on 13 December 2001 did not assist in resolving the issues.

6. In my view, it was proper for the plaintiffs to join Golder Associates.  Golder Associates played a key role as a consultant advising in connection with construction of the hockey pitch.  The issues were complex and difficult.  They revolved around the geo-technical issues and the question of soil movement.  It was reasonable for the plaintiffs to join all of the parties who had directly or indirectly advised it.  There were questions whether Golder Associates had adequately reported to Connell Wagner.  That was not only an issue raised by the plaintiffs but also by Brown Falconer.  In its defence Brown Falconer pleaded that Golder Associates had failed to give an adequate warning as to the implications of its report, see para 63.1 of its defence.  In addition, Brown Falconer and Connell Wagner had filed contribution notices against Golder Associates.  Thus, there is no basis for an award of solicitor and client costs before the solicitors for Golder Associates sent their letter on 27 June 2001.

7. I think that Golder Associates is entitled to costs on the solicitor and client basis after 27 June 2001.  By then all parties are in a position to make a realistic assessment of their respective cases.

8. I turn to examine who should pay the costs of Golder Associates.  The plaintiffs submit that they should be paid by Brown Falconer and Connell Wagner, that is to say, I should make a Sanderson order.  Alternatively, I could make a Bullock order.  The first and second defendants contend the costs should be paid by the plaintiffs.  In my view the costs of Golder Associates should be paid by Brown Falconer and Connell Wagner.  I do not think that the plaintiff should pay those costs.  For the reasons already given, it was proper for the plaintiff to join Golder Associates.  In addition, this was a case where the issues as to liability were very much as between the defendants.  In all the circumstances, the appropriate order is that Brown Falconer and Connell Wagner pay the costs of Golder Associates.

9. I will make orders to reflect these reasons.