Stone v Chappel (No. 2) - [2016] SASC 88

SUPREME COURT OF SOUTH AUSTRALIA
(Civil: Application)
STONE & ANOR v CHAPPEL & ORS (NO. 2)
[2016] SASC 88
Judgment of The Honourable Justice Stanley
23 June 2016
PROCEDURE - COSTS - DEPARTING FROM THE GENERAL RULE - OTHER CASES - FAILURE IN PORTION OF A CASE
DAMAGES - GENERAL PRINCIPLES - RECOVERY OF COSTS
This is an application for costs.
On 4 March 2016 judgment was given in favour of the plaintiffs against the defendant and awarded damages in the sum of $81,046.98.
The dispute between the parties concerned the construction of the shell of an apartment on the top floor of a building in a retirement village constructed and managed by the defendants. Central to the dispute was the failure of the defendants to construct the apartment to a ceiling height of 2,700 mm. The plaintiffs’ claim relied on a number of causes of action. The resolution to the dispute was fragmented. Part of the dispute was referred to an expert for determination conducted by Stephen Walsh QC. Part of it was settled pre-trial on 13 April 2015 by the defendants paying the plaintiffs the sum of $160,892 in respect of what was called the “base price deduction claim”.
Neither the base price deduction claim nor the issues determine by Mr Walsh concerned the ceiling height.
Each of the parties claims an entitlement to the costs of the action.
Held:
1. It is appropriate in the exercise of the court’s discretion to make an award of costs on a broad-axe basis, informed by balancing consideration of the issues decided, who succeeded or failed on those issues, and some consideration of the amount of the court’s time and resources that was occupied in hearing and determining those discrete issues, recognising the difficulties of precision in such consideration, given the evidence frequently was relevant to more than a single, discrete issue (at [13]).
2. The plaintiffs should not be deprived of an entitlement to costs on the basis of the application of Supreme Court (Civil) Rules 2006 r 263(2)(g) (at [16]).
3. The plaintiffs should not be deprived of costs by reason of the Calderbank offers (at [17]).
4. The defendants to pay the plaintiffs one-third of the costs of the action on a party/party basis, save and except for the costs of the expert determination which is to be decided by Mr Walsh, and the costs order of Master Norman made on 21 September 2011 (at [22]).
Supreme Court Act 1935 (SA) s 40(1); Supreme Court (Civil) Rules 2006 r 263(1)-(2), referred to.
A, DC v Prince Alfred College Inc (No. 2) [2016] SASCFC 27, considered.

STONE & ANOR v CHAPPEL & ORS (NO. 2)
[2016] SASC 88
Civil
STANLEY J:
Introduction

This is an application for costs.
On 4 March 2016 I gave judgment in favour of the plaintiffs against the defendant and awarded damages in the sum of $81,046.98.
The dispute between the parties concerned the construction of the shell of an apartment on the top…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Stone v Chappel (No. 2)

Details

AGLC: Stone v Chappel (No. 2) [2016] SASC 88
Case: [2016] SASC 88
Decision Date: 23 June 2016

CaseChat Overview and Summary

In Stone v Chappel (No. 2), the plaintiffs sought costs for their successful action against the defendants, who had been found liable for breaches of contract and misleading and deceptive conduct. The court was tasked with determining the appropriate allocation of costs, considering the partial success of the plaintiffs and the defendants' submissions regarding the costs incurred. The primary legal issues before the court involved the principles of costs allocation in cases of partial success, the relevance of the Calderbank offer, and the court's discretion in determining the costs of expert determinations.

The court considered the balance of success between the parties, noting that while the plaintiffs were successful on some claims, their recovery was modest compared to the overall resources expended. The court recognised that the misleading and deceptive conduct claim in relation to the base price was misconceived and the claim for damages based on the costs of rectification had no reasonable prospect of success. However, the court also acknowledged that the plaintiffs' success in the action was partly due to the defendants' denial of liability on the ceiling height claim, which necessitated the proceedings. Furthermore, the court observed that the plaintiffs had pursued an unrealistic award of damages. In weighing these considerations, the court concluded that awarding one-third of the plaintiffs' costs on a party/party basis was appropriate.

The court's decision was influenced by several factors. It recognised the appropriateness of awarding costs on a broad-axe basis, balancing the issues decided, the outcomes for each party, and the resources expended. The costs of the expert determination were to be determined by the expert himself, as per the terms of the expert determination deed. The court also noted that the costs of a pre-action disclosure application were already decided by Master Norman and declined to interfere with that order. The court rejected the defendants' arguments regarding the prescribed threshold for damages and the relevance of the Calderbank offer, finding that the plaintiffs were not to be deprived of their entitlement to costs on those grounds.

The final orders of the court were that the defendants were to pay one-third of the plaintiffs' costs of the action on a party/party basis, excluding the costs of the expert determination and the costs order of Master Norman made on 21 September 2011. This decision reflects the court's balanced approach to costs allocation in cases of partial success, taking into account the specific circumstances and the broader principles of justice.

Orders

Orders of the court

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Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

All in all, my impression is that the time and resources occupied by the issues on which the plaintiffs succeeded broadly equates to the time and resources occupied by the issues on which the defendants succeeded. Further, in my view, the misleading and deceptive conduct claim in relation to the base price was misconceived and the claim for damages based on the costs of rectification had no reasonable prospect of success. Nonetheless, the plaintiffs were successful on the action. Ultimately, they would not have had to undertake the proceedings if the defendants had not denied liability in relation to the ceiling height claim. On the other hand, they pursued an unrealistic award of damages. Balancing these considerations, I consider justice will be done by awarding the plaintiffs one-third of their costs of the action on a party/party basis. Conclusion I would order the defendants to pay the plaintiffs one-third of the costs of the action on a party/party basis, save and except for the costs of the expert determination which is to be decided by Mr Walsh, and the costs order of Master Norman made on 21 September 2011.

Ratio Decidendi

Legal Principle Established

The defendants submit that while the plaintiffs were successful in establishing a technical breach of contract, the court declined to award damages for the relief sought for the two major claims, and that putting to one side the expert determination of Mr Walsh, the plaintiffs succeeded at trial only in respect of the residual claims, and then only to the extent of $66,751. They submit that the plaintiffs failed to better the threshold of $120,000 in damages prescribed by 6SCR 263(2)(g). Further, they submit that the plaintiffs rejected an offer made by way of a Calderbank letter on 29 October 2014 in the sum of $200,000. Consideration In my view, first, it is appropriate to award costs in this matter on the basis that the plaintiffs have not been wholly successful in their action and the defendants have succeeded on some issues in the litigation. Second, I consider it is appropriate in the exercise of the court’s discretion to make an award of costs on a broad-axe basis, informed by balancing consideration of the issues decided, who succeeded or failed on those issues, and some consideration of the amount of the court’s time and resources that was occupied in hearing and determining those discrete issues, recognising the difficulties of precision in such consideration, given the evidence frequently was relevant to more than a single, discrete issue. Third, the costs of the expert determination must be decided by Mr Walsh. This follows from the terms of clause 1 to Schedule C of the expert determination deed[12] which modified r 13 of the Expert Determination Rules in Schedule B to the deed by providing:13.1 The Parties’ costs for the Expert Determination shall be determined as follows:13.1.1the Expert’s fees are to be initially born equally between the Parties;13.1.2Once the Expert has made his determination the Parties agree that the Expert may make orders at his discretion that the costs of the Matters for Expert Determination be awarded to or against either party in which event the costs of the Matters for Expert Determination be:a.determined, as to liability, by the Expert;b.in the event the Parties cannot agree the quantum thereof the Parties agree that those costs be adjudicated on by the Court in the normal course in the Proceedings in accordance with the Supreme Court (Civil) Rules 2013. [12] Exhibit P12. Fourth, the costs of the pre-action disclosure application before Master Norman was decided by him on 21 September 2011. The issue as to the costs of that application was decided by Master Norman. That matter is functus officio. I would not interfere with that order. Fifth, I do not consider that the plaintiffs are to be deprived of an entitlement to costs on the basis of the application of 6SCR 263(2)(g). At the time the action was instituted the prescribed threshold was $75,000. The damages awarded exceeded that sum. In any event, the base price deduction claim was settled for a sum of $160,892 shortly before trial. Sixth, neither do I consider the plaintiffs should be deprived of costs by reason of Calderbank offers. An offer was made on 29 October 2014 in the sum of $200,000. However, when properly analysed, that represented an offer of $25,000 for the ceiling height which is less than the award ultimately obtained under that head of damages.