WOODLAND v DONNELLAN [2011] NSWSC 1367

Supreme Court New South Wales

Medium Neutral Citation: WOODLAND v DONNELLAN [2011] NSWSC 1367 Hearing dates: 18 August 2011 Decision date: 18 August 2011 Jurisdiction: Common Law Before: RS HULME J Decision: Orders made on damages Category: Consequential orders Parties: Peter Richard WOODLAND Barbara WOODLAND Patrick DONNELLAN t/as PJ Donnellan & Co Representation: Mr JS Emmett (Plaintiff) Mr G Craddock SC (Defendant) Colin Biggers & Paisley Esplins Solicitors File Number(s): 2007/20438

Judgment 1RS HULME J: These reasons concern the assessment of damages in a matter in respect of which, on 29 July last, I delivered a decision in favour of the Plaintiff for an amount of damages to be assessed. 2In light of those reasons, both parties addressed the topic of damages in written and, on 18 August 2011, oral submissions and in a schedule which was handed up. During the course of the hearing on 18 August I made my decisions on the issues raised and orally delivered reasons. I advised that those reasons would be combined and reduced to a written judgment. This is the judgment. Item 1 3The first item in the schedule relates to the Plaintiff's own legal costs of the first instance proceedings against Manly Council. The issue between the parties is whether damages should be assessed upon the basis that those proceedings would have effectively settled so as to obviate the incurring of costs from 23 January or 25 January 2002. 4In my view, between those two dates the probability is that the proceedings would have settled later rather than earlier, and there is no reason to think they would have settled so early as to eliminate the incurring of the costs between 23 and 25 January. 5Accordingly, on this issue, the damages should be the sums advanced on the Defendant's behalf, namely $168,683.40. Item 2 6The second item to be reflected in an award of damages is an item of Manly Council's costs. It is agreed that the costs which Mr Woodland ultimately had to pay the Council were $243,717.31 plus $136,366.51 for interest. Both parties agree that there should be some deductions from the $243,717.31 with a consequential reduction in the interest component. It is agreed that those deductions should include an amount of $29,000 in respect of Manly Council's costs up to 23 January 2002. It is also agreed that there should be a deduction by way of contribution to the Council's drain. However, the parties disagree as to the amount in that connection, the Plaintiff arguing for a sum of $9,020 and the Defendant for a sum of $89,000. 7Some further explanation of that topic is required. A letter from Abbott Tout of 21 December 2001 proposed that the contribution should be, "equal to the cost that would have been incurred by (Mr and Mrs Woodland) in the construction of a separate drainage line to Ross Street". The handwritten Council memorandum set out at pages 6 and 7 of Exhibit D refers also to a contribution towards the construction and augmentation of a drain. 8The figure of $89,000 comes from evidence of Mr Woodland to the effect that that was the amount demanded by Council officers at a meeting he had with them in January 2001 following upon the correspondence commencing with the letter of 21 December 2001. However, it seems to me clear on the evidence that, insofar as a sum of $89,000 was or might have been mentioned, that was the total cost of the Council's drain, not the contribution sought by Mr Woodland and his recollection of the meeting in that connection was erroneous. Thus I am satisfied that the appropriate deduction is not $89,000, but some lesser figure representing a "contribution". 9Apart from evidence that indicates the Council was not disposed to compromise, the only evidence as to the Council's view as to the extent of the contribution is that afforded by the passage from the letter of 21 December 2001 which I have quoted and a notation on page 7 of exhibit D in terms: Our offer is a solution to the applicants at a cost of $50,000, a sum which is broken up into amounts of compensation $8,000, costs to date $29,000, costs to complete settlement $11,300, extras of $1,700. 10Those references suggest that the Council did not have in mind a very substantial sum of money by way of contribution though one must recognise, of course, the possibility that somehow or other the topic of the contribution to the drain was just forgotten in the compilation of the $50,000. 11The only evidence otherwise as to the cost which Mr and Mrs Woodland would have incurred in the construction of a separate drainage line to Ross Street is contained in a letter of 10 January 2002 from Mr Donnellan to Messrs Abbott Tout, that letter being included in exhibit D, where $9,200 is mentioned and it is said that: This is the amount which it would have cost our clients to construct the drain themselves to Ross Street to drain their properties. See attached quotation of Jetplumb Pty Ltd dated 5 December 2001. 12It seems to me that this is the amount which should be allowed by way of contribution to the Council's drain and deducted from the figure of $243,717.31 on that account. 13A further amount which the Defendant claims should be deducted is a sum of $11,300 in respect of further anticipated costs of Manly Council after 23 January 2002. As is apparent from what I have said, that amount is included in the handwritten note contained in exhibit D. 14A couple of issues arise. Firstly, it does seem to me that, subject to one matter, the amount of $11,300 by way of further costs seems high if intended to cover only the costs associated with the completion of the litigation itself. Mr Craddock submitted, and I think with justification, that the Council's intransigence leads to the conclusion that it was likely to insist on payment of that amount irrespective of whether objectively the amount was reasonable. I am disposed to accept that submission. 15The reservation that I made concerns the question of whether it was intended to encompass, not only as it were the costs of the litigation, but also the costs associated with the grant of an easement. In the definition of the issues for determination by me today, both parties agree that an amount of $15,724.70 referred to in paragraph 185 of my reasons of 29 July 2011 should be deducted, this representing costs Mr Woodland has incurred subsequent to the litigation with which I am concerned in obtaining his agreed easement. 16When one reads the Council note to which I have referred, I think it unlikely that, in addition to the $50,000 referred to therein, broken up as I have indicated, the Council was contemplating yet a further payment on account of costs it would or might incur associated with the grant of the easement. Thus it seems to me that to allow a deduction of the $11,300 sought by the Defendant would be doubling up on the deduction of $15,724.70 and, accordingly, a further deduction in the sum of $11,300 should not occur. 17A fifth deduction for which the Defendant contended in connection with Manly Council's costs was described as an unquantified deduction for the difference between party/party costs and indemnity costs after 17 May 2002 and there was a suggestion, though I think not finally agreed, that one could quantify that deduction by reference to a proportion of two- thirds/one-third. 18In this connection, the Defendant submitted that there was no sufficient causal connection between the solicitor/client costs of the Council and its negligence and the Defendant's liability should be limited to party and party costs, relying in that connection on remarks made by me concerning Justice Hamilton's decision to allow solicitor and client costs. 19Though I indicated, to put the matter mildly, reservations concerning his Honour's decision, I do not think it can be regarded as breaking the chain of causation. The consequence of the litigation because it did not settle in January meant that there were many uncertainties bearing on the question of what the amount of the Council's costs would turn out to be. His Honour's decision was only one of those. Accordingly, I do not think there should be any deduction for the difference between party and party costs and indemnity costs. 20Another deduction which is claimed by the Defendant from the sum of $243,717.31, is a sum of $8,000 by way of compensation for the grant on easement. The Plaintiff contends for a sum of $4,000 and it is undoubtedly the fact that well after January 2002 the parties agreed on an amount of $4,000 by way of compensation. 21However, in January 2002, as is clear from the Council handwritten memorandum to which I have referred, the Council was then seeking a higher figure. In the calculation of the $50,000 previously mentioned, the Council included an amount of compensation of $8,000. On the preceding page there is a notation that the valuer had assessed this amount as $7,000. Given the intransigent attitude which the Council was displaying at that stage, it does not seem to me that much, if any, weight can be placed on the fact that ultimately the Council agreed to a figure of $4,000. Certainly the reference to $7,000 provides an indication that the Council may well have not insisted on receiving the full $8,000, though there is a further note on the second page of that document which reads "Mr Woodland did not seem to be impressed and sought to negotiate a compromise on the $50,000 which I was not prepared to accept." 22In these circumstances it seems to me that while I cannot exclude the possibility of a figure under the $50,000 being negotiated between the various possibilities, the most likely is that the Council would have insisted on the $8,000. Accordingly, that amount also should be deducted from the $243,717.31. Obviously there should be appropriate adjustment of the interest figure. 23Finally, so far as this item is concerned, Mr Emmett conceded that there needed to be an adjustment to the commencing date for the calculation of interest, from 23 February to 25 February. (Presumably this concession was in consequence of the decision I made when considering item 1.) Item 3 - $15,724.70 24This is an amount Mr Woodland incurred in ultimately obtaining the easement that had been the subject of litigation with the Manly Council. It si referred to in [185] of my principal reasons. It was agreed that these costs would have been incurred in any event (and, implicitly, that they should not be included in any damages). Item 4 - $21,169.47 25This claim was for the costs Mr Woodland incurred in having the Council's costs assessed. 26It was agreed that my reasons lead to the conclusion that this amount should be included in the Plaintiff's damages. Item 5 - $26, 503.51 27Included in the damages which the Plaintiff seeks, is an amount of $26,503.51 (and interest thereon) being the costs of an application Mr Woodland made for leave to appeal against Justice Hamilton's decision on costs. The application for leave to appeal was unsuccessful and Mr Donnellan did not act for Mr Woodland in that connection. 28I have previously observed that it seemed to me that flowing from Mr Donnellan's negligence was the continuation of costs of the litigation with the Council, and the $26,503.51 falls into that category. It does not seem to me relevant whether or not Mr Donnellan was acting or advising at that stage, though obviously if those costs were not reasonably incurred, the Defendant should not have to pay them. 29However, in so far as the evidence goes, it seems to me that those costs were reasonably incurred and the prospect of costs of an appeal from part or the whole of Justice Hamilton's decision was something which was reasonably foreseeable at the time of the Defendant's negligence. In these circumstances, the Plaintiff should succeed for this item. Item 6 - Unquantified 30On behalf of the Defendant it was submitted that there should be a discount from any sum of damages otherwise arrived at upon the basis that what the Plaintiff really lost was a chance of settlement of the proceedings against the Council and that there was no certainty that settlement would in fact have occurred. 31I referred to this topic in paragraph 177 of my reasons of 29 July 2011, and in accordance with what I said there, I recognise again the possibility that the matter would not have settled. However, having regard to the Plaintiff's attitude as displayed in the correspondence and the potential risks of pursuing the litigation as they appeared at that time, the likelihood is that if the Plaintiff had been properly advised, the matter would have settled. Indeed, I think that is a strong likelihood. 32In these circumstances, it does not seem to me that damages should be assessed upon the basis of loss of a chance, but rather upon the basis of what the Plaintiff lost in consequence, not discounted as the Defendant has suggested. Other 33During the course of the hearing on 18 August 2011, Mr Emmett drew to my attention the figure of $41,047.53 in [183] of my principal reasons should be $410,047.53. He is obviously correct.