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THE DIRECTOR OF PUBLIC PROSECUTION SEEKS THAT AN ORDER FOR COSTS SHOULD BE ON THE STANDARD COSTS BASIS AND NOT AN IDEMNITY BASIS AS ALLEGED BY THE THE RESPONDENT
Disorganized Developments seeks costs on an indemnity basis in light of a formal offer filed after institution of the action. The Director opposes such orders.
Facts:
The Director of Public Prosecutions instituted an action seeking restraining and forfeiture orders under the Criminal Assets Confiscation Act 2005 in respect of a property owned by Disorganized Developments Pty Ltd. The Director ultimately decided not to proceed with the action and consented to an order dismissing the applications.
Disorganized Developments seeks an order for costs in the general jurisdiction of the Court pursuant to section 40 of the Supreme Court Act 1935 on the basis that costs should follow the event. It seeks an order for indemnity costs pursuant to rule 188F of the Former Rules on the ground that the Formal Offer was, subject to one exception, a “complying offer” and it obtained judgment on the claim to which the offer related. It accepts that the offer did not meet paragraph (c) of the definition of a “complying offer” but seeks dispensation with this requirement. Alternatively, it seeks an order for indemnity costs pursuant to rule 188G of the Former Rules on the ground that it has achieved a better result than the terms of its offer.
The Director contends in the alternative that, if there is power to order payment of Disorganized Developments’ costs, the costs order should be on the standard costs basis and not an indemnity basis. First, the Director contends that the indemnity cost regime under rule 188F does not apply to proceedings under, and is inconsistent with, the Act. Secondly, the Formal Offer was not a “complying offer” within the meaning of rule 188F because it did not involve a “genuine compromise” and did not contain a term either that Disorganized Developments pay the Director’s costs on a party/party basis or that the parties submit to any order the Court may make in the exercise of its discretion. Thirdly, the Director could not reasonably decide whether to accept the offer within 14 days (within the meaning of sub rule 188A (2)) because he had not received responding affidavits or an outline of submissions from Disorganized Developments. Fourthly, the Court ought not to exercise its discretion under rule 188G to order indemnity costs.
Issue:
Should the costs order be on indemnity basis or standard cost basis?
Law:
- Supreme Court Civil Rules 2006 (SA) rr 188F 188G
Analysis:
Weighing the comparative advantage to Disorganized Developments by reason of the release against the relatively small monetary offer of $10,000 and the term of the offer that each party bear their own costs, the Formal Offer did not involve a genuine compromise within the meaning of rule 188F(1)(b).
Commencing with sub rule 188G (3), the court does not consider that the Director unreasonably rejected the Formal Offer. The release contained in clause 2 of the Deed arguably would have precluded the Director from bringing a future application for a restraining order or forfeiture order in respect of the Property connected with the death of Mr. Boyce in a manner that would not have been precluded if the action had been dismissed on the merits. The payment of $10,000, with each party bearing their own costs, was inadequate to offset this substantial detriment.
Turning to sub rule 188G (2), it is mandatory for the court to take into account the Formal Offer, and its non-acceptance by the Director, in determining what order for costs should be made. Largely for the same reasons as are given in the previous paragraph, despite taking those matters into account, it is not appropriate to order that the Director pay Disorganized Developments’ costs of the action on any basis other than a standard costs basis.
Conclusion: The court orders that the Director pay Disorganized Developments’ costs of action on a standard costs basis.
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