Dunmall v O'Sullivan [No 7]
[2014] WADC 121
•5 SEPTEMBER 2014
DUNMALL -v- O'SULLIVAN [No 7] [2014] WADC 121
| DISTRICT COURT OF WESTERN AUSTRALIA | Citation No: | [2014] WADC 121 | |
| Case No: | CIV:232/2006 | 22 AUGUST 2014 | |
| Coram: | O'NEAL DCJ | 5/09/14 | |
| PERTH | |||
| 13 | Judgment Part: | 1 of 1 | |
| Result: | Plaintiff ordered to pay costs of first defendant on an indemnity basis from date of rejection of Calderbank offer Plaintiff's application for an order that unsuccessful defendants pay costs to the successful defendant dismissed | ||
| PDF Version |
| Parties: | GEOFFREY DUNMALL MARIE O'SULLIVAN TERRENCE ALLDEN WALSH SHIRE OF MURRAY |
Catchwords: | Costs Sanderson order Whether costs of successful defendant should be met by unsuccessful defendants Turns on own facts Costs Indemnity costs Calderbank offers Whether rejection of Calderbank offer a ground for offering indemnity costs Turns on own facts |
Legislation: | Rules of the Supreme Court 1971(WA), O 24A |
Case References: | Atkins v Purslowe [1966] WAR 46 Berrigan Shire Council v Ballerini [2006] VSCA 65 Bullock v London General Omnibus Co [1904-7] All ER Rep 44 Dunmall v O'Sullivan [No 6] [2014] WADC 61 Ford Motor Co of Australia Ltd v Lo Presti [2009] WASCA 115 Gould v Vaggelas (1985) 157 CLR 215 Hodder v Town of Port Hedland [2011] WADC 145 (S) Parlin Pty Ltd v Choiceone Pty Ltd [2012] WASCA 19 Sanderson v Blyth Theatre Co [1903] 2 KB 533 Victorian Workcover Authority v Kagan Bros Consolidated Pty Ltd (2011) 31 VR 386; (2011) VSCA 91 |
JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
- IN CIVIL
- Plaintiff
AND
MARIE O'SULLIVAN
First Defendant
TERRENCE ALLDEN WALSH
Second Defendant
SHIRE OF MURRAY
Third Defendant
Catchwords:
Costs - Sanderson order - Whether costs of successful defendant should be met by unsuccessful defendants - Turns on own facts
Costs - Indemnity costs - Calderbank offers - Whether rejection of Calderbank offer a ground for offering indemnity costs - Turns on own facts
Legislation:
Rules of the Supreme Court 1971(WA), O 24A
Result:
Plaintiff ordered to pay costs of first defendant on an indemnity basis from date of rejection of Calderbank offer
Plaintiff's application for an order that unsuccessful defendants pay costs to the successful defendant dismissed
Representation:
Counsel:
Plaintiff : Mr B P Wheatley
First Defendant : Mr D R Clyne
Second Defendant : Ms K Levy
Third Defendant : Mr J Eller
Solicitors:
Plaintiff : Mossensons
First Defendant : DLA Piper Australia
Second Defendant : Danaghers
Third Defendant : John Eller
Case(s) referred to in judgment(s):
Atkins v Purslowe [1966] WAR 46
Berrigan Shire Council v Ballerini [2006] VSCA 65
Bullock v London General Omnibus Co [1904-7] All ER Rep 44
Dunmall v O'Sullivan [No 6] [2014] WADC 61
Ford Motor Co of Australia Ltd v Lo Presti [2009] WASCA 115
Gould v Vaggelas (1985) 157 CLR 215
Hodder v Town of Port Hedland [2011] WADC 145 (S)
Parlin Pty Ltd v Choiceone Pty Ltd [2012] WASCA 19
Sanderson v Blyth Theatre Co [1903] 2 KB 533
Victorian Workcover Authority v Kagan Bros Consolidated Pty Ltd (2011) 31 VR 386; (2011) VSCA 91
1 O'NEAL DCJ: In Dunmall v O'Sullivan [No 6] [2014] WADC 61 I delivered reasons for judgment finding the second and third defendants liable for injuries suffered by the plaintiff as a result of a balcony collapse. At the same time I dismissed the plaintiff's claim against the first defendant. On 29 July 2014 I gave oral reasons for decisions apportioning liability for the plaintiff's loss 65% to the second defendant and 35% to the third defendant. The claims for contribution and indemnity by the second and third defendants, each against the other, have also been allowed.
2 Following both decisions referred to above, costs were reserved. The first defendant now seeks an order for costs from the plaintiff, including an order for indemnity costs from the dates of either of three settlement offers made to the plaintiff, as well as costs of the contribution proceedings from the second and third defendants.
3 The plaintiff opposes the first defendant's application for indemnity costs. The plaintiff further seeks what is commonly known as a Sanderson order. That is, the plaintiff seeks an order of the kind described in Sanderson v Blyth Theatre Co [1903] 2 KB 533, 538 – 539, requiring the second and third defendants to pay the first defendant's costs of the action.
4 All defendants oppose the plaintiff's application for a Sanderson order. The position of the first defendant in this regard is that if an order is to be made requiring the unsuccessful defendants to pay the successful defendants' costs it is more appropriate to make a Bullock order: Bullock v London General Omnibus Co [1904-7] All ER Rep 44. That is, if the plaintiff is to receive an order effectively requiring the second and third defendants to indemnify the plaintiff for the costs of the first defendant, it should be an order that the unsuccessful defendants reimburse the plaintiff for the costs paid by him to the first defendant.
5 I will deal first with the plaintiff's application to have the costs of the first defendant paid by the second and third defendants.
Sanderson & Bullock orders
6 The general rule with respect to costs is that the successful party recovers his costs. That rule of course assumes that success or failure is complete. Where a plaintiff sues multiple defendants and does not succeed against all, then a corollary of the general rule normally applies. That is, costs follow the event, with the successful defendant recovering her costs. The question then becomes, as between the unsuccessful defendants and the plaintiff, who should bear that successful defendant's costs. As a starting point:
A defendant, it is reasoned, should not be required to pay more than one set of costs merely because he or she proves unsuccessful. The partially successful plaintiff cannot look to each of the unsuccessful defendants for more than equal proportionate share of the costs not solely referrable to his or her claim against one or other of the defendants individually, in addition to the costs that are so referrable: Currabubula Holdings Pty Ltd v State … of New South Wales [2000] NSWC 232 at [95] per Einstein J; Rasch Nominees Pty Ltd v Batholomaeus (No 3) [2013] SASC 14 at [11] per Kourakis CJ.
Law of Costs, 3rd ed, GE Dal Pont at 11.8.
7 This court has the power to grant a costs order that would allow the plaintiff to recover all of its costs, including costs that would have to be paid to the first defendant. The manner in which that discretion may be exercised has been shaped by a number of principles that have developed with respect to applications of this kind. The dominant considerations were set out by Gibbs CJ and Brennan J in Gould v Vaggelas (1985) 157 CLR 215. Gibbs CJ said (230):
In my respectful opinion the true position was clearly stated by Blackburne CJ in Steppke v National Capital Development Commission (1978) 39 LGRA 94 at page 100; 21 ACTR 23 at pages 30 – 31, when he said that:
'there is a condition for the making of a Bullock order, in addition to the question whether the suing of the unsuccessful defendant was reasonable, namely that the conduct of the unsuccessful defendant had been such as to make it fair to impose some liability on it for the costs of the successful defendant.'
9 In determining any such application the fundamental objective is, so far as possible, to make orders that are just and fair to all parties. I will address the factors which in my view weigh most heavily here.
10 First, there are significant differences between the causes of action alleged against each defendant. While the cause of action against each was based on alleged negligence, that is not determinative: Atkins v Purslowe [1966] WAR 46 [47].
11 Each defendant in this case was alleged to have breached a duty to take reasonable care that, broadly speaking, looked to avoid foreseeable harm to users of the first defendant's balcony. Thereafter the nature of each claim diverged widely. That against the first defendant was based on the fact that she was an owner/occupier. She was said to have failed to have observed deterioration of the balcony or to have taken reasonable steps to detect it. The claim against the third defendant arose from its approval of the plans and specifications for the construction of the first defendant's house, including the balcony. In the exercise of that statutory duty the third defendant failed to observe or failed to take reasonable steps that would have detected the substantial deficiencies in the design of the balcony. The second defendant, who was responsible for overseeing the construction of the house and balcony, either allowed or failed to observe the substitution of shoddy electroplated bolts for the specified galvanised bolts securing the balcony to its supports. The negligence or alleged negligence of each defendant occurred at different times and in these different ways.
12 As the court said in Victorian Workcover Authority v Kagan Bros Consolidated Pty Ltd (2011) 31 VR 386; (2011) VSCA 91 [21]:
Whether the claims can be described as interdependent or alternatives is an important factor that should be taken into account and which would commonly be a critical consideration. But regardless of how the claim has been initiated or formulated, the justice of the case may still merit such an order if there is a substantial connection between the claims.
13 Plainly the claims against the three defendants in this case could not be described as interdependent or alternatives. Each stood or fell on its own. Thus, what will 'commonly be a critical consideration' is absent here.
14 Next, this is not a case where either unsuccessful defendant has effectively set the plaintiff upon the first defendant, or led the plaintiff to believe that he should look to the first defendant for his remedy. This action was commenced in 2006 against the first defendant only. The third defendant was not joined as a defendant to this action until August 2008 and the current second defendant was not joined until April 2010. If the conduct of the unsuccessful defendants did not induce the plaintiff to proceed against the successful defendant, and the plaintiff would have proceeded against the successful defendant in any event, that is a reason to not make a Sanderson or Bullock order: Berrigan Shire Council v Ballerini [2006] VSCA 65 [24] (Chernov JA).
15 Nor could it be said that anything done by the unsuccessful third defendant encouraged the plaintiff to maintain his action against the first defendant. The third defendant's notice of contribution and indemnity against the first defendant was filed in August 2009. However, no statement of claim was filed. Nor did the third defendant seek at trial to shift liability to the first defendant. No expert evidence was ever served by the third defendant and no evidence of any kind was offered at trial.
16 The position of the second defendant is different in this respect. The second defendant did not issue a contribution notice against the first defendant until February 2013. There was however a statement of claim subsequently filed by the second defendant in the contribution proceeding. It is the case that it relies on substantially the same facts and matters advanced by the plaintiff. The second defendant did serve and subsequently tender an expert report. That report, prepared by Mr Naismith and referred to in the reasons for judgment, did originally seek to suggest some breach of duty on the part of the first defendant by failing to observe what was suggested to be obvious signs of deterioration in the connection where the balcony failure occurred. That particular opinion of Mr Naismith, although ultimately excluded from his report, was picked up by Mr Saleeba, one of the plaintiff's experts in a report of his that became exhibit 25. While the particular reference from Mr Naismith appeared to enthuse Mr Saleeba, the same inadmissible references were ultimately excluded from Mr Saleeba's reports. Counsel for the second defendant did cross-examine the first defendant for the purpose of trying to establish a want of care on the part of the first defendant. Counsel for the second defendant did, in the course of her closing submissions, seek to shift liability for the plaintiff's injury on to the first defendant.
17 In this case the contribution claims by the second and third defendants against the first defendant did not present as a result of any reasoned forensic analysis but rather as a matter of reflex. I am told that I may accept that prior to the trial the third defendant advised the first defendant that it would not be advancing any allegation of negligence as against the first defendant. Counsel for the second defendant says that it was the plaintiff's conduct that encouraged the second defendant to bring a contribution proceeding against the first defendant. Although that was simply said from the bar table, it may well be the case here. It is the case that the efforts of the second defendant to shift liability to the first defendant were more limited and no more effectual than those of the plaintiff. By the time the second defendant made any such efforts the plaintiff had long been blindly committed to that course.
18 The written submissions filed on behalf of the plaintiff rely heavily on the proposition that in all of the circumstances it was prudent for the plaintiff to proceed against the first defendant and that therefore it should recover from the second and third defendants the costs that must be paid to the first defendant. As will become apparent when I come to discuss the first defendant's application for indemnity costs, I do not agree with that proposition. The conclusions I have reached with respect to the first defendant's application for indemnity costs are in fact another reason why it would not in my view be just, in all the circumstances, to visit those costs on the second or third defendant.
19 In all of the circumstances I see no basis for making either a Sanderson or Bullock order between the plaintiff and the second and third defendants in relation to the costs of the first defendant. I dismiss the plaintiff’s application for a Sanderson order.
Order 24A – Calderbank letter
20 The affidavit of Mark Lewis Williams sworn 3 June 2014 has been filed in support of the first defendant's application for indemnity costs. I will summarise the contents of Mr Williams's affidavit with respect to the indemnity costs application.
21 On 9 June 2006 the first defendant's then solicitors served the plaintiff's solicitor with a notice of offer to compromise pursuant to O 24A. In that notice the first defendant (then in fact the only defendant) offered to consent to judgment in the amount of $80,000 plus costs. The offer was not accepted.
22 On 24 July 2012 the first defendant's solicitors sent the plaintiff a letter offering settlement of the kind commonly described as a 'Calderbank letter' that was marked, 'without prejudice save as to costs'. The letter then commences:
We refer to the report of Peter Bruechle recently served by your client.
In our view, the report does not assist your client's claim against our client. Mr Bruechle expresses no opinion that would support your client's allegation that our client breached a duty of care she owed to him, either in tort or pursuant to statute.
Notwithstanding our client is prepared to re-instate its offer previously made in an attempt to resolve the action against our client, and to avoid ongoing defence costs if this matter proceeds to trial.
Our client therefore offers to settle your client's claim against her for $40,000 'all inclusive' on the following conditions.
23 The offer was stated to be left open for nine days until the conclusion of a pre-trial conference listed for 2 August 2012.
24 The report of Mr Bruechle that is referred to is, I infer, one of the reports subsequently tendered at trial. The writer correctly characterised the effect of Mr Bruechle's report.
25 The offer was not accepted. On 17 August 2012 the first defendant's solicitors sent another settlement offer to the plaintiff's solicitors, again marked 'without prejudice save as to costs'. This letter re-instates the $40,000 'all inclusive' offer. This time it was left open for acceptance for five weeks, until 21 September. In three pages the authors, Mr Williams and Ms Bishop, succinctly and courteously summarise the deficiencies in the plaintiff's claim and the strengths of the first defendant's case that ultimately led to the dismissal of the plaintiff's claim. No doubt to the satisfaction of the authors, many of the points raised presciently anticipate the reasons for judgment.
26 Among other things the letter says:
4. For your client to succeed in his claim against our client, he will need to prove on the balance of probabilities that our client knew or ought reasonably have known that the balcony was unsafe and may collapse, that her maintenance of the balcony was not to a standard that was reasonable in the circumstances, that her failure to maintain the balcony was a material cause of collapse, and that an inspection of the balcony by either a lay person or a qualified person would have revealed the defect that ultimately caused the collapse.
5. Your client's action has been on foot for six years. Despite that, and your client being on notice of our client's defence, your client has served no evidence to support his allegations against our client. The mere fact our client was occupier of the premises does not mean she is strictly liability [sic] for any harm suffered by entrants to the premises.
27 The letter then goes on, by reference to the contents of many of the expert reports ultimately tendered at trial and referred to in the reasons for judgment, to describe the causes of the collapse. This summary appears:
9. It is open for a court to find from your client's expert evidence that:
9.1 Bolts different to those provided for in the building specifications were used at the time of construction of the balcony.
9.2 The bolts were the cause of the balcony failure.
9.3 The bolts were an internal fixing and were not visible on the inspection by either a lay person or an expert without removing a bolt or dismantling the balcony.
9.4 There is no evidence available to our client that the bolts did not comply [sic] the building specification.
9.5 Our client had a maintenance system for the balcony that was adequate to clean and maintain the balcony.
9.6 There was no notice to our client about the inadequacy of the bolts or deterioration of the timber.
9.7 The balcony collapsed due to latent defects.
10. If the court makes findings to this effect, your client will fail in his claim against our client and in those circumstances your client will be liable for our client's costs in defence of the action.
28 As the paragraphs above correctly set out, all of this evidence was available from the plaintiff's expert evidence, long before trial. This evidence was tendered at trial by the plaintiff.
29 No affidavit material has been filed on behalf of the plaintiff on this issue. In written submissions filed by the plaintiff a number of assertions were made with respect to the conduct of the litigation on the part of the first defendant. The penultimate submission of the plaintiff is this:
At the time of the offers it cannot be said that the plaintiff did not have fair prospects of success against the defendant and was unreasonable in rejecting the offers.
30 Order 24A does not provide for an award of indemnity costs to a defendant when a plaintiff rejects the offer and does not achieve a better result at trial. That does not mean that an order for indemnity costs can never be made where O24A has been used to make an offer: Parlin Pty Ltd v Choiceone Pty Ltd [2012] WASCA 19.
31 In Parlin the Court said:
The court may make an order for indemnity costs if it is satisfied that there is some special or unusual feature of the case to justify the court exercising its discretion in that way. Thus such an order may be made where there has been some element of improper or unreasonable conduct by a party or the party's legal advisors… Whether the conduct of a party in rejecting an Order 24A offer is unreasonable will depend upon the particular circumstances of the case. It is clear, however, that it will not be sufficient for the offeror simply to show that it obtained a judgment more favourable than the terms of the offer." Counsel for the first defendant, reasonably in my view, did not press the position that the circumstances here were 'special or unusual'.
32 In supplementary reasons in Hodder v Town of Port Hedland [2011] WADC 145 (S) I summarised a review of the authorities with respect to the principles governing an award of indemnity costs where a Calderbank offer is relied on, taken from the reasons for decision of Buss JA in Ford Motor Co of Australia Ltd v Lo Presti [2009] WASCA 115 [16] – [32]. I adopt that summary of principles here.
33 It is the case that the mere fact of the Calderbank offer will not justify an award of indemnity costs unless rejection of the offer was unreasonable. The party who makes a Calderbank offer that is rejected bears the onus of satisfying the court that it should make an award of indemnity costs in her favour. There is no presumption of an entitlement to award of indemnity costs as a consequence of the rejection of the Calderbank offer. The unreasonableness of the rejection of an offer depends on the circumstances of each particular case. A difficulty that I am faced with here is that, apart from what emerged at trial, the only evidence I have is contained in the first defendant's affidavit. I have no information for example as to what the plaintiff's damages might reasonably amount to, to be able to compare that to the compromise offered. I am required to infer, it seems to me, that the prospects of success that were before the plaintiff, certainly by August 2012 were much the same as they were at trial.
34 I observe that in this case a very substantial offer was made in 2006, close to the time of the commencement of the proceedings. By July 2012, after some six years of litigation, with one defendant who was earlier joined to the proceedings having come and gone from the action, the first defendant's position had hardened. Given the evidence that then existed that undermined the position taken by the plaintiff towards the first defendant that is understandable. Indeed it is difficult to see what there was that could have led the plaintiff, properly advised, to think that it was then reasonable to continue to proceed against the first defendant.
35 That the first defendant had owed the plaintiff a relevant duty of care was of course beyond question. Beyond that it is difficult to see how, properly advised, the plaintiff could have thought that it had some prospect of establishing a breach of duty that was causative of any harm that was suffered. With respect, a number of the matters set out in the plaintiff's written outline of submissions on this application are unhelpful. That includes repeating assertions from the trial that have been rejected.
36 Among other things the plaintiff offers this:
The plaintiff was not in a position to prove the cause of the collapse of the balcony until after the first defendant discovered the report and colour photographs of Mr R Johnson on 27 February 2013 which was well after the date of each other.
37 There are two things to be observed about that. First, that submission rather begs the question as to what the plaintiff thought the first defendant's breach was. I do observe however that there is really very little difference in the conclusions reached by all of the engineering witnesses with respect to the cause of the collapse, including those referred to in the first defendant's letter of August 2012. Second however, the March 2005 report of Mr Johnson (which is referred to in my reasons for decision at [148]) describes the level of maintenance on the first defendant's house and balcony generally as 'considered to be to a standard comparable with other buildings of the same approximate age. It is apparent that there has been no maintenance on the timber in the area where the failure was initiated. However, this is considered to be associated with specific detail and not necessarily a reflection of the level of maintenance on the building generally'.
38 The 'specific detail' was the internal connection between the edge beam and the supporting plate. At the same time, as I refer to at [149] of my reasons for decision, the plaintiff had to hand the very first report from its expert engineer, Mr Bruechle. That report contained a reference to a statement from someone named Richard Machell that had been obtained by the plaintiff's solicitors. The statement then available to the plaintiff and his solicitors showed that Mr Machell having observed the bolts taken from the wreckage of the balcony that collapsed said:
The visual inspection of the ends of the bolts would not likely have given any cause for concern, based on the condition of the bolts inspected.
39 This evidence too was tendered at trial by the plaintiff. The plaintiff's case against the first defendant was not helped by the report of Mr Johnson. The contrary is true. The plaintiff maintained its action against the first defendant despite the receipt of that report and, despite the other evidence available to it that either did not point to a breach of duty by the first defendant or positively suggested she had taken reasonable care generally with respect to her house, her balcony and the safety of entrants.
40 Counsel for the plaintiff continues to assert that a want of care on the part of the first defendant could reasonably be inferred in this case because of the suggestion that, at some point prior to the balcony collapse, the first defendant was said to have observed dry rot in the supporting posts of the balcony. It is said that having observed that, she consulted the plaintiff about it, and caused extensive repairs to be made to the balcony posts by a competent tradesman. She then consulted the plaintiff about the condition of the posts again. Plaintiff’s counsel reasons that these circumstances demonstrate that the first defendant was therefore negligent for failing to have detected the deterioration that was going on inside the connection of the edge beam supporting plate. I dealt with this proposition at length in my reasons for judgment and I do not propose to do so again, other than to say that it does not logically follow.
41 One of the particulars of negligence against the first defendant asserted reliance, 'upon the doctrine of res ipsa loquitur'. A resort to Latin maxims is no substitute for a proper analysis of the facts measured against the applicable law. This was far from the sort of case where it could sensibly be suggested that the collapse of the balcony could not have occurred without the negligence of the first defendant.
42 Whatever vague hopes the plaintiff may have had of fixing liability on the first defendant, in the letter of 17 August 2012 the first defendant expressed the terms of its offer with complete clarity, offering substantial reasons underpinning the position taken. The plaintiff was given five weeks to consider the offer. The reasoned and careful analysis by the first defendant's solicitors showed any reader who chose to think carefully about it, why the plaintiff's claim against the first defendant was a very weak one, to say the least. The offer foreshadowed an application for indemnity costs in the event that it was rejected.
43 In all of the circumstances, in my view the plaintiff's failure to accept the first defendant's last offer of compromise was unreasonable. It follows that the first defendant should have an order for its costs up until 21 September 2012 and an order for indemnity costs thereafter.
Expert Conferral Application
44 Finally, I am asked to deal with a matter of costs with respect to an application made by the second defendant in the course of these proceedings. On 16 August 2013 an application came before registrar Kingsley. The second defendant applied for an order that there be a conferral of the experts who had been engaged in this case. Given that the third defendant was not calling expert evidence, the third defendant was not involved in this application. The learned registrar dismissed the application. In doing so he fairly plainly indicated that unless he was persuaded otherwise by written submissions, costs should follow the event. The second defendant appealed that decision. The registrar did not then deal with costs. Eventually the matter ended up before his Honour Judge Keen.
45 The appeal was of course a hearing de novo. It was never necessary however for his honour to decide the application. I was told by counsel for the second defendant that his honour discovered that there had been no or no proper pre application conferral between the legal representatives. Somehow in the course of the hearing agreement was reached that rather than an expert conferral, a list of three questions would be submitted to the parties’ expert witnesses, and the answers would be provided to the parties. His honour ordered that the cost of the appeal be reserved to the trial judge.
46 It is most regrettable that even this rather straightforward issue was incapable of agreement between the parties, before it came on for hearing. Of course it is not possible for me to know exactly why that was. In any event, the application was not successful. In my view the second defendant should bear the cost of the application before the registrar and the appeal, as well as all costs related to the application and the appeal.
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