Harris Technology v BI Contracting Pty Ltd - [2013] SADC 17

DISTRICT COURT OF SOUTH AUSTRALIA
(Civil: Application)
HARRIS TECHNOLOGY v BI CONTRACTING PTY LTD
[2013] SADC 17
Judgment of Her Honour Judge Farrell
26 February 2013
PROCEDURE
COSTS
Whether the defendant BI Contracting Pty Ltd should contribute to the plaintiff's costs in defending an earlier dust diseases claim where the agreed apportionment of liability for damages was 60/40.
Hanson v Matthew Bro (1990) 55 SASR 183; Proctor & Gamble P/L v Australian Slatwall Industries P/L [2001] NSWSC 398, considered.

HARRIS TECHNOLOGY v BI CONTRACTING PTY LTD
[2013] SADC 17

The plaintiff, Harris Technology, formerly Myer (SA) Stores Ltd, “Harris”, settled a dust diseases action brought against it by a carpenter, Mr Hermann, who was employed by Myer Ltd. That claim was settled on the basis of a payment to Mr Hermann of $370,000. Harris then sued the defendant BI Contracting Pty Ltd, “BI”, in these proceedings for indemnity or alternatively contribution on the basis that Mr Hermann’s alleged injury, loss and damage was a result of BI’s breach of its duty of care when it sprayed asbestos material in the Myer Building in Adelaide in the 1960s.
Mr Hermann had commenced proceedings against Harris alone, as he was entitled to do, in accordance with the Dust Diseases Legislation. Those proceedings were commenced in June 2008 and they were very promptly resolved and payments were made toward the end of 2008. Between 2008 and 2010 Harris made attempts without success to involve BI in the proceedings brought against it by Mr Hermann. Only as a result of the proceedings in 2010 and the concessions that were made on the morning of the hearing before me were interest and costs of this claim resolved.
Harris and BI have agreed all aspects of this action apart from one issue; Harris’ costs in defending the claim by Mr Hermann. The agreed aspects of the settlement are as follows; BI will pay $222,000 (sixty per cent) by way of contribution to Harris, BI will pay $55,000 by way of interest to Harris and BI will pay $7,500 for Harris’ costs of this claim.
The parties have requested that I decide the aspect of the claim that they have not agreed, that is, whether BI should also pay Harris 60 per cent of its costs of defending Mr Hermann’s claim.
The argument before me traversed the South Australian dust diseases legislation, the law reform legislation, the broad costs discretion in section 42 of the District Court Act, rule 263 of the District Court Rules and a number of authorities.
The discretion to award costs under section 42 must be exercised judicially. The discretion is broad and unfettered. It can extend to orders against non‑parties if the court finds it just and appropriate that such an order be made. Whilst the discretion must be exercised judicially, the court is entitled to have regard to an array of factors and circumstances.[1]
[1] Hanson v Matthew Bro. (1990) 55 SASR 183
The parties referred to a number of authorities however those authorities give no clear indication one way or the other of what could or should be ordered in this case. There was no authority directly analogous to the circumstances of this case. The case that was most similar was Proctor & Gamble v Australian Slatwall Industries P/L[2]. However the unusual factual matrix of that case renders it readily distinguishable from this matter.
[2] Proctor & Gamble P/L v Australian Slatwall Industries P/L [2001] NSWSC 398
The only question for me to consider is whether there should be some apportionment of costs based on the apportionment of liability with respect to the relative liability of the parties.
Mr Livesey for the plaintiff contended that BI was dilatory in its approach to its obligations and it left Harris to shoulder the burden of dealing with Mr Hermann's claim. He contended it was entirely fair and reasonable that BI be required to contribute to Harris’ costs incurred in defending Mr Hermann’s claim. I do not accept that contention. The liability for costs incurred is not to penalise a party but rather to compensate for the costs incurred.
There was argument about the extent to which the order for costs which Harris seeks can be sought as contribution under the law reform legislation. It was clear under the old legislation that a defendant's costs incurred in defending could not be the subject of an order for costs in a later action.
Mr Livesey submitted that under section 6(2) of the Law Reform (Contributory Negligence and Apportionment) Act 2001 there is now an express power to go broader than previously as a consequence of the use of the word “incidental”. Section 6 provides as follows:
“(1)    A person who is liable in damages for harm suffered by another may recover contribution from a third person who is also liable in damages for the same harm.
(2)     The right to contribution—
(a)     exists even though the act or omission that gave rise to the liability of the person seeking to recover contribution may amount to an offence; and
(b)     extends to liabilities incidental to damages (such as a liability for interest),
(but the right is subject to Part 3 and any other statutory provision ¹that may operate to modify, exclude or limit it in a particular case).
….”
Mr Cox submitted on behalf of BI that Harris had no right to contribution for its costs of defending Mr Hermann’s claim under the Law Reform Act.
I accept Mr Cox’s contention that section 6 of that Act does not give a right to contribution towards costs paid by a tortfeasor defending a claim brought by another plaintiff. Section 6 provides only for liabilities that can properly be described as incidental to the damages claimed by Mr Hermann, in this case that is only interest and costs paid as part of the compensation to Mr Hermann. It does not extend to the costs incurred by Harris in defending the earlier action.
I do not accept that the Law Reform Act has extended the power to award costs as sought by Harris in this matter. Section 6 of the Law Reform (Contributory Negligence and Apportionment) Act 2001 does not enable an order to be made by this court that there be contribution to the costs incurred by the defendant in the original proceedings.
A number of assertions of fact were made on behalf of Harris with respect to the circumstances of this case. It was contended on behalf of Harris that the defence of the plaintiff's action was prompt, responsible, that it benefited BI, that the costs it incurred were reasonable, that had BI been joined it would have been required to do the sorts of things that Harris did, that BI was dilatory in its approach and that the analysis undertaken by Harris was the same as BI was required to undertake. These matters were disputed by BI and in the absence of evidence I can place no reliance on those assertions in reaching a conclusion regarding the issue before me. There were contested by BI and there is no evidence that supports them.
BI drew the distinction between the analysis required of a dust disease case by an employer on the one hand and of a manufacturer and contractor on the other hand. BI argued that the pleading in paragraph 4 of Harris’ statement of claim sought only ‘costs of the within action’. The only basis on which Harris could seek its costs of the earlier action was as a claim for contribution under the Act. The contribution to costs by way of third-party or non-party costs order principles was not properly before the court.
The arguments put on behalf of BI are compelling reasons not to make any order in favour of Harris with respect to its costs of defending Mr Hermann’s action. Had BI been successfully joined in Mr Hermann’s claim it would have incurred costs, it has instead incurred those costs in these proceedings. If BI had been successfully joined Harris would still have incurred the costs that it did and because it too is liable to the plaintiff Hermann it would have been obliged to bear its own costs.
The Application by Harris for BI to pay its costs of the Hermann action is dismissed.