| JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA LOCATION : PERTH CITATION : HODDER by his next friend ELAINE GEORGINA HODDER -v- TOWN OF PORT HEDLAND [2011] WADC 145 (S) CORAM : O'NEAL DCJ HEARD : 14-18, 21-25 MARCH & 18 NOVEMBER 2011 DELIVERED : 16 SEPTEMBER 2011 SUPPLEMENTARY
DECISION : 2 DECEMBER 2011 FILE NO/S : CIV 1316 of 2008 BETWEEN : REECE WILLIAM HODDER by his next friend ELAINE GEORGINA HODDER Plaintiff
AND
TOWN OF PORT HEDLAND
First Defendant
THE YOUNG MEN'S CHRISTIAN ASSOCIATION OF PERTH
Second Defendant
Catchwords: Costs - Indemnity costs - Calderbank offer - Whether rejection of Calderbank offer a ground for ordering indemnity costs - Turns on own facts
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Costs - Sanderson order - Whether costs of successful defendant should be met by unsuccessful defendant - turns on own facts
Costs - Whether particular items of costs should be taxed without regard to the scale limit - turns on own facts Legislation: Rules of the Supreme Court 1971 (WA), O 24A Result: First defendant ordered to pay costs of the plaintiff and second defendant on party/party basis, scale lifted for counsel preparation Representation: Counsel:
Plaintiff : Mr G Droppert
First Defendant : Mr J C Campbell
Second Defendant : Mr D R Clyne
Solicitors:
Plaintiff : Donna Percy & Co
First Defendant : DLA Phillips Fox
Second Defendant : SRB Legal
Case(s) referred to in judgment(s):
Coastal Hire Pty Ltd v Ewers [2009] WASCA 36(S)
Ford Motor Company of Australia Ltd v Lo Presti [2009] WASCA 115
Gould v Viggelas (1985) 157 CLR 215, 229
Hodder by his next friend Elaine Georgina Hodder v Town of Port Hedland [2011] WADC 145
Premier Building & Consulting Pty Ltd v Spotless Group Ltd (No 13) [2007] VSC 516
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1 O'NEAL DCJ: On 16 September 2011 I delivered reasons for decision after the trial of this action: Hodder by his next friend Elaine Georgina Hodder v Town of Port Hedland [2011] WADC 145. The only issue at trial was the question of liability quantum of damages having already been agreed subject to leave of the court. In the result I determined that the first defendant had breached a duty of care owed to the plaintiff that caused the plaintiff's injury. I held that the conduct of the second defendant while amounting to a breach of the duty of care that was owed did not cause the plaintiff's injury. I found the plaintiff contributorily negligent and apportioned liability 10% to the plaintiff and 90% to the first defendant.
2 I also found that an agreement entered into between the first and second defendant, for the management of the SHAC, the aquatic facility where the plaintiff was injured, did not by its terms require the second defendant to indemnify the first defendant for the damages that would be paid to the plaintiff absent some culpability of the second defendant for the injuries suffered by the plaintiff: [378] 3 The plaintiff by his next friend then sought leave to compromise his claim for damages. The amount agreed between the parties prior to the apportionment of liability was $6,500,000. The consequence of the apportionment of liability meant that the plaintiff would receive $5,850,000. I ordered pursuant to O 70, r 10 of the Rules of the Supreme Court 1971 (RSC) that the plaintiff be granted leave to compromise his claim for damages in the amount offered. Judgment in the amount of $5,850,000 was entered against the first defendant on 18 November 2011. 4 The plaintiff now seeks the following costs orders: 1. the first defendant pay the plaintiff's costs of the action, including any reserved costs to be taxed if not agreed; 2. the plaintiff's costs payable by the first defendant be paid on a party/basis until 11 November 2010 and on an indemnity basis thereafter; 3. the first defendant pay the costs of counsel's opinion as to the compromise on quantum; 4. the first defendant pay the second defendant's costs of the action including any reserved costs to be taxed if not agreed; (Page 4)
5 The second defendant also seeks an order that the first defendant pay the second defendant's costs of the action as well as the contribution proceedings. The second defendant also asks for an order allowing its costs to be taxed without regards to the limits of the Legal Practitioners (Supreme Court) Contentious Business Determinations 2008 and 2010 for: (a) getting up;
(b) counsel fee on brief; first day of trial and preparation; and
(c) the counsel fee on the second and subsequent days of trial. 6 The first defendant accepts that it should pay the plaintiff's costs of the action, 'save to the extent that those costs related solely to the plaintiff's claim against the second defendant, to be taxed if not agreed'. With respect to the second defendant's costs, the first defendant submits that the order should be that 'the plaintiff pay the second defendant's costs of the action, save to the extent that those costs related solely to the first defendant's claim against the second defendant, to be taxed if not agreed'. 7 The first defendant accepts that the plaintiff should be able to tax its costs of getting up without regard to the usual limits. The first defendant also accepts that there should be orders for a certificate for the transcript, the costs of counsel's opinion as to the compromise on quantum, and a reasonable allowance for the costs of Professor Blitvich and Mr McElroy. Otherwise the first defendant opposes the orders sought by the plaintiff. (Page 5)
Calderbank offer 8 On 11 November 2010 the plaintiff's solicitors wrote to the defendant's solicitors. After referring to the style of cause of the plaintiff's action the letter began: 'Please note the content of this letter is in accordance with the principles in Calderbank v Calderbank [1976] Fam 93; [1975] 3 All ER 333'. The letter then went on to make three alternative settlement proposals to the defendants. 9 The first offer related to agreement about quantum while allowing for a trial of liability. It is not relevant to the question of costs. 10 The second alternative put forward an offer of agreement about liability while leaving issues of quantum of damages for trial. On the basis of the defendants accepting joint and several liability for negligence the plaintiff offered to apportion negligence by accepting contribution of 50% on the plaintiff's part. 11 The third alternative proposed that: 12 The plaintiff's offers were left open for 21 days from the date of the letter. The plaintiff's position is that in all of the circumstances the first defendant's rejection of the plaintiff's offers was unreasonable and accordingly the plaintiff should have indemnity costs from the date of the offer. 13 Given the result at trial and the judgment that has now been entered it is obvious that the plaintiff has achieved a substantially better result than the offers made to the defendants on 10 November 2010.
Offers to settle and indemnity costs 14 Prior to 1 March 2007 the former O 24 r 10(4) created a presumptive entitlement to indemnity costs. A plaintiff who made an offer in accordance with the provisions of O 24A and obtained a more favourable result at trial was entitled to indemnity costs from the date of the defendants' rejection of the settlement offer. That is no longer the case. (Page 6)
15 The less formal method of settlement offer known as a Calderbank letter remained in vogue despite the availability of O 24A r 10 both in its form prior to the March 2007 amendment and since. The relevant principles governing an award of indemnity costs where a Calderbank offer is relied on were conveniently set out in the reasons for decision of Buss JA in Ford Motor Company of Australia Ltd v Lo Presti [2009] WASCA 115 [16] – [32]. The authorities supporting those principles are comprehensively described in his Honour's reasons. I will summarise the results of his Honour's review of the authorities: 1. A Calderbank offer will not justify an award of indemnity costs unless rejection of the offer was unreasonable. 2. All of the relevant facts and circumstances are to be considered in determining whether a party's rejection of a Calderbank offer was unreasonable. 3. The mere fact that the recipient of a Calderbank offer is ultimately worse off than he or she would have been had the offer been accepted, does not mean that its rejection was unreasonable. 4. The decision as to whether conduct is 'reasonable' or 'unreasonable' always involves matters of judgment and impression. 5. While it is not possible to enumerate all circumstances that must be taken into account in deciding whether the rejection of a Calderbank offer was unreasonable, ordinarily regard should be had to at least the following: (a) the stage of the proceeding at which the offer was received; (b) the time allowed to the offeree to consider the offer; (c) the extent of the compromise offered; (d) the offeree's prospects of success, assessed as at the date of the offer; (e) the clarity with which the terms of the offer were expressed; and (f) whether the offer foreshadowed an application for … indemnity costs in the event of the offeree's rejecting it. (Page 7)
6. The party who makes a Calderbankoffer that is rejected bears the onus of satisfying the court that it should make an award of indemnity costs in his or her favour. 7. The standard to be applied in awarding indemnity costs should not be allowed to diminish to the extent that an unsuccessful party will be at risk of an order for costs assessed on an indemnity basis, absent some blameworthy conduct on its part. A test of unreasonableness should not be upheld on other than clear grounds. 8. There is no presumption of an entitlement to an award of indemnity costs as a consequence of the rejection of a Calderbank offer. The unreasonableness of the rejection of the offer is not determined by a presumption. Rather, it depends on the circumstances of the particular case.
The nature, circumstances and terms of the plaintiff's offer 16 Five of the six circumstances ordinarily taken into account in assessing the reasonableness of a defendant's conduct in rejecting a Calderbank offer arise from the nature, circumstances and terms of the offer itself. 17 Here the offer was made some four and a half years after the plaintiff's accident and four months prior to the trial. It was made at a time when there had been opportunity for the issues between the parties to have been well defined and for the parties to have considered their positions. The defendants were allowed 21 days to consider the plaintiff's offer. The extent of the compromise that was offered was substantial. The terms of the offer were expressed with clarityand the offer plainly foreshadowed an application for indemnity costs in the event of the offerees' rejection of it. All of these factors weigh in favour of the plaintiff and against the first defendant. Absent the parties identifying any other factor of significance what remains to be determined is the central reason for the first defendant's rejection of the offer, that is, its perception of its ultimate chance of success. 18 In Ford Motor Company of Australia Ltd v Lo Presti Buss JA referred to these observations of Byrne J in Premier Building & Consulting Pty Ltd v Spotless Group Ltd (No 13) [2007] VSC 516 in relation to the meaning of 'unreasonable' in the context of the rejection of a Calderbank offer: (Page 8)
A decision to accept or not an offer of this kind will ordinarily be based upon the offeree's perception of its ultimate chances of success, that is, it involves a prediction as to the likely outcome of the trial. At the time the debate about costs occurs the trial will normally be over; the event will have demonstrated that the prediction which underlay the decision was not fulfilled, that it was erroneous or even imprudent (Colgate Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225 at 228, per Sheppard J). … In the same way that the failure to achieve a more advantageous result will not automatically put the offeree at risk, so too it is not sufficient for it to avoid the consequence of its erroneous prediction that it says only that the outcome was uncertain. The outcome of almost all litigation is uncertain. The erroneous prediction may not, however, be an unreasonable one if the predictor was not, at the time, for good reason in possession of sufficient information to make an assessment or if the circumstances upon which it was based later changed. It must be acknowledged that it is part of the ordinary function of a lawyer to make predictions of this kind. The lawyer must make them at the outset and during the litigation in order to enable the client to make responsible and informed decisions to commence the litigation, to pursue it and to make the various decisions in the course of the proceeding's progress to trial and judgment. [13] 19 The evidence at trial disclosed that the first defendant had been aware of the risk of injury posed by the shallow end diving blocks since 2000. The significance of the risk was subsequently drawn again to the first defendant's attention by the second defendant and the Royal Life Saving Society of Australia. On two occasions prior to the accident the second defendant expressly and unequivocally advised the first defendant that the permanent fixed shallow end diving blocks should be removed from the SHAC. In all of the circumstances described in my reasons for judgment those matters created a significant risk that the first defendant would be found in breach of a duty of care owed to the plaintiff. 20 Especially when judged with hindsight, the offer contained in the plaintiff's Calderbank letter was a reasonable one. It does not follow automatically however that the rejection of that offer at the time was unreasonable. In particular it does not follow automatically that, as the plaintiff submits, it was unreasonable for the first defendant to have declined to accept sole liability for the plaintiff’s damages if the second defendant was unwilling to accept any joint responsibility to meet the plaintiff’s terms. On the authorities, the relevant prospect of success is that of the offeree. Where the offeree is but one of two or more defendants the offeree's prospects will not necessarily be the inverse of the offeror plaintiff's. 21 First, hindsight is to be avoided in determining the objective unreasonableness or otherwise of the first defendant’s conduct. (Page 9)
22 Second, there is in fact no evidence before me that illuminates the factors at play in the first defendant’s decision to decline solely to accept the plaintiff's offer without contribution from the second defendant. Apart from the evidence at trial and the circumstances surrounding it that I am aware of because of my role as trial judge, I know nothing of the discussions or negotiations between the parties, apart from the fact of the offer. 23 Third, the apportionment of contributory negligence involves the exercise of discretion where reasonable people may disagree as to the relative importance of the parties respective contribution to the injuries suffered. 24 Fourth, the plaintiff was advancing a claim of negligence against the second defendant with at least the same vigour as it pursued the first defendant. Among other things the plaintiff asserted at trial that the second defendant's management of the SHAC and its actual knowledge, of the plaintiff's condition by its manager Mr Retallack, meant that the second defendant should be at least equally culpable for the plaintiff's injuries. Given that the plaintiff anticipated success against the second defendant, it is difficult to see that it was unreasonable to anticipate that the second defendant could bear some liability for the plaintiff’s injuries. 25 Had the plaintiff's claim against the second defendant succeeded to any extent in making the second defendant liable for the plaintiff’s injuries, the terms of the management agreement referred to in my earlier reasons would have resulted in an outcome far more favourable to the first defendant than an entire responsibility for the plaintiff’s damages, regardless of the extent of the plaintiff's contribution. 26 Nor was it unreasonable in my view for the first defendant to believe that it was far more likely to achieve that result in a trial by the plaintiff against both defendants. The submission of the plaintiff was that it was open to the first defendant to settle with the plaintiff and then pursue the second defendant for contribution and indemnity. While that is indeed a theoretical possibility, the submission in my view ignores the forensic difficulties that the first defendant would be faced with in those circumstances compared with the advantage of 'piggy backing' on the efforts of the plaintiff and his legal advisers. There is no evidence before me that the first defendant would have any willing assistance from the plaintiff and his legal advisers had the first defendant elected to settle with the plaintiff by itself. (Page 10)
27 In all of the circumstances, I am unable to conclude that it was unreasonable of the first defendant to fail to accept the plaintiff's Calderbank offer.
Sanderson & Bullock orders 28 Both the plaintiff and the second defendant seek an order that the first defendant pay the second defendant's costs of the action. That is, they seek what is commonly known as a 'Sanderson' order. The first defendant's position is that the plaintiff should bear the second defendant's costs of the action 'save to the extent that those costs related solely to the first defendant's claim against the second defendant …'. Otherwise the first defendant's position was that it was indifferent as between a 'Sanderson' order or a 'Bullock' order if there was to be an order requiring the first defendant to meet the costs of the second defendant. 29 The first defendant's submissions recognise that an unsuccessful defendant will be ordered to pay a successful defendant's costs where either the claim against two or more defendants are substantially connected or interdependent or the plaintiff acted reasonably in suing the successful defendant. 30 The first defendant has referred me to the dicta of Gibbs CJ in Gould v Viggelas (1985) 157 CLR 215, 229: … the mere fact that the joinder of two defendants was reasonable does not mean that the unsuccessful defendant should be ordered to pay, directly or indirectly, the costs of the successful defendant. Obviously a judge should make a Bullock order only if he considers it just that the costs of the successful defendant should be born by the unsuccessful defendant, and if nothing that the unsuccessful defendant has said or done has led the plaintiff to sue the other defendant, who ultimately was held not to be liable, it is difficult to see any reason why the unsuccessful defendant should be required to pay for the plaintiff's error or over caution. 31 In this case, the first defendant as owner of the SHAC had appointed the second defendant as the manager of that facility. At the same time, the first defendant retained control and oversight. 32 The first substantial allegation appears in the first defendant's defence at par 10. After denying that it was under a duty to take care for the safety of entrants at the SHAC, the first defendant pleaded: If, which is denied, it had a statutory duty or duty of care as pleaded or at all: (Page 11)
10.1 the first defendant delegated that statutory duty and/or duty of care to the second defendant.
PARTICULARS
(a) the first defendant refers to the written management agreement for the premises between the first defendant and the second defendant, dated 27 February 2004. 33 At the trial, apart from the various arguments mounted to demonstrate that there was no liability to the plaintiff at all, the first defendant asserted that appropriate supervision and signage, matters within the control of the second defendant should have been an adequate response to the risk posed by the shallow end diving blocks. The first defendant’s case is summarised by this submission at [9.15] of its submissions at trial, It was YMCA's obligation to address the issues in the Audit as the responsible expert manager of the pool. There is no evidence whatsoever to suggest that the Town Council was advised that appropriate changes, if any had not been undertaken [sic]. Again, the evidence of Rebecca Pianta was unequivocal that no concerns in relation to ability to isolate in the context of signage and supervision had been expressed to her by either the area manager or the pool manager. 34 The full context of that quote is set out in my earlier reasons at [222]. 35 In my view the first defendant's conduct in this litigation caused the plaintiff to at least persist in the claims against the second defendant. Given the position adopted by the first defendant it would have been not merely unreasonable but foolhardy of the plaintiff to do otherwise. The conduct of the first defendant in asserting that reasonable care by the second defendant would have discharged any duty owed by the occupiers of the SHAC ensured that the second defendant remained a defendant in this action: see Coastal Hire Pty Ltd v Ewers [2009] WASCA 36(S) [43]. That contention on the part of the first defendant was found to be without substance. 36 In the circumstances the first defendant should be responsible for the costs that the plaintiff would otherwise have to pay the second defendant. It is in my view just that the first defendant should be responsible for the costs payable by the plaintiff to the second defendant. In this case the parties agree that if the first defendant is to be ordered to pay the second defendant's costs then it is convenient that a Sanderson order should be made. (Page 12)
Taxation of cost items without regard to scale 37 The first defendant agrees that the plaintiff should have an order that his costs of getting the matter up for trial be taxed without regard to the scale limit. Otherwise, the first defendant opposes any uplift with respect to counsel fees. The trial of this action ran for 10 days. The length of the trial here was not directly related to any particular factual or legal complexity. The factual issues here were not complex. Nor were the legal issues. The only slight exception to that was the proper construction to be given to provisions of the Civil Liability Act 2002 with respect to obvious risk and the test for contributory negligence. With respect to those matters, there was in fact little assistance forthcoming from any party. 38 An order of the kind sought by the plaintiff and second defendant allowing costs to be taxed without regard to the scale limits does not impinge upon the exercise of discretion by the taxing officer. An order of that kind still requires a taxing officer to determine whether or not the work done and charged for a particular item under the scale is necessarily or reasonably done but allows the taxing officer in his or her discretion to make allowance for charges beyond the scale limit. 39 As I have observed, the first defendant accepts the appropriateness of raising the scale limit for the item of 'getting up'. That it would appear to me is simply a sensible recognition of the volume of work involved in a trial of this length. The determination of the Costs Committee necessarily assumes an average length of trial for the calculation of some of the items in the scale. That of course can be seen in the allowance for preparation in item 20 for counsel fees. In the 2010 determination the allowance of 3 1/2 days for preparation together with the first day of trial, closely reflects the average length of trial in this court (currently 3.2 days) and something rather more than the average length of a civil trial in the Supreme Court. 40 In most cases the allowance of 3 1/2 days will be appropriate. Where a reasonably conducted trial exceeds a week in length based on experience and observation the allowance of 3 1/2 days for counsel preparation would normally be inadequate. I am satisfied that for that reason alone here the scale cost for counsel preparation is inadequate. 41 It is necessary however for me to consider not merely the adequacy of the allowances of particular items in the costs scale in the context of this litigation, but also whether the action is of unusual difficulty, complexity, or importance. It could not be said in my view that the action (Page 13)
was one of unusual difficulty or complexity. The issues of liability that were canvassed at trial involved fairly conventional questions of duty and breach. 42 The action was however of considerable importance both to the plaintiff and the second defendant. So far as the plaintiff is concerned it is only necessary to say that the plaintiff's entire ability to be maintained with some degree of comfort and dignity following his catastrophic accident turned on the outcome of this action. From the second defendant's perspective the allegations against it represented a threat to its reputation as well as a substantial financial loss under the terms of the management agreement were it to be found liable, even in part, for the plaintiff's injuries. 43 In the circumstances it is appropriate to allow the plaintiff and the second defendant to tax the costs of counsel and senior counsel in respect of the fee on brief without regard to the scale limit. No doubt the taxing officer will consider the extent to which economies were realised by virtue of the fact that the plaintiff was represented by senior and junior counsel with the examination of witnesses apportioned between them. 44 The same logic does not however apply in respect of the plaintiff's application with respect to the senior counsel fee on the second and subsequent days of trial, and the application of the second defendant with respect to counsel fees for the second and subsequent days. From my observation there was no reason to think that the work involved during the course of the trial necessarily exceeded the ordinary hours required. Nor is there any reason here to think that the Costs Committee's determination as an appropriate fee for counsel or senior counsel is inadequate.
Proposed orders in contribution proceedings 45 The second defendant seeks an order that the first defendant pay the second defendant's costs of those proceedings. In opposing an order that it be required to pay the costs that the plaintiff would be obliged to pay the second defendant, the first defendant submits that the costs of the contribution proceedings be ‘quarantined’. For the sake of completeness I will deal with that issue. 46 The relationship contractual and otherwise between the first and second defendants was a factual issue relevant to the main issues at trial. The precise nature of what was said to be the culpability or reasons for culpability of the second defendant were matters that were on the one hand relied upon by the first defendant to defeat the claim of the plaintiff (Page 14)
and alternatively relied upon by the first defendant to shift or share culpability. 47 No party has been able to identify any evidence of substance required by the contribution and indemnity proceedings that was not otherwise relevant to the main proceedings. The issue of indemnity added only slightly to the length of the proceedings. It involved at best a legal argument as to the meaning of the particular clause of the management agreement that was in evidence in any event. There is no reason here in my view to 'quarantine' the costs of the contribution and indemnity proceedings.
Orders 48 For the reasons set out above I will make the following orders: 1. The first defendant pay the plaintiff's costs of the action, including any reserve costs to be taxed if not agreed. 2. The first defendant pay the costs of counsel's opinion as to the compromise on quantum. 3. The first defendant pay the second defendant's costs of the action and of the contribution proceedings including any reserved costs to be taxed if not agreed. 4. The plaintiff's costs against the first defendant be taxed without regards to the limits of the Legal Practitioners (Supreme Court) Contentious Business Determinations 2008 and 2010 with respect to the following items: 5. There be a certificate for the transcript of the trial. 6. The plaintiff have a reasonable allowance for the costs of Professor Jenny Blitvich and Mr Keith McElroy. 7. The second defendant's costs be taxed without regard to the limits of the Legal Practitioners (Supreme Court) Contentious Business (Page 15)
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