Intrend P/L v O'Halloran (No 2) - [2007] SADC 38

DISTRICT COURT OF SOUTH AUSTRALIA
(Civil)
INTREND P/L & ORS v O'HALLORAN & ORS (No 2)
[2007] SADC 38
Judgment of His Honour Judge Muecke
20 April 2007
PROCEDURE - COSTS
Trial of preliminary issues arising from 6 separate but related actions - answers given to 4 questions as to the preliminary issues - number of issues as to costs.
Derrington & Ashton, The Law of Liability Insurance 2nd ed, para 13-109; Dal Pont, Law of Costs 2003, p356; Arnotts Ltd & Ors v Trade Practices Commission (1989) 24 FCR 313, 350-353; Cretazzo v Lombardi (1975) 13 SASR 4, 16; Colgate-Palmolive Co & Anor v Cussons P/L (1993) 46 FCR 225. 232-233; SGIC v Lane & Anor (1997) 68 SASR 257 at 265; Derrington & Ashton, The Law of Liability Insurance 2nd ed, para 13-109; Dal Pont, Law of Costs 2003, p356; Cornwall & Ors v Rowan (No 2) (2005) 239 LSJS 153, at 162, considered.

INTREND P/L & ORS v O'HALLORAN & ORS (No 2)
[2007] SADC 38

This is my decision on questions of costs. It follows a judgment published on 25 August 2006, being [2006] SADC 95. In that judgment I answered certain questions which were referred to as “the preliminary issues”.
The preliminary issues to be determined by me were set out in certain Trial Orders made by consent by a Master of this court on 8 November 2005. By those orders the Master ordered that six actions commenced in this court be listed for trial together. I refer to these six actions as “action 209 of 2003”, “action 1360 of 2003”, “action 115 of 2004”, “action 868 of 2004”, “action 1376 of 2004” and “action 1961 of 2004”.
All these actions arise from a fire that occurred at a two-storey office building and warehouse located at the corner of Rundle Street and The Parade West, Kent Town. Those premises were known as 66 Rundle Street, Kent Town. The land and buildings were owned by a company. A number of businesses were operated from those premises. Another company was a franchisor of a business carried on from the premises by another company.
I shall refer in these reasons to the parties in the way I referred to them in my judgment of 25 August 2006.
Bocksoffice conducted an advertising agency business on the ground floor of the premises at Kent Town. Mr O'Halloran was an employee of Bocksoffice. He worked in an office in the rented premises.
RAA Insurance had issued to Mr O'Halloran a Home and/or Contents Insurance Policy. By that policy RAA Insurance agreed to indemnify Mr O'Halloran for certain liabilities.
QBE Insurance had issued to Bocksoffice a Broadform Liability Policy by which it promised to pay Bocksoffice all sums which it became legally liable to pay by way of compensation in respect of property damage happening during the period of insurance and caused by an occurrence in connection with its business operated at the premises at Kent Town.
Five of the six actions to which the Master’s order of 8 November 2005 related were instituted by companies claiming to have suffered loss and damage as a result of the negligence of Mr O'Halloran in causing the fire by which they suffered loss and damage. They were action 209 of 2003, action 1360 of 2003, action 115 of 2004, action 868 of 2004, and action 1961 of 2004. These five actions were commenced by different solicitors. (I shall refer to all of these plaintiff companies as “the corporate plaintiffs”.) Action 1360 of 2003 had one corporate plaintiff. The other four actions had two or three corporate plaintiffs. Some of the corporate plaintiffs appeared as plaintiffs in a number of actions. Iceberg Media appeared as plaintiff in three of the actions. Oddlot appeared as plaintiff in two actions. Mr O'Halloran is the only party common to all actions. Bocksoffice appears as a plaintiff in one action and a defendant in another two actions.
As previously indicated, a Master made certain orders by consent on 8 November 2005. The first order was that the five actions be listed for trial together on a date to be fixed convenient to all parties. The order noted that it was agreed that the evidence in any one action would be admissible in any other action subject to the further order or directions of the Trial Judge.
Further, it was ordered that at the hearing of the trial the Trial Judge be asked to determine the preliminary issues only. The order set out those issues and I have set them out in my judgment of 25 August 2006 (para 16).
Further, the Master’s order set out certain matters to which the parties had agreed. They included that one counsel may be retained by the plaintiffs in action 209 of 2003, action 1360 of 2003, action 868 of 2004, and action 1961 of 2004; and that the plaintiffs in action 115 of 2004 be separately represented at the trial if so advised.
Further, the Master’s order noted the parties’ agreement that, for the purposes of the trial of the preliminary issues, the Trial Judge would not be required to determine certain issues, identified as follows:
3.9.1 Any issue relevant to the Counter Claim made by Bocksoffice against O'Halloran in action no 1376 of 2004 save for the matters previously set forth herein.
3.9.2 Any issue relevant to the Counter Claim made by Bocksoffice against RAA-GIO Insurance Limited T/as RAA Insurance in action no 1376 of 2004 save for the matters previously set forth herein.
3.9.3 Any issue relevant to the quantum of a claim by the plaintiffs (not including O'Halloran in his capacity as plaintiff in action no 1376 of 2003) or any of the other parties.
3.9.4 Whether any specific item of loss is a loss which may attract cover under the RAA Policy and/or the QBE MM Policy.
This order refers to the fact that the issues just set out may be the subject of separate trial or trials following final determination of all of the preliminary issues, if that is necessary.
Further, the Master’s order referred to the parties’ agreement that documents discovered in any of the actions that are relevant to the preliminary issues will be taken to be documents discovered in any of the other actions. (I refer to this because I infer from it that the parties had given discovery of documents that were relevant to issues other than the preliminary issues.)
Finally, it was relevantly noted in the Master’s order that the parties had agreed that for the purposes of the Trial Judge determining the preliminary issues that the costs of the actions including the trial be determined by the Trial Judge (para.3.8).
In a perfect world of litigation there could have been one action to resolve all issues between all parties to the six actions actually commenced. All the companies who suffered loss in the fire at 66 Rundle Street, Kent Town on 23 September 2001 could have sued Mr O'Halloran in negligence and sued Bocksoffice as being vicariously liable for Mr O'Halloran’s negligence. They could have sought to recover all of their losses, whether insured or uninsured, in such an action. Further, Mr O'Halloran could have joined RAA Insurance and QBE Insurance as third parties, and issued a contribution notice (claiming full indemnity) to his employer Bocksoffice. In that way Mr O'Halloran could have said, in effect, that - if I am liable for any losses of the corporate plaintiffs then either or all of RAA Insurance, QBE Insurance and Bocksoffice must indemnify me for that liability.
If this had occurred then questions relating to costs might have been more simple than they now are. That is not to say that all issues regarding costs would have been simply resolved. They would not have been because some of the issues before me would still have to be decided.
What I have set out above did not occur. I am not in a position to be confident about the reasons why it, or something like it, did not occur. When I heard the trial of the preliminary issues I had the Master’s orders of 8 November 2005 and a book of copy documents containing the pleadings. I did not know the background events leading up to the Master’s orders, or the full circumstances as to the issuing of proceedings by the various parties. There was no evidence put before me on the costs argument, other than some limited evidence (for a limited purpose) as to how the Master’s orders of 8 November 2005 came to be made. Some counsel during the costs argument told me about some matters. I have no hesitation in accepting what they told me. For example, I was told that action 1961 of 2004, which was an action by Iceberg Media, Oddlot and Bridge Finance, was an action by which those corporate plaintiffs sought to recover uninsured losses that resulted from the fire. As previously indicated Iceberg Media and Oddlot were plaintiffs in other actions which had already been commenced. I assume that those actions were instituted and conducted by their insurers for insured losses. I speculate (but I do not know) that Iceberg Media was a plaintiff in action 115 of 2004 and 868 of 2004 because Iceberg Media had insured losses covered by different insurers.
The five actions which were the subject of the trial on the preliminary issues grew somewhat like topsy. That is not a criticism of anyone. It may not have been practical or possible to do otherwise. It probably related to the insurance position of each corporate plaintiff.
What appears to have happened is that action 209 of 2003 was commenced by three of the corporate plaintiffs. They sued Mr O'Halloran. Mr O'Halloran joined RAA Insurance as a Third Party claiming indemnity under the RAA Policy. Then action 1360 of 2003, action 115 of 2004, and action 868 of 2004 were commenced by other corporate plaintiffs (with Iceberg Media being a plaintiff in each of the later two actions). These actions were also commenced against Mr O'Halloran who then joined RAA Insurance as a Third Party. Bocksoffice was a plaintiff in action 115 of 2004. So far, so good.
By that time Mr O'Halloran was facing four actions brought by eight corporate plaintiffs for their losses arising out of the fire. He had joined RAA Insurance as a Third Party to each of those actions. RAA Insurance had denied liability under the RAA Policy. Part of that denial included a reliance by RAA Insurance on Exclusion (d) of its policy by which it was provided that RAA Insurance shall not be liable for claims arising out of or in connection with any business, profession or occupation of Mr O'Halloran. I note that in action 115 of 2004 Mr O'Halloran filed a Defence in which he admitted that he entered the premises at Kent Town in the company of Ms Bryant and said further that he was permitted to enter the premises by his employer (Bocksoffice) and did so on his own business.
Thus, although Mr O'Halloran’s case was that he entered the premises at Kent Town on his own business (and therefore the RAA Policy Exclusion (d) did not apply) he knew that RAA Insurance was seeking to rely on that Exclusion, and he also knew that if it was held that he did enter the premises in connection with his business, profession or occupation that may enliven a policy of insurance that his employer held which covered him whilst acting within the scope of his duties in his capacity as an employee of Bocksoffice.
I was told by counsel for Mr O'Halloran during the costs submissions that rather than issuing further third party notices in the first four actions that were already instituted Mr O'Halloran started another action, action 1376 of 2004. By that action Mr O'Halloran sued RAA Insurance, QBE Insurance, and his employer Bocksoffice. I infer that any liability Bocksoffice had to Mr O'Halloran would be met by QBE Insurance under the QBE Policy. By action 1376 of 2004 Mr O'Halloran asserted, in effect, that if he was liable to anyone, either or both of RAA Insurance and QBE Insurance, or his employer by QBE Insurance, should indemnify him. Insofar as RAA Insurance was concerned this was a repetition of his third party notices issued in action 209 of 2003, action 1360 of 2003, action 115 of 2004, and action 868 of 2004. QBE Insurance, directly and as insurer to Bocksoffice, came into the proceedings for the first time.
Finally, in chronological sequence, action 1961 of 2004 was commenced. By that action two corporate plaintiffs which had already instituted proceedings and a new corporate plaintiff, Bridge Finance, instituted a separate action for uninsured losses. By that action they sued Mr O'Halloran and Bocksoffice. Mr O'Halloran did not join RAA Insurance as a third party to that action because, I infer, Mr O'Halloran’s claim for indemnity from RAA Insurance for such losses as were claimed in action 1961 of 2004 would be covered by his action against RAA Insurance in the earlier action 1376 of 2004.
It can be seen from what I have just set out that the six actions the subject of the trial before me on the preliminary issues developed in a rather unusual way. That gave rise to certain unusual and curious features which potentially impact upon the costs orders sought by the parties. These include:
(1)    the fact that I have made certain assumptions and inferences which may not be accurate or justified.
(2)    the fact that there is one action (action 1961 of 2004) in which RAA Insurance is not a party at all and costs orders are sought against it in respect of that action.
(3)    the fact that by my judgment of 25 August 2006 some parties will or should play no further part in any litigation arising from the fire. Those parties may, theoretically at least, include Mr O'Halloran, QBE Insurance, and Bocksoffice. I say theoretically because paragraphs 3.9.1-3.9.4 of the Master’s orders by consent of 8 November 2005 refer to separate trial or trials on any issue relevant to a counterclaim by Bocksoffice against Mr O'Halloran in action 1376 of 2004 and a counterclaim made by Bocksoffice against RAA Insurance in the same action. I was asked by one counsel during the costs submissions to exclude from any orders I make as to costs the issues identified in paragraphs 3.9.1-3.9.4. This feature may also be important to my consideration of that part of the Master’s order of 8 November 2005 by which the parties agreed, for the purposes of my determination of the preliminary issues, that I determine the costs of the actions including the trial. It would be preferable, if it is possible to do so, to make costs orders in respect of those parties who should play no part in any further trial or trials, where the order incorporates all their costs of the actions.
I have found it useful to set out how I have described one action might have been commenced to deal with all issues in a perfect world of litigation. It may not solve many of the particular problems raised in the costs submissions but it does at least help focus on what were the issues between the various parties and how my judgment of 25 August 2006, in answering questions on the preliminary issues, has determined those issues.
In summary, my judgment has had the following effect:
(1)    Each of the corporate plaintiffs (with the exception of Kitchen Industries) are entitled to judgment against Mr O'Halloran for whatever damages they can prove.
(2)    Mr O'Halloran is entitled to be indemnified by RAA Insurance in respect of any such judgment or judgments.
(3)    Mr O'Halloran is not entitled to be indemnified by QBE Insurance for any or any part of such judgment or judgments, either as a person covered by the QBE Policy, or by the QBE Policy through Bocksoffice’s vicarious liability.
(4)    Kitchen Industries is not entitled to a judgment against Mr O'Halloran for any of its alleged losses.
I consider that what I have just set out is a proper background upon which I should consider the submissions that the various parties made as to costs. I here note that no party submitted that I should make orders other than on an action by action basis. That is, no-one submitted that I should make orders that apply to counsels’ fees, for example, or for other costs, incurred as a direct result of the hearing of the trial before me by which I was asked to and did determine the preliminary issues. There is no question that any order or orders for costs would, in respect of the trial before me on the preliminary issues, be limited, in respect of the corporate plaintiffs (excluding Kitchen Industries) to one set of fees for senior counsel, plus either one or two sets of fees for junior counsel. Any orders I make in favour of the corporate plaintiffs will, I assume, be understood to be on this basis.
I am not privy to any arrangements that might have been made between all of the corporate plaintiffs (whether insured by more than one insurer or uninsured) as to who would pay counsel fees for the three counsel who appeared for them at the preliminary issues trial. Presumably, there is some formula or agreement as to that.
There are some issues that arise as to the questions of costs that I can identify and deal with discretely without referring to any particular action or actions.
The first is the breadth of any orders I make. By this I mean, how should I construe para.3.8 of the Master’s orders of 8 November 2005 that refer to the agreement by the parties, for the purposes of my determining the preliminary issues, that the costs of the actions including the trial (by which I infer the trial of the preliminary issues) be determined by me. Three possibilities were canvassed during submissions. One was that I should expressly limit orders as to costs to the trial on the preliminary issues. Another was that I should determine questions of costs of the actions, including (but not limited to) the trial on the preliminary issues. A third was that I indicate that any orders I make be construed as not to include any costs on the issues identified in para.3.9 of the Master’s orders of 8 November 2005.
In deciding this issue I start from a position that I have some responsibility or duty to all parties and to any taxing Master to give as much clarity and finality to issues as to costs, if that is possible.
I consider that any approach I take as to the three alternatives put to me will cause difficulties in some, even all, actions.
I consider that the appropriate course for me to adopt is the third approach referred to above. That is, that the orders I make as to costs should be read by the parties, and later if necessary by the taxing Master, on the basis that any costs associated with issues I expressly was not required to determine in the trial before me are not covered by my orders. I have come to that view notwithstanding the fact that I recognise, perhaps somewhat inconsistently, that on the face of it at least there will be no issue relevant to the counterclaims by Bocksoffice against Mr O'Halloran or against RAA Insurance. As para.3.9 was ordered by the Master by consent I expect that the parties will now be able to determine, from my Judgment, what part or parts of the issues referred to in para.3.9 will need to be the subject of a separate trial or trials.
I imagine that the parties will come to some accommodation between each other as to any costs associated with those parts of para.3.9 where it will not be necessary to have a separate trial or trials.
The second discrete issue is whether the successful corporate plaintiffs should be entitled to recover from any other party or parties all the costs associated with the calling of the two expert witnesses from whom I heard evidence at the trial of the preliminary issues. The successful corporate plaintiffs submitted that they are entitled to all the costs of and associated with those two experts. RAA Insurance submitted that the successful corporate plaintiffs should only be entitled to part of those costs. RAA Insurance did not submit that it was entitled to any of its costs associated with the calling of those two witnesses at the trial of the preliminary issues.

RAA Insurance’s submission was based on my comments and criticisms of the evidence of both Mr Kutek and Mr Baghurst. It was submitted by counsel for RAA Insurance that the corporate plaintiffs’ case was not materially advanced by the calling of Mr Kutek and Mr Baghurst. It was submitted that my judgment, when dealing with the evidence of those two witnesses, reflects that. It was submitted that the origin of the fire (being in Mr O'Halloran’s office) was never in contest. It was submitted that Mr Kutek was challenged as to his opinion as to whether the fire originated in a large plastic waste paper bin beneath the desk closest to the door to that office, and as to his conclusion that the evidence was consistent with a fire in the waste paper bin ignited by a discarded cigarette.
The issue as to whether the corporate plaintiffs can or should recover all of their costs that relate to the two expert witnesses is not easy to resolve. It is true that I was critical of both experts in my judgment. I indicated that I considered that the criticisms made by RAA Insurance in its address were largely well-founded and generally justified. I indicated that the expert witness’ recording of important instructions and information given to them, the processes each adopted in their examinations of the scene, the photographs they took or did not take, their lack of preservation of “exhibits” which could fairly be described as vitally important to their conclusions were particularly unimpressive.
I did, however, conclude that the conclusions and opinions of both expert witnesses were their own conclusions and were genuinely held by them when they wrote their respective reports in October 2000. I concluded that whilst their conclusions and opinions were of limited value to me, particularly as to matters of detail, I relied on some of their evidence in the way to which I referred in my judgment.
I can now say that I do consider that the value of both expert witness’ evidence was of a type which was not confined to the opinions they expressed. They had a value to me in the way referred to by senior counsel for some of the corporate plaintiffs in his reference to the case of Arnotts Ltd & Ors v Trade Practices Commission (1989) 24 FCR 313, 350-353. (See also Cretazzo v Lombardi (1975) 13 SASR 4, 16.)
The above comment may invite criticism that it is made ex post facto. But I have wondered, after hearing the submissions that the successful corporate plaintiffs’ costs should be limited in respect of the expert evidence, how I might have considered the case and the issues raised in the preliminary issues if neither Mr Kutek nor Mr Baghurst had given evidence. I think I would have been less able confidently to determine the issues that I have if that had been the case. Not only did I rely on these two experts for the matters upon which I have referred in my judgment, without their evidence I would not have known about texts and articles referring to the relationship between discarded cigarettes and fire, and the likelihood, or unlikelihood, of fire being caused in the absence of some appliance (like a strip heater) that draws a heavy current.
Although it is true that a considerable amount of cross-examination of both experts was spent in criticising the expert’s processes and undermining some of their conclusions I have come to the conclusion that no proper basis exists for me to limit the costs the successful corporate plaintiffs can recover that relate to the opinions and evidence of the two experts Mr Kutek and Mr Baghurst.
The third discrete issue is whether Mr O'Halloran is entitled to costs on an indemnity basis or on some other basis.
Counsel for Mr O'Halloran submitted that I should order that Mr O'Halloran have his costs against RAA Insurance on an indemnity basis. He pointed to a provision in the RAA Policy. He did not submit that the policy provided that Mr O'Halloran have indemnity costs against his insurer. Rather, it was submitted that the policy provision supported a submission that RAA Insurance should pay costs on an indemnity basis so that Mr O'Halloran gets the full benefit of his policy of insurance with RAA Insurance. In other words, Mr O'Halloran’s counsel submitted that the policy provision was a factor I should take into consideration when exercising my general discretion as to costs and to award Mr O'Halloran indemnity costs.
The starting point for orders as to costs is that they be ordered and paid on a party/party basis (Colgate-Palmolive Co & Anor v Cussons P/L (1993) 46 FCR 225, 232-233).The question is whether this is a case where I should depart from the ordinary rule regarding the payment of costs on a party/party basis.
The fact that a party is suing to enforce an entitlement to an indemnity under an insurance policy may not, standing alone, be sufficient to justify an order other than for party/party costs (Derrington & Ashton, The Law of Liability Insurance, 2nd ed, para 13-109; SGIC v Lane & Anor (1997) 68 SASR 257 at 265). Mr O'Halloran also sued QBE Insurance and Bocksoffice. He failed against both of those parties.
I do not consider that the policy provision referred to by Mr O'Halloran’s counsel takes the matter so far as to justify costs on an indemnity basis.
I have concluded that Mr O'Halloran’s counsel has not made out sufficient justification for orders other than costs on a party/party basis in favour of his client. I do not consider that there is established here any conduct of RAA Insurance in raising a defence that was not reasonably open to it, or by its conduct at the trial on the preliminary issues that would justify a departure from the ordinary rule of ordering costs on a party/party basis.
The fourth discrete issue is whether the corporate plaintiffs were entitled to have some of them represented by counsel whilst others were represented by different counsel. RAA Insurance submitted that there was no good reason to justify two sets of counsel fees for the corporate plaintiffs. It was submitted that whilst it would be appropriate for orders to include fees for a senior counsel and a junior counsel, it was not reasonable that orders be made which would entitle another junior counsel to represent some of the corporate plaintiffs.
Against that submission was a submission that I should have regard to the fact that a Master made orders, by consent, on 8 November 2005 which included the Master noting that the parties had agreed, for the purposes of the trial on the preliminary issues, that one counsel may be retained by the corporate plaintiffs in action 209 of 2003, action 1360 of 2003, action 868 of 2004, and action 1961 of 2004, and that the corporate plaintiffs in action 115 of 2004 be separately represented at the trial if so advised. Separate counsel did represent separate groups of corporate plaintiffs consistent with the agreed orders.
It was submitted against RAA Insurance that by agreeing to having orders made by the Master in which such an agreement is noted RAA Insurance should not be heard now to complain about any order which would give costs for counsel representing separate sets of corporate plaintiffs.
I do not give any weight to that submission in determining this issue. I do not consider that by agreeing to an “order” in these terms RAA Insurance is to be taken to having agreed to separate representation.
Representation by separate counsel in action 115 of 2004 had the effect that different counsel represented Iceberg Media and Oddlot in separate proceedings (albeit for different losses). But it also meant that the counsel who represented Bocksoffice as plaintiff in action 115 of 2004 was different to the counsel who represented Bocksoffice as defendant in action 1961 of 2004. The submission against that of RAA Insurance was that the same counsel could not represent Bocksoffice as plaintiff in action 115 of 2004 and as defendant in action 1961 of 2004.
On the face of it, that Bocksoffice was a plaintiff in one action and a defendant in another immediately gave rise to at least a potential for a conflict of interest. That potential for conflict was realised to some extent at the trial of the preliminary issues. Senior Counsel for the corporate plaintiffs other than those in action 115 of 2004 (which included Bocksoffice) submitted in his address at the trial that it would be a possible conclusion that both the RAA Policy and the QBE Policy respond to any liability Mr O'Halloran may have to the corporate plaintiffs represented by that counsel. Counsel for the corporate plaintiffs in action 115 of 2004 submitted that I should not find that the QBE Policy responds to any liability Mr O'Halloran had to the corporate plaintiffs in that action (which included Bocksoffice). That submission was presumably made because Bocksoffice was a corporate plaintiff in action 115 of 2004. (I ignore that that submission was made on behalf of two corporate plaintiffs in respect of which there was no potential for conflict, one of whom was represented in two other actions by the Senior counsel who submitted that the QBE Policy might respond, together with the RAA Policy.)
In Dal Pont, Law of Costs, 2003 the author states at p356:
When more than one party is represented by the same lawyer, the usual order is that only one set of costs will be allowed unless some separate work is required as a result. The court will not normally allow more than one set of costs to successful litigants where there was no possible conflict of interest between them in the presentation of their cases. A desire to be represented separately by counsel of one’s own choice cannot be indulged in at another’s expense without good reason.
…
In determining whether to allow the costs of separate representation, the court must consider the fiduciary rule that lawyers must not represent two clients with conflicting interests. Thus, courts are not keen to make a single set of costs orders unless there is clearly no such conflict. (footnotes omitted)
In this case I have concluded that the potential for a conflict of interest to arise in the way to which I have earlier referred, together with the fact that different submissions were ultimately made by counsel separately representing corporate plaintiffs, is sufficient to satisfy me that it is appropriate to allow two sets of counsel fees, for senior and junior counsel for those plaintiffs that were so represented, and by junior counsel who represented the corporate plaintiffs in action 115 of 2004.
The fifth and final discrete issue is whether or not a Sanderson order is appropriate to be made against RAA Insurance for costs which would normally be ordered to be paid by Mr O'Halloran in favour of QBE Insurance.
It is not enough to justify such an order that it was reasonable for Mr O'Halloran to bring his third party action against two insurance companies unless RAA Insurance has said or done something to lead Mr O'Halloran to sue QBE Insurance. RAA Insurance should not have to pay for Mr O'Halloran’s error or over caution. There must have been conduct of RAA Insurance such as to make it fair to impose some liability on it for the costs of QBE Insurance (see Cornwall & Ors v Rowan(No 2) (2005) 239 LSJS 153, at 162).
The argument put on behalf of Mr O'Halloran was that that RAA had in truth been egging (Mr O'Halloran) on to bring in QBE. It was submitted that in cross-examination by counsel for RAA Insurance and from his address at the trial on the preliminary issues, RAA Insurance was not just saying “Look, we’ve got an exclusion”, it was saying “Really you should be suing someone else”. It was submitted that when you look at the conduct of the case you can see what’s really happening because you can see that they are in fact raising positively, a vicarious liability point both in the cross-examination and in the closing address. So if there’s any question about what they are really doing in the pleadings, it comes out in the conduct of the case.
I do not consider it relevant what RAA Insurance, through its counsel, did at the trial of the preliminary issues, even if I were satisfied it did as was submitted, which I am not. I do not consider that counsel for RAA Insurance did other than to try and make out a case for the application of its pleaded Exclusion. What is important is whether RAA Insurance did something to lead Mr O'Halloran to sue another third party/defendant. I consider that RAA Insurance, in its Defences to Mr O'Halloran’s Third Party notices in the first four actions, was doing no more than raising a defence based on an Exclusion in its policy. In his Defence to action 115 of 2004 Mr O'Halloran admitted that he entered his employer’s premises in the company of Ms Bryant and said further that he was permitted to enter the premises by his employer and did so on his own business. Mr O'Halloran’s case clearly was that the RAA Policy applied and the Exclusion relied upon by RAA Insurance did not operate to exclude his claim.
I have concluded that RAA Insurance should not have to pay for Mr O'Halloran’s over-cautiousness in issuing action 1376 of 2004 to join QBE Insurance and Bocksoffice as defendants to that action. I do not consider that this is a proper case for my ordering that RAA Insurance pay QBE Insurance’s costs of action 1376 of 2004 and of action 1961 of 2004.
The orders that I now make as to costs are intended to be in accordance with what I have said in these reasons. They should be read in conjunction with these reasons. Because of the complexity of the actions and the issues it may well be that I have overlooked certain aspects that bear upon costs. Accordingly, I give liberty to any party to apply for further orders, or for clarification of the orders I shall make.
The orders that I would make are as follows:
Action 209 of 2003
1.The defendant pay the plaintiffs’ costs.
2.The third party pay the defendant’s costs, including all costs payable by the defendant to the plaintiffs.
3.The third party by way of discharge of the defendant’s obligation under order 1, pay direct to the plaintiffs their costs.
Action 1360 of 2003
1.The plaintiff pay the defendant’s costs.
2.The plaintiff pay the third party’s costs
Action 115 of 2004
1.The defendant pay the plaintiffs’ costs.
2.The third party pay the defendant’s costs, including all costs payable by the defendant to the plaintiffs.
3.The third party by way of discharge of the defendant’s obligation under order 1, pay direct to the plaintiffs their costs.
Action 868 of 2004
1The defendant pay the plaintiffs’ costs.
2.The third party pay the defendant’s costs, including all costs payable by the defendant to the plaintiffs.
3.The third party by way of discharge of the defendant’s obligation under order 1, pay direct to the plaintiffs their costs.
Action 1376 of 2004
1.The first defendant, RAA Insurance, pay the plaintiff’s costs.
2.The plaintiff pay the costs of the second defendant QBE Insurance.
3.The plaintiff pay the costs of the third defendant Bocksoffice.
Action 1961 of 2004
1.The first defendant pay the plaintiffs’ costs, excluding their costs incurred in prosecuting the vicarious liability claim against Bocksoffice.
2.The plaintiffs pay the second defendant Bocksoffice’s costs of defending the vicarious liability claim brought against it by the plaintiffs.
3.The first defendant pay Bockoffice’s costs, if any, of defending the Contribution Notice from the first defendant to Bocksoffice.