Jonstan Pty Limited & Ors v Nicholson & Ors - Costs Judgment - [2003] NSWSC 500

No judgment structure available for this case.

Reported Decision:
58 NSWLR 223

Supreme Court

CITATION: JONSTAN PTY LIMITED & ORS v NICHOLSON & ORS - COSTS JUDGMENT [2003] NSWSC 500

HEARING DATE(S): 16 December 2002

JUDGMENT DATE:
13 June 2003

JUDGMENT OF: Hulme J at 1

DECISION: See paragraph 136

CATCHWORDS: Law Reform (Miscellaneous Provisions) Act 1946, s5 - "Tort" - Trade Practices Act s52 - Fair Trading Act s42 - Costs - Offer of Compromise - multiple proceedings

PARTIES :
Plaintiffs: Jonstan Pty Ltd; Nelarc Pty Ltd; Prefix Pty Ltd; William Dixon Suthers; John James Wiley
Defendants: Glenn William Nicholson; Robert William Norman; Gerrard John Sturgess; Stan Reilly; John Cunningham; Michael J Perkins t/as Hooton & Perkins;
Cross Defendants: Jonstan Pty Ltd; Nelarc Pty Ltd; Prefix Pty Ltd; William Dixon Suthers; John James Wiley; Michael J Perkins; George Pashalis; Hunt Pacific Finance Pty Ltd; Stan Reilly; John Cunningham

FILE NUMBER(S): SC 20161 of 1998; 11657 of 1999

COUNSEL: Plaintiffs: P Taylor SC
Mr Cunningham D5: P Glissan
Mr Perkins D6: R Darke SC
Hunt Pacific D7: I Roberts

SOLICITORS: Plaintiffs: Deacons
D5: Dibbs Barker Gosling
D6: Ebsworth & Ebsworth
D7: Minter Ellison

- 51 -

IN THE SUPREME COURT
OF NEW SOUTH WALES
COMMON LAW DIVISION

Friday, 13 June 2003

JONSTAN PTY LIMITED & 4 ORS v GLEN NICHOLSON & 5 ORS – 20161/98
JONSTAN PTY LIMITED AND 5 ORS v HUNT PACIFIC FINANCE PTY LIMITED - 11657/99

JUDGMENT ON COSTS

1 HULME J: In these proceedings I delivered my principal Reasons on 8 November 2002. On 16 December 2002 I made orders intended to reflect those Reasons and some orders for costs which were either non-contentious or seemed appropriate having regard to the conclusions at which I had arrived. I reserved my decision in respect of some claims for contribution and for orders for costs. These Reasons address those reserved issues.

2 Obviously some reference to matters canvassed in my principal Reasons and orders already made may be necessary if these Reasons are to be understandable. However, so far as possible I will avoid repetition of matters which can be ascertained by reference to those Reasons and orders. I should say also that during the course of argument on 16 December reference was made to a number of affidavits which, at least as far as the transcript reveals, were not formally read. No objection was taken to this course.

3 It is convenient to consider the issues here dealt with by reference to those paragraphs of the draft Short Minutes of Order which were the subject of debate on 16 December 2002 and in respect of which decision was reserved. The paragraphs referred to in my recorded orders of that day were 15, 16, 25, 26, 29, and 30 to 34. However the transcript of proceedings (page 39) indicates that I had intended to reserve also claims forming part of paragraphs 22 and 23 for Hunt and Mr Cunningham to indemnify Mr Perkins in respect of any liability he might have to the Plaintiffs for costs.

15. The Fifth Defendant, Sixth Defendant and Seventh Defendant to pay the Plaintiffs’ costs of the proceedings up to and including 16 November 2000 on a party/party basis.

4 The Fifth, Sixth and Seventh Defendants were, respectively, Mr Cunningham, Mr Perkins and Hunt. The Plaintiff succeeded against all three and there was no suggestion that the Plaintiff was not entitled to an order for costs against the Fifth, Sixth and Seventh Defendants. The issues were whether such an order should be on an indemnity basis and what should be the consequence of suggested inefficiencies in the way the Plaintiffs conducted the litigation. The foundation for the claim in paragraph 16 lies in offers of compromise which were made on behalf of the Plaintiff.

5 On 16 November 2000 there were only 5 defendants to the proceedings 20161 of 1998, Messrs Nicholson, Norman and Sturgess (who, collectively can be referred to as the “guarantors”), Mr Reilly and Mr Cunningham. On that date Deacons, the solicitors who were then acting for the Plaintiffs in the proceedings wrote to the solicitors for each of the Third, Fourth and Fifth Defendants in those proceedings enclosing an “offer to compromise their claim in the following manner

1. By the defendants paying to the plaintiffs the sum of $414,500 in full and final satisfaction of any claim the plaintiffs may have against the defendants;

2. The defendants paying the Plaintiffs’ costs as agreed or assessed;

3. This offer shall be open for a period of 28 days only.

6 The offer said that it was made in accordance with Part 22 of the Supreme Court Rules and its form indicates it was made in proceedings 20161 of 1999. A calculation of the $414,500 was included and showed principal and interest totalling $414,837.39 (after a discount of 15%), rounded down. At the time the First and Second Defendants in the proceedings were bankrupt and no offer was made to them. (It would seem also that proceedings against them have not been pursued and judgment has not been entered.)

7 Also on 16 November 2000 Deacons made a similar offer to Hunt. It was made in proceedings 11657 of 1999 in which, at that time, Hunt was the only defendant but in which Hunt had cross-claimed against Mr Reilly, Mr Perkins and Mr Cunningham.

8 On the same day, Deacons wrote to the solicitors for Hooton and Perkins who, as I have said, were cross-defendants in proceedings 11657 but had not then been sued by the Plaintiffs. Deacons foreshadowed that Hooton and Perkins were likely to be joined and offered to accept $514,000 inclusive of costs. Again a calculation of the sum was included and showed principal and interest totalling $414,837.39 (after a discount of 15%) and legal costs and disbursements of $99,128.19. The letter stated that some of the costs had been rendered by Hooton and Perkins and this might allow some opportunity for adjustment in the settlement figure. Liberty was reserved to rely on the letter on the issue of costs.

9 The offers were not accepted. Later Hooton and Perkins were joined as the Sixth Defendant in proceedings 20161/1998. In my principal reasons I said that the two sets of proceedings should be consolidated and Hunt treated as an additional Defendant in proceedings 20161/1998 and I would proceed accordingly. (It would seem that I have not made formal orders consequent on these conclusions. I will accordingly do so at the time of publication of these Reasons. I am by no means persuaded that I need to rely on the rule but in case I do, the absence of such an order may fairly be described as “an error arising from an accidental … omission” within Part 20 rule 10. Submissions made in relation to costs have proceeded on the basis that an order for consolidation has been made.)

10 It was accepted that my findings in the proceedings led to the conclusion that the amounts to which the Plaintiffs were entitled against the persons mentioned, as at 16 November 2000 were:-

11 It is thus clear that I assessed the liability of the Third, Fifth, and Seventh Defendants in a higher amount than the amounts the Plaintiff had offered to accept from those Defendants by way of compromise. Because the offer to Mr Perkins was inclusive of costs, further consideration will be necessary before any such conclusion can be reached in his case.

12 Part 22 Division 1 of the Rules deals with what I may conveniently refer to as formal offers of compromise in proceedings. It is unnecessary to set out more than Rule 9. So far as is relevant, that rule provides:-

“Where two or more defendants are alleged to be jointly or jointly and severally liable to the plaintiff in respect of a debt or damages and rights of contribution or indemnity appear to exist between the defendants, part 52A rule 22 shall not apply to an offer unless -

(a) in the case of an offer made by a plaintiff – the offer is made to all defendants, and is an offer to compromise the claim against all of them;”

13 So far as is relevant Part 52A rule 22 provides:-

(3) Subrules (4)-(6) apply to an offer which has not been accepted at the time prescribed by Part 22 rule 3(8).

(4) Where an offer is made by a plaintiff and not accepted by the defendant, and the plaintiff obtains an order or judgment on the claim to which the offer relates no less favourable to the plaintiff than the terms of the offer, then, unless the Court otherwise orders, the plaintiff shall, subject to rule 33, be entitled to an order against the defendant for the Plaintiffs’ costs in respect of the claim from the day on which the offer was made, assessed on an indemnity basis in addition to his costs incurred before and on that day, assessed on a party and party basis.

(5) For the purpose of subrule (4), where the offer was made on the first or a later day of the trial of the proceedings, then unless the Court otherwise orders, the plaintiff shall be entitled to the Plaintiffs’ costs in respect of the claim from 11 am on the day following the day on which the offer was made, assessed on an indemnity basis, in addition to the Plaintiffs’ costs incurred before that time, assessed on a party and party basis.

14 In a consideration of the application of these rules, the first question which arises is whether, within Part 22 rule 9 “two or more defendants (were) alleged to be jointly or jointly and severally liable to the plaintiff(s)”. The Statement of Claim alleged an agreement by the Plaintiffs to lend moneys to Icon, that by a Deed of Guarantee the first three Defendants “guaranteed the performance by Icon of its obligations” under the loan agreement, default by Icon, demand on the first three defendants for payment under the guarantee and neglect by those defendants to pay. Although the terms of the guarantee under which the First, Second and Third Defendants were sued makes it clear that they were jointly and severally liable to the plaintiff there was no express allegation of joint or joint and several liability in the Statement of Claim. Although there was reference to it there was no incorporation of the terms of the Deed of Guarantee in the Statement of Claim.

15 In these circumstances, it does not seem to me that “two or more defendants are alleged to be jointly or jointly and severally liable to the plaintiff(s)”. Given the lack of precision which characterises modern pleading, the form of the Statement of Claim is equally consistent with the liability of the first three defendants being several. This conclusion makes it unnecessary to embark on the question whether, if any offer is restricted to defendants not jointly or jointly and severally liable, Part 22 Rule 9 has any application.

16 The claims against the Fourth Defendant in the version of the Statement of Claim which was current at 16 November 2000 were based on negligence and the Fair Trading Act. Those against the Fifth Defendant were based in contract (separate from that under which the first three Defendants were sued), and under the Fair Trading Act. There is no ground for concluding that these defendants were jointly or jointly and severally liable between themselves or with any of the first three defendants. Accordingly, Part 22 Rule 9 does not preclude reliance on Part 52A rule 22.

17 It should I think be recorded that the issue of whether there were any defendants said to have a joint or joint and several liability to the Plaintiffs was not argued during the course of proceedings before me. However that the liability of the Fifth, Sixth and Seventh Defendants is several is so clear that it is not inappropriate to proceed on the basis that Part 52A rule 22 applies. In any event even if Part 52A rule 22 did not in terms apply, it would be appropriate to have regard to the formal offer as an informal one or “Calderbank” letter.

18 Reliance was placed by those resisting the indemnity costs order on the fact that the First and Second Defendants had not been served. Again it seems to me that this fact can in an appropriate case be ignored or the offer treated as an informal one. In the circumstances of this case, and in particular the bankruptcy of the First and Second Defendants and the difference in the nature of the liability of them and the Fifth to Seventh Defendants, it seems to me that the absence of service of any offer on the First and Second Defendants does not argue significantly against ordering indemnity costs.

19 As Wood CJ at CL remarked in Hetherington v Mirvac Pty Limited & 3 Ors [1999] NSWSC 515 at [12-15]

“12. It is not necessary to enter into any inquiry whether this requires any difference of approach as to the costs of these proceedings or any part of them, since both sets of rules recognise the power of the Court to order costs on an indemnity basis (Pt 52 r 28A and Pt 52A r 37), and contain similar provisions in relation to offers of compromise (Pt 52 r 17 (4) and (5) and Pt 52A r 22 (4) and (6)). They provide, relevantly, that:

‘Where a defendant has made an offer of compromise that is not accepted by the plaintiff, and the plaintiff has obtained an order or judgment that is not more favourable to the plaintiff than the terms of the offer, then the plaintiff, unless otherwise ordered, is to be entitled to party and party costs up until the day of the offer and the defendant is to be entitled to costs upon a party and party basis thereafter.’

13. As Rolfe J observed in Multicon Engineering Pty Ltd v Federal Airports Corporation (1996) 138 ALR 425, these rules do not expressly accommodate the situation where a defendant has made an offer and the plaintiff has failed entirely. Notwithstanding, his Honour held that there was a prime face presumption that an order for indemnity costs should be made, if an offer of settlement was made, rejected and not bettered in litigation, unless the party rejecting the offer establishes that it was reasonable for it not to accept the offer. Prime face, his Honour held unreasonableness would depend upon the failure of the offeree to accept the offer. The discretion to order indemnity costs, his Honour considered, should not be limited to those cases where there was no prospect of success, or where the rejection of the offer was plainly unreasonable, or where there was an element of misconduct on the part of the offeree.

14. With respect, I agree with the conclusion which his Honour reached and with the analysis which led to that result.

15. The present case may be approached upon the basis that a Calderbank letter is the equivalent of an offer of compromise and that its existence may properly enliven the discretion to order indemnity costs. The present case is also one in which, so far as Mirvac and Boral are concerned, the principles described by Cole J, as he then was, in State Authorities Superannuation Board v Property Estates (Queensland) Pty Ltd (Supreme Court of New South Wales, 8 February 1991) and by Rogers CJ Comm D in AWA Ltd v Daniels (Supreme Court of New South Wales, 8 October 1992) have particular application.

20 In opposition to an order for indemnity costs Mr Glissan, appearing on behalf of Mr Cunningham, submitted that service was also required on cross-defendants. The simple answer to that submission is that the rule does not say so and there is authority that, within the terms of the rule “defendant” does not include “cross-defendant” – Skinner & Edwards v Australian Telecommunications Corporation (1992) 27 NSWLR 567 at 578. Furthermore, at least so far as the litigation is concerned the Plaintiff has no interest in cross-defendants who are not also defendants. There is no issue between the Plaintiff and such persons to be compromised. Thus no requirements of reasonableness require a plaintiff to serve any offer to a defendant on a cross-defendant.

21 Mr Glissan also submitted that the offer was made to the defendants severally and in those circumstances, the disadvantages of one party alone accepting it were such as to make failure to do so not unreasonable. In one sense that is correct but it very much depends on the perspective from which one seeks to judge reasonableness.

22 No doubt there is advantage to a defendant in having the issue of having the liability of cross-defendants to that defendant determined at the same time as any liability of the defendant to the plaintiff is determined. He may wish to avoid acceptance of a liability a cross-defendant may dispute. The defendant may wish to rely on the cross-defendant for funds with which to discharge any liability to the Plaintiff. However such a defendant’s interest is not the only one. Neglect to accept a liability ultimately found is calculated to leave a plaintiff out of pocket for longer and force that plaintiff to continue to incur legal costs which, in one sense are unnecessary. If such a defendant wishes to retain the advantages delaying liability to the Plaintiff will confer, it is not necessarily unreasonable that he should have to pay for them by reimbursing the Plaintiff all such costs.

23 At times a reasonable response on the part of a defendant will be to ask co or cross-defendants to join in an acceptance of a Plaintiff’s offer, leaving the ultimate resolution of their respective liabilities to the future. At times, it may be to seek some other compromise. Thus in a case similar to that here, it might be reasonable to ask the Plaintiffs for an assignment of their rights against the guarantors. As it is, there is no evidence that any of the Fifth to Seventh Defendants did anything in response to the letter of 16 November 2000. I am not persuaded that there is anything in the constitution of proceedings 20161/98 or in the cross-claims or the issues therein which argues significantly against an order for indemnity costs.

24 There are further matters to which reference should be made and which were relied on in opposition to the Plaintiffs’ claim for indemnity costs. One arises from the fact that, until I decided in my principal Reasons that there should be consolidation, there had been 2 sets of proceedings. This, so it is said, created complexity and inefficiency and a consequent unnecessary expenditure of costs. That is a proposition I have no difficulty in accepting and, given that the institution of both sets of proceedings was the responsibility of the Plaintiffs and the maintenance of the proceedings partly so, prima facie the Plaintiffs or their legal advisers should be responsible for at least some of the costs so wasted. However, except by way of notional set-off, this does not argue against an award of costs on an indemnity basis and the difficulty in assessing the relative values on each side of the set off provides an argument against that course being adopted.

25 However the existence of the two sets of proceedings has another facet. The purpose behind Part 22 and the encouragement the courts give to other offers of compromise is to encourage the disposition of proceedings or parts of them once and for all. It was submitted that the existence of the 2 actions brought by the Plaintiff against different defendants, with their actual or foreseeable cross-claims, effectively precluded, or at least reduced the prospects of, this happening.

26 The Statement of Claim against Hunt alleged negligence and misleading conduct in the forwarding of the valuations of the mortgaged properties. The Amended Statement of Claim filed on 4 March 1999 in the other proceedings alleged negligence and misleading conduct by Mr Reilly in the making and forwarding of the valuations and, against Mr Cunningham, breach of contract and misleading conduct in undertaking to provide originals of the valuations. Hunt’s Cross-Claim of 23 August 2000 alleges negligence by Mr Reilly in his valuations and in a number of other respects, negligence by Mr Cunningham in duties to the Plaintiffs and Hunt, and negligence by Mr Perkins in duties to the Plaintiffs and Hunt and also misleading conduct by each of Reilly, Cunningham and Perkins. In his Cross-Claim of 8 September 2000, Cunningham claimed indemnity or contribution from Reilly and Perkins pursuant to the Law Reform (Miscellaneous Provisions) Act 1946.

27 In none of the offers that the Plaintiffs made on 16 November 2000 to Mr Sturgess, Mr Cunningham or Hunt did the Plaintiffs offer to give up their rights in the proceeding to which those persons were not parties. For Mr Cunningham, by way of example, to have accepted the offer made would still have allowed the Plaintiffs to pursue Hunt, and Hunt to pursue Mr Cunningham in Hunt’s cross-claim in proceedings 11657/99. It was submitted on behalf of the Plaintiffs that there is no reason to doubt that, if the offer of compromise had been accepted by Hunt, the Plaintiffs would not have further participated in the proceedings and a letter of 9 November 2001 – a year after the offer with which I am presently concerned - from Minter Ellison, Hunt’s solicitors reflects “that reality”. It may well be, of course, that the Plaintiffs would not have continued any litigation but the fact is that their offer did not involve them in giving up their rights in that regard. On this ground, it seems to me that Messrs Cunningham, Hunt (and Sturgess) were not unreasonable in not accepting the Plaintiffs’ offer.

28 On behalf of Hunt, Mr Roberts also drew attention to the form of the pleading against Hunt (in proceedings 11657/99) at the relevant time. In substance the claim was that Hunt was negligent or guilty of misleading conduct in forwarding valuations which represented that the properties referred to in them were worth more than in fact they were. These claims failed. The Plaintiffs’ success against Hunt was the result of a conclusion by me that, as expressed in my principal reasons, contained within one of the Plaintiffs’ claims against Hunt was -

“a narrower one which, while it could have been better or expressly formulated, it is not unfair to Hunt to consider. It is one of the particulars of the Plaintiffs’ negligence claim against Hunt and one of the matters relied on by Hooton and Perkins in that party’s Cross-Claim against Hunt. It arises from the fact that each of the valuations included a statement that it was on “instructions received from Elliott and Harvey, Solicitors”. That statement was not correct.”

29 The particular of negligence that “the valuations had not, in truth been prepared on instructions from Elliott & Harvey, solicitors” seems first to have appeared in the Amended Ordinary Statement of Claim filed on 5 December 2001 pursuant to leave granted on the first day of hearing. Counsel for the Plaintiff described the further particulars as “entirely new”. It was not contained in the “Further Amended Ordinary Statement of Claim “ filed on 23 July 2001. It was submitted on behalf of Hunt that there is no allegation which resembles this in previous pleadings and thus it was not reasonable for Hunt to even consider it in November 2000. If Hunt had continued to defend the action as pleaded at that time, Hunt would have won. It would have been in a better position by rejecting rather than accepting the offer and it was accordingly reasonable for Hunt to reject the offer at the time it did.

30 The argument is convincing. In the context of offers of compromise, parties and their legal advisers cannot be expected to direct their attention to issues not raised and allegations not made at the time of the offer. Nor, given the complete absence of any reference in the pleading at that time to the issue on which the Plaintiffs succeeded against Hunt, is it a matter of preferring form over substance. On this ground also, Hunt should not be ordered to pay the Plaintiffs’ costs on an indemnity basis.

31 The offer made on 16 November 2000 to Mr Perkins was more complicated. It was an offer inclusive of costs. Mr Taylor QC, appearing for the Plaintiffs, conceded that there was no evidence before me as to the appropriate amount of costs as at 16 November 2000. He also agreed that the figure of $99,128.19 advanced probably included the costs of both sets of proceedings. Without exploration of the costs to which the Plaintiffs were or might have been entitled at the time of the offer, it is not possible to say that the judgment the Plaintiffs obtained against Mr Perkins was not less favourable than the terms of the offer. Hence I do not see in the terms of the letter to Mr Perkins’ solicitors any reason for ordering that costs against him be assessed on anything but the usual basis. Nor does the fact that some of these costs were apparently rendered by Hooton and Perkins change that view. They ceased to be the solicitors for the Plaintiffs no later than 8 February 2000 and while there is a statement in a letter from the Plaintiffs’ solicitors of 12 November 2001 in which it is stated that Hooton and Perkins had charged $54,385.22, there is again nothing to indicate either the basis or reasonableness of that amount.

32 This conclusion makes it unnecessary to consider a further term of the offer made to Hooton and Perkins, viz that the settlement would be on the basis that the Plaintiffs “will then assign their rights to pursue the existing defendants to Hooton and Perkins”. Causes of action in tort, as at least some of the Plaintiffs claims were, are not assignable – see Fleming, 6th ed, page 590 n 29 and while there are ways in which this principle might have been avoided, one would anticipate a far more detailed arrangement involving perhaps powers of attorney and/or indemnities would be required.

33 Part 52A Rule 22 provides an entitlement to indemnity costs in the circumstances to which it refers unless a judge otherwise orders. Apart from the provision, the awarding of costs on that basis is discretionary. The tests are not the same but whether the matter be approached under the rule or otherwise, the matters to which I have referred lead me to the view that no part of the costs awarded to the Plaintiff should, on the basis of the letters of 16 November 2000, be on an indemnity basis.

34 I should mention also that in the affidavit on which the Plaintiffs relied in support of their claim for indemnity costs, it was indicated – in paragraphs 8 and 9 and Annexure F - that the Plaintiffs had made further offers of settlement. The Annexure suggests that there was agreement by some, but not all, of the Defendants to the proposals but clearly the case against no-one actually settled before verdict. The full details of these further offers was not revealed and they were not relied on in argument so I need not consider them further.

35 It is also appropriate in a consideration of any order for the Plaintiffs’ costs to consider the impact of there being 2 sets of proceedings instead of one. It is not difficult to understand the commencement in the first instance of proceedings against only the guarantors. It was suggested on behalf of the plaintiffs that the real area of duplication occurred as a result of the defendants, by cross-claims, seeking to off-load responsibility for the primary loss. However a consideration of the following table in which I record a history of the pleadings indicates that that is not so. Subject possibly to some minor variation in dates, some of which are obscure on the documents, that history and the timing of one or two other events, seems to have been as follows:-

DATE	20161/98	11657/99	PLEADING
29/05/1998	20161	S/C against Nicholson, Norman and Sturgess (hereinafter referred to collectively as “Guarantors”)
29/06/1998	20161	Defence of Sturgess & Cross-Claim against Plaintiffs, alleging misrepresentations by Hooton & Perkins that loan was not more than 2/3 of value of properties mortgaged
21/08/1998	20161	Transfer to District Court by consent
22/09/1998	6909/98	Statement of Claim against Hunt
04/03/1999	6923/98	Amended S/C against Guarantors, Reilly and Cunningham
21/06/1999	Transfer to Supreme Court of “combined proceedings 6923 and 6909 of 1998 in District Court”
19/10/1999	11657	Defence of Hunt
8/2/2000	20161	11657	Plaintiffs change solicitor from Perkins to Abbott Tout
23/02/2000	20161	Defence of Reilly
29/02/2000	20161	Defence of Cunningham
11/08/2000	20161	Amended Defence of Cunningham
23/08/2000	11657	Cross-Claim by Hunt against Reilly, Perkins & Cunningham
08/09/2000	11657	Second Cross-Claim by Cunningham against Reilly & Perkins
15/09/2000	20161	Second Cross-Claim (by Sturgess) against Hooton & Perkins alleging similar misrepresentations as in First Cross-Claim
18/09/2000	11657	Defence of Cunningham to Cross-Claim of Hunt
16/11/2000	20161	Compromise offers to Sturgess, Reilly and Cunningham
16/11/2000	11657	Compromise offer to Hunt
16/11/2000	Compromise offer to Perkins
21/11/2000	11657	Defence of Perkins to First Cross-Claim (of Hunt)
21/11/2000	11657	Defence of Perkins to Second Cross-Claim (of Cunningham)
12/01/2001	20161	Further amended S/C against Guarantors, Reilly, Cunningham & Perkins
12/03/2001	20161	Further amended S/C against Guarantors, Reilly, Cunningham & Perkins
13/3/2001	11657	Amended S/C against Hunt & Perkins
18/04/2001	11657	Defence of Hunt to Amended S/C
01/05/2001	11657	Defence of Perkins to Amended S/C
01/05/2001	20161	Defence of Perkins to Further amended S/C
01/05/2001	20161	Third Cross-Claim (by Perkins) against Hunt, Reilly & Cunningham
25/05/2001	20161	Defence of Hunt to Third Cross-Claim
23/07/2001	11657	Further Amended S/C against Hunt & Perkins
23/07/2001	20161	Further re-amended S/C against Guarantors, Reilly Cunningham & Perkins
15/10/2001	20161	Defence of Cunningham to Third Cross-Claim
03/12/2001	20161	Amended S/C against Guarantors, Reilly, Cunningham & Perkins
03/12/2001	20161	Defence of Cunningham to amended S/C
05/12/2001	11657	Amended S/C against Hunt, Perkins

36 It should also be mentioned that on 4 March 1999, there was filed by Hooton and Perkins on behalf of the Plaintiffs in proceedings 6909/98 in the District Court a Notice of Motion seeking an order:-

“That these proceedings be heard with Proceedings No 6923 of 1998 and that evidence in each proceedings be evidence in the other.”

37 There is no record I could find in the Supreme Court files of any order made on that Notice of Motion but a “Case Enquiry” of the District Court has revealed that on 7 May 1999 orders were made in accordance with that Notice of Motion.

38 The duplication commenced when proceedings were commenced against Hunt instead of that organisation being joined in the original proceedings. The duplication was exacerbated on 4 March 1999 when Messrs Reilly and Cunningham were joined in the original proceedings. Unless liability was accepted, cross-claims in both proceedings were an inevitable consequence of the Plaintiffs proceeding in 2 actions.

39 It was also submitted on behalf of the Plaintiffs that all parties bear responsibility for the fact that the proceedings were not consolidated although it was also submitted that Mr Perkins’ Cross-Claim filed in May 2001 against Hunt, Reilly and Cunningham effected a de facto consolidation because all of the issues were then raised in proceedings 20161/98.

40 Appearing for Mr Perkins, Mr Darke conceded that the institution of the second set of proceedings was a procedurally inappropriate step and to the extent that costs flowed from that, they could properly be made the subject of an order against the solicitor who commenced them. However he submitted that it would not be appropriate to visit Mr Perkins with all the costs of these as Mr Perkins had ceased to act for the Plaintiffs in January 2000.

41 It might be mentioned that when the hearing before me commenced on 3 December 2001, Mr Cunningham sought consolidation, the Plaintiffs did not oppose such an order, and Mr Perkins was content for consolidation to occur. Mr Corsaro SC, appearing for Hunt opposed consolidation. He submitted that there were different parties and issues and, as the transcript cryptically records, “the disadvantage to consolidation would be costs”. For reasons recorded in the transcript I postponed a decision at that stage, concluding in the course of my principal Reasons that consolidation should occur.

42 There are a number of other considerations which arise. Firstly, the existence of the 2 sets of proceedings has resulted in a deal of duplication both in the paper of the pleadings and in the content of that paper. Thus having filed one statement of claim in proceedings 11657/99 and 2 in proceedings 20161/98 (or in their District Court equivalents) prior to the end of 1999, when the Plaintiffs came to amend in March 2001, July 2001 nd December 2001, this was done in each action. Six rather than three documents had to be drafted, copied and then considered by at least some of the Defendants and although I do not suggest that the work in this exercise was doubled thereby, a consideration of the documents in any of the three months shows that there was a deal of unnecessary duplication.

43 Secondly, consideration of the documents to see what the issues were has been necessarily more complicated. I was obliged to undertake that task in the course of preparing my principal reasons and it was very time consuming, even after one had managed to locate the relevant pieces of paper. It was submitted by Mr Taylor QC, appearing for the Plaintiffs, that the extra work was probably due to the multiplicity of parties rather than proceedings. I agree that the number of parties was more significant but I do not agree that the duplication of proceedings did not also create significant work for anyone trying to appreciate the issues, or drafting with a view to defining them. My own experience in this and other cases is that often as the paper increases, the time taken tends to increase if not exponentially, very much more than proportionally.

44 Thirdly, it should not be forgotten that, although many of the costs incurred by the Plaintiff would have been referable to both proceedings, there is something to be said for the view that the defendant or defendants in one action should not be held liable for the Plaintiffs’ costs of the other proceedings, certainly until the order for joint hearing and possibly until appreciably later.

45 Fourthly, the question arises as to how this aspect should be dealt with. It was urged on behalf of the Plaintiffs that, unless I was disposed to simply disallow the costs or a proportion of the costs of a particular document, I should leave to the solicitors or an assessor the quantification of the costs flowing from this duplication on the basis that they are in the best position to make such a quantification. While there is some force in this submission there are arguments the other way.

46 One is that the fact that the problem has arisen because of the conduct of the lawyers who it is suggested should be involved in the determination of its consequences. Some of them at least are clearly in a situation of conflict of interest and duty even in the course of seeking to pursue the topic in a claim for or assessment of costs against an opposing party. For while the original decision to have 2 sets of proceedings may have been that of Hooton and Perkins when that firm was acting for the Plaintiffs, that situation was allowed to continue thereafter by the legal advisers for all parties. Each set of advisers should, long before trial, have sought the consolidation of the 2 sets of proceedings. (It is suggested in paragraph 28 of Mr Mann’s Affidavit of 23 December 2002 that for the Plaintiffs to have done so would have exposed them to an order for costs. Possibly so, since the original error was by the Plaintiffs or their lawyers. However, despite the attitude of Hunt at the trial before me, everyone might have agreed as they seem to have done in respect of the topic of a joint hearing. And anyone who did not might well have had to pay the costs of their unsuccessful opposition. In any event, it would have been better to grasp the nettle then than continue to incur unnecessary costs. )

47 Furthermore, it is utterly impractical to embark on the task of assessing, document by document or page by page how much longer it would have taken for the drafting and subsequent consideration of unnecessary documentation or repetition. For it is not simply a case of disallowing the costs of some documents. Most or all seem to contain some useful material. One could theoretically go through on a line by line or paragraph by paragraph basis seeking to assess the duplication but there are likely to be a number of grey and very time consuming areas. And there would remain the task of assessing, or probably more accurately guessing, the time wasted in the subsequent consideration of the documentation made unnecessarily complex by the duplication. If that was to be attempted thoroughly, presumably some assessment would need to be made as to the state of knowledge of, including immediate familiarity with, all then relevant material that had gone before, of the persons who were giving the consideration. Insofar as such assessment was attempted, studies of prior documentation presumably available would be necessary. The time and cost of this exercise would be wholly out of proportion to the end sought to be achieved. A fortiori, if new lawyers not having a conflict of interest need to be engaged.

48 In amount, although perhaps not in relative terms, the costs of the duplication were exacerbated by the number of times the pleadings, particularly those of the Plaintiff, were amended albeit the Rules probably dealt with many of the costs incidental to the amendments. There were 10 versions of Statements of Claim or Amended Statements of Claim. And although I regard the problem as one primarily caused by the Plaintiff, it must be recognised that any party could have applied for consolidation.

49 At the end of the day however, one is left with the fact that costs have been wasted as the result of errors on the part of legal advisers. None of the litigants before me should have to bear those costs but at this stage I am not dealing with any issue between the Plaintiffs and their legal advisers. I am concerned solely with what orders for costs should be made in favour of the Plaintiffs against some of the Defendants. Clearly the orders should not be for those Defendants to pay all of the Plaintiffs’ costs, assessed or agreed. Having reached the view that it is not practical to make orders by reference to the costs of, or incidental to or consequent on particular documents, it seems to me that the best approach is to order the Defendants to pay a proportion of the Plaintiffs’ costs. Necessarily the selection of the proportion must involve a best estimate or guesswork but I am convinced that this is still preferable to making an order, a necessary incident of which is the incurring of further costs.

50 In my view an appropriate reduction of the Plaintiffs’ costs for which the Defendants should be liable on account of the duplication is 15%. That conclusion will be reflected in the proposed order 15. The proposed order 16 is refused but the limitation in the proposed order 15 “up to an including 16 November 2000” will be removed.

51 In my principal Reasons at [196] I drew attention to the fact that the Plaintiffs had succeeded on an appreciably narrower basis than pleaded. There was no challenge to this statement but neither was I asked to reduce the Plaintiffs’ costs on account of that fact. In those circumstances, I have wondered whether I should reflect that conclusion in the order for costs my making some further reduction. In the result, I think I should not, at least in part because no party sought to debate the extent to which costs were unnecessarily incurred on this account and partly because the exercise is difficult. I appreciate that no one sought to debate the extent of reduction on account of duplication either but the inefficiencies in that were so great that some reduction had to be made.

52 Neither was attention given to the frequency with which the parties, particularly the Plaintiffs had amended. It may be that there are orders covering the costs of amendments and it may be it will arise in the course of assessment but again, because of absence of debate, rather than from any belief that the Plaintiffs’ costs should not be reduced on account of those matters, they are not reflected in the 15% reduction I have made.

53 I would add this. The costs of litigation are a major problem in the way of the community being able to receive justice. Demonstrably the Plaintiffs in this case are not in any sense the authors of the difficulties which have led to the litigation. Yet, according to information apparent on the documents put before me on arguments as to costs, by early February 1999, the Plaintiffs’ legal costs billed by Hooton and Perkins were $54,000 and by 16 November 2000 they were $99,000. And the cases were still 16 pleadings away from the final definition of issues and 12 months away from trial. It is mind boggling to think what the final costs of the litigation for the four parties who actively contested the proceedings were.

25. The First Cross Defendant to the Third Cross-Claim to pay the costs of the Third Cross-Claimant on a party/party basis up to and including 23 November 2001 and thereafter on an indemnity basis

26. The Third Cross-Defendant to the Third Cross-Claim to pay the costs of the Third Cross-Claimant

54 It is convenient to defer dealing with these until later.

30. The Fourth Cross Claimant contribute to and indemnify the Third Cross-Defendant to the Fourth Cross-Claim with respect to three quarters of any liability he has to the plaintiffs and/or the Third Cross-Claimant pursuant to orders 10 to 16 inclusive and 23.

55 As has been said the Fourth Cross-Claimant was Hunt. The Third Cross-Defendant to that Claim was Mr Cunningham. The Third Cross-Claimant was Mr Perkins. Orders 10 to 14 were orders directing verdicts and judgments for monetary sums in favour of the Plaintiffs against each of Mr Cunningham, Mr Perkins and Hunt. Order 15 is an order which I have said above will be made for payment of the Plaintiffs’ costs by those defendants. I have declined to make order 16. Order 22 requires Hunt, and order 23 requires Cunningham, to indemnify Perkins with respect to any liability the latter may have to the Plaintiffs.

56 In the Fourth Cross-Claim Hunt sought indemnity or alternatively contribution from Mr Cunningham and in my principal Reasons I held that as between the two it was just and equitable that Hunt should bear three quarters of their liability to the Plaintiffs. Mr Cunningham did not file a cross-claim seeking any orders against Hunt but counsel appearing for Hunt at the time of debate as to the terms of the orders which should be made said (T45 line 19) that he took no point as to that. That course would seem well justified by the decision in Adamopolous and Anor v Olympic Airways SA (1991) 25 NSWLR 75 at 84-5. My findings in favour of the Plaintiffs against Hunt were of misleading and deceptive conduct. I did not find it necessary to consider the particular statutory basis for that claim. In fact in the final pleading of the Plaintiffs against Hunt, viz. that filed on 5 December 2001, no statutory basis for the complaint of misleading and deceptive conduct was alleged. A comparison with the previous edition of that Statement of Claim, which referred to s52 of the Trade Practices Act and s42 of the Fair Trading Act would suggest the omission was inadvertent and no point was taken about any inadequacy in the pleading. My findings carry the implications that the terms of both sections were breached and that the Plaintiffs were entitled to recover against Hunt under, at least, s82 of the Trade Practices Act and s68 of the Fair Trading Act.

57 My findings in favour of the Plaintiffs against Mr Cunningham were for misleading and deceptive conduct under s42 of the Fair Trading Act and for breach of contract (although the damages for the latter would be nominal).

58 In saying in the course of my principal Reasons that, as between Hunt and Mr Cunningham, it was “just and equitable” that Hunt should bear three quarters of their liability to the Plaintiffs, I clearly had in mind s5 of the Law Reform (Miscellaneous Provisions) Act 1946. However, in the course of considering draft orders 30 and 31, it has become apparent that s5 may not apply. That section, so far as is presently relevant, provides:-

“(1) Where damage is suffered by any person as a result of a tort (whether a crime or not) -

(c) any tortfeasor liable in respect of that damage may recover contribution from any other tortfeasor who is, or would if sued have been, liable in respect of the same damage, whether as a joint tortfeasor or otherwise, so, however, that no person shall be entitled to recover contribution under this section from any person entitled to be indemnified by him in respect of the liability in respect of which the contribution is sought.”

59 There was, so far as is presently relevant, no issue of other liability in tort of Mr Cunningham or Hunt found in the proceedings – c.f. Jones v Mortgage Acceptance Nominees Ltd and Ors (1996) 63 FCR 418 at 420. The question therefore arises whether breaches of s52 of the Trade Practices Act or of s42 of the Fair Trading Act are torts within s5 and thus those defendant(s) tortfeasors, and liable for, or entitled to, contribution. The determination of that question involves a consideration of the meaning of the word “tort”, either generally or as used in s5, and the characterisation of a breach of s52 and s42 and the rights arising in consequence.

60 There is, and was in 1946 (and in the 1930s when the English predecessor to s5 of the Law Reform (Miscellaneous Provisions) Act 1946 was introduced), no precise and universally accepted definition of a “tort”. It was defined in Salmond on the Law of Torts, 8th ed. (1934), p15 as “a civil wrong for which the remedy is a common law action for unliquidated damages, and which is not exclusively the breach of a contract or the breach of a trust or other merely equitable obligation”, although in a footnote the author goes on to say that “No satisfactory definition of a tort has yet been found”. Winfield, 1st ed. (1937), paragraph 2 said that “Tortious liability arises from the breach of a duty primarily fixed by law; this duty is towards persons generally and its breach is redressible by an action for unliquidated damages”. Earlier, in “Province of the Law of Tort”, the author had said that “unless an action were maintainable in the courts of Kings Bench, Common Pleas, Exchequer (or any one of them), as they existed before the Judicature Acts, it cannot be an action in tort” although he had declined to include reference to this jurisdictional element in the definition – see p 237. Pollock on Torts, 13th ed. (1929), at page 5 contained a similar view. Clerk and Lindsell on Torts, 9th ed. (1937), page 1 adopts the definition I have cited from Winfield although records that in the previous edition the definition had been “A tort may be described as a wrong independent of contract, for which the appropriate remedy is a common law action”. (The previous edition had been published in 1939.)

61 Later editions - see Winfield and Jolowicz on Tort, 14th. ed., p4, Clerk and Lindsell, 14th ed., paragraph 1, Salmond and Heuston on The Law of Torts, 21st ed., p13 repeat those views. Fleming, The Law of Torts, 9th ed., p1 refers to Winfield’s “Province of the Law of Tort” and goes on to explain the concept by contrasting tortious liability with what he suggests are “broadly speaking (the other aspects of) the entire field of liability” viz. criminal, contractual and restitutionary. Byrne J in Commonwealth Bank of Australia v White (1999) 2 VR 681 at 697 also acknowledged the difficulty in definition.

62 The definition in an early edition of Salmond and remarks to similar effect in Halsbury led Menhennitt J in Philip Morris v Ainley (1975) VR 345 at 349 to say that it appeared to him that “an action in tort is one in which the remedy is a common law cause of action although the right being enforced in the action may be a right created by either the common law or statute”. His Honour went on to hold that a statutory entitlement to an indemnity was not an action in tort although, it should be noticed, not on the simple basis that the remedy was conferred by statute.

63 Section 5 of the Law Reform (Miscellaneous Provisions) Act 1946 reproduced s6(1)(c) of the English Law Reform (Married Women’s and Tortfeasors) Act 1935. That provision had been enacted following the third interim report of the United Kingdom Law Revision Committee wherein the Committee had observed (paragraphs 3 and 4):-

3. When two or more persons jointly commit a wrongful act, the person injured can recover the full amount of his damage from any one of them. If he does so, the wrongdoer who has paid the whole damage has to bear the whole loss and the other wrongdoers escape liability by reason of the rule of the common law that there can be no contribution between joint tort-feasors.

The rule is different in cases of breach of contract, for where one of several persons, jointly, or jointly and severally, liable under a contract is called upon to perform the contract in full or to discharge more than his proper share, he has, as a general rule, a right to call upon persons jointly, or jointly and severally, liable with himself to contribute to the liability which he has incurred (Halsbury Laws of England (Vol. VII at 375).

4. The rule that no contribution obtains between joint tortfeasors, which is of obscure and uncertain origin, first assumed definite shape in the judgment of Lord Kenyon in Merryweather v Nixan ((1799) 8 T.R. 186; 1 Smith’s L.C. 13th Ed. p.449), and applies equally to claims for indemnity by one tortfeasor upon another ( Betts v Gibbins 2 Ad. And E. at pp.74 and 76). It has often been disapproved. In Palmer v Wick and Pulteneytown Steam Shipping Co. ([1894] A.C. at p. 324) Lord Herschell, speaking of the rule, said, “It does not appear to me to be founded on any principle of justice or equity, or even of public policy”. In Austin Friars Co v Spillers & Bakers ([1915] 3 K.B. at p. 592) a case relating to general average, Pickford LJ. described it as an artificial doctrine, and not to be extended.

Early in its history exceptions were engrafted upon it. …

“7 …. We think therefore that when two persons each contribute to the same damage suffered by a third the one who pays more than his share should be entitled to recover contribution from the other.

8. The question then arises whether the contribution by all the wrongdoers should be equal, or whether the Court should have the power to apportion the liability.

We think that there are many cases where such an apportionment might fairly be made…”

64 The rationale behind the rule that one tortfeasor could not obtain contribution from another should be recognised. In Betts v Gibbins 2 Ad & E 57 at 74; 111 ER 22 at 29, Lord Denman, when referring to Merryweather v Nixan, although saying that the case had been strained beyond what it would bear, said “The general rule is, that between wrongdoers there is neither indemnity nor contribution; the exception is, where the act is not clearly illegal in itself.” In Smith LC, 13th ed., vol 1, p 452 it is said to be contrary to policy to allow a man to recover what he has paid in consequence of an illegal act or wilful wrong. In Weld-Blundell v Stephens (1920) AC 956 at 976, Lord Dunedin said that there was no contribution between wrongdoers “because of the underlying proposition that no man can claim damages when the root of the damage which he claims is his own wrong” although his Lordship went on to add the qualification, if the person suing is “presumed to have known that he was doing an unlawful act”. An explanation of this latter concept is to be found in Burrows v Rhodes (1899) 1 QB 816 at 829-30 where Kennedy J indicated that knowledge of the circumstances constituting the unlawfulness or offence was sufficient, a person being presumed to know the law. In part this section of Kennedy J’s judgment was approved in Weld-Blundell v Stephens.

65 The explanation advanced by Lord Dunedin derives support from Eyles v Faikney, Peake NPC 144n where, albeit in a claim for an indemnity rather than contribution, the Plaintiff was refused relief seemingly on the basis that, having allowed a prisoner to escape by breach of duty, he ought not to be permitted to come as a plaintiff into a court of justice. Eyles v Faikney was followed in Pitcher v Bailey (1807) 8 East 171; 103 ER 308.

66 When the Bill for the Law Reform (Miscellaneous Provisions) Act 1946 was introduced into the NSW Parliament, the Attorney General in the second reading speech in the Legislative Assembly, recorded that the then existing law had been trenchantly criticised by a United Kingdom Law Revision Committee and that the Bill followed the relevant provisions of the English Law Reform (Married Women’s and Tortfeasors) Act 1935 verbatim. In explaining the proposal and before going on to summarise parts of the legislation including section 5(1)(c), the minister told the House that a tortfeasor was one who commits a tort or wrong against some other person. He also contrasted the then existing situation of a “joint tortfeasor” with one person liable under a contract who, so it was said, could generally call upon others also liable to contribute. Introducing the Bill’s second reading in the Legislative Council, the Minister for Justice also described a tortfeasor as one who commits a tort or wrong against some other person.

67 To what extent some of these matters can be taken into account depends on the terms of Sections 33 and 34 of the Interpretation Act, 1987 (NSW) which, so far as is presently relevant, provide:-

33 In the interpretation of a provision of an Act or statutory rule, a construction that would promote the purpose or object underlying the Act or statutory rule (whether or not that purpose or object is expressly stated in the Act or statutory rule or, in the case of a statutory rule, in the Act under which the rule was made) shall be preferred to a construction that would not promote that purpose or object.

34 In the interpretation of a provision of an Act or statutory rule, if any material not forming part of the Act or statutory rule is capable of assisting in the ascertainment of the meaning of the provision, consideration may be given to that material:

(2)(f) the speech made to a House of Parliament by a Minister or other member of Parliament on the occasion of the moving by that Minister or member of a motion that the Bill or the Act be read a second time in that House.

(3) In determining whether consideration should be given to any material, or in considering the weight to be given to any material, regard shall be had, in addition to any other relevant matters, to:

(a) the desirability of persons being able to rely on the ordinary meaning conveyed by the text of the provision (taking into account its context in the Act or statutory rule and the purpose or object underlying the Act or statutory rule and, in the case of a statutory rule, the purpose or object underlying the Act under which the rule was made), and

68 Before I go on to answer the questions I have so far raised, it may help in defining the issues to reflect on terms of the Trade Practices Act and the Fair Trading Act. There are differences between those two Acts but none are significant for present purposes and accordingly it will be convenient initially to confine attention to the Trade Practices Act.

69 So far as is presently relevant, ss 52 and 82 of that Act provide:-

52(1) A corporation shall not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.”

82(1) A person who suffers loss or damage by conduct of another person that was done in contravention of a provision of Part IV, IVA, IVB or V or Section 51AC may recover the amount of the loss or damage by action against that other person or against any person involved in the contravention.

(2) An action under subsection (1) may be commenced at any time within 6 years after the day on which the cause of action that relates to the conduct accrued.

70 It was said in Tobacco Institute of Australia Ltd v Australian Federation of Consumer Organisations Inc (1988) 19 FCR 469 at 473, that “Section 52 does not purport to create liability, nor does it vest in any party any cause of action in the ordinary sense of that term; rather, s52 establishes a norm of conduct, and failure, by the corporations and individuals to whom it is addressed in its various operations, to observe that norm has consequences provided for elsewhere in the Act: Brown v Jam Factory Pty Ltd (1981) 53 FLR 340 at 348”. Section 82 is one of the sections providing for those consequences. Other “remedies include a declaration (s 163A); injunction (s80); disclosure of information and publication of corrective advertisements (s80A); … and the prohibition of payment or transfer of moneys or other property (s87A).” The passage quoted was endorsed by Spender, Gummow and Lee JJ in State of Western Australia v Wardley Australia Limited and Ors (1991) 30 FCR 245. That case went on appeal – see (1992) 175 CLLR 514 - but only Toohey J dealt with the present topic. At page 551 his Honour said, “Although it is customary to speak of a claim for damages for misleading or deceptive conduct, s52 of the Act does not of itself give rise to any liability. The consequences of a contravention of the terms of s52 are to be found in various sections of the Act. One of those consequences lies in s82(1) … .”

71 In Bank of New Zealand v Spedley Securities Ltd (1992) 27 NSWLR 91 at 98-99, Kirby P observed that for some time there had been a controversy as to whether s52 of the Trade Practices Act (and by analogy s42 of the Fair Trading Act 1987) gives rise, by its own force, to a duty which is enforceable at law but that, whatever his own views, he was bound to pay deference to the decisions just mentioned because they applied to legislation designed to operate uniformly throughout Australia. Hope JA, at 110, agreed.

72 Whether a breach of s52 constitutes a tort has been the subject of consideration on a number of occasions. For example, in ANZ Banking Group Ltd v Turnbull (1991) 33 FCR 265 at 277, Shepherd J said that an action for breach of s52 was entirely statutory and not a tort. In an article in volume 67 of the Australian Law Journal, “Contribution, Contributory Negligence and Section 52 of the Trade Practices Act” Mr J C Campbell QC, (now Campbell J) argues that an action for breach of s52 is a tort. In Dorrough v Bank of Melbourne Ltd (1995) ATPR (Digest) 53,185 Cooper J, influenced by that article, said that there was a substantial argument that an action for breach of s52 was a tort. In Bialkower v Acohs Pty Ltd (1998) 83 FCR 1 at 11 the full Federal Court said that it preferred the views of Sheppard J to those of advanced by Campbell J but that it was unnecessary for the matter to be decided. Citing Bialkower v Acohs Pty Ltd, in Burke v LFOT Pty Ltd (2000) 178 FLR 161 at [131], Lehane J took the same view. In fact, as the other judgments in that case make clear, no party had suggested that s5 of the (Law Reform Miscellaneous Provisions) Act applied. On appeal, as might be expected, there was no discussion of s5 beyond the remark of Kirby J that “No state legislation intrudes to afford here a statutory foundation for contribution …” - Burke v LFOT Pty Ltd (2002) 76 ALJR 749 at [99].

73 In Commonwealth Bank of Australia v White (1999) 2 VR 681 at [60] Byrne J said that Justice Campbell’s article “presents a compelling argument in support of the conclusion that these claims (for breach of s52) should be treated for other procedural purposes as torts”. His Honour held that misleading and deceptive conduct in breach of s52 was a tort, although it must be acknowledged that he did so in the context of Rules of Court providing for service out of the jurisdiction and which Rules drew a distinction between claims in contract and those in tort. His Honour acknowledged that he was differing from McDonald J in Williams v the Society of Lloyds (1994) 1 VR 274.

74 In light of this difference of opinion, the topic merits further consideration. There can be no doubt that a breach of statutory duty is a tort – Spotless Group Ltd and Anor v Proplast Pty Ltd (1987) 10 IPR 668 at 670; Philip Morris v Ainley (1975) VR 345 at 349; Commonwealth Bank v White (1999) 2 VR 681 at [66]; London Passenger Transport Board v Upson (1949) AC 155 at 168;

75 Having regard to the approach to be seen in Martin v Western District of the Australasian Coal and Shale Employees’ Federation Workers Industrial Union of Australia (Mining Department) (1934) 34 SR (NSW) 593 at 596 and Whittaker v Rozelle Wood Products Ltd (1936) 36 SR (NSW) 204 and its endorsement by Dixon CJ in O’Connor v S P Bray Ltd (1937) 56 CLR 464 there can be little doubt that the statutory obligation in s52 not to “engage in conduct that is misleading or deceptive or likely to mislead or deceive” is one which, absent s82 and the other sections of the Act providing for remedies, would be regarded as one the breach of which gives rise to a cause of action and amounts to a tort. Experience both before and subsequent to the Act shows that misleading or deceptive conduct is not uncommon. The obvious purpose of the provision clearly embraces the protection of those who would be likely to suffer in consequence of such conduct – conduct which, it might be observed, if accompanied by other features such as knowledge of the misleading nature of the conduct or, in some cases negligence, is liable to amount to a tort at common law.

76 Does the presence of s82 and the other provisions of the Act providing for remedies change this?

77 At least in part it was the presence of s82 which influenced the court in Bialkower v Acohs Pty Ltd (1998) 83 FCR 1 at 11, to say that “the cause of action under s82 for breach of s52 of the Act is entirely statutory and is not an action in tort”. On the other hand, one of the difficulties which have beset courts asked to consider whether breaches of duties imposed by statute give rise to a civil cause of action has been the determination of what Parliament’s intention was. Commonly that has not been clearly expressed. An alternate way of looking at s82 is to regard the provision as merely an express indication of what might, and in my view would, otherwise have been implied, viz. that anyone who suffered in consequence of a breach of the obligations the statute imposed was to have a cause of action for the breach.

78 To conclude that although, if s82(1) was not in the Act, a breach of s52 would constitute the tort of breach of statutory duty and would confer on someone injured by the breach a right to damages, the presence of an express statement in s82(1) that such damages may be recovered removes the breach from the concept of tort is to draw a distinction which is both fine and of no obvious practicable use.

79 However, in that s82(2) goes on to say that an action under s82(1) may be commenced within a defined period (originally 3 years, but now 6 years) after the cause of action that relates to the conduct accrued, it provides an indication that any cause of action arises under s82(1) and not merely in consequence of the contravention itself. It is impossible to reconcile with the terms of the sub-section the thought that an action in consequence of the contravention and to which no, or other, time limits apply could be brought otherwise than under s82(1). On the other hand, s82(1) is directed to imposing a time limit on proceedings. To give to the sub-section the effect of determining the nature of the proceedings is to give to it an operation which goes well beyond its subject matter.

80 Nor, in light of the existence of s82, can one see in the other provisions of the Act conferring remedies for a breach of s52 an intention that a person injured by such a breach shall have no civil remedy in damages.

81 And, as Campbell J points out, the fact that not only an obligation but also the right arising in consequence of a breach has been statutorily imposed has not in all cases been regarded as precluding the right of action as being characterised as a tort. A right of action statutorily conferred has been regarded as a tort in the case of a statute creating a liability for excessive traffic or weight imposed on a highway – Story v Sheard (1892) 2 QB 515, a statute imposing liability on the Nominal Defendant – Chadwick v Bridge (1951) 83 CLR 314 and in the case of Lord Campbell’s Act – Koop v Bebb (1951) 84 CLR 629; Downs v Williams (1971) 126 CLR 61. In American Express v British Airways (1983) 1 WLR 701 at 708, an action under a provision of the Warsaw Convention imposing liability for loss of, or damage to, any registered baggage or cargo, if the occurrence which caused the damage so sustained took place during the carriage by air was regarded as “proceedings in tort” within s29 of the Post Office Act, 1969 (UK) which provided immunity from such proceedings.

82 Proceedings for breach of s52 were described as a “statutory tort” in Australian Commercial Research and Development Ltd v ANZ McCaughan Merchant Bank Ltd (1989) 3 All ER 65 at 72.

83 It is unnecessary to say more about the other cases to which I have just referred but remarks in the decisions of the High Court to which I have just referred merit further attention. In Koob v Bebb the majority of the High Court recounted the terms of the principal provision which repeated Lord Campbell’s Act in Victoria, viz:-

“Whenever the death of a person is caused by a wrongful act neglect or default and the act neglect or default is such as would (if death had not ensued) have entitled the party injured to maintain an action and recover damages in respect thereof, then in every such case the person who would have been liable if death had not ensued shall be liable to an action for damages notwithstanding the death of the person injured and although the death has been caused under such circumstances as amount in law to felony”.

“Lord Campbell’s Act described in the recital the situation to which it was addressed: “whereas no Action by Law is now maintainable against a Person who by his wrongful Act, Neglect, or Default may have caused the Death of another Person, and it is often times right and expedient that the Wrongdoer in such Case should be answerable in Damages for the Injury so caused by him.” The mischief of the Act was thus revealed as a lacuna in the law of liability for wrongs. As Lord Sumner pointed out in Admiralty Commissioners v SS Amerika (1917) AC 38 at p51-2, Scotland was excluded from the operation of the Act because the lacuna did not exist in Scottish law. Existing in the common law, it was filled for England by Lord Campbell’s Act and it was filled by Victoria by the provisions now contained in Part III of the Wrongs Act, by creating in favour of certain relatives of the deceased person a right to complain of his death as an injury to themselves: cf. Woolworths Limited v Crotty (1942) 66 CLR 603 at 611, 618.

Section 15 should therefore be considered as enacting a rule of the law of Victoria… the section may be considered as simply creating an addition to the category of actionable wrongs by reference to which, in a case involving a foreign element, the rules of private international law give a right of action in Victoria in conditions which they define. Alternatively the section may be regarded as giving a right of action in Victoria whenever the condition is fulfilled that the deceased person (if he had survived) would have been entitled by the law of Victoria, including its rules of private international law to recover damages for the act, neglect or default which caused his death.”

84 The High Court did not find it necessary to choose between these alternatives.

85 In Downes v Williams Windeyer J dissented. However that does not, in my view detract from the following remarks (at p 84):-

“… the proposition that Lord Campbell’s Act did not make new law will not bear examination against the light of authoritative pronouncements. What it did was to create a cause of action which Lord Blackburn described as “new in its species, new in its quality, new in its principle, in every way new”: Seward v The “Vera Cruz” (1884) 10 App Cas 59 at 70-71; See too Victorian Railways Commissioners v Speed (1928) 40 CLR 434 at p 440-1, 445. The new rights created by Lord Campbell’s Act were a part of the existing law of torts to which the Crown became subject” (when the Claims against the Government Act were later enacted).

86 In Victorian Railways Commissioners v Speed at p 440-1 Isaacs, Powers and Starke JJ said of an action under Lord Campbell’s Act:-

“Moreover, the cause of action does not connote any failure of obligation or duty by the defendant to the plaintiff. Indeed, as shown by the authorities referred to, this type of action is sui generis. Sections 14-20 inclusive of the Wrongs Act, as a matter of public policy, enter upon an entirely new region of the law, and make a sort of code specially fitted for the case contemplated by the legislation. The enactment selects certain classes of persons, creates in their favour a novel right of action, requires a particular representative plaintiff, except in named circumstances, prescribes a special measure of compensation, which it qualifies in certain respects, regulates the nature of the tribunal, provides for apportionment where individual interests exist, makes some specific pleading provisions, and sets a distinctive limit to the time for taking proceedings.”

87 I confess that, given that s16 of the Wrongs Act provides for the alternatives of a jury or court, I do not understand their Honours’ reference to regulating the nature of the tribunal but I need not pursue this. It is clear from the other remarks that although an element in the cause of action created by Lord Campbell’s Act was that the defendant’s act was wrongful and would (if death had not ensued) have entitled the party injured to maintain an action, the Act created a new right of action in favour of a person or persons who would not otherwise have had one. Furthermore, although clearly the wrongful act of the defendant might fairly be described as tortious, the infliction of death does not fit within any of the definitions of “tort” which I have set out above.

88 In ANZ Banking Group Ltd v Turnbull (1991) 33 FCR 265 at 277, Sheppard J expressed his reasons for coming to the conclusion that a claim for damages for breach of s52 was not a tort in the following terms:-

“In my opinion the claim for contribution made by the Cross-Claimant in this case cannot succeed if it is based on s5. There are at least two reasons for this. The first is that the damage which is alleged was not suffered by the Applicants as a result of a tort. The action is for damages for breach of an obligation imposed by the statute itself (s52) not to engage in misleading or deceptive conduct. The cause of action is entirely statutory; the right to bring it is conferred by s82 and, perhaps, s87. It is to be distinguished from other causes of action mentioned in argument. The cause of action in a case based on fatal accidents legislation is usually negligence. The right of action is conferred on the estate of a deceased person or upon a dependant but it will only succeed if there is tortious conduct on the part of the defendant. In a case based on breach of statutory duty, the cause of action is again tortious. The statute does not in terms confer a cause of action. Rather the court determines that, on the proper construction of the statute, the legislature intended a person within its purview who is injured as a result of its breach to have a right of action.”

89 In Bialkower v Acohs Pty Ltd at 11, the Court said that:-

“… we are inclined to the view that Sheppard J was correct when he said in Turnbull that the cause of action under s82 for breach of s52 of the Act is entirely statutory and is not an action in tort. It is true that actions based on s52 are analogous to actions in tort, and that because of this the rules for assessing damages in tort, rather than those for assessing damages in contract, are the appropriate guide. … But the cause of action is created by the statute. Unlike the tort of breach of statutory duty, the common law plays no part in the creation of the cause of action. However, since s5 does not apply to the present case, we need not decide the point.”

90 In light of the observations of the High Court, Sheppard J’s remark that “The cause of action in a case based on fatal accidents legislation is usually negligence” is, if one is being precise, inaccurate. Otherwise his Honour seems to be saying that there may still be a tort -

if the conduct relied on it traditionally tortious, even if the right of action is conferred by statute, or

if the conduct breaches a statutory obligation and the existence of a right of action is a matter of inference by the court, but not

if both the statutory obligation and the right of action are provided in the statute (and, to be consistent with the first proposition, presumably if the conduct is not traditionally tortious).

91 Again one sees a distinction which has nothing to justify it unless it be dictated by the meaning of the word “tort”. And in any event, if it be suggested that the right so conferred was a tort because generally damage or loss caused by wrongful acts, neglects or defaults are torts, then given that fraudulent and negligent misrepresentations are, in appropriate circumstances, torts, why should not misrepresentations or other misleading or deceptive conduct, proscribed by the Trade Practices Act, also be regarded as falling within the term, notwithstanding that that Act expressly provides for a right of action for such conduct? Just as in the case of the circumstances giving rise to an action under Lord Campbell’s Act, it may be inferred that by enacting section 52 of the Trade Practices Act, Parliament regarded the absence of liability for other mis-statements as a lacuna in the law.

92 The approach of Shepherd J and of the Court in Bialkower v Acohs Pty Ltd does derive support from those definitions of “tort” referred to above which include as an element of the definition a reference to “common law action”. The approach may also derive support from the requirement that the action be “maintainable in the courts of Kings Bench, Common Pleas, Exchequer (or any one of them), as they existed before the Judicature Acts” if one regards such actions as confined to those which actually came before those courts and not extending to actions which, had the relevant legislation existed prior to the Judicature Acts, would have been brought in such courts.

93 On the other hand if one adopted the definition of Winfield that “Tortious liability arises from the breach of a duty primarily fixed by law; this duty is towards persons generally and its breach is redressible by an action for unliquidated damages” or so much of the approach of Fleming as suggests that tortious liability covers matters that are not criminal, contractual or restitutionary, then proceedings under s82 for breach of s52 might fairly be regarded as an action in tort.

94 Having regard to the terms of s33 of the Interpretation Act, one is entitled to consider the purpose behind s5 of the Law Reform (Miscellaneous Provisions) Act. That purpose was to eliminate the rule that one wrongdoer could not seek indemnity or contribution from another. True it is that the Act was couched in terms of “tort” and “tortfeasor” but that was the normal, and possibly the only circumstance in which the issue had arisen but there is no basis for contending that that was the only situation in which it could arise. It cannot be thought that someone, a wrongdoer for breach of an Act of Parliament, would any more have been allowed to sue for contribution in the courts than was a perpetrator of a traditional tort.

95 Is one also entitled under s34 to look at other material, perhaps more widely at what was said in the Law Revision Committee report and also what was said by the ministers introducing the Bill? In my view the absence of agreement between the writers as to the meaning of the word “tort” leads to the conclusion that, if what was said is capable of assisting in the ascertainment of the meaning of the term, consideration should be given to those statements. These matters are so capable.

96 They provide grounds for concluding that no narrow meaning was intended to be given to the terms “tort” and “tortfeasor” and that “tort” was being used in contradistinction to contract, and indicate a view that “when two persons each contribute to the same damage suffered by a third (or to adapt the words of the ministers effect a “wrong”) the one who pays more than his share should be entitled to recover contribution from the other”. A fortiori, they indicate that Parliament was not intending to limit the change in the law to “action(s which) were maintainable in the courts of Kings Bench, Common Pleas, Exchequer (or any one of them), as they existed before the Judicature Acts”.

97 In short, because I am disposed to give to the word “tort” in s5 of the Law Reform (Miscellaneous Provisions) Act 1946, the meaning to which Winfield assigns it, rather than that which it bore in previous centuries and because the High Court has thought it proper to so characterise at least one civil wrong where both the breach of obligation and right of action are the product of statute, it seems to me that, for the purposes of s5, a breach of s52 of the Trade Practices Act should be regarded as a tort and the person committing such a breach a “tortfeasor”. Because of the similarity in language, the same approach should be taken in relation to breaches of s42 of the Fair Trading Act.

98 I do not forget that both Acts provide for other remedies beside actions for damages by persons who have suffered in consequence of such a breach. However, the fact that a person injured may have remedies additional to an action for damages, and that a breach of s52 provides grounds for the State to seek wider remedies does not seem to me to alter or qualify the fact that the breach is of a duty primarily fixed by law, owed to persons generally, and its breach is redressible by an action for unliquidated damages by anyone who has suffered damage in consequence of the breach.

99 I should however refer to some remarks of the High Court in Gates v City Mutual Life Assurance Society Ltd (1986) 160 CLR 1. In that case the High Court was considering the appropriate measure of damages under s82 for a breach of s52. In rejecting the contract measure, Gibbs CJ said at p6 that actions based on such conduct were “analogous to actions in tort”; Mason, Wilson and Dawson JJ said at p14 of such conduct that it is “similar both in character and effect to tortious conduct, particularly fraudulent misrepresentation and negligent misstatement”. While of course their Honours’ failure to say that a breach of s52 was a tort is a matter which argues against the conclusion at which I have arrived, the precise question I have to decide, viz. the proper operation of s5 of the Law Reform (Miscellaneous Provisions) Act 1946, was not before the High Court and I do not regard the remarks quoted as precluding the conclusion at which I have arrived.

100 Accordingly, I propose to make orders reflecting my finding as to what was “just and equitable” as between Mr Cunningham and Hunt.

101 I should perhaps add that it was submitted on behalf of the Fifth Defendant that contribution should be ordered under the general law upon the basis that Mr Cunningham and Hunt are not tortfeasors and that such contribution could be proportionate to the respective liabilities of the parties. Reference was made to remarks of Gaudron and Hayne JJ in Burke v LFOT Pty Ltd (2002) 76 ALJR 749 at 752 and to remarks of Kirby J at 771. In light of the conclusions reached above, I do not need to pursue this submission beyond recording that the weight of authority is heavily against the view that, except under s5 of the Law Reform (Miscellaneous Provisions) Act, any contribution ordered against those of those sharing equal liability to a third person, may be otherwise than equal – see for example Leigh-Mardon v Wawn (1995) 17 ACSR 741 at 751-2 (Hodgson J); Sky Channel Pty Ltd v Tszyu (No 2) [2002] NSWSC 1150 (Young J). However, given the conclusion at which I have arrived as to the respective responsibilities of Mr Cunningham and Hunt for the Plaintiffs’ loss, both any order for contribution under the general law and a refusal to order contribution would seem unfair. Either would over or under compensate compared with what is “just and equitable”.

102 Apart from the issues of whether contribution can, given the nature of the liabilities, be ordered, paragraphs 30 and 31 reflect findings and orders otherwise made. Accordingly, orders in terms of those paragraphs, omitting reference to paragraph 16, should be made.

103 I now come to the question of costs as between Mr Perkins, Mr Cunningham and Hunt. The orders sought, references to the headings under which the paragraphs appeared, and an interpolation of the identity of the parties referred to, were as follows. (I include the parts of orders 22 and 23 which I said I would reserve.)

The Third Cross-Claim – Perkins v Hunt, Reilly and Cunningham
22 The First Cross Defendant to the Third Cross-Claim ( Hunt ) indemnify the Third Cross Claimant ( Mr Perkins ) with respect to any liability he may have to the Plaintiffs for costs

23 The Third Cross Defendant to the Third Cross-Claim ( Mr Cunningham ) indemnify the Third Cross Claimant ( Mr Perkins ) with respect to any liability he may have to the Plaintiffs for costs

25. The First Cross Defendant to the Third Cross-Claim ( Hunt ) to pay the costs of the Third Cross-Claimant ( Mr Perkins ) on a party/party basis up to and including 23 November 2001 and thereafter on an indemnity basis

26. The Third Cross-Defendant ( Mr Cunningham ) to the Third Cross-Claim to pay the costs of the Third Cross-Claimant ( Mr Perkins )

The Fourth Cross-Claim – Hunt v Reilly, Perkins and Cunningham
29. The Fourth Cross Claimant ( Hunt ) to pay the costs of the Second Cross-Defendant to the Fourth Cross-Claim ( Mr Perkins ) on a party/party basis up to and including 23 November 2001 and thereafter on an indemnity basis.

32. The Fourth Cross-Claimant ( Hunt ) pay the costs of the Third Cross-Defendant to the Fourth Cross-Claim ( Mr Cunningham ) with respect to the Fourth Cross-Claim

33. The Fourth Cross-Claimant ( Hunt ) pay the costs of the Third Cross-Defendant to the Fourth Cross-Claim ( Mr Cunningham ) with respect to the proceedings generally from 21 November 2001 on an indemnity basis

34. The Fourth Cross Claimant ( Hunt ) indemnify the Third Cross-Defendant to the Fourth Cross-Claim ( Mr Cunningham ) with respect to any costs liability he has to the plaintiffs and/or to the Third Cross-Claim from 21 November 2001

The Fifth Cross-Claim – Cunningham v Reilly and Perkins

Mr Cunningham

Mr Perkins

104 I infer that the reference to the “Third Cross-Claim” in the proposed order 34 is intended as a reference to the Third Cross-Claimant, Mr Perkins.

105 In summary, Mr Perkins sought in paragraphs 22, 25 and 29 that Hunt indemnify him against any costs he had to pay the Plaintiffs and pay Mr Perkins’ own costs partly on a party/party and partly on an indemnity basis. It is arguable, although unlikely, that that latter request was confined to the costs of the Third and Fourth Cross-Claims.

106 Mr Perkins sought in paragraphs 23, 26 and 37 that Mr Cunningham indemnify him against any costs he had to pay the Plaintiffs and pay Mr Perkins’ own costs (presumably on a party/party). It is arguable, although unlikely, that that latter request was confined to the costs of the Third and Fifth Cross-Claims.

107 Mr Cunningham sought in paragraphs 32,33 and 34 that Hunt pay his costs of the Fourth Cross Claim, and of the proceedings generally (for some part on an indemnity basis), and indemnify him in respect of any liability he had to the Plaintiffs or Mr Perkins.

108 Mr Perkins wholly succeeded against both Mr Cunningham and Hunt for misleading and deceptive conduct but, though he could pass on his liability because of the rights the misleading and deceptive conduct gave him, he was himself held liable to the Plaintiffs for his own defaults. He defended the Plaintiffs’ complaints in that respect. His decision to do so was his own and in my view not, or not in any significant degree, one flowing from the misleading and deceptive conduct of Mr Cunningham or Hunt.

109 In the case of Mr Cunningham also it was his own actions which led to findings and orders being made against him and his decision to defend the Plaintiffs’ claim against him. As I recorded in paragraph 41 of my principal Reasons, the source of Mr Cunningham’s belief that led to him giving the undertaking and making the statements on which his liability was based was his client Mr Nicholson. It was not Hunt. Mr Cunningham did not seek to cross-claim against Hunt or Mr Perkins. The fact that he has or will receive an order against Hunt for a partial indemnity arises solely because both are liable to the Plaintiffs and Hunt cross-claimed.

110 In practical terms, the Plaintiffs’ costs were incurred because each of Mr Perkins, Mr Cunningham and Hunt chose to deny and defend the Plaintiffs’ claims and to continue to do so. Mr Perkins’ and Mr Cunningham’s own costs were incurred in part because they each elected to deny any liability and to defend the claims against them, an attitude which continued throughout the proceedings. While Hunt should properly be made liable for the consequences of its actions and losses in the litigation, it would be wrong to relieve Mr Perkins and Mr Cunningham from the consequences of their own actions and losses for which Hunt was not responsible. Accordingly it is not appropriate to order that Hunt pay the whole of Mr Perkins or Mr Cunningham’s costs or the whole of their several liabilities to the Plaintiffs for costs.

111 Of course, because Mr Perkins was successful in his claim against Hunt and successfully resisted Hunt’s claim against him, prima facie some order for costs in his favour and against Hunt should be made. Mr Cunningham made no claim against Hunt beyond asking, during the debate on costs and apportionment, for an order which was the corollary of that sought by Hunt. It might be said however that he had a degree of success in that Hunt’s claim for indemnity by him was limited to 25%.

112 However, in working out what orders should be made, it is relevant to consider where, in the overall scope of the litigation, the issues between these parties fitted. Because of the course of denial or responsibility for the Plaintiffs’ loss that each party took, it was necessary for the Plaintiffs to seek to establish their liability. In turn each adduced evidence and arguments directed to denying that liability. In one sense their claims against one another amounted to an increase in the scope of the litigation which, by comparison with what was involved in the making or resisting of the Plaintiffs’ claims, was only marginal.

113 On the other hand, it may fairly be said that even if Mr Perkins or Mr Cunningham or both had admitted liability to the Plaintiffs, the vast bulk if not all of the evidence and argument directed against Hunt and some of that directed to identifying Mr Perkins and Mr Cunningham’s own defaults, would have been required in any event. If one starts off from this perspective, one might then look to see to what extent their denials of liability to the Plaintiffs added to the litigation and make Hunt liable for the balance of the costs.

114 I am not persuaded that generally or in this case either of these approaches of treating part of the litigation as central, to which the balance might be regarded as a marginal extra, is correct to the exclusion of the other. However in this case the matter becomes more complicated in consequence of a “Calderbank” offer of compromise made on behalf of Messrs Perkins and Cunningham to Hunt and rejected.

115 The offer was contained in a letter of 21 November 2001 written by Dibbs Barker Gosling on behalf of Messrs Hooton and Perkins and Mr Cunningham (referred to therein as the “Lawcover interests”). It enclosed 2 letters from the Plaintiffs’ solicitors, recorded that the Plaintiffs were prepared to settle for $530,000, inclusive of interest and costs, expressed the view that the offer ought to be accepted, proposed that Hunt contribute 50% of the $530,000 and agreed to waive any right to recover Mr Perkins’ or Mr Cunningham’s costs from Hunt. The letter of 21 November recorded that the Plaintiffs’ offer was expressed to be open for acceptance until 5pm on 23 November 2001 and said “can you please let us know by no later than Midday of 23 November 2001 whether your client is prepared to participate in the settlement proposal”.

116 The letter of 21 November was received by Minter Ellison, Hunt’s solicitors at approximately 4.50 pm that day. On behalf of Hunt it was submitted that the time allowed – until midday on 23 November - was unreasonably short. In that connection it is appropriate to record that Minter Ellision replied at 9.42 am on 22 November and in terms which included the following:-

“We note that:

1. You have not addressed any of the issues raised in our 9 November 2001 Calderbank letter:

2. You provided no basis for your assertion that our client’s proportion of liability to the plaintiffs is at least 50%;

4. in our view, the Plaintiffs’ offer of $530,000 (inclusive of costs) is a very reasonable offer that should be accepted by the “LawCover interests”;

5. if the plaintiffs’ claim against our client is as strong as you suggest, the “LawCover interests” should take the assignment offered by the plaintiff and cap their liability.

Our client’s position remains as set out in our 9 November 2001 Calderbank letter.”

117 The letter of 9 November, headed “Without Prejudice save as to Costs”, consisted of a 7 page detailed canvass of many of the issues in the case, arguing that the cause of the Plaintiffs’ loss was actions by Hooton and Perkins and to a lesser extent Mr Cunningham, and that Hunt had no liability. The letter indicated that Hunt was willing to participate in settlement to the extent of paying its own costs but no further.

118 In these circumstances, I do not regard the shortness of time allowed to respond to the letter of 21 November as of significance. Hunt’s legal advisers felt sufficiently on top of matters to reject the proposal and, judged by the attitude displayed in their letters, more time would have made no difference. I may add that, although not directly relevant, the time specified in Part 52 A Rule 22(5), indicates a view that there comes a stage where parties can be expected to be able quickly to decide on the merits of compromise offers. Experience indicates the same.

119 However the question still remains whether the letter of 21 November 2001 and the response of Minter Ellision on Hunt’s behalf provide grounds for an indemnity costs order. A number of matters might be noted. Firstly, although the letter from Dibbs Barker Gosling of 21 November 2001 did not say in express words that Lawcover, and those it represented, would forgo any further rights they had against Hunt, some such term would necessarily be implied. Thus had Hunt agreed with the proposal in the letter of 21 November, and had that proposal then been implemented, the only aspect of the litigation involving Hunt which remained would have been Hunt’s claim against Reilly. I do not see this as a reason for Hunt not accepting the offer contained in the letter of 21 November.

120 It is also relevant to bear in mind that one of the reasons why I rejected the Plaintiffs’ claim for indemnity costs against Hunt, viz. that the claim on which the Plaintiffs succeeded was not made until the hearing. Thus it did not exist at the time of the correspondence with which I am presently concerned. However there was then in the Third Cross-Claim by Mr Perkins reliance on a similar claim – see my principal Reasons at [150] and [162–6] – and the letter of 21 November fairly raised this as a possible basis of Hunt’s liability.

121 Given the conclusions at which I have arrived concerning quantum and the respective liabilities for the Plaintiffs’ loss, clearly the proposal of 21 November that Hunt pay $265,000 was much more favourable to Hunt than the ultimate result. (I held inter alia that the Plaintiffs were entitled to a total of $487,835.69 against each of Messrs Perkins, Cunningham and Hunt, that Mr Perkins was entitled to be indemnified by Hunt for this, and that Mr Cunningham was entitled to be indemnified as to 75% of this by Hunt. Some discount from the figure would have to be made for the interest which accrued between 21 November 2001 and the time of judgment but in context, the amount of this would be insignificant.)

122 In the result, I regard Hunt’s refusal to accept the offer made on 21 November as unreasonable. In the circumstances, if the claims by Mr Perkins against Hunt and Hunt’s claims against Mr Perkins and Mr Cunningham are considered in isolation from other claims in the proceedings, there is a compelling case for an order requiring Hunt to pay the costs of those claims after 23 November 2001 on an indemnity basis.

123 However, I do not see the “Caldebank” offer and Hunt’s rejection of it as providing any reason why Hunt’s liability for costs should extend to the issues of the liability of Messrs Perkins and Cunningham to the Plaintiffs. The letter from Dibbs Barker Gosling contained the passage:-

“If your client refuses to participate, then it is likely that the matter will not settle but will proceed to trial. Should that occur, it will be due solely to the refusal by your client to participate in what is otherwise a reasonable settlement offer.

“In the event the matter proceeds to trial, and your client is ultimately found liable to pay more than $265,000 (after taking into account that that figure contains a component for the plaintiffs costs to date) either directly to the plaintiffs, or to either or both of the LawCover interests for contribution, then this letter will be tendered on the question of costs and the LawCover interests will seek orders that:

(a) your client pay their costs on an indemnity basis from the date of this letter;

(b) your client solely pay the costs of the plaintiffs form the date of this offer; …”

124 It was submitted that this was an unreasonable approach. In that Lawcover seems to have been seeking that Hunt take responsibility for the acceptance or rejection of the Plaintiffs’ offer, then I agree Lawcover was being unreasonable. Hunt was responsible for its own decisions, Lawcover and its clients for theirs. The decision by Hunt did not preclude Lawcover or Mr Perkins or Mr Cunningham accepting the Plaintiffs’ offer and pursuing such rights as any one of them had against Hunt thereafter.

125 It may be accepted that had Hunt accepted the offer in the letter of 21 November 2001, a great deal of costs would have been saved. However, whereas in a 2 party suit, refusal by one party to compromise means that the other party must continue the litigation or abandon pursuit of its rights, that is not an accurate statement of the situation which prevailed in these proceedings. Hunt’s rejection of the offer of 21 November meant that Messrs Perkins and Cunningham, if they were not to give up what they were entitled to, had to continue litigating with Hunt. But it did not compel them to continue to litigate with the Plaintiffs. The appropriate course for each of Mr Perkins and Mr Cunningham in November 2001 (and earlier) was to admit his liability to the Plaintiffs or at least accept the Plaintiffs’ offers of 19 November which the Lawcover interests thought “ought to be accepted”, perhaps to seek a stay of proceedings in that regard, and to pursue his own claims against Hunt and the other.

126 As it was, a substantial part of the case was devoted to the liability of Mr Perkins and Mr Cunningham. My estimate is that had Mr Perkins and Mr Cunningham admitted their own individual liability to the Plaintiffs, at least 50% of the hearing time would have been saved. There is no reason to think that the proportion of pleading or preparation time would be less and reasons to think it would be more. By far the greatest proportion of all of this would have been saved had Mr Perkins alone admitted his liability. Furthermore, had those persons admitted such liability, given the well known fact of solicitors’ insurance, it is probable that the Plaintiffs would not have pursued Hunt and not have been involved in the hearing at all. Certainly their involvement, except possibly as witnesses, would have been minimal. (I do not forget that Hunt could also have admitted liability but I am considering a claim against Hunt, not one in its favour.)

127 Except that Mr Cunningham’s liability to Mr Perkins is not affected by any “Calderbank” letter, much of what I have said applies also to Mr Perkins’ claim that Mr Cunningham indemnify Mr Perkins in relation to his liability for the Plaintiffs’ costs and pay Mr Perkins’ costs. To an appreciable degree the extent of that liability and the quantum of those costs was the result of Mr Perkins’ own decisions (or decisions made on his behalf) and not something for which Mr Cunningham was or should be made responsible.

128 In light of these considerations it seems to me that the respective entitlement and liability of Mr Perkins, Mr Cunningham and Hunt to costs should be as follows. I have indicated when considering the proposed order 15 above that there will be an order that Mr Perkins, Mr Cunningham and Hunt all pay a proportion of the Plaintiffs’ costs. As between Mr Perkins, Mr Cunningham and Hunt it seems to me that the costs of the Plaintiffs for which they are liable should be shared in the proportions, of 42.5%, 15% and 42.5%. In arriving at that conclusion I am influenced by the fact that the nature of, and time spent on, issues between the Plaintiffs and Mr Cunningham were substantially less than those between the Plaintiffs and Mr Perkins and Hunt.

129 As between Mr Perkins and Hunt, an appropriate order is that Hunt should pay 50% of Mr Perkins’ own costs (not including those Mr Perkins is liable for to the Plaintiffs), on a party/party basis up to 21 November 2001 and on an indemnity basis thereafter.

130 As between Mr Cunningham and Hunt, an appropriate order is that Hunt should pay 50% of Mr Cunningham’s own costs (not including those Mr Cunningham is liable for to the Plaintiffs), on a party/party basis up to 21 November 2001 and on an indemnity basis thereafter.

131 There is a liability in Mr Cunningham for Mr Perkins’ costs of the claim he made against Mr Cunningham. However, I have no doubt that these were minimal. As an incident of what I think should be the proper liability for costs, this order should be in terms that Mr Cunningham pay Mr Perkins’ costs to the extent they were increased by the claim in the Third Cross-Claim against Mr Cunningham. Having regard to Mr Perkins’ own default, and conduct of the litigation I am not disposed to make any wider order in his favour against Mr Cunningham.

132 In selecting percentages to be included in the orders against Hunt, I am naturally conscious that they do not accord with the extent of responsibility I have held Hunt has for the Plaintiffs loss. However, while relevant, those findings are not determinative of the appropriate liability for costs and the other matters to which I have referred have also to be given their proper weight. The liability for costs arises at least in part from decisions to oppose the Plaintiffs’ claim as distinct from the actions which contributed to the Plaintiffs’ initial loss.

133 I have selected 23 November as the date from which indemnity costs should be paid because it seems to me that the time of expiration of the offer, or at least of a reasonable time to consider it, rather than the time the offer was made is more appropriate. I appreciate that Part 52A Rule 22(4) argues for the earlier date although this was not an offer under Part 22. I have also largely avoided forms of order dealing with the costs of a particular claim. Given the extent to which issues extended over more than one claim, such orders seem to me to add complexity which in present circumstances can be avoided to the costs assessment process.

134 I am also conscious that I am making an order for indemnity costs arising from the letter of 21 November but not making such an order in consequence of its predecessors, the letters of 12 and more particularly 19 November from the Plaintiffs’ solicitors. The difference between the circumstances to which I have referred justifies the distinction.

135 I have, in the early part of these Reasons, adverted to what I see as costs unnecessarily incurred due to actions on the part of legal advisers. I could, pursuant to various provisions of the Supreme Court Act and Rules, have sought to quantify these and make orders against those legal advisers. However, matters requiring my decision are already sufficiently complicated and there are, in the circumstances of this case, other and better ways in which this topic can be addressed. Having drawn attention to the topic, I leave it to the parties or their legal advisers to address.

136 In summary, the orders I make are these (For ease of comprehension, I have referred to the parties by their positions as Defendants and included their names rather than use the inconvenient nomenclature involved in reference to the Cross-Claims):- .

1. That proceedings 11657/99 be consolidated with proceedings 20161/98, that Hunt Pacific Finance Pty Limited be treated as an additional Defendant in proceedings 20161/98, and that the Claims, Cross-Claims and Defences in proceedings 11657/99 be treated as further Claims, Cross-Claims and defences in proceedings 20161/98.

2. The Fifth, Sixth and Seventh Defendants (Messrs Cunningham, Perkins and Hunt) are to pay 85% of the Plaintiffs’ costs of the proceedings on a party/party basis.

3. The Seventh Defendant (Hunt) contribute to and indemnify the Fifth Defendant (Mr Cunningham) with respect to three quarters of any liability he has to the Plaintiffs and/or the Sixth Defendant pursuant to orders 10 to 14 and 23 made on 16 December 2002.

4. The Fifth Defendant (Mr Cunningham) contribute to and indemnify the Seventh Defendant (Hunt) with respect to one quarter of any liability he has to the Plaintiffs and/or the Sixth Defendant pursuant to orders 10 to 14 and 22 made on 16 December 2002.

5. Order that as between themselves, the Sixth Defendant (Mr Perkins), the Seventh Defendant (Hunt), and the Fifth Defendant (Mr Cunningham) shall be liable for the costs payable pursuant to Order 1 hereof in the proportions, 40%, 40% and 20%.

6. Order that the Seventh Defendant (Hunt) pay 50% of the Sixth Defendant’s (Mr Perkins’) own costs, on a party/party basis up to 21 November 2001 and on an indemnity basis thereafter.

7. Order that the Seventh Defendant (Hunt) pay 50% of the Fifth Defendant’s (Mr Cunningham’s) own costs, on a party/party basis up to 21 November 2001 and on an indemnity basis thereafter.

8. Order that the Fifth Defendant (Mr Cunningham) pay the costs of the Sixth Defendant (Mr Perkins) to the extent they were increased by the claim against the Fifth Defendant in the Third Cross-Claim.

Last Modified: 06/17/2003

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Citations

Jonstan Pty Limited & Ors v Nicholson & Ors - Costs Judgment [2003] NSWSC 500

Most Recent Citation

Glew v Harrowell of Hunt & Hunt Lawyers [2003] FCA 373

Cases Citing This Decision

18

Burke v LFOT Pty Ltd [2002] HCA 17

Henville v Walker [2001] HCA 52

Alexander (trading as Minter Ellison) v Perpetual Trustees WA Ltd [2001] NSWCA 240

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24

Statutory Material Cited

0

Hetherington v Mirvac Pty Ltd and 3 Ors [1999] NSWSC 515

Anderson Group Pty Ltd v Tynan Motors Pty Ltd (No 2) [2006] NSWCA 120

CITATION:	JONSTAN PTY LIMITED & ORS v NICHOLSON & ORS - COSTS JUDGMENT [2003] NSWSC 500
HEARING DATE(S):	16 December 2002
JUDGMENT DATE:	13 June 2003
JUDGMENT OF:	Hulme J at 1
DECISION:	See paragraph 136
CATCHWORDS:	Law Reform (Miscellaneous Provisions) Act 1946, s5 - "Tort" - Trade Practices Act s52 - Fair Trading Act s42 - Costs - Offer of Compromise - multiple proceedings
PARTIES :	Plaintiffs: Jonstan Pty Ltd; Nelarc Pty Ltd; Prefix Pty Ltd; William Dixon Suthers; John James Wiley Defendants: Glenn William Nicholson; Robert William Norman; Gerrard John Sturgess; Stan Reilly; John Cunningham; Michael J Perkins t/as Hooton & Perkins; Cross Defendants: Jonstan Pty Ltd; Nelarc Pty Ltd; Prefix Pty Ltd; William Dixon Suthers; John James Wiley; Michael J Perkins; George Pashalis; Hunt Pacific Finance Pty Ltd; Stan Reilly; John Cunningham
FILE NUMBER(S):	SC 20161 of 1998; 11657 of 1999
COUNSEL:	Plaintiffs: P Taylor SC Mr Cunningham D5: P Glissan Mr Perkins D6: R Darke SC Hunt Pacific D7: I Roberts
SOLICITORS:	Plaintiffs: Deacons D5: Dibbs Barker Gosling D6: Ebsworth & Ebsworth D7: Minter Ellison