Liam Patrick Jones v Ronald Lloyd Walker
[2013] ACTSC 71
•24 April 2013
LIAM PATRICK JONES v RONALD LLOYD WALKER & Ors
[2013] ACTSC 71 (24 April 2013)
COSTS – action for damages for personal injury – liability in issue – plaintiff succeeding against two defendants but failing against a third – whether Bullock or Sanderson order justified in respect of costs of successful defendant – Calderbank offer by plaintiff and two defendants rejected by remaining defendant – effect – principles applicable to exercise of discretion – orders as to costs made reflecting rejection of Calderbank offer
Calderbank v Calderbank [1975] 3 WLR 586
Quirk v Bawden (1992) 112 ACTR 1
Bullock v London General Omnibus Co [1907] 1 KB 264
Sanderson v Blyth Theatre Co [1903] 2 KB 533
Steppke v National Capital Development Commission (1978) 21 ACTR 23
Gould v Vaggelas (1985) 157 CLR 215
Skerbic v McCormack [2008] ACTSC 4
Jennings v Westfield Shopping Centre Management Co (ACT) Pty Ltd [2010] ACTSC 65
Roads and Traffic Authority of NSW v Palmer (No 2) [2005] NSWCA 140
Bostik Australia Pty Ltd v Liddiard (No 2) [2009] NSWCA 304
Whitbread v Rail Corporation New South Wales [2011] NSWCA 130
Perpetual Trustee Co Ltd v Milanex Pty Ltd (in liquidation) [2011] NSWCA 367
No. SC 699 of 2004
Judge: Master Harper
Supreme Court of the ACT
Date: 24 April 2013
IN THE SUPREME COURT OF THE )
) No. SC 699 of 2004
AUSTRALIAN CAPITAL TERRITORY )
BETWEEN: LIAM PATRICK JONES
Plaintiff
AND: RONALD LLOYD WALKER
First Defendant
AND:CTR PACIFIC PTY LTD
ACN 064 405 232
Second Defendant
AND:CONSTRUCTION CONTROL ACT PTY LTD
ACN 089 635 218
Third Defendant
AND:TEREEL PTY LTD t/as CELTIC PLASTERING COMPANY
ABN 86 008 559 411
Third Party
ORDER
Judge: Master Harper
Date: 24 April 2013
Place: Canberra
THE COURT ORDERS THAT:
the orders as to costs made on 31 May 2012 (orders 2 and 6) be vacated
the first defendant pay the plaintiff’s costs as between party and party
the second defendant pay the plaintiff’s costs as between party and party up to 8 April 2009, and as between solicitor and own client from 9 April 2009
the second defendant pay the first defendant’s costs as between solicitor and client from 9 April 2009
the plaintiff pay the third defendant’s costs up to 8 April 2009
the second defendant pay the third defendant’s costs from 9 April 2009 as between solicitor and client
the third defendant pay the third party’s costs
the contribution proceedings between defendants be dismissed with no order as to costs
On 31 May 2012 I delivered judgment in this action for damages for personal injury. Damages had been agreed prior to trial at $606,789.45. The action went to trial to determine the issues of liability between the plaintiff, the three defendants and the third party. I found in the plaintiff’s favour against the first and second defendants, and apportioned the agreed damages equally between them. I found that the plaintiff had not established negligence on the part of the third defendant. The third party had been joined by the third defendant only, and I directed the entry of judgment in favour of the third defendant and the third party.
Since then I have heard oral submissions and considered written submissions on behalf of each of the parties as to the orders as to costs which should follow the entry of judgment.
The plaintiff was a plasterer and renderer. He was injured when he fell from scaffolding on a building site at Canberra Airport on 1 March 2001. He was the controlling director, and an employee, of the third party, which was the plastering and rendering subcontractor to the third defendant, which I shall describe for present purposes as the building contractor, with overall control of the site. The second defendant was the bricklaying subcontractor on site. The first defendant was a truck driver, at the site for the purpose of delivering a load of sand ordered by the second defendant.
I found that the first defendant had negligently positioned the rear of his truck, for the purpose of unloading the sand, too close to the scaffolding, and that an employee of the second defendant had negligently directed him to put his truck in that position. I found that in the course of unloading the sand, a lug on the tailgate of the truck had struck and got caught in the scaffolding, and that the first defendant, unaware of this, had driven forward and buckled a vertical pipe in the scaffolding. This had disrupted components of the scaffolding some distance away, including boards on a walkway. Some time later the plaintiff had been walking on the walkway when planks beneath him had given way. He had fallen to the ground and suffered injury.
At the time I delivered judgment, I made provisional orders that the first and second defendants pay the plaintiff’s costs, each contributing one half to the other.
I was subsequently informed that there had been negotiations between the parties aimed at achieving a settlement of the action which might be relevant on the question of costs.
The plaintiff commenced the action in the Magistrates Court in February 2003 against the first and second defendants. In May 2004 he added the third defendant as a party. In November 2004 the third defendant joined the third party. In December 2004, on the plaintiff’s application, the action was removed to this Court. The action went to trial from 7 December 2009, occupying four days in that week. Primarily because of the availability of Court dates, the hearing resumed in August 2010 and took six days in all.
Notices claiming contribution were exchanged by the defendants well before trial.
After judgment, and in the course of submissions about costs, evidence was given of settlement negotiations by correspondence between the parties, most of it in the form of Calderbank offers (Calderbank v Calderbank [1975] 3 WLR 586).
Agreement as to quantum was achieved by the beginning of April 2009. On 1 April 2009 the solicitors for the third defendant wrote to the solicitors for the second defendant in Calderbank terms, on behalf of the plaintiff and the first defendant, offering to consent to judgment for the plaintiff against each of the defendants for the agreed amount plus costs, with the first and third defendants to contribute 65% between them and the second defendant to contribute 35%. The offer was expressed to expire on 8 April 2009.
The plaintiff seeks an order for costs on a more favourable basis that the usual against the second defendant in respect of costs incurred from 9 April 2009, by reason of the rejection by the second defendant of the offer contained in the letter of 1 April 2009. Acceptance by the second defendant of that offer would have brought the litigation to an end, on terms considerably more favourable to the second defendant than the outcome following trial.
The plaintiff further seeks an order that the first and second defendants pay the third defendant’s costs of the action, or alternatively that the plaintiff pay the third defendant’s costs but be indemnified in respect of those costs by the first and second defendants.
The first defendant relies on the same letter, and acknowledges its liability to the plaintiff for costs up to 8 April 2009. The first defendant asks for an indemnity by the second defendant in respect of costs it is ordered to pay to the plaintiff incurred after that date. The first defendant also seeks an order that the second defendant pay his costs from 9 April 2009.
The first defendant opposes the making of a Bullock or Sanderson order against it in favour of the plaintiff in respect of the third defendant’s costs.
The second defendant accepts that it must be found liable to meet the third defendant’s costs of the contribution claim on a more favourable basis from 9 April 2009, but argues against the plaintiff having any special order after that date, on the basis that the plaintiff did not achieve a result any more favourable than the offer put in the letter of 1 April 2009. The second defendant opposes the making of a Sanderson order in the plaintiff’s favour in respect of the third defendant’s costs, and opposes the making of an order against it for the first defendant’s costs.
The third defendant asks for an order that the plaintiff pay its costs, but that the second defendant indemnify the plaintiff for those costs, and a further order that the second defendant pay the third defendant’s costs from 3 March 2009 on an indemnity basis. The third defendant seeks a further order that the second defendant pay its costs of its contribution claim against the second defendant, with those costs being on an indemnity basis from 3 March 2009. The third defendant consents to an order that it pay the third party’s costs.
Calderbank offers
It has long been the practice of Australian courts to give effect to a reasonable Calderbank offer which is rejected. In Quirk v Bawden (1992) 112 ACTR 1 Higgins J, with whom Miles CJ and Gallop J agreed, said:
[34] There is much to be said for encouraging, at an early stage in the litigation, the serious consideration of offers of settlement. The savings to the parties and the community from such a process, if successful, are well demonstrated . . .
[35] Accordingly, I believe that this Court should apply an appropriate costs sanction where a party has declined to accept or to make, as the case may be, a reasonable offer of settlement . . .
His Honour continued:
[47] Most litigation, particularly in the area of personal injuries, admits of a range of outcomes. Which of those outcomes will, ultimately, be reflected in the final judgment is a matter upon which the parties might reasonably differ. Indemnity costs should not be used to inhibit either party from litigating an issue reasonably in contention between them. However, neither should parties be permitted to persist in an unrealistic assessment of the chance that the issue or issues in dispute will be determined favourably to them when that view is able to be perceived as unrealistic . . .
I am satisfied that in the present case, the second defendant rejected a reasonable settlement offer, contained in the letter of 1 April 2009, the acceptance of which would have resulted in the settlement of the whole of the litigation between all parties some eight months before the commencement of the hearing. That hearing occupied six days of Court time, spread over more than eight months, with five sets of solicitors and counsel engaged. The letter of 1 April 2009 was expressed to convey an offer on behalf of three parties (the plaintiff, the first defendant and the third defendant) and each of those parties is entitled to some benefit as against the second defendant flowing from its unreasonable rejection of the offer. That benefit is generally in the form of a more favourable order as to costs than would follow in the absence of the making and rejecting of the offer. The extent of the benefit is a matter within the discretion of the court, depending on the facts in each individual case.
The third defendant places reliance also on an earlier letter to the second defendant, of 24 February 2009, putting an offer open until 3 March 2009. That offer proposed a damages figure to be put to the plaintiff less than was subsequently agreed. I am not satisfied that the second defendant’s rejection of that offer should result in the benefit sought by the third defendant.
Bullock and Sanderson orders
A Bullock order (Bullock v London General Omnibus Co [1907] 1 KB 264) is an order that the plaintiff pay the costs of a successful defendant but add them as a disbursement to the plaintiff’s own costs recoverable from the unsuccessful defendant or defendants. A Sanderson order (Sanderson v Blyth Theatre Co [1903] 2 KB 533) is an order made against an unsuccessful defendant to pay the costs of a successful defendant as well as the costs of the plaintiff, and may be made notwithstanding that there may have been no issue on the pleadings between the defendants. The choice between the two orders can be significant where a party is insolvent or impecunious. The courts have long accepted that before a Bullock or Sanderson order will be made, it must be seen to have been reasonable and proper for the plaintiff to have sued the successful defendant. It has become clear that there is an additional requirement, that there must have been something in the conduct of the unsuccessful defendant which would make such an order a proper exercise of discretion. Blackburn CJ, referring to earlier British and Australian authority, said in Steppke v National Capital Development Commission (1978) 21 ACTR 23 at 30:
In my opinion there is a condition for the making of a Bullock order, in addition to the question of whether the suing of the successful defendant was reasonable, namely that the conduct of the unsuccessful defendant has been such as to make it fair to impose some liability on it for the costs of the successful defendant.
This statement of principle was approved by a number of the justices of the High Court of Australia in Gould v Vaggelas (1985) 157 CLR 215. Gibbs CJ said at 229:
In my respectful opinion, however, the mere fact that the joinder of two defendants was reasonable does not mean that the unsuccessful defendant should be ordered to pay, directly or indirectly, the costs of the successful defendant. Obviously a judge should make a Bullock order only if he considers it just that the costs of the successful defendant should be borne by the unsuccessful defendant, and, if nothing that the unsuccessful defendant has said or done has led the plaintiff to sue the other defendant, who ultimately was held not to be liable, it is difficult to see any reason why the unsuccessful defendant should be required to pay for the plaintiff’s error or overcaution.
In similar vein, Brennan J said at 260:
Although the making of a Bullock order is in the discretion of a trial judge, the mere joinder of two causes of action against separate defendants in the one action is insufficient to support the making of an order against an unsuccessful defendant when the other defendant is exonerated. A judicial discretion can be exercised to make a Bullock order against an unsuccessful defendant in an action brought against two or more defendants for substantially the same damages only if the conduct of the unsuccessful defendant in relation to the plaintiffs’ claim against him showed that the joinder of the successful defendant was reasonable and proper to ensure recovery of the damages sought.
In Skerbic v McCormack [2008] ACTSC 4 I declined to make a Bullock or Sanderson order against an unsuccessful defendant where the plaintiff had unsuccessfully sued another defendant, on the basis that there had been no conduct by the unsuccessful defendant which had led or encouraged the plaintiff to bring proceedings again the other defendant or to continue with those proceedings. The two defendants in question were entirely unrelated. The unsuccessful defendant had made no claim for contribution against the successful defendant, and had conducted the litigation entirely without reference to the claim by the plaintiff against the successful defendant.
In Jennings v Westfield Shopping Centre Management Co (ACT) Pty Ltd [2010] ACTSC 65, a personal injury claim against a shopping mall occupier and a cleaning contractor, where the plaintiff succeeded against the latter but not against the former, I found that the contractual relationship between the defendants placed the case in a different category from cases such as Skerbic where there was no relationship between defendants. I found on the facts of Jennings that the plaintiff had been entitled to succeed against one defendant but not against the other for reasons not within the plaintiff’s knowledge but within the knowledge of both of the defendants. In that case, this related to the successful delegation by the occupier to the cleaning contractor of its duty of care to entrants.
Counsel for the first defendant took me to a number of decisions of the Supreme Court of New South Wales: Roads and Traffic Authority of NSW v Palmer (No 2) [2005] NSWCA 140, where Giles JA, with whom Spigelman CJ and Handley JA agreed, held that while it may have been reasonable for the plaintiff in her own interests to join the RTA as a defendant, there was no conduct by the other defendants justifying a Bullock order. In Bostik Australia Pty Ltd v Liddiard (No 2) [2009] NSWCA 304, the Court of Appeal refused to make a Sanderson order, again on the basis that the conduct of the unsuccessful defendant did not justify it. Whitbread v Rail Corporation New South Wales [2011] NSWCA 130 and Perpetual Trustee Co Ltd v Milanex Pty Ltd (in liquidation) [2011] NSWCA 367 were further examples of cases where the Court of Appeal was not satisfied that a Bullock or Sanderson order was justified.
I am persuaded that the circumstances of the present case are sufficiently different to justify the exercise of the discretion in the plaintiff’s favour. A position had been reached in April 2009 where there was agreement between the plaintiff and two of the three defendants as to both liability and quantum. I am not satisfied that the plaintiff has made out a case for a Bullock or Sanderson order in respect of the costs of the successful third defendant up to 8 April 2009, but I am persuaded that it was the unreasonable refusal of the second defendant at that time to settle the case which created the plaintiff’s liability for the costs subsequently incurred by the third defendant. There is no suggestion that at that point the plaintiff should have discontinued against the third defendant. On the contrary, from the plaintiff’s perspective, the third defendant had joined in an offer of settlement which in practical terms could be seen as an acknowledgment of some degree of negligence, and some liability to contribute to the plaintiff’s damages. Weighing all of the considerations, I am satisfied that responsibility for the third defendant’s costs from 9 April 2009 should rest with the second defendant, and on a more favourable basis than the usual party-and-party footing.
The plaintiff has no particular interest in the quantification of the third defendant’s costs which will ultimately be payable by the second defendant. A Bullock order would add unnecessarily to further expense in that it would require the involvement of the plaintiff in the taxation process. A Sanderson order would hence be the appropriate order in respect of the third defendant’s costs.
Conclusion
The orders I made as to costs when delivering judgment of 31 May 2012 (orders 2 and 6 of those orders) should be vacated.
In place of those orders, the orders which seem to me appropriate to recognise the failure of the second defendant to accept the offer of 1 April 2009 are as follows:
a) the first defendant pay the plaintiff’s costs as between party and party.
b) the second defendant pay the plaintiff’s costs as between party and party up to 8 April 2009, and as between solicitor and own client from 9 April 2009.
c) the second defendant pay the first defendant’s costs as between solicitor and client from 9 April 2009.
d) the plaintiff pay the third defendant’s costs up to 8 April 2009.
e) the second defendant pay the third defendant’s costs from 9 April 2009 as between solicitor and client.
f) the third defendant pay the third party’s costs.
g) the contribution proceedings between defendants be dismissed with no order as to costs.
Orders were sought by some parties against others on an indemnity basis, but I was not provided with any evidence or information as to the retainer arrangements between any of the parties and their solicitors. I have said on earlier occasions that I would not countenance an order for costs on an indemnity basis without knowledge of the practical effect of such an order, that is to say without information as to the terms of the retainer agreement between the relevant solicitor and client. I have accordingly preferred to make orders as between solicitor and client or in some cases as between solicitor and own client.
Notwithstanding submissions that special costs orders should be made in respect of the contribution proceedings between defendants, I have taken the view that the identification of the separate costs items relating to those issues, and the making of special orders about them, would unjustifiably complicate the resolution of the remaining issues as to costs between the parties, without any obvious benefit to any party.
For the assistance of the taxing officer, I indicate that the plaintiff’s case was an appropriate one for the briefing of senior counsel. I further indicate that it was entirely reasonable for the third defendant to retain Mr Windsor SC as counsel in the matter notwithstanding his taking silk after the commencement of the trial.
I certify that the preceding thirty-three (33) numbered paragraphs are a true copy of the Reasons for Judgment herein of his Honour, Master Harper.
Associate:
Date: 24 April 2013
Counsel for the plaintiff: Mr RL Crowe SC
Solicitors for the plaintiff: Capital Lawyers
Counsel for the first defendant: Mr WM Fitzsimmons
Solicitors for the first defendant: Sparke Helmore
Counsel for the second defendant: Mr DC Morgan
Solicitors for the second defendant: Boyd House & Partners by their agents HWL Ebsworth
Counsel for the third defendant: Mr MJ Windsor SC
Solicitors for the third defendant: King & Wood Mallesons
Counsel for the third party: Mr AR Muller
Solicitors for the third party: Moray & Agnew
Date of hearing: 26 June 2012
Date of decision: 24 April 2013
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