Liverpool City Council v Estephan

In *Liverpool City Council v Estephan*, the Court of Appeal of New South Wales considered a negligence claim arising from a motor vehicle accident at a modified T-intersection. The primary dispute concerned the apportionment of liability between the driver of one vehicle (V2), who failed to see the intersection and drove straight ahead, and the local council, which was alleged to have failed to install appropriate warning signs and line markings. The driver of the other vehicle (V1), who had the right of way, was also a party, and the question arose as to whether V1 was contributorily negligent.

The court was required to determine whether the council was negligent in its signage and markings at the intersection, whether V1 was contributorily negligent by not slowing down or stopping despite having the right of way, and whether the trial judge's apportionment of liability between V2 and the council was erroneous. Additionally, the court considered whether the trial judge's costs orders, which directed the council to pay the plaintiffs' costs on an indemnity basis, were appropriate and whether they went beyond compensatory orders.

By majority, the Court of Appeal held that V1 was not negligent, finding that having the right of way was a relevant circumstance in assessing the reasonableness of V1's conduct, and on the facts, V1's actions were reasonable. The majority also found that the trial judge's apportionment of liability between V2 and the council was open to him. However, the court found that the trial judge had miscarried his discretion regarding the costs orders. The indemnity costs orders were considered to be in the nature of Bullock or Sanderson orders, and there was no proper basis for such orders, with the court determining that the council's delinquency only justified an award to the extent that costs were increased.

Consequently, the appeals were allowed in part. The indemnity costs orders made by the trial judge were set aside and replaced with orders that the council pay specific portions of the plaintiffs' and other defendants' costs on an indemnity basis, reflecting the extent to which those costs were increased by the council's conduct. The remaining appeals were dismissed, and specific orders were made regarding the payment of costs of the appellate proceedings.