Mill v Adgemis Investments Pty Ltd and Anor (Ruling as to Costs)
[2023] VCC 677
•3 May 2023
‘321
| IN THE COUNTY COURT OF VICTORIA AT Melbourne COMMON LAW DIVISION | Revised Not Restricted Suitable for Publication |
| GENeral List |
Case No. CI-18-04301
| RODNEY JAMES MILL | Plaintiff |
| v | |
| ADGEMIS INVESTMENTS PTY LTD | First Defendant |
| and | |
| LEEDA PROJECTS PTY LTD | Third Defendant |
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JUDGE: | HIS HONOUR JUDGE PARRISH | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 22 November 2022 | |
DATE OF RULING: | 3 May 2023 | |
CASE MAY BE CITED AS: | Mill v Adgemis Investments Pty Ltd and Anor (Ruling as to Costs) | |
MEDIUM NEUTRAL CITATION: | [2023] VCC 677 | |
RULING AS TO COSTS
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Subject:COSTS
Catchwords: First defendant found liable to pay damages to the plaintiff – claim dismissed against the third defendant. Third defendant seeks costs on an indemnity basis against the plaintiff and/or the first defendant – issues as to the nature of the costs and which party or parties shall bear such costs – relevant principles in determining who shall bear such costs
Legislation Cited: Workplace Injury Rehabilitation and Compensation Act 2013; County Court Act 1958, s78A; Civil Procedure Act 2010
Cases Cited:Fox v Wood (1981) 148 CLR 438; Calderbank v Calberbank [1975] 3 All ER 333; Dimos v Willetts & Anor (2000) 2 VR 170; Bullock v London General Omnibus Co [1907] 1 KB 264; Sanderson v Blyth Theatre Co [1903] 2 KB 533; Altamura v Victorian Railways Commissioners [1974] VR 333; Gould v Vaggelas (1984) 157 CLR 215; State of Victoria v Horgath(No 2) [2003] VSCA 24; Berrigan Shire Council v Ballerini; Forestry Commission of New South Walesv Ballerini [2006] VSCA 65; Victorian WorkCover Authority v Kagan Bros Consolidated Pty Ltd (2011) 31 VR 386; Spotless Services Australia Ltd v Herbath [2009] VSCA 285
Ruling: (1) The plaintiff pay the third defendant’s costs of the proceeding on a standard basis, up to 2 March 2020, and on an indemnity basis from 2 March 2020.
(2)The first defendant pay the costs of the third defendant of and incidental to the Claim for Contribution made by the first defendant, such costs to be on a standard basis and noncommon with the costs referred to in (1) above.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr A Ingram KC with Mr E Makowski | Arnold, Thomas & Becker |
| For the First Defendant | Ms R L Kaye KC with Mr J Plunkett | Lander & Rogers |
| For the Third Defendant | Ms G Gray | Sparke Helmore |
HIS HONOUR:
Introduction
1This Ruling concerns a Costs Order to be made in favour of the third defendant which was successfully defended the claim made against it by the plaintiff. Issues arise as to the nature of the costs to be awarded and whether such Costs Order should be made against the plaintiff and/or the first defendant which unsuccessfully defended the claim made against it by the plaintiff.
Background
2On 22 July 2014, Rodney James Mill, who I shall refer to as “the plaintiff”, was working at the Zouki Cafeteria situated at The Royal Melbourne Hospital (“the premises”), installing soft pipe within a ceiling cavity at the premises, when a manhole gave way, causing the plaintiff to fall a distance onto a concrete surface, thereby suffering a variety of injuries, but in particular, a spinal injury requiring spinal surgery.
3On 8 October 2018, the plaintiff initially issued proceedings against four defendants, namely, Adgemis Investments Pty Ltd, Zouki RMRWH Café Pty Ltd; Leeda Projects Pty Ltd and Melbourne Health. Approximately a month or so prior to the commencement of the hearing on 21 September 2020, the plaintiff discontinued against two of those defendants, leaving the following defendants:
(a) his employer at all material times, Adgemis Investments Pty Ltd, which I shall refer to as the “first defendant”, alleging negligence on its part and/or breach of the Occupational Health and Safety Regulations 2007 (Vic); and
(b) a contractor, Leeda Projects Pty Ltd, which I shall refer to as the “third defendant”, alleging negligence and/or the breach of duty said to be owed by the third defendant pursuant to s14B of the Wrongs Act 1958 (Vic).
4There was no issue that the third defendant performed works at the premises in 2008, involving, in particular, the construction of the false ceiling at the premises, from which the plaintiff fell on 22 July 2014.
5The plaintiff sought damages, including “pain and suffering” damages and “pecuniary loss” damages within the meaning of s325 of the Workplace Injury Rehabilitation and Compensation Act 2013 (“the WIRC Act”).
6The claim for “pecuniary loss” damages was limited to past loss of earnings from 22 July 2014 (the date of injury) to 30 May 2018 when the plaintiff suffered a stroke which was unrelated to his work injury and caused him to be unable to perform any work thereafter.
7The plaintiff alleged the following particulars of negligence against the first defendant:
(a) failing to provide a safe system of work;
(b) failing to provide the plaintiff with any or any adequate or proper supervision;
(c) failing to provide a safe place of work;
(d) failing to train or properly train the plaintiff in relation to working safely from heights;
(e) exposing the plaintiff to a risk of danger or injury of which the first defendant knew or ought to have known;
(f) exposing the plaintiff to a risk of injury which could have been avoided with reasonable care on behalf of the first defendant;
(g) permitting and/or requiring the plaintiff to work in a dangerous manner;
(h) failing to inspect the manhole in order to ensure the same was in safe condition for the plaintiff to use and/or work in the vicinity of;
(i) permitting the manhole to be constructed in a state which was not safe for the plaintiff to use and/or work in the vicinity of;
(j) failing to provide any or adequate warning to the plaintiff that the manhole was not in a safe condition for him to use and/or work in the vicinity of;
(k) failing to properly inspect the manhole and/or have in place any or adequate system for the inspection or the manhole;
(l) failing to provide to the plaintiff any or any proper equipment;
(m) requiring the plaintiff to perform the work in the manhole in an unsafe manner;
(n) failing to repair or replace the manhole and/or to have any or any adequate system for the repair or replacement of the manhole;
(o) failing to perform any or any appropriate risk assessment in relation to the work;
(p) failing to have any or any proper system to protect against the risk of falling against the roof;
(q) failing to provide a scissor lift;
(r) failing to have any or any appropriate fall arrest system;
(s) failing to comply with the Regulations made pursuant to the Occupational Health and Safety Act 2004.
8Further, and in the alternative, the plaintiff alleged that the first defendant owed a duty of care under the Occupational Health and Safety Regulations 2007 (Vic) and, in particular, the following Regulations were breached:
(a) Regulation 3.3.3, requiring hazard identification of a fall hazard;
(b) Regulation 3.3.4, requiring control of risks of fall hazards;
(c) Regulation 3.3.5, requiring the use of ladders as a control measure;
(d) Regulation 3.3.7, requiring the use of plant to control risks;
(e) Regulation 3.3.8, requiring review of risk control measures.
9The plaintiff further alleged, in relation to the third defendant, that it breached a duty said to be owed by it to the plaintiff pursuant to s14B of the Wrongs Act 1958, and/or was negligent. The plaintiff alleged the following Particulars of Breach and/or Negligence against the third defendant:
(a) failing to provide a safe system of work;
(b) failing to provide the plaintiff with any or any adequate or proper supervision;
(c) failing to provide a safe system of work;
(d) failing to have any or any safe work method statement for the project and, in particular, the plaintiff’s role in working in the roof;
(e) exposing the plaintiff to a risk of danger of injury of which the defendants, or one or other of them ought to have known;
(f) exposing the plaintiff to a risk of injury which could have been avoided with reasonable care;
(g) permitting and/or requiring the plaintiff to work in a dangerous manner;
(h) failing to inspect the manhole in order to ensure the same was a safe condition for the plaintiff to use and/or work in the vicinity of;
(i) permitting the manhole to be constructed in a state in which it was not safe for the plaintiff to use and/or work in the vicinity of;
(j) failing to provide any or any adequate warning to the plaintiff that the manhole was not in a safe condition for him to use and/or work in the vicinity of;
(k) failing to properly inspect the manhole and/or have in place any or adequate system for the inspection of the manhole;
(l) failing to repair and replace the manhole and/or have any or any adequate system for the repair and replacement of the manhole;
(m) constructing the manhole unsafely;
(n) failing to ensure the manhole could support the plaintiff;
(o) failing to have any proper system to protect the plaintiff from falling from the roof;
(p) failing to remedy the defective manhole in a timely fashion;
(q) failing to comply with the regulations made pursuant to the Occupational Health and Safety Act 2004;
(r) failing to give any or any adequate warning by way of a sticker or sign on the inside of access panels and/or the manhole and/or inside the false ceiling:
(i)signifying or alerting persons entering into the false ceiling via the access panel and/or manhole was dangerous and/or unsafe, and/or prohibited;
(ii)signifying or alerting persons that the access panel and/or the false ceiling was not trafficable and/or was not designed or intended to support the weight of a person.
10By way of a Defence delivered on 22 January 2019, those acting for the first defendant:
(a) admitted that the plaintiff was employed by the first defendant as a refrigeration mechanic as at 22 July 2014;
(b) admitted that the plaintiff submitted a Claim for Compensation, dated 6 August 2014, for injuries said to have occurred on 22 July 2014 to his “head, back, finger” when he “slipped fell through ceiling fell 3m. Hit the floor (concrete)”; and
(c) denied breaching any duty of care it owed to the plaintiff (either in tort or contract), denied any breach of the Occupational Health and Safety Regulations 2007, and also denied that the plaintiff suffered injuries as a result of any breach of duty and/or regulation.
11Furthermore, the first defendant, in the alternative, alleged contributory negligence on the part of the plaintiff, relying on the following particulars:
(a) failing to take reasonable care for his own safety;
(b) failing to properly assess the safety of the ceiling before undertaking the task at hand;
(c) failing to use the equipment provided to him – later this was made clear to mean in relation to using creep boards;
(d) failing to use his commonsense and experience.
12By way of a Defence delivered on 28 November 2018, those acting for the third defendant admitted that it was incorporated and, further, that it performed certain parts of the works, including the part of the works which involved the ceilings, by competent independent contractors – MCP Interiors Pty Ltd (“MCP”) – to supply and install walls and ceilings as part of the works:
(a) it took reasonable care in selecting MCP to perform that part of the works – and that MCP was competent to perform those parts of the works;
(b) it denied that it was the occupier responsible for the condition of the premises;
(c) it denied that it owed the plaintiff a duty of care pursuant to s14B of the Wrongs Act 1958 to take such care, as in all the circumstances it was reasonable;
(d) the plaintiff, while on the premises, was not injured by reason of the state of the premises, or the things done, or omitted to be done, in relation to the state of the premises;
(e) it denied that any injury suffered by the plaintiff was caused by reason of a breach by the third defendant, or its respective servants or agents of the duty owed to the plaintiff pursuant to s14B of the Wrongs Act 1958, or due to their negligence or the negligence of the respective servants or agents for whom they are vicariously liable;
(f) it does not admit that the plaintiff had suffered injury, loss and damage; and
(g) further, it alleges that, if it was negligent (which is specifically denied), and if any such negligence caused or contributed to any damage suffered by the plaintiff (which it does not admit), it then says the plaintiff is guilty of contributory negligence by:
(i)applying part or all of his weight to an access panel;
(ii)applying part or all of his weight to a part of the ceiling which was not intended to support his weight; and
(iii)failing to utilise an appropriate means of support.
13On 22 March 2019, the third defendant served a Notice of Contribution on the first defendant in the proceeding, by which it stated that it was entitled to a contribution from the first defendant in respect of any sum which the plaintiff may recover. Furthermore, the first defendant, on 26 February 2020, served a Notice of Contribution on the third defendant in the proceedings, in which it stated it is entitled to a contribution from the third defendant in respect of any sum which the plaintiff may recover.
14On 29 September 2020, that is to say the fourth day of evidence, and at the completion of re-examination of the plaintiff, Senior Counsel for the first defendant sought leave to file a further amended defence in which liability was admitted and which contained a further two particulars of contributory negligence which were:
(e) failing to construct another, or other, access points in the ceiling if required in order to perform his duties without climbing into the ceiling cavity;
(f) failing to report his concerns about entry into the ceiling cavity to Mr Adgemis.
15There was no issue that within the cavity made by a false ceiling, there was situated various refrigeration pipes and other material. Entry to such cavity was by a number of manholes permitting the head and shoulders of a person to enter into the cavity and perform any work without fully entering the cavity. Each of these manholes had a hinged door which allowed it to drop open to give access to the cavity. On the night in issue, there was no issue that the plaintiff had fully entered the cavity and had moved around within it and then when coming back to descend out of the cavity, he fell to the ground at the time he was about to descend into the manhole.
16The plaintiff ultimately put its case against the third defendant that the third defendant was negligent, in that it breached its duty of care which it owed to the plaintiff, as particularised in Particular (r), of the Particulars of Negligence, to which reference has already been made.
17Such allegation seemingly was based on the opinions of the expert witness, Mr Edward Dohrmann, who provided reports dated 7 November 2019 and supplementary reports dated 18 September 2020, 22 September 2020, 23 September 2020 and 24 September 2020. In this respect, bearing in mind that the proceeding was issued on 8 October 2018, subparagraph (r) of the Particulars of Negligence must have been the subject of amendment after the receipt of the first report from Mr Dohrmann.
18After a consideration of all of the evidence, the Court found:
(a) the first defendant, consistent with its admission, is guilty of negligence and breach of statutory duty and was liable to pay damages to the plaintiff;
(b) the claim by the plaintiff against the third defendant be dismissed, as any duty of care owed by the third defendant to the plaintiff did not extend to a requirement that there be signs placed on the hinged trapdoors or indeed, there be any information supplied to an occupier to warn people such as the plaintiff that a risk was present;
(c) in relation to pecuniary loss damages, the Court found the first defendant had a liability to pay the sum of $67,600.00, being loss of earnings (that is, net wages and superannuation) and in relation to pain and suffering damages, the first defendant had a liability to pay $265,000.00; and
(d) that the plaintiff was guilty of contributory negligence and that his damages should be reduced by 15 per cent.
19The Court was unable to make any formal orders at that stage, as it was unclear as to what amount of gross weekly payments of compensation paid to the plaintiff would have to be deducted from the loss of earnings and, indeed, how that would translate to the assessment of the so-called Fox v Wood[1] damages and ultimately what interest would be paid on past loss of earnings. Furthermore, there was no evidence whatsoever at that time as to whether the plaintiff had received any type of impairment lumpsum compensation under the relevant compensation legislation, which would have to be deducted from any “pain and suffering” damages.
[1] (1981) 148 CLR 438
20It was left to the parties to formulate orders, taking these matters into account.
Costs hearing
21When the parties returned to Court on 22 November 2022, agreement had been reached among the parties in relation to the following:
(a) that the “keep” compensation, no doubt consisting of the gross weekly payments and the permanent impairment lumpsum, amounted to $85,460.00;
(b) the Fox v Wood damages amounted to $264.95;
(c) the interest on the past lost earnings (reduction of the 15 per cent contributory negligence) amounted to $28,022.00.
22I was also informed on that day that the statutory offer made pursuant to s333(1)(b) of the WIRC Act was nil and that the statutory counteroffer made pursuant to s333(1)(c) of the WIRC Act was:
“$400,000 plus retention of benefits paid pursuant to the Workplace Injury Rehabilitation and Compensation Act 2013 plus costs pursuant to the WorkCover (Pre-Litigated) Claims) Legal Costs Order 2010.”
23Such a counteroffer meant that the plaintiff needed to obtain damages of at least $360,000 plus keep (90 per cent) in order to be entitled to his costs. Since his damages did not amount to such figure, the plaintiff was not entitled to any costs against the first defendant.
24The critical issue for determination was which party – the plaintiff or the first defendant – would pay the costs of the successful third defendant.
Documents relied on
25Each of the parties relied on documents, being either affidavits or brief written submissions, during the course of the arguments on 22 November 2022. I direct that each of these documents be tendered and marked as exhibits as follows:
(a) the affidavit of Jehan Ashwini Mata, affirmed on 21 November 2022 (Mr Mata was the solicitor for the third defendant). I direct this affidavit be tendered and marked as exhibit 1;
(b) counsel for the third defendant, Ms Gray, relied on a document headed “Third Defendant’s Outline of Issues for Mention 22 November 2022”, dated 21 November 2022. I direct that that document be tendered and marked as exhibit 2;
(c) the affidavit of Ms Lillian Rizkalla, sworn on 21 November 2022. Ms Rizkalla was the solicitor acting on behalf of the first defendant. I direct that this affidavit be tendered and marked as exhibit 3;
(d) Senior Counsel for the first defendant, Ms Kaye KC, and with her Mr James Plunkett, referred to a document headed “Written Outline of Matters in Issue on Behalf of the First Defendant”, dated 12 November 2022. I direct that this document be tendered and marked as exhibit 4;
(e) Senior Counsel for the plaintiff, Mr Ingram KC, referred to a document headed “Proposed Orders Sought by the Plaintiff”. I direct that this document be tendered and marked as exhibit 5.
The various orders sought
26It is to be noted that each of the parties sought different orders as follows:
(a) the third defendant sought the following orders:
(i)“that the plaintiff pay the third defendant’s costs of the proceeding on a standard basis up to 11.00am on 2 March 2020 and on an indemnity basis from 11.00am on 2 March 2020, consistent with Rule 26.02(4) of the Civil Procedure Rules”;
(ii)“that the first defendant pay the costs of the third defendant of and in relation to its claim for contribution in accordance with such rules”;
(b) the plaintiff sought the following order:
(i)“the first defendant pay the costs of the third defendant [on and from 27 February 2020 on an indemnity basis] to be assessed by the Costs Court in default of agreement”;
(c) the first defendant sought the following orders:
(i)“the plaintiff pays the third defendant’s costs of the proceedings on a standard basis pursuant to the County Court Scale, to be taxed by the Costs Court in default of agreement;
(ii)otherwise, no order as to costs.”
Timeline
27It is convenient to set out a timeline of events occurring. Such timeline is essentially based on the affidavit material which was not challenged:
· Statutory Offer, dated 6 August 2018 (already referred to earlier in this Ruling).
· Statutory Counter Offer, dated 23 August 2018 (already referred to earlier in this Ruling).
· On 8 October 2018, the plaintiff filed a Statement of Claim in the proceedings – such Statement of Claim issued against four defendants.
· On 27 November 2018, the third defendant filed its Defence in the proceedings.
· On 27 March 2019, the third defendant served a Notice of Contribution on the first defendant in the proceedings, by which it stated that it was entitled to contribution from the first defendant in respect to any sum which the plaintiff may recover.
· On 15 July 2019, the third defendant served a Calderbank[2] offer on all parties to the proceeding and offered to settle proceedings on the following terms:
[2] Calderbank v Calberbank [1975] 3 All ER 333
§Any claim against the third defendant be abandoned.
§The third defendant to bear its own costs.
The third defendant did not receive any response to this offer.
· On 15 August 2019, the third defendant served a further Calderbank offer on all parties to the proceeding and offered to settle proceedings on the following terms:
§Any claim against the third defendant be abandoned.
§The third defendant to bear its own costs.
The third defendant did not receive a response to this offer.
· On 21 August 2019, a letter from Lander & Rogers (solicitors for the first defendant) to Sparke Helmore (solicitors for the third defendant) referring to their letters date 15 August 2019 and 15 July 2019) offering to bear their own costs if the first defendant discontinued proceedings against the third defendant. It was pointed out to those acting for the third defendant that no proceedings were on foot at that stage, (which did not occur until 26 February 2020).
· On 7 February 2020, the third defendant served a Calderbank offer on all parties to the proceeding, and offered to settle proceedings on the following terms:
§Any claim against the third defendant be abandoned.
§The third defendant to bear its own costs.
The third defendant did not receive a response to this letter.
· The proceeding was unsuccessfully mediated as amongst all parties on 24 February 2020.
· On 26 February 2020, the first defendant served a Notice of Contribution against the third defendant.
· On 27 February 2020, the third defendant served a Calderbank offer on the plaintiff and offered to settle proceedings on the following terms:
§A claim against the third defendant be withdrawn.
§The plaintiff to pay the third defendant the sum of $26,000 for its legal costs and disbursements.
The third defendant did not receive a response to this offer.
· On 27 February 2020, the third defendant also served a Notice of Compromise on the plaintiff and offered to settle the proceedings on the following terms:
§The third defendant offered to compromise by accepting the sum of $26,000 for its legal costs and disbursements.
The third defendant did not receive a response to this Notice of Compromise.
· On 28 February 2020, the third defendant served a Notice of Willingness to Contribute on the first defendant in the following terms:
§The third defendant offers to bear its own costs of the proceeding.
§The first defendant discontinues its contribution claim against the third defendant (which had only been made two days earlier on 26 February 2020).
The third defendant did not receive a response to this Notice of Willingness to Contribute.
· On 17 July 2020, the third defendant served a Calderbank offer on the plaintiff and offered to settle the proceedings on the following terms.
§The claim against the third defendant be abandoned.
§The plaintiff is to pay the third defendant the sum of $26,000 in costs.
The third defendant did not receive a response to this offer.
· On 23 August 2020, the third defendant served a Calderbank offer on the plaintiff and offered to settle proceedings on the following terms:
§The claim against the third defendant be withdrawn.
§The plaintiff to pay the third defendant the sum of $32,000 in legal costs and disbursements.
The third defendant did not receive a response to this letter.
· On 28 August 2020, the third defendant served an Offer of Compromise on the plaintiff and offered to settle the proceedings on the following terms:
§The third defendant offers to compromise the plaintiff by accepting the sum of $26,000 for its legal costs and disbursements.
The third defendant did not receive a response to its Offer of Compromise.
· On 21 September 2020, the hearing of the proceedings commenced in Court and the matter was heard over ten days and concluded on 3 October 2020.
· On 23 September 2020, a letter from the first defendant was sent to the third defendant offering to solve contribution on the basis that the first defendant will contribute 85 per cent towards the plaintiff’s damages and costs, on the basis that the third defendant contributes the remaining 15 per cent of the plaintiff’s damages and costs.
· On 25 September 2020, a letter from the first defendant was sent to the third defendant offering to solve contribution on the basis that the first defendant will contribute 90 per cent towards the plaintiff’s damages and costs, or any settlement the defendants are able to negotiate with the plaintiff, on the basis that the third defendant contributes the remaining 10 per cent of the plaintiff’s and costs.
· On 28 September 2020, a letter from the third defendant was sent to the first defendant, wherein the third defendant rejected the first defendant’s offer to resolve contribution on the basis that it contributes 10 per cent towards the plaintiff’s damages and costs.
28It is to be noted that when the first defendant sent the letters dated 23 September 2020 and 25 September 2020 to those acting for the third defendant, such letters stated, in part:
“We … remind you that if only the first defendant is found negligent or the sole contributor to the plaintiff’s damages, and the amount of damages awarded is not at least 90 per cent of the plaintiff’s Statutory Counteroffer, then the plaintiff will not be entitled to recover his costs. You will recall that the plaintiff’s counteroffer was made in the sum of $400,000 plus keep, meaning that he will need to obtain damages of at least $360,000 plus keep (90 per cent) in order to be entitled to his costs.
However, in accordance with the decision of Spotless Services Australia Ltd v Herbath & Ors [2009] VSCA 285, if the third defendant is found liable to contribute to damages or contributes to a settlement of damages to the plaintiff, the plaintiff does not need to achieve 90 per cent of the statutory offer to obtain his party/party costs. Accordingly, in those circumstances, we suggest that settlement with the plaintiff is much more likely if the third defendant contributes to a damages amount to the plaintiff.
Yesterday, the plaintiff agreed to resolve his claim for an amount of less than 90 per cent of the statutory counteroffer on a plus costs basis. Your client rejected our offer to contribute 90 per cent towards a figure up to that amount (being $300,000 plus keep, plus costs) on the basis that he contributes 10 per cent towards the offer of costs.”
Relevant legal principles
29The starting point perhaps is this – if a plaintiff recovers judgment against one only of two defendants, under the usual order for costs the plaintiff recovers costs from the losing defendant, and the winning defendant recovers costs from the plaintiff. On taxation of the plaintiff’s costs against the losing defendant, the plaintiff will not be allowed the extra costs incurred by joining the other defendant unless an order for costs specifically so provides.[3]
[3] Dimos v Willetts & Anor (2000) 2 VR 170
30However, in some circumstances, it may be appropriate to order that the losing defendant, rather than the plaintiff, bear the costs of the successful defendant. Over time, this has been achieved by one of two methods – firstly, requiring the losing defendant to pay to the plaintiff the costs which the plaintiff must pay the successful defendant. An order in this form is generally referred to as a “Bullock” order, named after Bullock v London Central Omnibus Co.[4] Another way is to order the losing defendant to pay the costs of the successful defendant direct to that defendant. An order in that form is referred to as a “Sanderson” order, named after Sanderson v Blyth Theatre Co.[5]
[4] [1907] 1 KB 264 at 272
[5] [1903] 2 KB 533 at 539
31The choice between a Bullock and Sanderson order is a matter of discretion.
32Of course, either way, the losing defendant will be responsible, ultimately, for the costs of both the plaintiff (although not in this case, as the plaintiff did not recover 90 per cent of the statutory counteroffer, as already explained in these reasons) and the winning defendant.
33The law in this matter has developed over the years. I initially refer to the decision of Altamura v Victorian Railways Commissioners,[6] wherein the plaintiff was injured in an accident in the railways goods yard during shunting operations by servants of the defendant Commissioners. The plaintiff was at the time employed by the defendant B, a subcontractor, upon the building site adjoining the goods yards which was occupied by the defendant, D.A. Constructions Pty Ltd (“D.A. Constructions”), in the course of constructing premises for the defendant commissioner.
[6] [1974] VR 33
34The jury found against the Commissioners and D.A. Constructions, but in favour of the defendant B. Judgment was entered for B against the plaintiff with costs, and judgment for the plaintiff was entered against the other defendants with costs. Counsel for the plaintiff sought an order that the unsuccessful defendants pay the costs of the successful defendant B and stated that it was immaterial whether such an order was in the form of a Bullock or Sanderson order.
35Kaye J held that, in the circumstances of that case, the unsuccessful defendants should be ordered to bear the costs of the defendant B, which the plaintiff is obliged to pay. In particular, it was held:
“(1)if, at the commencement of the action, it was reasonable for the plaintiff to join the successful defendant, the unsuccessful defendants may be ordered to pay the costs of the successful defendant;
…
(2)Such an order may be made even though the cause of action alleged against the successful defendant was different from that alleged and made out against the unsuccessful defendants so long as the nature of the duty owed by the plaintiff by all the defendants was the same and arose out of the same factual situation.
…
(3)The conduct of the various defendants at the trial of the action, each striving to inculpate the other for the plaintiff’s injuries, may provide evidence for the reasonableness of the joinder.”[7]
[7] (op cit) at 34
36In particular, I refer to the judgement of Kaye JA, commencing at paragraph 20, wherein he states:
“… In an action in tort where the plaintiff at the commencement of his action, because of his injuries, has no, or only partial, knowledge of the fact situation, he may be unable to make an informed judgment of the party liable to him. To avoid multiplicity of actions and risk of his subsequent claim being barred by the Statute of Limitations, it may be proper and reasonable for him to join in one action all parties who owed to him a duty of care and whose breach of duty could have been a cause of his injury. Whether the decision to join a party at the commencement of the action was justified may have to be assessed in the light of the plaintiff’s, and his legal adviser’s, knowledge at that time. On the other hand, the circumstances of the case may require that his decision should be adjudged by the conduct of the defendants after the joinder of the successful defendant and even up till the jury’s verdict.
But the jury’s verdict ought not to be the sole criterion of whether the joinder of the successful defendant was reasonable. If there were so, then a plaintiff would be required to prognosticate at a time when both the facts of the accident and the defences were then unknown to him. Moreover, the conduct of the defendants at the trial of the action, each striving to inculpate the other for the plaintiff’s injuries, may provide evidence of the reasonableness of the joinder ….
I have already referred to the conduct of all the defendants in this case seeking contribution from the others, the defendant D.A. Constructions having filed its notice within three and a half months of the commencement of the action. Throughout the hearing of the action, and in the course their final addresses, counsel for each defendant continued to blame the other for the plaintiff’s injuries. In my opinion, their conduct in doing so is material to the reasonableness of the joinder of the defendant Barro for present purposes.[8]
[8] See Altamura v Victorian Railways Commissioners (op cit) at 35-36
37It must be borne in mind that it was not sufficient that it was reasonable for the plaintiff to proceed against the defendant who wins; an order will not be made unless the conduct of the losing defendant in the litigation makes it just that he or it pays the costs of the co-defendant.[9] Since the plaintiff has failed too, there must be something about the conduct of the losing defendant that makes it appropriate to shift the incidence of the successful defendant’s costs.[10]
[9] See Gould v Vaggelas (1984) 157 CLR 215 at 230
[10] See State of Victoria v Horgath(No 2) [2003] VSCA 24
38I refer to the Court of Appeal decision in the State of Victoria v Horgath (No 2),[11] wherein the Victorian Court of Appeal restated the conditions for the making of a Sanderson or Bullock order. In particular, I refer to Vincent JA, with whom Winneke and Chernov JJA agreed:
“In general terms, a plaintiff who seeks to have the losing defendant pay the costs of the successful defendant pursuant to a Bullock or a Sanderson order must establish that, in the circumstances of the case, it would be reasonable and just for such an order to be made – see for example, Sanderson, Reid and Gould v. Vaggelas. Additionally, a court will ordinarily not make such an order unless a number of requirements are satisfied. For example, a costs order in the Bullock or Sanderson form will not be made if the plaintiffs’ claims against the two or more defendants are not interdependent or are not, in essence, alternative claims. Thus, for example, in Norwest Refrigeration Services Pty. Ltd. v. Bain Dawes (W.A.) Pty. Ltd., the majority18 refused19 to make a Bullock order requiring the unsuccessful defendant (the Co-operative) to indemnify the plaintiff against the costs it was required to pay to the successful defendant (the insurer). Their Honours considered that the plaintiff’s unsuccessful claim on the policy was ‘a straightforward action which was not interdependent with or in any real sense alternative to the claim against the Cooperative.’ See also in this regard Bankamerica …
If that requirement is satisfied, a plaintiff who seeks a Bullock or a Sanderson order must also ordinarily show that it was reasonable for him to have joined the successful defendant and that the conduct of the unsuccessful defendant was such as to make it just to require him to indemnify the successful defendant … .”[12]
(Footnotes omitted.)
[11] Op cit
[12] (Op cit) at paragraphs [9]-[10]
39I also refer to the Court of appeal decision of Berrigan Shire Council v Ballerini; Forestry Commission of New South Walesv Ballerini.[13] In that matter, Ballerini (“the plaintiff”) sued Berrigan Shire Council (“the Council”) and the Forestry Commission of New South Wales (“the Commission”) for damages sustained by him when he dived from a log into an anabranch of the Murray River. The log jutted out from a park managed by the Council. The anabranch was on land belonging to the Commission.
[13] [2006] VSCA 65
40The trial judge found both defendants liable and the plaintiff contributorily negligent. The plaintiff’s contributory negligence was assessed at 30 per cent. Judgment was entered for the plaintiff in a certain sum and a division of responsibility between the defendants in the contribution proceeding between them was 80 per cent to the Council and 20 per cent to the Commission.
41The Council and Commission each appealed on liability and the plaintiff cross-appealed on contributory negligence. The Court of Appeal dismissed the Council’s appeal and the plaintiff’s cross-appeal, but allowed the appeal by the Commission.
42Leave was reserved to each of the parties to make written decisions concerning costs.
43In his judgment, Nettle JA, after referring to the above excerpt from State of Victoria v Horgath,[14] stated:
“In short an order will not ordinarily be made unless:
(a) the plaintiff’s claims against the two defendants are interdependent or essentially alternative claims; and
(b) it is reasonable for the plaintiff to have joined the successful defendant and the conduct of the unsuccessful defendant has been such as to make the order just.”[15]
[14] Op cit
[15] Op cit
44In that decision, the majority of the Court (consisting of Chernov and Nettle JJA) were not satisfied that either condition was so satisfied and, in such circumstances, refused to make a Bullock or Sanderson order. However, Callaway JA considered that such conditions – what he referred to as the “two principal issues to be resolved” – were resolved in the plaintiff’s favour. In particular, Callaway JA described the two principal issues to be resolved were:
“… The first is whether the plaintiff’s claim against the Commission was interdependent with, or in a real sense alternative to, his claim against the Council. The second issue is whether it was reasonable for the plaintiff to have joined the Commission and whether the Council’s conduct was such as to make it just to require the Council to pay the Commission’s costs.[16] It will be apparent that that second issue sometimes involves two questions, but in truth it is a matter of convenience whether to adopt a two-step analysis or to ask a single question, namely whether it is fair, as between the plaintiff and the unsuccessful defendant, that the latter should pay the successful defendant’s costs. Translated into the circumstances of this case, the single question relating to the second issue would be whether it is fair, as between the plaintiff and the Council, that the Council should pay the Commission’s costs … .”
(Footnotes omitted.)
[16] (Ibid) at paragraph [13]
45The condition that the claims against two defendants are interdependent or essentially alternative claims has been diluted to some extent and, in this respect, I refer to the Court of Appeal decision of Victorian WorkCover Authority v Kagan Bros Consolidated Pty Ltd.[17] In that matter, a process worker employed by a labour-hire company was injured in a tripping accident at a warehouse where she was working pursuant to an agreement between her employer and the warehouse occupier (“the occupier”) which had engaged the respondent to manage the work. The Victorian WorkCover Authority (“the VWA”), which had paid compensation to the worker, commenced an indemnity claim against both the occupier and the respondent under the then s138 of the Accident Compensation Act 1985, alleging that each company had breached its respective duty of care to the worker.
[17] (2011) 31 VR 386
46The trial judge upheld the claim against the respondent, but dismissed the claim against the occupier, with costs against the VWA, and declined to make a Bullock order requiring the respondent to reimburse it for its costs liability to the occupier on the basis that the VWA claims were not such that one or the other, but not both, of the defendants could have been found liable.
47It was held, on refusing leave to appeal, that:
“1.the grant of a Bullock order would ordinarily, but did not necessarily, require that the plaintiff’s claims against the respective defendants were interdependent or essentially alternative claims;
2.the occupier and respondent owed identical duties of care to the worker. The VWA’s indemnity claims were thus independent in the relevant sense.”[18]
[18] See head note
48In relation to point 1 above, the Court referred to a number of cases, but, in particular, to State of Victoria v Horgath[19] and Berrigan Shire Council v Ballerini; Forestry Commission of New South Wales v Ballerini[20] and in relation to the second point, the Court of Appeal referred to Altamura v Victorian Railways Commissioners[21] and State of Victoria v Horgath.[22]
[19] Op cit
[20] Op cit
[21] Op cit
[22] Op cit
49The Court consisted of Redlich and Bongiorno JJA, who jointly stated:
“12. Where a plaintiff succeeds against only one of the defendants, the court may, in the exercise of its discretion as to costs, order that in addition to paying the plaintiff’s costs the unsuccessful defendant should reimburse the plaintiff for the costs of the successful defendant (a ‘Bullock’ order), or order the unsuccessful defendant to pay the costs of the successful defendant directly to the successful defendant (a ‘Sanderson’ order). It must be reasonable and just for such orders to be made.[23] An assessment of whether such an order will do justice to the unsuccessful party, usually commences with an inquiry as to whether it was reasonable for the plaintiff to have joined the successful defendant. In Central Goldfields Shire v Haley (No 2) Redlich JA doubted that it is always necessary to show that it was reasonable on the facts known at the time of the joinder. Subsequent events may demonstrate that the joinder was reasonable. The circumstances of the case may require that the decision should be adjudged by the conduct of the defendants after the joinder of the successful defendant and even up to [the] date the court makes its decision. But the fact that it is reasonable to have joined the successful defendant, will not by itself be sufficient to warrant the making of the order. It is commonly required that the plaintiff’s claims against each defendant be interconnected or in a real sense alternatives.
13. In determining whether to grant a Bullock order, the trial judge considered whether the plaintiff’s claims against the two defendants were ‘interdependent, or essentially alternative’ claims. His Honour refused to grant a Bullock order for the following reason:
‘This was never a case in which, one or other but not both of the defendants could have been found liable. Both of the defendants were occupiers with identical duties of care. Indeed, in closing submissions it was put on behalf of the plaintiff that both defendants were liable to it by reason of their respective breaches of the duty each of them owed to the worker as occupiers of the premises in which the worker was injured.’
[23] Reference was made to the High Court decision of Gould v Vaggelas (op cit)
‘Interdependent’ or ‘alternative’ claims
14. The first sentence of the above ruling, with very slight modification, was taken from part of the reasons of Nettle JA in Berrigan Shire Council v Ballerini (No 2) …
15.The respondent initially submitted that his Honour had correctly applied the principle set out in Berrigan and had rightly determined that the claims made against the defendants were neither interdependent nor essentially alternative as the case advanced by the VWA at trial was that both defendants were liable to it by reason of their respective breaches …
16. It has long been recognised that in determining whether to make a Bullock or like order, there is no rule but rather a fact specific discretion which must be exercised judicially and according to the justice of the case. The discretion is not to be fettered by any immutable requirement. There is a line of authority recognising that it is commonly inappropriate to make such an order when independent or separate causes of action are alleged against each defendant.
17. The purport of the sentence from the reasons of Nettle JA in Berrigan which much influenced his Honour’s decision appears to have been misunderstood by the trial judge …
…
19.In Berrigan, Nettle JA at [42], having explained why the cases against the two defendants were not interdependent, then addressed the question as to whether they were ‘alternative’ claims, and in that context said ‘[It] was never a case of one or the other but not both being liable’ so as to emphasise that they had not been pleaded as or presented during the trial as alternative claims. This observation related solely to the question whether the claims were alternatives. The learned trial judge, having mistakenly thought that this observation applied to whether the claims were interdependent as well as to whether the claims were alternatives, concluded that the claims did not satisfy this criteria and refused the Bullock order.”[24]
(Footnotes omitted.)
[24] Victorian Workcover Authority v Kagan Bros Consolidated Pty Ltd (op cit) at paragraphs [12]-[19]
50Perhaps paragraphs 21 and 22 of Victorian WorkCover Authority v Kagan Bros Consolidated Pty Ltd summarises the position best when the Court of Appeal states:
“21.Whether the claims can be described as interdependent or alternatives is an important factor that should be taken into account and which will commonly be a critical consideration. But regardless of how the claim has been initiated or formulated, the justice of the case may still merit such an order if there is a substantial connection between the claims. The decision of Kaye J in Altamura v Victorian Railways Commissioners, a case not dissimilar to the present, is an illustration.
22.Properly understood, this observation in Berrigan was not an impediment to the granting of a Bullock order in the present case. As the trial judge found, both defendants were occupiers with identical duties of care. The case was analogous with Horvath and Central Goldfields where such an order was made in circumstances where both defendants were alleged to be responsible for the same wrong arising from the same circumstances. The claims made by the VWA against the respondent and Playcorp were in this sense interdependent. There was a very strong connection between the claims, both of them resting largely upon the same facts, the same cause of action and seeking the same relief. In oral argument, the respondent did not seriously contest this conclusion.”
(Footnotes omitted.)
51Finally, I again refer to Victorian WorkCover Authority v Kagan Bros Consolidated Pty Ltd[25] where, at paragraph 26, under the heading of “Conduct of the parties”, the Court stated:
“26.The conduct of the unsuccessful defendant must be such as to make it fair to impose some liability on it for the costs of the successful defendant. Such conduct will be found where the unsuccessful defendant tells the plaintiff in one way or another that it should look to the successful defendant for its remedy or has done something to induce the plaintiff to maintain its suit against the successful defendant. In the present case the question raised by the parties was whether the conduct of the respondent was such that it should have to assume the burden of the indemnity costs which the VWA had agreed to pay Playcorp. Accordingly, it will be necessary to consider whether the respondent induced the VWA to proceed against Playcorp or to persist in maintaining its claim against it so as to make it just for a Sanderson or Bullock order be made against it.”[26]
(Footnotes omitted.)
[25] Ibid
[26] (Ibid) at paragraph [26]
The submissions of the parties
52Senior Counsel for the plaintiff did not quibble that the third defendant was entitled to recover its costs from one of the parties. He submitted that the Court should make a “Sanderson” order against the first defendant in relation to the costs of the third defendant.
53In particular, it was submitted that the “conduct of the first defendant” during the course of the trial would justify making a Sanderson order against the first defendant.
54Senior Counsel for the plaintiff submitted that, during the course of the trial, there was “active participation” of the first defendant to make “good” the first defendant’s case against the third defendant. In particular, reference was made of the cross-examination by counsel for the first defendant of the expert witness, Mr Dohrmann, and the director of the third defendant, Mr Frank Rossi.
55Senior Counsel for the plaintiff very much relied on the comments of Kaye J in Altamura v Victorian Railways Commissioners,[27] to which reference has already been made.
[27] Op cit
56Senior Counsel for the first defendant submitted that there should be no Bullock or Sanderson order and that the normal course should occur; that is, the costs of the third defendant should be borne by the plaintiff. In particular, she submitted:
(a) That the claims brought by the plaintiff against the first defendant and third defendant were not “interdependent or essentially alternative claims” within the meaning set out by Nettle JA in Berrigan Shire Council.[28] In this respect, Senior Counsel for the first defendant submitted that, although there was always some crossover in a case, where one event – the fall of the plaintiff – has occurred, there was nothing really interdependent between the first defendant’s conduct and the third defendant’s conduct, as they involved completely separate factual events, times and legal duties. In particular, she submitted that they clearly were not essentially alternative claims;
[28] Op cit
(b) Senior Counsel for the first defendant acknowledged that, as a result of the later decision between Victorian WorkCover Authority v Kagan Bros Consolidated Pty Ltd,[29] such a condition is not necessary. However, again, note was made of what the Court of Appeal stated in Victorian WorkCover Authority v Kagan Bros Consolidated Pty Ltd,[30] at paragraph 21, wherein it is stated:
[29] Op cit
[30] Ibid
“Whether the claims can be described as interdependent or alternatives is an important factor that should be taken into account and which will commonly be a critical consideration … .”
(c) It was submitted that the first defendant in no way urged the plaintiff to issue against the third defendant. It was also noted, as outlined earlier in this Ruling, whereas the third defendant served a Notice of Contribution on the third defendant on 27 March 2019, it was not until 26 February 2020 that the first defendant served a Notice of Contribution against the third defendant. Such event occurred after an unsuccessful mediation involving all parties on 24 February 2020;
(d) Furthermore, reference was made to the letter from Lander & Rogers, dated 21 August 2019, advising those acting for the third defendant that, at that stage, the first defendant had not issued contribution proceedings against the third defendant. Such letter was sent in reference to earlier letters from the solicitors for the third defendant, dated 15 August 2019 and 15 July 2019, to the first defendant, to discontinue the contribution proceedings against the third defendant (which of course were not on foot);
(e) Senior Counsel for the first defendant referred to paragraph 26 of the Court of Appeal judgment of Victorian WorkCover Authority v Kagan Bros Consolidated Pty Ltd,[31] and I again refer to that paragraph, wherein it is stated, in part:
“The conduct of the unsuccessful defendant must be such as to make it fair to impose some liability on it for the costs of the successful defendant. Such conduct will be found where the unsuccessful defendant tells the plaintiff in one way or another that it should look to the successful defendant for its remedy or has done something to induce the plaintiff to maintain its suit against the successful defendant … .”[32]
(Footnotes omitted.)
[31] Op cit
[32] (Ibid) at paragraph [26]
It was submitted that it is not the case that the first defendant told the plaintiff “in one way or another” that it should look to the third defendant for its remedy. Furthermore, it was further submitted that the first defendant “has done nothing to induce the plaintiff to maintain its suit against the third defendant”;
(f) Senior Counsel also referred to the two letters from her client’s solicitors to the solicitors for the third defendant, dated 21 September 2020 and 23 September 2020 and, in particular, to that part of the letter which referred to the principles in relation to statutory counteroffers and the Court of Appeal decision of Spotless Services Australia Ltd v Herbath.[33]
It was submitted that it was clear that the first defendant was seeking modest amounts of contribution from the third defendant in order to find a vehicle whereby an offer plus party/party costs could be made to the plaintiff to settle the matter.
[33] [2009] VSCA 285
57Senior Counsel for the first defendant accepted that it may be appropriate that, on the basis of her client’s Notice of Contribution being dismissed, that the first defendant pay costs on a standard basis to the third defendant, such costs incidental to the issue of the Notice of Contribution and noncommon to any other costs.
58In particular, it was further submitted that it must be borne in mind that the first defendant could not discontinue its Notice of Contribution against the first defendant until it was clear that the plaintiff was no longer proceeding against the third defendant. If the first defendant had discontinued the claim of the Notice of Contribution against the third defendant and the third defendant continued to be a defendant in the proceedings, and was ultimately found to be liable to the plaintiff, it could look to the first defendant for contribution.
Conclusion
59After a consideration of all these matters, I do accept the submissions made by Senior Counsel for the first defendant. Although it is clear enough that counsel for the first defendant cross-examined the liability witnesses, much of that cross-examination related to the allegation of contributory negligence on the part of the plaintiff. And of course, for reasons best known to the plaintiff, the plaintiff maintained its claim against the third party, notwithstanding several Calderbank offers and ultimately the Offer of Compromise made on 27 February 2020. In this sense, the first defendant was clearly entitled to cross-examine the liability witnesses in respect of the liability of the third defendant, given there was potential for contribution from that defendant.
60I am not persuaded to exercise the discretion of the Court to make a Sanderson or Bullock order in the circumstances of this matter.
61I consider that, given the history of this matter involving various Calderbank offers made on the plaintiff and, in particular, the Offer of Compromise made by the third party and served on the plaintiff on or about 27 February 2020, the plaintiff should pay the costs of the third defendant on a standard basis until the Offer of Compromise takes effect and, thereafter, on an indemnity basis. Furthermore, bearing in mind that the Contribution Notice of the first defendant should be dismissed, I am of the view that the first defendant should pay the costs of the third defendant on a standard basis in relation to the Claim for Contribution made by the first defendant. I consider such orders should be on a standard basis, taking all circumstances into account.
62Accordingly, I make the following orders:
(1) That the plaintiff pay the third defendant’s costs of the proceeding on a standard basis, up to 2 March 2020, and on an indemnity basis from 2 March 2020.
(2) That the first defendant pay the costs of the third defendant of and incidental to the Claim for Contribution made by the first defendant, such costs to be on a standard basis and noncommon with the costs referred to in (1) above.
63I direct that the parties should incorporate these orders with the other orders constituting the judgment in this matter, with all parties signing such document, and it being forwarded to the Court.
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