Nilumbik Shire Council v Victorian YMCA Community Program Pty Ltd
[2016] VSCA 192
•11 August 2016
SUPREME COURT OF VICTORIA
COURT OF APPEAL
S APCI 2015 0137
| NILLUMBIK SHIRE COUNCIL | Applicant |
| v | |
| VICTORIAN YMCA COMMUNITY PROGRAMMING PTY LTD | Respondent |
S APCI 2015 0067
| VICTORIAN YMCA COMMUNITY PROGRAMMING PTY LTD | Applicant |
| v | |
| NILLUMBIK SHIRE COUNCIL | Respondent |
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| JUDGES: | TATE, OSBORN and SANTAMARIA JJA |
| WHERE HELD: | MELBOURNE |
| DATE OF HEARING: | 1 March 2016 |
| DATE OF JUDGMENT: | 11 August 2016 |
| MEDIUM NEUTRAL CITATION: | [2016] VSCA 192 |
| JUDGMENTS APPEALED FROM: | [2015] VCC 766 and [2015] VCC 1089 (Judge Morrish) |
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NEGLIGENCE – Workplace injury – Contribution between defendants – Worker’s foot caught by a hazard created by an unguarded handrail at a swimming pool following a fall – Employer of injured worker and owner of the premises both found to be negligent at trial – Employer also operator and manager of the premises under contract with the owner – Contribution between defendants determined to be equal in remitted trial – Whether judge erred in not being able to determine the cause of the worker’s fall – Whether judge erred in not finding the employer had a greater liability to contribute – Whether test in Podrebersek v Australia Iron & Steel Pty Ltd (1985) 59 ALR 529 properly applied – Whether delegation of duty by owner to operator and manager – Whether concurrent obligations on defendants for the safety and maintenance of the premises including the identification and remediation of hazards with respect to the state of the premises – Whether judge erred in not taking adequate account of reliance by the owner on the operator’s expertise – Whether judge took account of all the evidence – Leave to appeal granted – Appeal dismissed.
COSTS – Whether judge erred in refusing to award indemnity costs as a result of rejection of a Calderbank letter and an Offer to Contribute – Whether rejection of the offers reasonable in all the circumstances at the time – Whether judge erred in finding offers premature – Leave to appeal refused.
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| APPEARANCES: | Counsel | Solicitors |
| For Nillumbik Shire Council | Mr C J Blanden QC with Ms J Frederico | Minter Ellison Lawyers |
| For Victorian YMCA Community Programming Pty Ltd | Mr S A O’Meara QC with Mr R Kumar | Hall & Wilcox Lawyers |
TATE JA:
TABLE OF CONTENTS
Introduction and summary.......................................................................................... 4 Contribution appeal — the incident at the swimming pool ……………………. 4 The judge’s findings ………………………………………………………………….. 9 The grounds of appeal ………………………............................................................. 19 The parties’ submissions ............................................................................................. 20 Ground 1: Whether correct test used …………………………………………. 20 Ground 2: Whether error in not attributing cause of fall …………………...... 24 Ground 3: Failure to consider delegation of duty by the Council to YMCA …. 41 Ground 4: Error in finding that that the Council had no less experience in running the centre than YMCA ……………………………………... 51
Ground 5: Erroneous weight on Council audits …….……………………….. 52 Ground 6: Reliance of the Council on YMCA’s expertise .…………………… 53 Ground 7: Whether all of the evidence taken into account …............................ 54 Conclusion on contribution appeal ………………………………………………... 61 Costs appeal …............................................................................................................. 61 The judge’s findings ……………………….................................................................. 66 The grounds of appeal ……………………….............................................................. 68 The parties’ submissions ……………………………….…………………………… 69 (a) Failure to take account of relevant principles …..……………………. 70 (b) Whether mistake in relation to the facts ……………………………… 73 (c) Whether failure to refer to and act upon relevant evidence ………….. 74 (d) Whether guided by extraneous or irrelevant matters ………………… 76 Conclusion on the costs appeal …………...…………………….………………….. 77
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Introduction and summary
There are two applications for leave to appeal before the Court. Nillumbik Shire Council (‘the Council’) seeks to appeal from a decision of Judge Morrish made on 18 June 2015[1] in relation to the apportionment of contribution between it and the Victorian YMCA Community Programming Pty Ltd (‘YMCA’),[2] both of whom were defendants to a claim by Michelle Balassone for personal injury suffered by her when she was working as a swimming teacher at the Eltham Leisure Centre in 2005. I shall refer to this as ‘the contribution appeal’.[3] YMCA has also brought an application for leave to appeal from orders made by the judge on 24 June 2015[4] as to costs, and in particular whether the judge erred in her consideration of a Calderbank letter and an Offer to Contribute. I shall refer to this as ‘the costs appeal’.[5]
[1]Balassone v Victorian YMCA Community Programming Pty Ltd; VWA v Nillumbik Shire Council [2015] VCC 766 (‘Reasons’).
[2]Collectively the Council and the YMCA are sometimes referred to as ‘the defendants’.
[3]Proceeding S APCI 2015 00137.
[4]Balassone v Victorian YMCA Community Programming Pty Ltd; VWA v Nillumbik Shire Council (Ruling) [2015] VCC 1089 (‘Costs Reasons’).
[5]Proceeding S APCI 2015 0067. The costs appeal was brought first by YMCA, while the contribution appeal was raised initially as a proposed cross-application for leave to appeal within the same proceeding. The Court has directed that the application brought by the Council, which raises different issues in relation to a different decision, has the status of a separate proceeding. The contribution appeal and the costs appeal were heard at the same time.
For the reasons set out below, I would grant leave to appeal in relation to the contribution appeal and dismiss the appeal, and, with respect to the costs appeal, I would refuse leave to appeal.
I shall deal first with the contribution appeal.
Contribution appeal — the incident at the swimming pool
At the relevant time, Ms Balassone was employed by YMCA as a swimming teacher. She worked at the Eltham Leisure Centre (‘the centre’), which was owned by the Council, and managed and operated by YMCA pursuant to a contract dated 14 September 2001 between it and the Council (‘the contract’). The YMCA had been operating the centre for five years under an earlier contract with the Council.
On the morning of 23 April 2005, Ms Balassone was at the side of the swimming pool at the centre assessing a young student who was swimming towards the end of the pool. Her evidence at trial was that she was walking very slowly, about 25 to 30 centimetres from the tiles at the edge of the pool, watching the student, when somehow she fell into the pool and her right foot wedged between the pool wall and the handrail frame of a set of steps leading from the decking into the pool (‘the incident’). Ms Balassone was wearing running shoes at the time. Her foot was jammed and she was face down, unable to get her head up out of the water. Her attempts to dislodge her foot proved futile and she started to panic. As she struggled to free herself, she injured her right knee. Two of the fathers of swimming students got into the pool, one to lift her head out of the water, while the other dislodged her foot. They helped her out of the pool.
About three months after the incident, the Council installed an additional guard railing which blocked direct access to the handrail and steps from the part of the pool deck along which Ms Balassone had been walking just before the accident.
Ms Balassone brought common law proceedings in negligence against YMCA alleging breach of duty as employer and as occupier, and against the Council for breach of duty owed as occupier.
There was a significant dispute at trial about how Ms Balassone came to fall into the pool. One possible scenario was that she slipped on slime or algae on the edge of the pool, fell, became caught, and suffered the injury. An alternative is that she was not watching where she was walking and inadvertently stepped into the gap between the rail and the pool wall, fell, became caught, and suffered the injury. Other possibilities, or combinations of possibilities, were also postulated.
Following a 12-day trial before Judge Murphy and a jury of six, the jury found that there was negligence on the part of both YMCA and the Council that was a cause of Ms Balassone’s injuries and assessed her total damages in the sum of $250,000. His Honour entered judgment against the defendants in the following terms:
1.Judgment for the Plaintiff against the First Defendant [YMCA] in the sum of $240,810[[6]] [with] costs to be assessed on a party/party basis by the Costs Court in default of agreement.
2.Judgment for the Plaintiff against the Second Defendant [the Council] in the sum of $240,810 [with] costs to be assessed on an indemnity basis by the Costs Court in default of agreement.
[6]The damages awarded to Ms Balassone were reduced by $9,190 pursuant to s 134AB(25)(b) of the Accident Compensation Act 1985 to account for the amount of compensation previously paid to her under s 98C.
At trial the issue of contributory negligence by Ms Balassone, although pleaded by both defendants, was not left for the jury’s consideration.[7] The defendants brought contribution proceedings against each other. The jury was not asked to apportion liability between the defendants.[8]
[7]Reasons [4].
[8]Ibid [6].
The issue of contribution between the defendants was left to Judge Murphy to determine. After hearing submissions from the Council that it should be indemnified by YMCA, Judge Murphy found that YMCA had breached its obligations under the contract and that such breach caused the loss and damage incurred by the Council in respect of Ms Balassone. Accordingly, YMCA was ordered to indemnify the Council. His Honour indicated that if it were not for that indemnification, each defendant should contribute equally to the judgment in favour of Ms Balassone.
Although no appeal was brought against the judgment in favour of Ms Balassone, YMCA appealed against the indemnification order. The Council also brought a cross-appeal against a direction made by Judge Murphy at the close of the evidence, and before counsel addressed the jury, that ‘as a matter of law and as a matter of fact in this case the jury could not find that [the Council] had delegated its duty.’[9]
[9]See Victorian YMCA Community Programming Pty Ltd v Nillumbik Shire Council [2014] VSCA 197 [14].
The Court of Appeal (Ashley JA, Nettle and Hansen JJA agreeing) allowed both YMCA’s appeal against the indemnification order and the Council’s cross–appeal against the direction given by the judge. It did so after reaching the following conclusions with respect to Judge Murphy’s decision:
(1) the judge’s conclusion that YMCA breached its contract with the Council, such breach being causative of loss and damage to the Council, was erroneous. In those circumstances, the Council could not maintain a claim to be indemnified against its liability to the plaintiff and to VWA [Victorian WorkCover Authority];
(2)the judge erred in ruling, as a matter of law, that the Council was precluded from [delegating] the duty owed by it as occupier to the plaintiff;
(3)if the judge found that there was no evidence which could support a finding of delegation in fact, that conclusion was not available. Counsel for YMCA frankly and correctly conceded that this was so;
(4)it could not be concluded, contrary to a submission in writing for YMCA, that the judge should be taken to have determined the issue of factual delegation by the exercise of the power conferred by r 47.04 of the County Court Civil Procedure Rules 2008. His Honour was not invited to exercise that power. No order was made as that rule contemplates. Nor again did the judge make any reference to the rule in his ruling;
(5)in consequence of his Honour’s conclusion that delegation by the Council of performance of its duty of care to the plaintiff was not open in law or in fact, his consideration of the contribution issue between defendants was incomplete;
(6)for that reason, and also because, as was submitted for the Council, the judge appears to have been concerned to interpret the jury’s verdict, rather than find relevant facts consistent with that verdict for himself, his Honour’s determination of the contribution proceeding could not stand;
(7)both because the judge erred in concluding that YMCA was in breach of its contract with the Council, such breach being causative of loss and damage to the Council, and because, for several reasons, his Honour’s resolution of the contribution proceeding was flawed, consequences ensue for the order made in the recovery proceeding. The application by YMCA for leave to appeal against that order out of time, not opposed by the Council or by VWA, should be granted;
(8)in the circumstances described, YMCA’s appeal against the orders flowing from the judge’s ‘indemnification’ conclusion must be allowed. So also, the cross-appeal, attacking the order respecting contribution, must be allowed. Further still, YMCA's appeal against the order for indemnification of the Council in the recovery claim must be allowed;
(9) it is inappropriate that this Court should consider and itself determine the interrelated questions of delegation and contribution between defendants, and the implications of the eventual resolution of the contribution proceeding for the recovery proceeding. The material which would require examination is voluminous. Acknowledging that the questions will be answered by analysis of the evidence already adduced, and that credibility issues will be at least unlikely to arise, there comes a point at which this Court should decline to act as a trial court. The outstanding questions should be remitted for consideration, upon the evidence already adduced, by a different judge in the County Court.[10]
[10]Ibid [16] (citation omitted).
It was against this background that Judge Morrish dealt with the issues of contribution between YMCA and the Council. In considering the evidence adduced at trial, the parties consented to the judge not being required to have all the evidence placed before her, but rather to have regard to the transcript of the relevant viva voce evidence and to watch portions of the DVDs of the original recordings made at trial of two critical witnesses, Ms Balassone and Karen Quinn, the administration director of the centre employed by YMCA.[11] Although the judge invited the parties to adduce further evidence, with leave, no party sought to adduce additional evidence.[12] On the contribution appeal, the Council raises an issue about how the judge approached the evidence in practice, and in particular whether she had proper regard to the whole of the evidence.
[11]Reasons [11].
[12]Ibid n 4.
The judge’s findings
Judge Morrish concluded that it was just and equitable that the amount of contribution recoverable from each of YMCA and the Council be equal.[13] She said:
I agree … that both defendants fell short of the standard of conduct expected of them in the same (or similar) way. Accordingly, I consider it just and equitable, having regard to the extent of their respective responsibility for Ms Balassone’s damage, that they each contribute 50% (fifty per cent) for that damage.[14]
[13]Ibid [25] and [110]–[111].
[14]Ibid [25].
Her Honour was not satisfied on the balance of probabilities that Ms Balassone’s fall was caused by any substance on the pool walkway or by any failure on the part of YMCA to clean and maintain that walkway.[15] Ultimately she made no finding on what it was that caused the fall. Rather, the judge held that what was relevant in the circumstances was the structure of the handrail and the absence of a barrier around the handrail that left the handrail exposed. The problem was the state of the premises. This constituted a reasonably foreseeable risk which led to Ms Balassone suffering injury. As she said:
I am satisfied on the balance of probabilities that, as they conceded, both the YMCA and the Council failed to identify the structure of the handrail and the absence of a barrier in this area as a reasonably foreseeable risk of injury to persons (including Ms Balassone) on the premises. It is the state of the premises that contributed to Ms Balassone’s injury, loss and damage.[16]
[15]Ibid [22].
[16]Ibid [22] (emphasis in original).
As the judge noted, it was conceded by both the Council and YMCA that each of them, respectively, had failed to identify the structure of the handrail and the absence of a barrier as a reasonably foreseeable risk of injury to persons on the premises.
The judge held that the Council was responsible for the structural components of the premises as occupier. She held that this was ‘a duty it could not (and did not seek to) delegate to the YMCA’;[17] that is, the Council’s responsibility for the structure of the premises was not delegable to YMCA as manager of the centre; nor indeed did the Council seek to delegate that duty. However, YMCA in turn had a non-delegable duty as employer to provide Ms Balassone with a safe place of work, which it failed to provide given the state of the premises. The judge stated that it was unnecessary for her to determine specifically whether the failure to fulfil that duty also constituted a breach by YMCA as occupier, although the judge noted that those duties as occupier and employer overlapped.[18]
[17]Ibid [23]. See also [15]. See the concession the Council made on this issue before the judge extracted at [46] below.
[18]Ibid [24]. The judge also held that the Council was obliged to indemnify the VWA under s 138 of the Accident Compensation Act: Ibid [27].
She held that, although the duty owed with respect to the state of the premises in terms of the structure of the handrail was not delegated, the Council had delegated a different function, namely the responsibility for the day-to-day running of the centre, including cleaning, to YMCA. In considering whether there was a nexus between this delegated duty and the harm suffered by Ms Balassone, the judge observed that it was critical to identify whether a cause of that fall was any failure to clean and/or maintain the pool walkway surface. If that was a cause, this would be a factor to be counted in the Council’s favour when assessing contribution.[19]
[19]Reasons [33]–[35].
The judge then embarked on a detailed examination of the evidence given by Ms Balassone in examination-in-chief, in cross-examination and then in re-examination.[20] This evidence covered the circumstances in which Ms Balassone fell into the pool; and in particular whether she slipped; as well as the state of the pool decking on the day; complaints she had previously made about slipping events at the pool as a result of slime or algae on the pool decking; what remedial steps had been taken following those complaints; and whether, in accordance with the evidence of Ms Quinn but not of Ms Balassone, three weeks after the incident Ms Balassone told Ms Quinn that she had been walking backwards, lost track of where she was and took one step too far into the gap between the pool wall and the railing, and twisted as she fell to avoid hitting her head on the pool edge. The judge then looked at the evidence of Ms Quinn in examination-in-chief and in cross-examination about the alleged conversation.[21] In relation to the ‘clash in the evidence’[22] between Ms Balassone and Ms Quinn, the judge concluded that, although Ms Quinn did not deliberately lie about the conversation, she could not be ‘satisfied that her account in this regard is accurate’[23] and therefore could not be satisfied that Ms Balassone made the representations attributed to her.
[20]Ibid [43]–[71].
[21]Ibid [72]–[73].
[22]Ibid [76].
[23]Ibid.
The judge outlined four competing theories about how Ms Balassone fell into the pool:
There are a number of theories as to why Ms Balassone fell into the pool:
(i) Ms Balassone was walking backwards and did not realise where she was in relation to the steps — I have already found this inherently unlikely;
(ii) There was slime or algae on the decking at the point of her last step before falling that caused or contributed to her slip;
(iii) There was water on the decking at the point of her last step before falling that caused or contributed to her slip;
(iv) Ms Balassone was not watching where she was walking and simply misjudged her position in relation to the steps, resulting in a misstep over the edge of the pool — either an over-step or a slide off the tiling framing the pool’s edge.[24]
[24]Ibid [77].
Given ‘the uncontradicted evidence … that Ms Balassone was not watching where she was going and did not see where she placed her feet just before falling into the pool’,[25] the judge indicated that she would need to rely on inferential reasoning to reach any conclusions about the circumstances in which Ms Balassone fell into the pool.
[25]Ibid [78].
The judge then set out 24 uncontested facts, which she held on the balance of probabilities to be true:
(1) At the time of the incident, Ms Balassone had been working at the facility for approximately five years. She was familiar with the layout of the facility, in particular the vicinity where she came to grief;
(2) On the day of the incident, Ms Balassone had already walked the same path along the edge of the pool a number of times;
(3) At the relevant time, Ms Balassone was wearing runners. No evidence was given about the age of the shoes, the tread on the soles, and no evidence was given about their slip resistance. No evidence explained whether Ms Balassone purchased the shoes or whether they were issued by her employer;
(4) Ms Balassone was not watching where she was walking as she was looking over her left shoulder, body slightly turned, assessing a beginner student in the lane second closest to her. Her attention was focussed sharply on the girl’s execution of stroke and movement in the water, along with her ability to cover the distance of the pool’s length;
(5) It is unclear on the evidence for how long Ms Balassone walked along the decking, and what distance she covered in that time, without looking ahead or checking her position relative to the pool’s steps or edge;
(6) In her own words, Ms Balassone was walking ‘very, very slowly’;
(7) Ms Balassone does not know precisely where her feet were at the time she slipped;
(8) Ms Balassone did not know why she slipped, and still does not know;
(9) Ms Balassone did not testify that she observed any slime or algae at the spot where she fell at any time prior to or immediately after her fall on that particular day;
(10) Ms Balassone did not testify that on the day of the incident, she observed any water on the decking at the point where she fell;
(11) There was no evidence of any skid marks or other signs on the decking in the area where Ms Balassone fell such as might shed light on the precise spot where she lost her footing and the exact path of her travel as she entered the pool, although it is likely that she fell in a forward motion;
(12) There are no admissions (express or implied) that at the relevant time and place, there was any slime, algae or water on the decking where Ms Balassone fell;
(13) Although Ms Balassone had made complaints in the past about slipping hazards in the vicinity of the pool, she made no complaint about any such hazards on the day of the incident;
(14) Around the pool steps was a high traffic area as it was a means by which children entered and exited the pool;
(15) Ms Balassone had never had any difficulties traversing this particular area in the period of the previous five years, during which time she would have tread the same path many times;
(16) There were no eyewitnesses to the fall;
(17) There is no forensic evidence to match or relate Ms Balassone’s injuries to a likely mechanism or location of the initial fall;
(18) No witness states that immediately before or after Ms Balassone fell into the pool, there was any slime, algae or water on the decking at or in the vicinity where Ms Balassone lost her footing;
(19) From time to time, there would be areas where algae grew or slime developed or gathered. However, there was a daily routine for cleaning and maintaining the pool and its surrounds. Chemicals were regularly used to disinfect the decking and remove any algae;
(20) Ms Balassone did not testify about any lack of training, supervision or appropriate warnings from the YMCA. Nor did she postulate about what she would likely have done differently had she received training, supervision or warnings;
(21) Ms Balassone did not make timely complaint about the presence of slime, algae or water in the area where she fell. Nor during her testimony, did she blame her fall on any such substance. The description she gave of the circumstances of the incident most proximate to the event was in her WorkCover Claim Form, exhibit 1. In it, she made no mention of any slippery substance on the decking causing or contributing to her fall;
(22) There is no evidence that any person reported slime, algae or water in the relevant area on the day in question or in the days leading up to the incident. No cleaner was called to state that slime or algae was ever present in this area;
(23) No expert testified as to the likely presence of algae or slime in the relevant area at the time of the incident or the effect it might have if Ms Balassone stepped on it, in runners and moving at a very, very slow pace; and
(24) The pool decking had been resurfaced in 2000 with a superior slip-resistance substance.[26]
[26]Ibid [80] (footnotes omitted).
The judge next turned to the four competing theories.[27] She held that it was inherently unlikely that Ms Balassone was walking backwards and did not realise where she was in relation to the steps (theory 1) because Ms Balassone had given evidence that she had never done so before when teaching students, and no eyewitness was called to contradict her on that point.[28]
[27]See [21] above.
[28]Reasons [76(d)], [77(i)] and [82].
In relation to the theory that there was slime or algae on the decking at the point of the last step before she fell which caused or contributed to her slip (theory 2), the judge rejected the argument put on behalf of the Council that this was a case of res ipsa loquitur on the basis that the fact of the fall did not of itself prove that there must have been slime or algae present and that such a substance must have caused her fall. Instead, the judge concluded that she was
unable, on the balance of probabilities, to infer that there was slime or algae on the decking in the area where Ms Balassone lost her footing, much less that any such slime or algae was implicated in her fall.[29]
[29]Ibid [85].
With respect to theory 3, although the judge accepted that it was likely — indeed, inevitable — that there was water on the floor surface around the pool and that it would be unreasonable to expect it to be ‘kept dry every minute of the day that the pool is in use’,[30] especially near the high traffic area leading into the pool steps, she could not infer that
there was water on the decking in the area where Ms Balassone lost her footing, much less that any such water was implicated in her fall. She fell on the side of the steps bordered by the rail, not at the intended path of entry in front of the steps.[31]
[30]Ibid [86].
[31]Ibid [87].
Finally, in relation to theory 4, the judge held that she was not able on the balance of probabilities to infer, based on the established facts, that Ms Balassone ‘simply misjudged her position and slipped off the last tile or overstepped the pool’s edge.’[32] She said:
It is not possible, on the established facts, to pinpoint the precise point where Ms Balassone took her last step before she fell into the water. I am unable to say one way or the other whether she placed any part of her foot in a precarious position on the edge tiles, causing her to topple forward. Nor can I say one way or the other that Ms Balassone simply took a step too far.[33]
[32]Ibid [89].
[33]Ibid [88].
Given her findings in relation to the four theories, the judge was ‘unable to say what caused Ms Balassone’s initial slip or fall that triggered her inevitable landing in the pool.’[34]
[34]Ibid [90].
The judge then considered the particulars of negligence raised by Ms Balassone against each of the defendants. In the case of YMCA, the judge held that because she could not say what had triggered Ms Balassone’s fall, she could not find that the allegations relating to the system of work, including cleaning and the maintenance of the pool surrounds to ensure they were free from algae, slime, or water, were causally related to the damage suffered by her.[35] Nor could she make a finding of causation on the basis that the particulars relating to absence of warnings about the dangerous nature of the decking or failing to heed prior complaints about slipping were made out.[36] The judge did find, however, that the particulars relating to the failure to identify, and address, the risk posed by the handrail were established.[37]
[35]Ibid [95]. The relevant particulars were: (a) Failing to provide a safe system of work; (e) Failing to inspect the premises and ascertain the safety of the premises; (g) Failing to notice that the surface of the pool deck was slippery and posed a slipping hazard; and (h) Allowing or requiring the Plaintiff to work from the pool deck when it knew or ought to have known that there was a risk of slipping.
[36]Reasons [97]. The relevant particulars were: (m) Failing to heed warnings given by the Plaintiff of the dangerous nature of the pool deck; and (n) Failing to heed information given by the Plaintiff concerning prior incidents of slipping on the pool deck.
[37]Reasons [93]. The relevant particulars were: (b) Failing to provide a safe place in which to work; (d) Failing to take reasonable care for the safety of the Plaintiff in all the circumstances; (f) Failing to identify the risk of injury posed by the premises to the Plaintiff; (i) Failing to identify the risk of the Plaintiff trapping her foot in the handrail if she slipped from the pool deck; and (j) Failing to provide a safety rail to prevent the Plaintiff from slipping over the edge of the pool deck and trapping her foot in the handrail.
In the case of the Council, the judge likewise held that the particulars relating to the failure to identify and address the risk posed by the handrail were established.[38] However, the particulars relating to the alleged inadequacy of inspections by the Council;[39] any danger posed by a slippery surface to the deck;[40] or failure to warn about such a dangerous surface, [41] had not been established. With respect to the failure to warn, she said that she could
safely infer … that because the Council did not appreciate the danger, it failed to warn Ms Balassone, or persons likely to access the pool, of it. However, Ms Balassone did not testify that she would have acted any differently had she been appropriately warned.[42]
[38]Reasons [100]. The relevant particulars were: (a) Failing to take reasonable care for the safety of the Plaintiff in all the circumstances; (c) Failing to identify the risk of injury posed by the premises to the Plaintiff; (f) Failing to identify the risk of the Plaintiff trapping her foot in the handrail if she slipped from the pool deck; and (g) Failing to provide a safety rail to prevent the Plaintiff from slipping over the edge of the pool deck and trapping her foot in the handrail.
[39]Reasons [101]. The relevant particular was: (b) Failing to inspect the premises and ascertain the safety of the premises.
[40]Reasons [102] and [104]. The relevant particulars were: (d) Failing to notice that the pool deck was slippery and posed a slipping hazard; (e) Allowing or requiring the Plaintiff to work from the pool deck when it knew or ought to have known that there was a risk of slipping; (i) Failing to heed warnings given by the Plaintiff of the dangerous nature of the pool deck; and (j) Failing to heed information given by the Plaintiff concerning prior incidents of slipping on the pool deck.
[41]Reasons [103]. The relevant particular was: (h) Failing to warn the Plaintiff of the risk of trapping her foot in the handrail if she slipped over the edge of the pool deck.
[42]Reasons [103].
In the result, her Honour found that both the Council and YMCA had failed to identify, and therefore respond to, the risk posed by the handrail. In response to the question, ‘what is the negligence of each defendant’ the judge said:
I have found that both defendants breached the duty of care owed to Ms Balassone in a similar manner. Both failed to identify the foreseeable risk of injury that the structure of the handrail posed and consequently, both failed to respond to the risk.[43]
[43]Ibid [105].
With respect to the issue of delegation, the judge emphasised that, as noted, while the Council had delegated some of its responsibility for running and maintaining the centre to YMCA, it continued to have concurrent obligations regarding the maintenance and safety of the premises. In particular, it had not delegated responsibility for the structure of the handrail. Moreover, given that the state of the deck surface was not implicated in Ms Balassone’s fall, the delegation for day-to-day running and maintenance could not be taken into account in apportioning blame.[44]
[44]Ibid [106]–[107].
The judge rejected a submission by the Council that the duty on YMCA as employer was more onerous than that of the Council as occupier, and as such more weight should be attached to it. In reaching that conclusion, the judge made the following remarks at [109] of the Reasons:
I agree with Mr Stanley [senior counsel for YMCA] that the real issue is not whose duty was more onerous — it is the conduct of each defendant and the causal potency of that conduct in relation to the circumstances of Ms Balassone’s damage that must be compared.[45]
[45](Footnote omitted) (emphasis in original).
This passage is subject to criticism by YMCA[46] within the context of ground 1 of the grounds of appeal.
[46]See [43] below.
The judge based her finding that each defendant should bear equal responsibility for damages on the following factors:
(a) Both had failed to appreciate the danger posed by the handrail and each consequently failed to respond to the foreseeable risk of injury.[47]
[47]Reasons [110(1)].
(b) Given that the Council had 25 years of either sole or joint control of the centre, having built the centre and operated it for about 16 years before contracting with YMCA to manage it, and thereafter retaining responsibility for structural matters and some matters of safety, it had no less experience in running the facility than YMCA. Far from being oblivious to the activities conducted in the centre, the Council took a ‘hands-on’ approach that was consistent with its contractual and legal obligations. The judge referred to that portion of the agreed summary of evidence given to the jury in relation to the contractual obligations between the Council and YMCA.[48]
(c) The judge rejected the Council’s submission that YMCA had greater expertise in running swimming pools and that the Council relied upon YMCA’s greater expertise. This was no answer to the failure of the Council to appreciate the risk in the 16 years during which the Council had sole responsibility for the running of and the state of the centre, including responsibility for the handrail. No evidence was adduced of any reliance by the Council on any expertise of YMCA, nor was any contractual term identified that was consistent with such reliance. Although the judge accepted that if YMCA had asked the Council to remediate the handrail danger, it would likely have done so, this did not excuse the Council from its own responsibility to identify and address the risk. Moreover, the reliance argument was inconsistent with the contractual and legal obligations, particularly the non-delegated responsibility in relation to the structure of the handrail which was retained by the Council. Nor could YMCA be blamed for failures arising from the independent safety audits and inspections which the Council conducted of the facilities.[49]
(d) Although YMCA had concurrent responsibility to identify foreseeable risks such as that posed by the handrail, it had no authority to make permanent alterations to the structure of the centre without the Council’s approval and consent. The judge observed: ‘Only the Council could make the ultimate decision about structural alterations’.[50] And indeed, after the incident, while YMCA installed a temporary barrier in the gap between the pool side and the handrail, as mentioned, it was the Council that installed an additional rail outside the pool as a permanent fixture.[51]
[48]Ibid [41] and [110(2)].
[49]Ibid [110(3)].
[50]Ibid [110(4)].
[51]Ibid. See [6] above.
The judge ordered that each defendant contribute in equal portions to the judgment sum of $240,810.00 entered in Ms Balassone’s favour, and adjourned the costs argument to 24 June 2015.
The grounds of appeal
The Council seeks leave to appeal in the contribution appeal on the following proposed grounds of appeal:
1. When apportioning contribution between YMCA and the Council in equal proportions, the primary judge erred by —
(a) not using the correct test;
(b) failing to attribute any liability for the Plaintiff’s fall as distinct from the Plaintiff catching her foot when she fell;
(c) failing to take account of the delegation of duty to the Plaintiff by the Council to YMCA in assessing contribution;
(d) assessing the level of experience of the Council and YMCA as equal;
(e) placing too much weight on the fact the Council performed its own audits;
(f) failing to find the Council relied upon the expertise of the YMCA in relation to the rail;
(g) failing to refer and act upon relevant evidence —
with the consequence that there was manifest error in the ultimate decision.[52]
[52]The words of the grounds of appeal have been adapted to refer to the applicant as ‘YMCA’ and the respondent as ‘the Council’.
The summaries of the proposed grounds as set out in the Council’s amended written case are worded in a slightly different manner as follows:
Ground 1 — the primary judge erred in failing to apply the correct test for apportionment.
Ground 2 — Her Honour erred in her conclusion that she was unable to say what caused the plaintiff’s initial slip or fall. The consequence was she did not consider YMCA’s liability for the plaintiff slipping on the deck or the plaintiff simply misjudging the edge of the pool in her apportionment of liability.
Ground 3 — As a result of her Honour not considering the slip or the reason for the plaintiff’s fall in her apportionment, she mistakenly did not consider the issue of delegation.
Ground 4 — the primary judge erred in finding the Council had no less experience in running the facility than YMCA.
Ground 5 — the primary judge erred in her reasoning in placing weight on the fact the Council performed its own audits.
Ground 6 — the primary judge failed to find the Council relied upon the expertise of YMCA in relation to structural matters.
Ground 7 — the primary judge erred in her decision as she did not take into account all of the evidence.[53]
[53]Ditto. The Council sought leave to amend the proposed grounds of appeal in its written case by including the underlined words. That application was not opposed by YMCA and therefore leave was granted.
There is a degree of overlap between many of the grounds of appeal.
The parties’ submissions
Ground 1: Whether correct test used
As foreshadowed above, the Council submits that the judge approached the issue of contribution on the wrong footing when she said:
I agree with Mr Stanley [senior counsel for YMCA] that the real issue is not whose duty was more onerous — it is the conduct of each defendant and the causal potency of that conduct in relation to the circumstances of Ms Balassone’s damage that must be compared.[54]
[54]Ibid [109] (footnote omitted) (emphasis in original). See [33]–[34] above.
This statement by the judge, the Council says, only addressed the second limb of the test for apportionment set out in Podrebersek v Australian Iron & Steel Pty Ltd.[55] While the first limb of that test deals with the degree of departure from the standard of care, the second limb is concerned with the relative importance of the acts of the parties. The High Court in Podrebersek said:
The making of an apportionment as between a plaintiff and a defendant of their respective shares in the responsibility for the damage involves a comparison both of culpability, ie of the degree of departure from the standard of care of the reasonable man and of the relative importance of the acts of the parties in causing the damage. It is the whole conduct of each negligent party in relation to the circumstances of the accident which must be subjected to comparative examination.[56]
[55](1985) 59 ALR 529 (‘Podrebersek’).
[56]Ibid 532–3 (citations omitted).
The Council submits that the judge, in failing to consider the nature of the duty owed by each of the Council and YMCA to Ms Balassone, and which duty was more onerous, failed to consider the degree of departure from that duty. The Council argues that the judge did not compare the respective degrees of culpability of each defendant, with the result that such an assessment did not form part of her determination on apportionment. While the Council accepts that both defendants were responsible for the hazard or ‘trap’ constituted by the handrail, it submits that the judge failed to compare the responsibilities of the defendants when it came to the cause of Ms Balassone’s fall, which required, so it is said, an examination of YMCA’s greater responsibilities for her as employer, regardless of whether she fell because she slipped on algae or overstepped and fell into the pool. The Council asserts that neither of those causes of the fall could be ascribed to any negligence on the part of the Council, and the judge erred because she did not undertake a comparison of the relative roles of the defendants with respect to the fall.
YMCA submits the Council’s focus on the judge’s remarks in [109] of the Reasons[57] fails to take into account her examination of the relevant principles and their application earlier in the judgment, as described above.[58] YMCA also points to those passages of the judgment where the judge addressed the relevant breach of duty and culpability of each of the defendants.[59]
[57]See [33] and [40] above.
[58]Reasons [22]–[25], [28]–[31]. In general, see [15] above.
[59]See Reasons [22], [24], [25], [105] and [110(1)]. See, for example, [15], [31] and [35(a)] above.
YMCA argues that the judge arrived at her conclusions after having undertaken the two-stage consideration required by the Podrebersek test. As she observed:
I have examined all of the relevant circumstances identified above. I have accounted for all of the conduct I consider to be relevant that constituted the negligence of each defendant. I have compared the respective degrees of culpability of each defendant and the importance of their respective acts and omissions in causing Ms Balassone’s damage. Howsoever the duty of care of each defendant arose, I consider it to be just and equitable that the amount of the contribution recoverable from each of them be equal.[60]
[60]Reasons [111] (footnote omitted) (emphasis added).
In my view, it is apparent that her Honour considered not only the respective importance of the defendants’ conduct but also their respective degrees of culpability. The views she expressed in her reasons were set against the concessions made by the parties, in particular, those made by the Council. Senior counsel in discussion with the judge identified the negligence for which the Council was responsible in the same terms as that applicable to the YMCA. He said:
We say … that the area of our negligence is our failure to appreciate that the rail was a hazard. … [T]he YMCA is in exactly the same position vis-à-vis the rail in terms of failing to appreciate it being a hazard.
He went on to maintain that, nevertheless, there were different degrees of culpability because the YMCA had been managing the centre for ten years, they were in a position to observe the rail for those ten years, they were experts at managing pool facilities, and so on, all of which indicated that for YMCA it was ‘a much more serious breach’. He emphasised that any negligence by the Council (which was conceded) only arose after the fall:
Our involvement comes about when the rail becomes involved in the accident which is after the fall takes place and before she hits the water so our negligence comes about because we did not recognise that the rail posed a risk. We can’t delegate that responsibility because that’s a responsibility not to do with the maintenance of a premises or the operation of a premises, it’s a fixed item that was there when [YMCA] took over the operation of the business.
So we’re still responsible in the sense we have not recognised it provides a risk but we say, insofar as that particular part of the aspect of the claim is concerned, the other defendant is also negligent for exactly the same reason.
…
I’m saying there’s no negligence up till the rail becomes involved in the accident … on our part.
It would appear that the Council treated the issue of what caused the fall as of considerable significance because it was on that issue that it particularly sought to differentiate itself with respect to culpability. The difficulty arose because once the judge had concluded that she could not make a finding on the cause of the fall and arrived at the view, as extracted above, that it was the state of the handrail and the absence of a barrier around the handrail that constituted a reasonably foreseeable risk that led to the injury,[61] the concession by the Council of the similarity in the parties’ positions with respect to the hazard of the handrail assumed critical importance.
[61]See [16] above.
I address the challenge to the judge’s failure to make a finding about why Ms Balassone fell under ground 2 of the grounds of appeal. But putting that challenge to one side, once the focus for the determination of liability became concentrated on the handrail, it was irrelevant that the duty YMCA had as Ms Balassone’s employer was more stringent. In general terms, the duty as employer is more stringent because it is not delegable[62] and because it extends to the whole system of work and not merely to the state of the premises. As the judge observed, the handrail was not directly the responsibility of YMCA, and so no attempt was made by YMCA to delegate responsibility for it.[63] In the circumstances of this case, once the focus lay on the hazard of the unguarded handrail, in my view the judge was correct to conclude that both the defendants shared the same degree of culpability by failing to identify that hazard and respond to the risk it posed.
[62]Andar Transport Pty Ltd v Brambles Ltd (2004) 217 CLR 424, 439–40 [34].
[63]The issue of factual delegation is discussed below.
Moreover, the matters relied on by the Council to indicate a difference in the degree of culpability, in the context of the handrail, were expressly referred to by her Honour and taken into account. These included the alleged greater expertise of YMCA in operating swimming pools and the Council’s reliance on YMCA’s expertise;[64] the fact that the YMCA had operated the centre for 10 years and the Council had not;[65] and issues which her Honour squarely faced and some of which she rejected.[66]
[64]Reasons [110(3)]; see [35(c)] above.
[65]Reasons [110(2)]; see [35(b)] above.
[66]The rejection of some of the matters is disputed under other grounds of appeal.
I reject ground 1 of the grounds of appeal.
Ground 2: Whether error in not attributing cause of fall
The Council submits that the judge erred in being unable to identify the cause of the fall and that, as a consequence, she did not consider, in her apportionment of liability, YMCA’s liability for Ms Balassone slipping or misjudging the edge of the pool.
The Council’s submission is that the judge failed to take into account four matters relating to the evidence in erroneously reaching her conclusion that she could not make a finding about what caused Ms Balassone to fall:
(1) Ms Balassone’s evidence that she slipped;
(2) Ms Balassone’s evidence that the deck was slippery;
(3) YMCA’s evidence about the state of the drains and the cleaning system; and
(4) The consideration that certain evidence was uncontested when indeed the evidence was contested.
In relation to the first category, the Council submits that the judge failed to have regard to two pieces of uncontradicted evidence given by the plaintiff, namely, that: (1) she slipped on the pool decking rather than taking a step too far; and (2) her insistence that she did not slip on a tile at the edge of the pool. The two passages of evidence pointed to by the Council (underlined in the passages set out below) were included in extracts from the transcript of cross-examination set out by the judge in her reasons:
Q: You can’t recall just how it happened, can you?
A: I know that I slipped.
Q: What you slipped on you don’t know, do you?
A: No, and I’ve said that.
Q: Here you have told the authorities responsible for receiving your claim form that — not that you had slipped on the pool decking, but that you slipped off the pool decking, didn’t you?
A: Yes.
Q: And that, I suggest to you, is exactly what happened: you slipped off the pool decking, didn’t you?
A: My recollection is that I slipped and fell face forward into the pool, into the water. That is my recollection.
Q: What I’m suggesting to you is you slipped not on the pool decking as such, but on the tile at the very edge?
A: Well I don’t agree with that and I haven’t said that. I haven’t said that I’ve slipped on a tile.
Q: You haven’t said you slipped on the decking either?
A: Pool decking.
Q: You said you slipped off - - -?
A: Pool decking.
Q: The pool decking?
A: OK.
Q: Not on it?
A: OK.
…
Q: …. What I suggest to you is what happened here was that you, whilst looking at the child you were assessing, in effect took one step too many and what happened then was your foot slipped on the very edge of the tile and that’s how it slipped down between the edge of the pool and the handrail. Isn’t that the case?
A: I disagree.
Q: In what respects do you disagree?
A: Well, I believe I slipped on the pool decking, fell face forward into the pool. In the process of that at some point my foot became trapped. And, again, I’ve said that all I can recall is a sensation of a grab and I ended up face down. It was a very quick instance and I was in a lot of shock and panic, being face down underwater and not being able to recover.[67]
[67]Reasons [61] (footnote omitted) (except for underlining, emphasis as in the original).
The Council also points to the judge’s rejection of Ms Quinn’s evidence that Ms Balassone was walking backwards at the time. Further, the Council submits, the judge failed to consider Ms Balassone’s evidence that there had been problems with slipperiness and pooling of water on the pool decking, which had been the subject of complaint by her, and the attempts that had been made to ameliorate the problems.
In relation to the second category (Ms Balassone’s evidence that the deck was slippery), the Council submits that the judge failed to have regard to 12 pieces of evidence given by the plaintiff, all in examination-in-chief save for the last item given in cross-examination, as follows:
(1) That Ms Balassone had expressed concerns with the pooling of water on the deck and she had observed ‘slime’:
Q: When did you first express concerns, approximately?
A:It was some time — not long after I had commenced at Eltham. I commenced in February 2001 and it was some short time after that.
Q: What concern or concerns did you express?
A:The pooling of water on the pool deck made it particularly hazardous for young children, they move very, very quickly and I had observed a number of them slip over in the pooling of the water and then I had also observed some black and green — I can only call it slime in different areas of the pool deck which also I had observed particularly — particularly children would slip over and you could sometimes see the skid mark through that area.[68]
[68]Ibid [51].
(2) That Ms Balassone had previously experienced problems with slipping on the deck:
Q: Have you experienced any problems yourself with slipping?
A:From time to time, yes, I had lost my footing but I’d never actually fallen over so I’d been able to correct myself, correct my position.[69]
[69]Ibid.
(3) That Ms Balassone had expressed her concerns to her duty manager and others:
Q: Who did you express concerns to?
A:It would be the duty manager on duty from time to time or it would be a lifeguard. If I saw or observed that a patron had slipped or fallen and had required medical attention I would call them over and pointed out to them that they had gone over, required attention and it appeared to be in a particular area and I had also mentioned it to the aquatic managers, education directors, they were given different names through the time that I was there.
(4) That Ms Balassone had observed patrons slipping or falling on the surface of the deck as supported by the evidence extracted immediately above.
(5) That YMCA had responded to Ms Balassone’s complaints by scrubbing the area with a scrubbing brush:
Q:Now, did anything happen that you observed as a result of your complaints?
A:On occasion, not always. A junior staff member would be sent out with a hardwire brush or scrubbing brush and they would give the area a bit of a scrub or they would push the water away and they would use some pool water to then rinse, particularly the slimy areas off, and that would generally end up in the pool.[70]
[70]Ibid [52].
(6) That the scrubbing and hosing would alleviate the problem in the short term but that the problem would return after a few days:
Q:Did the scrubbing and the hosing off do anything to alleviate the problem from your observations?
A:In the short-term it would for a few days and then it would be back again.[71]
[71]Ibid.
(7) That if there was pooling of water YMCA’s employees would come out and sweep some of the water away. When asked what would be removed with the scrubbing brush, Ms Balassone said:
They’d give it a bit of a scrub and … [t]ake the worst of the slime off, or the — or they’d sweep a lot of the water off. So it depends on where I was — which particular part of the pool deck I was talking about at that particular time. So if we were talking about the pooling of water, occasionally they would come out and sweep some of the water away. If I was talking about the slime, they’d come out occasionally — not all the time — and give the area a bit of a scrub.
(8) That Ms Balassone was aware the deck was slippery and there were always extra water and slime spots:
Q:On the day that you got injured, 23 April, are you able to say anything about the nature of the pool deck that you were required to walk on?
A:That there was a lot of water on the pool deck. It was something that you — it was just always there. You were aware that it was slippery, you were aware that it was holding a lot of water, you were aware that there were slime spots and you just took extra care whenever you walked around.
Q:How were you aware that there was — we’re talking about 23 April. How were you aware that there were slime spots?
A: Because they were always there.
Q:Well, I’ll ask you this. In all the time you’re there and apart from the odd person giving a bit of a scrub that would last for a couple of days, did anything else happen to your observations to alleviate the problem?
A: No.
Q: Did that problem ever get better?
A: No.[72]
[72]Ibid [54].
(9) That Ms Balassone had seen green slime in the area where she slipped on other occasions:
Q: The area where you indicate where you slipped …
A: Yes.
Q: … had you ever seen black or green slime there on other occasions?
A: Green slime, yes.[73]
[73]Ibid [55].
(10) That Ms Balassone said there was an awful lot of water on the pool deck:
Q:Now, is there any other reason that you can think — possible reason that you can think of why you slipped, other than the nature of the surface that you were walking on?
A: There was an awful lot of water on the pool deck.[74]
[74]Ibid.
(11) That the pooling of the water extended right up to the tiling. On being shown a photograph of the pool decking and asked about the water shown in it, Ms Balassone said:
That’s indicative of some of the water that was on the pool deck. But the water actually extended right up to the tiling.
(12) That Ms Balassone saw and reported slipping incidents. In cross-examination, it was put to her that there was a special rubberised non-slip surface, which she accepted was rubberised but she said:
I can advise you that my experience was that I observed slips and falls on that surface during the time of my employment.
The third category raised by the Council (the YMCA evidence), relates to evidence from Susan Lees, who was YMCA’s operations director and assistant manager of the centre at the time of the accident. She had left employment with YMCA in 2008. The Council contends that the judge did not properly consider the following parts of Ms Lee’s evidence:
(1) That the drains were not providing a proper collection and drainage system for the water on the deck. On being shown, during cross-examination, a photograph of the pool deck taken shortly after the incident, the following exchange took place between Ms Lees and senior counsel for Ms Balassone:
Q: It shows pooling of water?
A: Yes.
Q:Which means the drains weren’t providing a proper collection and drainage system for the water on the deck?
A:Yes.
(2) That YMCA was unsure of the timing of the cleaning of the pool deck. The following exchange again took place during Ms Lee’s cross-examination in relation to cleaning the pool deck in sections, commencing with a clarification sought by Judge Murphy:
HIS HONOUR:
Q: About when did it happen?
A:I’ve been running the routine maintenance schedule from 2000, so whether it was the year 2000 or whether it was later — ‘cause that routine maintenance schedule kept — we kept adding to it.
Q:But what would the worker do? How did it work? You weren’t doing it yourself?
A:I used to, yes.
Q:So how would you do it. You’d pick a chunk of the pool deck and what would happen?
A:We’d hose the deck down, we’d dilute the sodium hypochlorite and get a hard brush and scrub the areas that needed it and then hose down the drains.
Q:And then, what, a week or a month later you’d move to the next section? Or how did you get around the pool?
A:Well, it was sort of — I don’t know the exact timing whether it was each week we did a different section or every couple of weeks we did a different section.
Q:But you’re running the show?
A:Yes, but I haven’t seen the checklist for quite a while.
Go on.
SENIOR COUNSEL:
Q: Well you can’t say with any accuracy the frequency with which you did this?
A:No.
Q:And the algae would be — but it was only after the algae appeared, the discolouration appeared, that you would do it in any event are you saying?
A:Yes.
Q:And you’re not able to say whether it was straight after the algae appeared that the chemicals were used?
A:I couldn’t definitely say.
Q: Were you aware that that algae completed [sic] a slipping hazard?
A: Yes.
(3) That YMCA was unsure about the timing and rigour of the cleaning regime. The following evidence was given by Ms Lees in cross-examination:
Q:Did you ever observe any chemicals being put on the pool deck?
A:Yes.
Q: When was that?
A: After close, after 10 o’clock at night.
Q: After 10 o’clock at night?
A: Yes.
Q: But when was it in relation to 2005?
A: I couldn’t definitely say.
Q:On how many occasions did you observe chemicals being put on the pool deck?
A:Would have been numerous times, but I wouldn’t know the dates.
Q: Was that spot cleaning or cleaning the whole pool deck?
A: Sections of the pool deck.
Q: Just sections?
A: Yep.
Q: So it was spot cleaning. And at what ---?
A: Large spots.
Q: What intervals did you actually observe?
A: Oh, I couldn’t say.
Q:In all the maintenance reports is there any mention at all of any cleaning of the pool deck with chemicals in any of the maintenance records of the YMCA?
A:I’m not sure.
Q:Have you had a look — well, you’re not aware of any? When you say you’re not sure?
A: I’m not sure what’s on the sheets. On the checklist sheets.
Q:Well, we haven’t — there’s been discovery in this case. We haven’t been provided with anything suggesting that, as far as maintenance was concerned, chemicals were used on the pool deck. Is that the normal thing that you would record in your maintenance records?
A:Yes, it would be.
Q:Well, I ask for the production of any record at all for the YMCA, or indeed the second defendant, concerning the application of chemicals on the pool deck as far as — well, just that, Your Honour. I don’t expect it right now, but in due course.
HIS HONOUR:
Q:I just want to get this clear. You gave evidence that at some stage you divided the pool deck into sections. Is that right?
A: Yes.
Q: That was at your instigation?
A: Yes.
(4) That there were many fall and slip incidents in the centre. Again, evidence was given by Ms Lees during cross-examination in the following exchange:
Q:Was there any enquiry made as to the reasons why people were slipping or falling?
A:I couldn’t definitely say.
Q:Those monthly reports were weighted very heavily with facts indicating that many people were slipping and falling, were they not?
A:What do you classify as many?
Q:Well, what do I classify as many — for example, August ‘05, 30 incidents reported, of which fall/slips were 11, and of those 30 incidents, ten happened in the main pool, six happened in the play pool. I’ve just picked August at random. Now, that’s what I mean by many?
A:Yeah.
Q: That’s many, isn’t it?
A: That — that’s many.
The fourth category raised by the Council relates to what it submits are erroneous findings about three uncontested facts:
(1) The finding that ‘Ms Balassone does not know precisely where her feet were at the time she slipped’,[75] when Ms Balassone gave the following evidence-in-chief:
[75]Ibid [80(7)]. See [23] above.
Q:As you were walking down the side of the pool were you conscious of railings at the end of the pool?
A:I was conscious of the end of the pool, yes, and the railings, yes. I’d spent a lot …
Q: Were you aware …
A: Of time in that pool.
Q: Were you aware where you were at all stages?
A: I’m sorry?
Q: Were you aware where you were at all stages?
A: Yes, I was.
(2) The finding that ‘Ms Balassone had never had any difficulties traversing this particular area in the period of the previous five years, during which time she would have tread the same path many times’,[76] when Ms Balassone gave the following evidence-in-chief:
[76]Ibid [80(15)]. See [23] above.
Q: Have you experienced any problems yourself with slipping?
A:From time to time, yes, I had lost my footing but I’d never actually fallen over so I’d been able to correct myself, correct my position.
(3) The judge’s finding that, ‘[f]rom time to time, there would be areas where algae grew or slime developed or gathered. However, there was a daily routine for cleaning and maintaining the pool and its surrounds. Chemicals were regularly used to disinfect the decking and remove any algae’,[77] when Ms Lees gave the evidence set out above[78] about her uncertainty about the frequency of cleaning with chemicals or how long after cleaning the algae re-appeared.
[77]Ibid [80(19)]. See [23] above.
[78]See [56(2)] above.
The Council submits that it was the judge’s failure properly to consider these four categories of evidence which in turn led to her failure to draw the inference that Ms Balassone slipped on the decking because of algae or slime or water, which would have resulted in a finding that YMCA was negligent in allowing the decking to become a slipping hazard. Moreover, had Ms Balassone not slipped on the deck, she would not have been injured by the hazard of the unguarded handrail.
The Council acknowledges that this is an unusual case in that the judge had to engage in what it accepted was a far from easy task of determining how the jury reached the finding that both defendants were negligent given the evidence of what the Council says were, in essence,[79] two scenarios: one in which Ms Balassone slipped on something such as slime or algae and fell, or the other possibility, which was that she simply walked off the edge of the pool. The Council submits that both alternatives result in a greater share of responsibility falling to YMCA because in each alternative Ms Balassone was undertaking her employment task in very close proximity to the pool. The Council argues that YMCA’s system of work was clearly deficient in that it failed to specify a safe method for teaching students in the pool, instead leaving it to each teacher to undertake the teaching task as he or she saw fit. Moreover, it was YMCA, not the Council, that was in a position to observe Ms Balassone at the pool as she undertook her teaching and had the responsibility for training her in safety measures.
[79]The Council’s submissions on appeal were that, of the four competing theories, theories (i) and (iv) in [77] of the Reasons were effectively the same, while theories (ii) and (iii) were the same. See [21] above.
In response, YMCA says that the judge was simply unable to reach a conclusion about how Ms Balassone came to fall, given the contradictory state of the evidence. It points to the following evidence of Ms Balassone noted by the judge in her reasons:
(1) That Ms Balassone did not notice discolouration in the area where she slipped as demonstrated by her evidence given during evidence-in-chief:
Q: Did you actually notice any discolouration in the area where you slipped on that day?
A: I wasn’t particularly aware of it on that particular day, no.[80]
[80]Reasons [54].
(2) That Ms Balassone did not know what she slipped on. During an exchange during her cross-examination, at what the judge described as ‘a tense moment’, Ms Balassone said:
Q: You can’t recall just how it happened, can you?
A: I know that I slipped.
Q: What you slipped on you don’t know, do you?
A: No, and I’ve said that.[81]
[81]Ibid [61] (emphasis in original).
(3) That Ms Balassone during cross-examination agreed she did not refer to ‘slime’ on her claim form:
Q: Can we just turn over the page to question 21. It asks, ‘What happened that caused or contributed to your injury or condition?’ and you were asked then to include information about any objects, people or chemicals or stress factors, et cetera, that may have contributed to your injury. And all you’ve done is put a dash?
A: That’s correct.
Q: No mention there of a slippery pool deck. No mention there of any slime, green or black, is there?
A: No.[82]
[82]Ibid.
(4) That Ms Balassone again during cross-examination could not explain how she could have slipped and fallen forward when she had been walking ‘very slowly’:
A: I was walking very slowly.
…
Q: Can you explain to the jury how you could slip and fall forward, walking at that pace?
A: No.[83]
[83]Ibid [62].
(5) That Ms Balassone conceded during cross-examination that she was not watching where she was going when she fell:
Q:You came to the edge of this deck without realising you’d come that far, because your attention perhaps was being directed to the child in the water?
A: I was watching the child in the water, yes.
Q: And you weren’t watching precisely where you were going, were you?
A: No, I was watching the child in the water.[84]
[84]Ibid [63].
(6) That Ms Balassone had not previously had a problem in the area where she fell:
Q: Ms Balassone, you, I take it, must have walked up and down the edge of this pool over the five years or so you were working there as a teacher on many, many, many occasions?
A: Yes.
Q: Hundreds or thousands even?
A: I would not have said that many but I had walked that pool deck a number of times, yes.
Q: Indeed, on the day in question, you’d been working on the pool deck since you started work?
A: Yes.
Q: What time did you start work that morning?
A: I think it was nine am, I think.
Q: So you’d been about three-quarters of an hour or so on the job before the incident happened?
A:Yes.
Q: In general, your use of that area of the pool would be to assess and/or teach students, is that so?
A: At different times over the four years, yes.
Q: And over the whole of that time, you’d never had any problem with the end of the pool where this accident happened on this occasion?
A: No.[85]
[85]Ibid [65].
YMCA submits that the process engaged in by the judge of identifying the four competing theories, arriving at uncontested facts, and then reaching her conclusions, was not surprising given the indications to that effect given by her in lengthy discussions with counsel during the contribution hearing, and the acknowledgements made by senior counsel for the Council at that time. For example, the issues were canvassed in the following exchange:
HER HONOUR: … I’m just saying I can’t find there to be anything negligent in the conduct of either of the defendants in relation to the antecedent fall or slip, or how it was that the plaintiff ended up there, other than to say there was no barrier to stop her going in.
SENIOR COUNSEL: If Your Honour —
HER HONOUR: That’s all the evidence would permit me to say.
SENIOR COUNSEL: If Your Honour feels compelled to reach that conclusion, that is entirely a matter for Your Honour.
HER HONOUR: Well, no, I’m sorry, I’m sounding aggressive. I didn’t mean to, but I’m really just trying to articulate what the evidence is and how I feel I would be falling into an error on the fundamental reasoning process for drawing inferences. And there has got to be some facts, matters or circumstances that would make the theory most likely when in this case you can’t even say what the theory is, and nor could you because the plaintiff can’t say.
SENIOR COUNSEL: Yes.
HER HONOUR: She’s honestly said, look, I just don’t know why. I don’t know what position — I don’t know where my foot was. We’ve got none of that sort of detail to help us. So on that basis, … there is no negligence identified against either defendant, then it can’t be — whether it’s occupier, owner or employer — there’s no negligence established in relation to that. So it could only be in relation to the preventing her from going under, into the water and trapping her leg.[86]
[86]Emphasis added.
Although counsel then urged the judge to find on the evidence that it was possible to identify a reason as to why Ms Balassone slipped, he acknowledged that he was not ‘necessarily putting … that it’s strong evidence’ and the evidence may ‘not be compelling’. In my opinion, these concessions were properly made.
In my view, her Honour did not err by failing to draw the inference on causation that the Council was inviting her to draw. As she observed, the fact that some of the evidence supported the theory proposed by the Council was not sufficient to demonstrate that it was the more likely theory, especially in the absence of evidence from any other eyewitness to the incident. In particular, the evidence of the occasional presence of algae or slime on the pool deck was of little assistance when Ms Balassone gave evidence that she could not recall any algae, or pooling of water, on the deck before the incident. Her evidence was that she did not know what she slipped on[87] and, as mentioned,[88] there was no reference to slime in the document in which Ms Balassone first reported the incident. She did not independently complain about a slipping hazard in the vicinity of the pool on the day of the incident. There was no other evidence, such as skid marks or other signs, to indicate that on the morning of the incident there was algae, or undue pooling of water, on the area of the pool deck where she slipped. Indeed, the unsatisfactory nature of the evidence meant that it could not even be inferred precisely at what spot Ms Balassone slipped.
[87]See [60(2)] above.
[88]See [60(3)] above.
Moreover, evidence about the state of the drains and the cleaning system may have assumed importance if the judge had otherwise been able to find that Ms Balassone had fallen into the pool because she slipped on algae or slime, or due to there being pools of water where she fell. But she was unable to arrive at those findings on the state on the evidence and, for the reasons I have given, I consider that she did not err in being unable to arrive at those findings.
Furthermore, the judge remained unconvinced about any alleged inadequacy in the system of work, including any inadequacy with respect to training, or warning, about the dangers of teaching at the pool side that might have adverted Ms Balassone simply walking off the edge of the pool, if that was what happened. The judge observed in discussions with senior counsel for the Council:
Now, just trying to narrow the issues — if it is not open on the evidence to say that it was the system of work that was at fault — and I don’t know how I could infer that from the evidence, but if it is an inference that you’re inviting me to draw … I require you to point to the evidence that would admit of that conclusion because I am inclined to say there is no evidence, but I might be wrong there. So I’m putting the … burden on you in relation to that.
On the following day the judge had a further exchange with senior counsel for the Council about the lack of evidence pointing to an inadequacy in the system of work:
HER HONOUR: … could we just stay with the pleadings for a moment and the evidence? If we go back to p 7, paragraph 11, the way the case is put against the YMCA, there was no evidence as to what the system of work was, subparagraph (a)?
SENIOR COUNSEL: I accept that —
HER HONOUR: Let’s just go through it because I appreciate that you’ve got to look at it in the light of the pleadings but most of what’s in those pleadings didn’t end up being the subject of evidence.
SENIOR COUNSEL: I appreciate that and I’m mindful of Your Honour’s comments yesterday evening about how the evidence relates to what in fact allegations were put et cetera and I want to take Your Honour to the evidence now as to what it in fact related to.
HER HONOUR: So, for example, failing to notify or failing to warn, there’s no evidence there was a failure to warn, there’s just no evidence on that at all.
SENIOR COUNSEL: I appreciate that, Your Honour.[89]
[89]Emphasis added. On the particulars of negligence see [29] above.
The judge expressly addressed the allegation that there was a failure to warn and held that it was not material:
Particular (l), concerns a failure to warn. There was no evidence that the YMCA failed to warn Ms Balassone of the danger referred to. I can safely infer however that, because the YMCA did not appreciate the danger, it failed to warn Ms Balassone of it. However, Ms Balassone did not testify that she would have acted any differently had she been appropriately warned.[90]
[90]Reasons [96].
Moreover, the fact that the judge may have described some parts of the evidence as uncontested, when there was some other evidence which was at odds with it, was of no consequence when much of the evidence was unsatisfactory and went in different directions.
In my view, it is not sustainable to submit that the judge erred in failing to identify the cause of the fall. I consider that her Honour was correct in identifying the four possible theories of causation and in eliminating each one of them in light of the conflicting nature of the evidence adduced at the trial. While there was some evidence in support of each theory, they were competing theories, and it was necessary for the Council to demonstrate that one of those theories was the more probable in light of the evidence overall. This the Council was unable to do. The unsatisfactory nature of the evidence, as set out above, demonstrates the difficulties the Council faced. In those circumstances, the judge quite properly identified, as the fundamental failure by both the Council and YMCA in the circumstances of the case, the fact that neither of them recognised the hazard posed by the unguarded handrail.
I consider that the judge was correct in rejecting the proposition proffered by the Council that YMCA was negligent in allowing the deck to become a slipping hazard, which was a cause of Ms Balassone’s fall. I consider that the judge did not err in being unable to make a finding, on the evidence, as to what caused Ms Balassone to fall.
I reject ground 2 of the grounds of appeal.
Ground 3: Failure to consider delegation of duty by the Council to YMCA
The Council submits that the position taken by the judge on the issue of factual delegation, when considering apportionment, was at odds with that laid down by the Court of Appeal in the earlier appeal, when that Court said:
(1) A provision of the contract required YMCA to take out insurance on behalf of the Council, and any failure to have done so would enable the Council to seek an indemnity for breach of contract; and
(2) The Council had delegated its duty as occupier to YMCA under the contract and therefore YMCA was responsible for occupational, health and safety matters in the centre, especially where Ms Balassone was an employee of YMCA.[125]
[124]Hall & Wilcox, the solicitors for YMCA, were also instructed to act for the Council on 21 June 2010 until Minter Ellison was appointed on 19 August 2010 to act for the Council.
[125]Costs Reasons [21] and [22].
The judge noted that the relevant contractual clause relied on by the Council was cl 9.2.1 in the ‘General Conditions of Contract’ between the Council and YMCA, which provided:
The Contractor [YMCA] must, at all times during the Contract Term, be the holder of a current [public] liability policy of insurance (‘The Public Liability Policy’), in the joint names of the Contractor, its sub-contractors and the Council providing coverage for an amount per event of at least that stated in the Annexure.[126]
[126]Ibid [36].
Clause 9.2.1 further provided:
The Public Liability Policy must —
9.2.1.1 be effected with an insurer; and
9.2.1.2cover such risks, and be subject only to such conditions and exclusions, as are —
approved by the Supervisor.
By 10 January 2011, Ms Balassone had rejected a statutory offer and had served a statutory counter offer on YMCA for $120,000 plus retention of compensation and costs. The offer was open for 21 days. A copy of Ms Balassone’s counter offer was served on the Council by YMCA together with its Calderbank letter (dated 17 January 2011) in the following terms:
We refer to our telephone conversation on 12 January 2011.
We are instructed that the employer [YMCA] is willing to contribute 60% to any settlement of the worker’s action up to $120,000, or 60% of any judgment.
This offer as to contribution is open for acceptance for a period of 21 days from the date of this letter.
Should the offer not be accepted and this matter proceed to hearing and a judgment is given which is more favourable to the employer, then the employer shall rely on this letter and invite the court to exercise its discretion in accordance with the principles enunciated in Calderbank v Calderbank [1975] 3 All ER 333 to make an order as to the costs of the proceeding from the date of this letter.
Please confirm you have instructions to accept this letter on behalf of Nillumbik Shire Council.
We enclose a copy of the letter from Maurice Blackburn Lawyers dated 10 January 2011, enclosing the statutory counter offer.
If you have any queries, please contact the writer.
On or about 16 February 2011, Ms Balassone commenced her proceedings in the County Court naming both YMCA and the Council as defendants. On 17 February 2011, the Council’s solicitors wrote to YMCA rejecting the offer in the following terms:
We refer to your letter of 17 January 2011.
As indicated during the statutory conference our client is not prepared to make any offer of contribution and does not believe it has any liability.
We also note we have joined the Victorian YMCA Community Programming Pty Ltd as a third party to the proceedings issued by the Victorian WorkCover Authority pursuant to Section 138 of the Accident Compensation Act.
On 4 March 2011, YMCA served a Notice of Contribution on the Council and on 7 March 2011 it filed its Defence.
On 15 March 2011, YMCA served an Offer to Contribute under r 26.10 of the County Court Civil Procedure Rules 2008 in the following terms:
TAKE NOTICE that the first defendant [YMCA] offers to contribute sixty per cent (60%) towards a compromise or judgment of the claim made by the plaintiff, plus sixty per cent (60%) of the plaintiff's costs.
This offer to contribute is served pursuant to and in accordance with Rule 26.10 of the County Court Civil Procedure Rules 2008.
This offer is open to be accepted by the second defendant for 14 days from the date of the offer.
Of course, as circumstances transpired, the contribution YMCA is obliged to make is less than the 60% contribution of any judgment entered for Ms Balassone that it had offered in either the Calderbank letter or the Offer to Contribute.
On 16 March 2011, the Council’s solicitors filed a Notice of ‘Person Liable in Respect of Damage Claiming Contribution Against Another’ dated 15 March 2011 (‘the Council’s Notice of Contribution’), which attached a statement of claim pleading YMCA’s contractual obligations in relation to safety and maintenance, and public liability insurance.
A letter dated 8 April 2011 was sent by the Council’s solicitor to YMCA’s solicitor acknowledging receipt of the Offer to Contribute. The solicitor for the Council, Olivia Warwick, has deposed that:
At all times the Second Defendant [the Council] required copies of the insurance policy in place as at the date of the Plaintiff’s accident to review the wording of the policy in order to satisfy itself that the description of the insured in the policy did not cover the Second Defendant. The First Defendant [YMCA] has at no time produced a copy of the policy.[127]
[127]This affidavit is described further below.
On 13 May 2011, YMCA’s solicitors served a Defence to the Council’s Statement of Claim dated 9 May 2011 which admitted the contractual terms between the Council and YMCA, but in [5] pleaded further that:
a. it was a term of the agreement that the Public Liability Policy must cover such risks, and be subject only to such conditions and exclusions, as are approved by the Supervisor (clause 9.2.1.2 of the General Conditions of Contract);
b. the Supervisor did not approve any risks, conditions and exclusions as required for the operation of clause 9.2.1; and
c. the second defendant knew or ought to have known of the matters alleged in paragraph (c) [sic] above;
Particulars
The Supervisor was an employee and agent of the second defendant. He was identified in the Agreement to be Mr Garry King, Manager Facilities and Contract Support (clause 1.1, and the annexure of the General Conditions of Contract) and by clause 1.4.7 of the General Conditions of Contract was explicitly permitted to perform his powers under, inter alia, clause 9.2.1 of the General Conditions of Contract in the interests of the second defendant.
In response to the Council’s allegation in [6] of its Notice to Contribute that YMCA had breached its contractual obligations by failing to effect and keep in force a policy of public liability insurance, YMCA pleaded:
As to paragraph 6:
a.It admits that it did not effect and keep in force a public liability insurance in the joint names of the first defendant, its subcontractors and the second defendant;
b.It says that by reason of the matters alleged in paragraphs 5(a) to (c) above, its failure to do so did not amount to a breach of clause 9.2.1 of the Agreement, alternatively the first defendant waived any entitlement to damages for breach of clause 9.2.1 of the agreement;
c.Alternatively, it was a term of the agreement that if the first defendant failed to comply with its obligations under clause 9.2.1, the second defendant was entitled to require payment by the first defendant to the second defendant of the premium for any such policy (clause 9.4.3.1), which step the second defendant did not take; and
d. It otherwise denies the allegations in paragraph 6.
As noted above,[128] the Court of Appeal held that Judge Murphy was wrong to have found that YMCA had breached its contract with the Council and that the Council was entitled to be indemnified by YMCA against its liability to Ms Balassone and the VWA. In doing so, the Court of Appeal inferred that ‘a public risk policy in which the Council was named as insured was produced [by YMCA] to the Supervisor and was approved’,[129] but that the Council had not established that any such policy would have responded to a claim for damages made by an injured employee of YMCA.[130] In the analysis that led to this conclusion, the Court of Appeal observed that the issue of maintenance and repair of structural components of the centre was within the scope of responsibility of the Council,[131] and that the Council held its own public risk insurance attached to the centre.[132] Moreover, there were reasons to do with containment of the cost of insurance which explained why it was probable that YMCA’s public liability insurance would not extend to coverage for claims such as this: on YMCA’s part, such matters should be covered by its accident compensation insurance,[133] while on the Council’s part, it would be to its net advantage under the profit sharing arrangement with YMCA for it to cover such claims under its own public liability insurance rather than requiring YMCA to take the more expensive step of extending YMCA’s policy.[134]
[128]See [13] above. See Victorian YMCA Community Programming Pty Ltd v Nillumbik Shire Council [2014] VSCA 197 [16(1)].
[129]Victorian YMCA Community Programming Pty Ltd v Nillumbik Shire Council [2014] VSCA 197 [42]. The Court of Appeal observed that the Council’s letter of 26 June 2001, and the subsequent execution of the contract, supported the inference.
[130]Ibid [53] and [55].
[131]Ibid [49].
[132]Ibid [33(13)] and [49].
[133]Ibid [50].
[134]Ibid [51].
The judge’s findings
In arriving at her ruling on costs, the judge referred to the well-established principles set out in Hazeldene’s Chicken Farm Pty Ltd v Victorian WorkCover Authority [No 2],[135] as well as to statements in Commissioner of State Revenue v Challenger Listed Investments Ltd [No 2][136] about the reasonableness of rejecting an offer that is not a genuine attempt to compromise, but rather ‘an invitation to capitulate or a derisory or nominal offer.’[137]
[135](2005) 13 VR 435, 441–3 [23]–[29] (‘Hazeldene’).
[136][2011] VSCA 398.
[137]Ibid [13].
The judge also set out the provisions of r 26.10,[138] the rule governing offers to contribute, but the version she included was that applicable in 2015, and not that applicable in March 2011.[139] The County Court Civil Procedure Rules 2008 as at 1 January 2011 provided:
[138]Costs Reasons [42].
[139]Senior counsel for YMCA submits that nothing turns on that for present purposes.
26.10 Offer to contribute
(1) Where in any proceeding a defendant makes a claim (in this Rule called a contribution claim) to recover contribution or indemnity against any person, whether a defendant to the proceeding or not, in respect of any claim for a debt or damages made by the plaintiff in the proceeding, any party to the contribution claim may serve on any other party to the contribution claim an offer to contribute toward a compromise of the claim made by the plaintiff on the terms specified in the offer.
(2) The Court may take an offer to contribute into account in determining whether it should order that the party on whom the offer to contribute was served should pay the whole or part of—
(a) the costs of the party who made the offer;
(b) any costs which that party is liable to pay to the plaintiff.
(3) Rules 26.04 and 26.05, with any necessary modification, shall apply to an offer to contribute as if it were an offer of compromise.
The judge held that the Calderbank offer (dated 17 January 2011) in the circumstances of the case was ‘just too early’.[140] Ms Balassone had not yet filed her Writ, which she did on 16 February 2011. The Calderbank offer was also served before YMCA had filed any pleadings, and there was no formal discovery or interrogation. The time frame for the Council to consider the complex issues raised by the case was too short. The prospects of success for Ms Balassone could not be known given the early stage of the proceedings, when the pleadings and interlocutory steps had only commenced. Nor did the offer explain why the two grounds enunciated during the statutory conference[141] (breach of contract and delegation) were wrong in fact or in law. Finally, the letter did not put the Council on notice that indemnity costs would be sought. Given all these factors, the judge concluded that:
It was simply too early to make a reasonable decision whether to accept or reject the offer, and given the early timing, the offer lacked any legal or factual information such as may assist the offeree to decide whether to accept or reject it.
There was no burden on the Council to ask for further information or clarification. The offer had to be interpreted on its face. It stood or fell on its own and, if necessary, by reference to any other documents incorporated, but there were none.[142]
[140]Costs Reasons [46].
[141]See [121] above.
[142]Costs Reasons [52]–[53].
Similarly, the judge held that the Offer to Contribute was too early and lacked explanation of law and fact to assist the Council to determine whether it should be accepted. The judge said that the contractual provision provided a prima facie basis for the Council’s position that it ought to have been covered by insurance taken out by YMCA, and failing such insurance, the Council was entitled to seek damages or indemnification from YMCA to the extent of the breach of contract.[143]
[143]Ibid [57].
As a result, the judge rejected YMCA’s application that she exercise her discretion to depart from the usual costs orders. She ordered that:
1.The defendants contribute to the plaintiff’s party/party costs in equal shares.
2.Each defendant bear its own costs of the proceeding, including the contribution proceeding, subject to order 3.
3.The Council (2nd defendant) pay the YMCA’s (1st defendant) costs of today’s hearing.
The grounds of appeal
The proposed ground of appeal in respect of which YMCA seeks leave to appeal against the costs orders are:
1. When declining to give any effect to the applicant’s [YMCA’s] Calderbank Offer dated 17 January 2011 and/or Offer to Contribute dated 15 March 2011 in respect to costs orders made following trial, the primary judge erred by —
(a) failing to take account of relevant principles;
(b) mistaking the facts;
(c) failing to refer to and act upon relevant evidence; and
(d) being guided by extraneous or irrelevant matters —
with the consequence that her Honour’s exercise of discretion miscarried.
YMCA also asks this Court to set aside the judge’s orders and to re-determine for itself what costs orders should be made.
The parties’ submissions
In summary, the position taken by YMCA is that the Council adopted an unreasonable stance in rejecting outright the Calderbank offer and the Offer to Contribute, and by not making allowance for the risk that the public liability policy of insurance might never be found, and even if located, it might exclude the relevant risk because of the operation of workers’ compensation insurance. Nor were the two offers premature; in the context of negotiations between the defendants, the Council’s solicitor was in a position in 2011 to make a broad brush assessment of the chance that the insurance required by cl 9.2.1[144] was not insurance which covered the risk which in this case occurred, regardless of whether or not the Council was named as an insured. That situation did not change. This was an exercise in risk assessment with a view to shortening or avoiding litigation. Accordingly, the insurance issue raised by the Council’s solicitor was not a reasonable basis for the outright rejection of YMCA’s offers. The Council should not be entitled now to benefit from the rigid position it took on this issue. The judge erred in not granting the costs orders sought.
[144]See [122]–[123] above.
The Council does not accept YMCA’s characterisation of the insurance position. Prima facie, YMCA was in breach of its obligation under cl 9.2.1. It was not apparent in 2011 that any public liability policy would not respond to this case. Ms Balassone may have been an employee of YMCA, but she was not an employee of the Council. Accordingly, there was no obvious reason why, in respect of any liability of the Council, a public liability insurance policy held by YMCA and naming the Council should not respond to the relevant risk. The Council acknowledges that ultimately the Court of Appeal held in 2014 that the Council had not established that any public liability policy would have responded,[145] yet it submits that it was not unreasonable for the Council’s solicitor in 2011 to reject YMCA’s offers given the circumstances known at the time. The solicitor was not in a position, for example, to assess whether the definition of ‘insured’ in YMCA’s public liability policy might be wide enough to cover the Council, even where the Council was not named as an insured, because any policy could not be located and no formal process of discovery had taken place.
[145]See [133] above.
(a) Failure to take account of relevant principles
YMCA submits that in effect the judge, by affirming the rigid position taken by the Council in refusing to engage in a broad brush risk assessment, failed to take into account the broader purpose behind Offers to Contribute as described in Henderson v Simon Engineering (Aust) Pty Ltd:[146]
The purpose of O 26 is, no doubt, to provide a spur to enable a defendant to bring litigation to an end, to lessen costs and to shorten litigation. It also enables a reasonable defendant to protect itself against incurring costs occasioned by the unreasonable conduct of a fellow defendant.[147]
[146][1988] VR 867 (Murphy J).
[147]Ibid 869.
YMCA also points to Toomey v Scolaro’s Concrete Constructions Pty Ltd [No 4][148] in which Eames J said:
In my view, the primary purpose of the rule is directed to encouraging unreasonable defendants to see reason, by accepting what turns out later to have been a sensible offer, thereby avoiding the incurring of unnecessary costs by the defendant making the offer. It is a rule which is not directed to rewarding the defendant whose counsel proves to have been closest in estimating the probable outcome of the case, but is directed to encouraging an unreasonable litigant to contribute to settlement of a case where his unreasonableness has caused other defendants to unnecessarily incur costs.[149]
[148][2002] VSC 28.
[149]Ibid [31].
In Hazeldene[150] this Court made the following remarks in the context of offers to compromise an appeal:
[150](2005) 13 VR 435.
In Grbavac v Hart, Hayne JA cited with approval what the New South Wales Court of Appeal had said in Maitland Hospital v Fisher (No 2) about the policy rationale underlying the availability of special orders for costs where offers of compromise are rejected. Like his Honour, we think that what was there said is equally relevant to the exercise of the costs discretion where a Calderbank offer has been made. The policy objectives were said to be:
(1) To encourage the saving of private costs and the avoidance of the inherent risks, delays and uncertainties of litigation by promoting early offers of compromise by defendants which amount to a realistic assessment of the plaintiff’s real claim which can be placed before its opponent without risk that its ‘bottom line’ will be revealed to the court;
(2) To save the public costs which are necessarily incurred in litigation which events demonstrate to have been unnecessary, having regard to an earlier (and, as found, reasonable) offer of compromise made by a plaintiff to a defendant; and
(3) To indemnify the plaintiff who has made the offer of compromise, later found to have been reasonable, against the costs thereafter incurred. This is deemed appropriate because, from the time of the rejection or deemed rejection of the compromise offer, notionally the real cause and occasion of the litigation is the attitude adopted by the defendant which has rejected the compromise. In such circumstances that party should ordinarily bear the costs of litigation.
At the same time, as Redlich J said in [Oversea-Chinese Banking Corporation v Richfield Investments Pty Ltd], there are other competing objectives of equal importance.
… Potential litigants should not be discouraged from bringing their dispute to the courts. It is such considerations which underlie the general rule that an order for special costs should only be made in special circumstances.
The test of unreasonable rejection
In our view, these competing considerations can be sufficiently accommodated by applying a test of (un)reasonableness. The critical question is whether the rejection of the offer was unreasonable in the circumstances. We see no justification for a more stringent test such as ‘manifestly’ or ‘plainly’ unreasonable.[151]
[151]Ibid 441 [21]–[23] (citations omitted).
The Council submits that the judge’s discretion to award costs is wide and the task of establishing that such a discretion miscarried is difficult, as was observed by Nettle JA (with whom Neave JA agreed) in Peet Ltd v Richmond:
The principles which govern an application for leave to appeal against an indemnity costs order are tolerably clear. As Ormiston JA observed in Transport Accident Commission v O'Reilly:
[I]t is extraordinarily difficult to show that a court of first instance or a tribunal with wide discretionary powers has erred in the exercise of its powers to award costs, if there be some basis for making an order other than the conventional order in favour of the successful [party].[152]
[152][2010] VSCA 71 [3] (citations omitted).
The Council submits that the judge correctly stated the principles when she said:
Ordinarily, costs follow the event on the appropriate scale; costs are in the discretion of the Court. The ordinary costs rule may be displaced in circumstances, including where offers of compromise have been rejected unreasonably.[153]
[153]Costs Reasons [14].
The judge also made reference to the Hazeldene principles in considerable detail.[154]
[154]Ibid [40]. See [134] above.
The Council further submits that while the position it took in 2011 (that since it would have been entitled to be covered by YMCA’s public liability policy it should be indemnified for any liability given YMCA’s failure to comply with cl 9.2.1) may have ultimately failed, it could not be said to be one that was ‘hopeless or conducted in bad faith’.[155] It claims that it was an entirely reasonable stance to take and that YMCA did not engage in any discussion on the issue when it was raised in 2011, or assert that even if the Council had been a named insured, the policy would not have responded in any event because this risk was not covered. What may have appeared to be an uncompromising stance taken by the Council’s solicitor was based on the view — as it turned out, one affirmed by Judge Murphy but not upheld by the Court of Appeal — that YMCA’s failure to take out a public liability policy naming the Council as an insured was a breach of contract that entitled YMCA to be indemnified for any liability to Ms Balassone.
[155]Commissioner of State Revenue v Challenger Listed Investments Ltd [No 2] [2011] VSCA 398 [20]. Applied in Ultra Thoroughbred Racing Pty Ltd v Those Certain Underwriters at Lloyd’s [No 2] [2011] VSC 636.
I consider that the Council is correct in its defence of the judge’s orders. In my view, it cannot be concluded that the judge failed to take account of the relevant principles governing an award of costs in a context in which a Calderbank offer or an Offer to Contribute has been made and rejected. Her Honour’s reasons make it apparent that she was alive to the criteria expressed in Hazeldene and engaged in a careful dissection of the facts in applying them to determine that the rejection of the offers was not unreasonable. The judge was particularly conscious, quite properly, of the need to assess the reasonableness or otherwise of the rejection of an offer at the time, and in the circumstances, in which it was rejected, and not with the benefit of hindsight or through the prism of a subsequent appellate determination.
(b) Whether mistake in relation to the facts
YMCA submits that the judge mistook the state of the evidence in concluding that the Calderbank offer or the Offer to Contribute was made ‘too early’, and in finding that the Council was not in a position to assess the risks because there were complex issues raised by the case and YMCA had provided no explanation for why the matters raised in the statutory conference were wrong.[156]
[156]See [136] above.
I do not consider that the judge mistook the facts. It is apparent at least from the evidence of the affidavit sworn by Ms Warwick (set out in some detail below) that the offers were made at a time when the Council was not in a position properly to assess them. In this sense it could be readily inferred that the offers were made ‘too early’ in a context of some complexity.
(c) Whether failure to refer to and act upon relevant evidence
YMCA contends that in the affidavit sworn by Ms Warwick she deposed that she knew the policy could not be located, and that this evidence was not referred to in the judge’s reasons despite its importance.
The Council contends, and I agree, that it could not be inferred from the affidavit of Ms Warwick that at the time the offers were made the Council knew that the policy could not be located; rather, Ms Warwick deposed that the policy had not been produced to the Council despite its request. In her affidavit Ms Warwick deposed as follows:
I was … provided with a certificate of public liability insurance from [YMCA] for the financial year ending 2005 which revealed that the [Council] was not a named insured, in apparent breach of the terms of the contract.
As I was not provided with a copy of the insurance policy, I was unable to ascertain if the [Council] was covered under the definition of insured in the policy. In my opinion it was important to view the policy to determine if the [Council] was covered by the policy. If the [Council] was covered under the definition of insured, the [Council] would have been indemnified under the policy. If it was not covered, in my opinion the [Council] could have relied upon [YMCA]’s breach of contract …
On 29 November 2010 I attended the s 134AB(12) Accident Compensation Act 2005 statutory conference on behalf of the [Council]. I advised [YMCA] that the [Council] was relying on the contractual provision requiring [YMCA] to take out insurance on behalf of the [Council]. Any failure to do so would enable the [Council] to seek an indemnity for breaching the contract. …
On 17 January 2011, Hall & Wilcox served the Calderbank latter on behalf of [YMCA].
…
By letter dated 15 March 2011 I served the [Council]’s Notice of contribution. The [Council] alleged [YMCA] was obliged to take out public liability insurance on behalf of the [Council] and had failed to do so in accordance with the contract …
By letter dated 15 March 2011 [YMCA] served the Offer to Contribute dated 15 March 2011.
…
At all times the [Council] required copies of the insurance policy in place as at the date of the plaintiff’s accident to review the wording of the policy in order to satisfy itself that the description of the insured in the policy did not cover the [Council]. [YMCA] has at no time produced a copy of the policy.
…
By letter dated 13 May 2011 Hall & Wilcox served [YMCA]’s Defence to the [Council]’s Notice of Contribution. At this time, [YMCA] admitted that it had not taken the insurance policy on behalf of the [Council].
In my view, a fair reading of these paragraphs suggest that at the time the Calderbank offer and the Offer to Contribute were made the Council did not have knowledge that the policy could not be located. Discovery had not occurred and it remained possible that the policy might still be produced and the Council might then have had a proper foundation to claim that it was indemnified under the policy, or that YMCA had breached its contract and the Council was entitled to be fully indemnified by YMCA with respect to liability to Ms Balassone on that basis.
I do not consider that the judge failed to refer to or act upon relevant evidence.
(d) Whether guided by extraneous or irrelevant matters
YMCA submits that the judge erred by taking into account that neither the Calderbank letter nor the Offer to Contribute expressly foreshadowed any application for indemnity costs. The Calderbank letter did say that it would be relied upon ‘to make an order as to the costs of the proceeding from the date of the letter’.[157] YMCA submits it could hardly be surprising that such a letter would be relied upon to seek indemnity costs where experienced practitioners were acting for institutional clients; and no evidence was advanced by the Council’s solicitor that she understood that either offer was put on any other basis. It also asserts that r 26.10 provides that the Court may take into account an Offer to Contribute in determining whether a party should pay ‘the whole or part of’ any costs.[158]
[157]See [124] above.
[158]See [135] above.
Senior counsel for the Council contended that the scheme under the Rules for the costs consequences of a failure to accept an offer of compromise by a plaintiff to a defendant, namely that the plaintiff’s costs after the date of the offer would be paid on indemnity basis,[159] did not necessarily apply as between defendants when it came to contribution. Rule 26.10, in the terms in which it applied at the time, was not specific with respect to the scale on which costs were to be paid.[160]
[159]Rule 26.08(2). Where a plaintiff fails to accept an offer of compromise by a defendant, and the plaintiff receives a judgment not more favourable than the offer, the defendant’s costs to be paid by the plaintiff from the date of the offer are on a party and party basis: r 26.08(3)(b).
[160]See [135] above.
In Hazeldene the Court noted that one of the factors that should ordinarily be taken into account when deciding whether to exercise its discretion in awarding costs in light of a Calderbank offer, is that ‘the offer foreshadowed an application for an indemnity costs [order] in the event of the offeree’s rejecting it’.[161] I consider that the judge was entitled to take into account, in the circumstances, that neither the Calderbank offer nor the Offer to Contribute expressly foreshadowed that an application for indemnity costs would be made if the offer were to be unreasonably rejected and YMCA was ordered to make a contribution to Ms Balassone’s loss that was less than the percentage offered. In the circumstances, the offers may have been relied upon to ensure that YMCA received a costs order in its favour, an anterior question to the question of the scale of costs. In my view, the judge’s discretion did not miscarry.
[161]Hazeldene (2005) 13 VR 435, 442 [25].
Conclusion on the costs appeal
I consider that, with respect to the costs appeal, leave to appeal should be refused. I consider that the basis upon which leave is sought had no more than fanciful prospects of success.
OSBORN JA:
I have had the considerable advantage of reading the reasons of Tate JA in draft form. I agree with her Honour’s reasons and proposed orders.
SANTAMARIA JA:
I have had the benefit of reading in draft the reasons of Tate JA. For the reasons she gives, I would grant leave to appeal on the contribution appeal and dismiss the appeal, and, in respect of the costs appeal, I would refuse leave to appeal.
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