Power Technologies Pty Limited v State Insurance Regulatory Authority (No. 2)

[2018] NSWDDT 2

Dust Diseases Tribunal

New South Wales

Medium Neutral Citation:	Power Technologies Pty Limited v State Insurance Regulatory Authority & Ors (No. 2); (Re: Peter Watson) [2018] NSWDDT 2
Hearing dates:	On the papers
Date of orders:	16 February 2018
Decision date:	16 February 2018
Before:	Judge D. Russell
Decision:	(1)   Order the cross-claimant to pay the costs of the first and second cross-defendants of the Amended Second Cross-Claim. (2)   No order as to the costs of the third cross-defendant. (3)   Order the fourth cross-defendant to pay the cross-claimant’s costs of the Amended Second Cross-Claim. (4)   Order the cross-claimant to pay the costs of the fourth cross-defendant of the determination of outstanding costs issues.
Catchwords:	COSTS – application by cross-claimant for Bullock order against a cross-defendant – principles governing entitlement to Bullock orders – cross-claimant must show that it was reasonable to sue the successful cross-defendant – cross-claimant must show that the conduct of the unsuccessful cross-defendant makes it fair to impose liability on it for costs of the successful cross-defendant – whether there was anything said or done by the unsuccessful cross-defendant which led the cross-claimant to sue the successful cross-defendant.
Legislation Cited:	Workers Compensation Act 1987
Cases Cited:	Gould v Vaggelas 157 CLR 215 Steppke v National Capital Development Commission (1978) 21 ACTR 23 CGU Insurance Ltd v AAI Ltd [2016] NSWCA 335
Category:	Costs
Parties:	Power Technologies Pty Limited (cross-claimant) State Insurance Regulatory Authority (first cross-defendant) AAI Limited (second cross-defendant) Allianz Australia Insurance Limited (third cross-defendant) Allianz Australia Workers Compensation (NSW) Limited (fourth cross-defendant)
Representation:	Counsel: P. Webb QC (cross-claimant) D. Hooke SC (first cross-defendant) J. Sharpe (second cross-defendant) J. McIntyre SC (third cross-defendant) J. McIntyre SC (fourth cross-defendant)   Solicitors: Firths (cross-claimant) William Roberts Lawyers (first cross-defendant) Kemp & Co Lawyers (second cross-defendant) Rankin Ellison (third cross-defendant) Rankin Ellison (fourth cross-defendant)
File Number(s):	DDT 215/2017/CC2

Judgment

1. On 7 December 2017 I delivered judgment on the Amended Second Cross-Claim, which dealt with s 151AB of the Workers Compensation Act 1987. I found that the fourth cross-defendant (Allianz) was liable to indemnify the cross-claimant (Power) for Power’s share of damages and costs payable by it to the plaintiff Mr Watson, and for Power’s costs of defending the plaintiff’s claim.

2. Questions of costs of the Amended Second Cross-Claim were reserved. At a Directions Hearing on 14 December 2017 an order was made for the filing and serving of written submissions, and for the issue of costs to be determined on the papers.

3. The first cross-defendant (SIRA) and the second cross-defendant (AAI) have sought orders for costs against Power. There is agreement by Power that such orders should be made.

4. The third cross-defendant indicated that it does not seek any order for costs against Power.

ORDERS SOUGHT

5. By a written submission dated 19 December 2017, Power sought a Bullock or Sanderson order, that Allianz should pay to Power the costs which Power will be ordered to pay to the first and second cross-defendants.

THE SUBMISSIONS

6. Power submitted that Allianz wrongly refused to indemnify it, as demonstrated by the ultimate finding of liability made in the judgment of 7 December 2017.

7. Power submitted that Allianz had argued at trial that the SIRA should have indemnified Power, and that Power should not be penalised in costs for being forced to bring proceedings against SIRA. Further, it was submitted that not only should Power be entitled to a Bullock order, but it should also be entitled to an order for its costs on an indemnity basis against Allianz.

8. Allianz filed a written submission dated 16 January 2018. Allianz opposed a Bullock order, but said nothing in opposition to a costs order on the ordinary basis. It also filed and served an affidavit of Mr Prentice sworn on 16 January 2018. The history of the matter set out in that material was as follows.

9. On 14 July 2017 the Statement of Claim by the original plaintiff Mr Watson against the Power (as defendant) was filed. SIRA conducted the defence by Power of Mr Watson’s claim until 3 November 2017, when it denied liability to indemnify Power.

10. Power then retained its present lawyers, since no workers compensation insurer had agreed to indemnify it in relation to the claim of the plaintiff Mr Watson.

11. On 6 November 2017 the solicitors for Power wrote to Allianz enclosing a copy of the pleadings and evidence in the case. The letter advised that a claim for indemnity had been made on SIRA, which had denied indemnity on 3 November 2017 “on the basis that the Plaintiff was subject to a risk of exposure to asbestos dust and fibres after March 1983”.

12. The letter foreshadowed that a cross-claim would be brought, saying:

In the circumstances we are instructed to issue a Cross-Claim against SIRA as agent for IGF-NEMGIA Ltd and the insurers subsequently ‘on risk’ prior to the cessation of the Plaintiff’s employment in November 1987.

13. Power filed its Second Cross-Claim on 8 November 2017 against all four insurers. An Amended Second Cross-Claim was filed on 10 November 2017. Only one insurer could be found liable.

14. The written submissions for Allianz gave extensive references to authorities in relation to Bullock orders. I will return to the authorities later in this judgment.

15. Allianz submitted that nothing done by it led to the decision by Power to join other ultimately successful cross-defendants. Allianz submitted that it was quite reasonable in declining to indemnify Power, “particularly in circumstances where Senior Counsel for the Cross-Claimant ultimately made submissions consistent with another insurer (not Allianz) being liable to indemnify his client at the hearing”.

16. Allianz submitted that it had “an arguable case that it was not the insurer liable to indemnify”. It also submitted that “nothing was done by Allianz that could support the costs order sought”. It submitted that there had been “no conduct by Allianz that has been identified that would make [it] ‘fair’ to impose such a liability on Allianz”. Finally, it was submitted that even if there was an appropriate basis demonstrated for a Bullock order, there was no basis for making such an order in respect of any period prior to the joinder of Allianz in the proceedings.

17. The cross-claimant filed Submissions in Reply dated 30 January 2018. It submitted that “as a matter of necessity” it had to join all insurers on risk prior to the last date of the plaintiff’s employment by Power.

18. Power submitted that the conduct of Allianz which supported the making of a Bullock or Sanderson order was “its appearance at the trial, arguing that SIRA (the first cross-defendant) was the responsible insurer”.

19. Power sought to distinguish the situation from that in a recent Court of Appeal case, which will be referred to below.

20. Finally, it was submitted that it was irrelevant that Power had argued at trial that SIRA was the responsible insurer. It was said “that argument was made to form a platform for an application for indemnity costs against SIRA, in the event that the Tribunal held that SIRA was responsible for indemnifying the second cross-claimant”.

AUTHORITIES ON BULLOCK ORDERS

21. The High Court considered the conditions for the making of a Bullock order in Gould v Vaggelas 157 CLR 215. Gibbs CJ said (at 220):

In my respectful opinion, however, the mere fact that the joinder of two defendants was reasonable does not mean that the unsuccessful defendant should be ordered to pay, directly or indirectly, the costs of the successful defendant. Obviously a judge should make a Bullock order only if he considers it just that the costs of the successful defendant should be borne by the unsuccessful defendant, and, if nothing that the unsuccessful defendant has said or done has led the plaintiff to sue the other defendant, who ultimately was held not to be liable, it is difficult to see any reason why the unsuccessful defendant should be required to pay for the plaintiff’s error or overcaution.

22. Gibbs CJ (at 230) indicated that he agreed with the statement of principle by Blackburn CJ in Steppke v National Capital Development Commission (1978) 21 ACTR 23 at 30-31), when his Honour said that:

There is a condition for the making of a Bullock order, in addition to the question whether the suing of the successful defendant was reasonable, namely that the conduct of the unsuccessful defendant has been such as to make it fair to impose some liability on it for the costs of the successful defendant.

23. Citing Gould v Vaggelas, Acting Justice Emmett in CGU Insurance Ltd v AAI Limited [2016] NSWCA 335 said at [37]:

A Bullock order should be made only if the court considers it just that the costs of the successful defendant should be borne by the unsuccessful defendant. If nothing said or done by the unsuccessful defendant has led the plaintiff to sue the successful defendant, who was held not to be liable, there is no reason why the unsuccessful defendant should be required to pay for the plaintiff’s error or overcaution.

24. His Honour said at [44] that there was no finding that CGU (the unsuccessful defendant at trial) had conducted the litigation in some manner that made it fair or appropriate to visit upon it an order to indemnify Amaca (the insured/cross-claimant) in respect of the costs of AAI (the successful insurer/defendant at trial). In that case Amaca initially sued AAI. AAI denied that it was liable and asserted that CGU was liable. Amaca then joined CGU as a second possible insurer from which it sought contribution. Given that sequence of events the Court of Appeal said that there was nothing in the behaviour of the unsuccessful defendant at trial (CGU) that led Amaca to sue the successful defendant at trial (AAI).

CONSIDERATION OF A BULLOCK ORDER

25. The joinder by Power of SIRA (the successful cross-defendant) and Allianz (the unsuccessful cross-defendant) was certainly reasonable, and at trial the question of the ascertainment of the time when the worker was last employed by the employer in employment to the nature of which the disease was due, depended not just on the evidence of the plaintiff (Mr Watson), but also on the three affidavits of past claimants, as well as the publicly available material regarding the inspection of Power’s work site.

26. The question then becomes whether the conduct of the unsuccessful cross-defendant (Allianz) has been such as to make it fair to impose some liability on it for the costs of the successful cross-defendant (SIRA).

27. Power’s submissions in reply were that the conduct of Allianz which supports the making of a Bullock order was “its appearance at the trial, arguing that SIRA was the responsible insurer”.

28. Certainly nothing said or done by Allianz caused Power to sue SIRA. Once SIRA denied indemnity to Power, on 3 November 2017, Power chose to bring a cross-claim against all four insurers. No conduct on the part of Allianz led Power to include SIRA in the Cross-Claim.

29. The letter dated 6 November 2017, referred to above, leads me to conclude that it was the decision of Power alone, unprovoked by any action on the part of Allianz, which led the cross-claim to include a claim against the ultimately successful cross-defendant (SIRA).

CONCLUSION ON BULLOCK ORDER

30. I find that the joinder of SIRA to the Cross-Claim by Power was reasonable. I do not consider it just that the costs of SIRA should be borne by Allianz, since nothing that Allianz did led Power to sue SIRA, which ultimately was held to be not liable. I find nothing in the conduct of Allianz such as to make it fair to impose some liability on it for the costs of the successful first cross-defendant (SIRA).

APPLICATION FOR INDEMNITY COSTS

31. In paragraph 10 of the initial Written Submissions of Power dated 19 December 2017, it also sought an order for indemnity costs of its Cross-Claim against Allianz. It submitted that: “The cross-claimant should be put back in the position where it would have been had the fourth cross-defendant accepted liability to indemnify the cross-claimant”.

32. This application was not addressed in the Written Submissions of Allianz dated 16 January 2018.

33. No basis for seeking such an order was put forward in Power’s Written Submissions dated 19 December 2017. There was no Calderbank letter or any Offer of Compromise. Nor was there any reference to any principle to the effect that an insurer found liable to indemnify an insured should automatically pay costs of the claim for indemnity on an indemnity basis. Power could have used the rules of court or a Calderbank letter, to set itself up to obtain indemnity costs. It did not do so.

34. I will make an order that the fourth cross-defendant pay the cross-claimant’s costs of the Cross-Claim, but I will not order that those costs be on an indemnity basis.

ORDERS

35. I make the following orders:

1. Order the cross-claimant to pay the costs of the first and second cross-defendants of the Amended Second Cross-Claim.

2. No order as to the costs of the third cross-defendant.

3. Order the fourth cross-defendant to pay the cross-claimant’s costs of the Amended Second Cross-Claim.

4. Order the cross-claimant to pay the costs of the fourth cross-defendant of the determination of outstanding costs issues.

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Decision last updated: 16 February 2018