Quilligan v Copyshift Group (No 2)
[2019] VSC 221
•8 April 2019
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
PERSONAL INJURIES LIST
S CI 2018 02200
BETWEEN:
| JOHN FRANCIS QUILLIGAN | Plaintiff |
| v | |
| COPYSHIFT GROUP PTY LTD (ACN 007 230 006) | First Defendant |
| MELBOURNE PACKAGING SUPPLIES PTY LTD (ACN 005 605 952) | Second Defendant |
| SWIFT TRANSPORT SERVICES PTY LTD (ACN 101 606 400) | Third Defendant |
| BENJAMIN CALLOS | Fourth Defendant |
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JUDGE: | Ginnane J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | On the papers |
DATE OF JUDGMENT: | 8 April 2019 |
CASE MAY BE CITED AS: | Quilligan v Copyshift Group (No 2) |
MEDIUM NEUTRAL CITATION: | [2019] VSC 221 |
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COSTS — Third defendant’s application for indemnity costs - Plaintiff’s application for Serious Injury Certificate and negligence action failed on causation ground — Third party’s Calderbank offer before it was joined as third defendant — Calderbank offer that plaintiff not issue proceeding against it and bear his own costs — Plaintiff’s refusal of offer not unreasonable — Third defendant’s costs while a third party — Standard costs ordered.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Slater & Gordon Lawyers | |
| For the Third Defendant | Moray & Agnew Lawyers |
HIS HONOUR:
In this proceeding, I dismissed the plaintiff’s claims against all the defendants. I refused the plaintiff’s application for a Serious Injury Certificate and dismissed his proceeding for damages for a workplace injury said to have occurred at the first defendant’s premises on 24 June 2016.[1]
[1]Quilligan v Copyshift Group & Ors [2018] VSC 784.
Following delivery of judgment, the third defendant, Swift Transport Services Pty Ltd (‘Swift Transport’), sought an order that:
The plaintiff pay the costs of the third defendant of the proceeding up to and including 21 September 2018 on a standard basis and thereafter on an indemnity basis.
The order that it sought included that the plaintiff pay its costs directly for the period when it was a third party and prior to it being joined by the plaintiff as a defendant.
The plaintiff opposed the third defendant’s application and instead argued that he should be ordered to pay the third defendant’s costs on a standard basis only, as he had been so ordered to pay the costs of the other defendants.
In the judgment I found Swift Transport vicariously liable for the actions of its employee. I found that an incident occurred on 24 June 2016 that caused discomfort to the plaintiff’s, Mr Quilligan’s, right foot and first right toe and I generally preferred his evidence about the incident to Mr Callos’ (the fourth defendant). I stated that I considered it more probable that Callos was involved in starting the Crown Lift Machine and moving it back to the truck, and that as it started, it came into contact with Quilligan’s right first toe and right foot and that that was a breach of his duty of care to Quilligan. There was a conflict of medical opinion as to causation, but I preferred Associate Professor Lording’s evidence that there was no causal link between the breach of the duty of care and the injury.
The Calderbank offer
The basis for the third defendant’s application for an indemnity costs order was a Calderbank offer sent to the plaintiff on 14 September 2018. At that time, the third defendant was subject only to a third party proceeding brought against it by the second defendant, Melbourne Packaging Supplies Pty Ltd (‘Melbourne Packaging’). However, it appears that at this time the plaintiff intended to join Swift Transport as a third defendant, and did so upon filing an amended writ on 21 September 2018.
In the letter the third defendant offered a compromise of the proceeding in the following terms:
(a) Your client undertakes that proceedings not be issued against Swift;
(b) Each party will bear its own costs in relation to the claim; and
(c) Your client agrees to sign a release in an agreed form.
In the letter, the third defendant cited issues in the plaintiff’s asserted chain of causation between the incident and his osteomyelitis in claiming that this Court would find that the incident did not occur as alleged and that it would not be found to be negligent. After setting out a number of matters concerning the incident and the plaintiff’s subsequent treatment, the letter stated:
In what appears to be the absence of medical treatment sought by your client in response to the incident and the evidence of Mr Callos that the incident did not occur, it is open to the court to find that the incident did not occur in the manner alleged. Swift will not be found to have been negligent.
Further, if a court does conclude that the incident occurred (which we consider to be unlikely), we consider that the evidence of Associate Professor Lording in respect of causation will be preferred over that of Dr Rillstone.
The offer of compromise remained open for seven days and foreshadowed that, if it was not accepted and the plaintiff failed to obtain a judgment more favourable than the offer, that the third defendant would seek indemnity costs.
The plaintiff did not accept the Calderbank offer and served his amended writ and statement of claim joining the third defendant and claimed that the third defendant’s negligence caused damage to him.
Applicable principles
Applying the principles in Hazeldene’s Chicken Farm Pty Ltd v Victorian WorkCover Authority (No 1) (‘Hazeldene’s’),[2] the ‘critical question’ is whether the rejection of the offer was unreasonable in the circumstances.[3] The Court set out, non-exhaustively, relevant circumstances, including:
[2](2005) 13 VR 435.
[3]Ibid [23].
(a) the stage of the proceeding at which the offer was received;
(b) the time allowed to the offeree to consider the offer;
(c) the extent of the compromise offered;
(d) the offeree’s prospects of success, assessed as at the date of the offer;
(e) the clarity with which the terms of the offer were expressed;
(f)whether the offer foreshadowed an application for an indemnity costs in the event of the offeree’s rejecting it.[4]
[4]Ibid [25].
The parties addressed these circumstances in their written submissions, which I will now summarise.
Third defendant’s submissions
The third defendant argued that the seven days given to the plaintiff for consideration of its offer were entirely reasonable, and that it expressly foreshadowed an application for indemnity cost in the event of rejection and the plaintiff failing to obtain a judgment more favourable than the offer.
Further, the third defendant submitted that the fact it was a third party and had not been formally joined as a defendant did not detract from the unreasonableness of the plaintiff’s non–acceptance of its offer. It so submitted on the basis that the offer was made in the face of an imminent trial – less than a month away – and its opinion that the plaintiff ‘was evidently giving consideration to joining it is a defendant’, as shown by the plaintiff joining it as a defendant on 21 September 2018.
The third defendant submitted that the terms of the Calderbank offer were clear and comprehensive. The plaintiff’s pertinent medical history was set out in detail, and it expressed a reasonable conclusion that there was an absence of medical treatment sought by the plaintiff and that the evidence of Associate Professor Lording in respect of causation would be preferred over that of Dr Rillstone, the plaintiff’s general practitioner. The third defendant set out passages from my judgment of 14 December 2018 which were consistent with the conclusions expressed in its letter. It referred to my finding that the plaintiff had not established that the incident caused the osteomyelitis that led to the below-knee amputation of the right leg.
Finally, the third defendant addressed the plaintiff’s prospects of success. It argued that, pursuant to Hazeldene’s, the offeree’s prospects of success were to be assessed at the date of the offer. At trial, the plaintiff’s case for causation was principally based upon the evidence of Dr Blombery. However, his report was dated 26 September 2018 – after the date of the offer. It therefore argued that there was insufficient medical evidence supporting a causal connection between the incident and the osteomyelitis, and that the plaintiff’s prospects of success were low.
The plaintiff’s submissions
The plaintiff argued that his rejection of the offer was not unreasonable for three reasons: the premise of the offer, which was that the plaintiff would not be able to establish that the incident occurred, was incorrect; the offer was not a genuine compromise, and the unique nature of the proceedings.
The plaintiff first submitted that the reasoning behind the third defendant’s offer was rendered redundant by my finding that the incident at the first defendant’s premises did occur,[5] and my finding that the third defendant was negligent.[6] Had medical causation been established, the plaintiff’s claim would have succeeded against the third defendant. He argued that the principal premise of the offer was that the Court may find ‘that the incident did not occur in the manner alleged’, and that ‘Swift will not be found to have been negligent’. As these predictions were false, the refusal was not in fact unreasonable. It was acknowledged, however, that the third defendant stated:
Further, if a court does conclude that the incident occurred (which we consider to be unlikely), we consider that the evidence of Associate Professor Lording in respect of causation will be preferred over Dr Rillstone.
Although the plaintiff’s principal medical witness became Dr Blombery rather than Dr Rillstone, his general practitioner, the third defendant’s prediction was nonetheless accurate as I preferred Associate Professor Lording’s evidence in respect of causation. Despite this, the plaintiff asserted that it was reasonable for him to hold the view that the Court would prefer the evidence of his long term treating general practitioner, his treating podiatrist and a vascular physician medico-legal expert.
[5][2018] VSC 784, [70]-[82].
[6]Ibid [152]; I found that the third defendant had been vicariously negligent through its employee, the fourth defendant, rather than independently negligent.
The plaintiff’s second submission was that the offer made by the third defendant was not a genuine compromise. It relied upon Hazeldene’s,[7] as well as the Court of Appeal decision in Laming v Jennings,[8] for the proposition that refusal of an offer will only be unreasonable when the offer involves a ‘real element of compromise’. He argued that the third defendant’s compromise was only that it lost the possibility of obtaining a costs order against the plaintiff in the event it was successful at trial. The benefit conferred upon the plaintiff was only the avoidance of any potential costs order in the event that he was unsuccessful. The plaintiff submitted that the third defendant offered no genuine compromise but rather sought his total capitulation, and that therefore his refusal was not unreasonable. He argued that his lack of success against the third defendant at trial should not inform the consideration of whether the compromise was genuine.
[7](2005) 13 VR 435, [30].
[8][2018] VSCA 354, [10].
The plaintiff thirdly submitted that the unique nature of the proceedings rendered his refusal not unreasonable. The trial simultaneously heard two proceedings: a nunc pro tunc application for a Serious Injury Certificate, and a common law negligence claim. The former proceeding was by its very nature a precondition to the latter, however in light of the plaintiff’s life-threatening illness his proceeding was expedited through their combination. A causal connection had to be established to succeed in either application. Therefore, the plaintiff argued that, ordinarily he would have failed at the Serious Injury Certificate hurdle in the County Court, in a proceeding opposed only by the first defendant and/or the Victorian WorkCover Authority. However, that outcome was not afforded to him due to his terminal illness.
Analysis
There is no presumption that an offeror will receive their costs on an indemnity basis following an offeree refusing a Calderbank offer and then failing to obtain a more favourable judgment. This proposition was recently restated by the Court of Appeal in Laming v Jennings:
In contrast to the position under the Rules, where a party makes a Calderbank offer, there is no rule or prima facie presumption that the failure by the offeree to obtain judgment more favourable than the offer which has been rejected will result in an order for indemnity costs or some other special costs order.[9]
[9]Ibid [8].
Therefore, indemnity costs ought not be automatically or invariably awarded if a party does not accept a Calderbank offer and does not obtain a more favourable judgment. Rather, the ‘crucial question’ is whether, in this case, the plaintiff’s rejection of the third defendant’s offer was unreasonable, having regard to the factors identified in Hazeldene’s and any others deemed relevant.
The terms of the Calderbank offer satisfied the requirements of expressing its terms with sufficient clarity and foreshadowing an application for indemnity costs if it was not accepted and the plaintiff failed to obtain a more favourable judgment. The plaintiff did not dispute these matters, nor the reasonableness of the seven day period for which the offer remained open.
I do not consider that the unique nature of the proceedings relied on by the plaintiff is determinative.
But, I do not consider that the plaintiff’s refusal of Swift Transport’s offer of compromise was unreasonable, particularly having regard to the difficulty of assessing the plaintiff’s prospects of success as at the date of the offer. At that time, the outcome of the proceeding was very dependent on the facts found and the medical evidence preferred by the Court. The plaintiff presented expert evidence from Dr Blombery that supported his case, as well as from Dr Rillstone, his treating General Practitioner, which provided some support for his causation argument. I do not consider it decisive that Dr Blombery’s evidence was not available at the time of the offer. It is likely that the substance of Dr Rillstone’s evidence was available to the plaintiff when considering the offer. I found that the third defendant had been negligent, but was not persuaded that causation was proved. The offer was made about a month before an expedited trial, but at that point the plaintiff was still assembling his expert evidence. The degree of the compromise offered is also relevant to the reasonableness of the refusal of the offer. In this instance, the extent of the compromise offered was relatively modest.
The other issue is Swift Transport’s costs when it was a third party. As mentioned, the order for costs that Swift Transport seeks includes that the plaintiff pay its costs while it was a third party and prior to being joined by the plaintiff as a defendant. In this proceeding, Swift Transport was first a third party pursuant to a third party notice issued by Melbourne Packaging. About two months later, the plaintiff joined it as a third defendant. The issue is Swift Transport’s costs for the comparatively short time it was a third party.
I do not consider that I should order that the plaintiff pay directly to Swift Transport its costs as a third party before he joined it as a defendant. The authorities suggest that where a third party claim is dismissed because the plaintiff’s claim against the defendant fails, the defendant will ordinarily be liable for the third party’s costs of the proceeding. However, circumstances may warrant a departure from the rule, including the reasonableness of the defendant’s decision to join the third party, whether the joinder was reasonably foreseeable by the plaintiff, such that the plaintiff might be viewed as having some responsibility for the costs of the third party proceeding, the responsibility of the parties for the time taken up in the hearing of the third party proceeding, whether the third party claim raised ‘private issues’ such that the third party was not necessarily joined because of the plaintiff’s claim, whether the plaintiff’s claim was the catalyst for the third party claim or made it ‘inevitable’ and the relationship between the original claim and the third party claim.[10]
[10]See Boral Australian Gypsum Ltd v Victorian Workcover Authority [2015] VSCA 187, [9]-[10].
When the plaintiff’s claim reasonably prompted the bringing of the third party proceeding, most commonly a court will order that the successful defendant is entitled to recover from the plaintiff both the defendant’s own costs and those of the successful third party which the defendant has been ordered to pay. It will be relevant to consider whether the joinder was reasonably foreseeable by the plaintiff.[11]
[11]Ibid [9].
In this instance, the third party claim depended on the contractual relationship between Swift Transport and Melbourne Packaging. Swift Transport’s submissions state that the initial joinder of the third party appears to have been based on the factual substratum raised by the plaintiff against Melbourne Packaging – the allegation of the injury at the hands of an employee or contractor of the third party. But the plaintiff’s statement of claim pleaded that he sustained injury when a servant or agent of Melbourne Packaging, caused a forklift to run over his feet. Melbourne Packaging’s defence pleaded that it was not a specialist delivery company, but contracted such a company, Swift Transport, to deliver the goods to Copyshift’s premises.
On consideration of the submissions that I have received, I do not consider that the joinder of Swift Transport as a third party was reasonably foreseeable by the plaintiff or that he had some responsibility for it that justifies the order that Swift Transport seeks. In all the circumstances, I do not consider that in the exercise of the discretion as to payment of costs, that I should order that the plaintiff pay directly to Swift Transport its costs as a third party. I therefore, refuse Swift Transport’s application that I order, or include in the order otherwise made, that the plaintiff pay Swift Transport’s costs incurred while it was a third party and prior to being joined by the plaintiff as a defendant.
Conclusion
I will order that the plaintiff pay the third defendant’s costs of the proceeding on a standard basis to be taxed in default of agreement.
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