Rosemary Frances Jennings v Westfield Shopping Centre (ACN 008 612 002) and Reflections Cleaning Pty Limited (ACN 119 493 382) - [2010] ACTSC 65

ROSEMARY FRANCES JENNINGS v WESTFIELD SHOPPING CENTRE (ACN 008 612 002) & REFLECTIONS CLEANING PTY LIMITED (ACN 119 493 382)
[2010] ACTSC 65 (9 July 2010)

COSTS – personal injury claim – plaintiff succeeding against one defendant but failing against the other – whether Bullock or Sanderson order justified – whether any effect should be given to Calderbank offer between defendants

Bullock v London General Omnibus Co [2007] 1 KB 264
Calderbank v Calderbank [1975] 3 WLR 586
Gould v Vaggelas (1985) 157 CLR 215
Sanderson v Blyth Theatre Co [1903] 2 KB 533
Skerbic v McCormack [2008] ACTSC 4
Steppke v National Capital Development Commission (1978) 21 ACTR 23
Quirk v Bawden (1992) 112 ACTR 1

No. SC 710 of 2008
Judge: Master Harper
Supreme Court of the ACT

Date: 9 July 2010

IN THE SUPREME COURT OF THE       )
  )          No. SC 710 of 2008
AUSTRALIAN CAPITAL TERRITORY    )

BETWEEN:ROSEMARY FRANCES JENNINGS
Plaintiff

AND:WESTFIELD SHOPPING CENTRE MANAGEMENT CO (ACT) PTY LIMITED
(ACN 008 612 002)

First Defendant

REFLECTIONS CLEANING
PTY LIMTIED
(ACN 119 493 382)

Second Defendant

ORDER

Judge:  Master Harper
Date:  9 July 2010
Place:  Canberra

THE COURT ORDERS THAT:

The plaintiff’s costs be paid by the second defendant.
The first defendant’s costs be paid by the second defendant.

I delivered judgment in this action on 19 February 2010. The plaintiff had brought an action for damages for personal injury against the first defendant as occupier of Belconnen Mall, and the second defendant as cleaning contractor. She had slipped and fallen on a wet floor within the Mall. I found that she fell because of the negligence of the second defendant. I held that the first defendant had succeeded in delegating its duty of care to protect the plaintiff from injury by reason of a wet floor to the second defendant, having regard to the terms of the cleaning contract. The first defendant was accordingly not liable to the plaintiff. I directed the entry of judgment against the second defendant for damages, which I assessed at $114,657.22. I ordered that judgment be entered for the first defendant. I expressed the provisional view that the plaintiff had acted reasonably in bringing proceedings against both defendants, and should have a Bullock order against the second defendant in respect of the first defendant’s costs.
On 26 March 2010 I heard submissions from counsel as to costs. Counsel for the first defendant handed up a copy of a letter dated 5 January 2010, a month or so before the hearing, addressed to the Solicitors for the second defendant. The letter was in the following terms:
Without prejudice save as to costs
Please note that we have received instructions to put to your client an offer that the first defendant will accept from the second defendant a full indemnity or 100% contribution to a judgment or settlement sum in favour of the plaintiff plus 100% of the plaintiff’s costs and disbursements in settlement of the claims for contribution or indemnity between the defendants.
Please note that this is a Calderbank offer and is open for acceptance for 14 days from the date of this letter.
If the matter proceeds and judgment is delivered on terms equal to the first defendant’s offer set out in this letter than we reserve the right to tender this letter in relation to costs applications and in particular an order for indemnity costs against the second defendant.
I refered to the principles to be applied in similar circumstances in Skerbic v McCormack [2008] ACTSC 4, and will repeat some of what I said there. It has long been recognised that actions with a multiplicity of defendants can give rise to special problems in relation to costs. In the first place, the costs of a defended action are generally greater where there are multiple defendants or additional parties. Secondly, the fruits of a victory by a plaintiff against one defendant can be severely diminished if the plaintiff loses against other defendants and is ordered to pay their costs. The courts have developed special orders to meet some of these problems. A Bullock order (Bullock v London General Omnibus Co [2007] 1 KB 264) is an order that the plaintiff pay the costs of the successful defendant but add them as a disbursement to the plaintiff’s own costs against the unsuccessful defendant. A Sanderson order (Sanderson v Blyth Theatre Co [1903] 2 KB 533) is an order made direct against an unsuccessful defendant to pay the costs of a successful defendant, as well as the costs of the plaintiff, despite the fact that there might have been no issue on the pleadings between the defendants. The choice of order can be significant where a party is insolvent or impecunious.
The courts have long accepted that before a Bullock or Sanderson order will be made, it must be seen to be reasonable and proper for the plaintiff to have sued the successful defendant. It is now clear that there is an additional requirement that there must have been something in the conduct of the unsuccessful defendant which would make such an order a proper exercise of discretion. Blackburn CJ said in Steppke v National Capital Development Commission (1978) 21 ACTR 23 at page 30:
In my opinion there is a condition for a making of a Bullock order, in addition to the question of 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.
This statement of principle was approved by a number of the Justices of the High Court of Australia in Gould v Vaggelas (1985) 157 CLR 215. Gibbs J said at page 229:
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 over-caution.
In similar vein, Brennan J said at page 260:
Although a making of a Bullock order is in the discretion of a trial judge, the mere joinder of two causes of action against separate defendants in the one action is insufficient to support the making of an order against an unsuccessful defendant when the other defendant is exonerated. A judicial discretion can be exercised to make a Bullock order against an unsuccessful defendant in an action brought against two or more defendants for substantially the same damages only if the conduct of the unsuccessful defendant in relation to the plaintiff’s claim against him showed that the joinder of the successful defendant was reasonable and proper to ensure recovery of the damages sought.
On the facts of the present case, the plaintiff acted entirely reasonably in bringing proceedings against both the occupier and cleaning contractor. She succeeded in establishing that the occupier owed her a duty of care. She was injured in circumstances where a breach of that duty would have been inferred in the absence of evidence called by the occupier to satisfy the court that it had been successful in delegating its duty of care to the cleaning contractor.
So far as the cleaning contractor is concerned, it was aware of the terms of its contract with the occupier and was accordingly aware of all of the facts upon which the court held that successful delegation had occurred. The contractual relationship between the defendants places this case in a different category from those cases where there is no relationship between defendants, as was, for example, the position between the first defendant and the other defendants in Skerbic. On the facts as I have found them, the plaintiff was entitled to succeed against the second defendant but not against the first defendant, for reasons not within the plaintiff’s knowledge but within the knowledge of both of the defendants. This is sufficient to satisfy the requirement relating to the conduct of the unsuccessful defendant which, with the benefit of hindsight, should have offered, or agreed, to indemnify the first defendant and to assume the conduct of the matter on behalf of the first defendant. The plaintiff should have a Bullock order in respect of the first defendant’s costs against the second defendant, in accordance with the provisional view which I expressed at the time of delivering judgment.
This brings me to the letter between defendants of 5 January 2010. The offer was expressed to be a Calderbank offer. This court held in Quirk v Bawden (1992) 112 ACTR 1 that it was proper for a trial judge to give effect to a Calderbank offer (the name originating from the decision in Calderbank v Calderbank [1975] 3 WLR 586) where a party has made an offer in writing to settle an action, the offer is rejected and the party rejecting the offer ultimately does no better at trial. The offer must contain an element of compromise. Higgins J at page 7 cited a number of decisions of the Supreme Court of NSW to the effect that there must be some compromise, connoting that the party making the offer gives something away.
The letter of 5 January 2010 conveyed an offer between defendants. The first defendant had filed and served a notice claiming contribution or indemnity from the second defendant, and the letter related to that claim rather than to the plaintiff’s claim. In the event the plaintiff failed against the first defendant and hence the first defendant had no need to rely on its notice claiming contribution or indemnity.
It is not entirely clear what would have happened if the second defendant had accepted the offer. There was apparently no corresponding offer put to the plaintiff. The plaintiff could not have reasonably been expected to discontinue her claim against the first defendant in the absence of an admission of liability by the second defendant, which was not forthcoming and would have been quite inconsistent with the way the second defendant conducted the case. Acceptance of the offer would accordingly not of itself have removed the need for the first defendant to continue with its defence of the plaintiff’s action. It is hard to see that acceptance of the offer would have shortened the hearing at all.
In any event, the outcome was not “on terms equal to the first defendants offer.” The issue of indemnity by the second defendant of the first defendant did not arise: it was unnecessary for the court to consider or determine it.
In those circumstances, where acceptance of the offer would not have brought the litigation to an end so far as the first defendant was concerned, it would not, it seems to me, be appropriate to give it any effect in relation to the costs orders to be made.
The second defendant must pay the plaintiff’s costs and the first defendant’s costs, but not on any basis more generous than as between party and party. This is more accurately described as a Sanderson order rather than a Bullock order. It seems to me a more practical order than one requiring taxation of the first defendant’s costs against the plaintiff preparatory to the recovery of those costs from the second defendant.

I certify that the preceding fourteen (14) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Master.
Associate:
Date: 9 July2010

Counsel for the plaintiff:  Mr FMG Parker
Solicitors for the plaintiff:  Slater & Gordon
Counsel for the first defendant:  Mr S H Pilkinton
Solicitors for the first defendant:                 Dibbs Barker
Counsel for the second defendant:                Mr H J Kay
Solicitors for the second defendant:             Goodman Law
Date of hearing:  26 March 2010
Date of decision:  9 July 2010