Ross Ambrose Group Pty Ltd v Renkon Pty Ltd
[1999] TASSC 127
•24 November 1999
[1999] TASSC 127
CITATION: Ross Ambrose Group Pty Ltd v Renkon Pty Ltd & Ors [1999] TASSC 127
PARTIES: ROSS AMBROSE GROUP PTY LTD
(ACN 009 501 759)
v
RENKON PTY LTD (ACN 009 581 622) (No 2)
TITLE OF COURT: SUPREME COURT OF TASMANIA
JURISDICTION: ORIGINAL
FILE NO/S: 422/1992
DELIVERED ON: 24 November 1999
DELIVERED AT: Hobart
HEARING DATES: 16 November 1999
JUDGMENT OF: Wright J
CATCHWORDS:
Procedure - Costs - Jurisdiction - Costs incurred by plaintiff in successfully defending counterclaim cannot be recovered as damages against third and fourth parties in same proceedings.
Ross Ambrose Group Pty Ltd v Renkon Pty Ltd 72/1998; Cockburn v Edwards (1881) 18 Ch 449; Wiffen v Bailey [1915] 1 KB 600; Ritchie v British Cables (1960) 77 WN(NSW) 299; Hobartville Stud Pty Ltd v Union Insurance Co (1991) 25 NSWLR 358; Fox v Commissioner for Main Roads [1988] 1 Qd R 120; Law v Collins Expose Aggregate Pty Ltd 24 March 1997 (Court of Appeal New South Wales); Hammond & Co v Bussey (1888) 20 QBD 79; Agius v Great Western Colliery Co (1899) 1 QB 413; Johnson v Ribbins [1977] 1 All ER 806; Gold Coast Bakeries (Qld) Pty Ltd v Heat and Control Pty Ltd [1992] 1 Qd R 162, considered.
Halsbury Laws of England 4 edn, vol12, par1120, applied.
Aust Dig Procedure [67, 552]
REPRESENTATION:
Counsel:
Plaintiff: W M Griffiths
Third Parties: A M Blow QC
Fourth Party: M Thompson
Fifth Party: K B Proctor
Solicitors:
Plaintiff: Dobson Mitchell & Allport
Third Parties: Butler McIntyre & Butler
Fourth Party: Rae & Partners
Fifth Party: Murdoch Clarke
Judgment Number: [1999] TASSC 127
Number of Paragraphs: 18
Serial No 127/1999
File No 422/1992
ROSS AMBROSE GROUP PTY LTD (ACN 009 501 759)
v RENKON PTY LTD (ACN 009 581 622) & ORS (No 2)
REASONS FOR JUDGMENT Wright J
24 November 1999
On 22 June 1998, I found that the defendants' counterclaim against the plaintiff ("Ambrose") and the defendant to the counterclaim ("Deming") must fail (Ross Ambrose Group Pty Ltd v Renkon Pty Ltd 72/1998). On 17 March 1999, counsel for all parties appeared and made further submissions. As a consequence, judgment was formally entered in the following terms:
"1 That there be judgment on the counterclaim for the plaintiff and the defendant to the counterclaim against the firstnamed defendant;
2 That the plaintiffs and the defendant to the counterclaim's taxed costs referable to the counterclaim including any reserved costs be paid by the firstnamed defendant;
3 That upon the signing of a certificate of the taxation of the plaintiff's and the defendant to the counterclaim's costs, the sum of $10,000.00 paid into Court by the firstnamed defendant on or about 10th May 1993 together with any interest earned thereon be paid to the solicitors for the plaintiff and the defendant to the counterclaim in part satisfaction of the costs certified;
4 That until further order, execution of the costs order in favour of the plaintiff and the defendant to the counterclaim, other than in respect of monies paid out of Court as ordered by order 3, be stayed;
5 That there be liberty to apply in respect of further execution of such order as to costs.
6 That the question of costs in all third and fourth party proceedings be adjourned sine die."
On 22 May 1999, the third parties ("Zeeman Kable & Page"), applied (inter alia) (1) "That there be judgment for the Third Parties against the Plaintiff and the Defendant to the Counterclaim in the third party proceedings against the Third Parties".
On 10 June 1999, the fourth party ("Meander Valley Council") applied for orders (inter alia) (1) "That the claim by the Plaintiff … against the fourth party … brought by third party notice filed 15 April 1996 be dismissed" and, (3) "That the claim by the defendant to counterclaim … against the fourth party brought by third party notice filed 15 April 1996 be dismissed".
These applications were heard together on 16 November 1999. Mr Blow QC, of counsel for the third parties, and Mr Thompson, of counsel for the fourth party, submitted that as the counterclaim had failed, the plaintiff's claim against their respective clients also failed and that, accordingly, they were entitled to the orders sought, the only outstanding or live issue between them being in relation to costs. Mr Griffiths, of counsel for Ambrose, argued that the third parties and the fourth party should remain as necessary parties to the substantive litigation because, although the plaintiff had an order in its favour to recover party and party costs from the first named defendant ("Renkon") in respect of the failed counterclaim, it was unlikely that the plaintiff would be able to recover such costs from Renkon as it was now insolvent. No evidence of this fact was placed before me, but there was general agreement at the bar table that this fact would be established in due course. Mr Griffiths also claimed that his client should be able to recover unpaid party and party costs and any solicitor and client costs which it had incurred in the failed counterclaim proceedings from the third and/or fourth parties as damages.
In notices to the solicitors for the third and fourth parties, the solicitors for Ambrose and Deming purported to make these claims for damages by way of particulars under the relevant third party and fourth party notices. The terms of that document were nearly identical in each case. The following document delivered to the third party's solicitors to the plaintiff's solicitors will serve to illustrate the style and content of the supposed particulars in each case.
"amended plaintiff's particulars of expense for third party
notice to third party filed 22nd december 1992
(which is to be read in conjunction with, and is not superseded by,the statement of claim dated 9th august 1994)
(a)The plaintiff claims as damages any part of the plaintiff's costs of the counterclaim ordered to be paid by the first defendant by Mr Justice Wright on 17th March 1999 which it is not able to recover from the first defendant.
(b)The plaintiff claims its solicitor and client costs (excluding the costs referred to in (a) above) of the defence to the counterclaim.
The basis for these damages is that had the third party not been negligent, the first defendant would have had no cause of action against the plaintiff, and the counterclaim would not, and could not, have been brought. The plaintiff would therefore have incurred no legal costs in defending that counterclaim, and is therefore entitled to recover as damages all legal costs incurred by the third party, as an alternative to any costs order sought in the third party proceedings."
Messrs Blow and Thompson each contend:
(a)That the supposed particulars are not particulars of an existing claim at all, but are really new claims of a kind not previously made in either the third party or fourth party notices or the relevant statements of claim delivered subsequently in the third and fourth party proceedings.
(b)That there has been no application to amend the pleadings in the third and fourth party proceedings and, if such an application were to be made, it would be opposed on the grounds (inter alia) that the new claims as formulated are outside the relevant limitation period and are thus statute barred.
(c)That, in any event, claims of this kind cannot be entertained as the sums sought are not recoverable as damages in the present proceedings and any indemnification of Ambrose for costs incurred can only be dealt with as a matter of discretion by the Court in exercising its jurisdiction to make orders as to costs.
The following passage from Halsbury Laws of England 4 edn, vol 12, par1120, was accepted by counsel for the relevant parties to correctly state the law:
"1120 Costs recovered as damages. The distinction between damages and costs had already been mentioned. A party to court proceedings may not recover his costs of those proceedings from any other party to them except by an award of costs by the court. The costs of other proceedings, however, stand on a different footing. Where, as a result of the defendant's wrong, the plaintiff has incurred costs in other proceedings the plaintiff may, subject to the rules of remoteness, recover those costs from the defendant as damages.
The action in which the costs of other proceedings have been recovered include both actions in contract and actions in tort. The other proceedings may have been brought by or against the plaintiff. If the plaintiff was successful in his previous proceedings his claim for costs will generally be confined to his own costs incurred, less any costs recovered from his unsuccessful opponent. If he was unsuccessful his claim will probably include not only his own costs but also any costs or damages which he may have been ordered to pay to his successful opponent. These latter sums will be similarly recoverable from the defendant. The other proceedings will generally have been between the plaintiff and some person other than the defendant, but situations may arise where the other proceedings were also between the plaintiff and the defendant."
A significant number of English and Australian cases confirm these principles. In Cockburn v Edwards (1881) 18 Ch 449 at 459, Jessel MR said:
"The most important point is as to the costs as between solicitor and client. I am of opinion that it is not according to law to give to a party by way of damages the costs as between solicitor and client of the litigation in which the damages are recovered."
At 463, Cotton LJ said:
"… I am of opinion that the difference between solicitor and client costs and party and party costs in an action cannot be given by way of damages in the same action, the latter costs being all that the Plaintiff is entitled to. Costs in another action stand on quite a different footing."
These principles have been applied in Wiffen v Bailey [1915] 1 KB 600, per Buckley LJ at 607 and Phillimore LJ at 610; Ritchie v British Cables (1960) 77 WN(NSW) 299, per Manning J at 300; Hobartville Stud Pty Ltd v Union Insurance Co (1991) 25 NSWLR 358, Per Giles J at 365 - 366 and Fox v Commissioner for Main Roads [1988] 1 Qd R 120, per Thomas J at 123. The only authority referred to which tended to support Mr Griffiths' argument that costs could also constitute damages in the same proceedings was Law v Collins Expose Aggregate Pty Ltd 24 March 1997 (Court of Appeal New South Wales) where Handley JA said:
"The Trial Judge ordered the cross defendant to pay the cross claimant's costs of the cross claim, but not the costs incurred by the cross claimant in defending the plaintiff's action, or the costs it was ordered to pay to the plaintiff.
The cross claimant has cross appealed claiming to be entitled to recover such costs as part of its damages. Legal costs may be recovered as part of a plaintiff's damages either in tort or in contract. See Hammond & Co v Bussey (1887) 20 QBD 79 CA, and McGregor 'Damages', 15th Ed, 1988, pp 439-451. Recovery of these costs as part of the cross claimant's damages depends on whether its decision to defend the proceedings brought by the plaintiff was reasonable. The plaintiff's claim for damages for breach of contract was really unanswerable, and in my judgment the costs of defending the claim on the issue of liability were not reasonably incurred. The trial Judge was correct, and the cross appeal should be dismissed."
His Honour does not appear to have drawn the distinction made by Halsbury, but it was unnecessary for him to do so as he rejected the cross-claimant's application to recover costs on its merits. I therefore do not regard his Honour's observations as constituting an exposition of the law which provides authoritative support from Mr Griffiths' submission.
But Mr Griffiths also makes the point that the third party proceedings and the fourth party proceedings actually constitute separate proceedings for the purpose of the rule described in Halsbury. No precedent dealing with this point was referred to by counsel and it therefore falls to be decided by the application of first principles. It seems to me that although orders of the court are required before a notice may be issued joining a third or subsequent party and further orders may be required as the litigation progresses, dealing with delivery of pleadings, discovery and, of course, the degree of participation open to that additional party in the trial between the principal protagonists, once the additional party has been joined he or she is a party to the cause or matter for all relevant purposes and, as such, can be made the subject of any order of the court which may be designed to spread the burden of costs between the competing litigants in such a way as to achieve fairness and balance.
Although costs normally follow the event, this rule is not axiomatic and, particularly where multiple parties have been involved, and where diverse issues have arisen, nice questions of discretion may arise. It is difficult to see how such issues could be dealt with effectively if the costs incurred by one party in respect of separate and possibly unrelated questions could be crystallised into a damages claim against another party. There may also be difficult and, possibly lengthy questions of causation which would require investigation and resolution.
Equally importantly, as pointed out by Mr Thompson, the issues raised as to damages would require resolution before the making of any final order as to costs by the court and this could lead to circuitous and probably insoluble arguments.
It therefore seems to me that, although for some purposes relating to the award of costs, third party proceedings can be regarded as separate from the principal action (see Hammond & Co v Bussey (1888) 20 QBD 79; Agius v Great Western Colliery Co (1899) 1 QB 413 and Johnson v Ribbins [1977] 1 All ER 806) and in many circumstances it would be just to order the third party to pay the costs of a defendant who has successfully resisted the plaintiff's claim (Gold Coast Bakeries (Qld) Pty Ltd v Heat and Control Pty Ltd [1992] 1 Qd R 162, the costs incurred by one party in a multifaceted case involving three or more parties, cannot be recovered in those proceedings as damages by one party against another.
In any event, I am of the opinion that the plaintiff has made no valid claim in the third or fourth party proceedings which is wide enough to embrace a claim for damages.
Ambrose's claim against Zeeman Kable & Page in the third party notice of 22 December 1992, is formulated as follows:
"and take notice that the Plaintiff claims against you to be entitled to indemnity in respect of each of the Defendant's claims to the extent of such amount as may be found to be just and equitable, and the Plaintiff also claims against you to be indemnified against liability for any loss or damage sustained by it as a result of any Judgements or Order obtained against it by the Defendants upon the said Counter Claim and any costs which the Defendants may recover against the Plaintiff and the Plaintiff also claims against you the cost of these third party proceedings, on the grounds that the Defendant's Counter Claim arises out of and was caused or contributed to by the negligence and or breach of contract of you, and says that as a result of your negligence and or breach of contract the Plaintiff has been put to expense."
In my opinion, this claim breaks down into four component parts:
(1)Indemnity on just and equitable grounds in respect of any liability established by the counterclaim.
(2) Loss or damage consequent upon any order obtained against Ambrose on the counterclaim.
(3) Costs which may be recovered against Ambrose by Renkon on the counterclaim.
(4) Costs of the third party proceedings.
Claims 1, 2 and 3 are redundant in the events which have happened and claim number 4 has yet to be determined. Counsel for Ambrose says that the concluding words of the claim set forth above constitute a fifth claim for "expense occasioned by negligence" but this is not so in my opinion. The words "on the ground … the Plaintiff has been put to expense" do no more than state the basis or grounds of the claim. They do not constitute a separate claim for a fifth category of recompense available to the plaintiff.
I am therefore of the opinion that the claim is not maintainable in the present proceedings because:
(a)It has never been properly claimed in the pleadings and is not now properly claimed without amendment to the pleadings. There has been no application to amend. In any event, such an application would be unlikely to succeed.
(b)Costs in the proceedings are not damages which can be recovered by one party to the proceedings against another party and questions as to the distribution of the burden of costs can be adjusted only by the court exercising its general discretionary jurisdiction as to costs.
It follows that there are no substantive issues requiring the retention of the third or fourth parties as active participants in the proceedings and that there should now be orders entering judgment for each of those parties against the plaintiff and defendant to the counterclaim in the third and fourth party proceedings in the terms of par1 of the Zeeman Kable & Page application of 27 May 1999 and pars1 and 3 of Meander Valley Council's application of 9 June 1999. The remaining aspects of each of those applications will be adjourned sine die.
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