Stanley v Colorado Group and Anor (Ruling)
[2014] VCC 2173
•10 December 2014
| IN THE COUNTY COURT OF VICTORIA AT WARRNAMBOOL CIVIL DIVISION | Revised Not Restricted Suitable for Publication |
DAMAGES AND COMPENSATION LIST
GENERAL DIVISION
Case No. CI-12-03574
| MAVIS MERRY STANLEY | Plaintiff |
| v | |
| COLORADO GROUP LIMITED (Administrators Appointed) | Defendant |
| and | |
| CHARTER SECURITY GROUP PTY LTD | Second Defendant |
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JUDGE: | HIS HONOUR JUDGE LACAVA | |
WHERE HELD: | Warrnambool | |
DATE OF HEARING: | 24, 25, 26, 27 and 28 November 2014, 1, 2, 3, 4 5 and | |
DATE OF RULING: | 10 December 2014 | |
CASE MAY BE CITED AS: | Stanley v Colorado Group & Anor (Ruling) | |
MEDIUM NEUTRAL CITATION: | [2014] VCC 2173 | |
RULING
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Subject: COSTS
Catchwords: Costs orders where contribution proceedings between defendants – application of Order 26.10(2) of the County Court Civil Procedure Rules 2008
Legislation Cited: Wrongs Act 1958, s23B; Accident Compensation Act 1985, s134AB(12) and s134AB(28)(d); Civil Procedure Act 2010, s7; County Court Civil Procedure Rules 2008.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr N Bird with Mr I Fehring | Taits Lawyers |
| For the First Defendant | Mr P D Elliott QC with Mr J Batten | Lander & Rogers |
| For the Second Defendant | Mr D McWilliams | Wotton + Kearney |
HIS HONOUR:
1 In this proceeding the plaintiff claimed damages against each defendant for injury she alleged she sustained on 1 November 2008 whilst employed by the first-named defendant. The proceeding was tried before a jury of six over ten days commencing on 24 November 2014.
2 On 4 December 2014, the jury found in favour of the plaintiff and it has been agreed between counsel that I should enter judgment on the claim for the plaintiff in the sum of $64,373.00. There are other consequential orders as to the plaintiff’s costs that have also been agreed between counsel. In the orders that I shall make at the end of this ruling the first five orders are non-contentious.
3 However, there is a dispute as to costs between the defendants. In the proceeding each sought contribution from the other. In order to understand the dispute, some background is necessary.
4 The plaintiff sued the first defendant as her employer. In summary form her cause of action against the first defendant was a failure to provide a safe system of work.
5 The plaintiff’s case against the second defendant was that it was negligent in the supply, installation, configuring and monitoring of a burglar alarm system. After the evidence concluded it was clear there was no evidence from which the jury could properly conclude the second defendant had breached its duty of care to properly supply or install or configure the relevant burglar alarm system. The issue that was left to the jury, so far as the second defendant was concerned, was whether or not it had breached its duty of care to properly monitor the burglar alarm system.
6 On 1 November 2008, the plaintiff arrived at her place of employment which was the Diana Ferrari shoe store in Torquay. She opened the store but whilst attempting to deactivate the burglar alarm system she entered the incorrect code number. Shortly thereafter the alarm sounded. There was nothing wrong with the alarm system that caused it to sound. The alarm was triggered because the plaintiff had forgotten her code number and entered the incorrect code.
7 The plaintiff suffered what was described in evidence as an acoustic shock syndrome. This was explained as a psychological reaction to fright caused by a sudden unexpected loud sound. The plaintiff claimed and, by its verdict the jury must be taken to have accepted, that she continues to suffer from this syndrome which manifests itself on an ongoing basis by causing the plaintiff to continue to have adverse reactions to unexpected loud noises, such as a car back firing. To protect herself from this, the plaintiff wears ear plugs on a daily basis. Her claim against the first defendant as her employer was that it failed to properly instruct her in the use of the alarm and the importance of remembering the code number and it failed to have the correct code number written down in a safe place within the store.
8 The second defendant was first joined as a third party to the proceeding by the first defendant and it was later joined as a second defendant by the plaintiff.
9 The first defendant also joined another party, Securenet Monitoring Services Pty Ltd (“Securenet”), but this party was released from the proceeding before trial. It was not joined by the plaintiff.
10 When the alarm was triggered, it sent a message electronically to Securenet in Sydney. That company monitored the alarm system for the second defendant after hours and at weekends. The plaintiff triggered the alarm at 8.58am on a Saturday morning. Ms Brown was a witness called by the second defendant. She was employed by Securenet. She gave evidence about her various duties but, importantly as it transpired, she gave evidence about telephone conversations she had with the plaintiff and a technician employed by the second defendant.
11 Shortly before trial the second defendant discovered audio recordings of all of the conversations had by Ms Brown in response to the triggering of the alarm. The first defendant complains in argument about this late discovery. Those recordings showed that Ms Brown had a lengthy telephone conversation with the plaintiff who was on a landline phone within the premises where the alarm was sounding. The sound of the alarm ceased two to three minutes into the conversation which lasted a bit more than nine minutes. During the course of the telephone conversation the plaintiff asked Ms Brown for the code but was told by Ms Brown that she did not have it.
12 After Ms Brown had spoken with the plaintiff, she then spoke with a technician who was employed by the second defendant. That conversation made it clear that Ms Brown did have the correct code at her disposal on her computer because she verified it to the technician who shortly thereafter telephoned the plaintiff at the premises and provided her with the correct code numbers. Ms Brown said she did not provide the code to the plaintiff immediately because she was not authorised to do so. The second defendant did however permit a technician to reveal the correct code.
13 These were all factual issues for the jury to decide, although what I have set out briefly above seems to me to have been the undisputed evidence at the end of the day.
14 During the course of the trial the various pleadings of the plaintiff and the first defendant were amended on a number of occasions. Late in the proceeding after the close of the plaintiff’s case, I permitted an amendment to the Statement of Claim to include an allegation that the second defendant breached its duty of care to properly monitor the alarm. In response, the second defendant amended its Defence to plead that it had delegated the monitoring duty or function to Securenet. One of the issues the jury had to decide was whether or not there had in fact been a delegation to Securenet making it a sub-contractor of the second defendant or whether Securenet was merely an agent of the second defendant. By its verdict, the jury must be taken to have rejected this defence raised by the second defendant. The verdict of the jury is consistent with it having decided Securenet was an agent of the second defendant.
15 Although the first defendant’s notice of contribution claimed relief from the second defendant in contract and, pursuant to s23B of the Wrongs Act 1958, as between the defendants, the jury was asked to apportion responsibility in negligence between the two defendants on the later ground, that is, on a just and equitable basis. That was the only basis upon which the jury was asked to decide the contribution proceedings between defendants.
16 In answering the questions asked of it, the jury decided the plaintiff suffered injury as a result of the negligence of each defendant. They assessed the amount of the plaintiff’s pain and suffering damages and pecuniary loss damages and, decided that the plaintiff was guilty of contributory negligence to the extent of 60 per cent. The jury decided the contribution proceedings between the respective defendants by attributing 60 per cent responsibility to the first defendant and 40 per cent to the second defendant. That explains the basis of the orders that I will shortly make that have been agreed to.
17 The plaintiff had made an offer of compromise to both defendants on 9 October 2014. In that offer the plaintiff offered to accept $190,000 and retention of weekly benefits and costs on a party/party basis.
18 Thereafter, the second defendant served two notices of its willingness to contribute to a compromise of the plaintiff’s claim on the first defendant. Each notice was served pursuant to Order 26 of the County Court Civil Procedure Rules 2008 (“the Rules”).
19 On 23 October 2014, the second defendant served a Notice of Willingness to Contribute 50 per cent of the sum of $190,000 and 50 per cent of the plaintiff’s costs (“the first notice”). The covering letter forwarding the first notice was “Without Prejudice Save as to Costs” and, the offer to contribute was expressed to remain open until 4.00pm on 31 October 2014. The first defendant did not accept the second defendant’s offer to contribute made in the first notice.
20 On 7 November 2014, the second defendant served a second Notice of Willingness to Contribute (“the second notice”). In the second notice, the second defendant offered to contribute 50 per cent toward a compromise or judgment of the plaintiff’s claim, as well as 50 per cent of the plaintiff’s party/party costs and disbursements. As with the first notice, so too the covering letter forwarding the second notice was “Without Prejudice Save as to Costs” and, the offer to contribute was expressed to remain open until 4.00pm on 14 November 2014.
21 In my view, each of the notices conveyed to the first defendant before trial gave clear notice that the second defendant was willing to contribute with the first defendant to a compromise of the plaintiff’s claim on a 50/50 basis.
22 The trial commenced on the first day of the circuit sittings at Warrnambool on 24 November 2014. The trial proceeded over ten days before the jury. As I have said, the jury apportioned negligence between the defendants on a 60/40 basis in favour of the second defendant.
23 The orders for costs that I will make as regards payment of the plaintiff’s costs are against the second defendant only. Because the amount of damages the jury awarded the plaintiff was less than 90 per cent of her statutory offer made pursuant to s134AB(12) of the Accident Compensation Act 1985 then, s134AB(28)(d) of that Act also applies here, in the result that the Court must not make an order against the first defendant in respect of the plaintiff’s costs, and as between the plaintiff and the first defendant, each party must bear its own costs.
24 Section 134AB(28)(d) of the Accident Compensation Act 1985 here relevantly regulates costs orders that the Court can or cannot make as between the plaintiff or “worker” on the one hand and, an employer represented by the Victorian WorkCover Authority on the other. It does not in terms constrain the Court in any cost order it may make as between a plaintiff and a party who is not an employer of the plaintiff. Further, the section does not in terms constrain the Court from making a costs order in contribution proceedings that are between the employer of a plaintiff and a non-employer party.
25 After the jury delivered its verdict, Mr McWilliams, who appeared for the second defendant, made application for orders, firstly, that the first defendant pay the second defendant’s costs of and incidental to the proceeding as a whole on a party/party basis up to 25 October 2014 and thereafter on an indemnity basis. This application relies on the first notice. Alternatively, he asked for a similar order on a party/party basis up to 11 November 2014 and thereafter on an indemnity basis. This alternative relies on the second notice. Secondly, Mr McWilliams sought an order that the first defendant indemnify the second defendant for all of the costs it is liable to pay to the plaintiff under order two that I will make. Alternatively, he asked that I order the first defendant to pay 60 per cent of any costs the second defendant must pay the plaintiff consistent with the apportionment reflected in the jury’s verdict.
26 The application on behalf of the second defendant is made on the basis of Order 26.10(2) of the Rules which provides as follows:
“If an offer is made by a contributor party (the first contributor party) and not accepted by another contributor party, and the first contributor party obtains a judgment against the other contributor party more favourable than the terms of the offer, then, unless the Court otherwise orders, the first contributor party is entitled to an order that the contributor party who did not accept the offer pay the costs incurred by the first contributor party—
(a) before 11.00 a.m. on the second business day after the offer was served — on a party and party basis; and
(b) after the time referred to in paragraph (a) — on an indemnity basis.”
27 Order 26.10(2) is in a new form that began to operate from 7 October 2013.
28 There is no dispute that in attributing only 40 per cent negligence to the second defendant, it obtained a judgment in the contribution proceeding that was more favourable than the terms of either of its offers contained in the first and second notices. Order 26.10(2) is therefore enlivened.
29 In summary, Mr McWilliams submitted that there was no more that the second defendant could have done to resolve the contribution proceedings between defendants. He argued that the second defendant’s willingness to effectively contribute 50 per cent to the plaintiff’s loss and damages was both realistic and, reasonable in the circumstances having regard to the evidence. He submitted the offers made by his client fulfilled its obligations under the Civil Procedure Act 2010 the overarching purpose of which is to facilitate cost effective resolution of disputes.[1] He submitted his client should not be held responsible for costs incurred after the offers contained in each of the notices were rejected, simply because the first defendant, indemnified as it is by the Victorian WorkCover Authority, miscalculated or, misjudged, the extent of its liability to the plaintiff.
[1]See Section 7(1)
30 Mr McWilliams submitted the second defendant should not be out of pocket and the court should exercise the discretion which it has under Order 26.10(2) to order that the first defendant pay the second defendant’s costs of the proceedings from expiry of either the first or second notices on an indemnity basis. Mr McWilliams also submitted the rule should be read to include all of the costs that the second defendant be ordered to pay to the plaintiff.
31 Mr Elliott QC, Senior Counsel for the first defendant, opposed the orders sought by the second defendant.
32 He submitted first, that as to the costs that the second defendant should be ordered to pay the plaintiff, then if there be an order against the first defendant, then it should be limited to indemnifying the second defendant as to 60 per cent only and not a full indemnity consistent with the apportionment of contribution by the jury.
33 Mr Elliott further submitted that in the exercise of its discretion, the Court should not order the first defendant to pay any of the second defendant’s costs of the proceedings from the time that either the first or second notices lapsed. He submitted that this was because the second defendant was late in giving discovery of various documents that related to critical evidence in the proceedings, especially the audio files of the telephone conversations between Ms Brown and the plaintiff and a further recorded conversation between Ms Brown and the second defendant’s technician. Those recordings were not discovered until the eve of trial.
34 I accept that the second defendant did not discover the audio files of the recorded conversations until the eve of the trial. I also accept that those recordings featured heavily in the submissions and arguments addressed to the jury by counsel. However, I do not accept that the first defendant was prejudiced at all by the late discovery. In my view, the discovery of the audio files enhanced the arguments which the first defendant made against the second defendant in the contribution proceedings and did not detract from them. Had the audio files been discovered by the second defendant in accordance with the Rules, I very much doubt the first defendant would have made any different decision when assessing whether or not to compromise the contribution proceedings. Indeed, having regard to the way the first defendant conducted the defence of the proceeding, the discovery of the audio files, in my view, would have strengthened the first defendant in its opinion that it should reject the offers to contribute by the second defendant.
35 I reject the arguments advanced by Mr Elliott on behalf of the first defendant that I should reject the applications for costs advanced by Mr McWilliams on behalf of the second defendant.
36 Order 26.10(2) was revised with operation from October 2013. In summary, the order in its new form entitles a defendant that has obtained a judgment more favourable than an offer it had made in a notice of willingness to contribute, to an order for costs “incurred” by it on a party and party basis up until two days after the service of the notice and thereafter on an indemnity basis unless the Court otherwise orders.
37 The terms of Order 26.10(2) in its current form may be contrasted with the earlier terms of that order before amendment. The earlier version of Order 26.10(2) provided the Court with a general discretion to take an offer to contribute into account in determining which party should pay the whole or part of the costs of the party making the offer to contribute and on what basis.
38 The new version of the Rule strengthens the older version by providing a successful defendant with a prima facie entitlement to indemnity costs in certain circumstances.
39 But the earlier version of the Rule also provided for the Court to be able to take into account an offer to contribute in deciding what costs the party that made an offer to contribute should pay to a plaintiff. In this respect the new version of the Rule differs from that which preceded it. The new version of the Rule is confined to a consideration of the “costs incurred” by an otherwise successful defendant. In terms it does not address any costs that the party making the successful offer is liable to pay the plaintiff. In my view, by using the words “costs incurred” in the new version of the Rule, the operation of the Rule is limited to the actual costs incurred by a party for its own legal costs and does not extend to the costs of the plaintiff that it may be ordered to pay consequent upon any apportionment of liability between defendants. Here, the plaintiff’s costs were “incurred” by the plaintiff but ordered to be paid by the second defendant.
40 For these reasons, I reject the application by Mr McWilliams for an order that the first defendant indemnify the second defendant for the whole of the costs which the second defendant be ordered to pay to the plaintiff. In my judgment, such an order is not empowered by the current form of Order 26.10(2) of the Rules.
41 It is appropriate, in my view, that the first defendant be ordered to indemnify the second defendant for 60 per cent of the plaintiff’s costs which the second defendant be ordered to pay to the plaintiff. Such an order is consistent with the jury’s verdict apportioning liability between defendants on a 60/40 basis in favour of the second defendant.
42 The second defendant delivered two notices of willingness to contribute to settlement of the plaintiff’s claim. The jury’s verdict, both as to amount and, as to apportionment of liability between defendants, meant that the result for the second defendant was more favourable than the offer it made in each notice. Having rejected the arguments as to the exercise of discretion on costs advanced by Mr Elliott, in my view, there is no good reason why the second-named defendant should not be entitled to the benefit of an order for its costs under Order 26.10(2). The second defendant is entitled to an order that the first defendant pay its costs of and incidental to the proceeding, including the contribution proceedings, on a party and party basis up to and including 25 October 2014 and, thereafter on an indemnity basis, and that will be included in the orders that I will make.
43 Mr McWilliams opposed a certificate that plaintiff’s counsel be entitled to charge for two days’ preparation fee. He argued that question ought best be decided by the Costs Court. I disagree. As the trial judge, I am in the best position to determine this question without having the Costs Court to be informed of how the trial proceeded. The trial here proceeded for 10 days before the jury with argument as to costs on day 11. There were complicated factual issues and the risks to the plaintiff were high. In my opinion, counsel were entitled to two full days of preparation over and above the time that merges in the brief fee and for these reasons, I have certified for two days of preparation for each of the plaintiff’s counsel.
44 The Orders of the Court will be as follows:
(1) Judgment on the claim in the sum of $64,373.00.
(2) The second-named defendant pay the plaintiff’s costs of and incidental to the proceeding (including any reserved costs) such costs absent agreement to be taxed by the Costs Court on the County Court Scale.
(3) Certify for two counsel:
(a) Leading Counsel’s fee on brief at $4,800 per day for eleven days with a circuit fee of $559, ten days circuit fee at $372, 4 hours special conference at $480 per hour and two days preparation at the daily brief fee;
(b) Junior Counsel’s fee on brief at $3,800 per day for eleven days with a circuit fee of $559, ten days circuit fee at $372, 4 hours special conferences at $380 per hour and two days preparation at the daily brief fee.
(4) The first-named defendant indemnify the second-named defendant to the sum of 60 per cent of the amount outlined in Order 1.
(5) The second-named defendant indemnify the first-named defendant to the sum of 40 per cent of the amount outlined in Order 1.
(6) The first-named defendant indemnify the second defendant for 60 per cent of all the costs the second-named defendant is required to pay the plaintiff pursuant to Order (2) hereof.
(7) The first-named defendant pay the second-named defendant’s cost of and incidental to the proceeding on a party and party basis up to 25 October 2014, and thereafter on an indemnity basis. Such costs absent agreement to be taxed by the Costs Court.
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