Tarres v Rozelle Carriers Pty Ltd (No 2)
[2011] NSWSC 1586
•19 December 2011
Supreme Court
New South Wales
Medium Neutral Citation: Tarres v Rozelle Carriers Pty Ltd (No 2) [2011] NSWSC 1586 Hearing dates: 09/12/2011 Decision date: 19 December 2011 Jurisdiction: Common Law Before: Garling J Decision: (1) Third defendant pay the costs of the plaintiff.
(2) Third defendant pay the costs of the first and second defendants insofar as, and for the period during which, Zurich Australian Insurance Ltd indemnified those named defendants.
Catchwords: COSTS - Judgment for plaintiff - Negligence proceedings - Motor Vehicle Accident - Two insurers involved in defence of proceedings - Plaintiff abandoned additional claim under Occupational Health and Safety Act - Trial limited to Motor Accidents Compensation Act claim- Second insurer elected to be separate party due to cause of action travelling outside MACA - Additional pleading did not occasion additional investigation or evidence - Second insurer took unduly restrictive and unnecessary approach - No sensible negotiations to develop cost-effective defence of claim - Second insurer to pay costs of plaintiff - Second insurer to pay costs of first insurer for period first insurer indemnified defendants Legislation Cited: Civil Liability Act 2002
Civil Procedure Act 2005
Motor Accidents Compensation Act 1999
Occupational Health and Safety Act 2000
Occupational Health and Safety Regulation 2001
Uniform Civil Procedure Rules 2005
Workers Compensation Act 1987Cases Cited: AWB Limited v Cole (No 6) [2006] FCA 1274; (2006) 235 ALR 307
Channel Seven Sydney Pty Limited v Mahommed (No 2) [2011] NSWCA 6
Commonwealth of Australian v Gretton [2008] NSWCA 117
Dodds Family Investments Pty Limited v Lane Industries Pty Limited (1993) 26 IPR 261
Elite Protective Personnel Pty Ltd v Salmon (No 2) [2007] NSWCA 373
Hughes v Western Australian Cricket Association (Inc) [1986] FCA 382; (1986) ATPR 40-748
James v Surf Road Nominees Pty Ltd (No 2) [2005] NSWCA 296
Latoudis v Casey [1990] HCA 59; 170 CLR 534
Macquarie International Health Clinic Pty Limited v Sydney South West Area Health Service (No 2) [2011] NSWCA 171
Monie v Commonwealth of Australia (No 2) [2008] NSWCA 15
Norbis v Norbis [1986] HCA 17; (1986) 161 CLR 513
Ohn v Walton (1995) 36 NSWLR 77
Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72
Roads and Traffic Authority v McGregor (No 2) [2005] NSWCA 453
Rockdale City Council v Micro Developments Pty Ltd [2008] NSWCA 128
State of New South Wales v Stanley [2007] NSWCA 330
Turkmani v Visvalingam (No 2) [2009] NSWCA 279
Van Eeden v Henry [2005] NSWCA 14; (2005) 62 NSWLR 301
Waters v PC Henderson (Australia) Pty Ltd (1995) 254 ALR 328; [1994] NSWCA 338Category: Costs Parties: William Tarres (P)
Rozelle Carriers Pty Ltd (D1)
Hobbs Bros (Carriers) Pty Ltd (D2)
Allianz Australia Insurance Limited (D3)Representation: L King SC / A McSpedden (P)
R Cavanagh SC (D1-D2)
K Rewell SC / G Smith (D3)
Napier Keen (P)
Riley Gray-Spencer Lawyers (D1-D2)
TLlawyers (D3)
File Number(s): SC 2009/332335
Judgment
On 25 November 2011, I delivered the principal judgment in these proceedings: [2011] NSWSC 1410.
I directed that the parties calculate and agree upon the sum for which judgment should be entered in favour of the plaintiff and to bring in submissions with respect to any question of costs.
This judgment deals with those outstanding issues. I will not repeat what has been written in the earlier judgment.
Judgment Sum
The parties are agreed, having regard to the reasons which I delivered, that the proper calculation of the damages to which the plaintiff is entitled, is as follows:
Non-economic loss $200,000 Past out of pocket expenses $75,500 Past domestic and attendant care $35,000 Past economic loss $182,169 Fox v Wood reimbursement $11,786 Future medical treatment expenses $30,000 Future attendant and domestic care $135,000 Future economic loss $170,685 Total $840,140 This total figure needs to be adjusted for the finding of contributory negligence of 35 per cent and also the agreed finding of 15 per cent which relates to the notional fault of the employer for the purposes of s 151Z(2) of the Workers Compensation Act 1987.
The parties are agreed that after these deductions have been made the proper figure for judgment is $509,572.70. I note that this figure includes interest up to date.
That was the sum for which judgment was entered on Friday 9 December 2011.
Costs
The question of costs is quite complicated.
The plaintiff claims costs from the first and second defendants.
Since this order follows the findings in the principal proceedings in which the plaintiff recovered a judgment, then such a submission accords with the general rule that costs follow the event and it seems generally to be agreed that it is appropriate that the plaintiff be entitled to his costs of, at least, the claim upon which he succeeded.
However, the position about costs is complicated by the need to highlight and evaluate the position of the defendants, particularly leading up to the trial.
The two defendants Rozelle Storage and Warehousing Pty Ltd (formerly known as Rozelle Carriers Pty Ltd) and Hobbs Bros (Carriers) Pty Ltd were both found liable in the principal proceedings. These two defendants admitted that they owed the plaintiff a duty of care and further admitted that they were responsible for the state of the truck in which the plaintiff sustained his injuries.
I found in [7] of the principal judgment that both defendants were in breach of their duty of care to the plaintiff by failing to replace the seatbelt in the prime mover. No distinction was made during the hearing between the positions of the two named defendants. Rather, because there were, up to the first day of the hearing, two insurers involved in the defence of the proceedings, distinctions were made which were based upon the range of indemnity offered by the insurers.
When the proceedings came before the Court for hearing, Mr J Gracie appeared for the first two defendants. At that time, Mr K Rewell SC and Mr G Smith appeared for the third defendant, Allianz Australia Insurance Ltd.
Allianz Australia Insurance Ltd ("Allianz")
Allianz became the third defendant upon its own application, made by Notice of Motion at an early stage of the proceedings. Since Allianz was the compulsory third party insurer of the truck involved in the collision, the Notice of Motion was based upon the provisions of s 79 of the Motor Accidents Compensation Act 1999.
The District Court granted leave to Allianz to be joined as a party to the proceedings.
Although it had originally filed a Notice of Appearance for the two named defendants, which purported to limit the appearance to the indemnity provided by Allianz, once it was joined separately, Allianz ceased to represent the interests of the two named defendants in any respect.
Thereafter the first and second defendants were represented by a firm of solicitors, Riley Gray-Spencer, who did so on the instructions of Zurich Australian Insurance Ltd, which also indemnified the two named defendants against liability which was not covered by the compulsory third party policy of insurance.
The Plaintiff's Amended Statement of Claim
In the Amended Statement of Claim filed on 24 August 2009 with the consent of the solicitors for Allianz, who were then acting for the named defendants, the plaintiff pleaded a cause of action in negligence against both defendants. He pleaded that the first defendant was the registered owner of the relevant prime mover and that the second defendant, Hobbs Bros (Carriers) Pty Ltd, carried on business as a timber and container carrier at Ingleburn.
He pleaded that the first defendant was the owner of the truck within the meaning of the Motor Accidents Compensation Act , and in the alternative, that the second defendant was the owner of the truck.
It is instructive to look at the pleaded particulars of negligence of the defendants. Those particulars include allegations relating to the installation and maintenance of the seatbelt and seat suspension systems. I deal with these allegations in the principal judgment. The final particular of negligence pleaded was in the following terms:
"Failure to ensure that plant, namely the Truck, supplied for use by people was safe and without risks to health when properly used contrary to s 11(1) of the Occupational Health and Safety Act 2000 ("the Act") as evidence of negligence."
It is to be observed that although a breach of the Occupational Health and Safety Act was pleaded, the factual substratum, namely the defective seat belt and seat suspension systems, was the same as the earlier particulars. It simply pleaded that particular of negligence by reference to a standard which it claimed to be erected by s 11 of the Occupational Health and Safety Act .
Had the matter remained there, then the particular issue about costs was unlikely to have arisen.
However, the plaintiff pleaded the following:
"Further, or in the alternative, the First Defendant, and/or the Second Defendant, breached their statutory duties as set out below."
It was pleaded that the statutory duties arose pursuant to the Occupational Health and Safety Regulation 2001. That regulation was made pursuant to the Act. The particulars under this pleading specifically related to identified clauses of the Regulations.
Leading up to this amended pleading, there had been considerable correspondence between the solicitors for Allianz and the solicitors for the plaintiff.
On 10 June 2009, the solicitors for Allianz wrote a letter which included the following paragraphs:
"We confirm that without confirmation from you that the plaintiff's claim is confined to the Motor Accidents Compensation Act 1999, and is not brought pursuant to some other legislation, we are not in a position to file a Defence.
...
As you are aware, we act on behalf of the compulsory third party insurer of the named defendant and accordingly, cannot plead to particulars of negligence which fall outside the ambit of the Motor Accidents Compensation Act 1999.
Subject to your reply to particulars, Allianz Australia Insurance Limited, the compulsory third party insurer, may be in a position where indemnity to the named defendant will have to be declined and we will seek leave to intervene pursuant to Section 79 of the Motor Accidents Compensation Act 1999. In circumstances such as this, Rozelle Carriers Pty Limited will be required to obtain their own legal representation."
In a letter of 11 June 2009, the solicitors for the plaintiff responded and included this material:
"1. In our view, it is inaccurate to describe any defence as being filed on behalf of the CTP insurer Allianz Australia Insurance Limited. Any defence must be filed on behalf of the defendant.
2. The Plaintiff does not intend to restrict his claim solely to remedies under the Motor Accidents Compensation Act , but to the extent that his remedies do not fall under the provisions of the Act, the Plaintiff will seek to recover damages under the Civil Liability Act .
3. The Defendant may be liable for circumstances which may be particularised in such a way as to not come under the provisions of the Motor Accidents Act but also may be liable in respect of other acts or [omissions] coming under the Motor Accidents Act . In such a case, the CTP insurer may be liable in respect of these other acts or [omissions] notwithstanding the alternate manner in which the claim may be pleaded: see Emad Trolleys Pty Ltd v Shigar (2003) 57 NSWLR 636."
After the Amended Statement of Claim was filed and served, correspondence from the solicitors for Allianz to the solicitor for the plaintiff included this material:
"We note the plaintiff's claim, as set out in the Amended Statement of Claim, is not confined to the Motor Accidents Compensation Act 1999. Accordingly, unless agreement can be reached between the respective insurers with respect to indemnity under the various policies of insurance, Allianz Australia Insurance Limited may be in a position where indemnity to the named defendant will have to be declined and leave will be sought to intervene pursuant to Section 79 of the Motor Accidents Compensation Act 1999."
After Allianz was joined to the proceedings as a party on 14 December 2009, Riley Gray-Spencer commenced to act for the two named defendants. This was as a consequence of being instructed by Zurich Australian Insurance Ltd to conduct the defence of the two named defendants.
On the first day of the hearing before me, I raised the question as to the need for the named defendants and Allianz to be separately represented.
I was informed that a further Amended Statement of Defence had been filed by the first and second defendants in which an admission was made that the first and second defendants were the owners of the relevant truck and that both of the parties were owners within the meaning of s 4 of the Motor Accidents Compensation Act . A duty of care was admitted but the particular content of it and a breach of it, remained in dispute.
In the course of discussion, I asked Mr King SC, senior counsel for the plaintiff, whether he was limiting the plaintiff's claim to one under the Motor Accidents Compensation Act or not. He indicated that he was. I confirmed with him that there was no other claim at all being put forward by his client.
The following exchange then took place:
"His Honour: Well Mr King, let us deal with it now. Is there any doubt at all that your client's claim is entirely limited by the provisions of the Motor Accidents Compensation Act?
King: No your Honour.
His Honour: It either falls within that Act or not at all.
King: That's right your Honour.
His Honour: Is that now plain to the three defendants?
Gracie: Yes, your Honour.
His Honour: Should I now have one set of counsel for the three defendants?
Gracie: I think you ought your Honour."
A short adjournment followed.
Thereafter, when the Court resumed, I was informed that there would be one set of representation for all defendants. That continued for the entirety of the case.
The Issues on Costs
As a consequence of my judgment, it is not contended by any of the parties that the plaintiff should not have his costs of the claim upon which he succeeded. The issue is, putting it somewhat simply, which of the two insurers ought pay those costs and what should the costs order include?
Zurich, appearing in the guise of the two named defendants, submits that all of its costs ought properly be paid. It claims those costs either from the plaintiff or the third defendant, Allianz.
Allianz accepts that it should pay the plaintiff's costs, in light of the principal judgment, but disputes that that order for costs should in any way include any component of the costs relating to Zurich's appearance and the issues which fall outside those raised by the plaintiff's claim for damages in accordance with the Motor Accidents Compensation Act .
Arguments
It was put on behalf of Allianz, that the reason it elected to be separately made a party and to cease to act for the named defendants, was because of the suggestion that the plaintiff's cause of action travelled past the Motor Accidents Compensation Act and into areas for which it may not be liable to indemnify the named defendants.
It was then submitted that because ultimately the plaintiff retracted from that position, that the plaintiff should pay the costs of and associated with the dual representation by the insurers. In a simplified way, it was submitted that proper way of making an order with respect to those costs was to order the plaintiff to pay Zurich's costs including that of its representation by Riley Gray-Spencer.
Allianz submitted that, alternatively, that Zurich should pay its own costs. It further submitted that insofar as there were any costs associated with the allegations under the Civil Liability Act 2002, that the plaintiff should pay his own costs of those allegations and pay Allianz's costs of those allegations.
Zurich put alternative submissions to the Court, but ultimately submitted that it should have its costs paid by the plaintiff and the plaintiff should have his costs paid by Allianz.
Costs Principles
The principles with respect to costs are relatively straight forward. It is useful to attempt to summarise them, as they apply in the circumstances of this case.
The power of the Court to award costs is to be found in s 98 of the Civil Procedure Act 2005. It is clear that, in the exercise of that discretionary power, the Court can determine by whom, to whom, on what basis (ie ordinary or indemnity) and to what extent, costs are to be paid.
The Court's power extends to determining when costs are to be paid, whether costs should be subject to an assessment process and even, whether a party should pay a specified gross sum instead of assessed costs: s 98(4) Civil Procedure Act .
The exercise of the Court's discretion is constrained by the Uniform Civil Procedure Rules 2005. Rule 42.1 provides that costs are to follow the event " ... unless it appears ... that some other order should be made ..." .
The discretionary power dealing with costs in the statute is a wide one and should be liberally construed: State of New South Wales v Stanley [2007] NSWCA 330 at [18] per Hislop J (Beazley and Tobias JJA agreeing).
The Court's power is to be exercised judicially, and not arbitrarily or capriciously. The legislative intention is not to be frustrated by the exercise of the power: Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72 at [21].
Whilst principles may be of use to guide the exercise of the discretion, these principles are not legal rules which confine the discretion more narrowly than the Parliament intended: Norbis v Norbis [1986] HCA 17; (1986) 161 CLR 513.
The principles, which I derive from a number of decisions which, if relevant in a particular matter, may guide the exercise of the Court's discretion include:
(a) an order for costs is not a punishment but is compensatory in nature, awarded to indemnify a successful litigant against expense incurred by bringing the legal proceedings: Latoudis v Casey [1990] HCA 59; (1990) 170 CLR 534.
(b) for a successful litigant, costs generally follow the event because the responsibility for the incurring of costs is that of the unsuccessful litigant who had failed to accord that to which the successful litigant was entitled: Commonwealth of Australia v Gretton [2008] NSWCA 117 at 121 per Hodgson JA, Ohn v Walton (1995) 36 NSWLR 77 at 79 per Gleeson CJ; Turkmani v Visvalingam (No 2) [2009] NSWCA 279 at [13] per Hodgson JA, Beazley and McColl JJA agreeing;
(c) the general rule that costs follow the event, and any exceptions to that rule, are founded on the proposition that costs should be ordered to be paid in a way which is "fair" or "just and reasonable", having regard to the responsibility for the incurring of the costs: Gretton at [121]; Ohn at p 79;
(d) at common law, ordinarily a successful litigant receives an order for costs in the absence of special circumstances justifying some other order: Hughes v Western Australian Cricket Association (Inc) [1986] FCA 382; (1986) ATPR 40-748; James v Surf Road Nominees Pty Ltd (No 2) [2005] NSWCA 296 at [31]-[33];
(e) circumstances which may justify an exception to the general rule (or another order) include, but are not limited to:
i. where a litigant has succeeded on only a portion of a claim, it may be reasonable that he bear the expenses of litigating the unsuccessful portion;
ii. the exception may include an order that the successful litigant be deprived of his own costs of the unsuccessful issue and/or that he pay the other party's costs of that issue;
iii. in determining whether such circumstances apply, the particular issue or group of issues, ought be the clearly dominant issue or group, or else readily separable: Waters v PC Henderson (Australia) Pty Ltd (1995) 254 ALR 328; [1994] NSWCA 338; Waters at 330-331; Elite Protective Personnel Pty Ltd v Salmon (No 2) [2007] NSWCA 373;
(f) the discretionary exercise involves the Court making a broad evaluative judgment: Macquarie International Health Clinic Pty Limited v Sydney South West Area Health Service (No 2) [2011] NSWCA 171 at [6];
(g) an allocation of costs in a case of mixed results can rarely, if ever, be done with mathematical precision, rather a sensible application of the decision requires the taking of a broad view of the results of a case: Channel Seven Sydney Pty Limited v Mahommed (No 2) [2011] NSWCA 6 at [63] per McColl JA (Spigelman CJ, Beazley JA, McClellan CJ at CL and Bergin CJ in Eq agreeing); Dodds Family Investments Pty Limited v Lane Industries Pty Limited (1993) 26 IPR 261 at 272 per Gummow, French and Hill JJ; AWB Limited v Cole (No 6) [2006] FCA 1274; (2006) 235 ALR 307 at [14] - [15];
What Orders should be made
There is no question, particularly having regard to admissions in the pleadings and the result of the proceedings, that the named defendants were properly sued and I am not satisfied that the pleading which alleged particulars of negligence based upon the Occupational Health and Safety Act , nor the pleading of a statutory duty based upon Occupational Health and Safety Regulations , was in all of the circumstances an unreasonable one to emanate from the plaintiff.
Whilst the factual matrix was an unusual one, it was the same matrix regardless of which legal cause of action was to be constructed upon the proved facts. It was appropriate, in these circumstances, for the plaintiff, faced with an inevitable finding of a court that he would bear a proportion of the blame for what occurred, to take the somewhat broad pleading which was filed and then follow the approach which the plaintiff's lawyers initially took.
I am not satisfied on the evidence before me that the additional pleading, which was ultimately not pursued at the hearing, in fact occasioned any additional factual investigations, nor the obtaining of any additional evidence. The evidence presented was not any longer than was necessary to, nor otherwise more complex, than the preparation of the evidence and for the hearing generally. The factual matrix of this case always centred upon the adequacy of, and state of repair of, the seatbelt and the seat in the prime mover.
The pleading of the counts relating to the Occupational Health and Safety Act and the Occupational Health and Safety Regulations, pleaded either as a particular of negligence or else as a statutory count, was the basis for Allianz ceasing to act for the plaintiff. That conduct by Allianz then led to the necessity for Zurich taking up acting for the first and second-named defendants.
Allianz submitted that it was obliged by reason of the Motor Accidents Compensation Act to take the course which it did. I disagree.
It is not uncommon for named parties to be indemnified by more than one insurer in respect of a claim. It is not uncommon for insurers to have limited coverage with respect to a particular claim. It is not uncommon for a party to have an uninsured component of a claim which is made and which is partly covered by an insurance indemnity.
These circumstances create an occasion for sensible negotiation between the party, the insurers and the lawyers involved in an attempt to ascertain and then develop a proper working relationship which enables the claim to be defended in as cost effective a manner as is possible. Such an approach to the issue of representation, should not, unless absolutely necessary, result in dual representation. Dual representation, which substantially increases cost and expense, should be generally avoided. The need for dual representation is often more chimerical than real, and will not ordinarily result in an acceptance by the Court of the appropriateness of a costs order being made which fully allows for it. In Van Eeden v Henry [2005] NSWCA 14; (2005) 62 NSWLR 301, Spigelman CJ said at [40]:
"Nevertheless this Court has a discretion with respect to the award of costs and could refuse to make an order for costs in favour of a party whose separate representation was unnecessary or inappropriate."
In my view, in this case, Allianz took an approach which was unduly restrictive and unnecessary and which resulted in the fact of dual representation, albeit through the mechanism of Allianz being added as a party.
The plaintiff was not to blame for that approach. It was in my assessment, substantially caused by the attitude of Allianz, which I am not persuaded was a reasonable one. I see no reason why, having regard to the pleaded facts, there could not have been single representation which properly protected the insurance interests of both Allianz and Zurich. Both insurers had the same interest in arguing that there had not been a breach of duty by the two named defendants. Both insurers had the same interest in arguing that any proved breach was not causative of the injuries sustained and the consequential disabilities suffered by the plaintiff. There was no conflict in their being represented by the same counsel.
Whilst it may have suited the convenience of Allianz to be separately represented, it was not necessary. I conclude that fairness and justice require that Allianz pay all of the costs of all of the parties to the proceedings. This reflects its proper share of the responsibility for what occurred.
In those circumstances I would order the third defendant to pay the costs of the plaintiff and the first and second defendants insofar as, and for the period during which, Zurich indemnified those named defendants.
Orders
I make the following orders:
(1) Third defendant pay the costs of the plaintiff.
(2) Third defendant pay the costs of the first and second defendants insofar as, and for the period during which, Zurich Australian Insurance Ltd indemnified those named defendants.
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Decision last updated: 09 January 2012
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