Theden v Cook Shire Council

[2005] QSC 73

SUPREME COURT OF QUEENSLAND

CITATION:

Theden v Cook Shire Council & Ors [2005] QSC 073

PARTIES:

THEKLA CHARLOTTE THEDEN
(First Plaintiff)
ULRICH THEDEN
(Second Plaintiff)
v
NOMINAL DEFENDANT
(First Defendant)
STATE OF QUEENSLAND
(Second Defendant)
THE COUNCIL OF THE SHIRE OF COOK
(Third Defendant)

FILE NO/S:

63 of 1999

DIVISION:

Trial

PROCEEDING:

ORIGINATING COURT:

Supreme Court at Cairns

DELIVERED ON:

10 March 2005

DELIVERED AT:

Cairns

HEARING DATE:

9 February 2005

JUDGE:

Jones J

ORDER:

1. Judgment for the first plaintiff against the first and second defendants in the sum of FOUR MILLION FOUR HUNDRED AND SEVENTY TWO THOUSAND NINE HUNDRED AND EIGHTY ONE DOLLARS ($4,472,981) and the first plaintiff’s costs of the proceedings against the first defendant and the second defendant to be assessed on an indemnity basis.

2. Judgment for the second plaintiff against the first and second defendants in the sum of FIFTY FIVE THOUSAND DOLLARS ($55,000) and the second plaintiff’s costs of the proceedings against the first and second defendants to be assessed on the standard basis on the District Court scale applicable to such judgment sum.

3. It is ordered that the amount of contribution recoverable in respect of the liability of the first defendant and the second defendant to each of the plaintiffs shall be to the first defendant 80% of the said damages and costs and as to the second defendant 20% of the said damages and costs.

4. Judgment for the first defendant against the second defendant on the first defendant’s claim for contribution and indemnity against the second defendant to the extent of 20% of the said damages and costs adjudicated in favour of the plaintiffs and the costs of the claim to be assessed on a standard basis.

5. Judgment for the second defendant against the first defendant on the second defendant’s claim for contribution or indemnity against the first defendant to the extent of 80% of the said damages and costs adjudicated in favour of the plaintiffs and the costs of the claim to be assessed on a standard basis.

6. It is ordered that if the first plaintiff or the second plaintiff recover from either the first defendant or the second defendant an amount of damages or costs in excess of the amount of contribution for which such defendant has been found liable as a above such defendant shall be at liberty to enter judgment against the other defendant for the total sum so recovered by such plaintiff from it in excess of the amount of such contribution with costs of entering such judgment to be assessed on a standard basis.

7. Judgment for the third defendant against the plaintiffs on their proceeding against the third defendant and the third defendant’s costs of that proceeding to be assessed on a standard basis.

8. It is ordered that the second defendant pay to the plaintiffs the amount paid by them to the third defendant in satisfaction of the above order.

9. Judgment for the third defendant against the first defendant upon the first defendant’s claim for contribution and indemnity against the third defendant.

10. Judgment for the first defendant against the third defendant on the third defendant’s claim for contribution and indemnity against the first defendant.

11. Judgment for the third defendant against the second defendant on the second defendant’s claim for contribution and indemnity against the third defendant.

12. Judgment for the second defendant against the third defendant on the third defendant’s claim for indemnity pursuant to the contract between them.
13. The second defendant pay to the third defendant 95% of its costs of the proceedings between them such costs to be assessed on the standard basis.

14. Liberty to apply upon giving each other relevant party two business days notice.

CATCHWORDS:

COUNSEL:

Mr M Glen for the first and second plaintiffs
Mr Dickson for the first defendant
Mr R Douglas SC for the second defendant
Mr K Holyoak for the third defendant

SOLICITORS:

Stacks Goudkamp Solicitors for the first and second plaintiffs
Broadley Rees Solicitors for the first defendant
Crown Solicitor for the second defendant
Barry & Nilsson for the third defendant

1. Since delivering judgment on 17 September 2004 I have received extensive submissions from each of the parties on the issue of costs. In addition my attention was drawn to the fact that I failed to make formal orders in relation to the second plaintiff’s claim, the quantum of which had been agreed between the parties in the sum of $55,000 with costs on the standard basis according to the relevant District Court scale. I will vary my formal orders to accommodate this oversight. I shall also amend typographical error appearing in paragraph [89]. The word ‘plaintiff’ should be substituted for the word ‘defendant’ in the first line of that paragraph.

1. The second and third defendants also seek my formal adjudication on a claim by the third defendant to be indemnified by the second defendant pursuant to the terms of the contract between them.  This was an issue which I passed over in the belief that its determination was unnecessary on the findings which I had made.  See para [83] of my reasons.  The contract in question is the Road Maintenance Performance Contract (RMPC) referred to in paras [77] – [60].  The adjudication has relevance to whether the second defendant is liable to indemnify the third defendants for all its costs associated with defending the plaintiffs’ claims.

1. There is also a need for me to make formal orders disposing of the claims between the defendants inter se. The parties have agreed that I should determine all these issues notwithstanding the fact that appeals have been instituted against some of the orders already pronounced.  At the conclusion of these reasons I therefore propose to make a composite set of orders dealing with these matters together with the orders already pronounced. 

Indemnity issue

1. The third defendant, by its Amended Defence and Counterclaim, alleged that the claims made by the plaintiffs against it fell within the terms of clause 8.4.3 or clause 8.4.4 of the RMPC.  Those clauses form part of the General Conditions of Contract in which conditions are expressly given priority over other terms. The third defendant seeks a declaration that on the proper construction of these terms it was entitled to be indemnified. 

1. It is necessary to set out in full the relevant clauses wherein the “Principal” is the second defendant, (“the State”) and “the Contractor” is the third defendant, (“the Council”).

8.4.3      Public Liability for Contractor’s Non-performance

The Principal shall indemnify the Contractor against claims by a person against the Contractor in respect of personal injury or death or loss of or damage to any property arising from or a direct consequence of the Contractor’s non-performance of Maintenance whether or not such performance:

·           related to any Defect of which the Contractor had no knowledge, and would not reasonably have been expected to have such knowledge; or

·           related to Defects (and scheduled Activities) known to the Contractor

-         which were below the Agreed Intervention Level; or

-         which were above the Agreed Intervention Level but

v  there was no discretion to remedy the Defect; or

v  there was insufficient time to remedy the Defect, having regard to its priority; or

v  the Defect did not represent a significant safety hazard

8.4.4      Public Liability for Contractor’s Work

The Principal shall indemnify the Contractor in respect of personal injury or death or loss of damage to any property arising from completed Maintenance where such work had been carried out in accordance with the Agreed Activity Standards.

1. In my reasons (at para [66]) I found that the provision of the relevant warning signs was outside the scope of the RMPC.  The Council argues that that does not determine the issue.  It contends that it is a matter of judgment whether the plaintiff’s injury arises from non-performance of maintenance and suggests that the clause is directed to circumstances “where there is a claim that the Council is or might be liable”.

1. Of the three elements necessary to establish the right to an indemnity, the first two are clearly present.  The issue between the State and the Council turns on the construction of the clause and in particular the qualifying expression “arising from…the Council’s non-performance”.  The Council argues that the expression “arising from” is to be equated with “the effective cause of loss”.  See the separate judgments of Stephen J and of Mason and Wilson JJ in Shipping Corporation of India Ltd v Gamlen Chemical Co (A/Asia) Pty Ltd.[1]  Whilst the proximate cause of the first plaintiff’s injury was the overturning of the vehicle, the argument relies upon the fact that the claim against the Council asserted its liability for non-performance of maintenance.  That submission suggests that all that is necessary to establish the obligation to indemnify is the fact that a claim has been raised alleging non-performance of maintenance.

   [1](1980) 55 ALJR 88 at p 91 and p 95

1. The State argues for a construction whereby the expression “arising from” simply relates to the injury, death or loss.  Thus, by reason of my finding that the subject injury did not arise from non-performance of contract, the clause has no application.  Counsel for the State referred to the principles of construction discussed in Andar Transport v Bramwells[2]  where the majority judgment (Gleeson CJ, McHugh, Gummow, Hayne & Heydon JJ) determined that the principles defined in Andar Pty Ltd v National Westminster Finance (Australia) Ltd[3] with respect to guarantees applied similarly to the construction of indemnity clauses.  Put simply, ambiguous contractual provisions should be construed in favour of the indemnifier.[4]

   [2](2004) 78 ALJR 907

   [3](1987) 162 CLR 549

   [4]Ibid at p 561

1. In my view the proper construction of clause 8.4.3 is sufficiently clear without the need to resort to the principles of construction.  The expression “arising from…non-performance of maintenance…” refers directly to the injury or damage.  A finding that there is no injury or damage so caused means that there is no claim which requires indemnification.  In the light of the findings that there was no connection between the first plaintiff’s injury and the conduct of the Council, the Council is not entitled to the declaration which it seeks pursuant to clause 8.4.3.

1. As to clause 8.4.4 I cannot see how that clause has any application in the light of the finding that the first plaintiff’s injuries have no connection with maintenance work nor compliance with agreed activity standards. 

1. I therefore reject the third defendant’s claim to be indemnified by the second defendant.

Plaintiff’s costs on an indemnity basis?

1. The first plaintiff (hereinafter “the plaintiff”) seeks costs against the first and second defendants to be assessed on an indemnity basis relying on the provisions of R 360 of Uniform Civil Procedure Rules (UCPR).

1. The plaintiff made a written offer on 24 June 2002 to settle her claim for $3,000,000 plus costs on the standard basis.  That offer was not accepted and her award exceeded that amount.

1. The first and second defendants (whom I will refer to simply as “the defendants” unless the context requires differentiation) concede the plaintiff’s entitlement to costs on a standard basis, but oppose the ordering of costs on an indemnity basis.  The defendants assert that the offer was not directed to any particular defendant but was simply an offer that the defendants pay.  Thus they argue that the offer was not in a form capable of acceptance.  The plaintiff counters this argument by reference to R 363 which provides for offers to multiple defendants.  Sub-rule 2 is applicable since the defendants were alleged to be jointly or jointly and severally liable to the plaintiff and rights of contribution or indemnity had been raised between defendants.  Consequently the plaintiff was obliged to make the offer to all defendants, as in fact she did.

1. The second basis for the defendants’ opposition to indemnity costs is based on their allegation that the material raised at trial was substantially different to that available to them at the time of their consideration of the offer in April 2001.

1. From the terms of R 360 the plaintiff is prima facie is entitled to indemnity costs the judgment being no less favourable than her offer to settle.  It is for the defendants to show that another order is appropriate.  They seek to do this by comparing the quantum of the allowances in the Loss and Damage Statement of 26 April 2001 and those in the last Loss and Damage Statement 26 November 2003.  They suggest that the differences between those allowances shows that they were misled by the earlier document.

1. The Loss and Damage Statement of April 2001 showed itemised allowances in the sum of $4,736,300 plus un-costed claims for pain suffering and loss of amenities and past transportation costs.

1. By the year 2001 allowances for general damages for injuries of this magnitude were relatively stable.  Any legal practitioner versed in these matters considering the offer would have expected general damages to fall within the range of $150,000-$200,000.  The transportation costs related mainly to the need to change over vehicles of well-known models.  Estimates of this expense would also fall within a relatively narrow range. 

1. There was also an unquantified claim for the increased costs of holiday travel for which the defendants had been given a report of Twelfth Man Consulting.  That report detailed the increased expenses for such travel from which an allowance of such costs could have been estimated.  The allowance made at trial of $175,000 could easily have been anticipated from that material.

1. As at April 2001 the total amount of the claim making a reasonable estimate for unspecified items was in excess of $5,000,000.  At all events the claim then was higher than what was ultimately allowed at trial. 

1. In their submissions after the trial the defendants complained that the level of the claim was substantially higher than the earlier Loss and Damage Statement.  But this did not result from any change in the nature of the claims nor in the manner of computation of allowances.  Rather, there was an increase in prices for some services and a change in the quantum of claim for past services.  There was also a change in the plaintiff’s personal circumstances in 2003 when she and her husband separated.  This led to increased allowances for future care but that unforseen event was not relevant to the defendants’ failure to accept the offer made in 2001.

1. In my view the offer to settle for $3,000,000 was a reasonable one on the material then available to the defendants.  They have not pointed to any specific item in the final assessment which caused them to be misled by its not having been included in the material disclosed to them in 2001.  The failure to accept the offer was no doubt linked to the defendants’ assessments of their prospects on liability as well as any views they might have had on quantum. 

1. The defendants have not satisfied me that circumstances exist which warrant a departure from the effect of the rule.  I therefore order that the plaintiff is entitled to have her costs assessed on the indemnity basis.

The third defendant’s costs

1. Whilst the third defendant was fully successful against the plaintiffs in respect of their claims, it was not fully successful in the claims by and against the other defendants.  Consequently, it will be necessary in assessing the third party’s costs to apportion them between the plaintiffs’ proceedings and the proceedings between defendants. The assessment in each instance will be on the standard basis.

1. The plaintiffs acknowledge that the third defendant has a prima facie right to an order for costs against them in respect of the plaintiffs’ proceedings.  However they argue that they were justified in joining the third defendant in the action such that they should recover those costs from the first and second defendants.  The plaintiffs argue that they had no means of knowing the detail of the arrangements in place between the second and third defendants.  I accept that assertion because in fact those details only became known as the trial unfolded. 

1. The first defendant submits that the second defendant alone should pay for the plaintiffs’ recovery of that component of the third defendant’s costs.  The first defendant argues that it was in the same position as the plaintiff in not knowing which of the two road authorities was responsible for the negligence which the plaintiffs alleged.  At no time prior to the trial was the first defendant in a position to make any assessment of this responsibility and it would have been unwise to discontinue the claim for contribution against either the first or second defendant.

1. In its Notice Claiming Contribution dated 17 July 2002 the first defendant sought contribution against the third defendant in the following terms:-

   “This claim is made relying on the plaintiffs’ allegations against you.”

The plaintiffs’ allegations at the time were expressed in paragraphs 4 and 9 of their Amended Statement of Claim and were directed to the second and third defendants in identical terms.

1. The first defendant’s claim for contribution in those circumstances did not, to any appreciable extent, increase the costs of either the second or third defendant in contesting the issues between them or in responding to the claims for contribution.  At trial, the first defendant did not participate in the disputed issues between the second and third defendants.  Whilst no doubt there were some costs associated with the pleading of the contribution claim, these costs would be so minor in the context of this litigation as not to warrant any order for the third defendant’s costs being shared between the first and second defendants.

1. The second defendant argues that the plaintiffs should themselves bear the costs of joining the third defendant.  It contends there was nothing in its conduct which encouraged the plaintiffs to pursue the third defendant.

1. I reject this suggestion.  The plaintiffs could not be expected to be aware of the complex arrangements prevailing between the State and the Council.  Shortly prior to the accident, the road in question had been re-sheeted.  The work was performed by the Council but the responsibility for the scope of the work and the basis on which it was done could not possibly have been known to the plaintiffs.  Nor indeed was there any way in which the plaintiffs (or the first defendant) could have anticipated nature and extent of the stewardship arrangements between the State and the Council.  In its defence, the second defendant admitted control over the road but pleaded that that control was exercised on its behalf by the third defendant.  As a matter of prudence it was proper for the plaintiff to join both the second and third defendant on the issues relating to the road and its lack of signage.  Thereafter the complexity of the issue between the second and third defendants was raised by the exchange of their pleadings claiming contribution and indemnity.  As I have mentioned the true nature of these dealings was not revealed until the trial.

1. In my view no worthwhile assessment of the likely determination of those issues could possibly have been made by either the plaintiff or the first defendant prior to trial.  It is not to the point now to argue that submissions made after the trial by the plaintiffs and first defendant seeking to maintain a separate case against the third defendant.  The question must turn on whether it was reasonable for the plaintiff to institute proceedings against the third defendant and thereafter to maintain those respective positions.  The test was succinctly expressed by Gibbs CJ in Gould v Vaggelas[5] as follows:-

   “In my respectful opinion the true position was clearly stated by Blackburn C.J. in Steppke v National Capital Development Commission (60), when he said that “there is a condition for the making of a Bullock order, in addition to the question 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.”

   [5](1983-5) 157 CLR 215 at 230

1. Given the nature of the dispute between the second defendant and the third defendant and the late disclosure of the details upon which the dispute turned, it was reasonable for the plaintiffs to take the approach which they did.  The costs in question relate only to the liability arising from the state of the roadway and so do not concern the first defendant.  That being the case it is appropriate that the plaintiff should recover the costs they are obliged to pay to the third defendant from the unsuccessful second defendant.  I propose therefore to make a Bullock order to achieve this result.

1. My findings on the contribution/indemnity issues between the second and third defendants must result in the second defendant bearing the major part of the costs of those issues.  As between these defendants there was the principal question as to which of them had responsibility for road signage. This involved significant factual and contractual issues and the determination of the tortious responsibility.  The second defendant was however successful on the more minor question of construction of the indemnity provision dealt with above.  Rather than having those charged with the responsibility of assessing costs attempt to discriminate between these issues I will order that the second defendant pay 95% of the third defendant’s costs of the proceedings between it and the second defendant.

1. The third defendant was unsuccessful in its claim seeking contribution against the first defendant who was unsuccessful in its claim against the third defendant.  These issues,  in the context of the whole of the trial, do not warrant the making of separate orders for costs.

1. Having made these determinations I make the following orders which will include the orders already pronounced.

1. My orders are:-

1.          Judgment for the first plaintiff against the first and second defendants in the sum of FOUR MILLION FOUR HUNDRED AND SEVENTY TWO THOUSAND NINE HUNDRED AND EIGHTY ONE DOLLARS ($4,472,981) and the first plaintiff’s costs of the proceedings against the first defendant and the second defendant to be assessed on an indemnity basis.

2.          Judgment for the second plaintiff against the first and second defendants in the sum of FIFTY FIVE THOUSAND DOLLARS ($55,000) and the second plaintiff’s costs of the proceedings against the first and second defendants to be assessed on the standard basis on the District Court scale applicable to such judgment sum.

3.          It is ordered that the amount of contribution recoverable in respect of the liability of the first defendant and the second defendant to each of the plaintiffs shall be to the first defendant 80% of the said damages and costs and as to the second defendant 20% of the said damages and costs.

4.          Judgment for the first defendant against the second defendant on the first defendant’s claim for contribution and indemnity against the second defendant to the extent of 20% of the said damages and costs adjudicated in favour of the plaintiffs and the costs of the claim to be assessed on a standard basis.

5.          Judgment for the second defendant against the first defendant on the second defendant’s claim for contribution or indemnity against the first defendant to the extent of 80% of the said damages and costs adjudicated in favour of the plaintiffs and the costs of the claim to be assessed on a standard basis.

6.          It is ordered that if the first plaintiff or the second plaintiff recover from either the first defendant or the second defendant an amount of damages or costs in excess of the amount of contribution for which such defendant has been found liable as a above such defendant shall be at liberty to enter judgment against the other defendant for the total sum so recovered by such plaintiff from it in excess of the amount of such contribution with costs of entering such judgment to be assessed on a standard basis.

7.          Judgment for the third defendant against the plaintiffs on their proceeding against the third defendant and the third defendant’s costs of that proceeding to be assessed on a standard basis.

8.          It is ordered that the second defendant pay to the plaintiffs the amount paid by them to the third defendant in satisfaction of the above order.

9.          Judgment for the third defendant against the first defendant upon the first defendant’s claim for contribution and indemnity against the third defendant.

10.       Judgment for the first defendant against the third defendant on the third defendant’s claim for contribution and indemnity against the first defendant.

11.       Judgment for the third defendant against the second defendant on the second defendant’s claim for contribution and indemnity against the third defendant.

12.       Judgment for the second defendant against the third defendant on the third defendant’s claim for indemnity pursuant to the contract between them.

13.       The second defendant pay to the third defendant 95% of its costs of the proceedings between them such costs to be assessed on the standard basis.

14.       Liberty to apply upon giving each other relevant party two business days notice.

.