Victorian Workcover Authority v Kagan Bros Consolidated Pty Ltd
[2011] VSCA 91
•01 April 2011
SUPREME COURT OF VICTORIA
COURT OF APPEAL
| S APCI 2011 0020 | |
| VICTORIAN WORKCOVER AUTHORITY | Applicant |
| v | |
| KAGAN BROS CONSOLIDATED PTY LTD | Respondent |
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APPLICATION ON SUMMONS
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| JUDGES | REDLICH and BONGIORNO JJA |
| WHERE HELD | MELBOURNE |
| DATE OF HEARING | 01 April 2011 |
| DATE OF JUDGMENT | 01 April 2011 |
| MEDIUM NEUTRAL CITATION | [2011] VSCA 91 |
| JUDGMENT APPEALED FROM | Victorian WorkCover Authority v Playcorp Pty Ltd and Kagan Bros Consolidated Pty Ltd [2011] VCC 139 (Judge Saccardo) |
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COSTS – Bullock order sought against unsuccessful defendant for indemnity costs payable by VWA to successful defendant – Whether claims against defendants interdependent or alternatives – Substantial connection between claims sufficient – Observations in Berrigan Shire Council v Ballerini (No 2) [2006] VSCA 65, [42] explained – Apportionment proceeding under s 138 Accident Compensation Act 1985 – Unreasonable refusal by VWA to accept Calderbank offers – Nature of s 138 claims permits Bullock order – Conduct of unsuccessful defendant – Whether substantial injustice in refusing leave to appeal – State ofVictoria v Horvath(No 2)[2003] VSCA 24; Central Goldfields Shire v Haley (No 2) [2009] VSCA 203 and Fassbender v Bohlmann(t/as Seymour Freight Lines and Caravans) [2010] VSCA 204 considered.
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Appearances: | Counsel | Solicitors |
| For the Applicant | Mr M Wheelahan SC Mr J C Simpson | Thomsons Lawyers |
| For the Respondent | Mr J Ruskin QC Mr W C Grainger | Minter Ellison |
REDLICH JA:
BONGIORNO JA:
This is an application for leave to appeal pursuant to s 74(2E) of the County Court Act 1958 from a refusal by the trial judge to grant the Victorian Workcover Authority (‘VWA’) a Bullock order as against Kagan Bros Consolidated Pty Ltd (‘the respondent’). The application originates out of proceedings brought by the VWA against the respondent and Playcorp Pty Ltd for an indemnity pursuant to s 138 of the Accident Compensation Act 1985 (‘the Act’).
Factual Background
On 4 September 2003 Rosalie Jones (‘the worker’) was injured while working at a warehouse occupied by Playcorp as a ‘picker and packer’. At the time of her injury she was employed by Group Industrial Pty Ltd (‘the employer’), it having entered into an agreement with Playcorp to provide the worker’s services to the latter. The respondent was generally managing the work undertaken at the warehouse at the time the worker was injured. The worker’s injury occurred while she was carrying out her usual work activities at the warehouse, when she tripped over a bolt that was protruding from the floor and fell heavily. The worker’s knee was seriously injured, and as a result she suffered ongoing complications, pain and restricted mobility, and was unable to return to work. Prior to her injury, the worker and other workers had complained about the bolts protruding from the floor to the supervisor, who was employed by the respondent.
At trial it was not in dispute that the bolt presented a potential tripping hazard, and that the worker’s injury had been occasioned by a breach of the duty of care her employer owed to the worker.
Following a successful Workcover claim by the worker for compensation from the VWA for her injuries, the VWA commenced proceedings in the County Court against Playcorp and the respondent for an indemnity pursuant to s 138 of the Act, alleging that both parties were in breach of the obligations they owed to the worker and accordingly were liable to contribute to the amount of compensation payable to the worker. Section 138 sub-s (1) provides that where an injury for which compensation is payable by the VWA is caused in circumstances where a third party is liable, the VWA is entitled to be indemnified by the third party in accordance with the section. The amount payable by the third party in these circumstances is the lesser of the whole amount payable under the Act for the injury, and the amount calculated in accordance with the formula expressed in s 138(3)(b). The formula applicable in the present case is the amount of damages for pecuniary and non pecuniary loss which the third party is or would have been liable to pay in respect of the injury (disregarding the extent, if any, whereby any other person's act, default or negligence caused or contributed to the injury), multiplied by the extent (expressed as a percentage and divided by 100) to which the third party’s act, default or negligence caused or contributed to the injury.[1]
[1]This is because in this case no amounts were recoverable from the Transport Accident Commission, and the respondent had not paid any settlement amounts: see Accident Compensation Act 1985 s 138(3)(b).
Decision as to the substantive claims
After a six-day hearing the trial judge delivered judgment in the substantive proceeding on 20 January 2011.
His Honour held that the employer owed a non-delegable duty of care to the worker not to expose her to risk of injury in the course of her employment, and concluded that it had ‘comprehensively abandoned’ its obligations.[2] His Honour found that the respondent was the occupier in possession of the warehouse where the work was being carried out, to the extent that it exercised control over the work systems and the detection and management of hazards within the workplace. He held that the relationship between the respondent and Playcorp was such that the respondent had undertaken to manage the site and any occupational health and safety issues that arose at it, including those that resulted in the worker’s injury. His Honour concluded that the system that the respondent implemented to manage the problem of the bolts that caused the worker’s injury was inadequate.[3]
[2] VWA v Playcorp Pty Ltd and Kagan Bros Consolidated Pty [2011] VCC 138, [56].
[3]Ibid [57]–[59].
Turning to Playcorp’s liability, the trial judge characterised Playcorp as an occupier of the site that had engaged the respondent, an ‘expert in the area’, to manage the warehouse on its behalf.[4] His Honour found that the respondent had assumed the responsibility to report to Playcorp in relation to any work which it believed needed to be undertaken at the warehouse, but did not at any point prior to the injury notify Playcorp of any potential problem that arose by reason of the tripping hazard constituted by the protruding bolts. As his Honour was satisfied that Playcorp consequently had no knowledge of the existence of the tripping hazard and had a limited opportunity to detect the problem, its failure to detect and remedy the problem was not a breach of the duty of care which it owed to the worker.[5]
[4]Ibid [60].
[5]Ibid [64]–[65].
Accordingly, his Honour upheld the VWA’s claim against the respondent, but rejected the claim against Playcorp. His Honour apportioned the responsibility for the worker’s injury as being 60 per cent due to the breach of duty by the respondent, and 40 per cent due to the breach of duty by the employer.
Decision as to costs
On 14 February 2011 the trial judge published his decision on the issues of the quantum of the judgment and the interest payable, and rejected an application by the VWA for a Bullock order, under which it sought to have the respondent reimburse the VWA for the costs payable by it to Playcorp as the successful defendant.
Application for Leave to Appeal
The VWA sought leave to appeal from the refusal of his Honour to grant the Bullock order,[6] leave to appeal being required under s 74(2E) of the County Court Act 1958, as the refusal to grant a Bullock order is an exercise of the trial judge’s discretion as to costs.[7]
[6]The VWA has also filed a notice of appeal against the part of the orders made 14 February 2011 that relate to the amount of interest fixed.
[7]Fassbender v Bohlmann(t/as Seymour Freight Lines and Caravans) [2010] VSCA 204, [66]–[67].
This creates a significant obstacle for the VWA, as it is well established that an appellate court will not interfere with the exercise of a discretion as to costs by the court below unless the VWA can demonstrate strong reasons why the court should do so.[8] As stated in Spotless Group Ltd v Premier Building and Consulting Pty Ltd,[9]
This Court may disturb the costs orders made below where an error in principle is identified, where the judge acted on a manifestly erroneous view of the facts, or where the award is manifestly unreasonable. But the applicant must satisfy a high threshold for such a grant of leave. The test to be applied is not whether the Court of Appeal would have made the same order but whether there is a ground upon which the order by his Honour could reasonably be made. Some manifest error must be exposed to take the case out of the ordinary situation in which, wherever a discretion is to be exercised, minds may differ on the result.[10]
[8]Spotless Group Ltd v Premier Building and Consulting Pty Ltd [2008] VSCA 115, [10].
[9]Ibid.
[10]Ibid [11] (citations omitted).
Where a plaintiff succeeds against only one of the defendants, the court may, in the exercise of its discretion as to costs, order that in addition to paying the plaintiff’s costs the unsuccessful defendant should reimburse the plaintiff for the costs of the successful defendant (a ‘Bullock’ order),[11] or order the unsuccessful defendant to pay the costs of the successful defendant directly to the successful defendant (a ‘Sanderson’ order).[12] It must be reasonable and just for such orders to be made.[13] An assessment of whether such an order will do justice to the unsuccessful party, usually commences with an inquiry as to whether it was reasonable for the
plaintiff to have joined the successful defendant.[14] In Central Goldfields Shire v Haley(No 2)[15] Redlich JA doubted that it is always necessary to show that it was reasonable on the facts known at the time of the joinder. Subsequent events may demonstrate that the joinder was reasonable. The circumstances of the case may require that the decision should be adjudged by the conduct of the defendants after the joinder of the successful defendant and even up to date the court makes its decision.[16] But the fact that it is reasonable to have joined the successful defendant, will not by itself be sufficient to warrant the making of the order.[17] It is commonly required that the plaintiff’s claims against each defendant be interconnected or in a real sense alternatives.[18]
[11]Bullock v London General Omnibus Company [1907] 1 KB 264.
[12]Sanderson v Blyth Theatre Co [1903] 2 KB 533.
[13]Gould v Vaggelas (1983–1985) 157 CLR 215.
[14]Johnsons Tyne Foundry Pty Ltd v Maffra Corporation (1948) 77 CLR 544, 556 and 572–3; Altamura v Victorian Railways Commissioners (1974) VR 33, 35; Gould v Vaggelas (1983–1985) 157 CLR 215, 247 and 229.
[15][2009] VSCA 203 (‘Central Goldfields’), [8].
[16]Altamura v Victorian Railways Commissioners [1974] VR 33, 35 (Kaye J).
[17]G E Dal Pont, Law of Costs (2nd ed, 2009) [11.21]; Hong v A & R Brown Ltd [1948] 1 KB 515, 523 (Lord Greene MR); Stevedoring Industry Finance Committee v Gibson (2000) NSWCA 179, [128] (Mason P, Stein and Heydon JJA agreeing); Council of the City of Liverpool v Turano (No 2) [2009] NSWCA 176, [16].
[18]Norwest Refrigeration Services Pty Ltd v Bain Dawes (WA) Pty Ltd (1984) 157 CLR 149, 163; Berrigan Shire Council v Ballerini (No 2) [2006] VSCA 65, [41] (Nettle JA).
In determining whether to grant a Bullock order, the trial judge considered whether the plaintiff’s claims against the two defendants were ‘interdependent, or essentially alternative’ claims. His Honour refused to grant a Bullock order for the following reason:
This was never a case in which, one or other but not both of the defendants could have been found liable. Both of the defendants were occupiers with identical duties of care. Indeed, in closing submissions it was put on behalf of the plaintiff that both defendants were liable to it by reason of their respective breaches of the duty each of them owed to the worker as occupiers of the premises in which the worker was injured.[19]
‘Interdependent’ or ‘alternative’ claims
[19]VWA v Playcorp Pty Ltd & Kagan Bros Consolidated Pty Ltd (No 2) [2011] VCC 139.
The first sentence of the above ruling, with very slight modification, was taken from part of the reasons of Nettle JA in Berrigan Shire Council v Ballerini (No 2).[20] The VWA submitted that the trial judge erred in concluding that because ‘this was never a case in which one or the other but not both of the defendants could have been found to be liable’, the claims against the respondent and Playcorp were neither interdependent nor essentially alternative. It submitted that this was always a case in which the respondent or alternatively Playcorp could have been found liable, but it was also a case in which both defendants could have been found liable for a proportionate share of the amount of indemnity payable under the formula in s 138(3)(b) of the Act, because that formula involves an assessment of the extent to which each third party is responsible for the injury suffered by the worker.
[20][2006] VSCA 65 (‘Berrigan’), [41].
The respondent initially submitted that his Honour had correctly applied the principle set out in Berrigan and had rightly determined that the claims made against the defendants were neither interdependent nor essentially alternative as the case advanced by the VWA at trial was that both defendants were liable to it by reason of their respective breaches. It further submitted that the nature of s 138 proceedings invited that conclusion as the VWA claimed separate tortious conduct by each defendant and sought indemnity from each. At the oral hearing senior counsel for the respondent no longer sought to maintain any of these submissions.
It has long been recognised that in determining whether to make a Bullock or like order, there is no rule but rather a fact specific discretion which must be exercised judicially and according to the justice of the case. The discretion is not to be fettered by any immutable requirement. There is a line of authority recognising that it is commonly inappropriate to make such an order when independent or separate causes of action are alleged against each defendant.[21]
[21]G E Dal Pont, Law of Costs (2nd ed, 2009) [11.27].
The purport of the sentence from the reasons of Nettle JA in Berrigan which much influenced his Honour’s decision appears to have been misunderstood by the trial judge. We should therefore refer to the relevant passage of Nettle JA’s reasons where he said:
The conditions for a Sanderson or Bullock order were recently restated by this court in State of Victoria v Horvath (No 2). As Vincent, J.A., with whom Winneke, P. and Chernov, J.A. agreed, put it:
‘In general terms, a plaintiff who seeks to have the losing defendant pay the costs of the successful defendant pursuant to a Bullock or a Sanderson order must establish that, in the circumstances of the case, it would be reasonable and just for such an order to be made - see for example, Sanderson, Reid and Gould v. Vaggelas. Additionally, a court will ordinarily not make such an order unless a number of requirements are satisfied. For example, a costs order in the Bullock or Sanderson form will not be made if the plaintiffs' claims against the two or more defendants are not interdependent or are not, in essence, alternative claims. Thus, for example, in Norwest Refrigeration Services Pty. Ltd. v. Bain Dawes (W.A.) Pty. Ltd., the majority refused to make a Bullock order requiring the unsuccessful defendant (the Co-operative) to indemnify the plaintiff against the costs it was required to pay to the successful defendant (the insurer). Their Honours considered that the plaintiff's unsuccessful claim on the policy was "a straightforward action which was not interdependent with or in any real sense alternative to the claim against the Co-operative." See also in this regard Bankamerica. ...
If that requirement is satisfied, a plaintiff who seeks a Bullock or a Sanderson order must also ordinarily show that it was reasonable for him to have joined the successful defendant and that the conduct of the unsuccessful defendant was such as to make it just to require him to indemnify the successful defendant...’
In short an order will not ordinarily be made unless:
(a)the plaintiff’s claims against the two defendants are interdependent or essentially alternative claims; and
(b)it is reasonable for the plaintiff to have joined the successful defendant and the conduct of the unsuccessful defendant has been such as to make the order just.
I do not consider that either of those conditions is satisfied in this case. As the Council submits, MrBallerini’s claims against the Council and the Commission were not interdependent or alternative in the relevant sense. MrBalleriniclaimed to be entitled to recover against each defendant under individual duties of care which each was said to have owed him. The only interdependence between the claims was that some of the facts relied upon to establish liability against the Council were also relied upon to establish liability against the Commission. It was never a case of one or the other but not both being liable and indeed at trial MrBallerinirecovered judgment
against both, in each case for the amount of his claim less a percentage for contributory negligence.[22]
[22]Berrigan Shire Council v Ballerini (No 2) [2006] VSCA 65, [40]–[42] (emphasis added, citations omitted).
As Redlich JA said in Central Goldfields[23] in distinguishing Berrigan, the defendants in Berrigan owed separate duties to the plaintiff arising from different facts. Nettle and Chernov JJA were not satisfied that the claims were interdependent as there was insufficient commonality between them, and they were not satisfied that they were real alternatives because of the likelihood of a judgment against both of the defendants. Their Honours were also satisfied that there was no conduct of the unsuccessful defendant which made it fair that the unsuccessful party should bear the costs of the successful defendant.[24]
[23][2009] VSCA 203, [12].
[24]Berrigan Shire Council v Ballerini (No 2) [2006] VSCA 65, [22]–[24] (Chernov JA), [40]–[44] (Nettle JA).
In Berrigan, Nettle JA at [42], having explained why the cases against the two defendants were not interdependent, then addressed the question as to whether they were ‘alternative’ claims, and in that context said ‘[It] was never a case of one or the other but not both being liable’ so as to emphasise that they had not been pleaded as or presented during the trial as alternative claims. This observation related solely to the question whether the claims were alternatives. The learned trial judge, having mistakenly thought that this observation applied to whether the claims were interdependent as well as to whether the claims were alternatives, concluded that the claims did not satisfy this criteria and refused the Bullock order.
Claims on which a Bullock order is made are commonly interdependent or essentially alternatives. In Johnsons Tyne Foundry Pty Ltd v Maffra Corporation[25] the High Court referred to the Bullock order as one sometimes made ‘where a plaintiff joins two defendants and claims that one or other is liable jointly or in the alternative’ for the amount claimed. The language sometimes employed in cases where Bullock orders have been sought suggests that an order cannot be made unless the claims are interdependent or in essence alternative claims,[26] but the preponderance of authority is to the clear effect that the jurisdiction to make such an order does not depend upon such a characterisation of the claims.[27] It would lead to error if it was mandatory that the claims be interdependent or essentially alternatives. Although contending that the present claims were interdependent or alternatives, the VWA also submitted in oral argument, without appropriate forewarning to the Court, that the decisions in State of Victoria v Horvath (No 2),[28] Berrigan Shire Council v Ballerini (No 2),[29] Central Goldfields Shire v Haley(No 2),[30] and Fassbender v Bohlmann(t/as Seymour Freight Lines and Caravans)[31] should be overruled as each wrongly elevated the presence of this criteria to a necessary precondition, contrary to the decisions of the High Court in Gould v Vaggelas[32] and Norwest Refrigeration Services Pty Ltd v Bain Dawes (WA) Pty Ltd,[33] and the decision of the New South Wales Court of Appeal in Nationwide News v Naidu.[34] But as both parties accepted during oral argument that the claims were interdependent or alternatives, it became unnecessary to address this submission. That said, we would not wish it to be understood that we considered there to be any force in that submission. The Court in Horvath stated that a court would not ‘ordinarily’ make such an order unless such requirements were satisfied,[35] and Nettle JA in Berrigan and the Chief Justice and Emmerton AJA in Fassbender made like observations. In Central Goldfields, Redlich JA, in finding the claims to be interdependent or essentially alternatives, cited Berrigan in support of the approach he adopted.
[25](1948) 77 CLR 544.
[26]State ofVictoria v Horvath(No 2) [2003] VSCA 24; Bankamerica Finance Ltd v Nock [1988] AC 1002.
[27]Gould v Vaggelas (1983–1985) 157 CLR 215 (Wilson J); Reid v Campbell Wallis Moule & Co Pty Ltd [1990] VR 859.
[28][2003] VSCA 24 (‘Horvath’).
[29][2006] VSCA 65.
[30][2009] VSCA 203.
[31][2010] VSCA 204 (‘Fassbender’).
[32](1983–1985) 157 CLR 215.
[33](1984) 157 CLR 149.
[34][2008] NSWCA 71.
[35]State ofVictoria v Horvath(No 2) [2003] VSCA 24, [9].
Whether the claims can be described as interdependent or alternatives is an important factor that should be taken into account and which will commonly be a critical consideration. But regardless of how the claim has been initiated or formulated, the justice of the case may still merit such an order if there is a substantial connection between the claims.[36] The decision of Kaye J in Altamura v Victorian Railways Commissioners,[37] a case not dissimilar to the present, is an illustration.
[36]See for example Lipovac v Hamilton Holdings Pty Ltd (1997) 136 FLR 400.
[37][1974] VR 33.
Properly understood, this observation in Berrigan was not an impediment to the granting of a Bullock order in the present case. As the trial judge found, both defendants were occupiers with identical duties of care. The case was analogous with Horvath[38] and Central Goldfields[39] where such an order was made in circumstances where both defendants were alleged to be responsible for the same wrong arising from the same circumstances. The claims made by the VWA against the respondent and Playcorp were in this sense interdependent. There was a very strong connection between the claims, both of them resting largely upon the same facts, the same cause of action and seeking the same relief. In oral argument, the respondent did not seriously contest this conclusion.
[38][2003] VSCA 24.
[39][2009] VSCA 203.
The VWA submitted that its proposed appeal also raised an important point of principle concerning when and in what circumstances it is appropriate to make a Bullock order in favour of the VWA in recovery actions under s 138 of the Act. It wished to demonstrate that the view taken of s 138 by Judge O’Neill in Victorian WorkCover Authority v City of Port Phillip, Kane Constructions Pty Ltd and 350Q BBS Pty Ltd,[40] was correct. In that case a defendant that sought to resist an application for a Bullock order in recovery proceedings under s 138 of the Act submitted that as the VWA’s claim against each defendant was assessed in accordance with the formula in s 138(3)(b) which calculated the proportionate amount of indemnity that a third party should contribute, the defendants were not jointly nor severally liable in the recovery proceeding. Judge O’Neill rejected this argument. He held that it was reasonable for VWA to issue against all the defendants, because if it failed to issue against one of those parties, ‘it faced the prospect of other defendants attempting to reduce their own liability by attributing blame to another party not a defendant in the proceeding without the disadvantage of that party being able to respond.’[41]
[40][2010] VCC 1466.
[41]Ibid [17].
The VWA submitted that the interests of justice require that Bullock orders be available to it in s 138 proceedings, as there are many circumstances where the VWA does not and cannot know the true factual matrix surrounding the accident and the extent to which two or more defendants contributed to the injury before hearing all the evidence at the trial. Additionally, the VWA can reasonably be influenced as to whether or not to maintain a recovery action against a particular defendant by reference to other defendants’ submissions, where a defendant may seek to attribute liability, in whole or in part, to another party, in order to reduce their own potential liability as assessed by the formula in s 138(3)(b).
We can discern nothing in the assessment called for by s 138 which would preclude the making of a Bullock order as between ‘third parties’ against whom an apportionment is sought, if the circumstances justify it. That is to say there may be situations in which the claims made against the third parties are interdependent or alternatives or have a substantial connection, and where the conduct of one third party has induced the claim against another third party which it was reasonable for the VWA to have made. When pressed, senior counsel for the respondent accepted that where the circumstances warrant it, a Bullock order may be made against an unsuccessful third party in s 138 proceedings. He contended that this was not such a case.
Conduct of the parties
The conduct of the unsuccessful defendant must be such as to make it fair to impose some liability on it for the costs of the successful defendant.[42] Such conduct will be found where the unsuccessful defendant tells the plaintiff in one way or another that it should look to the successful defendant for its remedy[43] or has done something to induce the plaintiff to maintain its suit against the successful defendant.[44] In the present case the question raised by the parties was whether the conduct of the respondent was such that it should have to assume the burden of the indemnity costs which the VWA had agreed to pay Playcorp. Accordingly, it will be necessary to consider whether the respondent induced the VWA to proceed against Playcorp or to persist in maintaining its claim against it so as to make it just for a Sanderson or Bullock order be made against it.[45]
[42]Gould v Vaggelas (1983-1985) 157 CLR 215, 230 (Gibbs CJ and Brennan J); Victoria v Horvath (No 2) [2003] VSCA 24 (Vincent JA, with whom Winneke P and Chernov JA agreed); Berrigan Shire Council v Ballerini (No 2) [2006] VSCA 65.
[43]Altamura v Victorian Railways Commissioners [1974] VR 33; Gould v Vaggelas (1983–1985) 157 CLR 215; Fennell v Supervision & Engineering Services Holdings Pty Ltd (1988) 47 SASR 6.
[44]Central Goldfields Shire v Haley(No 2) [2009] VSCA 203, [9].
[45]Berrigan Shire Council v Ballerini (No 2) [2006] VSCA 65, [24] (Chernov JA).
The VWA contended that the conduct of the respondent by its pleadings, examination of witnesses and final submissions put in issue Playcorp’s alternate, or interdependent liability to that of the respondent. The respondent in its defence gave particulars of negligence alleged against Playcorp, in an attempt to reduce its own legal liability to indemnify the VWA under s 138 of the Act. Contrary to Playcorp’s defence, it denied any agreement between it and Playcorp which would relieve Playcorp of its duty as an occupier. The allegation attributing responsibility to Playcorp was withdrawn when the respondent filed and served a further amended defence six weeks prior to trial. The denial of an agreement remained. Hence VWA submitted that the pleadings and the manner in which the trial was conducted exposed it to the prospect that Playcorp had an alternative or interdependent liability to that of the respondent, by reason of the fact that it could not be said with any certainty that Playcorp, as occupier of the warehouse, had divested control and management of it at the time the worker was injured. As between the VWA and the respondent, it was said that it was reasonable for the VWA to have maintained up until judgment its claim against Playcorp. Moreover in oral argument, attention was drawn to the respondent’s final submissions in which it sought to attribute a degree of responsibility to Playcorp. The VWA also submitted that, in the absence of a Bullock order, the orders requiring that the VWA pay Playcorp’s costs of the proceeding will impose a very significant costs burden on the VWA, as it requires them to pay costs, including indemnity costs from a certain date, estimated to be in excess of $65,000, which is almost half of the judgment sum of $134,188.26 that the VWA is entitled to from the respondent.
It was in substance submitted by the respondent that the VWA had always intended to pursue Playcorp and that was evident from its pleadings and the way the case was conducted. It was submitted that the respondent had done nothing that could be said to constitute the form of encouragement that would justify a Bullock order, let alone one for indemnity costs. The respondent identifies the burden of the indemnity costs awarded to Playcorp from 30 March 2010 as the consequence of the applicant’s unreasonable failure to accept Calderbank offers. Such costs it is said do not attract Bullock orders as they are not costs ‘reasonably and properly incurred’ by reason of the conduct of the respondent, because the costs burden is a consequence of the VWA’s unreasonable persistence in the claim.
None of these matters were referred to by his Honour in his reasons as he had refused such an order by reference to the nature of the claims. The question which now arises is whether the conduct of the parties was such that a Bullock order was likely to have been made. If not, the VWA would suffer no injustice if leave to appeal were refused.
It was not in issue on this application that it must be inferred from the making of the indemnity costs order that the trial judge accepted that the VWA had unreasonably failed to accept any of Playcorp’s offers to pay an amount to the VWA in satisfaction of its claim. Senior counsel for the VWA rightly submitted that this meant only that the VWA should have understood that it would not recover more than the amount offered. It did not mean that the VWA should have concluded it would fail to establish any liability in Playcorp. While that is so, the VWA did not however communicate to the respondent, the content of any of the Calderbank letters or give the respondent any notice that the VWA was now exposed to the risk of indemnity costs which it would seek to pass on to the respondent. The respondent submits with considerable force that one is left to conclude that the VWA took the risk that in refusing Playcorp’s offers it would be protected by a Bullock order against the respondent, for such costs as it was ordered to pay Playcorp, when no proper foundation for such a belief existed.
The claims made by the VWA against each defendant were interdependent or real alternatives, and were thus claims which could have supported a Bullock order had the conduct of the respondent been such that responsibility for the award of indemnity costs could be placed at its feet. But there was no such conduct by the respondent. His Honour’s discretion would have miscarried had he required the respondent to bear the successful defendant’s indemnity costs.[46]
[46]Leave to appeal was not sought on the basis that the trial judge should have ordered that the respondent should at least reimburse the VWA the party-party costs of Playcorp.
VWA has failed to show that any substantial injustice would be caused were the refusal of the Bullock order for the indemnity costs to stand.[47] Leave to appeal must be refused.
[47] Niemann v Electronics Industries Ltd [1978] VR 431, 433 (McInerney and Murphy JJ). The VWA must show that it was the decision itself, rather than his Honour’s reasons for decision, which is attended with sufficient doubt to justify the grant of leave: King v Lintrose Nominees Pty Ltd (2001) 4 VR 619, 627 (Callaway JA).
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