ALMEIDA v UNIVERSAL DYE WORKS PTY LIMITED & ORS

IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL

CA 40723/99 DC 3102/98 PRIESTLEY JA POWELL JA SANTOW J

14 November 2001 ALMEIDA v UNIVERSAL DYE WORKS PTY LIMITED & ORS 1 PRIESTLEY JA: Judgment in this appeal was delivered on 12 December 2000. The orders then made included costs orders. The parties had made no submissions about costs in the course of their arguments. This frequently happens, and usually the court, acting on the basis that the parties have left it to the court to make costs orders consistent with the result of the appeal, makes costs orders without calling for further submissions. 2 In the present case the partially successful appellant, after seeing the result of the appeal, which may not have been easy to predict, and the orders for costs, wished to submit to the court that different costs orders should be made and promptly filed a notice of motion seeking their reconsideration. The court has the necessary jurisdiction for such a reconsideration and it seems to me appropriate that in the present case the matter should be reconsidered. 3 Powell JA, in the course of his reasons delivered on 12 December 2000, set out a history of the facts of the case. Although this was for the purpose of establishing a background for his opinion that the appeal should be dismissed, the same history is relevant for this reconsideration of the costs orders. This history is contained in pars 14 to 53 of Powell JA's reasons and I will treat it as incorporated in my present reasons without reproducing it. I will use the same abbreviated names for parties as he adopted. 4 Mrs Almeida's action as tried in the District Court was against the defendants Universal, Baleskim and Newtown. She failed against all three and was ordered to pay their costs. Mrs Almeida appealed and in her appeal proceeded against all three defendants as respondents. She succeeded against Universal but not the other two. The judgment below in favour of Universal was set aside and the matter remitted to the District Court for a new trial limited to damages. Universal was ordered to pay Mrs Almeida's costs as against Universal of the first trial and the appeal. So far as Baleskim and Newtown were concerned the setting aside of the judgment against Universal had no effect on them; the judgments in their favour, with costs, remained on foot. Mrs Almeida was ordered to pay their costs of the appeal. 5 In substance, what Mrs Almeida wanted to argue in her motion for reconsideration was that there should be added to the orders already made by the court further orders that Universal pay Mrs Almeida's costs of the trial payable by her to Baleskim and Newtown and that her costs in respect of the appeal payable by Universal should include those costs payable by her to Baleskim and Newtown. The precise terms of the orders sought in her notice of motion were: "1. That Order 4 of the Court's Orders dated 12th December 2000 be amended by adding the words: 'and that the First Respondent pay the appellant's costs of the trial payable by her to the Second and Third Respondents.' 2. Alternatively, that the First Respondent pay the appellant's costs of the trial payable by her to the Second Respondent and the Third Respondent. 3. Further or other Orders as this Honourable Court deems fit. 4. Costs." 6 The parties were directed to file written submissions in support of their positions in regard to the further orders sought by Mrs Almeida. Written submissions were duly filed. Among the respondents, Universal opposed her application and Baleskim and Newtown supported it. In Mrs Almeida's written submissions, leave was sought to amend her notice of motion by adding the following paragraph: "2A. That Order (5) of the Court's orders dated 12 December 2000 be deleted and that in lieu thereof there be substituted an order that the costs of the appellant in respect of the appeal payable by the first respondent include those costs payable by the appellant to the second and third respondents." I would grant leave for the making of this amendment. 7 It was not in dispute that the court had a discretion to make such orders but it was also recognised that this discretion was subject to some limitations. For Mrs Almeida it was submitted that the way in which the discretion should be exercised had been accurately stated by Giles J in Sved v Council of the Municipality of Woollahra (1998) NSWConvR 55-842 at 56,605 where he considered the authorities (the references to all but one of which I omit in the following quotation) and said: "It is not sufficient for the making of a Bullock order that it was reasonable for the plaintiff to bring the proceedings against both defendants, although sometimes the condition for making a Bullock order is stated in that way ... One statement of principle is that the order may be made where the costs have been reasonably and properly incurred by the plaintiff as between it and the unsuccessful defendant ...; it has also been said that the conduct of the unsuccessful defendant must have been such as to make it fair to impose some liability on it for the costs of the successful defendant, or that the conduct of the unsuccessful defendant must show the joinder of the successful defendant was reasonable and proper to ensure recovery of the damages sought ... The difference in formulations is probably more apparent than real, as reasonableness as between the plaintiff and the unsuccessful defendant will normally be demonstrated by some conduct of the unsuccessful defendant which made it proper that the successful defendant be joined or that the unsuccessful defendant should bear the costs of the successful defendant. Such conduct was found in Lackersteen v Jones (No 2) in the unsuccessful defendant denying the authority of its agent whereby the plaintiff joined the agent who became the successful defendant, and more widely has been found in the unsuccessful defendant telling the plaintiff in one way or another that it should look to the successful defendant for its remedy ..." 8 That this was a correct distillation of the position from the current authorities was not disputed by Universal. However, Universal then sought to limit the "conduct" spoken of by Giles J in a way which was disputed. For Universal it was said that the "conduct" spoken of by Giles J was conduct either at the time the plaintiff's intended litigation was known to the other party or conduct after the litigation commenced. I do not agree that "conduct" should be limited in this way. In my view any conduct by the defendant or state of affairs in which the defendant is an integral part which makes it fair and reasonable for other parties to be joined as defendants will be relevant to deciding on fair costs orders. The first respondent submitted that there was no relevant conduct by it which made it proper that the other defendants be joined or that it should bear the costs of the successful defendants. 9 What was submitted for Mrs Almeida was that the conduct of the Universal which justified the orders she was seeking was the position of the Universal vis-a-vis the other two respondents and the uncertainty that their relationships created as to whether it was safe to do other than proceed against all three. The specific incidents of conduct relied on were that Universal had accepted the quotation for the roofing work done by Mr Almeida's employer, that Universal and Newtown had a common directorship and that Mr Montebello had conducted business on behalf of all three respondents with Mr de Sylva the person in charge of the work being done at the time Mr Almeida fell to his death. 10 Included in the paragraphs from the reasons of Powell JA delivered on 12 December 2000 already referred to were materials from which the relationships between the three respondents could be understood. These showed that Newtown had become the owner of the premises in August or September 1990 and that at that time Baleskim was already lessee of part of the premises holding under a lease which had been made in April 1990 for a term of five years with an option for a further five years. The shares in Newtown were held by Universal, but the materials also showed that Newtown's ultimate holding company was a third company, Standard Knitting Mills Pty Ltd (MNF). It follows from this that Universal's shares must have been controlled by that same company. A fourth company in this group about which there were some facts in the materials was Standard Knitting Mills Pty Limited. Universal, Newtown and Standard Knitting Mills Pty Limited all had the same directors. There was no information about the directors of Standard Knitting Mills (MNF) Pty Limited. The details came from company and like searches tendered in evidence by Mrs Almeida, the dates on which showed they had been obtained at intervals after the commencement of the case, the last date being well before the trial. 11 Mrs Almeida made a claim in the Compensation Court soon after the death of her husband. It appears that at first the respondents to the claim were Unistyle, (Mr Almeida's uninsured and soon to be liquidated employer) and the WorkCover Authority. Then Universal was added as a s 20 respondent (for the meaning of this see pars 46 and following in Powell JA's reasons). Universal in its answer (dated 23 august 1991) to the claim denied that it had entered into a contract with Unistyle and denied that Mr Almeida had been employed by Unistyle. An award was made against Universal on 20 November 1991 on the basis that it had been an insured principal on the date of the accident within the meaning of s 20. 12 In 1992 Mrs Almeida commenced in the Supreme Court the proceedings now the subject of her appeal. The proceedings were subsequently transferred to the District Court. There were some amendments to the pleadings from time to time, including changes in the names of the second and third defendants. In the plaintiff's pleadings it was alleged that all three defendants were, pursuant to s 4 of the Factories, Shops and Industries Act, occupiers of the remises from which Mr Almeida fell. It was also alleged that Universal was the head contractor for the work being done on the roof, and that Mr Almeida was carrying out work there for Unistyle and Universal. In its pleadings Universal denied all these allegations. 13 Looked at from the point of view of the plaintiff, she was faced with the task of proving that some party was an occupier of the factory roof, either in an undefined sense or in a statutory sense; she had joined what she had some reason to believe was the company which had contracted to have the work done, the company lessee, and the company owner of the premises. The questions of occupation and whether Universal was the head contractor were put in issue by Universal. This alone would in my opinion have been sufficient conduct on the part of Universal to warrant the making of the orders against it which Mrs Almeida now seeks. 14 A further matter makes this conclusion, in my opinion, still clearer. Universal and Newtown were directed by the same individuals. These two companies were parts of a large business being conducted by the same individuals. Mr De Sylva, the man in charge of Unistyle, was accustomed to dealing with individuals from Universal and Newtown without being concerned about which company it was that he was dealing with. The plaintiff's advisers were not to know what arrangements internal to the overall business the individuals managing it made when contracting to have repairs done to the roof of the building owned by Newtown.. The overall business was organised in such a way that outsiders could easily be confused as to which company entity, part of the business, they were dealing with. This is not said in criticism of the individuals running the overall business. No doubt it was organised to comply with fiscal and corporation laws, in as advantageous a way as could legitimately and conveniently be done; the result however was that the way in which Universal was conducted led to the plaintiff, when confronted with the issues raised by Universal in the litigation and when she found such information as was publicly available about Universal and its associated companies, not being able to be sure who she seek to prove was the occupier in any of its senses, or who was the contractor in charge of the work which Unistyle as subcontractor had undertaken to do. 15 In my opinion, the situation in which Universal was placed in conducting its business and the relationships confusing to outsiders which were part of that situation, amounted to relevant conduct within the sense used by Giles J in the passage I have earlier set out from his opinion in Sved, and as I sought to explain in par 8. 16 For these reasons it seems to me that the court should make further costs orders as sought on behalf of Mrs Almeida. I would propose therefore that orders be made as sought in paragraphs 1 and 2A of Mrs Almeida's amended notice of motion. Paragraph 4 of the notice of motion raised the question of costs of the motion. The written submissions did not deal with these costs. In the circumstances I think the most appropriate course is to make no order for the costs of the motion, thus leaving the various parties to bear their own. 17 POWELL JA: When on 12 December 2000 this Court delivered its Judgment on the appeal which had been brought against the verdict found and judgment entered by Patten DCJ in the District Court, it, by majority, made the following orders:

2. Appeal dismissed as against Second and Third Respondents.

3. Set aside judgment in favour of the First Respondent only and remit the proceedings to the District Court for a new trial limited to damages for breach of statutory duty by the First Respondent arising under Regulation 74 of the Construction Safety Regulations 1950.

4. The First Respondent to pay all the Appellant's costs as against the First Respondent of the first trial and the appeal.

5. The Appellant to pay the costs of the Second and Third Respondents of the appeal. 18 On the hearing of the appeal, no submissions were advanced on behalf of any of the parties in relation to the costs of the hearing at first instance or the costs of the appeal nor was any request made to the Court to have the question of costs reserved so that submissions might be advanced on behalf of the parties after they had had the opportunity to consider the Court's judgment when delivered. 19 This notwithstanding, on 15 December 2000, there was filed on behalf of the Appellant a Notice of Motion in which were sought the following (inter alia) orders: "1. That Order 4 of the court's Orders dated 12 December 2000 be amended by adding the words: 'and that the First Respondent pay the Appellant's costs of the trial payable by her to the Second and Third Respondents'. 2. Alternatively, that the First Respondent pay the Appellant's costs of the trial payable by her to the Second Respondent and the Third Respondent." 20 The Notice of Motion was supported by an Affidavit sworn by a solicitor clerk in the employ of the Appellant's solicitors which Affidavit contained the following: "2. Upon perusal of the Reasons for Judgment of the Court, published on 12th December 2000, it appeared to me that the costs order made by the Court did not deal with the question of the costs of the trial in the District Court of New South Wales of the Second and Third Respondents and the orders made in their favour against the Appellant. In particular, no consideration had been given to whether the Appellant should have had a Bullock Order against the First Respondent in respect of the costs payable by her to the Second and Third Respondents." 21 It would appear that when that Notice of Motion was listed before Mr. Registrar Irwin, he directed that it should proceed upon Written Submissions, and gave directions as to the filing of Written Submissions by each of the Appellant and the several Respondents. 22 In the Written Submissions which were filed on her behalf, the Appellant sought leave to amend the Notice of Motion by adding a further paragraph 2A reading as follows: "2A That Order (5) of the Court's Orders dated 12 December 2000 be deleted and that in lieu thereof there be substituted an order that the costs of the Appellant in respect of the appeal payable by the First Respondent include those costs payable by the Appellant to the Second and Third Respondents." 23 Although the original Statement of Claim needed to be amended because of some difficulty as to the correct names of the Second and Third Respondents, the Appellant concedes that all Respondents were intended to be sued at the outset and that none was joined later as the result of any Cross-Claim filed or of any urging of substance by any other parties. 24 This notwithstanding, the submission advanced on behalf of the Appellant is that the conduct of the First Respondent justifying a Bullock Order lies in so placing itself vis-a-vis the other two Respondents as on the one hand to be "closely enmeshed with them and on the other to create uncertainty as to whether it was safe to do other than proceed against all three respondents". 25 In the submissions which were filed on its behalf, the First Respondent opposed the making of the orders sought upon the grounds, first, that the "conduct" relied upon by the Appellant was not such as justified the making of the orders sought and, second, that as no submission as to costs was advanced on behalf of the Appellant on the hearing of the appeal, it is not now open to the Appellant to argue for the supplementary orders sought. 26 Although putting in issue one of the matters advanced on behalf of the Appellant as "conduct" justifying the making of a Bullock Order the Second Respondent did not oppose the amendment of the Notice of Motion and consented to the Orders sought. 27 In the Written Submissions filed on its behalf, the Third Respondent indicated that it did not object to the amendment of the Notice of Motion and further indicated that it supported the Appellant's application for a Bullock Order. 28 When, on the hearing of an appeal, no submissions are made regarding costs and no request is made to have questions of costs reserved until after judgment has been delivered then, unless there is some particular reason for taking a different course, the Court ordinarily acts on the basis that the parties have left it to the Court to decide the question of costs without further argument. 29 As, in the present case, I remain of the view that the appeal should have been dismissed with costs, I do not consider there is anything useful which I could contribute to the discussion as to the proper disposition of the present Notice of Motion and I accordingly refrain from doing so. 30 SANTOW AJA: Introduction 31 By the Appellant's Notice of Motion dated and filed 15 December 2000 and the affidavit in support of Ms Hutchinson affirmed and filed on the same date, this Court is asked to revisit its early costs orders, with a view to making "Bullock" orders in favour of the Appellant against the unsuccessful First Respondent, the head contractor. This is in respect both of the proceedings in this Court and in the District Court and against both the successful Second and Third Respondents. The Second and Third Respondents were originally the Second and Third Defendants. The circumstances in which this application is made are sufficiently set out in Powell JA's judgment and I gratefully adopt it along with the abbreviations he has used. Being of the view that the appeal should have been dismissed with costs, Powell JA does not express any conclusion in relation to the proper disposition of the present Notice of Motion, leaving it to the judges who comprised the majority to do so. Priestley JA in separate reasons concludes that a Bullock order should be made, a conclusion in which I would concur, though for reasons which may be of slightly narrower ambit. All parties have proceeded on the basis that the present Notice of Motion should be resolved on the written submissions without further oral argument. I note that the Second and Third Respondents (Baleskim the lessee and Newtown the owners) oppose amendment of the Appellant's Notice of Motion so as to include in the relevant cost orders sought, the costs for this Court of Appeal. I would however be in favour of giving the necessary leave for that purpose so that the substance of the Appellant's application can be properly dealt with. Otherwise, Baleskim and Newtown support the Appellant's application. A Bullock Order? 32 In order for a Bullock order to be made in favour of a plaintiff against an unsuccessful defendant, the conduct of that defendant must have been such as to make it fair, as between plaintiff and unsuccessful defendant, to impose some liability on it for the costs of the successful defendant; see Gould v Vaggelas (1984) 157 CLR 215 per Gibbs CJ at 565-6. Brennan J (at 579) formulated the test in these terms: "the conduct of the unsuccessful defendant in relation to the plaintiff's claim against him showed that the joinder of the successful defendant was reasonable and proper to ensure recovery of the damages sought". This formulation requires not only fairness in the sense of what is proper, but also reasonableness. It focuses on the joinder of the successful defendant. 33 However, I do not understand that focus on joinder excludes from consideration relevant conduct pre-dating joinder. This is so long as that conduct is relevant to the fairness, or reasonableness, of making a cost order against the unsuccessful defendant. 34 Thus both judgments make clear that it is not enough for the plaintiff to show in the abstract that such an order be reasonable and proper. There must also be some sufficient element in the conduct of the unsuccessful defendant which makes it reasonable and proper to join the successful defendant (Brennan J) or fair for such a cost order to be made against the unsuccessful defendant (Gibbs CJ). 35 That conduct of the unsuccessful defendant must be "in relation to the plaintiff's claim against him" (per Brennan J in Gould v Vaggelas (supra) at 579). From that proposition one would expect the conduct ordinarily to relate to the way the unsuccessful defendant conducted its defence, taking account of any claim between the defendants inter se. 36 What is the conduct of the unsuccessful First Respondent (the head contractor) which is here said to justify a Bullock order? That is to say, an order which requires the First Respondent to pay the costs of the two successful Respondents, who are lessee and owner respectively? That conduct is described by the Appellant in these terms: "it so placing itself vis a vis the other two Respondents as to on the one hand be closely enmeshed with them on the other, create uncertainty as to whether it was safe to do other than proceed against all three Respondents. Its conduct included: (a) Receiving the quotation for the roofing work as noted by Patten DCJ (RAB 25X-Y);

(b) The First and Third Respondents had a common directorship (RAB 26N-P);

(c) All the Respondents had Mr Montebello conduct business on their behalf at least with Mr de Sylva (RAB 26C-G) and it seems allow the situation to persist in which Mr de Sylva did not, and presumably did not need to, distinguish among the Respondents (RAB 26M-0)."

See Appellant's written submissions 8 February 2001, para 7. 37 It is said by the Appellant that, "These things must have engendered in the mind of any experienced Plaintiff's solicitor the need by way of ordinary prudence to join all three and calls for a Bullock order."; Appellant's written submissions para 8. I turn now to consider that basis for treating the conduct or circumstances in question as justifying cost orders against the First Respondent. 38 Like Priestley JA, I would not agree that "conduct" in the sense used by Giles J in Sved v Council of the Municipality of Woollahra (1998) NSW ConvR 55-842 at 56-605, has as narrow an ambit as was contended for by Universal, the First Respondent head contractor. Universal argued that the conduct spoken of could only be conduct at the time the Plaintiff's intended litigation as was known to the other party or conduct after the litigation commenced. I would certainly consider relevant in that regard the unsuccessful defendant's (First Respondent's) conduct in denying that it was the head contractor. That denial would encourage a rational Plaintiff to sue the other Respondents when one takes also into account the factual context of their enmeshment earlier described (7 above), as each Respondent is intrinsically capable of being the head contractor. That enmeshment includes the common directorship and shared holding company between First and Third Respondents, coupled with the fact that the First Respondent also owned all the shares in the Third. Then there is the common role of Mr Montebello as representing all three Respondents in dealings with Mr de Sylva on behalf of the sub-contractor. I would however treat that enmeshment, not as conduct but rather as the factual context which leads a rational plaintiff to seize on the conduct of the First Respondent (denying it was the head contractor) to sue the Second and Third Respondents. 39 Priestley JA puts the test for what is relevant conduct in these terms: "… any conduct by the defendant or state of affairs in which the defendant is an integral part which makes it fair and reasonable for other parties to be joined as defendants will be relevant to deciding on fair cost orders." [my emphasis]. I would prefer to treat "state of affairs" as factual context rather than conduct Thus I differentiate conduct from a purely passive state of affairs, the latter merely providing context for appraising any actual conduct that bears on fairness. In making that distinction, I would acknowledge that conduct can include deliberate acts of omission, so that the distinction between conduct and context is not always clear-cut. By treating context as relevant to the appraisal of conduct, going to fairness of Bullock orders, the practical result is usually likely to be the same, save where there is no overt conduct at all on the unsuccessful defendant's part associated with the litigation that went to fairness. That would be so here if the unsuccessful defendant had not denied it was the head contractor. 40 Finally, I would exclude from consideration conduct which bears only upon a ground of the plaintiff's claim which failed against all Respondents, namely that each or any of them were occupiers, liable as such, either in an undefined or statutory sense. In that sense also, I would reach the same result as Priestley JA but by a narrower route.

OVERALL CONCLUSION 41 I would thus conclude that only the conduct of the First Respondent denying it was a head contractor was such as to justify the Bullock cost orders sought by the Appellant, once considered in the factual context of the state of affairs of the Respondents' enmeshment, though it pre-existed the litigation. Had the First Respondent not denied that it was the head contractor, I would have concluded that the various matters of enmeshment were not conduct at all but a pre-existing state of affairs both pre-dating, and disassociated from, the litigation. As such, by themselves, they would not in my opinion have been capable of justifying Bullock orders as against the First Respondent. 42 I would therefore propose cost orders identical to those proposed by Priestley JA in the concluding paragraph of his judgment.

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