HIS HONOUR: There remain three areas in which the Court is required to give reasons and make a decision about questions concerning costs. The first application is by the plaintiff pursuant to s 341 of the Legal Profession Act 2004 to make an order excluding from the maximum costs limitation imposed by that Act the legal services rendered to the plaintiff by her solicitors and barrister. Although the Legal Profession Act 2004 has been repealed I am told that it is agreed between the parties that s 338 and s 341 of that Act apply to the present case, but the same provisions are now contained in Sch 1 of the Legal Profession Uniform Law Application Act 2014. Pursuant to s 338, as the plaintiff's damages do not exceed $100,000, the maximum costs for legal services provided to the plaintiff are fixed at $10,000. However, those legal services do not include disbursements. Section 341 provides this:
"A court hearing a claim for personal injury damages may by order exclude from the operation of this Division legal services provided to a party to the claim if the court is satisfied that the legal services were provided in response to any action on the claim by or on behalf of the other party to the claim, that in the circumstances was not reasonably necessary for the advancement of that party's case or was intended or reasonably likely to unnecessarily delay or complicate determination of the claim."
The judgment entered for the plaintiff against the second and third defendants was for $32,512.
In Port Stephens Council v Theodorakakis (No 2) [2006] NSWCA143 at [4] Giles JA broke down the alternatives offered by s 198G of the Legal Profession Act 1987 which became s 341 of the Legal Profession Act 2004, into three. It appears to me that the alternatives can in fact be divided into five. They are these:
(1) it was not reasonably necessary for the advancement of a defendant's case;
(2) was intended to delay unnecessarily the plaintiff's claim;
(3) was intended to complicate unnecessarily the determination of the plaintiff's claim;
(4) was reasonably likely to delay unnecessarily the plaintiff's claim;
or
(5) was reasonably likely to complicate the determination of the plaintiff's claim.
Awad v ISPT Pty Limited & Jones Lang LaSalle [2015] NSWDC 331 | Case summary | Zoe
When I enquired of Mr Austin, for the plaintiff, which one or more of those five elements he was relying upon there was no direct response. Rather, Mr Austin relied upon dicta in Port Stephens Council v Theodorakakis which refer to proportionality. In particular Mr Austin relied upon what fell from Giles JA in [6]. His Honour there said:
"Whether action by a party was reasonably necessary for the advancement of the party's case was concerned with proportionality between advancement of the case and action taken to advance it, by stating a standard of reasonable necessity. Although the party failed in the case, it may have been 'a damned nice thing - the nearest run thing you ever saw in your life', as Wellington said of Waterloo, and the action to advance the case could well have been reasonably necessary in the endeavour to advance it. Napoleon lost at Waterloo, but his deployment of his forces must at least for the most part have been reasonably necessary in the endeavour to win the battle."
Shortly thereafter his Honour said:
"8. Although the costs cap under s 198D of the [1987] Act could operate harshly in some circumstances, the legislation must be applied according to its terms: see Newcastle City Council v McShane (No 3) [2005] NSWCA 431 passim. In that case ss 198F and 198G were described at [25] as providing a protection against the risk of a party's costs being affected by the conduct of the other party, and at [39] it was suggested that they could 'be invoked in many situations by a plaintiff who becomes the opponent or respondent in fruitless proceedings in the Court of Appeal'. I do not think the suggestion was that fruitlessness in itself warranted an exclusion order. The bluntness of the legislative scheme was alleviated, but not by making failure in a party's case the measure of reasonable necessity; that would quite distort the scheme.
9. The party could take action to advance its case in the knowledge that its costs exposure was limited by the cap, subject amongst other qualifications to greater costs exposure to the extent that the action was not reasonably necessary for that purpose. It should not be forgotten that action on the claim by the successful party in the claim could be not reasonably necessary for the advancement of that party's case. While reasonable necessity did not exclude regard to the outcome, it called also, and in my view principally, for regard to the circumstances at the time the action was taken and the nature and quality of the action itself.
10. The opponent accepted that the claimant 'conducted its case in a professional manner', but submitted that s 198G could nonetheless apply: Wollongong City Council v Nyboer [2005] NSWCA 394 at [4]. Whether it applied turned on the reasonable necessity of applying for leave to appeal, not on the professionalism with which the application was conducted. The opponent's submissions, more to the point, were that the appeal had no reasonable prospects of success and a finding of obviousness was clearly open to the trial judge and the claimant's reliance on s 42 of the Civil Liability Act 2002 was bound to fail because the claimant had not properly pleaded it or called evidence to support it; she submitted that no issue of principle arose, and that on the facts the trial judge was clearly correct.
11. I join with Bryson JA in declining to accept that the application for leave to appeal had no reasonable prospects of success, and in his description of it as not lacking in substance. The application was fairly arguable, although the arguments did not prevail, and the Courts would be slow to effectively penalise a party in costs by an exclusion order under s 198G where the party brought a fairly arguable application. I do not think that bringing the application for leave to appeal should be held to have been not reasonably necessary for the advancement of the claimant's case."
Later, his Honour said this:
"15. The delay and any complication flowed inevitably from bringing the application for leave to appeal; they were reasonably likely. Were the delay and any complication reasonably likely to be unnecessary; or, if the assessment of lack of necessity was more straightforward, were they unnecessary? The application for leave to appeal, and the consequential delay and any complication, were necessary if the claimant's case was to be advanced at all. Again, the application for leave to appeal was fairly arguable. I do not think delay and any complication because a fairly arguable application for leave to appeal was brought should be held to have been reasonably likely to be unnecessary, or unnecessary."
Because it is relevant to the case as argued, I should also refer to Stephens v Giovenco; Dick v Giovenco (No 2) [2011] NSWCA 144. Hodgson JA, with whom Allsop P concurred, said this:
"13. Ms Giovenco relied on a number of offers of compromise served on her by Mr Dick and Mr Stephens, notably one served on 2 December 2008 offering to accept the sum of $80,000 plus costs. Ms Giovenco accepted that this could not bring her case within s 340 of the Legal Profession Act [2004]; but submitted that Mr Dick's refusal of this offer, his failure to make any counter offer, and his raising of many points on which he was unsuccessful, satisfied s 341.
14. In my opinion, it cannot be said that there was action by Mr Dick that was not reasonably necessary for the advancement of his case or was intended or reasonably likely to unnecessarily delay or complicate the determination of the claim.
15. Settlement is to be encouraged, but failure to make a settlement offer, where a party has a reasonable chance of total success, cannot be considered action satisfying s 341. As shown by both the majority and minority judgments on Mr Dick's appeal, he did have a reasonable chance of total success. Similarly, in my opinion, it cannot be suggested that the various defences raised by Mr Dick constituted action satisfying s 341. I note that the primary judge did not make a finding that Mr Dick fully and consciously gave deliberately false evidence, and the Court of Appeal also stopped short of that finding."
I quote that decision as authority for the propositions that simply failing to make an offer cannot itself enliven an application under s 341 and that merely pressing a defence which was arguable itself cannot enliven an application under s 341.
The broad thrust of the submissions made by Mr Austin is that this was an unnecessarily long case in which the defendants made no offer of settlement to the plaintiff thereby forcing the plaintiff to pursue the case to its conclusion. The case was not a large one, as I ultimately determined it, and the length of the hearing has been quite disproportionate to the amount of damages which the plaintiff has recovered.
A little should be said about the history of these proceedings. The proceedings were listed for hearing on Wednesday, 30 September 2015. On that day the plaintiff commenced giving her evidence. At the conclusion of the Court's day the plaintiff was being cross-examined by learned counsel for the first defendant, Mr Gracie. The transcript records an order standing the matter over to Thursday, 1 October 2015. However, I told counsel that on that day I had a pre-existing commitment to sentence an offender whom I had found guilty of certain grave crimes in a judge alone trial. Unfortunately that sentencing exercise took the whole of 1 October. Counsel were kept apprised by my Associate of when I would become available and ultimately that I would not have an opportunity to return to this case on 1 October. The case resumed on Friday, 2 October 2015. The evidence of the plaintiff was completed on that day, and then oral evidence was called from her daughter, Ms Jessica Awad. Like the plaintiff, she was cross-examined by each of the counsel for each of the three defendants. The rest of the day was taken up with the tender of documents or argument about the admissibility of certain documents. Monday, 5 October 2015 was a public holiday. On Tuesday, 6 October 2015 I had a pre-existing commitment, a requirement to call over the Special Statutory Compensation List, which I did on the morning of that day. The Court resumed the hearing of this matter at approximately 3pm. Again there was argument about the admissibility of documents, and there is a seven page ruling on the admissibility of the tender of a report of Mr Ian Burn. The matter was then adjourned to 7 October, when documentary evidence was presented on behalf of the first defendant, and the first defendant then closed its case. Counsel for the second defendant then called Mr Jamie Irvine to give evidence. He was an employee of the second defendant and described himself as the operations manager of the second defendant at the Southgate Shopping Centre at Sylvania. He was cross-examined by counsel for the third defendant and counsel for the plaintiff, and then re-examined, and that brought the day's hearing to an end.
On the fifth day of hearing, that is to say 8 October 2015, further documentary evidence was admitted and the second defendant closed its case. Mr Oag for the third defendant then called Mr Nirab Sijabadi to give evidence. Mr Sijabadi was, at the time of giving evidence and the time of the plaintiff's accident, a cleaner employed by the third defendant at the Southgate Shopping Centre at Sylvania. Mr Sijabadi was cross-examined by counsel for the first defendant, counsel for the second defendant and counsel for the plaintiff, and was re-examined by counsel for the third defendant before withdrawing. The case for the third defendant closed prior to the luncheon adjournment. I was then advised that there was no case in reply. Addresses then started and they occupied the rest of Thursday, 8 October 2015.
I was not available on Friday, 9 October 2015, having to attend, as the Court's official representative, the Colloquium of the Judicial Conference of Australia which was held in Adelaide on that Friday and over the following weekend. I returned to the matter on Monday, 12 October and essentially addresses continued until morning tea on Thursday, 15 October 2015. After that adjournment, I commenced giving judgment. In that part of the judgment given on that day I assessed the plaintiff's damages. I commenced giving reasons on liability on Friday, 16 October 2015. I was still giving reasons at the end of that day but could not finish my reasons for judgment in the following week as I was on circuit in Griffith. I returned to the Bench to continue my reasons on Monday, 26 October 2015, and eventually completed my primary judgment on Tuesday, 27 October 2015.
It ought be clear, accordingly, that much of the time, even the time when witnesses were being called, was taken up by lawyers' argument and argument about the admissibility of various documents. The oral evidence and argument about the admissibility of documents took up four and a half days, and of that time at least one whole day might be assigned to argument about the admissibility of documents.
The matter was lengthy because of the approach taken by each party to the proceedings and there was more argument raised by Mr Austin, for the plaintiff, than by any other practitioner, although it was a close run thing with Mr Gracie, for the first defendant. I do not make those comments in any pejorative way, because many of the arguments were necessary and sometimes they were very well constructed and required detailed consideration and rebuttal by those opposing any application.
However, the case was complicated by there being three defendants and it appears from how the case has been conducted and argued, and from the fact that no Bullock or Sanderson order was sought in respect of the costs ordered against the plaintiff in favour of the first defendant, that it was the plaintiff herself who elected to join three defendants. The hearing itself was not unduly lengthy bearing in mind that each witness could have been cross-examined by three barristers. What was lengthy was the time spent in argument and the time spent in addresses. Counsel were also present some of the time during the giving of my reasons but not all of the time.
This is the second day on which more time has been spent arguing about costs. I cannot see anything that was done unreasonably in defence of the plaintiff's claims against the three defendants. I cannot see anything that was causing unnecessarily delay in the presentation of the plaintiff's case. Indeed, the only unnecessary time was really spent in arguing about the admissibility of the report of Mr Ian Burns upon which the plaintiff was almost entirely unsuccessful and on argument as to the admissibility of certain documents from the Australian Bureau of Statistics on which the plaintiff was wholly unsuccessful.
I cannot see or point to any action which was likely to unnecessarily delay the completion of the case nor anything which was done which would complicate decision-making about the plaintiff's case. My inability to identify any of the five matters which I have set out towards the commencement of these reasons is mirrored by the fact that Mr Austin was unable to identify any particular thing other than the course of attempts to settle the matter.
There was an informal settlement conference held on 13 July 2015. The plaintiff made two offers at different times. The first was rejected by the defendants and no counteroffer was made. The second was also rejected by the defendants and no counteroffer was made. By letter dated 17 August 2015, the plaintiff served an offer of compromise. The plaintiff's formal offer of compromise was greater than the second offer made at the informal settlement conference. The plaintiff's second offer of compromise was made on 17 August 2015 and was open for 28 days. It was not accepted. The offers made by the plaintiff at the informal settlement conference and in the formal offer of compromise of 17 August 2015 were substantially in excess of the damages ultimately recovered by the plaintiff. Indeed, the word "substantially" might not do justice to describe the extent of the difference between the offers that had been made at these times and the judgment recovered.
On 30 September 2015, prior to the commencement of the hearing, the plaintiff made a greatly reduced offer which was, to use American vernacular, "closer to the ballpark". However, that drew no immediate response. On 1 October 2015, the plaintiff made a formal offer of compromise which appears to me to have been greater than the offer made to the defendants on 30 September. An affidavit by Mr Michael James Cooper, a solicitor with Messrs McCabes, who acted for the third defendant, tells me that he sought instructions after that formal offer from his client. Unfortunately exhibit 31, correspondence between the third defendant's solicitor and those instructing him, does not tell me when the instructions were sought. The inference I draw is that it was likely to have been on 1 October 2015. Mr Cooper's affidavit then says this:
"Given the underwriters of the third defendant's insurance policy are in London, a slight delay in obtaining these instructions ensued. Specifically, due to public holidays in both Melbourne and Sydney on Friday, 2 October 2015 and Monday, 5 October 2015, the instructions in relation to the proposed offer were not received until Tuesday, 6 October 2015."
It is clear from exhibit 31 that the solicitors were corresponding with a company known as "Proclaim Management Solutions Pty Ltd" of Melbourne. No doubt that company was obtaining instructions from an underwriter in London. Hence the public holiday in Victoria on Friday 2 October and the public holiday in New South Wales on Monday 5 October prevented the third defendant's solicitors from obtaining any instructions until Tuesday 6 October 2015. An offer was then put, a joint offer on behalf of the second and third defendants, but before the plaintiff could provide her response to that offer, it was withdrawn, as the second defendant withdrew its contribution to the joint offer of settlement that had been made. Thereafter, there were no further negotiations.
An argument which I shall rehearse at this time (or it would need to be dealt with later) is that the third defendant ought earlier to have accepted an offer of contribution made by the second defendant to it. The second defendant had offered to contribute $15,000 inclusive of costs to the third defendant in order to enable the third defendant to settle the action and to indemnify the second defendant any further. The solicitors for the third defendant obtained instructions to contribute the same amount to a settlement indicating that the joint offer was for $30,000 inclusive of costs but unfortunately the plaintiff could not finish her consideration of that offer because it was withdrawn. Thereafter I have been told that there were no further meaningful attempts by anybody other than the plaintiff and the third defendant to try to settle the matter.
However, at the time that the second defendant made its offer of contribution to the third defendant, the parties were still a long way apart and the plaintiff was still seeking probably around three times more than the damages which she ultimately recovered. If the costs are capped then the second defendant is liable for one-third of the damages, $10,837, one-third of $10,000, $3,333, and one-third of the plaintiff's disbursements which are currently said to be $24,500. One-third of that sum is $8,166 and the total of those sums is $22,336 which exceeds, of course, $15,000.
When I first started practising law 39 years ago, delays in obtaining instructions because of an underwriter being in London were extremely common. It appears that those problems still exist. They have been foreseeable for years. Mr Austin was very correct in conceding that part of the problem may have been the plaintiff's unreasonable expectations. Another part of the problem, meaning the inability to settle the case, may have come from the fact that the plaintiff herself elected to join three defendants albeit that she was successful against only two of them. It is understandable that the first defendant did not wish to contribute anything towards any settlement, although it had been at one stage, because ultimately the Court's judgment appears to have agreed with the advice given by the first defendant's lawyers to the first defendant. However, as the case law establishes, a mere failure to make an offer is not grounds for granting relief under s 341.
Unfortunately, the case was prolonged but that prolongation was not due to any act or default of any defendant or of any lawyer acting for any of the defendants and, although settlement is desirable and is to be encouraged by all means available, it cannot in itself justify granting relief under s 341. As I said earlier, I cannot see, on my analysis of the facts of this case and the way it was conducted by the parties, any action or inaction by any of the defendants which would warrant the granting of relief under s 341. The plaintiff's application under s 341 of the Legal Profession Act 2004 is accordingly refused.
The next application concerning costs with which I must deal is an application by the second defendant that the costs which the second and third defendants have been ordered to pay to the first defendant ought be borne by them in the same proportion as the second and third defendants were ordered to pay the plaintiff's damages. In essence, the second defendant seeks that, as between the second and third defendants, they pay the first defendant's costs pursuant to s 5(1)(c) of the Law Reform (Miscellaneous Provisions) Act 1946. If the only relief sought by the first defendant had been in tort then there would be no dispute about this issue.
In James Hardie v Wyong Shire Council [2000] NSWCA 107 Handley JA said this:
"14. This legislation was adopted in England in 1935, in this State in 1946, and at various dates in the other States and Territories. In the intervening periods (in England until the Civil Liability (Contribution) Act 1978) the courts in both countries, it seems without debate, regularly, if not invariably, ordered contribution in respect of the plaintiff's costs as well as his damages. Cases in which such orders have been made or affirmed without comment include in England Wilkinson v Rea Ltd [1941] 1 KB 688 CA, 704-5; Jerred v T Roddam Dent & Son Ltd [1948] 2 All ER 104, 110 and in the High Court Broken Hill Pty Co Ltd v Duffy (1943) 16 ALJ 374; A V Jennings Construction Pty Ltd v Maumill (1956) 30 ALJ 100; Soblusky v Egan (1960) 103 CLR 215, 239; Chapman v Hearse (1961) 106 CLR 112, 114; and Voli v Inglewood Shire Council (1963) 110 CLR 74, 101. In this Court the cases include Commissioner for Government Transport v Bitumen & Oil Refineries (Australia) Ltd (1953) 54 SR (NSW) 1, 6; Sinclair v William Arnott Pty Ltd (1963) 64 SR (NSW) 88, 97; and Barisic v Devenport [1978] 2 NSWLR 111, 154. Similar orders were made in Brazendale v Kenna [1961] Tas SR 199 FC, 202, 214; Sherras v Van der Maat [1989] 1 Qd R 114, 118, 120; and Hanson v Matthew Bros Contractors Ltd (1991) 55 SASR 183, 196, 198.
15. As Megarry J said in Richard West & Partners (Inverness) Ltd v Dick [1969] 2 Ch 424 at 431-2, such a course of practice is a source of authority which should be followed unless shown to be clearly wrong. The seminal textbook on this topic is Glanville Williams Joint Torts and Contributory Negligence 1951 which stated at p 488 that the equivalent of ss 5(1)(c) and 5(2) in the 1935 Act:
"… which give a right of contribution among concurrent tortfeasors, are perfectly general in their wording, and enable the Court to order contribution towards costs payable to the injured party. Normally contribution will be ordered in the same proportions as the wrongdoers are held liable between themselves in respect of the plaintiff's damages. Where the plaintiff has sued only one wrongdoer, D1, and obtains a judgment for damages and costs, D1 may … be given a final judgment against D2 for the latter's contribution to the costs payable to P".
16. A number of reported cases deal with claims for contribution in respect of the costs incurred by the defendant to his own solicitors in defending the plaintiff's action, where liability to contribute to the costs payable to the plaintiff was not challenged. See Brazendale v Kenna [1961] Tas SR 199 (FC), 202, 214; Sherras v Van der Maat [1989] 1 Qd R 114, 118, 120; and Hanson v Matthews Bros Contractors Ltd (1991) 55 SASR 183, 198."
In the same case Giles JA after quoting s 5(1)(c) of the Law Reform (Miscellaneous Provisions) Act 1946 said this:
"31. Contribution under s 5 requires that there be a liability for the pecuniary consequences of which the amount of contribution recovered partially compensates, by s 5(2) even completely indemnifies, the tort feasor found liable. The liability is the tort feasor's liability in respect of the damage suffered by the plaintiff as a result of the tort.
32. Damage here means the physical or economic injury or harm caused by the tort feasor (Dillingham Constructions Pty Ltd v Steel Mains Pty Ltd (1975) 132 CLR 323 at 327, 329). With the utmost respect to Handley JA, it seems to me that regarding costs as part of the tort feasor's liability in respect of the damage is not excluded by the requirement that the contributing tort feasor be liable, actually or presumptively, in respect of the same damage. Both tort feasors are correctly described as liable in respect of the damage. The tort feasor's liability is for damages and costs. For the purposes of s 5 the contributing tort feasor's liability is notional, even if the contributing tort feasor has been found liable, and notionally can also be for damages and costs. Section 5 clearly recognises these two elements of "action brought in respect of [the] damage", see s 5(1)(b).
33. In my view this provides the textual basis for the established practice by which contribution has been ordered as to costs as well as damages. The phase "in respect of" is wide. In Trustees Executors & Agency Co Ltd v Reilly (1941) VLR 110 at 111 Mann CJ said that it has "the widest possible meaning of any expression intended to convey some connection or relation between the two subject-matters to which the words refer". This passage has been cited with apparent approval by the High Court, in State Government Insurance Office (Queensland) v Crittenden (1966) 117 CLR 412 at 416 and McDowell v Baker (1979) 144 CLR 413 at 419. There is an undoubted connection or relation between the injury or harm caused by a tort feasor and the tort feasor's liability for costs when successfully sued, and if there were a contractual indemnity from the plaintiff's claim it would extend to costs (The Millwall [1905] P 155 at 174, 176). Costs can readily be regarded as part of the tort feasor's liability in respect of the damage suffered by the plaintiff as a result of the tort."
His Honour then went on in following paragraphs to point out that beyond the textual analysis which he had conducted there were sound reasons for costs being part of the tort-feasors liability in respect of the plaintiff's damage.
The matter is here, complicated because the first defendant has obtained orders following upon a breach of contract, a breach of contract by the second defendant in its contract with the first defendant and a breach by the third defendant of its contract with the first defendant. Learned counsel for the third defendant referred me to the 5th edition of Meagher, Gummow and Lehane's Equity: Doctrines and Remedies and pointed out that there was a coordinate liability on the second and third defendants to indemnify the first defendant in respect of the same damage, and therefore the matter ought be dealt with in equity and the second and third defendants would be equally liable in equity because of the maxim that equality is equity. However, this matter is not free of binding authority.
A convenient starting point is the decision of Davies J in Jones and Ors v Mortgage Acceptance Nominees Limited and Ors [1996] FCA 1255; (1996) 142 ALR 561; (1996) 63 FCR 418. At [2] his Honour said this:
"In my reasons of 10 November 1995, I found that Mr Done was liable to the applicants for breach of fiduciary duty, but not for negligence. That followed from the way in which the claim was put in the statement of claim. In my reasons of 10 November 1995, I indicated that it was my view that, had the applicants made an appropriate claim for negligence against Mr Done based on the events which gave rise to the findings of breach of fiduciary duty on his part, I would have found him to be liable as a tort-feasor."
His Honour then went on to quote s 5(1)(c) of the Law Reform (Miscellaneous Provisions) Act 1946. His Honour then recorded that counsel had submitted that as Mr Done was a tort-feasor who, if sued, would have been held liable in respect of the same damage as his clients, his clients could obtain contribution from Mr Done. However, it was also submitted that Mr Done could not recover contribution from counsel's o clients as he had not been sued in tort, and therefore, Mr Done was not a "tort-feasor liable" within the meaning of the section. His Honour then said this:
"4. Such an approach was rejected by Dr Glanville Williams in his work on Joint Torts and Contributory Negligence at p.129. The approach has also been consistently rejected by Judges of the Supreme Court of New South Wales. Sheppard J, while a judge of the Supreme Court of New South Wales, held to the contrary in Employers' Corporate Investments Pty Ltd v Cameron (1977) 3 ACLR 120. This view was followed by Brownie J in Rap Industries Pty Ltd v Royal Insurance Australia Ltd (1988) 5 ANZ Ins. Cas., para 60-876, by Giles J in R.W. Miller and Co Pty Ltd v Krupp (Australia) Pty Ltd (unreported, 9 June 1992) and by Rogers CJ, Com. Div. in AWA Ltd v Daniels (1992) 7 ACSR 759 at 856-8. The same approach was taken in the Supreme Court of Tasmania in Brown v Sevrup Fisheries Pty Ltd (1970) Tas SR 1, the judge being Crawford J.
5. The substance of the view expressed in these cases was stated by Giles J in R.W. Miller and Co Pty Ltd v Krupp (Australia) Pty Ltd at p.225 as follows:-
'Since the defendant is claiming contribution, before an order in
his favour can be made there must be an ascertained liability to the
plaintiff. That explains `liable' in the requirement that the
defendant be tortfeasor liable in respect of the plaintiff's loss,
to be contrasted with the alternative of a cross-defendant who would
if sued have been liable in respect of that loss. But s 5(1) does
not say that the ascertained liability must be a liability in tort.
It says that the defendant must be a tortfeasor - someone who has
committed a tort against the plaintiff.'
His Honour in the following paragraph quoted decisions to the contrary decided in Victoria, then in [7] of his reasons his Honour said that he would follow the approach adopted by judges of the Supreme Court of New South Wales applying New South Wales law. He went on to point out that the section was introduced to remedy what was considered a defect in the common law. It had been the law in New South Wales and comparable jurisdictions for a long time and had been applied so as to achieve a fair apportionment between tort-feasors liable in respect of the same damage.
The same issue arose in South Australia in Duke Group Limited (in Liq) v Pilmer and Ors (No 2) [2000] SASC 418; (2000) 78 SASR 216. An extract of that case is conveniently set out in Duke Group Limited (In Liq) v Pilmer and Ors (No 5) [2003] SASC 381. In [2] of the 2000 decision the Court (Doyle CJ, Duggan and Bleby JJ) said:
"The Court found that the partners Nelson Wheeler Perth (NWP) were liable to the plaintiff for breach of a contractual obligation to exercise reasonable care and skill in the preparation of certain reports. The Court also found that NWP was liable to the plaintiff in tort for breach of a duty of care relating to the same matter. The Court found that the loss in each case was the same, and the damages in each case should be assessed in the same amount…"
Their Honours went on to say this:
"7. The claim by NWP for contribution from the directors is founded on s 25(1)(c) of the Wrongs Act (SA) 1936. That is the well-known provision for contribution between tort-feasors. In the alternative, the claim to contribution is based on the equitable principle of contribution identified by the High Court, and in particular in the reasons of Kitto J in Albion Insurance Co Ltd v Government Insurance Office of NSW [1969] HCA 55; (1969) 121 CLR 342.
8. For the purposes of s 25 we are satisfied that NWP is to be considered a tort-feasor liable in respect of damages to the plaintiff. It is to be so regarded even though the judgment entered against NWP is referable to the claim in contract. There is authority to support the view that for the purposes of a claim by a tort-feasor under s 25(1)(c) it suffices that the claimant be a person who is in fact a tort-feasor liable in respect of damages, even though a judgment has not been entered against that person on that basis: see AWA Ltd v Daniels (1992) 7 ACSR 759 at 856-858, Jones v Mortgage Acceptance Nominees Limited [1996] FCA 1255; (1996) 63 FCR 418 at 419-422, Australian Breeders Co-operative Society Ltd v Jones [1997] FCA 1405; (1997) 150 ALR 488 at 548-549[1997] FCA 1405; , 26 ACSR 26 at 86-87.
9. The damage for which NWP is liable in tort is the same damage as that for which it is liable in contract. The damages for which NWP is liable in tort should be assessed at the same figure as the damages for which it is liable in contract.
10. Accordingly, provided that the directors can be regarded as tort-feasors, liable to the plaintiff in respect of the same loss as that for which NWP is liable to the plaintiff, NWP has a claim under s 25(1)(c) for contribution from the directors. As we have indicated, we are of the view that the directors owed a duty of care to the plaintiff, were in breach of that duty of care and that the damage caused to the plaintiff by that breach of duty of care is the same damage as that for which NWP has been held to be liable."
It appears to me that s 5(1)(c) can be applied to tort-feasors who are sued, to tort-feasors who are not sued, and to tort-feasors who are sued but not in tort, provided that he who was not sued in tort would have been liable as a tort-feasor. Here, the breach of contract committed by each of the second and third defendants was an act of negligence in performance of the contract that each of the defendants had entered into with the first defendant and therefore each of the second and third defendants would have been liable to the first defendant in tort. Each of the cross-claims pleads that the relevant cross-defendant owed a duty of care to all lawful entrants entering upon the premises in question to ensure in essence that the premises were kept safe. There is no formal pleading as far as I am aware of each of the second and third defendants owing a duty of care to the first defendant but such could be inferred from [7] of the second cross-claim and [8] of the amended third cross-claim.
Accordingly, it appears to me that on the authorities I have cited, insofar as the second and third defendants are required to indemnify the first defendant for its costs of resisting the plaintiff's claim, that indemnity must be apportioned one-third to the second defendant and two-thirds to the third defendant.
The remaining argument concerning costs has been variously described. Mr Gracie, before he was excused, described the submissions that were about to fall from Mr Purdy as "rancid". When the submissions were made Mr Oag, somewhat incensed, described the submissions as "disingenuous". However, I believe that Mr Oag misapprehended what Mr Purdy was putting. Mr Purdy was not submitting that either Mr Oag or those instructing him had in any way misconducted themselves but rather that their effective client had not participated in the processes of court in conformity with the duty that falls upon a party in civil proceedings under s 56 of the Civil Procedure Act 2005. For my part, I would not adopt neither the epithet used by Mr Gracie nor that used by Mr Oag. However, I would describe the submissions made by Mr Purdy on this issue as "brave".
Yesterday I pointed out that one-third of the plaintiff's damages and one-third of what were then thought to be the plaintiff's costs amounted to some $22,336. However, if the matter had settled on 1, 2 or 6 October the quantum of the disbursements may have been far less as the disbursements clearly include hearing fees, transcript fees and, for all I know, some of the disbursements, although said by the plaintiff's solicitor to be recoverable, might not be because, for example, I if I were a costs assessor would not allow any costs for qualifying Mr Burn whose report was of no practical utility other than providing brief synopses which I included in my reasons for judgment. Accordingly, one-third of the plaintiff's damages and costs could be less than $20,000. The substance of what Mr Purdy put to me was that what his client offered to contribute, $15,000, which was close enough to one-third of the plaintiff's costs and disbursements. With great respect, I cannot accept that submission. Close enough is not good enough. It is not a matter of a few dollars or a few cents but is a matter of thousands of dollars. Furthermore, the offer was not to contribute a proportion of the judgment that might be recovered by the plaintiff, but rather a fixed sum of money and that was inclusive of costs. At the time that Mr Purdy withdrew the offer which his client had made, or perhaps I should say "thrown into the ring" the plaintiff's formal bargaining point was an offer of compromise of $90,000 plus costs which had always been approached on the basis that they were $60,000, that is, the plaintiff's formal position was $150,000 inclusive of costs. If the plaintiff had achieved a result comparable to that, Mr Purdy's offer of contribution which could only be seen as being one tenth whereas what I decided was that his client's contribution should be one-third.
The inability of the matter to settle from 6 October onwards was, on what has been put before me during argument, the inability of Mr Oag to obtain any further offer of contribution from either the first defendant or the second defendant. The first defendant was wholly justified in maintaining that position but not, I am afraid, the second defendant. I cannot see any reason why, as has been submitted by Mr Purdy, I should order the third defendant to pay some part of Mr Purdy's client's costs on an indemnity basis from, for example, the date when his client's offer of contribution could have been last accepted or at any other particular stage in the proceedings.
Furthermore, insofar as Mr Purdy was asking for some further indulgence or accommodation on the question of costs because of what he submitted was inaction on the third defendant's part, I cannot see any basis for granting such relief. The matter did not settle on 6 October because Mr Purdy's client withdrew its offer of contribution and thereafter no accommodation could be reached between the second and third defendants so that they could make a joint approach to the plaintiff.
Accordingly, I refuse the application of the second defendant for any further costs order in its favour against the third defendant.
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Decision last updated: 19 January 2016