BELL v VEIGEL; BELL v BROUGHTON; BROUGHTON v VEIGEL

CATCHWORDS: PROCEDURE - Costs - general rule - costs follow the event - costs of whole action - where offer of compromise made - costs at first instance - costs on appeal - co-defendants - multiple matters

Edwin BELL Jamie DEE PARTIES: John VEIGEL bht Paula TALLEN The Nominal Defendant Dean Leslie DAVIS Christie BROUGHTON

FILE NUMBER(S): CA 40470/2005; 40471/2005; 40499/2005

P R Garling SC/ C Thompson (Bell and Dee) R Letherbarrow SC/ A Stone (Veigel) COUNSEL: L M Morris QC/ J M Morris (Broughton CA40470/05,CA 40499/05) R McIlwaine SC/ J Davidson (Broughton CA40471/05) R Stitt QC/ D Wilson (The Nominal Defendant) R Seton SC/ P Carr (Davis)

Carrolll & O'Dea (Bell and Dee) Stacks Goudkamp (Veigel) Moray & Agnew (Broughton, CA40470/05, CA40499/05) SOLICITORS: Keddies Litigation Lawyers (Broughton, CA40471/05) Sparke Helmore (The Nominal Defendant) Ferguson Bolton (Davis)

LOWER COURT FILE NUMBER(S): DC 8279/2002 DC 1082/2004

12 May 2005 LOWER COURT DATE OF DECISION: 27 May 2005 8 September 2005

IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40470/2005 CA 40471/2005 CA 49499/2005

MASON P GILES JA TOBIAS JA

Tuesday 27 May 2008 Elwin BELL & Anor v John VEIGEL & Ors Elwin BELL & Anor v Christine BROUGHTON & Ors Christine BROUGHTON v John VEIGEL & Ors (NO 2) JUDGMENT 1 THE COURT: We shall refer to the parties by surname without intending any disrespect. 2 The reasons for judgment handed down on 20 March 2008 (Bell v Veigel; Bell v Broughton; Broughton v Veigel [2008] NSWCA 36) addressed three sets of appellate proceedings: (a) The Bell/Dee appeal (CA 40470 of 2005) in relation to Bell/Dee's liability in Veigel's action; (b) The Broughton appeal (CA 40499 of 2055) in relation to Broughton's liability in Veigel's action; and (c) The Bell/Dee appeal (CA 40471 of 2005) in relation to liability (with damages to be assessed) in Broughton's action. 3 We determined that Broughton was neither negligent nor contributorily negligent; and that there must be a new trial as to the identity of the offending vehicle and its owner/driver. Para 238 of our reasons may be repeated: Each appeal ought to be upheld, with costs. So too should Mrs Broughton's cross appeal in CA 40471 of 2005. Verdicts and judgments on liability should be entered in Mrs Broughton's favour. Other verdicts and judgments on liability, in the actions and the cross-claims, should be set aside, along with ensuing costs orders. The scope of the new trial to be ordered has already been indicated. Subject to any special costs issues, the costs of the first trial touching all parties except Mrs Broughton in her status as a defendant should abide the result of the new trial. It is presently unclear whether any separate costs question remains for determination in these appeals. 4 The legal representatives of Bell/Dee have now provided draft orders and all parties have indicated the extent of their several objections to them, supported by written submissions.

5 A number of issues have emerged. Should the respective appellants get their costs of the appeals? 6 Some respondents have suggested that the costs of the proceedings in this Court should abide the outcome of the new trial. We have already indicated the contrary view (see the earlier reasons of Mason P at [238], [242]). The Bell/Dee appeals and Broughton's cross appeal in CA40471 of 2005 raised discrete matters upon which the parties joined issue. The successful parties are entitled to be awarded their appellate costs, subject to any relevant Calderbank isssues. Prima facie, those orders should be made against each respondent or cross-respondent who took an opposing stance. 7 By parity of reasoning, we also reject the submissions contending that the burden of any order as to the appeal costs might, pursuant to a Sanderson order, later shift having regard to the outcome of the new trial.

Costs of the defensive cross-appeals 8 Veigel, Davis and the Nominal Defendant submit that there should be no order as to the costs of the defensive cross-appeals that were filed by Veigel in CA40499 of 2005 and CA40470 of 2005. We agree.

9 We do not accept Bell/Dee's or Broughton's proposal that the cross-respondents should be compensated for the costs they incurred in relation to Veigel's cross-appeals. These costs will have been minimal. We are unaware of any written or oral submissions addressing Veigel's defensive cross-appeals. Who should bear the costs of the respective appeals? 10 As indicated, these costs should in principle be borne by the respondents to each appeal and to Broughton's cross-appeal who actively opposed the orders sought in this Court. 11 Since Broughton did not oppose the Bell/Dee appeal (see Orange Book 140), she should not be included as a respondent liable to pay the costs in CA 40470 of 2005.

12 Since Veigel elected to take an active role in the appeals he is prima facie in no different situation from the insured respondents, although there is a question about a special order stemming from Calderbank principles to which we now turn. Should Veigel get any special costs order? 13 Veigel is a necessary party to the actions and the appeals. Yet his involvement in the litigation is solely as the innocent victim of an accident about which he could personally give no evidence in which at least one of the defendants was clearly negligent. His damages were agreed at first instance. 14 Veigel has always been entitled to regard the owner/driver of the truck and caravan as reponsible, while being uncertain as to the identity of those parties. As events turned out in the Court of Appeal, his decision to join Broughton as a defendant from the outset was misconceived.

15 In June 2006, during the early stages of the appellate proceedings, Veigel made an open offer to all defendants. It was contingent upon acceptance by all. The terms were complicated, but the nub of the proposal was that Veigel be allowed to adopt a neutral role in the Court of Appeal, leaving the defendants (being the Nominal Defendant and three sets of insured defendants) to fight among themselves as to liability and their proportionate share(s) of liability. Only Broughton accepted the proposal and she did so contingently upon the other defendants doing likewise. In our view, the proposal was eminently reasonable as regards the appeal costs. Its non-acceptance by Bell/Dee, the Nominal Defendant and Davis ought to be reflected in Veigel being indemnified as to the burden of the appeal costs that would otherwise be payable by him to the respective successful appellants. The simplest course is to award Bell/Dee as the successful appellants in CA 40470 and CA 40471 of 2005 their costs against the Nominal Defendant and Davis; and to award Broughton as the successful appellant in CA 40499 of 2005 her costs against Bell/Dee, the Nominal Defendant and Broughton. 16 Bell/Dee have argued against this conclusion, relying among other things upon the fact that the Calderbank offer included a proposal to protect Veigel from the costs burden of the new trial as well. It is true that Veigel will need to present his case at the new trial, perhaps by tendering all or some of the evidence of the first trial. Nevertheless, he is certain to be awarded his costs against the defendant(s) found responsible. The spirit of the proposal was a sensible one and it ought to have been accepted or met with some counter-proposal from the defendants given the attitude to Veigel's situation evinced throughout of the appeal.

Ultimate burden of Sanderson order in Broughton's favour 17 There is to be a verdict and judgment for Broughton against Veigel in Veigel's action, with costs. 18 Veigel and Davis propose (in slightly different forms) that the unsuccessful defendant at the retrial should indemnify Veigel on a Sanderson basis for the costs of the first trial. Bell/Dee submit that this matter should be left to the discretion of the Judge who hears the new trial. We agree with Bell/Dee. There has been no proper opportunity to explore Veigel's justification for joining Broughton in his action from the outset.

Broughton's costs as defendant 19 Veigel recovered a verdict and costs against Broughton at the trial. This Court held that Broughton was not guilty of negligence, with the consequence that Broughton is entitled to a verdict in her favour against Veigel with costs in proceedings DC 8279 of 2002. Broughton will also get the costs of her successful appeal in CA 40499 of 2005 against the respondents that opposed her appeal. 20 Veigel has proposed that this Court should make a Sanderson order in his favour with respect to this costs liability so far as it touches him. This is inappropriate because (a) as indicated, the basis for his decision to join Broughton as a defendant has not yet been explored; and (b) the person or persons against whom any such an order should be made are presently unascertainable. 21 The question then arises as to whether recovery of Broughton's trial costs ought to be stayed until the outcome of the appeals to the High Court (see below) and/or the new trial is determined; and if so, upon what terms. Broughton submits that she ought to be entitled to interest on costs if immediate recovery from Veigel is stayed. We were informed that those costs have already been paid to Broughton's insurer's lawyers. Broughton's proposal seems reasonable on the material presently before us. The suggested mechanism for addressing it is for this Court to note that Broughton reserves her right to claim interest on costs (cf Civil Procedure Act 2005, s101(4)).

Should costs orders be stayed pending the outcome of the High Court appeals? 22 Veigel and the Nominal Defendant have filed applications for special leave to appeal to the High Court. Davis has foreshadowed his intention to do so. 23 It is not clear whether the decision to acquit Broughton of negligence is proposed to be challenged in the High Court.

24 Interim stay orders are consented to by Bell/Dee, Davis, the Nominal Defendant. 25 Broughton's submissions on the matter accept the appropriateness of a stay so long as her right to interest on costs already paid by her insurer is preserved.

26 Provided that the High Court proceedings are prosecuted with despatch the enforcement of the costs orders should be stayed in the meantime. To permit enforcement of costs orders now would involve the parties in expensive and possibly unnecessary processes, including the processes of costs assessment. And in the case of costs awarded to Broughton against Veigel, enforcement now would cause avoidable complications given the foreshadowed Sanderson order to be sought by Veigel in the new trial.

Orders 27 The orders below reflect the agreement of the parties and the resolution of the above issues. 28 In CA 40470 of 2005 the following orders should be made:

2. The third and fourth respondents are to pay the appellants' costs of the appeal.

Each party is to pay their own costs of the cross-appeal.

The Judgment and Orders of Coorey DCJ on 12 May, 27 May, 8 September and 7 December 2005 are set aside with the exception of Orders 1, 3, 4 and 8 in the Judgment/Order made on 27 May 2005 and Orders D and E in the Judgment/Order made on 8 September 2005.

Verdict and judgment for the second respondent against the first respondent.

The first respondent is to pay the second respondent's costs of the trial before Coorey DCJ.

Verdict and judgment for the second respondent on the first cross claim by the third respondent.

The third respondent is to pay the second respondent's costs of the first cross claim. 10. Verdict and judgment for the second respondent on the second cross claim by the first and second appellants.

The first and second appellants are to pay the second respondent's costs of the second cross claim.

Verdict and judgment for the second respondent on the fifth cross claim by the fourth respondent.

The fourth respondent is to pay the second respondent's costs of the fifth cross claim.

The third, fourth and sixth cross claims are dismissed with no order as to costs.

The matter is remitted for a new trial limited to the issues as to the identity of the offending vehicle and its owner/driver.

Subject to any costs orders in paragraphs 1 to 15 inclusive above, the costs of the trial before Coorey DCJ are to be at the discretion of the judge who hears the new trial, with the exception of the Orders D and E in the Judgment/Order made on 8 September 2005.

The costs orders referred to in paragraphs 2, 9, 11 and 13 are stayed pending the outcome of the appeal to the High Court. 29 In CA 40471 of 2005 the following orders should be made:

3. The second and third opponents are to pay the first and second cross claimants/appellants' [Bell/Dee] costs of the appeal.

The cross opponents are to pay the cross claimants' costs of the cross appeal.

The Judgment and Orders of Coorey DCJ on 12 May, 27 May, 8 September 2005 are set aside.

The matter is remitted for a new trial limited to the issues as to the identity of the offending vehicle and its owner/driver.

The costs of the trial before Coorey DCJ are to be at the discretion of the judge who hears the new trial.

The costs orders referred to in paragraphs 3 and 7 are stayed pending the outcome of the appeal to the High Court. 30 In CA 40499 of 2005 the following orders should be made:

1. By consent, the Amended Notice of Appeal with Appointment filed by the appellant on 6 October 2005 in proceedings No 40499 of 2005 (to be found at Red 269) be amended by deleting the words "Owen Arnold" (being the identity of the third respondent in the appeal and the third defendant in the court below), and substituting it with the word "Elwin" .

3. The respondents other than the first respondent are to pay the appellant's costs of the appeal.

Each party pay their own costs of the cross appeal.

The Judgment and Orders of Coorey DCJ on 12 May, 27 May, 8 September and 7 December 2005 are set aside with the exception of Orders 1, 3, 4 and 8 in the Judgment/Order made on 27 May 2005 and Orders D and E in the Judgment/Order made on 8 September 2005.

Verdict and judgment for the appellant against the first respondent.

The first respondent is to pay the appellant's costs of the trial before Coorey DCJ.

Verdict and judgment for the appellant on the first cross claim by the second respondent.

The second respondent is to pay the appellant's costs of the first cross claim.

Verdict and judgment for the appellant on the second cross claim by the third and fourth respondents.

The third and fourth respondents are to pay the appellant's costs of the second cross claim.

Verdict and judgment for the appellant on the fifth cross claim by the fifth respondent.

The fifth respondent is to pay the appellant's costs of the fifth cross claim.

The third, fourth and sixth cross claims by the appellant are dismissed with no order as to costs.

The matter is remitted for a new trial limited to the issues as to the identity of the offending vehicle and its owner/driver.

Subject to any costs orders referred to in paragraphs 1 to 16 inclusive above, the costs of the trial before Coorey DCJ are to be at the discretion of the judge who hears the new trial, with the exception of the Orders D and E in the Judgment/Order made on 8 September 2005.

It is noted that the appellant reserves her right to claim as against the first respondent an entitlement to: (a) interest on the sum of $2.25 million paid to the first respondent; and (b) interest on costs which she is entitled to recover, but will not be finally addressed until after the re-trial.

The costs orders referred to in paragraphs 3, 8, 10, 12, 14 and 15 are stayed pending the outcome of the Appeal to the High Court.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.