Briffa v Rail Corporation New South Wales

The plaintiff's choice of defendants 5On 16 November 2010 the plaintiff, while walking along the overhead pedestrian walkway at Blacktown Railway Station during the morning rush hour, slipped and fell less than one minute after another person, pushing a leaking wheelie bin along the same walkway into the McDonald's restaurant outlet, had left a long thin trail of leaking contaminant behind him. This incident was recorded on CCTV footage and is the subject of an accident report (Exhibit E), the text of which is set out at [7] of my judgment of 3 June 2014. 6As noted in the chronology above, that CCTV footage has always been in the possession of the first defendant. The accident report was always in the possession of all defendants. The plaintiff, however, had neither until after commencing proceedings. 7The plaintiff commenced proceedings solely against the first defendant (Rail Corporation New South Wales ("RailCorp")), albeit under an incorrect name, on 22 June 2012. At all relevant times, the plaintiff had believed she had slipped on water, judging by the statements she made to medical practitioners at the time; she knew nothing about the wheelie bin or the contaminant. 8However, after the litigation commenced, examination of the CCTV footage confirmed what the incident report had made clear, namely that the plaintiff had slipped on some unknown contaminant from the McDonald's wheelie bin. The plaintiff filed an amended statement of claim joining McDonald's as a second defendant and correcting the name of the first defendant. Subsequent amendments to this statement of claim added the third and fourth defendants, in place of the second defendant, as the persons against whom the claim arising out of the conduct of the servant or agent of McDonald's should have been brought. 9As is set out in [2]-[4] of my judgment of 3 June 2014, these defendants cross-claimed against each other. Those cross-claims were maintained for the duration of the hearing. 10The central issue in the proceedings was one of causation, and in particular whether the sole cause of the plaintiff's fall was slipping on unknown contaminant issued from the leaking wheelie bin, or by reason of the asserted inadequate slip resistance of the walkway tiles. As is set out in my judgment, I was satisfied the sole reason for the plaintiff's fall was the slippery contaminant.

The issues in dispute 11It is not in dispute that the plaintiff should pay the costs of the first defendant. The disputed issues in relation to costs are: (a)Whether the third and fourth defendants should pay the costs of the plaintiff in relation to her unsuccessful claim against the first defendant; (b)If so, whether such costs should be made on the basis of a Sanderson (Sanderson v Blyth Theatre Co [1903] 2 KB 533) or Bullock order (Bullock v London General Omnibus Company [1907] 1 KB 264); (c)Whether, if such costs are payable, they should extend to costs incurred prior to the joinder of the third and fourth defendants; (d)Whether delay by the plaintiff in identifying the correct name of the third and fourth defendants is a mitigating factor; (e)The appropriate form of order (3) of my judgment of 3 June 2014; (f)Costs orders in relation to the cross-claims, including whether any costs orders at all should be made as the cross-claims were not enlivened; and (g)Whether the first defendant is entitled to an order for indemnity costs from the third and fourth defendants by reason of an offer of contribution (r 42.18 Uniform Civil Procedure Rules 2005 (NSW)).

The plaintiff's costs of the unsuccessful proceedings against the first defendant 12The rule that costs follow the event may be varied where otherwise the plaintiff would be liable for the costs against the successful defendant(s): Gould v Vaggelas (1985) 157 CLR 215. This may be achieved either by a "Bullock order", which requires the unsuccessful defendant(s) to pay the plaintiff by way of reimbursement any costs the plaintiff has paid to the successful defendant(s) (Bullock v London General Omnibus Company), or a "Sanderson order", which simply requires the unsuccessful defendant(s) to pay the costs of the successful defendant(s) leaving the plaintiff out of the process entirely: Sanderson v Blyth Theatre Co; see Coombes v Roads and Traffic Authority (No 2) [2007] NSWCA 70 at [42].

A concession by the plaintiffs 13Mr Sharpe submits (written submissions, paragraph (e)) that the plaintiff sued the first defendant prior to joining his clients (the third and fourth defendants) and that his clients should not be liable for costs prior to the commencement of proceedings against them. I have dealt with this submission out of turn, as it was the subject of a concession by Ms Campbell in her submissions in reply. I have accordingly considered the remaining issues as to the plaintiff's costs in relation to the failed action against the first defendant on that basis.

Application for a Bullock or Sanderson order 14The plaintiff and first defendant asked the court to make a Sanderson or Bullock order against the third and fourth defendants. In practical terms, the parties agreed that a Sanderson order involved less procedure, and was preferable to a Bullock order, if such an order was to be made. 15In those circumstances, the questions are as follows: (a)Was it reasonable and proper for the plaintiff to join RailCorp and to maintain proceedings against it? (b)Was there anything in the conduct of the third and fourth defendants making it appropriate for the court to exercise its discretion and make a costs order of a Sanderson or Bullock nature? 16I shall deal with each of these questions in turn.

(a) Was it reasonable and proper for the plaintiff to join RailCorp and to maintain proceedings against it? 17The plaintiff at all relevant times thought she had slipped on water. But for the incident note and CCTV footage, the role of the third and fourth defendants would never have been known. The report of Dr Adams notes at page 7 that the pedestrian surfaces within the walkway could be expected to be wet from time to time from rain and that slip resistance on the tiles on wet conditions gave a slip resistance well below the Australian Standard (see pages 12-16). Dr Adams considered that the circumstances of the plaintiff's fall were equally contributed to by the decreased slip resistance of the tiles and the presence of contaminant on them. 18These paragraphs from Dr Adams' report show that the plaintiff had an arguable case against RailCorp. Additionally, the third and fourth defendants, at all relevant times, not only refused to admit that the person pushing the wheelie bin was in their employ (submissions being made to this effect, namely that the plaintiff had failed to discharge the burden of proof and that judgment should be entered for the third and fourth defendants) but prosecuted a cross-claim against the first defendant on that basis, thereby creating uncertainty as to who was the proper defendant: Dominello v Dominello (No 2) [2009] NSWCA 257; RTA v Palmer (No 2) [2005] NSWCA 140 at [35]; Bostik Australia Pty Ltd v Liddiard (No 2) [2009] NSWCA 304 at [29]. The third and fourth defendant at all relevant times disputed the issue of the identity of the man pushing the wheelie bin; for all the plaintiff knew, it could have emerged at trial that he was a person under the direction of the first defendant. 19As Mr Sharpe noted, the relevant principles concerning whether it was reasonable and proper to join the successful defendant are set out in Roads and Traffic Authority of NSW v Dederer (2007) 234 CLR 330 at [176]-[193], [296]-[299], and those principles do not require repetition. This is not a case where the plaintiff joined the successful defendant in an attempt to spread the net of liability (Raulfs v Fishy Bite Pty Ltd [2012] NSWCA 135 at [105] - [111]) but where, until the CCTV evidence and incident report were obtained, the first defendant appeared to be the solely liable party, and was joined as such. 20I am satisfied it was reasonable and proper for the plaintiff, who had already commenced proceedings against solely the first defendant, to continue those proceedings.

(b) Was there anything in the conduct of the third and fourth defendants making it appropriate for the court to exercise its discretion and make a costs order of a Sanderson or Bullock nature? 21As set out above, the third and fourth defendants, while not calling any evidence, nevertheless prosecuted the cross-claim and defended the claim. However, this would be the case for any defendant (or cross-claimant) and is not of itself sufficient to warrant the making of a Sanderson or Bullock order. Nevertheless, by casting doubt upon who the correct defendant was (Dominello v Dominello (No 2); RTA v Palmer (No 2) at [35]) the third and fourth defendants left the plaintiff with little option but to proceed, particularly since they had commenced the proceedings against the first defendant solely. I particularly note the contents of paragraphs 28 - 44 of the first defendant's submissions on costs in this regard.

Conclusions concerning the making of a Sanderson order 22I am satisfied that the plaintiff has established an entitlement to the making of a Sanderson order, subject only to the proviso that such order should date from the time when the third and fourth defendants came into the litigation. 23That date is not easy to determine. The plaintiff at first sued McDonald's, and then in its place another corporation, before finally identifying the current third and fourth defendants. The relevant correspondence concerning the correct identification of the persons conducting the McDonald's store has been tendered, and I have heard oral submissions about the difficulties the plaintiff had in identifying the correct defendant. I accept the submissions of the plaintiff and first defendant that any delay in doing so arose not out of incompetence or dilatoriness by the plaintiff but due to the third and fourth defendant in that: (a)The amendments to the pleadings were undertaken as part of the task of identifying the correct defendant and whether or not the wheelie bin operator was an employee, in circumstances where the third and fourth defendants were always in the best position to clarify this (first defendant's written submissions, paragraph 25); (b)Although three attempts had to be made by the plaintiff to identify the correct defendant, this was because the correct defendants, as well as McDonald's, took the view that it was up to the plaintiff to find this out. They are entitled to take such a stance, but if unsuccessful in the litigation, they must bear the cost of doing so. 24Accordingly the Sanderson order will apply from 12 December 2012.

The third and fourth defendants' application that no costs of the cross-claims be payable. 25The third and fourth defendants submit that Railcorp should pay the costs of the Railcorp cross claim or alternatively that no costs should be payable (paragraphs 7 - 12 of the written submissions) and, at paragraph 15 of the written submissions, that "there should be no order as to costs of the Meduri Cross Claim"). 26The third and fourth defendants submit that as Railcorp obtained a judgment against the plaintiff the cross-claim was not enlivened, as there was no liability found against Railcorp in the primary action. The first defendant's cross-claim claimed indemnity in respect of the plaintiff's claim, indemnity and/or contribution pursuant to the Law Reform (Miscellaneous Provisions) Act 1946 (NSW) and costs; in other words, the cross-claim was pleaded in negligence only (written submissions, paragraph 10). Accordingly, it is submitted, there was no liability to apportion, or damages to recover; both cross-claims failed. In those circumstances it is argued that: (a)Railcorp should pay the third and fourth defendants' costs (paragraph 10); or (b)There should be no order as to costs. 27Each party also raised discretionary issues. The third and fourth defendants relied upon correspondence (see chronology above) which, it was asserted, demonstrated delay in handing over the CCTV footage; the problem seems to have been, however, that the first defendant was prepared to provide a copy of the footage but not to hand over the original tape. The first defendant, in submissions, relied upon the conduct of the litigation by the third and fourth defendants, including the failure to admit that the wheelie bin operator was their servant or agent. This was a more relevant concern, in that the likelihood that McDonald's would permit a total stranger to wheel a large bin into their food preparation area (as shown, partially, on the CCTV footage) was always implausible. 28The question is, however, not one of how the case was conducted but of which party, in reality has been successful. The principle that costs follow the event does not fall away in the absence of the specific resolution of a particular issue, such as the resolution of a cross-claim, but extends to all disputed issues of law and fact: Cretazzo v Lombardi (1975) 13 SASR 4 at 12. In practical terms, the first defendant was successful in this litigation and costs should follow that event. 29None of these reasons for refusing the first defendant any costs at all, or ordering them to pay the third and fourth defendant's costs, has merit. I shall not deal with this submission further, beyond formally noting this finding as to the third and fourth defendants' application for payment of costs by the first defendant (or alternatively no order as to costs), because it is subsumed by the issue of whether there should be an award of indemnity costs by reason of the first defendant's offer of contribution under Uniform Civil Procedure Rules 2005 (NSW) ("UCPR") r 42.18, which presupposes an entitlement to costs.

The first defendant's application for indemnity costs of the cross-claims 30Rule 42.18 UCPR provides: "If a party has made an offer to contribute, as referred to in rule 20.32, the court must take into account both the fact and the amount of the offer in exercising its discretion as to costs." 31Although rarely referred to, UCPR r 42.18 is an important tool in enabling defendants to make offers to each other in circumstances where, by reason of multiple parties, an Offer of Compromise in relation to the whole of the litigation is not possible. The rule is so framed as to allow the court greater flexibility in making indemnity costs orders in that the rule does not stipulate the particular consequences of not accepting the offer, so as to permit the court to have regard to the circumstances of the case. What is important, however, is that the court "must" take such an offer into account when considering what costs order should be made. 32The difference in wording between the offer of compromise and offer to contribute provisions has been explained by the NSW Court of Appeal in Diamond v Simpson (No 4) [2004] NSWCA 57 at [62] and C G Maloney Pty Ltd v Hutton-Potts [2006] NSWCA 136 at [155] - [164], albeit in respect of the repealed legislation. The first defendant submits, and I agree, that the court "must" take the offer to contribute into account, but that otherwise the discretion is unfettered, which permits the taking into account of the other issues raised by the third and fourth defendants, which I have done. 33In the present case the first defendant relies upon: (a)Letter from Gillis Delaney Lawyers to McCulloch v Buggy Lawyers dated 17 March 2014; and (b)The enclosed Offer to Contribute. 34There is no submission that the Offer to Contribute is bad in form or otherwise invalid. It was validly served on the third and fourth defendants pursuant to UCPR r 20.32. 35The contents could not be clearer - the first defendant offered to contribute $10,000 towards any judgment that the plaintiff obtained in the proceedings. 36A number of matters must be determined: (a)As set out above, whether the first defendant is entitled to costs at all. (b)Was this a genuine compromise or a "walk away" offer? (c)The offer remained open only until 11 am on the first day of hearing. Was this long enough? (d)Were there any other discretionary factors that should be taken into account in relation to the offer?

Is the first defendant entitled to costs? 37This submission is the same as was made above, namely that the first defendant is not entitled to any costs (or should pay the third and fourth defendants' costs) because the court did not determine the cross-claims. 38While it is true that there was no apportionment, that was because the third and fourth defendants were liable and the first defendant was not. The "event" was the success of one and the failure of the other, and costs should follow that event.

A genuine offer? 39Although framed as an offer of $10,000, the offer had the additional benefit of ensuring a shorter case. If the first defendant and the cross-claims were out of the proceedings, the issue would simply have been the issues between the plaintiff and the third and fourth defendants. This is relevant because consideration of an offer to contribute can take into account benefits of this kind. In Henderson v Simon Engineering (Aust) Pty Ltd [1988] V R 867 at 870 Murphy J said: "It has been submitted ... that r 2602(1) clearly contemplates that an offer of compromise must specify a precise sum of money. I do not agree with this submission. If liability is an issue which the plaintiff must prove and contributory negligence has been raised, the proportions are most relevant ... If the issue of negligence and contributory negligence were issues, taking up a good deal of time (as in an industrial accident they so often are) it appears to me that r 2602(1) provides a vehicle by which a defendant or a plaintiff may protect himself as to costs, for example, by offering to pay or to accept (as the case may be) a stated percentage of any damages that the tribunal may find that the plaintiff is entitled to receive and that should the offeree refuse such an offer and be found more responsible by the tribunal, the offeror should be entitled to use an offer to compromise on this issue, served on the other party, on the issue of costs concerning that issue. Should the opposite party accept such an offer then the matter would proceed as an assessment and the plaintiff would receive as a judgment only the agreed percentage of the damages assessed by the tribunal. This procedure is commonplace in practice." 40I am satisfied that the offer was not "walk away" but one of substance.

The amount of time that the offer was open 41The facts in this case are similar to those in Schepis v Commonwealth [2013] NSWCA 354, where an offer remained open for four days just before the commencement of the trial, and I note the authorities listed by the Court at [32]. Although this ground was only faintly hinted at, I should include a finding that I am satisfied that this costs offer was open for a reasonable time.

Other discretionary issues 42The third and fourth defendants submit (written submissions, paragraph 17) that the report of Dr Adams, if accepted, would have resulted in a contribution of in excess of $10,000 and that, in those circumstances, it is submitted, the rejection of the offer to contribute was "not unreasonable". This statement is erroneous, for two reasons. The first is that "not unreasonable" is not the test. The second is that Dr Adams' conclusions as to causation were not accepted by the court, nor was the court obliged to follow those findings, even if there was no expert evidence in reply (as was the case in Makita (Australia) Pty Ltd v Sprowles (2001) 53 NSWLR 705). 43Cases where there is CCTV evidence of the events in question are generally strong cases (by coincidence, Schepis also involved CCTV evidence, and leave to appeal was refused because the appellant had no substantial prospects of success). In his helpful written submissions, Mr King (on behalf of the first defendant) points out that the very criticisms made by the third and fourth defendants of the plaintiff in relation to persisting with her claim against the first defendant would have to apply with even more force to the cross-claim. Additionally, the third and fourth defendants put the other parties to proof of issues without leading evidence themselves, in circumstances where their evidence was weak: Thornton v Wollondilly Mobile Engineering (No 2) [2012] NSWSC 742. 44Mr Sharpe submitted that the first defendant could have protected itself by Calderbank offer, or an offer of compromise, against either the third and fourth defendants or the plaintiff. A similar argument was raised in Thornton v Wollondilly Mobile Engineering (No 2) at [13] - [18]. I note the difficulties generally of a defendant in such circumstances (James Hardie & Co Pty Ltd v Wyong Shire Council (2000) 48 NSWLR 679 at [23]). The very flexible nature of r 42.18 makes it ideal for use by one defendant against another in litigation and such a defendant should not be shut out from seeking costs, including indemnity costs, by reason of the existence of alternative provisions in the Rules.

Conclusions concerning indemnity costs 45The first defendant submits (at paragraph 66), and I agree, that there is an "overwhelming" basis for the court to exercise its discretion to order indemnity costs against the third and fourth defendants. The provisions of s 60 Civil Procedure Act 2005 (NSW) require the court to take into account, in relation to costs, issues of proportionality. The cross-claims and issues in relation to the first defendant added complexity to what was otherwise a straightforward claim. Accordingly I have made orders for the third and fourth defendants to pay the first defendant's costs on an indemnity basis in relation to both the cross-claims.

Concluding remarks 46I thank the parties for their helpful written and oral submissions. To save costs, the parties agreed that these reasons could be emailed to them, rather than having the matter relisted to hand down judgment. 47While I have used the proposed orders set out by RailCorp (written submissions, paragraph 68) as a guide, there are many changes: (a)First, it is not necessary for me to make orders 68(a) and (b) on that list, as these were made on 6 August 2014. (b)Nor is it strictly necessary for any further orders to be made about the now-absent second defendant, as these orders were made in my judgment, but for the sake of completeness I have done so. (c)I have included, in relation to the Sanderson costs order, that these be payable from the time of joinder of the defendants variously identified as the "McDonald's" defendants, namely the amended statement of claim filed on 12 December 2012, in order to reflect the concession made by the plaintiff on this issue. (d)Nor is it generally necessary to direct that these orders be "on the ordinary basis as agreed or assessed" as the former applies to all orders unless an order is specially made for indemnity costs, and the latter is implicit in the order; however, as part of the costs of the first defendant are made on an indemnity basis, I have added the words "on the ordinary basis" in order to differentiate these costs. (e)I have added an order formally dismissing the costs applications made by the third and fourth defendants against the first defendant. (f)As sometimes there are issues on assessment as to the costs of making the costs order, and as the costs orders for the plaintiff and first defendant are on different bases, I have set out a specific order for the costs of this application. 48I have, however, otherwise adopted the orders proposed by the first defendant both in relation to the costs of the first defendant in the main action and in relation to the costs issues in the cross-claims. 49Since hearing from the parties, the decision Simmons v Rockdale City Council (No 2) [2014] NSWSC 1275 has been handed down. In those proceedings, a successful defendant similarly sought indemnity costs for its offer of compromise and the plaintiff similarly sought a Bullock or Sanderson order against the unsuccessful defendant. That judgment led to different results, but applied the same principles, and turns on its own facts.

Orders (1)The first cross-claim between Rail Corporation New South Wales and McDonald's Australia Ltd is dismissed with no order as to costs. (2)Third and fourth defendants to pay the plaintiff's costs of the action between the plaintiff and the third and fourth defendants on the ordinary basis. (3)A Sanderson order that the third and fourth defendants pay the first defendant's costs of the proceedings brought by the plaintiff on the ordinary basis, such costs to be limited to the costs incurred from the date of the amended statement of claim (12 December 2012). (4)As to the cross-claim Rail Corporation New South Wales v Frank Meduri & Meduri Enterprises Pty Ltd, judgment for the cross-claimant, with the cross-defendants to pay the cross-claimant's costs on an ordinary basis up to 17 March 2014 and on an indemnity basis from 18 March 2014. (5)As to the cross-claim Frank Meduri & Meduri Enterprises Pty Ltd v Rail Corporation New South Wales, cross-claim dismissed, with the cross-claimants to pay the cross-defendant's costs on an ordinary basis up to 17 March 2014 and on an indemnity basis from 18 March 2014. (6)The third and fourth defendants' applications in relation to the costs of the cross-claims are dismissed. (7)The third and fourth defendants are to pay the costs of the plaintiff in relation to this application for costs on an ordinary basis, but are to pay the costs of the first defendant on an indemnity basis.

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. Decision last updated: 11 December 2014