Hallmark Construction Pty Ltd v Brett Harford; Copeland Building Services Pty Ltd v Hallmark Construction Pty Ltd; Hallmark Construction Pty Ltd v Harford Transport Pty Ltd

Hallmark Construction Pty Ltd v Brett Harford; Copeland Building Services Pty Ltd v Hallmark Construction Pty Ltd; Hallmark Construction Pty Ltd v Harford Transport Pty Ltd - [2020] NSWCA 134 - NSWCA 2020 case summary — Zoe

Judgment

THE COURT: In May 2013 Brett Harford was severely injured when delivering bricks to a site where the principal building contractor was Hallmark Construction Pty Ltd (Hallmark). Hallmark had subcontracted the construction work on a group of townhouses to Copeland Building Services Pty Ltd (Copeland). Copeland had contracted supervision of its works to Mr Isaia. Mr Harford was the principal of, and employed by, Harford Transport Pty Ltd (Harford Transport). Prior to the trial in the Common Law Division, Mr Harford's damages were agreed at $1.6 million. The dispute was limited to liability. Mr Harford sued Hallmark for negligence; Harford Transport sued Hallmark to recover workers' compensation benefits paid to Mr Harford.
Hallmark cross-claimed against Copeland in both proceedings. There were also cross-claims brought against the insurers of ANM Building Services Pty Ltd (which had been deregistered) which had employed Copeland's supervisor, Mr Isaia.
The trial judge, Fagan J, delivered his principal judgment on 17 April 2019: Harford v Hallmark Construction Pty Ltd. [1] Although the parties were required to supply precise amounts, final orders were entered later that day. On 19 July 2019 a second judgment was handed down resolving the costs of the cross-claims.
Hallmark and Copeland each filed two appeals in this Court. Hallmark's appeals identified Mr Harford as the principal respondent in one matter (CA 2019/146962) and Harford Transport Pty Ltd (Harford Transport) as the principal respondent in the other matter (CA 2019/146975).
On 17 March 2020 this Court delivered judgment in the four appeals Hallmark Construction Pty Ltd v Brett Harford. [2] The two appeals brought by Copeland were dismissed. Hallmark was successful on one aspect of its appeal, namely in increasing the proportion of liability to be borne by Copeland from 50% to 75%. In other respects, Hallmark was unsuccessful.
Costs orders were made which were intended to reflect these outcomes and which will be explained further below.

[4]

Variations of orders - Copeland's motion

On 30 March 2020, within the 14 day window in which parties are permitted to seek variation of entered orders, [3] both Copeland and Hallmark sought variations of the orders made. It is convenient to deal first with the motion filed by Copeland, the orders sought not being opposed.
In the judgment of 17 March 2020, the Court made the following orders with respect to the costs of the four appeals, namely: "(1) Order the appellants (Hallmark and Copeland) pay the costs of the respondents, namely Brett Harford, Harford Transport Pty Ltd, Certain Underwriters at Lloyds subscribing to Policy No CV004/226CGL and Berkley Insurance Company. As between the appellants, liability should be apportioned equally. (2) Order that Copeland pay 15% of Hallmark's costs of the four appeals."
Copeland sought a variation of order (1) in so far as it required that it pay the costs in this Court of Mr Harford and Harford Transport. Hallmark had sought a finding of contributory negligence with respect to Mr Harford and had claimed contribution from Copeland with respect to its liability to Harford Transport. It had been unsuccessful. The appeals brought by Copeland had not sought any variation of the judgments below with respect to Mr Harford or Harford Transport. Accordingly, it submitted that it should not have to pay costs incurred by those parties in this court. The submission reflected the conclusion the Court had expressed in its reasons. [4] So much is accepted by Hallmark. Accordingly, of the two orders with respect to costs of the appeals, order (1) should be varied to read: (1) Order that - (a) Hallmark Construction Pty Ltd pay the costs of Brett Harford and Harford Transport Pty Ltd in this Court; and (b) Hallmark Construction Pty Ltd and Copeland Building Services Pty Ltd pay the costs of Certain Underwriters at Lloyds subscribing to Policy No CV004/226CGL and Berkley Insurance Company, such costs to be apportioned between the appellants equally.
As this order is made by consent, no costs should be payable with respect to Copeland's motion.

[5]

Variation of costs orders by trial judge - Hallmark's motion

The notice of motion filed by Hallmark sought to reopen the costs orders made by the trial judge and have this Court reformulate the substantive orders made on 17 March 2020. There is also a new order claimed with respect to the apportionment of the indemnity payable under s 151Z of the Workers Compensation Act 1987 (NSW).
The basis for reformulating the costs orders made by the trial judge is said to be that they do not reflect the apportionment of liability between Hallmark and Copeland. There is no need to reformulate the substantive orders, unless to effect a change to the costs orders made at trial, or the workers' compensation indemnity. It is convenient to start with the proposed variation of the trial costs.
The factual assertion (that the costs orders do not reflect the apportionment of liability) may be accepted; whether the trial judge intended the apportionment exercise to apply equally to damages and costs is, however, disputed. While one might expect such an apportionment in a straightforward case, there was a degree of complexity in the present proceedings, making it difficult to resolve Copeland's submissions as to possible intentions. In any event, the real issue concerns the power of this Court to intervene in the way proposed by Hallmark.
Hallmark's motion to vary the costs orders in this Court was made within the 14 day period permitted by UCPR r 36.16(3A). Had it not been, this Court would have lacked power to vary its own orders of 17 March 2020. That is, r 36.16(3A) provides a specific exception to the principle of finality governing entered orders of a court. There are three other exceptions, namely (i) by way of appeal, in accordance with relevant statutory provisions and rules; (ii) pursuant to the "slip rule", and (iii) by proceedings alleging fraud or other irregularity, illegality or conduct against good faith. The third category is encapsulated by r 36.15; [5] no reliance was placed upon this exception. The other two exceptions were relied upon.
As to the first, Hallmark submitted that it had appealed against the costs orders made by the trial judge because the notices of appeal sought to set aside the "judgment" of the trial judge. Whatever the general meaning of the term "judgment", in the context of a notice of appeal it must be understood by reference to the description of the subject matter of the appeal, the grounds of the appeal and the orders sought, and, if permitted, any expansion of the grounds in argument without amendment of the pleaded grounds. Each of Hallmark's notices of appeal described the scope of the appeal in the following terms: "The appellant appeals from so much of the decision below [as] rejected the plea of contributory negligence and the [appellant's] cross-claim against the employer Harford Transport Pty Ltd."
In neither appeal was there a ground raising the question of costs. It is true that the orders sought included an order that the "[j]udgment of the court below be set aside" (proposed order 2) and an order that "[t]he respondents or one or other of them pay the appellant's costs, in this court, and in the court below" (proposed order 7). The latter order was to be understood as requiring variation of relevant costs orders consequential upon a variation of the substantive orders. There was no separate and independent challenge to the costs orders made by the trial judge in the grounds, in the proposed orders, in the written submissions, nor in oral argument.
As noted in this Court's earlier judgment there were curious aspects of the manner in which the appeal proceeded. Thus Copeland sought to allege a duty of care and breach of duty on the part of Mr Isaia for which his employer was vicariously liable, but did not join the employer (or the insurance companies standing in its place). Hallmark did join the insurance companies, but made submissions in relation to their liability only in reply to Copeland. [6] That provided an example of the way in which the appeal was allowed to proceed without insistence on limiting submissions to the grounds, no objection being taken by the insurance companies to this course. This informal expansion of the grounds did not result in any submissions by Hallmark with respect to the costs of the cross-claims.
This was not surprising because, as Hallmark's lawyers frankly conceded on the motion, the failure by the trial judge to apportion costs was not appreciated until consideration was being given to the orders made by this Court. Consistently, the earlier judgment of this Court noted with respect to the cross-claims: "[95] On 18 July 2019 the judge made separate orders for costs in respect of the cross-claims in each proceeding. Those orders were not sought to be varied in respect of the proceedings between Hallmark and Mr Harford. Copeland sought to set aside the requirement that it pay Hallmark the costs Hallmark was required to pay to the cross-defendants. However that order need not be varied in circumstances where the orders with respect to the cross-defendants have not been varied, except to the extent that Copeland's liability has increased."
The assertion that Hallmark appealed from the costs orders cannot be accepted.
With respect to the second exception to the finality principle, namely the "slip rule", Hallmark submitted that the failure of the trial judge to apportion costs occurred "by error or oversight", at least in respect of the apportionment of liability under s 151Z of the Workers Compensation Act. When orders were made by the trial judge on 17 April 2019, Hallmark was directed to pay Mr Harford's costs of the proceedings brought by him against Hallmark. The judge then made orders with respect to the costs of two cross-claims, but did not order contribution to Hallmark for any part of the costs payable to the plaintiff. The second judgment (of 18 July 2019) made further orders with respect to the costs of cross-claims, but not with respect to the judgments in favour of Mr Harford and Harford Transport.
In each case, the orders made by the trial judge were in identical terms (except that what were described as "damages" with respect to Mr Harford were identified as "recoverable benefits and interest thereon" with respect to Harford Transport). The orders with respect to Mr Harford read as follows: "(1) Judgment for the plaintiff in the sum at which his damages have been agreed. (2) The defendant pay the plaintiff's costs. (3) Copeland Building Services Pty Ltd is to indemnify the defendant for half of the judgment that is to be entered in favour of the plaintiff."
There is some irony in the fact that Hallmark, which in construing its notice of appeal claimed that an order seeking to set aside a "judgment" included both damages and costs, understands that the reference to "the judgment" in order (3) did not include the amount payable for costs under order (2). It may be that it was intended to, and it may be that there is an ambiguity to be resolved. However, that issue was no part of the proceedings in this Court and the motion to vary the orders made by this Court in respect of that issue should be refused. If there were an application available under the slip rule, it should have been addressed to the trial judge.
The principal thrust of Hallmark's motion must be rejected.
There was a further aspect of Hallmark's motion, unrelated to the issue of the costs of the trial. With respect to the payment due to Harford Transport on account of workers' compensation payments, the judge had proposed in his first judgment that there should be judgment for Harford Transport "for the sum in which the recoverable benefits and interest thereon had been agreed." Copeland was to indemnify Hallmark for half of the judgment in favour of the plaintiff. When orders were entered, the amount of the indemnity was included, being a sum of $749,063.60; interest was separately ordered in an amount of $162,086.19. Because payment by Hallmark to the employer would reduce the amount payable to Mr Harford, no contribution was ordered as between Hallmark and Copeland with respect to the indemnity. [7] However, the judge did order payment of contribution with respect to the interest component. This Court ordered that the amount of that contribution be increased to reflect the increased liability attaching to Copeland.
In its notice of motion, Hallmark added the amounts of the indemnity and the interest and sought a judgment by way of contribution from Copeland of 75% of the total amount. There was no suggestion on the appeal that the judge's award of contribution limited to the interest payment was in error. Accordingly order 2(4) of the orders sought in the notice of motion must be rejected.
As Hallmark has been unsuccessful with respect to all of the orders sought in its notice of motion filed on 30 March 2020, it must pay Copeland's costs of the motion. (The other parties to the proceedings did not file submissions.)

At a glance

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Judgment (7 paragraphs)

Legislation Cited (2)

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