Ireland v Garry Denson Metal Roofing Pty Ltd

CITATION : Ireland v Garry Denson Metal Roofing Pty Ltd (in liquidation) [2009] NSWSC 999

DECISION : (1) On the 1st cross-claim by JB Metal Roofing against Australand, there will be no order as to costs to the intent that each party will pay its own; (2) On the 4th cross-claim by Australand against JB Metal Roofing, Australand is to pay JB Metal Roofing's costs of the cross-claim from 13 May 2009; (3) Australand is to pay 50% of JB Metal Roofing's costs of the applications for costs.

CATCHWORDS : PROCEDURE - costs - costs of cross-claims - settlement of cross-claims whereby judgment entered for each of the Cross-Defendants - who should pay the costs of the cross-claims - whether cross-claims should have been maintained after amendments to defence - whether costs of cross-claim should include Cross-Defendant's costs of Plaintiff's claim against Cross-Defendant.

Civil Liability Act 2002 Law Reform (Miscellaneous Provisions) Act 1946 LEGISLATION CITED : Occupational Health and Safety Regulation 2001 Uniform Civil Procedure Rules 2005 Workers Compensation Act 1987

Australian Securities and Investment Commission v Rich [2003] NSWSC 297 Burke v New South Wales [2004] NSWSC 725 Calderbank v Calderbank [1975] 3 All ER 333 CASES CITED : Mulcahy v The Hydro-Electricity Commission (unreported, Federal Court of Australia, 2 July 1998) Rushcutters Bay Smash Repairs Pty Limited v H McKenna Netmakers Pty Limited [2003] NSWSC 670 Ryan v South Sydney Junior Rugby League Club Limited [1975] 2 NSWLR 660 Sheehan v SRA; Wicks v SRA [2009] NSWCA 261 Trade Practices Commission v Nicholas Enterprises Pty Limited (No. 3) (1979) 28 ALR 201

PARTIES : JB Metal Roofing Pty Ltd (In Liquidation) (2nd Defendant) Australand Holdings Ltd (3rd Defendant)

COUNSEL : P Webb QC & S Kettle (2nd Defendant: JB Metal Roofing Pty Ltd (in liquidation) A Davis (3rd Defendant: Australand Holdings Ltd)

SOLICITORS : Moroney Lawyers Pty Limited (2nd Defendant: JB Metal Roofing Pty Ltd (in liquidation) Ellison Tillyard Callanan (3rd Defendant: Australand Holdings Ltd)

• 13 - IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION

IRELAND v GARRY DENSON METAL ROOFING PTY LTD (IN LIQUIDATION) & ORS

1 On the second day of the hearing I was informed that settlement had been reached which would result in the 1st, 2nd and 4th Defendants no longer remaining in the proceedings. The various claims and cross claims were resolved by judgment in favour of the 1st, 2nd and 4th Defendants on the Plaintiff's claim and for judgment in favour of each of the 1st, 2nd, 3rd and 4th Defendants on each of the cross claims against those Defendants. The Plaintiff and each of those Defendants agreed that there would be no order as to costs in the Plaintiff's proceedings as between the Plaintiff and those Defendants. It was also agreed that there would be no order for costs in respect of the cross claims between those Defendants. Further, as between the 3rd Defendant and the 4th Defendant it was agreed that each party would pay its own costs of those cross claims. 2 That left only for determination the issue of costs between the 2nd and 3rd Defendants on the 1st and 4th cross claims. The 1st cross claim was the cross claim brought by the 2nd Defendant, JB Metal Roofing (the employer of the apprentice Joel Exner who fell from the roof and subsequently died) against the 3rd Defendant, Australand Holdings Ltd (the employer of the Plaintiff and owner of the site) and the 4th cross claim was brought by Australand against JB Metal Roofing. 3 When the proceedings commenced on 11 October 2006 in the District Court, the only 2 Defendants were the 1st Defendant Garry Denson Metal Roofing and the 2nd Defendant JB Metal Roofing. By the Amended Statement of Claim filed in this Court on 12 February 2008 Australand was added as the 3rd Defendant. From the outset Australand admitted that it breached its duty of care to the Plaintiff although it did not admit the causation of the Plaintiff's injury. 4 Thereafter, on 20 May 2008 JB Metal Roofing filed the 1st cross claim against Australand and on 28 July 2008 Australand filed the 4th cross claim against JB Metal Roofing. 5 The claim made in the 1st cross claim was chiefly a claim for contribution or indemnity under s 5 Law Reform (Miscellaneous Provisions) Act 1946 but a further claim was made for damages alleging a breach of statutory duty on the part of Australand for breaches of the Occupational Health and Safety Regulation 2001. In its defence to JB Metal Roofing's cross-claim Australand admitted that it had been negligent but, again, it did not admit causation of the Plaintiff's loss. 6 The 4th cross claim by Australand against JB Metal Roofing sought contribution and indemnity under s 5, indemnity under s 151Z Workers Compensation Act 1987 and damages for breach of statutory duty in relation to many of the same clauses of the Occupational Health and Safety Regulation 2001 as JB Metal Roofing relied on against Australand. In its defence to this cross-claim JB Metal Roofing admitted that it was a joint tortfeasor with Australand but said its share of responsibility was 0% or such other percentage as the Court determined, and admitted that it was liable to indemnify Australand with respect to compensation paid in accordance with s 151Z Workers Compensation Act 1987. 7 On 6 May 2009 the solicitors for JB Metal Roofing wrote to Australand's solicitors enclosing a proposed Amended Defence to the Plaintiff's claim which, in particular, added a defence based on s 30 Civil Liability Act 2002. That section relevantly provides: "(2) The plaintiff is not entitled to recover damages for pure mental harm unless: (a) the plaintiff witnessed, at the scene, the victim being killed, injured or put in peril, or (b) the plaintiff is a close member of the family of the victim." 8 In the present case the Plaintiff was not a close member of the family of the victim and therefore the Plaintiff would have to establish that he "witnessed, at the scene, the victim being killed, injured or put in peril". The letter went on to say that the amendments to the defence necessitated amendments to the defence to Australand's cross claim. Consent to the filing of those amended pleadings was sought. 9 On 28 May 2009, the solicitors for Australand responded by saying that they did not oppose the proposed amendments nor the reliance by JB Metal Roofing on s 30 Civil Liability Act. They pointed out, quite correctly, that s 3B(1)(f) Civil Liability Act meant that the regime set out in the Civil Liability Act (including s 30) did not apply to the claim against Australand. In other words, Australand could not rely on s 30 to defend the Plaintiff's claim nor the cross-claims against it. 10 On 31 August 2009 the Court of Appeal delivered its judgment in Sheehan v SRA; Wicks v SRA [2009] NSWCA 261. That decision upheld the decision at first instance of Malpass AsJ that for the purpose of satisfying s 30(2)(a) Civil Liability Act the person must witness something at the scene and the person must directly observe the causal event whereby another person is being killed, injured or put in peril. Those provisions did not extend to persons, including rescuers, who came upon the scene after the incident in which a person was killed, injured or put in peril was over. McColl JA dissented to some extent, saying that 30(2)(a) could be read more widely to include the time immediately after the event when the breach of duty was still producing consequences. Nevertheless, on the facts of that case, her Honour did not consider that the rescuers were entitled to recover. 11 On 4 September 2009 the solicitors for JB Metal Roofing served an Offer of Compromise on the Plaintiff and on Australand. The Offer of Compromise was in these terms: "The Second Defendant offers to compromise the claims against it on the following terms:- (a) Verdict for the Second Defendant. (b) Each of the Plaintiff and the Second Defendant to bear their own costs of the proceedings. (c) The First, Second and Fourth Cross Claims to be dismissed with no order as to costs. (d) This offer is open for acceptance until 4pm on 11 September 2009 only. (e) This offer is made in accordance with Rule 20.26 of the Uniform Civil Procedure Rules 2005 (as amended). 12 The covering letter said that the offer should also be regarded as being made in accordance with the principles in Calderbank v Calderbank [1975] 3 All ER 333. 13 The letter to the Plaintiff''s solicitors also said this: "Part 1(c) of the offer obviously involves parties to the cross claim rather than your client. Accordingly, if your client wishes to accept only Parts 1(a) and (b) of our offer, he can do so without accepting Part 1(c) of the offer." 14 In the letter to Australand's solicitors, the solicitors for JB Metal Roofing said this: "The basis upon which our client offers to dismiss the cross-claims in which it is involved with no order as to costs if the Plaintiff agrees that a verdict be entered in our client's favour with each party to bear its own costs of the primary proceedings is that the cross-claims that have been filed in the proceedings are simply cross-claims between existing parties to the primary proceedings and the cost of prosecuting and defending the cross-claims effectively cancel each other out in the event that any additional work was performed in relation to the cross-claims rather than defending the Plaintiff's claim." (emphasis added) 15 Further correspondence then ensued suggesting that the offer made by JB Metal Roofing had been rejected by Australand. Ultimately, as I have noted, the proceedings settled on the 2nd day of the hearing. The desire had been that all cross-claims would be dismissed but, after hearing argument, I was satisfied that the appropriate way to bring the cross-claims to an end was to direct entry of judgment for the Cross-Defendant on each cross-claim. Ultimately, the parties did not contest the entry of judgments. 16 JB Metal Roofing now seeks costs associated with the 4th cross-claim. Its primary submission is that it ought to be awarded the costs from the date of its filing and that those costs should include JB Metal Roofing's costs of the proceedings as a whole. JB Metal Roofing submits that the 4th cross-claim was never going to succeed on the facts pleaded and on the facts known to the parties as a result of the extensive investigations, the coronial inquest and the Industrial Relations Commission prosecutions. 17 JB Metal Roofing further submits that the costs incurred by it in the proceedings as a whole can be attributed as much as to work performed in responding to Australand's claim as well as to responding to the Plaintiff's claim because Australand's cross-claim was not simply a defensive one. JB Metal Roofing points to the principle, decided in some cases being Ryan v South Sydney Junior Rugby League Club Limited [1975] 2 NSWLR 660; Trade Practices Commission v Nicholas Enterprises Pty Limited (No. 3) (1979) 28 ALR 201; Rushcutters Bay Smash Repairs Pty Limited v H McKenna Netmakers Pty Limited [2003] NSWSC 670; and Mulcahy v The Hydro-Electricity Commission (unreported, Federal Court of Australia, Heerey J, 2 July 1998) that where there are multiple unsuccessful parties, costs ought to be ordered against those parties jointly and severally. 18 JB Metal Roofing submits, in the alternative, that it ought to have its costs of the 4th cross-claim from 6 May 2009 when it notified its intention to amend its Defence to the cross-claim to plead s 30 Civil Liability Act. It submits that from that time it was clear that Australand would fail on the cross-claim because the Plaintiff would never be able to satisfy s 30. In that regard it draws attention to the decisions in Wicks and Sheehan at first instance and the earlier decision of Master Malpass, as he then was, in Burke v New South Wales [2004] NSWSC 725. 19 JB Metal Roofing also seeks costs on an indemnity basis from 6 May 2009 on the basis that Australand knew or ought to have known that from the time the s 30 defence was raised neither the proceedings nor Australand's cross-claim had any really prospects of success. Alternatively, JB Metal Roofing submits that from the date of the service of the Offer of Compromise it should have its costs on an indemnity basis. 20 Australand seeks its costs on the 1st cross-claim brought by JB Metal Roofing. It says, in effect, that many of the matters raised by JB Metal Roofing for costs on Australand's cross-claim can equally be raised by Australand in respect of JB Metal Roofing's cross-claim so that the costs in that regard would cancel each other out. Australand says further that it was reasonable for it to maintain its cross-claim up until the time it did because the Plaintiff had not abandoned his claim against the various Defendants including JB Metal Roofing. Although s 30 had been pleaded by JB Metal Roofing in its defence to the Plaintiff's claim, the Plaintiff was still pursuing that claim. In those circumstances, Australand says, it was reasonable for it to maintain its cross-claim against JB Metal Roofing notwithstanding the plea of s 30. 21 Australand submits further that it also placed reliance on a claim said to be brought pursuant to s 5 Law Reform (Miscellaneous Provisions) Act 1946 that would not be affected by the application of s 30. The argument, as best I could understand it, was that there are distinct items of damage which the employer would be able to claim against another tortfeasor which constitute a separate damages claim by the employer. That being so, s 30, it is said, will have no application because the true Plaintiff is the employer company who has not suffered the mental harm. 22 Australand further submits that in respect of the defence under s 30 it was not until mid-August 2009 that an Amended Defence was filed by JB Metal Roofing in reliance on s 30. 23 Australand says that it was reasonable for it to maintain the cross-claim because the Plaintiff maintained his claim notwithstanding that JB Metal Roofing relied on s 30 for its defence against his claim. That does not seem to me to provide an answer that justifies Australand maintaining its cross-claim without being at risk for costs on that cross-claim once that defence was notified. Although there was little authority on s 30 (and that was hardly surprising given the recency of the enactment of the Civil Liability Act) the 2 cases that had determined the matter, Burke and Wicks, had both determined it in such a way that made it very likely the Plaintiff would fail against any party that relied on s 30. Those decisions were not out of line with the tolerably clear wording of the section in any event. 24 It seems to me that Australand should have been given a short period of time to consider the effect of a s 30 defence before it was obliged to make a decision about what it did in relation to the cross-claim. It ultimately responded on 28 May but apologised for its delay in doing so. However, it did not raise any opposition to the proposed amendments. In my opinion, it should have been required to make a decision within a week of the letter from JB Metal Roofing's solicitors. The letter consenting to the amendment did not raise any argument against it nor suggest that, despite s 30, the Plaintiff might still have a good claim against JB Metal Roofing and, accordingly, that Australand would continue to have a good claim against it. It must also be remembered that Australand itself did not and could not rely on s 30. The fact, therefore, that the Plaintiff maintained his claim against Australand cannot be a relevant consideration to the question whether Australand should have abandoned its claim against JB Metal Roofing. 25 In my opinion, the appropriate order to be made is that on the 4th cross-claim by Australand against JB Metal Roofing, Australand should pay JB Metal Roofing's costs from 13 May 2009 on the ordinary basis and those costs should be the costs associated with the cross-claim only. Further, in respect of the cross-claim by JB Metal Roofing against Australand, each party should pay its own costs of that cross-claim. My reasons are as follows. 26 First, I bear in mind the statement of Austin J in Australian Securities and Investment Commission v Rich [2003] NSWSC 297 at [78] that where an application is disposed of it by a settlement is not normally appropriate to make an order for costs except as agreed between the parties. However, Austin J said that there were cases (and the one before him was an example) where it is appropriate for the Court to make a costs order despite the agreement between the parties otherwise to deal with the matter by consent orders. In the present case, what ultimately happened was a complete abandonment by Australand of its cross-claim against JB Metal Roofing in circumstances where the Plaintiff had not abandoned his claim against Australand. 27 The matter can be viewed from another perspective that leads to the same result. I was initially asked, as I have noted above, to make an order dismissing Australand's cross-claim. That was because Australand no longer wished to pursue that cross-claim and an order for dismissal might be regarded as relevantly identical to a discontinuance of the cross-claim. The usual rule where a discontinuance is sought is that the party seeking to discontinue pays the other party's costs of the claim being discontinued. 28 Secondly, in the circumstances of multi-party litigation, I do not consider that it was unreasonable for Australand to file a cross-claim against JB Metal Roofing. That is despite the fact that Australand had admitted that it was negligent. It was, in the circumstances of the accident pleaded and the identity of the various parties, particularly JB Metal Roofing and its role on the site and in respect of the accident, reasonable for that cross-claim to be brought and maintained. 29 Thirdly, at the time in May when JB Metal Roofing sought the consent of Australand to amend its defence both to the Plaintiff's claim and to Australand's cross-claim to rely on s 30 Civil Liability Act things changed. There was no opposition by Australand to the amendment. The agreement to that amendment, however, required Australand to give serious consideration to whether it could any longer maintain its cross claim against JB Metal Roofing. Whilst it was ultimately a question of fact whether the Plaintiff could bring himself within s 30, none of the accounts of the accident available at that time suggested that the Plaintiff had actually seen Joel Exner fall from the roof. The accounts were largely consistent that the Plaintiff had come upon the scene shortly afterwards. 30 Fourthly, I do not accept Australand's argument concerning the separate damages claim not being affected by s 30. A claim under s 5 is for contribution or indemnity in respect of a claim the plaintiff has or might have brought against the claimant and not damages for loss the claimant has suffered by virtue of a duty owed to it. Any right to recover by Australand against JB Metal Roofing pursuant to s 151Z Workers Compensation Act was dependent upon JB Metal Roofing being liable to pay damages to the injured worker (see s 151Z(1)(d)). If s 30 proved to be a defence for JB Metal Roofing it would be a defence in respect of the claims made under s 151Z in the same way as it would be a defence for the s 5 contribution claim. 31 Fifthly, the fact that the amended pleadings were not filed until August 2009 is not a relevant consideration. That occurred because of resistance on the part of the Plaintiff to the amendments being made necessitating the filing of Notices of Motion to that end. Ultimately, the Notice of Motion brought by the 2nd Defendant was settled with Consent Orders being made that permitted the filing of the amended pleadings. The fact remained that the proposed amendments were notified on 6 May 2009 and Australand consented to them later that month. 32 Sixthly, it does not seem to me that JB Metal Roofing can obtain the benefit from the Offer of Compromise that the Rules permit. Before the Rules would operate in favour of JB Metal Roofing it would have to have secured the agreement of the Plaintiff to what was contained in a multi-conditional offer. The Plaintiff did not consent. 33 Nor did the covering letter to Australand allow Australand to accept only that part of paragraph (c) of the Offer that touched and concerned it. In that regard, the contrast with the covering letter to the Plaintiff (set out in para 13 above) is stark. Moreover, the highlighted section of the letter to Australand's solicitors (set out in para 14 above) adds weight to the conclusion that it was not unreasonable for Australand not to accept the Offer of Compromise for its interests because the Offer was put, it would seem, conditionally on the Plaintiff accepting the Offer. 34 Seventhly, although regard may be had to the Offer in terms of Calderbank principles (that is to say, the matter did not need to be fitted neatly within the provisions of the Rules) I do not think it can be said to have been unreasonable on Australand's part not to have accepted that Offer when, on its face, it involved all of the other parties to it agreeing in the terms that were put to them. There was nothing that suggested that if Australand agreed to dismiss its cross-claim the matter would be further advanced without the other parties, particularly the Plaintiff, agreeing to what was put to them. 35 Eighthly, there does not seem to me any justification for including JB Metal Roofing's costs of defending the Plaintiff's claim in any costs order made in relation to Australand's cross-claim. JB Metal Roofing was a Defendant in the Plaintiff's proceedings for some 14 months before Australand was even joined to the proceedings. The proceedings between JB Metal Roofing and the Plaintiff were settled on the basis that there would be no order as to costs between them. Although, in absolute terms, that does not prevent JB Metal Roofing claiming those costs against another party, it is a factor to be taken into account that JB Metal Roofing was content to settle the Plaintiff's proceedings on that basis. The expectation would be that it was content to pay its own costs of those proceedings. 36 I do not consider that the matter is analogous to the cases cited such as Mulcahy. Although there were some common interests between the Plaintiff and Australand (in the sense that they wished to recover against JB Metal Roofing as a tortfeasor that had caused the Plaintiff's loss or part of it) it could not be said that the Plaintiff and Australand were so aligned as to render a joint and several costs order justifiable. The cases relied upon in that regard by JB Metal Roofing, in addition to Mulcahy, were concerned either with joint plaintiffs or proceedings against a number of defendants. 37 It is true that costs in relation to the s 30 defence would have been incurred without any distinction between the 2 parties against whom it was pleaded, and it may be appropriate for any costs assessor to have regard to that. However, it will be for JB Metal Roofing to demonstrate to a costs assessor that any other costs incurred in its defence of the Plaintiff's claim were costs incurred in the same way as in the defence of Australand's cross-claim. 38 Finally, although a judgment was entered for Australand on the cross-claim brought by JB Metal Roofing, the reason JB Metal Roofing wished to abandon that cross-claim was because the Plaintiff was abandoning his claim against JB Metal Roofing. It seems likely that that was because of the strength of the defence based on s 30. That that abandonment happened relatively soon after the Court of Appeal's judgment in Sheehan is not surprising. That judgment is significant also in considering the extent of any costs order in favour of JB Metal Roofing on Australand's cross-claim from or shortly after 31 August 2009. If there had been any doubt about what s 30 meant prior to that time, the matter was effectively put to rest by the Court of Appeal's decision. 39 One approach to costs after the Court of Appeal's decision would be that costs should be payable on an indemnity basis in favour of JB Metal Roofing by Australand on Australand's cross-claim from or shortly after that date but on the other hand costs should be payable to Australand on the effective abandonment by JB Metal Roofing of its cross-claim against Australand. Making 2 costs orders which would ultimately have to be offset against each other on any assessment seems an inconvenient approach for all concerned. The better course, in my opinion, is not to order indemnity costs in favour of JB Metal Roofing on Australand's cross-claim and to order that each party pay its own costs of JB Metal Roofing's cross-claim. 40 The costs to be paid by Australand to JB Metal Roofing should not include the cost of the Notice of Motion to amend the pleadings to add the s 30 defence. That Motion was settled on the basis that each party pay its own costs of it. 41 As JB Metal Roofing has been partly but not wholly successful on this costs application, Australand should pay 50% of JB Metal Roofing's costs of these applications for costs. 42 Accordingly, the Orders are as follows: (1) On the 1 st cross-claim by JB Metal Roofing against Australand, there will be no order as to costs to the intent that each party will pay its own;

(2) On the 4 th cross-claim by Australand against JB Metal Roofing, Australand is to pay JB Metal Roofing's costs of the cross-claim from 13 May 2009;

(3) Australand is to pay 50% of JB Metal Roofing's costs of the applications for costs.

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.