Lincoln v Pendonna Pty Ltd

Cross-Claimant to First Cross Claim: Pendonna Pty Ltd First Cross-Defendant to First Cross Claim: Pioneer Building Products Pty Ltd Second Cross-Defendant to First Cross Claim: Quality Building Services Limited Third Cross-Defendant to First Cross Claim: Site Welding Services Pty Limited t/as Roof Rail Australia

Cross-Claimant to Second Cross Claim: Site Welding Services Pty Limited t/as Roof Rail Australia Cross Defendant to Second Cross Claim: Robert Bruce Pymble Second Cross Defendant to Second Cross Claim: Pendonna Pty Ltd PARTIES : Third Cross Defendant to Second Cross Claim: Pioneer Building Products Pty Ltd Fourth Cross Defendant to Second Cross Claim: John Cameron Fifth Cross Defendant to Second Cross Claim: Joyce Caqmeron

Cross-Claimant to Third Cross Claim: Pioneer Building Products Pty Ltd First Cross-Defendant to Third Cross Claim: Quality Building Services Limited Second Cross-Defendant to Third Cross Claim: Site Welding Services Pty Limited Third Cross-Defendant to Third Cross Claim: Robert Bruce Pymble Fourth Cross-Defendants to Third Cross Claim: John Cameron and Joyce Cameron

Cross-Claimant to Fourth Cross Claim: Robert Bruce Pymble Cross Defendant to Fourth Cross Claim: Site Welding Services Pty Limited FILE NUMBER(S) : SC 20756 of 2001 COUNSEL : D. Feller SC - Pioneer Building Products Pty Ltd C.Bridge SC - John Cameron & Joyce Cameron SOLICITORS : Vardanega Roberts Solicitors - Pioneer building Products Pty Ltd. Thompson Cooper Lawyers - John Cameron & Joyce Cameron

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

HIS HONOUR: The hearing of these proceedings commenced on November 15. They then involved disputation between 7 parties represented by some 10 counsel. The case was expected to occupy about 2 weeks. However, by the end of the first day and before any evidence was called, the parties had, with one qualification, resolved their differences and the following morning I made a number of orders by consent. The parties and the community benefited from the early resolution of what seemed, on its face, a rather complicated case.

The one qualification was that the Cross Claimant, Pioneer Building Products Pty Ltd (Pioneer), whilst agreeing that its Cross Claim against John Cameron and Joyce Cameron (The Camerons) should be dismissed, was unwilling to consent to an order for the payment of their costs. The matter of these costs was debated on 19 November, Mr Feller SC appearing for Pioneer and Mr Bridge SC for The Camerons. I reserved my decision.

In order to understand the respective positions of Pioneer and The Camerons, it is necessary that I say something briefly about the nature of the proceedings. The Plaintiff sued only one defendant Pendonna Pty Ltd Trading as New Accent Home Builders (Pendonna), alleging that it was the principal contractor on a building project where the Plaintiff was engaged in roofing work as an employee of Quality Building Services Pty Ltd (Quality). He further alleged that, at the direction of an employee of Pendonna, he climbed a ladder, on to the roof of the house in the course of construction, in order to make an inspection. He claimed that as he stepped on to the roof, "a tile moved out from under him", causing him to fall from the roof to the ground, a distance of more than 3 metres. He sought compensation for injuries suffered in the fall.

Pendonna cross-claimed against Pioneer, Quality and Site Welding Services Pty Ltd. Against Pioneer, it alleged that it had contracted to "arrange to tile the roof of the house" and that negligently or, in breach of its contract, inter alia, it failed to properly supervise its sub-contractors working on the site and failed to erect guard rails around the entire perimeter of the roof.

Pioneer, inter alia, cross-claimed against The Camerons alleging that as a roof tiling contractor, they subcontracted with Pioneer to install the roof tiles on the house and agreed that they would exercise reasonable care for the safety of any persons permitted onto the roof during such installation. Negligently, or in breach of their contractual obligations, it was alleged that The Camerons failed to properly install the roof tiles in the manner alleged by the Plaintiff and, in effect, allowed the Plaintiff, without first warning him, to climb on to the roof when it was unsafe for him to do so.

The material in its possession which led Pioneer to cross-claim against The Camerons consisted of the allegation in the Statement of Claim that "a tile moved out from under" the Plaintiff and question and answer 11 in an interview between the Plaintiff and an officer of Work Cover on 18 May 1999: "Q. Please tell me in your own words what happened to you?

A. I attended the site at approximately 7.00 where upon I proceeded up the ladder that had been erected by the roof tilers who were on site. The ladder was held by one of the roof tilers while I climbed up to inspect the valley problem. I stepped off the ladder onto the third row of tiles and the tile moved out from under me causing me to fall backward off the roof to the ground below."

Pioneer was also in possession of a statement made by Mr Cameron on 25 September 2002. (4 years after the Plaintiff's fall) in which he denied that a tile moved and said that the Plaintiff simply slipped on the tiles which were covered with dew. In the statement, Mr Cameron, in effect, also denied that he had any responsibility for the safety of people coming on to the roof.

The present position of Pioneer is that all issues have been settled between it and Pendonna and it has no further need to pursue its cross-claim against The Camerons. It wishes to terminate that Cross Claim and says that there should be no order for costs as a consequence.

The Camerons, on the other hand, assert that there was no reasonable basis for the Cross-Claim against them and that, if it is dismissed, costs should follow the event. They also rely on a "Calderbank" letter sent.

Costs disputes of the kind which have arisen here are, of course, by no means novel. In Re The Minister for Immigration and Ethnic Affairs Ex Parte Lai Quin 186 CLR 622, Mc Hugh J at 624,said (citations omitted): "In most jurisdictions today, the power to order costs is a discretionary power. Ordinarily, the power is exercised after a hearing on the merits and as a general rule the successful party is entitled to his or her costs. Success in the action or on particular issues is the fact that usually controls the exercise of the discretion. A successful party is prima facie entitled to a costs order. When there has been no hearing on the merits, however, a court is necessarily deprived of the factor that usually determines whether or how it will make a costs order. In an appropriate case, a court will make an order for costs even when there has been no hearing on the merits and the moving party no longer wishes to proceed with the action. The court cannot try a hypothetical action between the parties. To do so would burden the parties with the costs of a litigated action which by settlement or extra-curial action they had avoided. In some cases, however, the court may be able to conclude that one of the parties has acted so unreasonably that the other party should obtain the costs of the action." Later at page 625, His Honour continued: "Moreover, in some case a judge may feel confident that, although both parties have acted reasonably, one party was almost certain to have succeeded if the matter had been fully tried. This is perhaps the best explanation of the unreported decision of Pincus J in South East Queensland Electricity Board v Australian Telecommunications Commission where his Honour ordered the respondent to pay 80 per cent of the applicant's taxed costs even though His Honour found that both parties had acted reasonably in respect of the litigation. But such cases are likely to be rare. If it appears that both parties have acted reasonably in commencing and defending the proceedings and the conduct of the parties continued to be reasonable until the litigation was settled or its further prosecution became futile, the proper exercise of the cost discretion will usually mean that the court will make no order as to the cost of the proceedings. This approach has been adopted in a large number of cases. In an unreported Victorian case, Hyder Consulting (Victoria) Pty Ltd v CGU Insurance Ltd 25 June 2003, Mandie J, after referring to the judgment of McHugh J in Lai Quin said at page 4 of the judgment: "In Gribbles Pathology Pty Ltd v Health Insurance Commission (1997) 80FCR 284. Finkelstein J said at 287 that in the absence of a hearing on the merits, it was difficult to see how any order, other than an order that each party bear its own costs, could be made except in special circumstances. However, I would agree, in that regard, with what was said by Gillard J concerning that dictum in Champagne View Pty Ltd v Shearwater Resort Management Pty Ltd [2000] VSC 214 at [47} where His Honour said that he would not go as far as Finkelstein J had because each case must depend on its own circumstances and there might be circumstances which would justify an order being made in favour of a party, but "[a]s a general proposition if there is no other material before the court other than the pleadings then it would be extremely difficult to make any order other than each party bear its own costs". In One Tel Limited v Commissioner of Taxation (2000) 101 FCR 548, Burchett J said at 553 that it was important to draw a distinction between cases in which one party, after litigating for some time, effectively surrendered to the other and cases where some supervening event or settlement so removed or modified the subject matter of the dispute that, although it could not be said that one side had simply won, no issue remained between the parties except that of costs. Burchett J went on to say, "in the former type of case, there will commonly be lacking any basis for an exercise of the court's discretion otherwise than by an award of costs to the successful party. It is the latter type of case which more often creates problems, since there may be difficulty in discerning a real reason why one party, rather than the other should bear the costs."

More recently the problem was considered by the Court of Appeal in Edwards Madigan Torzillo Briggs Pty Ltd v Stack & Ors (unreported 16 October 2003). Davies AJA (with whom Mason P and Meagher JA agreed) referred to and followed a number of authorities to similar effect, including Lai Quin and One Tel.

In this case, which was settled before any evidence was called, it is impossible to say that one party was "almost certain to have succeeded if the matter had been fully tried". That being so, the question is, was it patently unreasonable for Pioneer to join The Camerons as a cross defendant. Not without some hesitation because, on any view of the matter, the case against The Camerons was flimsy, I have come to the conclusion that this question should be answered in the negative. Although the facts known to Pioneer only barely suggested a cause of action against The Camerons, I think they were sufficient to justify the course taken, given that the Plaintiff, in his Statement of Claim alleged that a tile, presumably fixed by the Camerons moved.

I earlier referred to reliance by The Camerons on a "Calderbank" letter. This was written on 27 October 2004 and offered that they would bear their own costs in return for a verdict in their favour on the Cross Claim. However, the letter, in my view, really only begs the question and does not advance The Camerons case before me. A verdict favourable to them now will not follow a trial on the merits, but the intervening resolution of other issues in the case.

Mr Bridge raised, as a relevant factor, that The Camerons were insured by HIH Insurance, now in liquidation. The submission, as I understand it, was that different considerations might apply where a party, such as The Camerons may be uninsured or not fully insured. I doubt the correctness of that proposition but in any event, there was no evidence as to the extent to which, if at all, The Camerons will need to bear personally their own costs.

I order that the Cross-Claim by Pioneer against The Camerons be dismissed with no order as to costs.

Last Modified: 12/17/2004 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.