Cross-Defendant to Fourth Cross-Claim)
Active Tree Services Pty Ltd (Second Defendant
Cross-Defendant to First Cross-Claim
Cross-Claimant to Second Cross-Claim
Source
Original judgment source is linked above.
Catchwords
Cross-Claimant to First Cross-ClaimCross-Defendant to Fourth Cross-Claim)
Active Tree Services Pty Ltd (Second DefendantCross-Defendant to First Cross-ClaimCross-Claimant to Second Cross-ClaimCross-Claimant to First Cross-ClaimCross-Defendant to Fourth Cross-Claim)
S McMahon - via AVL (Second DefendantCross-Defendant to First Cross-ClaimCross-Claimant to Second Cross-ClaimCross-Claimant to Fourth Cross-Claim)
M Hamdan - via AVL (Cross-Defendant to Second Cross-Claim)
Judgment (10 paragraphs)
[1]
Background facts
From the evidence before the court on the various applications and as appears from the court file in relation to orders and the filing of pleadings, the following is the position and constitutes my factual findings:
1. On 24 November 2016, the plaintiff commenced the proceedings by way of a Statement of Claim filed on that day. The only defendant in the Statement of Claim was Mr Robin. The claim was made against Mr Robin in negligence under the CLA. It was asserted that both the plaintiff and Mr Robin were sub-contractors "employed by Active Tree Service Pty Ltd". A Statement of Particulars was filed soon after.
2. On 27 January 2017, Mr Robin filed a Defence to the Statement of Claim. Liability was denied by him. There was no pleading in the Defence that the plaintiff was a "worker" or "deemed worker" under the WIM Act. The entitlement of the plaintiff to claim under the CLA was generally disputed.
3. On 28 June 2017, an Amended Statement of Claim was filed by the plaintiff. This joined Active as the second defendant in the proceedings. The Amended Statement of Claim pleaded that Active through its servants and/or agents engaged the plaintiff as a subcontractor. It was alleged that Active was liable under the CLA.
4. On 17 October 2017, Mr Robin filed a Defence to the Amended Statement of Claim. Again, the "worker" or "deemed worker" defence was not referred to expressly.
5. On 1 February 2019, Active filed a Defence to the Amended Statement of Claim. In paragraph 14 of that pleading, it was pleaded that the rights of the plaintiff were regulated by the CLA. This should be contrasted with the correspondence which was occurring at the time.
6. On 15 November 2017, the solicitors for Mr Robin sent a letter to the plaintiff's solicitors serving an Offer of Compromise. The covering letter was also said to be a Calderbank letter. The letter set out some detail in relation to why Mr Robin would succeed or the plaintiff's damages would be heavily reduced. None of the matters relied upon were in substance successful at the hearing. Whilst the Offer was rules compliant no offer was made which involved a cash payment. The Offer involved a forgoing of costs only.
7. On 22 November 2017, the solicitors then acting for Active (Vardanega Roberts) sent a letter to the solicitors for the plaintiff referring to the fact that the solicitors for WFI had asserted that the plaintiff was a "deemed worker" under WIM Act and had denied insurance indemnity. The solicitors for Active stated that if that was the case, the plaintiff should discontinue the proceedings. Evidence was sought in relation to invoices issued to, and receipts from, persons other than Active in the three or four years prior to the date of the plaintiff's injury. Active invited the plaintiff to discontinue the proceedings if no such material was available.
8. On 30 November 2017, the solicitors for the plaintiff wrote to the then solicitors for Active seeking the relevant correspondence from Holman Webb, the solicitors for WFI, and indicating that they would respond to the issues raised within the correspondence on receipt of the material requested. It is thus clear that from 22 November 2017, the solicitors for the plaintiff were aware of the "deemed worker" issue. They would therefore be aware that they had to consider the entire status of the plaintiff under the relevant legislation.
9. It is clear that at this time, the solicitors for the plaintiff obviously considered the plaintiff's position. By letter dated 31 January 2018, the solicitors for the plaintiff noted the denial of indemnity for Active by WFI on the basis that the plaintiff was a "worker" or "employed" and, without conceding the issue, served an unsigned claim form and a report of Dr Ghabrial. Instructions were sought to accept a workers compensation claim and for the letter to be treated as a claim for work injury damages under the WIM Act. Related letters were also sent on 31 January 2018 by the solicitors for the plaintiff including to the solicitors for Mr Robin. In a letter dated 31 January 2018 to Mr Robin's lawyers, the solicitors for the plaintiff noted "that the issue of indemnity remains live in the proceedings" and that they were "instructed to seek a lengthy adjournment … in order that the issue might be resolved prior to parties incurring further costs".
10. On 5 February 2018, the then solicitors acting for Active again raised the issue in the light of the fact that the plaintiff did not concede the "worker" or "employee" point. The letter expressly asked whether the plaintiff was bringing a claim under the WCA or not and, in particular, asked the solicitors for the plaintiff to confirm their client's position in relation to the District Court proceedings and suggested that the proceedings be discontinued. The solicitors then acting for Active sought a letter from the plaintiff on this issue "as a matter of urgency".
11. In the light of the position of WFI, Active retained Hicksons as their solicitors and the plaintiff forwarded copies of all correspondence to and from Active's previous lawyers and the lawyers for WFI held on their file by letter dated 27 January 2018. By letter dated 12 November 2018 to Active's previous solicitors, the solicitors for the plaintiff indicated that they had "recently completed our investigations" in relation to previous contractors of the plaintiff. On 12 November 2018, the solicitors for the plaintiff sent copies of pleadings to the new solicitors for Active.
12. By letter dated 14 May 2019, Hicksons, the solicitors then acting for Active, instructed the solicitors for the plaintiff that their client, Employer's Mutual (NSW) Limited ("EML"), accepted liability for injury to the plaintiff for workers compensation purposes. Given that position, it was stated that the claim against Active in the District Court ought be discontinued as the procedures under the WCA and WIM Act had not been satisfied. In the event that there was no discontinuance, the instructions were to file a Notice of Motion seeking to have the proceedings struck out. This continued to make the position of Active clear in the proceedings.
13. By letter dated 15 May 2019, the solicitors for the plaintiff enclosed a complying agreement under s 66A of the WCA for completion, execution and return. This seems to be an indication that the plaintiff suggested it was an appropriate workers compensation claim yet no steps were taken to discontinue the District Court proceedings. This letter was headed "without prejudice - save as to costs".
14. Despite that, by letter dated 15 May 2019, the solicitors for the plaintiff referred to the Defence filed by Active in the proceedings. By letter dated 23 May 2019, particulars of Active's Defence to the Amended Statement of Claim were sought. This request has to be seen in the light of a letter from Hicksons to the plaintiff dated 20 May 2019 denying there is any inconsistency in the pleadings and making clear in particular the Active pleading was not inconsistent with the plaintiff satisfying the criteria of a "deemed worker" under the WIM Act.
15. On 16 July 2019, a Notice of Motion was filed by Active seeking to strike out the plaintiff's claim. Prayer 2 indicated that the basis of the Notice of Motion was that "the Plaintiff has not satisfied s 151H of the [WCA] and has not complied with s 315 of the [WIM Act]".
16. On 26 July 2019, there was sent a letter from Holman Webb, the solicitors for WFI, to Hicksons, the solicitors for Active, asserting that there was no basis for a claim against WFI. The letter constituted a Calderbank letter.
17. On 29 July 2019, the matter was mentioned before Olsson DCJ in the Newcastle civil sittings. The Notice of Motion was listed to be heard on 1 August 2019. Counsel for the plaintiff proposed orders for the Notice of Motion to be determined at the trial.
18. On 31 July 2019, Counsel for Active agreed to the consent orders proposed by the plaintiff. Mr Robin also agreed to the consent orders proposed by the plaintiff. On 1 August 2019, orders were made by Olsson DCJ as requested by the plaintiff with a slight variation. Counsel for the plaintiff and Active appeared before Olsson DCJ and counsel for Active mentioned the appearance of Mr Robin. WFI appeared through a legal representative and neither consented nor opposed the orders.
19. On 1 August 2019, an Amended Defence was filed by Active expressly pleading that it contracted with the plaintiff for the performance by the plaintiff of certain works and that the plaintiff was a "worker" within the WIM Act or a "deemed worker" within the WIM Act. In paragraph 7(f) it did not admit that the CLA applied to the action. The position of Active was made clear again.
20. On 10 October 2019, the solicitors for WFI sent a letter to the solicitors for Active enclosing an Offer of Compromise.
21. On 29 October 2019, a mediation was unsuccessfully held.
22. On 14 November 2019, the solicitors for the plaintiff sent Offers of Compromise to the solicitors for Active and Mr Robin.
23. On 12 November 2019, Mr Robin filed a Further Amended Defence to the Amended Statement of Claim. Paragraph 7 of this pleading denied negligence under the CLA (paragraph 9 of the Amended Statement of Claim). This was the same as paragraph 7 to the Defence to the Amended Statement of Claim filed by Mr Robin on 17 October 2017.
24. On 29 January 2020, Mr Robin filed a Second Further Amended Defence to the Amended Statement of Claim admitting that he was a servant and/or agent of Active: paragraphs 2 and 3. In paragraph 15, Mr Robin asserted that he was an employee of Active and as such Active was vicariously liable for any negligence of Mr Robin.
25. In April and May 2020, the solicitors for Mr Robin sent letters to the solicitors for the plaintiff and Active enquiring about the status of the matter. In particular, a letter dated 20 May 2020 from the solicitors for Mr Robin to the other solicitors raised the issues in the Notice of Motion and what was the proposed conduct of the hearing on the "worker" and "deemed worker" issues. It was noted that the plaintiff had filed no affidavit evidence on the Notice of Motion on the issue.
26. On 22 May 2020, there was an email from the solicitors for Mr Robin asserting that Mr Robin was also a "worker" or "deemed worker" within the WIM Act and claiming Mr Robin should not be joined to the proceedings.
27. On 27 May 2020, there was a letter from the solicitors for WFI to all other solicitors asserting that the Notice of Motion filed by Active could not be determined until the lay evidence was heard.
28. By letter dated 27 May 2020 from the solicitors for the plaintiff to the solicitors for Active, it was asserted that the plaintiff could proceed as a "deemed worker" while still pushing the CLA claim against Mr Robin: see the letter from the plaintiff's solicitors to Mr Robin's solicitors dated 27 May 2020.
29. There was then various correspondence between the parties as to when the Notice of Motion would be heard. The solicitors for WFI in particular, stated that the Motion needed to be determined before the substantial hearing.
30. By letter dated 3 June 2020, the solicitors for WFI proposed a settlement which included a payment by it to the plaintiff as a contribution, of $40,000 subject to certain terms. This was not accepted.
31. The hearing of the matter commenced by way of a mention on 3 June 2020. In due course, the Notice of Motion was not pressed to be heard as a preliminary point or a first point by any party.
[2]
Consideration
I turn to consider the various claims made by the parties for costs including the claims for special costs orders. In doing so, I make clear that I have reviewed all the written submissions filed and served.
The plaintiff failed in his claims against both defendants that they were liable in negligence under the CLA. The court held that the CLA did not apply: Judgment at [505] and [518]-[520]. Accordingly, both defendants succeeded in their defence of the claims.
Both defendants established that Mr Moffett and Mr Robin were a "worker" under the WIM Act or, in the alternative, were a "deemed worker" under the WIM Act. Mr Robin also succeeded in establishing he was an "employee" of the second defendant Active and thus he was entitled to an indemnity from Active under the Employee's Liability Act 1991 (NSW), in the event that the CLA applied. Mr Robin's claim under s 5(1) of the Law Reform (Miscellaneous Provisions) Act 1946 (NSW) ("the 1946 Act") was not successful as a matter of law. The legal submissions on this point took up a very short period of the overall hearing. Whilst Mr Robin failed in his Cross-Claim against Active, that was because the issue did not arise having regard to the success of the defendants on the "worker" and "deemed worker" points. WFI was wholly successful on the Cross-Claim to which it was a party. From November 2017, the solicitors for Active had raised with the solicitors for the plaintiff at least the "deemed worker" point. This was the basis for a rejection of indemnity by WFI of Active.
Despite Active raising this point in November 2017 and repeatedly referring to it in later correspondence, the plaintiff chose to run his CLA claims against the two defendants. This necessitated both defendants to run their "worker" and "deemed worker" arguments whilst in the alternative, defending the CLA claims by the plaintiff. In my view, there was little that Active could do but to defend the matter including on the alternative basis. I will consider below the different positions of Mr Robin and WFI.
The matter was a factually complex matter. Substantial evidence and detailed findings were required to determine the "worker" and "deemed worker" points. That is clear from the Judgment. Whilst the court found that the plaintiff would have succeeded in his causes of action if the CLA applied, many factual matters were not determined in the plaintiff's favour. These included whether he was the leading hand on the day of the accident, whether the plaintiff had fractured the T1 level of his thoracic spine, the substantial conflict between the opinions of Dr Maxwell and Professor Ghabrial and a number of the plaintiff's claims as to damages.
It was submitted in oral submissions by counsel for Mr Robin, that Mr Robin's "camp" did a lot of the "heavy lifting" during the trial. Whilst there was some substance in this submission, there was also detailed cross-examination by counsel for Active of some witnesses. In addition, Mr Robin was the first defendant and, unless there was agreement, would be the party to proceed first with cross-examination. It was therefore inevitable, that counsel for Mr Robin would undertake the initial cross-examination of witnesses called by the plaintiff. I accept the submission of Active on this point. Active also had different issues to explore with some of the witnesses.
Similarly, Mr Robin's written submissions as to damages were adopted by Active and WFI in large part. This was also because detailed written submissions were made by counsel for Mr Robin on these issues.
I turn to consider the various costs positions of the parties.
[3]
Plaintiff v Mr Robin
The plaintiff's claim against Mr Robin under the CLA was rejected. The court held that Mr Robin was a "worker" or, in the alternative, a "deemed worker" under the WIM Act on the day of the accident. On 17 June 2020, judgment was entered for the first defendant Mr Robin against the plaintiff in relation to the plaintiff's claim against the first defendant under the CLA.
In the exercise of its discretion as to costs, the court sees no convincing reason why Mr Robin should not have an order for costs against the plaintiff at least on the usual basis. Under Part 42.1 of the Uniform Civil Procedure Rules, if the court makes any order as to costs, it should be in terms that costs follow the event unless it appears to the court that some other order should be made as to the whole or part of the costs. No relevant disentitling conduct of Mr Robin was referred to. Generally, the "event" for the purposes of the rule, should be understood as referring to the practical result of a particular claim. Although the plaintiff succeeded on some issues in the event that the CLA applied, the factual matters were intertwined and the plaintiff also lost on a number of arguments in the consideration of the potential CLA claim. This was not a case where there were issues which were clearly dominant and separable in terms of time which would warrant a different costs order as to those issues.
The court rejects the submission of Mr Moffett that the course of the litigation demonstrated "exceptional circumstances" as would attract an apportionment of the costs, such that the appropriate and just order should be that each party pay their own costs: written submissions paragraph 13. In the court's view, there are no such exceptional circumstances dictating that such an order is appropriate. I accept Mr Robin's submissions on this issue. Mr Robin defended the claim under the CLA against him successfully, obtained a judgment in his favour and succeeded on a number of aspects even under the potential CLA claim if the CLA applied. At least the usual costs order is appropriate in favour of Mr Robin against the plaintiff.
[4]
Offer of Compromise from Mr Robin to the plaintiff dated 15 November 2017
Mr Robin seeks an order for indemnity costs against the plaintiff from 16 November 2017. This is based on an Offer of Compromise forwarded by the solicitors for Mr Robin to the solicitors for Mr Moffett on the previous day. The Offer of Compromise was open until 13 December 2017 and proposed an offer to settle the whole of the claim of the plaintiff against Mr Robin by way of a judgment in favour of Mr Robin with no order as to costs.
There was no dispute between the parties that the offer was compliant with the UCPR Part 20.26. However, the compromise was a limited one and did not involve the payment of any money by Mr Robin. There was no evidence before the court of the extent of Mr Robin's legal costs as at 15 November 2017. Two Defences had, however, been filed by Mr Robin by this date.
As stated, Mr Robin claims an order for indemnity costs in accordance with the Offer of Compromise. The plaintiff disputes the entitlement of Mr Robin and points to the fact that the covering letter dated 15 November 2017 referred only to matters upon which Mr Robin was in substance unsuccessful and did not refer to the "worker" or "deemed worker" points: written submissions paragraphs 2 and 4 . Mr Robin submits that whilst this may be an answer to a Calderbank offer on the basis that the rejection of the offer by Mr Moffett was not "unreasonable" in all the circumstances of the case, it is no answer to an Offer of Compromise.
It is submitted by Mr Moffett that the reasonableness of the rejection is relevant and that although solicitors then acting for Active by letter dated 22 November 2017 raised the "deemed worker" point, that was not raised by Mr Robin whether in correspondence or in pleadings until much later. In pleadings up until that time, Mr Robin had merely denied liability under the CLA.
Mr Moffett submits that the court should "otherwise order" within Part 42.15A(2).
The onus is on Mr Moffett in the light of the Offer of Compromise within the rules to demonstrate that the court should make an order in relation to costs different to that contemplated by Part 42.15A(2). The mere fact that it was reasonable for Mr Moffett to take the view that he did in rejecting the offer is not enough by itself to displace the rule. However, the reasonableness of the rejection is not an irrelevant consideration under the authorities set out above. At the time, the letter from the then solicitors for Active was received a week after the Offer of Compromise was made by the solicitors for Mr Robin. By letter dated 30 November 2017, the solicitors for the plaintiff requested information including correspondence received from Holman Webb, the solicitors for WFI. There is no indication that by this time, the solicitors for the plaintiff were aware that Mr Robin was taking the point or what the evidence relating to Mr Robin was on this issue. The plaintiff submitted orally that the solicitors for the plaintiff were entitled to investigate the issue properly. I accept that by this time, Mr Robin had filed a Defence to the Amended Statement of Claim on 17 October 2017 which revealed that some enquiries had been made on the factual issues by that time by Mr Robin.
Having considered all the circumstances of the case and the timing of the correspondence, I accept the submissions made by counsel for the plaintiff on this issue. The letter serving the Offer of Compromise did not raise the "worker" or "deemed worker" issues. Soon after, it was raised by the solicitors for Active but not by the solicitors for Mr Robin. Mr Robin did not succeed in substance on the other issues raised in the letter. The plaintiff was entitled to investigate the issues in a complex factual matrix. This gains some support from the 15 September 2017 letter from the solicitors for the plaintiff to the solicitors for WFI: see Ms Huynh's 2 August 2021 affidavit. The failure to accept the offer was thus not unreasonable, which is a factor to be taken into account in considering the Offer of Compromise. The compromise in the Offer was rules compliant but was a limited offer. No money was offered. It was thus not a "significant compromise": Toyota Finance Australia Ltd v Gardiner (No 2) [2016] NSWCA 181 at [15]. See also the plaintiff's written submissions at paragraphs 5-7. I have taken into account that Mr Robin was not insured in relation to Mr Moffett's claim.
Taking into account all the circumstances which I have indicated, in my view the court should "otherwise order" in relation to the 15 November 2017 Offer of Compromise by the solicitors for Mr Robin to the solicitors for the plaintiff. Similarly, in relation to the Calderbank offer within the covering letter, I find that the plaintiff did not act unreasonably in rejecting the offer for the same reasons.
[5]
Whether Active should be required to pay any costs order in favour of Mr Robin against the plaintiff
Both Mr Robin and the plaintiff submit that if any costs order is made in favour of Mr Robin against the plaintiff then Active should be ordered to pay those costs on the basis of a Bullock or Sanderson order (see Bullock v London General Omnibus Co [1907] 1 KB 264; Sanderson v Blyth Theatre Co [1903] 2 KB 533). The Court is entitled to make a Bullock or Sanderson type order as part of its statutory discretion as to costs.
It is submitted by the plaintiff and Mr Robin that Active should have indemnified Mr Robin and taken over the claim on behalf of Mr Robin. It is submitted by Mr Robin that there was no indication that Active was not covered irrespective of the outcome of the proceedings by one or other of the insurers EML or WFI. It was submitted that effectively that Mr Robin remained in the proceedings in circumstances where he did not need to and where Active should have taken over the claim. Thus it was said that Mr Robin was exposed to a lengthy trial for no real reason: written submissions paragraphs 10-11.
Active says that it agrees that the "worker" and "deemed worker" points were at the forefront of its mind following the denial of indemnity by WFI and as shown in the correspondence between its then solicitors and the solicitors for the plaintiff from November 2017. However, it submits that the plaintiff pursued its CLA claims against both defendants even after becoming aware of Active's argument on the "worker" and "deemed worker" points. Active submitted that there was nothing it could do in those circumstances but to defend the alternate claim made by the plaintiff under the CLA. It was further submitted that the defence of that alternate claim would not have allowed it to indemnify Mr Robin. If the "worker" and "deemed worker" points were rejected by the court, then there were differing claims against Mr Robin and Active by the plaintiff under the CLA. It was also pointed out by Active that the Offer of Compromise sent by the plaintiff to Active was not sent jointly to both insurers with the position spelt out clearly and indemnity invited from one or the other depending on the court's findings.
Counsel for the plaintiff submitted that the position of Active was "untenable" as if Active had all information relating to Mr Moffett and Mr Robin it should have accepted Mr Robin was an employee and indemnified him. Reference was also made, whilst accepting that Active was in substance successful on the Notice of Motion filed on 16 July 2019, to the "deemed worker" argument not being raised until May 2019. Further, the delay in "accepting liability" under the statutory scheme was said to be unexplained and reference was made to ss 74 and 94 of the WIM Act. Mr Robin pointed to the argument that if Mr Moffett was a "deemed worker" then Mr Robin was in an even clearer position which it avoided conceding in its submissions: Judgment at [525]; written submissions paragraph 11.
In my view, the submissions of Active should be accepted on this point. If there were breaches of ss 74 and 94 of the WIM Act by Active, the plaintiff has the remedies under that Act relating to the breaches. Active was successful in substance on the Notice of Motion filed on 16 July 2019. There were separate claims against Mr Robin and Active in relation to the plaintiff's CLA claims. Active had to deal with the alternative case it faced. It is unclear to me how in practical terms Active could have satisfactorily indemnified Mr Robin and then appeared for him where his defence to the CLA claim rested on different factual matters and involved a consideration of the relative positions of both Mr Robin and Active. The test for whether Mr Robin and Mr Moffett were employees or a "worker" under the WIM Act was in substance the same. Active filed its Notice of Motion and counsel for the plaintiff proposed that it be put over to the trial. Counsel for Mr Robin agreed as did counsel for Active. If the court rejected the "worker" and "deemed worker" points then the positions of Mr Robin and Active were in conflict and contribution was sought under the 1946 Act by each. In my view, Active was reasonable in the circumstances in not providing an indemnity to Mr Robin. There are no compelling circumstances warranting the order sought.
For these reasons, I reject the submission by the plaintiff and Mr Robin that in the event Mr Robin obtained an order for costs against the plaintiff that Active should indemnify him for such costs.
Accordingly, the appropriate order is:
"In relation to the plaintiff's claim against the first defendant, Mr Robin, the plaintiff is to pay on the ordinary basis as agreed or assessed the costs of Mr Robin. These costs include the costs of Mr Robin of the Notice of Motion filed 16 July 2019."
[6]
Plaintiff's claim against Active
No Calderbank offer or Offer of Compromise was made by Active to the plaintiff.
In Active's written submissions, a submission is made that despite the failure to serve a Calderbank offer or an Offer of Compromise to the solicitors for the plaintiff, an order for indemnity costs should be made in favour of Active from 15 May 2019: written submissions paragraph 11.
In my view, the claim for indemnity costs by Active should be rejected. Although the position of Active was made clear to the plaintiff from the end of 2017, that Active considered that the "deemed worker" definition under the WIM Act applied to the plaintiff, there was, in my view, no conduct of the plaintiff or other exceptional circumstances which would justify an indemnity costs order. Active could have served an Offer of Compromise but did not do so. As Active submitted itself, complex factual issues were involved which necessitated careful consideration and detailed findings from the court.
The next issue is whether the usual order for costs should be made against the plaintiff in favour of Active. The plaintiff did purport to make a claim for work injury damages by letter dated 31 January 2018. However, the plaintiff had not complied with any of the pre-litigation requirements under the WIM Act and did not seek to discontinue the District Court proceedings. The plaintiff maintained the CLA claim against Active despite being notified of the position of Active on the "deemed worker" point. The plaintiff was unsuccessful against Active in relation to its claim under the CLA. The plaintiff was wholly unsuccessful in the relief sought against Active. I reject the submission of the plaintiff that there was conduct on the part of Active inconsistent with the principles of the Civil Procedure Act 2005 (NSW). Active filed its Notice of Motion raising the WIM Act points in July 2019. This claim was in substance successful. There was no particular conduct of or on behalf of Active which unreasonably extended the trial. Both counsel for the plaintiff and Mr Robin as well as counsel for Active agreed that the Notice of Motion would be heard and determined at the trial. There was no pressing at the trial by the plaintiff or Mr Robin for the Motion to be determined first.
Accordingly, in my view in the exercise of my discretion as to costs, there is no proper basis for depriving Active of an order for costs against the plaintiff on the usual basis.
I therefore order as follows:
"In relation to the plaintiff's claim against the second defendant, Active Tree Services Pty Ltd, the plaintiff is to pay the costs of Active Tree Services Pty Ltd on the ordinary basis as agreed or assessed. These costs include the costs of Active Tree Services Pty Ltd of the Notice of Motion filed 16 July 2019."
[7]
Cross-Claims by Mr Robin against Active and Active against Mr Robin
In the orders made on 17 June 2021, the court ordered that the First Cross-Claim by Mr Robin against Active be dismissed and the Fourth Cross-Claim by Active against Mr Robin be dismissed. Whilst the First Cross-Claim was dismissed, in substance Mr Robin was successful in his argument that he was an "employee" of Active under the Employee's Liability Act 1991 (NSW). As indicated above, Mr Robin failed in his claim under the 1946 Act against Active on an alternate basis, but that did not take a considerable period of time in the argument.
In the exercise of my discretion as to costs, I can see no compelling reason why, in circumstances where Mr Robin was substantially successful, he should not have his costs of the two Cross-Claims relating to Active.
Active submits, whilst conceding that Mr Robin was successful in seeking indemnity under s 3 of the Employee's Liability Act 1991, that the facts relating to the issues of "worker" and/or "deemed worker" were always in dispute and were not finally determined until the matter had been fully contested. The determination of the issues involved consideration of extensive factual evidence and considering competing factual contests and submissions. Active also submits that should a costs order be made in Mr Robin's favour against Active that the plaintiff should be responsible for the same as this is warranted in the circumstances. It is submitted that an unsuccessful plaintiff can be ordered to pay the costs of another party against whom a Cross-Claim is pursued by the successful party and Active submits such an order is appropriate in the circumstances. I accept that the court has the power to make such an order.
In my view, the plaintiff should not be ordered to pay any costs arising between Mr Robin and Active on the Cross-Claims. It seems that whatever the result which occurred, Active had insurance cover from either EML or WFI. The plaintiff was pursuing both Mr Robin and Active. Mr Robin had no alternative but to defend the claim. There is no conduct of Mr Robin which would disentitle him to an order for costs on the Cross-Claims against Active. Active chose to pursue its defences to the plaintiff's claim which in the end Mr Robin also adopted against the plaintiff. Similarly, in my view there is no conduct or other circumstances relating to the plaintiff justifying the order sought.
For these reasons, I reject the claim by Active that the plaintiff as the unsuccessful plaintiff should be ordered to pay any costs Active is ordered to pay under the Cross-Claims with Mr Robin.
As stated, as Mr Robin was in substance successful against Active on the Cross-Claims, in my view he is entitled to costs against Active on the ordinary basis.
The issue is whether Mr Robin should be entitled to an indemnity costs order under his Offer of Compromise and Calderbank letter served on Active on 29 November 2019.
Mr Robin made numerous submissions in favour of such an order. In relation to the Offer of Compromise, there was no dispute that the offer was rules compliant. By this time, the proceedings had been on foot for a number of years. It was clear therefore that Mr Robin had incurred by this time substantial costs in defending the matter, although there was no evidence before the court as to the quantum of those costs. The Offer appears to have been both genuine and a substantial compromise.
Mr Robin points to the fact that Active had cover from one or other of the two insurers. By this time, Active had made a decision by filing the Notice of Motion and its pleadings to claim that Mr Moffett was a "worker" or "deemed worker" under the WIM Act.
Active points out that the Offer of Compromise was not directed to both insurers and Active at the same time which would have allowed a joint position to be considered. Secondly, Active points to the fact that the claim of the plaintiff against both defendants remained under the CLA. In the event that the primary claim of Active was not successful, the alternate position under the CLA had to be considered. Whilst it is true that Mr Robin's solicitors raised the 1991 Act in paragraph 3g of their 29 November 2019 letter to the solicitors for Active, the Offer of Compromise required an indemnity of Mr Robin. In circumstances where the primary defence was rejected, the positions of Mr Robin and Active were potentially different and in conflict and may have required apportionment under s 5 of the 1946 Act. Whilst Active's position had crystallised in relation to the plaintiff being a "deemed worker", its defence to the plaintiff's claim was in the alternative. There were thus significant practical impediments in Active providing the indemnity sought to Mr Robin. It was submitted that it was not until the Second Further Amended Defence to the Amended Statement of Claim was filed by Mr Robin on 29 January 2020 that the claim of Mr Robin was clear that he was an employee of Active on Mr Robin's pleadings. The facts relating to the position of Mr Robin and the plaintiff as alleged "employees" were said to be complex.
In relation to the Calderbank offer within the 29 November 2019 letter from the solicitors for Mr Robin to the solicitors for Active, in my view it was not unreasonable for Active to reject the offer. Whilst the offer did involve a degree of compromise, the plaintiff's claim against the two defendants remained extant. Despite the plaintiff being informed of the positions of particularly Active, the plaintiff continued to pursue the claims under the CLA. Active had its defence under the "worker" and "deemed worker" provisions of the WIM Act but had to mount the alternative defence under the CLA. In my view, the issues were factually complex and it was not unreasonable for Active to reject the Calderbank offer where the circumstances of the claims against Mr Robin and Active were different and involved separate factors and evidence.
In relation to the Offer of Compromise, there was no issue about it being rules compliant.
In my view, Mr Robin's position was made clear in the covering letter dated 29 November 2019 from the solicitors for Mr Robin to the solicitors for Active in which it was asserted that Mr Robin was entitled to be indemnified by Active under s 3 of the 1991 Act. Mr Robin's position was thus clear on the issue. I accept the submission of counsel for Mr Robin on this point.
However, the defence of Active had been taken over by the insurer EML. The claim by the plaintiff against both defendants remained under the CLA. Whilst Active and Mr Robin had adopted a position, it was by no means unarguable that the CLA applied. Whether it would be held to apply by the court remained subject to how the evidence emerged at the trial. Further, if the "worker" and "deemed worker" points were rejected there was a potential conflict between the positions of Mr Robin and Active under the CLA with contribution issues to be determined. While in substance Active had accepted liability in relation to the plaintiff being a "worker" in May 2019, the plaintiff continued with his claim.
In all the circumstances of the case, the onus being on Active, I am satisfied that I should otherwise order for the above reasons in relation to the rules compliant Offer of Compromise by Mr Robin to Active. The reasonableness of not accepting the offer is a factor I take into account in the circumstances.
However, I accept the submissions by counsel for Mr Robin that there is no apparent compelling reason why he should not have his costs on the ordinary basis of the two Cross-claims.
I therefore make the following order:
"In relation to the First Cross-Claim by Mr Robin against Active Tree Services Pty Ltd and the Fourth Cross-Claim by Active Tree Services Pty Ltd against Mr Robin, Active is to pay the costs of Mr Robin of the First Cross-Claim and the Fourth Cross-Claim on the ordinary basis as agreed or assessed."
[8]
Active claim against WFI
WFI succeeded on the Second Cross-Claim. The Second Cross-Claim by Active against WFI was dismissed.
Counsel for WFI submits that there were no exceptional circumstances or disentitling conduct on the part of WFI which would mean that it should not at least obtain its costs on the ordinary basis against Active in relation to the Second Cross-Claim.
Active submits first, that each of the parties should be responsible for its own costs of the Cross-Claim on the basis that the uncertain facts constituted exceptional circumstances to justify such an order. In my view, that submission should be rejected. Active was always aware of the position of WFI. WFI was successful in the Cross-Claim and there was no conduct on its behalf which would disentitle it to the usual order.
Active submits that in the light of the claim being advanced by the plaintiff, WFI had to be joined to the proceedings and WFI did not file a submitting appearance and did not offer to indemnify Active should the plaintiff have been found to be a contractor and entitled to damages under the CLA. It is accepted that an unsuccessful plaintiff can be ordered to pay the costs of another party against whom a cross-claim is pursued by another defendant. Active submits that this is appropriate in the present circumstances.
In my view, this should be rejected. There is no evidence that Active proposed to WFI an indemnity in those circumstances. The position of WFI on the correspondence before the court, appeared reasonable at all times. It was Active which chose to join WFI. There is no evidence that it pursued alternatives before the Cross-Claim was filed.
In the exercise of my discretion, I confirm my view that WFI should be entitled at least to its costs of the Cross-Claim on the ordinary basis.
WFI pursues an order for indemnity costs on the basis of a Calderbank offer and then an Offer of Compromise.
In relation to the Calderbank offer this was set out in the letter from Holman Webb, the solicitors for WFI, to Hicksons, the solicitors for Active, dated 26 July 2019. The offer sought that the Cross-Claim against WFI "be dismissed on the basis that each party bear their own costs". Such a dismissal of the Cross-Claim, would have required Active to have commenced fresh proceedings for an indemnity against WFI if it failed on its "worker" and "deemed worker" points. As stated above, the claim against Active by the plaintiff was under the CLA and had to be dealt with if Active's defences failed on the "worker" and "deemed worker" points. The letter dated 26 July 2019 from Holman Webb did not indicate that indemnity would be provided in this scenario. In those circumstances, in my view the failure by Active to accept the Calderbank offer was not unreasonable in all the circumstances. Accordingly, I reject the claim for indemnity costs on that basis.
WFI, through Holman Webb, served an Offer of Compromise with a covering letter dated 10 October 2019. This Offer of Compromise sought to compromise the entirety of the Second Cross-Claim on the basis that there be "judgment" in favour of WFI and no order as to costs. It was not submitted by Active that this Offer of Compromise was not rules compliant. The onus remained on Active to establish why the court should "otherwise order" within the rules.
The term of the Offer that there be "judgment in favour of [WFI]" is problematic. If there was judgment for WFI under the Offer of Compromise, then if the plaintiff succeeded in its CLA claim, Active could not have sought an indemnity against WFI under its contract of insurance with it. In submissions, Counsel for WFI did not appear to press the Offer of Compromise strongly for this reason. However, in my view this was a powerful reason to reject the Offer of Compromise by Active. Such a rejection was clearly reasonable in all the circumstances. However, although there was a compromise, with their being a term for no order as to costs, the compromise was not a real compromise because acceptance of the offer would have deprived Active of an indemnity under its insurance policy with WFI. In those circumstances, in my view, in the exercise of my discretion, I should "otherwise order" in relation to the Offer of Compromise from WFI to Active.
For the above reasons I make the following order:
"The second cross-claimant, Active Tree Services Pty Ltd, is to pay the costs on the ordinary basis as agreed or assessed of the cross-defendant to the Second Cross-Claim WFI Insurance Ltd trading as Lumley Insurance of the Second Cross-Claim."
The court was well assisted by the helpful written and oral submissions by counsel for the parties.
[9]
Determination
For the above reasons, the court makes the following orders
1. In relation to the plaintiff's claim against the first defendant, Mr Robin, the plaintiff is to pay on the ordinary basis as agreed or assessed the costs of Mr Robin. These costs include the costs of Mr Robin of the Notice of Motion filed 16 July 2019.
2. In relation to the plaintiff's claim against the second defendant, Active Tree Services Pty Ltd, the plaintiff is to pay the costs of Active Tree Services Pty Ltd on the ordinary basis as agreed or assessed. These costs include the costs of Active Tree Services Pty Ltd of the Notice of Motion filed 16 July 2019.
3. In relation to the First Cross-Claim by Mr Robin against Active Tree Services Pty Ltd and the Fourth Cross-Claim by Active Tree Services Pty Ltd against Mr Robin, Active is to pay the costs of Mr Robin of the First Cross-Claim and the Fourth Cross-Claim on the ordinary basis as agreed or assessed.
4. The second cross-claimant, Active Tree Services Pty Ltd, is to pay the costs on the ordinary basis as agreed or assessed of the cross-defendant to the Second Cross-Claim WFI Insurance Ltd trading as Lumley Insurance of the Second Cross-Claim.
The parties each had limited success in relation to aspects of the arguments as to costs. In my view, no particular order for costs should be made in relation to the costs arguments such that the costs of those arguments should be dealt with under the orders set out in these reasons. If any party wishes to submit to the contrary, I grant leave to the parties to approach my Associate on two business days' notice.
[10]
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: 23 August 2021
These reasons for decision deal with a number of costs disputes which have arisen in the above proceedings following the court handing down its decision on 28 May 2021: Moffett v Robin [2021] NSWDC 211 ("the Judgment"). The trial was a lengthy one and virtually all issues were in dispute between the four parties. The proceedings arose from a work accident which occurred on 25 November 2013. On that day, the plaintiff was struck by a sawn part of a tree branch which fell from some height onto him during tree felling and tree pruning operations conducted at Raymond Terrace in New South Wales. The plaintiff brought a claim against two defendants, Mr Apihana Robin and Active Tree Services Pty Ltd ("Active"). Those two defendants then brought a number of Cross-Claims against each other and against a third party insurer of Active, WFI Insurance Limited trading as Lumley Insurance ("WFI").
As in the main proceedings, there is substantial disputation between the parties in relation to the proper costs orders which should be made in the proceedings. Following the handing down of the Judgment, extensive written submissions and affidavit evidence was filed and served by each of the parties, asserting an entitlement to costs including, in some cases, special costs orders.
These reasons for decision assume a familiarity with the factual background as set out in the Judgment.
In summary, the plaintiff sued the two defendants, Mr Robin and Active, in the tort of negligence under the Civil Liability Act 2002 (NSW) ("CLA"). The court found that the proceedings should have been brought by the plaintiff as a work injury damages claim under the Workers Compensation Act 1987 (NSW) ("WCA") with the requirement to satisfy the procedural provisions for such a claim in the Workplace Injury Management and Workers Compensation Act 1998 (NSW) ("WIM Act"). Both Mr Robin and Mr Moffett were held by the court to be a "worker" under the WIM Act or, if that was not the case, a "deemed worker" under the WIM Act. Mr Moffett could therefore not sue for damages under the CLA and his claim had to be dismissed because he had not satisfied the procedural requirements. The court found that if it was in error in relation to this finding, both Mr Robin and Active had breached a duty of care which they owed to Mr Moffett. As a consequence of the plaintiff's failure in his action against Mr Moffett and Active, a number of the Cross-Claims practically did not arise and, accordingly, costs issues have arisen in relation to them. WFI is the insurer which would have indemnified Active if the claims had properly fallen within the CLA.
In addition, a number of the parties served either Offers of Compromise under the Uniform Civil Procedure Rules 2005 ("UCPR") or Calderbank letters. As a result of this, special costs orders are sought by those parties.
Principles relating to costs
Section 98(1)-(4) of the Civil Procedure Act 2005 (NSW) provides as follows:
"98 Courts powers as to costs
(1) Subject to rules of court and to this or any other Act -
(a) costs are in the discretion of the court, and
(b) the court has full power to determine by whom, to whom and to what extent costs are to be paid, and
(c) the court may order that costs are to be awarded on the ordinary basis or on an indemnity basis.
(2) Subject to rules of court and to this or any other Act, a party to proceedings may not recover costs from any other party otherwise than pursuant to an order of the court.
(3) An order as to costs may be made by the court at any stage of the proceedings or after the conclusion of the proceedings.
(4) In particular, at any time before costs are referred for assessment, the court may make an order to the effect that the party to whom costs are to be paid is to be entitled to -
(a) costs up to, or from, a specified stage of the proceedings, or
(b) a specified proportion of the assessed costs, or
(c) a specified gross sum instead of assessed costs, or
(d) such proportion of the assessed costs as does not exceed a specified amount."
Part 20.26 of the UCPR provides as follows:
"20.26 Making of offer
(1) In any proceedings, any party may, by notice in writing, make an offer to any other party to compromise any claim in the proceedings, either in whole or in part, on specified terms.
(2) An offer under this rule -
(a) must identify -
(i) the claim or part of the claim to which it relates, and
(ii) the proposed orders for disposal of the claim or part of the claim, including, if a monetary judgment is proposed, the amount of that monetary judgment, and
(b) if the offer relates only to part of a claim in the proceedings, must include a statement -
(i) in the case of an offer by the plaintiff, as to whether the balance of the proceedings is to be abandoned or pursued, or
(ii) in the case of an offer by a defendant, as to whether the balance of the proceedings will be defended or conceded, and
(c) must not include an amount for costs and must not be expressed to be inclusive of costs, and
(d) must bear a statement to the effect that the offer is made in accordance with these rules, and
(e) if the offeror has made or been ordered to make an interim payment to the offeree, must state whether or not the offer is in addition to that interim payment, and
(f) must specify the period of time within which the offer is open for acceptance.
(3) An offer under this rule may propose -
(a) a judgment in favour of the defendant -
(i) with no order as to costs, or
(ii) despite subrule (2)(c), with a term of the offer that the defendant will pay to the plaintiff a specified sum in respect of the plaintiff's costs, or
(b) that the costs as agreed or assessed up to the time the offer was made will be paid by the offeror, or
(c) that the costs as agreed or assessed on the ordinary basis or on the indemnity basis will be met out of a specified estate, notional estate or fund identified in the offer.
(4) If the offeror makes an offer before the offeree has been given such particulars of the offeror's claim, and copies or originals of such documents available to the offeror, as are necessary to enable the offeree to fully consider the offer, the offeree may, within 14 days of receiving the offer, give notice to the offeror that -
(a) the offeree is unable to assess the reasonableness of the offer because of the lack of particulars or documents, and
(b) in the event that rule 42.14 applies to the proceedings, the offeree will seek an order of the court under rule 42.14(2).
(5) The closing date for acceptance of an offer -
(a) in the case of an offer made two months or more before the date set down for commencement of the trial - is to be no less than 28 days after the date on which the offer is made, and
(b) in any other case - is to be such date as is reasonable in the circumstances.
(6), (7) (Repealed)
(8) Unless the notice of offer otherwise provides, an offer providing for the payment of money, or the doing of any other act, is taken to provide for the payment of that money, or the doing of that act, within 28 days after acceptance of the offer.
(9) An offer is taken to have been made without prejudice, unless the notice of offer otherwise provides.
(10) A party may make more than one offer in relation to the same claim.
(11) Unless the court orders otherwise, an offer may not be withdrawn during the period of acceptance for the offer.
(12) A notice of offer that purports to exclude, modify or restrict the operation of rule 42.14 or 42.15 is of no effect for the purposes of this Division.
Part 42.15A of the UCPR provides as follows:
"42.15A Where offer not accepted and judgment no less favourable to defendant
(1) This rule applies if the offer is made by the defendant, but not accepted by the plaintiff, and the defendant obtains an order or judgment on the claim no less favourable to the defendant than the terms of the offer.
(2) Unless the court orders otherwise -
(a) the defendant is entitled to an order against the plaintiff for the defendant's costs in respect of the claim, to be assessed on the ordinary basis, up to the time from which the defendant becomes entitled to costs under paragraph (b), and
(b) the defendant is entitled to an order against the plaintiff for the defendant's costs in respect of the claim, assessed on an indemnity basis -
(i) if the offer was made before the first day of the trial, as from the beginning of the day following the day on which the offer was made, and
(ii) if the offer was made on or after the first day of the trial, as from 11 am on the day following the day on which the offer was made."
Several Offers of Compromise were served in the proceedings. It was conceded by the relevant parties that all relevant Offers of Compromise were rules compliant.
In Sze Tu v Lowe (No 2) [2015] NSWCA 91 Gleeson JA (with whom Meagher and Barrett JJA agreed) stated the following in paragraphs 37-40:
"37. Costs are not awarded by way of punishment of the unsuccessful party but, rather, "are compensatory in the sense that they are awarded to indemnify to successful party against the expense to which he or she has been put by reason of the legal proceedings": Latoudis v Casey [1990] HCA 59; 170 CLR 534 at 543 (Mason CJ); Oshlack v Richmond River Council [1998] HCA 11; 193 CLR 72 at [67]; Mahenthirarasa v State Rail Authority of NSW (No 2) [2008] NSWCA 201; 72 NSWLR 273 (Mahenthirarasa (No 2)) at [8] (Basten JA; Giles and Bell JJA agreeing). It follows that the inquiry as to what costs order should be made is primarily directed to the position of the successful party: Latoudis v Casey at 542; Mahenthirarasa (No 2) at [9].
38. The starting position is s 98 of the Civil Procedure Act 2005 (NSW) which provides that, subject to the rules of court, costs are in the discretion of the Court including by whom, to whom and to what extent costs are to be paid. Reference should also be made to r 42.1, Uniform Civil Procedure Rules 2005 (NSW) (UCPR), which provides that if the Court makes any order as to costs, it should be in terms that costs follow the event unless it appears to the Court that some other order should be made as to the whole or part of the costs.
39. How "the event" should be defined will depend upon the nature of the litigation. Generally the "event" refers to the event of the claim and may be understood as referring to the practical result of a particular claim: Windsurfing International Inc v Petit [1987] AIPC 90-441 at 37,861 - 37,862 (Waddell J).
40. In a proper case, the party that is successful overall may be deprived of part of its costs, or ordered to pay the costs of a discrete issue. The circumstances in which this may occur are not limited to cases where it was unreasonable for the successful party to raise the issue on which it failed: Rosniak v Government Insurance Office (1997) 41 NSWLR 608 at 615D. The relevant principles were reviewed by this Court in Elite Protective Service Pty Ltd v Salmon (No 2) [2007] NSWCA 373, and summarised in Bostik Australia Pty Ltd v Liddiard (No 2) [2009] NSWCA 304 at [38] (Beazley, Ipp and Basten JJA), as follows:
• Where there are multiple issues in a case the Court generally does not attempt to differentiate between the issues on which a party was successful and those on which it failed. Unless a particular issue or group of issues is clearly dominant or separable it will ordinarily be appropriate to award the costs of the proceedings to the successful party without attempting to differentiate between those particular issues on which it was successful and those on which it failed: Waters v P C Henderson (Aust) Pty Ltd (Court of Appeal, 6 July 1996, unreported).
• In relation to trials it has been said that it may be appropriate to deprive a successful party of costs or a portion of the costs if the matters upon which that party was unsuccessful took up a significant part of the trial, either by way of evidence or argument: Sabah Yazgi v Permanent Custodians Limited (No 2) [2007] NSWCA 306 at [24]. A similar approach is adopted on appeal.
• If the appellant loses on a separate issue argued on the appeal which has increased the time taken in hearing the appeal, then a special order for costs may be appropriate which deprives the appellant of the costs of that issue: Sydney City Council v Geftlick & Ors (No 2) [2006] NSWCA 374 at [27].
• Whether an order contrary to the general rule that costs follow the event should be made depends on the circumstances of the case viewed against the wide discretionary powers of the court, which powers should be liberally construed: State of New South Wales v Stanley [2007] NSWCA 330 at [18] per Hislop J (with whom Beazley and Tobias JJA agreed).
• A separable issue can relate to "any disputed question of fact or law" before a court on which a party fails, notwithstanding that they are otherwise successful in terms of the ultimate outcome of the matter: James v Surf Road Nominees Pty Ltd (No 2) [2005] NSWCA 296 at [34].
• Where there is a mixed outcome in proceedings, the question of apportionment is very much a matter of discretion and mathematical precision is illusory. The exercise of the discretion depends upon matters of impression and evaluation: James v Surf Road Nominees Pty Ltd (No 2), citing Dodds Family Investments Pty Ltd v Lane Industries Pty Ltd [1993] FCA 259; (1993) 26 IPR 261 at 272."
Sze Tu was referred to with approval by the Court of Appeal in McInnes v Rheem Australia Pty Ltd [2021] NSWCA 89 at paragraphs 28 and 34.
Some parties have also sought either a Bullock Order or a Sanderson Order. In Sze Tu Gleeson JA stated as follows at paragraph 55:
"55. The power to make a Bullock order is found in the Court's statutory discretion as to costs: Civil Procedure Act, s 98. In G E Dal Pont, Law of Costs (3rd ed, LexisNexis Butterworths, 2013), the author suggests at [11.18] the following rationale for a Bullock order:
At a basic level, the rationale for a Bullock order is that in some circumstances it will be just for a successful plaintiff who has sued two (or more) defendants to be indemnified by the unsuccessful defendant for the costs he or she incurred in proceeding against the successful defendant. This may be a just outcome where the allocation responsibility between the potential defendants is uncertain, making it a reasonable course for the plaintiff to proceed through to trial against more than one defendant."
A Sanderson Order usually involves the court making an order directly against an unsuccessful defendant to pay the costs of a successful defendant. A Sanderson Order may be varied to fit the circumstances. It is not necessary, in order to justify a Sanderson Order, to show that a party encouraged or induced a plaintiff to join a defendant: Zhang v ROC Services (NSW) Pty Ltd [2016] NSWCA 370 at [229].
A number of the costs issues to be considered by the court following the handing down of the Judgment, involve discretionary considerations arising from a complex trial with numerous issues where parties were successful on some issues and not on others. The pleadings, relevant interlocutory orders made in the proceedings, and the correspondence between the solicitors for the parties, are all relevant to the exercise of the court's discretion which, of course, must be exercised judicially in all the circumstances of the case.
A number of submissions are made that the court should not make indemnity or special costs orders and should "otherwise order" within Part 42.15A(2). It is important to consider the principles applicable to whether a court should "otherwise order" within the Rules.
In AB v Keanes (No 2) [2019] NSWDC 765 I stated the following at paragraphs 15-21:
"15. In paragraph 34 of Boateng v Dharamdas, above, the court stated as follows:
"This Court would also not be in a position to decide whether an order "otherwise" should be made for the purposes of r 42.15(2). The argument before this Court identified, without fully addressing, contentions as to whether the respondent's rejection of the Offer of Compromise was reasonable. The mere fact that the rejection of an Offer of Compromise is reasonable is not enough to displace the rule but the reasonableness of the rejection remains a relevant consideration in the exercise of the court's broad discretion to "order otherwise" (The Uniting Church in Australia Property Trust (NSW) v Takacs (No 2) [2008] NSWCA 172 at [15] and [18], compare [32]-[33]; Leach v The Nominal Defendant (QBE Insurance (Australia) Ltd) (No 2) [2014] NSWCA 391 at [48], [60] and [61])."
16. The plaintiff accepts that the onus is on the plaintiff in the light of the offers of compromise to demonstrate that the court should make an order in relation to costs different to the order contemplated by Part 42.15(2). In Leach v The Nominal Defendant (QBE Insurance (Australia) Ltd) (No 2) [2014] NSWCA 391, McColl JA stated as follows at paragraph 45:
"45. Accordingly, the question is whether, as the appellant submits, the Court should "order otherwise": UCPR 42.15A(2). The onus is on the appellant to demonstrate why the Court should depart from the consequence of his rejection of the Offer: Caine v Lumley General Insurance Ltd (No 2) [2008] NSWCA 109 (at [35]) per McColl JA (Mason P and McClellan CJ at CL agreeing); Miwa (at [16])."
17. McColl JA stated the following in paragraph 48 in relation to the reasonableness of the offer:
"It is impossible exhaustively to state the circumstances in which the court's discretion to "order otherwise" might be exercised: New South Wales Insurance Ministerial Corporation v Reeve (at 102). The mere fact that it was reasonable for the litigant to take the view that he or she did in rejecting the offer is not enough to displace the rule: Morgan v Johnson (at 582). However that does not mean that reasonableness of the rejection is an irrelevant consideration: see Seven Network Ltd v News Ltd (at [64] - [67]); Uniting Church in Australia Property Trust (NSW) t/as Northaven Retirement Village v Takacs (No 2) [2008] NSWCA 172 (at [15]) per Hodgson JA (McColl JA agreeing); cf Basten JA (at [32] - [33])."
18. This view was confirmed by the majority in Boateng v Dharamdas at [34].
19. In Vale v Eggins (No 2) [2007] NSWCA 12 at [22] the Court of Appeal found, in circumstances where a party had not served all the medical reports on which it relied at the time the offer of compromise was made and which were relevant to an assessment of the offer, that the failure of service in the context of that case, disentitled the offering party from obtaining an award of indemnity costs.
20. Vale, above, was cited with approval by the Court of Appeal in Fairall v Hobbs (No 2) [2017] NSWCA 133.
21. In South Eastern Sydney Area Health Service v King [2006] NSWCA 2 at [85] Hunt AJA (with whom Mason P and McColl JA agreed) stated that indemnity costs should not be awarded in that case as "it would be unfair to a defendant to make an order for indemnity costs when the evidence at the trial is different from that known to the defendant at the time of the offer.""
In Outerbridge trading as Century 21 Plateau Lifestyle Real Estate v Hall (No 2) [2020] NSWDC 8 I stated as follows in paragraphs 12-14:
"12. Where there is a valid offer of compromise made to a party, it is for the offeree to establish a proper basis for depriving the offeror of the prima facie entitlement to indemnity costs: Nominal Defendant v Hawkins [2011] NSWCA 93 at [53] and [56] per Hodgson JA (with whom Beazley JA agreed). Exceptional circumstances are not necessary to be established before the court may "otherwise order": Regency Media Pty Ltd v AAV Australia Pty Ltd [2009] NSWCA 368 at [15]. The discretion to "otherwise order" should be exercised having regard to all the circumstances of the case: Perisher Blue Pty Ltd v Nair-Smith (No 2) [2015] NSWCA 268 at [32].
13. In Toyota Finance Australia Ltd v Gardiner (No 2) [2016] NSWCA 181 the Court of Appeal stated at [13]-[15] as follows.
"13. Rule 42.15A of the UCPR applies when a defendant has made an offer which is not accepted by the plaintiff, and the defendant obtains an order or judgment on the claim no less favourable to the defendant than the terms of that offer. In those circumstances, the defendant is entitled to a special costs order from the time the offer was made, unless the Court orders otherwise. This rule is applicable to appeals: UCPR rr 51.47 and 51.48.
14. The making of a valid offer of compromise does not, however, guarantee a special costs order. This is a matter for the Court's discretion.
15. It is clear that "where no significant compromise at all is made by a party to an appeal, the default position provided for in the rules will not be applied": Mega-top Cargo Pty Ltd v Moneytech Services Pty Ltd [2016] NSWCA 3 at [5]; Taheri v Vitek (No 2) [2014] NSWCA 344 at [9]- [11]."
14. In Leach v The Nominal Defendant (QBE Insurance (Australia) Ltd) (No 2) [2014] NSWCA 391 at [40] and [43], McColl JA (with whom Gleeson JA and Sackville AJA agreed), in considering the position under Part 42.15A, stated as follows:
"40. The consequence is that a prima facie entitlement arose in favour of the respondent to have costs awarded in accordance with UCPR 42.15A: New South Wales Insurance Ministerial Corporation v Reeve (1993) 42 NSWLR 100 (at 102) per Gleeson CJ (Clarke and Cripps JJA agreeing); Leichhardt Municipal Council v Green [2004] NSWCA 341 (at [19]) per Santow JA (Stein JA agreeing). This is because, from "the time of non-acceptance 'notionally the real cause and occasion of the litigation is the attitude adopted by [the party] which has rejected the compromise'": Morgan v Johnson [1998] NSWSC 367; (1998) 44 NSWLR 578 (at 581-582) per Mason P (Sheller JA agreeing).
...
43. In my view in the circumstances of this case, the Offer did constitute a genuine offer of compromise. The opportunity to offer any compromise for the respondent was limited. The substantive issue on appeal was an all or nothing determination on the liability issue. There was no range of verdicts as in the case of a challenge to an award of damages or to an assessment of contributory negligence or contribution between tortfeasors: cf Leichhardt Municipal v Green (at [22] - [26]); Regency Media Pty Ltd v AAV Australia Pty Ltd (at [29]). Thus the only room for compromise was in relation to costs, in which respect the respondent was prepared to forego the costs order it had been awarded by the primary judge and any costs order it might ordinarily obtain in this Court by the operation of UCPR 42.1. That constituted a "real concession": Clark v Commissioner of Taxation [2010] FCA 415 (at [90] - [92]) per Greenwood J."
A number of the letters serving Offers of Compromise also stated that they should be considered as Calderbank offers: see Calderbank v Calderbank [1975] 3 All ER 333. In AB v Keanes (No 2) above, I stated as follows at paragraphs 42-44:
"42. The first offer of compromise was served with a covering letter relying on the Calderbank principles. These were not addressed in submissions but I will consider them briefly.
43. The rejection of a Calderbank offer by a party does not necessarily mean that indemnity costs are ordered as a matter of course. The applicant for indemnity costs must demonstrate to the court that the rejection of the offer was "unreasonable" in all the circumstances of the case: Leichhardt Municipal Council v Green [2004] NSWCA 341 at [19]; Jones v Bradley (No 2) [2003] NSWCA 258 at [12]; Russell v Edwards (No 2) [2006] NSWCA 52 at [8]; Trustee for the Salvation Army (NSW) Property Trust v Becker (No 2) [2007] NSWCA 194 at [7].
44. In NRMA Insurance for the Nominal Defendant v Al-Bayati (No 2) [2019] NSWCA 14, the Court of Appeal stated in paragraph 10 as follows:
"[10] The party making an offer of compromise or Calderbank offer bears the onus of satisfying the court that it should exercise the costs discretion in its favour: Evans Shire Council v Richardson (No 2) [2006] NSWCA 61; Commonwealth of Australia v Gretton [2008] NSWCA 117 at [46]; County Securities Pty Ltd v Challenger Group Holdings Pty Ltd (No 2) [2008] NSWCA 273 at [31] ...""