NATIONWIDE NEWS PTY LTD v NAIDU; ISS SECURITY PTY LTD v NAIDU [2008] NSWCA 71 | Case summary

24 April 2008 NATIONWIDE NEWS PTY LTD v NAIDU; ISS SECURITY PTY LTD v NAIDU (NO. 2) Judgment 1 THE COURT: On 21 December 2007 the Court delivered judgment in the two appeals - see [2007] NSWCA 377, the proposed orders being as set out at [426]. As noted at [427], the parties were given an opportunity to seek further or different orders to those proposed, preferably by agreement, but in default of agreement the parties were granted leave to file written submissions. On further application, the grant of leave was expanded, the final submissions being received on 14 March 2008. 2 The original proceedings in the Common Law Division were brought by Mr Naidu against his former employer, ISS Security Pty Ltd ("ISS") and the company with which he was placed as a security officer, namely Nationwide News Pty Ltd ("Nationwide"). At trial Mr Naidu obtained judgment against ISS and Nationwide, though in differing amounts, reflecting the operation of s 151Z of the Workers Compensation Act 1987 (NSW). On appeal, ISS was successful in setting aside the judgment against it, but Nationwide News was unsuccessful. This result gave rise to a number of potential complications, in relation to the quantum of the appropriate verdicts, the unwinding of an interim payment order made by the trial judge as a condition of a stay and in relation to costs. 3 The various issues raised in the written submissions of the parties require some variation of the orders proposed on 21 December 2007, as indicated below. Quantum of judgment against Nationwide 4 The proposed orders in relation to the appeal by ISS included a judgment in favour of Mr Naidu against Nationwide in an amount of $1,946,189.40, to have effect from 12 May 2006. Mr Naidu noted that the quantum of that award was reduced (properly) in accordance with s 151Z(2) of the Workers Compensation Act because he was also successful against his employer, but in a lesser amount due to the differential amounts recoverable under the general law and against an employer in accordance with Part 5 of the Workers Compensation Act. It having been established that the employer (ISS) was not liable, no such reduction is now required. Mr Naidu claimed the full damages calculated in accordance with the general law and an entitlement to the sum of $2,047,237.20. 5 Nationwide has not resisted a judgment in that amount and the proposed order should be varied accordingly. Costs of appeal: Nationwide 6 On 24 August 2006, following the judgment in the Court below and the filing of a notice of appeal by Nationwide, Mr Naidu made an offer of compromise in an amount of $1,371,000, "clear of workers compensation payments paid to date". The offer was said to be made in accordance with Part 22 of the Supreme Court Rules, although these had been replaced by the Uniform Civil Procedure Rules approximately one year earlier, namely on 15 August 2005. Nevertheless, no point has been taken in that regard and a claim for costs on an indemnity basis against Nationwide from 24 August 2006 is not resisted. The order being made in accordance with Part 42 of the UCPR, costs should be assessed on the ordinary basis up to and including 24 August 2006 and thereafter on an indemnity basis. Interest on judgment: Nationwide 7 The proposed orders stated that the judgment against Nationwide was to take effect from 12 May 2006, being the date of the trial judgment. Mr Naidu claims interest thereafter on the judgment amount referred to at [4] above less a deduction for workers compensation payments and a deduction for an amount paid by Nationwide to Mr Naidu as a condition of the stay of the judgment below. According to Mr Naidu's written submissions of 12 February 2008, the addition of interest, calculated as at 15 January 2008, provided a total judgment figure of $2,331,394.40. The calculation was based in part on interest running at the rate of $459.13 per day from 1 January 2007. Calculated on that daily rate, the total judgment as at 24 April 2008 would be $2,377,307.40. The proposed judgment against Nationwide should be for that amount. Restitution of interim payment: ISS 8 In accordance with UCPR r 51.54, ISS has sought restitution of a part payment made by it to Mr Naidu as a condition of the stay granted by the trial judge on 2 September 2005. The payment was made on 20 September 2005 and ISS claims interest on that amount at the rate prescribed under Schedule 5 of the UCPR. ISS noted that such a payment will not prejudice Mr Naidu, because he will be entitled to recover that amount with interest from Nationwide. 9 Mr Naidu has not resisted such an order in its terms, but seeks to avoid its immediate effect against the possibility that Nationwide may seek special leave to appeal and obtain a stay in respect of its liability to him pending determination of that application and any appeal proceedings resulting therefrom. If that happened, Mr Naidu has asserted hardship (or inability) in repaying ISS. 10 ISS is entitled to an order for restitution of the part payment of its former judgment debt (now set aside) together with interest: see Commonwealth v McCormack (1984) 155 CLR 273 at 276; Heydon v NRMA Ltd (No 2) [2001] NSWCA 445; 53 NSWLR 600 at [14] and other authorities referred to in Ambulance Service of NSW v Worley (No 2) [2006] NSWCA 236; 67 NSWLR 719 at [30]-[34]. Questions of hardship or enforceability do not affect the right to the order. Repayment of workers compensation: Nationwide 11 ISS also claimed an order that Nationwide pay to ISS's workers compensation insurer, Allianz Australia Workers Compensation (NSW) Ltd, an amount of $214,667.38. Authority for such an order is to be found in s 151Z(1)(d) of the Workers Compensation Act. That order has not been resisted and should also be made. 12 The amount sought to be recovered by Nationwide is not the same amount relied upon by Mr Naidu in calculating interest on the Nationwide judgment. No party referred to this discrepancy and it may be that nothing turns upon it. If anything does turn upon it, it will be a matter which must be sorted out between the parties. 13 Similarly, no party suggested that this payment would affect the amount of the judgment to be entered against Nationwide. Sanderson costs order 14 The final issue raised by the further submissions concerned an application by Mr Naidu for an order that Nationwide pay the costs of ISS, pursuant to Sanderson v Blyth Theatre Co [1903] 2 KB 533. Nationwide resists such an order. 15 As a result of its success on the appeal, ISS is entitled to receive its costs of the trial. The question is who should pay them. Pursuant to a Sanderson order, the unsuccessful defendant, namely Nationwide, may be ordered to pay the costs of the successful defendant, namely ISS. It is well-established that such an order may be made where two preconditions are satisfied, namely that it was reasonable for the plaintiff to proceed against the successful defendant and, secondly, that the conduct of the unsuccessful defendant made it fair to impose liability on it for the costs of the successful defendant: see Gould v Vaggelas (1985) 157 CLR 215 at 230 (Gibbs CJ). 16 Those preconditions operate where the costs are required to be paid directly by one defendant to the other (in the case of a Sanderson order) or indirectly, where the plaintiff is ordered to pay the costs of the successful defendant, but is entitled to recover his or her costs, including those paid to the successful defendant, from the unsuccessful defendant (a Bullock order). In the present case, Mr Naidu did not seek a Bullock order and Nationwide did not oppose the proposed costs order on the basis that there was any distinction in the preconditions to such an order. Nationwide did, however, contend that there was an additional precondition, namely that the claim against ISS should have been either inter-dependent with, or in a real sense alternative to, the claim against Nationwide. That was said to follow from a comment made in Norwest Refrigeration Services Pty Ltd v Bain Dawes (WA) Pty Ltd (1984) 157 CLR 149 at 163. 17 It is by no means clear that the joint judgment in Norwest Refrigeration intended to lay down such an additional requirement. If that had been intended, it is surprising that the decision was not referred to in Gould, a case involving three of the four authors of the joint judgment in Norwest Refrigeration including Gibbs CJ whose statement of principle in Gould is now treated as authoritative. Further, it is not entirely clear what their Honours meant by saying that the unsuccessful action by Norwest against its insurer on the insurance policy was not in any real sense alternative to the claim against the Co-operative, on which it succeeded. Norwest had taken out insurance in relation to a fishing vessel which was subsequently destroyed by fire. Under the insurance policy, the vessel was required to have a current certificate of survey, which it did not. The insurer was found not to be liable on that basis. The claim against the Co-operative was based upon its failure to take reasonable care to arrange insurance of the type requested or to warn Norwest of any exclusions or limitations in the policy. On its face, the claim against the Co-operative was in a real sense an alternative to the claim against the insurer: if the policy covered the claim, the insurer was liable and the Co-operative was not; the exclusion provided the basis for the insurer's success and the Co-operative's failure. 18 The joint judgment in Norwest Refrigeration was not seeking to settle some general principle, but was dealing with an appeal from a discretionary decision with respect to costs in the court below. Properly understood, the inter-dependence of claims against two defendants or the need to join both in circumstances where one only may be liable but the plaintiff is unable to determine which, are examples of circumstances which may demonstrate the reasonableness of the plaintiff in joining the successful defendant. These examples may be borne in mind, but the test should be understood as that set out by Gibbs CJ in Gould. (An example of inter-dependent and alternative claims is to be found in State of Victoria v Horvath (No 2) [2003] VSCA 24 at [9] where the plaintiffs had sued both police officers and the State in circumstances where the State would be liable, but not the police officers, if the officers were acting within the scope of their authority but the police officers alone would liable if they were not.) 19 It is difficult to deny that the first precondition in Gould was established in the present case. Both the trial judge and one member of this Court thought that the claim against ISS was not merely reasonable, but should succeed. Further, it will frequently be reasonable to join an employer, even if the clearer liability is that of a third party defendant, because of the requirement, in assessing damages, to take account of any entitlement of the plaintiff to recover from his or her employer as a joint tortfeasor or otherwise, pursuant to s 151Z(2)(c) of the Workers Compensation Act. Although the joinder of the employer is not necessary to allow the necessary calculation to take place, there are difficulties for a court determining the entitlement as against the employer in circumstances where the employer is not party to the proceedings and the plaintiff is seeking to deny any entitlement to recover from the employer. That is not to say that it will always be reasonable to join an employer in such circumstances; rather, in the present circumstances it was a reasonable step for the plaintiff to take. 20 The real question is whether there was anything in the conduct of Nationwide which would make it just to impose upon it liability for the plaintiff's costs as against the successful defendant. As explained by Gibbs CJ in Gould (at p 229): "Obviously a judge should make a Bullock order only if he considers it just that the costs of the successful defendant should be borne by the unsuccessful defendant, and, if nothing that the unsuccessful defendant has said or done has led the plaintiff to sue the other defendant, who ultimately was held not to be liable, it is difficult to see any reason why the unsuccessful defendant should be required to pay for the plaintiff's error or overcaution." 21 In some circumstances, one or other of two defendants may be liable, where the identity of the correct defendant depends on matters known to the defendants but not the plaintiff. Coombes v Roads and Traffic Authority (No. 2) [2007] NSWCA 70 provides an example. In that case an order was appropriate because the plaintiff had taken express steps to have the Council indicate which of it or the RTA was responsible for particular aspects of road construction works about which complaint was made and the unsuccessful Council failed to concede that it bore responsibility and not the RTA. 22 This case is, however, different. The potential liability of ISS did not depend, for example, upon the contractual relationship between Nationwide and ISS. Nationwide's defence was that its liability depended upon whether its senior officers knew or ought reasonably to have known of Mr Chaloner's treatment of Mr Naidu. That defence failed. Mr Naidu bore the burden of proof in respect of his claim against ISS. To a significant extent, his success depended upon acceptance of his own evidence as to matters of complaint to Mr Blinkworth or others in authority with ISS. His joinder of ISS involved an assessment of his prospects in establishing such knowledge, actual or constructive. In that he failed, but neither his decision to join ISS nor his failure to prove its liability resulted from any particular conduct of Nationwide. Indeed, the strongest submission made in that respect was that, had Nationwide admitted liability, as properly it should have, he would not have been forced to engage in lengthy litigation against either Nationwide or ISS. That, however, is not the test. Nationwide was entitled to defend itself even while not defending Mr Chaloner's conduct. Its defence did not in any relevant sense suggest that his conduct was the responsibility of ISS. Nationwide was ultimately unsuccessful and must bear the plaintiff's costs as a result. However, its conduct, whether by omission or commission, did not provide a basis upon which it could fairly be said that it should bear the costs of the plaintiff's action against ISS. Accordingly the appropriate order in relation to the costs of the trial, as between Mr Naidu and ISS, is that he should pay the trial costs incurred by ISS, assessed on the ordinary basis. 23 In relation to the costs of the appeal by ISS, the order proposed was that Nationwide and Mr Naidu pay ISS' costs of the appeal. Apart from the possible extension of Mr Naidu's application for a Sanderson order in relation to the costs of the trial, no party opposed this order. Accordingly, it should be made. Conclusions 24 There is no challenge to the order dismissing Nationwide's appeal or the orders allowing the ISS appeal and setting aside the orders of the trial judge against ISS, nor in relation to the dismissal of the cross-appeals and the grant of a Suitors' Fund certificate. However, the orders as proposed were incorrectly sub-numbered and it is convenient to restate the whole of the orders in relation to both appeals including the alternative orders resulting from the submissions and issues discussed above. 25 The orders are as follows:

NATIONWIDE NEWS PTY LTD v NAIDU; ISS SECURITY PTY LTD v NAIDU

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