Shoveller v Dak-Wal Constructions Pty Ltd

Possible Slip

1. Further, the parties have pointed out that, in their view, there has been a slip in the wording of the Order and the first defendant to the Statement of Claim is the first cross-defendant to the First Cross-Claim. The intention of the Court was clear.
2. The First Cross-Claim was brought by the Owners (the third to seventh defendants to the Statement of Claim) against the first and second defendants to the Statement of Claim, which are Dak-Wal and Akota respectively. The judgment is against Dak-Wal, the first defendant to the Statement of Claim.
3. JusticeLink, the Court's computer system, records the Amended First Cross-Claim as having been filed on 19 November 2019. A printout of the JusticeLink Cross-Claim records Dak-Wal as the first cross-defendant and Akota as the second cross-defendant. The print out accords with the body of the First Cross-Claim in the Court Book.
4. The Amended First Cross-Claim is contained in the Joint Court Book at Tab 6 on p 34. On the coversheet, filed by the cross-claimant at the time and enclosing the Cross-Claim itself, it has the computer generated Registry stamp certifying its filing on 19 November 2019.
5. The coversheet records Akota as the first cross-defendant and Dak-Wal as the second cross-defendant. Both documents, i.e. the coversheet and the body of the Cross-Claim, cannot be correct. I am of the view that the body of the Cross-Claim prevails, but it is not certain.
6. The Order may or may not be a "slip", but, if the coversheet to the Amended First Cross-Claim in the Joint Court Book at p 34 is incorrect, as it probably is, then the Orders do not manifest the intention of the Court and may be altered. [2]
7. The orders issued in the principal judgment refer to the record on the coversheet, in the Joint Court Book at p 34. As a matter of abundant caution, the Court will delete, from Order 3 of 8 April 2021, the words "first defendant/second cross-defendant" and insert "Dak-Wal Constructions Pty Ltd". It will also delete from Order 4 of 8 April 2021, the words "first cross-defendant" and insert "Akota Constructions Pty Ltd".
8. The foregoing assumes that the orders of 8 April 2021 have been entered. The orders are entered when the orders are recorded on the "court's computerised court record system". [3] The 8 April 2021 orders were entered on that system on 8 April 2021.
9. The application purportedly correcting a slip was made on 15 April 2021. Affidavits of 14 April 2021 were relied upon in the application. Even though the application was not by Motion on notice, it was filed in accordance with the leave granted and the terms specified in Order 9 of the principal judgment, which allowed a different process.
10. The effect of r 36.16(3A) of the Uniform Civil Procedure Rules 2005 (NSW) (hereinafter "UCPR") is, in my view, to undo the effect of entry, nunc pro tunc, and allow alteration, as if the orders had not been entered. Ultimately, it is unnecessary to determine the issue finally, as, whether or not the orders were entered, they can, on the authorities, be altered in the manner indicated.

COSTS: Facts

1. It is necessary to recite some facts that underpin the issue raised by the costs applications. Before doing so, it is appropriate to set out that which is the subject of application.
2. The plaintiff seeks indemnity costs from the first defendant (Dak-Wal) from 26 August 2020 and the third to seventh defendants (the Owners). The Owners seek indemnity costs from Dak-Wal from 10 March 2020 and the second defendant (Akota) seeks indemnity costs from Dak-Wal from 31 July 2020.
3. On 10 March 2020, the Owners sent a Calderbank letter to both Dak-Wal and Akota offering to contribute 10% towards any judgment in favour of the plaintiff and 10% towards the plaintiff's costs. They also served an Offer to Contribute, pursuant to UCPR r 20.32.
4. On 31 July 2020, all of the parties agreed that damages would be $3 million. Further, it was agreed that there was no issue of contributory negligence.
5. On 31 July 2020, Akota sent a Calderbank letter to Dak-Wal and the Owners offering to contribute 12.5% of the then agreed damages and the costs as agreed at that time. The letter also included an Offer to Contribute, pursuant to UCPR r 20.32, and gave notice of the reliance on UCPR r 42.18 in relation to costs.
6. On 25 August 2020, the plaintiff served a Calderbank letter on all of the defendants offering to settle the proceedings for $2,850,000 (i.e. $150,000 less than the already agreed damages) plus costs as agreed or assessed. There are a number of affidavits, or correspondence annexed to submissions, establishing the foregoing facts. They are uncontentious.
7. Dak-Wal opposes orders against it for indemnity costs. It does so on the basis that the offer from the plaintiff was not a genuine compromise; the level of its liability was not known until the evidence of Mr Squires on the first day of hearing; and, given that the plaintiff's offer was to all defendants, it was impossible for Dak-Wal to accept it, except by admitting liability for all damages.

COSTS: Consideration

1. At the time that the plaintiff offered to accept $2,850,000, each of the parties, including the plaintiff, had agreed that the damages were $3 million. Thus, the offer was less than the sum that had already been fixed by agreement. Such a circumstance puts the $150,000 in a different category than if it were to be compared with a sum that was in dispute and to be assessed later by the Court.
2. Moreover, all of the parties, including Dak-Wal, had agreed that there was no contributory negligence. As a consequence, leaving aside the almost impossible proposition that no defendant would be liable to an invitee to premises, who fell through an insecure railing, the plaintiff was to have received $3 million in damages. The only issue was from whom, or which defendant.
3. At the time that Dak-Wal received the offer from the plaintiff, it had received offers from the Owners to contribute 10% and from Akota to contribute 12.5% of the damages. As a consequence, Dak-Wal could have accepted the three offers and rendered itself liable for $2,208,705, a saving of $791,250 from the agreed damages and from the damages awarded against it.
4. Pursuant to the terms of UCPR r 42.18, the Court is required to take into account both the fact and the amount of any Offer to Contribute in the exercise of its discretion to award costs. Ordinarily, costs are awarded on a party/party basis. Whatever be the basis for the assessment of costs, all costs are compensatory; not punitive.
5. The awarding of costs is intended to compensate the successful party for the reasonable expenses associated with the enforcement of the party's rights or resisting an unsuccessful claim. Indemnity costs are awarded only in limited circumstances, one of which is where there has been an unreasonable rejection of an offer of settlement.
6. Further, ordinarily costs follow the event. No party, including Dak-Wal, submits that the costs of Akota or the Owners should be paid by any party other than Dak-Wal. Notwithstanding the agreement, the Court independently considers that a Bullock [4] Order is appropriate because, given the issues; the number and extent of the Cross-Claims; and the result, it is proper for Dak-Wal to pay the costs of the successful defendants.
7. The jurisdiction to order costs is, in this Court, inherent and is now governed by the provisions of s 98 of the Civil Procedure Act 2005 (NSW) and the UCPR. The Civil Procedure Act grants to the Court the discretion to determine by whom, to whom and to what extent costs are to be paid. [5] An order for indemnity costs does not require the payment of costs that have been unreasonably incurred.
8. Where, as here, indemnity costs are sought as a result of the rejection of an offer to compromise the proceedings, whether a formal offer under the UCPR or a Calderbank offer, the purpose of the exercise of discretion is to encourage the commercial compromise of proceedings.
9. As a consequence, of that purpose, the offer must involve a real compromise, which, in the case of an offer in a Calderbank letter, it was unreasonable to reject. In these proceedings, each of the offers forewarned of its use in the assessment of costs.
10. In dealing with the reasonableness of non-acceptance of the offers, it is necessary to consider Dak-Wal's submission as to the timing of when it was aware of its potential liability. As already stated, Dak-Wal submits that it was first aware of its liability on the first day of hearing, when Mr Squires was cross-examined.
11. There are some difficulties with this submission. First, Mr Squires was called by Dak-Wal. His knowledge, as a senior employee of Dak-Wal, should have been known to Dak-Wal. He, and Dak-Wal, visited the site when the railing was disconnected; took photos of the area; and stood adjacent to it.
12. The photograph used in the cross-examination of Mr Squires was an enlargement of a photograph taken by Mr Squires and produced in the proceedings by Dak-Wal. It is that photograph that caused the concession by Mr Squires. The foregoing was described in full in the principal judgment.
13. It seems on the foregoing facts that: the offer from the plaintiff was a real compromise; Dak-Wal was in possession of the information necessary to assess its liability fully and to estimate its relative exposure accurately; and it was unreasonable not to accept the plaintiff's offer at the same time as the offers from the Owners and from Akota.
14. For the foregoing reasons, the Court will order that costs be assessed, from the appropriate date, on an indemnity basis. The Court makes the following orders: 1. Vary Order 1, issued in these proceedings on 8 April 2021, by inserting after the words "seventh defendants", the phrase "in the sum of $3,000,000.00 (the 'judgment sum')". 2. Delete from Orders 3 and 4, issued in these proceedings on 8 April 2021, the words "first defendant/second cross-defendant" in Order 3 and "first cross-defendant" in Order 4 and insert "Dak-Wal Constructions Pty Ltd" and "Akota Construction Pty Ltd" respectively. 3. Insert a new Order in the Orders, issued in these proceedings on 8 April 2021, being Order (3A), in the following terms: "(3A) As a matter of abundant caution, a declaration that, as a result of the orders in these proceedings, the first defendant, Dak-Wal Constructions Pty Ltd, is liable for 100% of the judgment sum." 1. Vacate Orders 8 and 9, issued in these proceedings on 8 April 2021. 2. The first defendant and the third to seventh defendants are to pay the plaintiff's costs on an ordinary basis up to and including 26 August 2020 and thereafter on an indemnity basis. 3. The first defendant is to pay the second defendant's costs in relation to the proceedings between the plaintiff and the second defendant on an ordinary basis up to and including 31 July 2020 and thereafter on an indemnity basis. 4. The first defendant is to pay the second defendant's costs of all Cross-Claims on an ordinary basis up to and including 31 July 2020 and thereafter on an indemnity basis. 5. The first defendant is to indemnify the third to seventh defendants in relation to costs orders referred to in Order 5 above. 6. The first defendant is to pay the costs of the third to seventh defendants/cross-­claimants to the First Cross-Claim and the second, third, fourth, fifth and sixth cross-­defendants to the Second Cross-Claim on an ordinary basis up to and including 10 March 2020 and thereafter on an indemnity basis. 7. Otherwise, proceedings dismissed.

Endnotes

1. Shoveller v Dak-Wal Constructions Pty Ltd (No 3) [2021] NSWSC 352.
2. DJL v The Central Authority (2000) 201 CLR 226; [2000] HCA 17 at [34]; Commissioner for Fair Trading v Jonval Builders Pty Ltd (No 2) [2020] NSWSC 1308 at [16]-[21].
3. Uniform Civil Procedure Rules 2005 (NSW) r 36.11(2).
4. Bullock v London General Omnibus Co [1907] 1 KB 264.
5. Civil Procedure Act 2005 (NSW) s 98(1)(b).

Amendments 13 May 2021 - Typographical error. 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: 13 May 2021