State of Victoria v Horvath

[2003] VSCA 24

Court of Appeal (Vic)|2003-04-04|Before: WINNEKE, P., CHERNOV AND VINCENT, JJ.A.

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Source facts

Court

Court of Appeal (Vic)

Decision date

2003-04-04

Before

WINNEKE, P., CHERNOV AND VINCENT, JJ.A.

Source

Original judgment source is linked above.

Judgment (70 paragraphs)

[1]

[ 2003] VSCA 24

[2]

Practice and procedure - Costs - Bullock Order - Sanderson Order - Form of costs order in court's discretion - Considerations relevant to exercise of discretion - Whether plaintiff's claims against successful defendant and unsuccessful defendant interdependent or alternative - Which form of costs order reasonable and just - Whether joinder of successful defendant reasonable - Conduct of unsuccessful defendant - Impecuniosity of unsuccessful defendant.

[3]

The Court had before it a number of appeals to which the reasons published on 7 November 2002 were relevant. There were four appeals by the State of Victoria (which had been the fifth defendant in the court of first instance) in which the four plaintiffs in the trial proceedings (namely Horvath, Love, Colleen Kniese and David Kniese) were respectively named as the first respondent, and in each of which the four police defendants at trial (Christensen, Davison, Jenkin and Saunders) were respectively the second, third, fourth and fifth respondents. These were the appeals numbered 5310, 5311, 5312 and 5313 of 2001. In one of these appeals, namely 5312 of 2001, there was a cross appeal by Christensen. Then there were four appeals in which Davison and Jenkin were appellants to which each of the plaintiffs at trial were respectively the first respondent and the State of Victoria was the second respondent. Those appeals were numbered respectively 5316 of 2001, 5317 of 2001, 5318 of 2001 and 5319 of 2001. In respect of only one of these appeals (namely 5317 of 2001) was there a substantial live issue raised; namely Davison's liability to Love for malicious prosecution. The other appeals raised, for relevant purposes, non-contentious issues about the form of orders made by the trial judge.

[9]

(a) When the plaintiffs filed their respective proceedings[3] the State was not named as a defendant; the only defendants were the police defendants.

(b) On 8 July 1997 (in the case of Horvath and Love) and on 3 September 1997 (in the two Kniese cases) the police defendants joined the State as a third party to the proceedings, claiming that it was liable to indemnify them in respect of any liability they may be found to have to the plaintiffs. In its defences to the claims in the third party notices, filed on 17 September 1998, the State denied any liability and claimed that the alleged wrongful acts of the police defendants, if committed, were not within the scope of their employment with the State.

(c) On 11 October 1999 the plaintiffs filed, pursuant to leave, an amended writ and pleadings in which they joined the State as a defendant and effectively reproduced against the State the allegations of the police defendants as they were pleaded in their Third Party Notices to which reference has just been made**,** and sought declarations that the State was liable to indemnify the police defendants in respect of any liability they may be found to have to the plaintiffs. Perhaps it is of interest to note that, at or about this time, the Parliament was debating the introduction of s.123 of the Police Regulation Act 1958 ("the Act").

(d) On 2 April 2000 the newly worded s.123 of the Act came into effect.

(e) On 6 October 2000 the police defendants again amended their pleadings alleging that, in raiding the Horvath premises, they acted in the course of their duty and in good faith and, therefore, were entitled to immunity from suit pursuant to s.123 of the Act (and that the State was liable for any damage caused by their impugned conduct).

(f) On 23 October 2000[4], the plaintiffs alleged, specifically, for the first time, in their Reply to the Amended Defence of the State, that the impugned conduct of the police defendants fell within s.123 of the Act and that, as a consequence, the State was liable therefor.

(g) After a trial lasting some forty days and after taking time to consider his decision, the learned trial judge gave written reasons for judgment on 23 February 2001 concluding, inter alia, that the State was not vicariously liable to the plaintiffs, but was liable to them on the basis of "transferred liability" pursuant to s.123 of the Act.

(h) On 29 March 2001 his Honour made the following relevant costs orders:

(i) In proceeding No.5310 of 2001 (the Horvath proceeding) Jenkin and the State were ordered to pay the plaintiffs' costs of the proceeding on a solicitor and client basis on scale D.

(ii) In proceeding No.5311 of 2001 (the Love proceeding) Davison and the State were ordered to pay the plaintiffs' costs of the proceeding on a party and party basis on scale D.

(iii) In proceeding No.5313 of 2001 (the David Kniese proceeding) all of the defendants were ordered to pay jointly and severally the costs of the plaintiffs on a solicitor and client basis on scale D.

(iv) In proceeding No.5312 of 2001 (the Colleen Kniese proceeding) all the defendants were ordered to pay jointly and severally the plaintiffs' costs of the proceeding on a solicitor and client basis on scale C.

(i) On 9 April 2001 the State filed its appeal in each of the four proceedings and on 23 April the learned trial judge granted a stay of the operation of the order for damages (and costs) until the hearing and determination of the appeals.

(j) On 26 February 2002, on the application of the plaintiffs, his Honour lifted the stay on his costs order so that it no longer applied to the costs orders made against the State, and also ordered that interest be paid on such costs at 11.2% per annum from 12 March 2001 to 12 March 2002 and that these costs and interest be paid by the State within fourteen days upon the plaintiffs' solicitor giving a written undertaking to the Court that he would repay such costs in the event that the State's appeals were successful.

(k) Such undertaking was provided and, on 22 March 2002, the State paid to the plaintiffs' solicitor almost $300,000 being the costs of the plaintiffs' trial counsel and interest. Between 1 and 20 July 2002 the State paid to the plaintiffs' solicitor a further $100,000 on account of his costs in respect of the proceedings. After the determination of the appeals, on 11 November 2002, the State sought repayment of those costs, but to date, this has not occurred**.**

[17]

"It is sometimes said that the court may make an order of that kind - a Bullock order - where it was reasonable in all the circumstances for the plaintiff to bring the action against two or more defendants: see The Supreme Court Practice (U.K.) 1982, par. 62/2/39 and _Halsbury's Laws of England,_4th ed., vol. 37, par.219. There are some statements in the authorities which appear to support that view, including the judgment of Latham C.J. in Johnsons Tyne Foundry Pty. Ltd. v. Maffra Corporation. In my respectful opinion, however, the mere fact that the joinder of two defendants was reasonable does not mean that the unsuccessful defendant should be ordered to pay, directly or indirectly, the costs of the successful defendant. 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. The ground on which a Bullock order may be made is, in my opinion, more accurately stated in a passage in Sanderson v. Blyth Theatre Co which was cited with approval in Bullock v London General Omnibus Co. and Hong v. A. & R. Brown, viz., that the costs which the plaintiff has been ordered to pay to the defendant who succeeded, and which the plaintiff recovers from the defendant who has failed `are ordered to be paid by the unsuccessful defendant, on the ground that ... those costs have been reasonably and properly incurred by the plaintiff as between him and the [unsuccessful] defendant'. In Johnsons Tyne Foundry Pty. Ltd. v. Maffra Corporation, Williams J. stated the principle in a similar way and Starke and Dixon JJ., in giving their reasons for making a Bullock order, both relied on the circumstance that the attitude adopted by the successful[22] defendant had induced the plaintiff to join the other defendant. In my respectful opinion the true position was clearly stated by Blackburn C.J. in Steppke v. National Capital Development Commission, when he said that `there is a condition for the making of a Bullock order, in addition to the question whether the suing of the successful defendant was reasonable, namely that the conduct of the unsuccessful defendant has been such as to make it fair to impose some liability on it for the costs of the successful defendant.'" (Footnotes omitted)

[21]

In our view, however, given the circumstances of the case, it was reasonable for the plaintiffs to have joined the State as defendant. As Mr. Dreyfus for the plaintiffs submitted, it was not only reasonable, but necessary, for this to have occurred given that the police defendants had first joined the State as a Third Party and levelled against it the claims referred to above. In particular, the plaintiffs pointed to the fact that it was the police defendants who first pleaded s.123 of the Act as against the State. Once that occurred, said the plaintiffs, they virtually were bound to join the State as a defendant because, had the claim of the police defendants in that regard been successful, the plaintiffs could not have obtained judgment against any of the then existing defendants notwithstanding that they might have made out their case. Such is the nature of s.123 which grants immunity to police officers and transfers their liability to the State. Thus, it was the police defendants who first raised the issue whether the State was bound to indemnify them because it was vicariously liable for their conduct or by virtue of the operation of s.123 of the Act. The plaintiffs essentially came in on their "coat tails" to join the State as defendant and to press those matters at trial. Even if one assumes that the claims against the State that were based on vicarious liability were hopeless, they were effectively overtaken very shortly after they were first raised by those based on s.123 of the Act. As we have already noted, the latter claim was first raised by the police defendants and it became a substantial issue at the trial (and later, on appeal). As things transpired, such claims were not upheld on appeal, but they did find favour with the experienced trial judge. Thus, in the circumstances, it could not be said that, viewed at the time of the relevant amendments, the plaintiffs' act of relevantly aligning themselves with the police defendants and alleging that their impugned conduct fell within s.123 of the Act was so unreasonable as to make it unfair to require the police defendants to pay the State's costs. On the contrary, this was the first time upon which the width of the immunity from liability of police officers provided by s.123 of the Act had fallen to be considered by a court. It was an issue which was not only of vital significance to the police defendants in this case, but to police officers generally; and it was an issue of equal importance to the State.

[28]

Similarly, in Vucadinovic, although the impecuniosity of the losing defendant was taken into consideration on the question what form of costs order should be made, it was but one of the matters to which Pape, J. had regard in resolving this issue. The plaintiff's conduct in prosecuting her claim in the prevailing circumstances seems to have assumed the greater significance. In that case the plaintiff suffered minor physical injuries as the result of a collision between a taxi in which she was a passenger and which was driven by the first defendant and a motor truck which was driven by the second defendant. The jury returned a verdict against the first defendant only and assessed the plaintiff's damages at $7,500. His Honour accepted that the plaintiff acted reasonably in joining the successful defendant in the proceeding and recognised[38] the unfairness that would flow to her if she were required to pay the successful defendant's costs and only have a right to recover them from the seemingly impecunious losing defendant by way of a Bullock order. On the other hand, said his Honour, the plaintiff knew or ought to have known, at least from the time when the trial commenced that, save for limited insurance proceeds, the unsuccessful first defendant had no assets to speak of and that there was a risk of her failing against the second defendant and of being ordered to pay his costs without a real prospect of being able to recover them from the first defendant. Notwithstanding those circumstances, the judge pointed out, the plaintiff effectively elected to proceed with the action which occupied four sitting days. His Honour said[39] that, in all of the circumstances, he could not see why unfairness should be imposed on the successful defendant (by ordering the unsuccessful defendant to pay his costs) in order to be fair to the plaintiff. The learned judge considered that the "ordinary rule" that costs should "follow the event" ought to apply, which required the unsuccessful plaintiff to pay the successful defendant's costs. He ordered accordingly and made a Bullock order in the plaintiff's favour as against the impecunious losing defendant.[40]

[29]

In Bankamerica, on the other hand, the House of Lords resolved the issue of what form the costs order should take essentially by reference to the extent of the hardship that would flow to the competing parties (the plaintiff and the successful defendant) from a Bullock or a Sanderson order. The question whether the plaintiff's behaviour was inappropriate did not arise for consideration. In that case the plaintiff finance company won against the defendant dealer which was, by the time of the trial, insolvent. It failed, however, against the defendant hirer who succeeded in his counterclaim against the plaintiff and who sought a Bullock order whereby the plaintiff would pay its costs. The trial judge refused to make such a costs order and instead made a costs order in the Sanderson form which required the losing (insolvent) defendant dealer to pay the hirer's costs. This decision was upheld by the House of Lords. Lord Brandon of Oakbrook, who made the leading speech, rejected the hirer's contention that since he succeeded at the trial costs should have followed the event and that his costs should have been paid by the plaintiff. Applying Mayer v. Harte, their Lordships held that, where the judge has the power to make a Bullock or a Sanderson order, the choice between them was a matter for his discretion although it was accepted that the insolvency of the unsuccessful defendant dealer was a factor that was relevant to the exercise of that discretion. Like the trial judge, their Lordships balanced the extent of the hardship that would flow to the plaintiff if it were made to pay the successful defendant's costs (with a right to recover them from the losing defendant pursuant to a Bullock order) with that which would be experienced by the successful defendant if a Sanderson order were made requiring the unsuccessful, but insolvent, defendant to pay its costs. They concluded that, in relative terms, less hardship or injustice would result from a Sanderson order than from a Bullock order. Consequently, their Lordships came to the view that it could not be said that, in the exercise of his discretion, the trial judge could not have made a Sanderson order but was bound to have made a Bullock order.