Allman v Daly (No 2) [1959] VicRp 81; [1959] VR 614, considered.

Burke and Another v Gillett and Another [1966] VicRp 26; [1966] 1 VR 196; Johnson v Ribbins and Others [1977] 1 WLR 1458, followed.

Tortfeasors and Contributory Negligence Act 1954, s3(1)(c).

HOBART, 10 September 1997 (hearing), 14 October 1997 (decision)

1 That there be judgment for the third party against the defendant.

2 That the defendant pay the third party's costs of and incidental to the third party proceedings, such costs to be taxed.

3 That the defendant be entitled to indemnification as against the plaintiff with respect to costs payable by it to the third party with respect to those third party proceedings.

Judgment was entered for the defendant in an action grounded in tort and contract brought by the plaintiff and arising out of his employment with the third party at premises operated by the defendant. The circumstances of the action and the reasons for judgment are set out in 70/1997. No appeal has been made against that judgment. Given that no findings of negligence or breach of contractual or statutory duty were made against the defendant, it was not necessary to determine the consequential issues as between the defendant and the third party. The third party now seeks orders that the proceedings against it be dismissed and that it recover costs against the defendant. The defendant opposes the making of any costs order against it. It should be observed that the court had previously accepted the defendant's submission that it was not necessary to proceed to determine the issue between the defendant and the third party unless there was first a finding adverse to the defendant. Whilst the proceedings are separate, on 18 October 1996, the third party sought and obtained an order that the proceedings be heard together and that it be permitted to participate fully in the trial. That was a reasonable and prudent course.

Whilst Rules of the Supreme Court O18, r65, affords a wide discretion, any order as to costs is subject to the proper exercise of the judicial discretion. Prima facie, a successful party is entitled to an order for costs. In this case, however, the issue between the parties was not determined on the merits of their respective cases, but rather by the failure of the plaintiff's case. The status of the defendant differed from that of the third party, but the consequence of differing duties which might have been owed to the plaintiff required consideration. The plaintiff elected not to sue his employer, although, at the time of the claimed injury, he was working at the direction of, and subject to the control of the third party. The Tortfeasors and Contributory Negligence Act 1954, s3(1)(c) states:

"... a tortfeasor who is liable in respect of that damage may recover contribution from any other tortfeasor who is, or would, if sued by the person by whom the damage was suffered at the time when the cause of action arose, have been, liable in respect of the same damage (whether as a joint tortfeasor or otherwise) but so that no person is entitled to recover contribution under this section from a person who is entitled to be indemnified by him in respect of the liability in respect of which the contribution is payable;".

In this case, no liability has attached to the claimed tortfeasor.

In Allman v Daly (No 2) [1959] VicRp 81; [1959] VR 614, Pape J, in dealing with the complexities of two actions with a multiplicity of issues, declined to enter judgment for third parties against a successful defendant, stating at 624:

"... because, as I have already shown, these proceedings are contingent on the defendant's liability being established. Since it has not been established, the third party proceedings were never litigated, and were I to enter judgment for the third parties, and were the defendant Daly to appeal from this judgment, it would be necessary for the Country Roads Board to appeal also against the judgment for the third parties in order to preserve its rights should the appeal be successful."

However, his Honour's reasoning may have reflected the particular manner in which the parties had conducted the litigation in two different actions with varying questions and decisions taken as a result of mistaken belief concerning legal procedures. As his Honour said at 621:

"In these circumstances I cannot see any justice in ordering a party who is brought into the action solely by way of proceedings to decide his liability to contribute 'in a contingent event', ie in the event of the defendant being held liable, to pay the costs of the defendant who succeeds in preventing the contingency from becoming a reality."

"It seems to me ... that in this case it was not a reasonable and proper method of conducting the litigation in the first action that the second action should be commenced and carried through. As I have already said, the second action was commenced, not because there was ever any doubt as to whether Monson was liable for the wrong done to the plaintiff, but solely because it was thought that the defendant Monson, who was primarily responsible, was unable to satisfy any judgment which might be entered against him."

His Honour relied on the decision of In re Salmon; Priest v Uppleby [1889] 42 Ch D 351, and the comments of Kekewich J at 359 when he said:

"They do not trust him, but would rather be present and watch. From a prudent point of view no doubt they are right. They do come, and then the Defendant succeeds, and the third parties then say: 'But you have brought us here, and though you have succeeded and therefore there is no indemnity, you must pay our costs.' I do not think that is the meaning of the rule. I do not think the intention of the rule is that third parties should be brought in as defendants against whom a claim is made in any event, but as defendants against whom a claim is made in a contingent event which the party giving the notice of course knows, as also they know, may not occur. I do not think that I can make either the Plaintiff or the Defendant pay these costs. The result is that the third parties will have no costs."

Given that the subsequent appeal, [1889] 42 Ch D 359, determined that the third parties had a right to be served with the notices and take part in the hearing of that appeal, and further, at 362, that Kekewich J may:

"... have made use of some expressions which might be construed to mean that he must try the whole case over again between the third parties and the Defendant. That would defeat the intention of the third party rules. The third parties had liberty to appear at the trial, and, in my opinion, if they wished to cross-examine the Plaintiff's witnesses on the question whether the Defendant was liable to the Plaintiff, they were entitled to do so, and Mr Justice Kekewich would have been wrong in refusing to allow them to do so. I do not think the learned Judge intended to do that.",

it could be said that the judgment is less than highly persuasive. The approach taken by Pape J in Allman was followed by Kaye J in Devon Downs Administrators Pty Ltd v Theoporopoulos, Victorian Supreme Court, unreported 7 April 1992, where he took the view that since he had found for the defendants and had not determined the third party proceedings, no substantive order or judgment upon the third party proceedings ought to be pronounced. That case was distinguished by the Full Court of the Victorian Supreme Court in Burke and Another v Gillett and Another [1996] VicRp 11; [1996] 1 VR 196, which, although dealing with a successful appeal by a third party against whom partial liability had been determined, was nevertheless dealing with a party against whom, because of the success of the appeal, no liability had attached. A costs order was made. In his reasons for judgment, Tadgell J, with whom Orminston and Smith JJ concurred, preferred the reasoning of an English decision stating at 200 - 201:

"In my opinion, costs of the third party proceedings and of the third party's appeal should follow the event, as it was indicated in Johnson v Ribbins [1977] 1 WLR 1458, at 1464, should ordinarily be the case. Counsel for the defendants, by way of reply this morning, submitted that that decision of the Court of Appeal was given at a time when the English Rules of Court provided that prima facie costs should follow the event. I am not at all sure that the rules did so baldly provide. True it is the court has a large discretion as to costs. For the reasons I have given, however, it seems to me that this is a case in which, so far as the third party proceedings and the third party's appeal are concerned, costs ought properly in justice to follow the event."

In the English case, the Court of Appeal had considered an appeal by a third party unsuccessful in a costs application following the entry of judgment for a defendant. In the view of that court, there ought to exist special facts before a court departs from the ordinary principle that costs follow the event. Johnson v Ribbins (supra) was applied by the Full Court of the Federal Court of Australia in Gladstone Park Shopping Centre Pty Ltd and Another v Wills and Others (1984 - [1984] FCA 166; 1985) 59 ALR 109, and the Queensland Supreme Court in Swisstex Finance Pty Ltd v Lamb [1993] 2 Qd R 463.

In this case, no liability has attached to the claimed tortfeasor. Accordingly, there can be no further proceedings taken against the third party and it is entitled to have those proceedings dismissed. Thus, whilst the action by the defendant might have been reasonable, the third party stands in a strong position in relation to its claim for costs. It did not seek to become a party to the action and its conduct during the trial did not unnecessarily lengthen its duration or cause unwarranted cost. Little prejudice attaches to the defendant by reason of the third party's conduct of its case. Whatever approach might be taken in relation to the entry of judgment in favour of the third party, there is no doubt that neither Pape J in Allman v Daly (No 2) (supra), or the Court of Appeal In r_e Salmon_ (supra), doubted the existence of power to award costs. This was not a case where it could be said that the competing obligations of the defendant and the third party were so disparate that distinct issues were involved (cf Gold Coast Bakeries (Qld) Pty Ltd v Heat & Control Pty Ltd [1992] 1 Qd R 162). In the circumstances of this case, the Court could have proceeded to determine a hypothetical question dependent upon the assumption that the plaintiff would have succeeded, by means of the third party proceedings, in establishing that a different standard of care and breach thereof was owed by the third party. But the plaintiff had chosen to sue only the defendant. Given the success of the "differing standards of care" argument advanced by the defendant, no indemnity could have been required of the third party. In the event that the plaintiff was successful, then the finding would have amounted to a conclusion that the defendant had failed in its duty. A complex and substantial question involving causation and differing standards would have required resolution. But that issue was not of the making of the third party. The proceedings have been finalised and the third party is entitled to the entry of judgment and an order for costs.

The defendant seeks an order that the plaintiff pay to the defendant the costs payable to the third party, an order commonly referred to as a "Bullock" order (Bullock v The London General Omnibus Company and Others [1907] 1 KB 264). Whilst counsel for the plaintiff made no submissions in opposition to the application, it is necessary for the Court to consider, in the exercise of discretion, factors relevant to the making of such an order. It is appropriate for an order to be made (Burke v Gillett (supra); Gould and Another v Vaggelas and Another [1984] HCA 68; (1984) 58 ALJR 560; Gladstone Park Shopping Centre v Wills (supra)). Factors relevant to that exercise of discretion are:

- the causes of action between the three parties were substantially connected and it was reasonable for the defendant to join the third party;

- the plaintiff elected not to sue his employer or to claim against joint defendants, although he could argue that a different duty was owed by the third party;

- if liability attached to the defendant it was likely, subject to the issue of causation, that some contribution by way of indemnity would have been ordered against the third party;

- it is unreasonable to determine that the defendant ought to have awaited verdict before bringing the third party to trial. The plaintiff's writ was served on 9 December 1994 and the Tortfeasors Contributory Negligence Act, s3(5), afforded the defendant twelve months to seek joinder. The action was heard in February 1997. The third party sought an order that the proceedings be heard together and the plaintiff, not unreasonably, agreed. Modern practice is designed to avoid multiplicity of trials. This was a case which warranted all issues being determined in the same trial. The plaintiff, rather than the defendant, ought to bear the costs of the failure of the action.

1 That there be judgment for the third party against the defendant.

2 That the defendant pay the third party's costs of and incidental to the third party proceedings, such costs to be taxed.

3 That the defendant be entitled to indemnification as against the plaintiff with respect to costs payable by it to the third party with respect to those third party proceedings.