Steven George Villanti v Coles Group Supply Chain Pty Limited; Steven George Villanti v All Staff Australia NSW Pty Ltd t/as Allstaff Australia

Supreme Court of NSW|2018-03-07|Before: Ronald J

2015/39590 R Sheldon with E Welsh (Plaintiff) P Perry (Defendant)

Solicitors: No 2012/104536 Brydens Compensation Lawyers (Plaintiff) McCulloch and Buggy (Defendant)

2015/39590 Brydens Compensation Lawyers (Plaintiff) Sparke Helmore Lawyers (Defendant) File Number(s): 2012/104536, 2015/39590 Publication restriction: Nil

Judgment

HER HONOUR: This is a judgment on costs.
On 29 September 2017, I delivered judgment in Villanti v Coles Group Supply Chain Pty Limited; Villanti v All Staff Australia NSW Pty Ltd t/as Allstaff Australia [2017] NSWSC 1231 ("Villanti [2017]"). Costs were reserved. Both the plaintiff and Allstaff furnished written submissions. Coles does not rely on submissions.
The plaintiff succeeded in his claim against Allstaff but failed in his claim against Coles. Allstaff agrees it should pay the plaintiff's costs in the proceedings against it, as well as Coles' costs in relation to the cross claims. The plaintiff seeks an order that Allstaff pay Coles' costs including any costs it is held the plaintiff is liable to pay Coles. Allstaff submitted that the plaintiff should pay Coles' costs in accordance with UCPR 42.1 as he was the unsuccessful party.

History of the proceedings

There were two proceedings before the Court.
In proceedings 2012/104536 Villanti v Coles, Mr Villanti sought damages for a crushing injury to his lower right leg sustained when a pallet mover collided with him in a warehouse owned by the Coles Group Supply Chain Pty Limited ("Coles") on 24 April 2009.
In proceedings 2015/39590 Allstaff Australia NSW Pty Ltd t/as Allstaff Australia ("Allstaff"), Mr Villanti commenced the Allstaff proceedings. The amended statement of claim filed 2 April 2015 alleged at [4] and [10] that Mr Douglas, the driver of the pallet mover, was Allstaff's employee and that Allstaff was vicariously liable for his conduct.
In other words, the plaintiff sought damages for the same injury sustained on the same date from Allstaff. The plaintiff and Mark Douglas were both employed by Allstaff. Allstaff was responsible for the training and instruction of their employees placed at the Coles warehouse in the safe operation of pallet mover machines. The plaintiff and Mark Douglas were placed by Allstaff at the warehouse pursuant to a labour hire contract or agreement for service. Coles was the owner of the pallet mover.
On 8 April 2015, the plaintiff filed a further amended statement of claim (FASC) in the Coles proceedings. The FASC conceded that Mr Douglas was an Allstaff employee (at [6]), but alleged that Coles was liable for failing to ensure a safe system of work, and also maintained that Coles was vicariously "liable for the actions of Mark Douglas as the driver of the said forklift." (FASC [14], [16]). The FASC in the Coles proceedings was filed before Allstaff had filed a defence in the Allstaff proceedings.
On 30 April 2015, Allstaff filed a defence in the Allstaff proceedings. Allstaff admitted that Mr Douglas was its employee and that it was vicariously liable for his actions. ([4], [9]). It denied Mr Douglas was negligent in driving the pallet mover. ([11]). Thus, Allstaff says that the only contest on liability was whether Mr Douglas was negligent.
On 10 September 2015, Coles filed a defence to the further amended statement of claim. Coles admitted that it was the occupier of the warehouse and was responsible for implementing and maintaining a safe system of work. ([2]-[3]). It denied that it owed a duty of care commensurate with that of an employer, that it was aware of the risk of injury to workers as a result of forklifts, that it did not have any system of monitoring the activities of forklifts, and that it was liable for the actions of Mr Douglas. ([2]).
On 19 May 2017, an order was made that the proceedings be heard together.
The hearing commenced on 20 June 2017 before me. It "proceeded on the basis that Mr Douglas is a person for whose acts Allstaff is vicariously liable": Villanti [2017] at [121]. That is, Allstaff's vicarious liability was not in issue. It was the negligence of Mr Douglas and Coles that was in issue. Mr Villanti and Allstaff alleged Coles was also vicariously liable for Mr Douglas' conduct even though Allstaff had already admitted vicarious liability some two years prior (FASC [16]; plaintiff's written submissions at trial [36]: "Coles is liable as owner [of the pallet mover] in that Douglas was it[s] statutory agent pursuant to s 112 of [the Motor Accidents Compensation Act 1999]"). However, Allstaff raised a legal argument with which the plaintiff agreed that by virtue of the interaction between the Motor Accidents Compensation Act 1999 (NSW) and the Workers Compensation Act 1987 (NSW) Coles is liable for the negligence of Mr Douglas. In Villanti [2017] at [99] to [150], I dealt with this issue and concluded that Coles was not a presumed agent of Allstaff.
On 22 June 2017, the third day of the hearing as foreshadowed by them, Coles and Allstaff filed cross claims against each other: Villanti [2017] at [2]. Each of the cross-claims repeated (for the purposes of the cross claim) the plaintiff's allegations, and sought contribution or indemnity from the other defendant pursuant to s 5 of the Law Reform (Miscellaneous Provisions) Act 1946 (NSW). Allstaff also sought indemnity from Coles under s 151Z(1)(d) of the Workers Compensation Act for benefits Allstaff had paid to the plaintiff.
In prosecuting its cross claim, Allstaff relied on one additional allegation not raised by the plaintiff: that Coles was negligent (had an unsafe system of work) by having a pallet encroaching into the aisle where the accident occurred: Villanti [2017] at [41]. The plaintiff in turn adopted that allegation in his primary claim against Coles: see [26]-[27] of the plaintiff's written submissions at trial.

Should the plaintiff have a Sanderson/Bullock order?

The law on this topic is not in dispute.
It is not necessary to show that a party encouraged or induced a plaintiff to join a defendant to justify a Sanderson or Bullock order: see Johnsons Tyre Foundry v President, Ratepayers and Councillors of the Shire of Maffra (1948) 77 CLR 544 at 572 cited with approval at [229]; and Zhang v ROC Services (NSW) Pty Ltd; National Transport Insurance by its manager NTI Ltd v Zhang [2016] NSWCA 370 ("Zhang").
Gould v Vaggelas (1985) 157 CLR 215 at 230, 247 and 260 (Gibbs CJ), applied in Council of the City of Liverpool v Turano (No 2) [2009] NSWCA 176 at [15] and referred to by Leeming JA in Zhang, requires the Court to consider two matters: 1. that it was reasonable for the plaintiff to have brought proceedings against Coles, and 2. that there must have been some conduct on the part of the unsuccessful defendant which would make it fair to impose liability on it for the costs of the successful defendant.
Allstaff agrees that these are the two preconditions for a Sanderson or Bullock order.
The plaintiff submitted that if one of these two preconditions are not met, this Court in the exercise of its discretion, should balance two considerations of policy that are set out in Stevedoring Industry Finance Committee v Ronald J Gibson & 4 Ors [2000] NSWCA 179 at [128], where the Court of Appeal per Mason P (with Stein JA and Heydon JA agreeing) cited Lackersteen v Jones (No 2) (1988) 93 FLR 442 in which Asche CJ stated at 449: "4… in the exercise of its discretion balance overall two considerations of policy the first, that an unnecessary multiplicity of actions should not be forced on litigants, so that a plaintiff who acts reasonably in joining two or more defendants should not be penalised or lose the fruits of his victory in costs on the basis that he should have either elected or taken separate actions, secondly, that an unsuccessful defendant should not have to pay more than one set of costs merely because he is unsuccessful."
The plaintiff submitted that Allstaff should pay Coles' costs as it prosecuted a cross claim against Coles and was unsuccessful. Allstaff submitted that the plaintiff should pay Coles' costs as it was the unsuccessful party in those proceedings.

The plaintiff's submissions

The plaintiff says that although the formal cross claim was filed late in the proceedings, it is clear from all that occurred before and after the taking of that formal step that the controversy in respect of liability was a dispute as to whether it was Coles or Allstaff who was liable to the plaintiff for the negligence of Mr Douglas who was an employee of Allstaff driving a pallet mover which was owned by Coles on Coles' premises.
As I have previously stated, Allstaff's case against Coles included reliance upon an additional act of negligence on the part of Coles in having a pallet partly encroaching on the trafficable aisle in which the subject collision occurred: Villanti [2017] at [41]. Mr Douglas' evidence as to the role this played in the accident was rejected: Villanti [2017] at [42].
Allstaff ran a "freestanding" case against Coles the intended effect of which was to make Coles liable on a basis other than as a party responsible for Mr Douglas' negligence.
Allstaff's submissions relating to Coles' liability are dealt with in Villanti [2017] from [118]. Those paragraphs make clear the extent to which it was a more than active prosecutor of a case implicating Coles on a basis which did not depend on vicarious liability for the acts or omissions of Mr Douglas. Allstaff maintained an immutable position that it was not liable to the plaintiff and Coles was.
The plaintiff says that this mistaken view held by Allstaff of the case caused both the matter to run to a judgment and prevented the plaintiff from obtaining full satisfaction against Allstaff by any means other than a contested hearing.
It was in no sense unreasonable, faced with Allstaff's intransigence, for the plaintiff to maintain his case against Allstaff. One of the defendants had to be liable to the plaintiff for the negligence of the driver in driving a vehicle owned by Coles, on its premises, under its system of work while employed by Allstaff. Neither defendant conceded the negligence of Mr Douglas and the plaintiff could not reasonably have been expected to sue the other after in fresh proceedings after one of them had been exonerated. It was not only reasonable but in the interests of the administration of justice that there should be one hearing in which all controversies were decided.
Allstaff is not liable for the costs merely because it was unsuccessful, rather it is liable because it actively pursued the case against Coles which effectively required the plaintiff to either bring sequential actions or alternatively sue only one of the defendants at a time if he was to avoid this controversy concerning costs.
The Court found that "Allstaff owed the plaintiff a non delegable duty of care as his employer and is vicariously liable for the actions of Mark Douglas". Mr Douglas, it was further found, was negligent and caused the accident. Thus, "Allstaff breached its duty of care to the plaintiff and is negligent". Further, there was no evidence of any unsafe system of work: "the accident occurred because of Mr Douglas' causal act of negligence and not because of any systemic failure by Coles". In particular the accident was not caused by a protruding pallet. "Hence, Coles is not liable": Villanti [2017] at [53], [54], [91] and [93].

Allstaff's submissions

As to the first precondition, the plaintiff's position is, at best, mixed. In April 2012, due to his lawyers' oversight, Mr Villanti unreasonably sued Coles based on an incorrect assumption that Mr Douglas was Coles' employee. It was not until three years later, in April 2015, that he amended his claim to include a reasonable allegation that Coles had an unsafe system of work. On the other hand, the second limb of the amended claim was a contention advanced solely by the plaintiff that Coles was vicariously liable for the acts and/or omissions of Mr Douglas by operation of s 112 of the Motor Accidents Compensation Act 1999 (NSW). This submission is incorrect. Allstaff ran this argument and the plaintiff supported Allstaff's position.
As to the second precondition, a mere denial of liability up to and including the hearing does not justify a Sanderson or Bullock order: Dominello v Dominello (No 2) [2009] NSWCA 257 at [16] and [19] per Handley AJA; (with Beazley and Macfarlan JJA agreeing). Denying liability and bringing a cross claim against the other defendant is also insufficient to justify a Sanderson or Bullock order: Bostik Australia Pty Ltd v Liddiard (No 2) [2009] NSWCA 304 at [6], [17], [29]-[30]. According to Allstaff, this is significant because its conduct rises no higher than this, as the procedural history set out earlier demonstrates.
Nothing in Allstaff's conduct makes it fair for Allstaff to bear Coles' costs. The plaintiff does not suggest Allstaff encouraged him to sue Coles, or that Allstaff created uncertainty as to the correct defendant. Nor are such findings open. The plaintiff knew from the outset who the potential defendants were: PS [3].
Further, Allstaff's defence filed 30 April 2015 in the Allstaff proceedings maintained a mere denial of liability with no positive assertion of liability against Coles. Allstaff's cross claim, filed on the third day of hearing, played no part on the plaintiff's decision to sue Coles, and did not suggest the plaintiff could succeed against only one of the defendants. It was always possible that both defendants would be found liable.
The plaintiff points to three factors in support of a Sanderson or Bullock order. Counsel for Allstaff submitted that none of them should be accepted.
First, the plaintiff says Allstaff "maintained an immutable position that it was not liable to the plaintiff and Coles was" in consequence of which the matter went to hearing. This, however, is simply to say that Allstaff (and Coles) denied liability and overlooks, in any event, the admissions made by Allstaff as to vicarious liability. Again, a mere denial of liability with or without a cross claim does not support a Sanderson or Bullock order: see Roads and Traffic Authority of New South Wales, Council of the Shire of Evans & Pioneer Road Services Pty Ltd v Palmer (No 2) [2005] NSWCA 140, where Giles JA (with Spigelman CJ and Handley JA agreeing) stated at [35]: "…not obliged to concede liability or make admissions in order to remove the [successful defendant, Coles] from contention, there being a respectable argument that the [successful defendant, Coles] was liable, and there is no reason to think that short of effective capitulation by the [unsuccessful defendant, Allstaff] the plaintiff would not have maintained [his] claim against the [successful defendant, Coles]":
Second, the plaintiff asserted that, as Coles and Allstaff both denied liability, "the plaintiff could not reasonably have been expected to sue the other...in fresh proceedings after one of them had been exonerated". That may suggest it was reasonable to sue both at once rather than each sequentially; but it does not point to any conduct of Allstaff justifying an order that it pay Coles' costs of the Coles proceedings. Further, the submission overstates the objective reality of the case. As matter of law, if Mr Douglas was negligent, then only Allstaff could be, and would be, vicariously liable. If he was not negligent, it simply was not open, as the plaintiff suggests, to sue Coles on the basis that Coles was vicariously liable for Mr Douglas.
Third, the plaintiff asserts that Allstaff "actively pursued the case against Coles which effectively required the plaintiff to bring sequential actions or sue only one of the defendants at a time if he was to avoid this controversy concerning costs". To the extent this does not simply repeat the previous point, it puts things backwards. It was the plaintiff who actively pursued the case against Coles. The plaintiff brought that case and pressed it to hearing, including a novel claim of dual vicarious liability. It was only on the third day of hearing that Allstaff adopted the plaintiff's case for the purposes of a cross claim against Coles, and added a single additional allegation (as to the protruding pallet) which the plaintiff then also adopted. The claim against Coles was always, fundamentally, the plaintiff's claim. In no sense did Allstaff induce the plaintiff to commence or continue that claim.
It follows that there is no basis for a Sanderson or Bullock order.
There is also a further principle to be applied as set out by the Court of Appeal in the decision of Council of the City of Liverpool v Turano [No 2] [2009] NSWCA 176 at [48] (Beazley JA, Hodgson and McColl JJA). "[W]here there is no basis for suggesting that [the unsuccessful defendant, Allstaff] caused the [successful defendant, Coles] to incur costs other than those it would have incurred in the course of defending the issues which arose on the Statement of Claim, there is no basis upon which it would be fair to order [the unsuccessful defendant, Allstaff] to pay part of the [successful defendant, Coles'] costs."
This principle applies here. Allstaff's cross claim against Coles in the Allstaff proceedings simply repeated the plaintiff's allegations in the amended statement of claim. There is no evidence (nor any suggestion) that the additional allegation about the protruding pallet added significantly, or at all, to Coles' costs. Therefore, a Sanderson or Bullock order is inappropriate.
Allstaff agrees with the plaintiff that even if the preconditions for a Sanderson or Bullock order are met, it would be necessary to balance discretionary factors. A Sanderson or Bullock order for the costs of the entire Coles proceedings would be a disproportionate response to a cross claim filed only on the third day of hearing where there is no evidence that any party either significantly changed its position or changed it at all, or incurred any significant additional costs, by reason of the cross claim. In the absence of such evidence, there is no proper factual basis for a Sanderson or Bullock order.
A Sanderson or Bullock order for the costs of the entire Coles proceedings would also ignore the fact that Coles has several interlocutory costs orders against the plaintiff in the Coles proceedings (including, at least, orders on 7 August 2015, 9 September 2015, 15 October 2015 and 9 February 2016). Allstaff should not be liable for those orders.

The plaintiff's submissions in reply

As the submissions made by Coles in the substantive hearing amply demonstrate, Coles recognised another alternative basis to its liability, namely, that the forklift driver was its true agent in accordance with Soblusky v Egan (1960) 103 CLR 215.
Contrary to Allstaff's submissions on costs, Allstaff's conduct relevantly created significant doubt as it was pursuing a claim that absolved the forklift driver from liability, or reduced the degree of his culpability, by reference to the fact of a pallet protruding into the aisle in which the collision occurred. This presented for determination a system case. Coles' system of placing pallets in the racking was contended by Allstaff to be deficient either because those who placed the pallets did not take care to see that they did not compromise the trafficable width of the aisle, or because Coles did not conduct sufficiently regular inspections to detect the fact that the pallet was protruding into the aisle.
Nor could it be argued that the denial that Mr Douglas was negligent was a mere denial because it was to be seen in the light of what Mr Douglas said was the cause, namely the pallet protruding into the aisle. That cause directed attention to Coles' and contended for, at least, a finding of breach of duty of care by Coles.
Allstaff's position was "our driver was not negligent because the pallet protruding into the aisle gave him insufficient room to pass". This made the plaintiff's case against Mr Douglas contingent on the finding as to whether the pallet had caused or contributed to the accident. If it protruded and was relevantly found to be a cause of the accident, the possibility existed that Mr Douglas would be exonerated. This was certainly the outcome for which Allstaff contended in their protruding pallet argument.
Allstaff's additional allegation concerning the protruding pallet contributed to the interconnection between the two cases. It follows that Allstaff set up a case which implicated Coles and exonerated it. If the factual underpinning of that case turned out to be correct, the plaintiff could have failed against Allstaff. Accordingly, Allstaff's approach made Coles a necessary party and joining Coles and maintaining a case against it was entirely reasonable.

Conclusion

While Allstaff admitted that it was vicariously liable for the actions of its employee, Mr Douglas, it ran a case that Mr Douglas was not negligent because a pallet protruding into the aisle did not give him enough room to pass. If that argument had been accepted, Coles would have been liable on the basis that it had an unsafe system of work.
Allstaff also actively ran a case that raised a legal argument (with which the plaintiff agreed) that, by virtue of the interaction between the Motor Accidents Compensation Act and the Workers Compensation Act, Coles as a statutory agent is liable for the negligence of Mr Douglas. My conclusion in Villanti [2017] at [150] was that the failure to satisfy s 3B of the Motor Accidents Compensation Act necessarily meant that s 112 of the Motor Accidents Act did not operate to impose a relationship of statutory agency between the plaintiff and Coles. I also stated that even if I am wrong, s 112 cannot be read so as to remove the longstanding principle in Australia against dual vicarious liability as set out in Laugher v Pointer (1826) 5 B & C 547 at 558; 108 ER 204 at 208, and adopted in Day v The Ocean Beach Hotel Shellharbour Pty Ltd [2013] NSWCA 250. It followed that Mr Douglas was a servant of one or the other, but not the servant of one and the other. The law does not recognise a several liability in two principals who are unconnected. Hence, Coles is not a presumed agent of Allstaff.
In my view, it was reasonable for the plaintiff to have brought the separate proceedings against Coles. The conduct of Allstaff makes it fair to impose liability on it for costs of the successful defendant, Coles. Thus, the two preconditions to make a Sanderson or Bullock order have been met. In the exercise of my discretion, it is my view that Allstaff should pay Coles' costs. As Allstaff is not insolvent, I prefer to make a Sanderson order. Allstaff is to pay Coles' costs in proceedings 2012/104536 Villanti v Coles except where the plaintiff was ordered to pay the costs of 7 August 2015, 9 September 2015 and 9 February 2016. However, this order does not include the interlocutory costs orders made against the plaintiff in the Coles proceedings which include the costs of 7 August 2015, 9 September 2015 and 9 February 2016. Allstaff played no part in causing the plaintiff to be responsible for those costs. The plaintiff is to pay to Coles those interlocutory costs.
So far as these submissions relate to costs, the plaintiff has been successful. Applying the general rule in UCPR 42.1, Allstaff is to pay the plaintiff's costs in relation to the costs submissions.

The Court orders that: (1) In proceedings 2015/39590 Villanti v Allstaff Australia NSW Pty Ltd t/as Allstaff Australia Allstaff is to pay the plaintiff's costs on an ordinary basis. (2) Allstaff is to pay Coles' costs in relation to both cross claims. (3) In proceedings 2012/104536 Villanti v Coles, Allstaff is to pay Coles' costs on an ordinary basis except where the plaintiff was ordered to pay costs of 7 August 2015, 9 September 2015 and 9 February 2016, the plaintiff is to pay those costs. (4) Allstaff is to pay the plaintiff's costs in relation to the written submissions.

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: 07 March 2018

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