Thornton v Wollondilly Mobile Engineering

Judgment 1On 7 June 2012 I handed down reasons for decision on the plaintiff's claim and the cross-claim (Thornton v Wollondilly Mobile Engineering [2012] NSWSC 621) and heard submissions on the appropriate costs orders. On that day I made the following orders as to costs: (1)Order the second defendant pay the plaintiff's costs of the proceedings. (2)In respect of the cross-claim relating to the plaintiff's claim, order the cross-defendant to pay the cross-claimant's costs on a party/ party basis up until 12 October 2011 and thereafter on an indemnity basis. (3)In respect of the balance of the cross-claim, order the cross-defendant to pay the cross-claimant's costs on a party/ party basis. 2I also asked the parties to calculate interest and superannuation and to bring in short minutes of order with an agreed judgment sum. 3The matter was re-listed before me today because of an omission in the consideration of costs which arose because the proportional liability that the second defendant (Penrose) and the cross-defendant (Wollondilly) bore in respect of the plaintiff's claim was not expressed to cover the plaintiff's costs. The reasons I gave could be read so as to include, or exclude, the plaintiff's costs from the 60% / 40% apportionment allocated to Wollondilly and Penrose respectively. 4Neither party submitted that the clarification fell outside the slip rule: Loose Fit Pty Limited v Marshbaum & Ors (No. 2) [2012] NSWCA 23 at [17]. Both Penrose and Wollondilly made submissions as to the appropriate costs order. 5Wollondilly submitted that the order should be that Penrose pay the plaintiff's costs of the proceedings and that there should be no provision for a proportion of the plaintiff's costs to be paid by Wollondilly. 6Penrose submitted that the following costs orders should be made: "1. Order that the Second Defendant pay the Plaintiff's costs of the proceedings; 2. In the First Cross Claim: (a) Order that the Cross Defendant pay 60% of the costs paid by the Cross Claimant to the Plaintiff pursuant to Order 1; (b) Order that the Cross Defendant pay the Cross Claimant's costs of that part of the Cross Claim that pleaded a cause of action under section 5 of the Law Reform (Miscellaneous Provisions) Act 1946 (NSW) with such costs to be assessed on an indemnity basis from 12 October 2011; and (c) Order that the Cross Defendant pay the Cross Claimant's costs of the remainder of the Cross Claim assessed on the ordinary basis." 7Penrose submitted that the right to contribution conferred by s 5 of the Law (Miscellaneous Provisions) Act 1946 extended to both damages and costs. It relied on James Hardie v Wyong Shire Council [2000] NSWCA 107; 48 NSWLR 679 (James Hardie v Wyong) at [23] per Handley JA and [31]-[36] per Giles JA, Heydon JA agreeing. It submitted that Wollondilly would be unjustly enriched if it were not required to contribute to the plaintiff's costs in the same proportion as it was required to contribute to the plaintiff's damages. 8Wollondilly did not dispute the Court's power to order that the costs be dealt with in the fashion for which Penrose contended. However, it submitted that there were several reasons why it would not be appropriate to adopt the orthodox practice in the instant case. 9First, Wollondilly submitted that James Hardie v Wyong applied only in circumstances where the cross-claim brought was exclusively founded on a s 5 claim for contribution. In the instant case there were two aspects to the cross-claim: the claim for contribution and the property damage claim. It argued that the plaintiff was required to be present for the duration of the property damage claim and that that the costs attributable to this aspect of the proceedings meant that the usual rule, that the proportion flow through to costs, ought be displaced. 10Secondly, Wollondilly submitted that Penrose ought to have admitted liability on the plaintiff's claim and that its failure to do so was unreasonable and necessarily elongated the proceedings. It relied on what was said in James Hardie v Wyong at [17], per Handley JA: "In Brazendale v Kenna ([1961] Tas SR 199) above at 212, the Full Court said that '... where a defendant's claim against a third party is founded on an indemnity arising ex contractu or ex lege there is a well established rule that the defendant may add to the damages for which he is entitled to be indemnified any costs reasonably incurred in resisting the plaintiff's claim'." [Emphasis added] 11It submitted that the costs incurred by Penrose in resisting the plaintiff's claim and unreasonably propounding defences that were not ultimately pressed were not "reasonably incurred". Wollondilly submitted that Penrose had pressed neither the contributory negligence of the plaintiff, nor the contributory negligence of the deceased (relevant because of the provisions of s 30(3) of the Civil Liability Act 2002). Further, Wollondilly submitted that Penrose did not make submissions to the effect that it was not liable to the plaintiff. 12Wollondilly submitted that counsel for Penrose had failed to put to the plaintiff that he had not told Mr Battersby that there was a fire in the shavings bin when he went to ask him to open the door to the shavings bin (a matter that was relevant both to breach and causation). Wollondilly also submitted that Mr Thornton's evidence that both Mr Blackburn and the deceased had told Mr Battersby what work was being done that day was not challenged. Wollondilly submitted that it flowed from these omissions that Penrose ought not to have resisted the Plaintiff's claim. 13In reply, Penrose relied on the following passage from Handley JA's reasons in James Hardie v Wyong, at [23]: "In my judgment the right to contribution conferred by s 5 extends, as a matter of right, to the costs payable to the plaintiff in addition to the damages. The third party's responsibility for the damage assessed under s 5(2) will determine his contribution to both damages and costs. This construction does not leave a third party at the mercy of a defendant's unreasonable conduct in defending the plaintiff's action. The defendant may well have no right to contribution in respect of the costs he incurs to his own solicitors, and the third party can protect himself by an offer to contribute under the rules of court which deal with offers of compromise, or by a Calderbank letter." 14It contended that its resistance to the plaintiff's claim was reasonable and further, that in any event, Wollondilly could have protected itself by Calderbank offer on the cross-claim, but failed to do so. 15In my view, the bringing of the property damage part of the cross-claim in the current proceedings was appropriate having regard to the principle that it is desirable that all matters in dispute between the parties be determined in the one proceedings. The issues as to contributory negligence by Penrose on the property damage claim overlapped with the issues arising from the plaintiff's claim and the claim for contribution. The quantum of the property damage claim did not take much time, the evidence being largely uncontested. Accordingly I do not consider that the adding the property damage claim onto the cross-claim for contribution displaces the general rule that costs and damages should be dealt with in the same proportions. 16I do not consider that the stance Penrose took in resisting the plaintiff's claim was unreasonable. Had I accepted that Mr Battersby had not been told of the work that Wollondilly was to do that day, and had I considered that it was reasonable of him to characterise the "smoke" as saw dust from the shavings bin and open the bin notwithstanding, Penrose could have succeeded in defeating the plaintiff's claim. 17I do not consider that the alleged failure of Penrose's counsel to put the matters alleged to the plaintiff alters the position. The issue whether the word fire was mentioned was decided in favour of Penrose: that is, I did not accept that the plaintiff told Mr Battersby that there was a fire in the shavings bin ([36]). As to what the deceased told Mr Battersby, that was determined on the basis of evidence as to usual practice. What Mr Blackburn told Mr Battersby was also dealt with in a general way. I do not consider that Penrose was precluded from making submissions as to liability by either of these two matters. 18I accept Penrose's submission that Wollondilly could have protected itself in any event, had it consider that Penrose's defence of the plaintiff's claim was unreasonable, by making a Calderbank offer. I assume that it did not do so since none has been tendered on the costs application. 19For the foregoing reasons, I make the following orders: (1)Judgment for the plaintiff against the second defendant in the sum of $136,363. (2)Judgment for the second defendant/ cross claimant against the cross defendant in the sum of $136,899. (3)Order that the second defendant pay the plaintiff's costs of the proceedings. (4)In the first cross-claim: (a)Order that the cross-defendant pay 60% of the costs paid by the cross-claimant to the plaintiff pursuant to order 3; (b)Order that the cross-defendant pay the cross-claimant's costs of that part of the cross-claim that pleaded a cause of action under s 5 of the Law Reform (Miscellaneous Provisions) Act 1946, with such costs to be assessed on an indemnity basis from 12 October 2011; and (c)Order that the cross-defendant pay the cross-claimant's costs of the remainder of the cross-claim assessed on the ordinary basis.