GEORGITSIS vy LEND LEASE INTERIORS LTD SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL KIRBY P, CLARKE and MEAGHER JJA 7 February 1994, 31 March 1994 [1994] NSWCA 106 INDUSTRIAL ACCIDENT — CONTRACTOR — SUBCONTRACTOR — MULTIPLE PLAINTIFFS — SEPARATE SET OF COSTS PER PLAINTIFF — FAILURE TO TAKE INTO ACCOUNT RELEVANT CONSIDERATIONS An industrial accident occurred on premises where building work was being carried out and as a result the ten appellants who worked for the sub-contractor, DeMartin & Gasparini Pty Ltd, were injured. There are ten appeals against an order that each appellant receive only one-tenth of his costs. The trial judge found that the relevant interests of all ten plaintiffs in the hearing were identical and thus that justice would be done if LLI were ordered to pay one full set of costs in relation to the representation of all ten of the plaintiffs as between them on the one hand and LLI on the other. It was held that the trial judge had failed, in considering whether it was just to the appellants to make the order which he did, to have regard both to the right of, and the need for, each appellant to be represented at the hearing of the crossclaim and, secondly, had taken no account of the importance of representation at the hearing for each appellant in order that that appellant's interests might be protected. The appeal was thus allowed. Clarke JA These are ten appeals, pursuant to leave granted on 19 October 1993, against an order that each appellant receive only one-tenth of his costs, which order was made by Sully J on 10 September 1993. The substantive argument on the appeal was propounded by senior counsel for two of the appellants, Vittorio Dimanno and Tome Conevski, (he having appeared only for Conevski at the trial) and, although I was informed subsequent to writing this judgment that Conevski's appeal had been settled I will specifically mention Conevski from time to time to reflect the submissions put to the Court. I say this for two reasons. First, the only arguments advanced to the Court focussed on Conevski's case and counsel for the other appellants, for reasons which will become apparent, simply relied on those arguments. Secondly, his Honour made, in substance, one costs order in respect of all ten appellants and if there was an error in the reasoning process leading to that order it infected not only that order but the consequent awards in favour of each appellant. The facts out of which the trial arose, and the appeal arises, are relatively complex and should be summarised. On 14 November 1987 an industrial accident occurred on premises on which building work was being carried out. The head contractor on the site was Lend Lease Interiors Pty Ltd, the respondent. As a result of the accident Conevski and the nine other appellants were injured. Each of them had been employed by DeMartin & Gasparini Pty Ltd (DMG) which had been engaged by the respondent to pour concrete on the site. On the day of the accident they were engaged in pouring concrete on level 7 of the building when the structures which were supporting the formwork collapsed and, as a consequence, the appellants received injuries. Eight of them sued the respondent in the Supreme Court and two commenced actions in the District Court. These latter actions were in turn transferred to the Supreme Court. In each 2 UNREPORTED JUDGMENTS action the respondent cross-claimed against DMG. There were a number of cross-claims and at least one other party was involved but it is unnecessary for present purposes to say more than that the appellants sued the respondent which cross-claimed against the appellants' employer, DMG. In June 1992 each of the proceedings was called up from the general Common Law list with a view to its inclusion in the Special Sittings which was to commence on 20 July 1992. The ten actions were placed under the management of Badgery-Parker J. On 2 June 1992, upon Conevski's motion (in which, ultimately, each of the other appellants joined), Badgery-Parker J entered summary judgment against the respondent. His Honour also entered summary judgment against the respondent in the other nine actions. Orders that the respondent pay the costs of each appellant relating to the liability issue were also made by Badgery-Parker J. His Honour concluded that, in the light of the complicated issues, the actions were not suitable for hearing in the Special Sittings and directed the separate trial of the issues arising upon the respondent's cross-claim against DMG. An application by each of the appellants, who had joined DMG as an additional defendant after the respondent cross-claimed against it, that judgment be entered in favour of DMG against him was refused by his Honour broadly on the ground that it was arguable that such a judgment may prejudice the respondent's cross-claim against DMG. It is pertinent at this stage to mention that the respondent had sought relief on tortious and contractual grounds in its cross-claim. It sought contribution and/or indemnity against DMG as a tortfeasor who would, if it had been sued by the appellants have been liable in negligence to them and, in addition, it sought contractual indemnity. The existence of the tortious cross-claim was a complicating factor in the litigation of the proceedings between the appellants and the respondent. Each of the appellants wished to have their damages assessed and they were prima facie entitled, once they had secured judgment against the respondent, to have those damages assessed in accordance with well-established common law principles. However, if it was found at the end of the hearing of the cross-claims that DMG was obliged to provide contribution to the respondent as a joint tortfeasor who would, if sued, have been liable to the appellants then, arguably at least, the damages to which appellants were entitled would be lower than those to which they were entitled at Common Law. That prospect arose as a consequence of s151Z of the Workers' Compensation Act 1987 and was discussed both by Badgery-Parker J and Sully J. Accordingly, the Court was unable to assess the damages to which each appellant was entitled until after the cross-claim had been determined. The existence, and possible impact, of s151Z also led to the consequence that each of the appellants had a vital interest in the cross-claim. If it failed then each of them was entitled to damages assessed upon common-law principles. If it succeeded then, arguably at least, their damages were much less. Thus it was that they were represented at the hearing of the cross-claims which commenced before Sully J on 1 February 1993. Like the previous hearing before Badgery-Parker J the hearing in February involved all ten of the cross-claims although the actions had not been consolidated. At this hearing Conevski was represented by Mr Nagle and Mr Whitelaw of counsel instructed by A Malouf & Co. Dimanno was represented by Mr Bartley of counsel instructed by T D Kelly & Co. Georgitsis was also represented by Mr URJ GEORGITSIS v LEND LEASE INTERIORS LTD (Clarke JA) 3 Bartley this time instructed by Steve Masselos & Co and the remaining appellants were represented by Mr Wheelahan QC and Mr Bartley instructed by Taylor & Scott. On the first day of the hearing each of the appellants discontinued his action against DMG and the hearing proceeded to the determination of the cross-claims. This occurred on 19 March 1993 when Sully J handed down a reserved judgment. His Honour found in favour of DMG and stood over all questions of costs for hearing at a later time. This hearing occurred on 10 September 1993 and in the event his Honour awarded each of the appellants one-tenth of his costs of appearing at the hearing of the cross-claims to the intent that the respondent should be liable for only one full set of costs. His Honour's reasons for that conclusion are concise and can conveniently be reproduced in full. His Honour said: "T do not see why it is reasonable to saddle LLI with a full separate set of costs for each of the ten plaintiffs. The relevant interests of all ten plaintiffs in the hearing before me were identical. I think that justice would be done if LLI were ordered to pay one full set of costs in relation to the representation of all ten of the plaintiffs as between them on the one hand and LLI on the other. I think that the fairest practical way of achieving that result is to order formally that LLI pay one-tenth of the costs of each of the ten plaintiffs incurred after 2 June 1992." Each of the appellants assert that his Honour was in error in making this order and Conevski points to the fact that he was separately represented and that he is considerably out of pocket in his efforts to ensure that his damages were not be reduced by the success of the cross-claims. It will be seen that his Honour reached his conclusion for two reasons. First, the interests of all the appellants were identical and, secondly, that it would be unfair to saddle the respondent with the responsibility for ten sets of costs. His Honour does not seem to have had regard to the question whether it was unfair to one or all of the appellants to make such an order except insofar as it is implicit that he thought that, as their interests were identical, the order he proposed would not be unfair to any of them. In particular he does not appear to have considered that Conevski's separate representation was a relevant consideration. The order made by his Honour was a discretionary one and accordingly this Court may interfere with that order only in limited circumstances. The principles are familiar and are to be found in House v The King (1936) 55 CLR 499, at 505, and, to the extent that the question of costs is a matter of practice and procedure (see Wentworth v Rogers (No 3) [1986] 6 NSWLR 642, at 651) the court should adopt restraints which are somewhat greater than those which are applied in dealing with an exercise of discretion which determines substantive rights (Re the Will of FB Gilbert (Deceased) (1946) 46 SR 318 at 323). In broad principle the court would interfere in the present appeal only if the trial judge had acted upon a wrong principle, if he had allowed extraneous or irrelevant matters to guide or effect him, if he had mistaken the facts or if he had not taken into account some material consideration. Obviously the court would not interfere solely because it would itself have reached a different conclusion. The governing rule which applied to the application for costs was SCR Pt52 rl which reads: "Tf the Court makes any order as to costs, the Court shall, subject to this part, order that the costs follow the event, except where it appears to the Court that some other order should be made as to the whole or any part of the costs." 4 UNREPORTED JUDGMENTS Clearly his Honour thought another order should be made and the reasons upon which he based his discretion to make the order have already been referred to. In my opinion those reasons are deficient in two substantive respects which are, to a degree, interconnected. First, his Honour failed, in considering whether it was just to the appellants to make the order which he did, to have regard both to the right of, and the need for, each appellant to be represented at the hearing of the cross-claim and, secondly, his Honour took no account of the importance of representation at the hearing for each appellant in order that that appellant's interests might be protected. At an earlier point in his judgment his Honour was called upon to consider whether the appellants were entitled to an order for costs at all. That required a determination whether the appellants had an interest in the proceedings. Clearly they did because the result could have impacted significantly upon the damages to which they were entitled. In addition they were parties to the proceedings against whom the respondent, if it had been successful in its cross-claims, would have asserted an estoppel which would, arguably, have led to an assessment of damages modified by the operation of sI51Z. In reaching his conclusion that "each plaintiff had a continuing and significant interest to do whatever it could properly do in aid of defeating LLI's claim against DMG" his Honour pointed out that the resolution of some of the issues with which he was confronted required findings on strongly disputed questions of fact and credit. In those circumstances his Honour was "unable to see why there was anything unreasonable about the desire of the plaintiffs to watch out for their own interests in that regard rather than to risk some conflict developing between their interests in particular and the interests in particular of DMG itself, their employer. " Although it was correct to say that in substance the interests of each of the appellants were identical, that is, to defeat the cross-claim, it by no means followed that each of the ten appellants could safely sit back and rely upon the legal representative of another appellant to protect his interests. For instance, evidence may have been given during the hearing, by another appellant or some other person which, if unanswered, may have given weight to the cross-claim and which Conevski, for instance, could have refuted either in cross-examination or evidence in chief Obviously the appellant could only effectively refute that evidence if present and represented. His Honour, as it seems to me, took a broader view and took no account of the interests of an individual appellant to be present and represented in order to ensure that his particular claim was not prejudiced by anything that happened at the hearing or, at least, to answer any evidence which was given that might be considered prejudicial to his interests. Accordingly, while I agree with his Honour's observation that it was in the interests of the appellants to be present at the hearing, I think it was a mistake not to conclude that it was in the real interests of, at least, Conevski, who was represented by a separate solicitor and counsel, to be present to protect his interests. That was particularly so because the respondent had at no stage served upon the appellants the evidence upon which it intended to rely in its cross-claim. Each must have known that one or other, or all of them, might be called to give evidence for on 13 January the respondent's had written to the appellants' solicitors in the following terms: "We assume that your client's interests in our client's s151Z defence will ensure your client's representation at the liability issues hearing in the Supreme Court of New South Wales commencing on 1| February 1993. URJ GEORGITSIS v LEND LEASE INTERIORS LTD (Clarke JA) 5 Please confirm that you will ensure your client's attendance at this hearing so that we may cross-examine him pursuant to the order Mr Justice Badgery-Parker made on 26 June 1992. If you do not have such confirmation by 18 January 1993 we will subpoena your client and will seek an order that the unnecessary costs of same be met by your client." Clearly the respondent was demanding the presence of each appellant at the hearing and, in the light of the first paragraph, in company with his legal representative. The order to which the letter makes reference was an order made by Badgery-Parker J that the respondent and/or DMG be at liberty to call and/or cross-examine each or any of the plaintiffs on the separate questions raised during the hearing of the cross-claim. This letter was a material consideration and, as it seems to me, his Honour overlooked it. Not only did each appellant have a very real interest in the cross-claims but each had been summoned, as it were, by the respondent to attend at the hearing in circumstances where the respondent could hardly have expected the appellant to attend without legal representation. Indeed the letter demonstrates that the respondent both expected and invited that representation. In determining what fairness dictated in the making of a costs order his Honour was bound to take into account the interests of the respondent and each of the appellants. His Honour was, for instance, concerned that it may be unfair to award separate sets of costs for each of the ten appellants. That was certainly a relevant consideration. But against that had to be balanced the fact that each of the appellants had an interest in the proceedings, each was a plaintiff in a separate action and was at risk of being prejudiced by the determination of the cross-claims, each had been summoned to attend and the summons in each case had made plain the respondent's expectation that the relevant appellant would be represented at the hearing. These factors had to be considered. Another matter which it was necessary for his Honour to take into consideration was that, in the circumstances that the letter to which I have referred had been written, if the respondent had intended to object to a series of costs order it ought to have put the appellants on notice that if they were separately represented it would take such a course. Its action, however, in writing the letter and in not at any stage seeking to object to the separate representation of the various parties militate, in my opinion, very heavily against its later stand when it sought the order ultimately made by his Honour. I am driven to the conclusion by the terms of the judgment and the considerations to which I have already referred that his Honour failed to take into account the terms of the letters of 13 January 1993 and the injustice to each of the appellants, and Conevski in particular, in awarding that appellant one-tenth of the costs which he had expended in successfully defending his position on damages. In those circumstances, his Honour failed, in my opinion, to carry out the appropriate balancing exercise in order to determine what was appropriate in the interests of justice and his order cannot be sustained. Although the circumstances involving the other appellants were slightly different, insofar as they were represented by different counsel and in some instances by common counsel, there is no reason, in my view, why the error which pervades the decision involving Conevski should not be considered as applying also in respect of the other appellants. 6 UNREPORTED JUDGMENTS Accordingly, I am of opinion that the appeals of all appellants except Conevski should be upheld and that the order of Sully J made on 10 September 1993 that the respondent pay each of the appellants one-tenth of the costs of the hearing on the cross-claims be set aside and in lieu thereof I would order that the respondent pay each of the appellants, other than Conevski, his costs of the hearing. I should add that this does not mean that the respondent will obliged to pay nine separate sets of counsel fees and ten separate sets of solicitor's costs for attending on the days of the hearing. Although the amount of the costs payable pursuant to these orders is a matter for the taxing authority it is, I think, relatively clear that, as the appellants Correia, Guerra, Melfi, DaSilva and Toneguzzo were jointly represented by Mr Wheelahan QC and Mr Bartley, who were instructed by Taylor & Scott, the respondent would be liable for only one set of counsel's fees and the costs of only one set of solicitors appearing during the trial on behalf of those appellants. The positions of Dimanno and Georgitsis, who were represented by Mr Bartley instructed by different solicitors, were slightly different but it is difficult to see that any additional counsel's fees would be involved. I mention these matters, which are strictly irrelevant to the present question and relate only to the taxation of the costs, solely to point out that the result of making what I regard as the proper orders in this case would not be that the respondent is obliged to pay ten sets of senior and junior counsel fees and ten sets of solicitor's costs for the appearances before his Honour. Insofar as the costs of the appeal are concerned the position is complicated by the compromise between Conevski and the respondent. At the hearing of the leave application Mr Rofe gave notice that he would object to the awarding of more than one set of costs upon the hearing of the appeal upon the grounds that the interests of each appellant were identical, there were no prospects of conflicting evidence and it would be unfair to make an order for more than one set of costs. I do not understand the appellants to have contended to the contrary and, because of Mr Rofe's statement, Mr Wheelahan appeared briefly before the court to indicate that he was withdrawing. In the result there should be no order as to costs of the appeals. Cross-appeal Sully J also made an order that the respondent pay the costs which each of the appellants would be ordered to pay on a party and party basis to DMG up to the point of discontinuance. The respondent has submitted that his Honour erred in the exercise of his discretion in making that order at all or, alternatively, at least in respect of any such costs after 2 June 1992 which was the date upon which summary judgment was entered against the respondent. Leaving aside the inclusion within of the costs order of the period after 2 June 1992 I do not think it can be said that it can be said his Honour erred in making the order. The appellants each initially sued the respondent. It, for its part, joined DMG asserting, in substance, that that party was the negligent one. The appellants, as a matter of normal prudence, then joined DMG and maintained the action against both defendants. In these circumstances I would agree with his Honour that it was reasonable as between both parties to make the order which he did make. Slightly different considerations apply in respect of the period after 2 June 1992 for by then the appellants had summary judgment against the respondent. However, in the circumstances where Badgery-Parker J had declined to enter URJ GEORGITSIS v LEND LEASE INTERIORS LTD (Kirby P) 7 judgment in DMG's favour on 2 June and the later hearing was related essentially to the cross-claims I would not conclude that his Honour erred in failing to separate the two periods. Accordingly, the cross-appeal should, in my opinion, be dismissed with costs. Meagher JA I agree with Clarke JA. Kirby P I agree with Clarke JA. (1) The appeals of all appellants, except Conevski, are upheld and the order of Sully J made on 10 September 1993 that the respondent pay each of the appellants one-tenth of the costs of the hearing on the cross-claims be set aside and in lieu thereof order that the respondent pay each of the appellants, other than Conevski, his costs of the hearing; (2) No order as to costs of the appeals; (3) The cross-appeal is dismissed with costs. Counsel for the Appellants (Georgitsis, Correia, Da Silva, Libera, Toneguzzo, Melfi, Guerra, Ferras): D Wheelahan QC & P R Nagle Counsel for the Appellant Conevski: G B Hall QC & P R Nagle Counsel for the Appellant Dimanno: G B Hall QC & M Bridger Counsel for the Respondent: D F Rofe QC & B C Lynch Solicitors for the Appellants (Georgitsis, Correia, Da Silva, Libera, Toneguzzo, Melfi, Guerra, Ferras): Taylor & Scott Solicitors for the Appellant Conevski: Malouf Solicitors Solicitors for the Appellant Dimanno: T D Kelly & Co Solicitors for the Respondent: Malcolm Johns & Co