New South Wales Court of Appeal CITATION : (1) Roads and Traffic Authority v Ryan & 2 Ors (2) Blue Mountains City Council v Ryan & 2 Ors (No 2) [2002] NSWCA 128 FILE NUMBER(S) : CA (1) 40334/01; (2) 40335/01 HEARING DATE(S) : 27/03/02, 28/03/02 JUDGMENT DATE : 16 May 2002 PARTIES : Roads & Traffic Authority (Appellant) v Nadia Catherine Ryan by her Tutor Heather Ryan (1st Respondent), Jack Pledge (2nd Respondent), Blue Mountains City Council (3rd Respondent) Blue Mountains City Council (Appellant) v Nadia Catherine Ryan by her Tutor Heather Ryan (1st Respondent), Jack Pledge (2nd Respondent), Roads and Traffic Authority (3rd Respondent) JUDGMENT OF : Meagher JA at 1; Giles JA at 2; Ipp AJA at 10 LOWER COURT JURISDICTION : Supreme Court - Common Law Division LOWER COURT SC 20099/95 FILE NUMBER(S) : LOWER COURT Dunford J JUDICIAL OFFICER : C T Barry QC/S A Woods (Roads and Traffic Authority) COUNSEL : J D Hislop QC/G J Gemmell (Blue Mountains City Council) A S Morrison SC (Nadia Catherine Ryan by her Tutor Heather Ryan) P R Garling SC/J M Morris (Jack Pledge) I V Knight, Crown Solicitor (Roads and Traffic Authority) SOLICITORS : Phillips Fox (Blue Mountains City Council) Stacks (Nadia Catherine Ryan by her Tutor Heather Ryan) Abbott Tout (Jack Pledge) CATCHWORDS : ORDERS ON COSTS - restitution of money paid under judgment - unjust enrichment - rate of interest - applicability of Schedule J rates. ND LEGISLATION CITED : Motor Accidents Act 1988 CASES CITED: Heydon v NRMA & Ors (No 2) NSWCA 445 DECISION : See para 27. IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40334/01 CA 40335/01 SC 20099/95 MEAGHER JA GILES JA IPP AJA Thursday 16 May 2002 ROADS AND TRAFFIC AUTHORITY v NADIA CATHERINE RYAN BY HER TUTOR HEATHER RYAN & 2 ORS BLUE MOUNTAINS CITY COUNCIL v NADIA CATHERINE RYAN BY HER TUTOR HEATHER RYAN & 2 ORS Judgment (No 2) 1 MEAGHER JA: I agree with Ipp AJA. 2 GILES JA: Ipp AJA has explained the questions arising after delivery of judgment on 10 April 2002. 3 I can see no reason why Nadia should have a Bullock order or a Sanderson order (it was not entirely clear which was asked for) against Mr Pledge for the costs of the RTA and the Council. For the reasons which follow, the "on the face of it" reaction of Mr Morrison SC during argument in the appeal was in my opinion correct. 4 For a Bullock order or a Sanderson order it is not enough that it was reasonable for Nadia to have sued the RTA and the Council as well as Mr Pledge. There must have been some conduct by Mr Pledge making it fair to impose on him liability for the costs of the RTA and the Council. In other cases such conduct has been found in the unsuccessful defendant indicating to the plaintiff in some way that it should look to the successful defendant for its remedy, see for example Altamura v Victorian Railway Commissioners (1974) VR 33; Gould v Vaggellas (1984) 157 CLR 215; Fennell v Supervision & Engineering Services Holdings Pty Ltd (1988) 47 SASR 6. 5 Nadia's argument was, in essence, that there had been conduct of this kind by Mr Pledge. Mr Pledge cross-claimed against the RTA and the Council, and it may be said that he thereby indicated to Nadia that she could look to them for a remedy. But on the facts it was all but impossible for Mr Pledge to escape liability to Nadia, and realistically by his cross-claims he did no more than seek to share the burden. At best, he indicated that Nadia could look to the RTA and the Council for a remedy as well as to himself. It was a matter for Nadia whether she extended the proceedings to claim against the RTA and the Council as additional defendants, and the prospect of greater recovery against them provided a separate reason for her to do so. I do not think that Mr Pledge acted so as to make it fair to impose on him liability for the costs of the RTA and the Council. 6 The Calderbank letters do not lead to indemnity costs. It is not easy to see how they could have worked. The RTA sent identical letters to all other parties, offering to resolve the appeal "on the basis that it contribute $371,250 towards the verdict in favour of Nadia Ryan together with payment of 10% of her costs" and on condition that all cross-claims be dismissed with no order as to costs. Presumably the cross-claims to be dismissed were those against the RTA. Acceptance by all parties was necessary, bringing about an arrangement between all parties by which the RTA escaped from the proceedings at the proffered price. If Nadia had accepted the offer for her part there would not have been a settlement of the proceedings, and she could not make the other offerees accept the offer. There was no evidence that the other offerees accepted the offer for their parts, with or without additional contributions, or made offers by which they also would contribute towards the verdict. In these circumstances it has not been shown that it was unreasonable for Nadia to not to accept the RTA's offer for her part. 7 An order for repayment of money paid under a judgment later set aside is restitutionary, made to restore the appellant to the position in which it would have been but for the erroneous judgment: Production Spray Painting and Panel Painting Pty Ltd v Newnham (No 2) (1992) 27 NSWLR 659; TCN Channel 9 Pty Ltd v Antoniadis (No 2) (1999) 48 NSWLR 381. Interest is part of the restitution (Heydon v NRMA (No 2) 2001 NSWCA 445), and is payable as of right not in the exercise of a discretion. It follows that the rate of interest is generally not governed by what the respondent did with the money between payment and repayment. It is governed by the need to provide appropriate restitution to the appellant. 8 The fact that the respondent may have earned interest on the money paid under her judgment at a low rate, and may have been constrained in law from earning interest at a higher rate, is therefore not to the point. The rates in Schedule J to the Supreme Court Rules are customarily used as the measure of restitutionary interest, and once the interest earned by the Protective Commissioner is put aside no other measure was suggested. The Schedule J rates should therefore be used. 9 For these reasons, I agree with the orders proposed by Ipp AJA. 10 IPP AJA: These reasons are supplementary to those delivered on 10 April 2002. 11 After judgment was delivered on 10 April 2002, counsel for the parties asked that, for the time being, no order be made as to costs so as to allow them to file written submissions in that connection. Additionally, the RTA and the Council sought leave to claim restitution of part of the monies each had paid to Nadia. The Court acceded to these submissions and orders were made relating to the filing of written submissions which have now been filed. 12 It was submitted on behalf of Nadia that Mr Pledge should pay the trial costs of the Council and the RTA. The basis of this submission was that the Council and the RTA were originally joined in the proceedings by Mr Pledge. It was said that Nadia "only joined the Council and the RTA after Pledge had commenced proceedings against them and both Pledge and [Nadia] ran active cases against them at first instance and on appeal. Given that Pledge denied any responsibility below, only blaming the Council and the RTA, [Nadia] was left with no choice but to sue them in case Pledge's allegations that they caused his distraction or inability to see, and accordingly the accident, was [sic] upheld". 13 It was submitted on behalf of Mr Pledge, in reply, that Nadia had a material financial interest in joining the Council and the RTA as, were she to be successful against them, she was likely to recover a greater amount of damages based on the difference between the Motor Accidents Act 1988 and the assessment of damages at common law. Moreover, during the trial, evidence was led on Nadia's behalf against the RTA and the Council and counsel on her behalf energetically prosecuted her claim against them. It was said that in the circumstances, the costs of the trial should be borne equally between "each of the respondents to the appeal" (and by that, I understand the submission to mean Nadia and Mr Pledge). 14 During the course of argument in the appeal, Mr Morrison SC, senior counsel for Nadia, said: "If the appeals were successful standing alone and the cross-appeal was unsuccessful then on the face of it the appropriate order for costs would appear to be borne equally by the respondents". 15 I appreciate that those representing Nadia have now departed from that submission and they are entitled to do so. Nevertheless, it seems to me that Mr Morrison's suggestion was properly made and brings about a fair and appropriate result. It accords with the submission made on behalf of Mr Pledge which I think is persuasive. In my view, that submission should be upheld. 16 The RTA sought an order that Nadia and Mr Pledge pay its costs on a party and party basis from the date of commencement of proceedings until 5 September 2001, and thereafter on an indemnity basis. This submission was grounded on Calderbank letters written by the RTA on 5 September 2001 to the solicitors representing Nadia and Mr Pledge. In those letters the RTA stated that it was prepared to resolve the appeal on the basis that it contribute $371,250 towards a verdict in favour of Nadia, together with payment of 10% of the costs. RTA stated, however, that it was a condition of the offer that all cross-claims be dismissed, with no order as to costs. 17 It was said on Nadia's behalf that the condition that all cross-claims be dismissed with no order as to costs was a condition of the offer that was not within the power of Nadia to determine. In the circumstances the offer was incapable of acceptance. I agree with that submission. Accordingly, I would reject the RTA's claim for indemnity costs. 18 On 3 August 2001 the Council paid to the Court the sum of $371,250 in part payment of the judgment at first instance. On 11 May 2001 the RTA paid into Court the sum of $500,000 in part payment of that judgment. 19 An affidavit has been filed by a solicitor in the employ of the Protective Commissioner in which he testifies that on 24 April 2002 the Protective Commissioner paid out $371,250 to the Council and $500,000 to the RTA. In the circumstances, it is not necessary to make restitution orders in respect of the capital sums paid. 20 There is an outstanding question remaining, however, namely, that in regard to the interest payable by Nadia in respect of the capital sums of $371,250 and $500,000. 21 The RTA and the Council contended that interest should be payable on the capital sums in question in accordance with Schedule J rates. 22 Nadia pointed to the fact that some interest (significantly lower than the market rate) has been earned by the Protective Commission on the capital sums received by him but, as yet, the actual rate for the period 1 January 2002 to date cannot be ascertained. It was contended on Nadia's behalf that, in view of the lack of certainty as to the interest, no interest should be payable. In the alternative, it was said, the award of interest should not exceed the amount earned by the Protective Commissioner on the capital sums invested by him together with the fees charged by him. It was submitted that: "The fees incurred and the modest rate of interest obtained are a direct consequence of the tort for which the second respondent Pledge remains liable. It would be unjust if [Nadia] was to suffer as a consequence of being a protected person". 23 In Heydon v NRMA & Ors (No 2) (2001) NSWCA 445 Mason P expressed the opinion (at para 19) that the claim for interest on money paid under a judgment set aside was restitutionary in nature. Accordingly, "the purpose of an award of interest in these circumstances is restitutio in integrum … ie to put the parties in the position they should have been when the litigation was completed at first instance". The learned President observed that (at para 27), in the context of such a restitutionary claim, "doing justice to both sides also means that a respondent cannot be made hostage to the appellant's particular susceptibility any more than the appellant can be made hostage to the respondent's particular caution or carelessness". I may say that, following the same reasoning, doing justice to both sides also means that an appellant cannot be made hostage to the respondent's particular susceptibility. 24 Generally, Mason P observed (at para 30): "The interests of the parties and of the court, including the interest of consistency as a component of justice, are served by taking a broad, standard approach whereby interest is calculated according to predetermined rates that the parties can take into account in their dealings during the litigation and in their endeavour to avoid wasteful disputation concerning its outcome". 25 The expense incurred by Nadia in having to meet the charges of the Protective Commissioner cannot be laid at the door of the appellants. They are not responsible for the fact that such charges were levied. Similarly, the appellants are not to blame for the fact that the interest earned by the Protective Commissioner was low in comparison with market rates. 26 Overall, I am not persuaded that this Court should exercise its discretion to depart from Schedule J rates. 27 In summary, therefore, I propose the following additional orders: (a) Nadia and Mr Pledge pay the costs of appeal of the RTA and the Council, their liability in this respect to be joint and several. (b) Each of Nadia and Mr Pledge be entitled to a certificate under the Suitor's Fund Act if otherwise qualified. (c) Mr Pledge and Nadia pay the costs of the trial of the RTA and the Council, their liability in this respect to be joint and several. (d) Nadia to pay the RTA interest at Schedule J rates on the sum of $500,000 from 11 May 2001 (the date on which the RTA paid this sum into Court) to 24 April 2002. (e) Nadia to pay the Council interest at Schedule J rates on the sum of $371,250 from 3 August 2001 (the date on which the Council paid this sum into Court) to 24 April 2002. ********** 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.