New South Wales Supreme Court CITATION : Quintano v B W Rose Pty Ltd & anor (Costs) [2009] NSWSC 626 HEARING DATE(S) : 19 June 2009 JURISDICTION : Common Law Division Professional Negligence List JUDGMENT OF : Brereton J EX TEMPORE JUDGMENT DATE : 19 June 2009 DECISION : Sanderson order made; First defendant to pay second defendant's costs CATCHWORDS : PROCEDURE – Costs – where plaintiff brings action against multiple defendants – where plaintiff only succeeds against first defendant – where reasonable to bring action against both defendants as defendants disputed liability amongst themselves – Where conditions for Bullock or Sanderson order are satisfied – considerations as to which is the appropriate order – where first defendant is or is likely to be insolvent – where plaintiff is unlikely to recover any or much of damages or costs due to first defendant's insolvency – where second defendant is unlikely to recover costs due to first defendant's insolvency CATEGORY : Consequential orders BankAmerica Finance Ltd v Nock [1988] AC 1002 Exford Pines Pty Ltd v Vlado's Pty Ltd (Supreme Court of Victoria, Ashley J, 1 April 1996, Unreported). CASES CITED : Rudow v Great Britain Mutual Life Assurance Society (1881) 17 Ch D 600 Sanderson v Blyth Theatre Company [1903] 2 KB 533 Schipp v Cameron (Supreme Court of New South Wales, Einstein J, 12 October 1998, Unreported). Vucadinovic v Lombardi & Meyers [1967] VR 81 TEXTS CITED : Ritchie's Uniform Civil Procedure NSW Luke Quintano (plaintiff) PARTIES : BW Rose Pty Ltd (first defendant) AWS Security Services Pty Ltd (second defendant) FILE NUMBER(S) : SC 20130/04 COUNSEL : Mr H J Marshall SC w Mr D J Hooke (plaintiff) SOLICITORS : Beilby Poulden Costello (plaintiff) Curwood & Partners (second defendant) IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION PROFESSIONAL NEGLIGENCE LIST BRERETON J Friday 19 June 2009 20130/04 Luke Quintano v BW Rose Pty Limited & ors JUDGMENT (ex tempore) 1 HIS HONOUR: In a judgment given on 26 May 2009 I assessed the plaintiff's damages, before apportionment for contributory negligence, at $6,610,385, plus costs of funds management. I concluded that Luke was entitled to judgment against the first defendant BWR for half of that sum, and afforded the parties an opportunity to be heard as to the quantum of fund management costs to be included. I further concluded that there should be judgment for the second defendant AWS. I observed that prima facie the first defendant BWR should pay Luke's costs, and that Luke should pay AWS's costs, but afforded the parties an opportunity to be heard as to costs. 2 There are, therefore, two outstanding issues - the funds management component of the judgment, and costs. 3 So far as funds management is concerned, I have been provided with calculations, and an extract from a standard handbook that indicates the appropriate calculations in this regard. The amount available for investment will not be one half of the total sum assessed, because past medical expenses of $183,580 (see judgment paragraph 98) will have to be deducted. That will leave a fund for investment and management of $3,121,612.50. The costs of managing such a fund over Luke's life expectancy of 55 years amount to about $758,610. That amount should be added to 50 percent of the assessed damages, resulting in a total judgment sum of $4,063,802.50. 4 I give judgment that the first defendant pay the plaintiff the sum $4,063,802.50. I give judgment for the second defendant. 5 I turn to the question of costs. 6 BWR's defence in the proceedings sought to cast responsibility for Luke's injuries onto AWS. Thus not only was it unclear until questions of fact were resolved which defendant would ultimately bear responsibility, but in addition BWR in its defence – and even at the trial, albeit indirectly, through evidence given by its former officer, Mrs Rose – sought to shift the burden of responsibility to AWS. It can thus be said that it was not only reasonable for the plaintiff to sue AWS, but that BWR contributed in a significant way to that necessity; indeed, that necessity was exacerbated by the circumstance that BWR brought a cross-claim for indemnity or contribution against AWS. In those circumstances, it being not only reasonable for the plaintiff to have pursued AWS, but BWR being implicated in the necessity for it to do so, the conditions for making a Bullock or Sanderson order are plainly satisfied. 7 The more difficult question is which of those orders should be made. Although the authorities are not entirely consistent, there is some limited and qualified preference for Sanderson orders as more desirable than Bullock orders, primarily because the former avoids circuity in the recovery of costs [Rudow v Great Britain Mutual Life Assurance Society (1881) 17 Ch D 600; Sanderson v Blyth Theatre Company [1903] 2 KB 533, 539, 542-3; Exford Pines Pty Limited v Vlado's Pty Limited (Unreported, Supreme Court of Victoria, Ashley J, 1 April 1996]. Other than avoiding circuity, the practical significance of a choice between a Bullock or Sanderson order is limited, where all the parties concerned are solvent and able to satisfy the order [BankAmerica Finance Limited v Nock [1988] AC 1002]. It is otherwise where one of the parties is or is likely to be insolvent, and in such a circumstance the exercise of the discretion requires careful attention to the application of general costs principles – in particular, that costs usually follow the event – and also to the assessment of the fairness in the particular circumstances of either making or refusing to make a cost orders against the party that has means [Vucadinovic v Lombardi and Meyers [1967] VR 81; Schipp v Cameron (Unreported, Supreme Court of NSW, Einstein J, 12 October 1998]. See generally Ritchie's Uniform Civil Procedure Rules [42.1.45], from where the foregoing summary is adapted. 8 The present is such a case. BWR is a company in liquidation and is therefore at least likely to be insolvent and unable to meet any order made against it. The general costs principle that costs usually the follow the event would favour making a Bullock order. The likely result of that would be that AWS would recover its costs against Luke – who is relevantly the party with means – but Luke would be unable to recover his costs (including those payable to AWS) from BWR because of its insolvency. The question is whether in the circumstances of this particular case that is so unjust a result as to dictate the making of a different costs order. 9 In this respect, I think I need to take into account that while Luke has succeeded in obtaining a substantial judgment against BWR, its insolvency means that it is unlikely that he will see much, if any, of it. Were BWR solvent, the justice of a Bullock order, in the context that Luke could satisfy it out of part of the judgment recoverable from BWR, would be clearer. But in circumstances where he will not likely obtain satisfaction of much if any of the judgment, it is a factor to be taken into account that Luke's "indemnity" against BWR would be a hollow one. 10 A second consideration, pointing in the other direction, is that if I make not a Bullock order but a Sanderson order, then for all practical purposes AWS – an entirely successful defendant – will be left out of pocket so far as its costs are concerned. 11 Thus both Luke and AWS are, in a sense, casualties of the insolvency of BWR. Both have been involved in litigation substantially because of an act that I have found to be the responsibility of BWR, and both will be affected in their ability to be compensated for the consequences by the insolvency of BWR. In that context, there is at least a rough measure of justice in a situation that will affect the ability of each to attain justice is affected to some degree by BWR's insolvency, rather than visiting the consequences on one to the exclusion of the other. A Sanderson order would have that effect: while nominally giving AWS a costs order, it would leave AWS to share with Luke (who will be unable to recover his judgment or costs) the misfortunes occasioned by BWR's insolvency. In the overall circumstances of the case, I think that this not an unjust outcome. 12 It is one that is made easier to reach by the circumstance that AWS, being on notice of the hearing today and the application that was to be made by Luke in respect of costs, has not appeared to oppose it. While I am of course aware that AWS's insurer itself is now under external administration, it could have appeared to oppose the order sought if it considered it inappropriate. 13 Accordingly, I order that the first defendant pay the plaintiff's costs, and that the first defendant pay the second defendant's costs. ********** 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.