New South Wales Court of Appeal CITATION: DOMINELLO v DOMINELLO & ANOR; DOMINELLO v THE NOMINAL DEFENDANT & ANOR [NO 2] [2009] NSWCA 257 HEARING DATE(S): On the papers. JUDGMENT DATE: 26 August 2009 JUDGMENT OF: Beazley JA at 1; Macfarlan JA at 2; Handley AJA at 3 (1) Vacate the order made on 8 May 2009 that the Nominal Defendant pay the plaintiff's costs of the action. DECISION: (2) In lieu thereof substitute orders that the Nominal Defendant pay the plaintiff's costs of the action on the ordinary basis until and including 22 July 2007 and thereafter on the indemnity basis. (3) Notice of Motion of 23 May 2009 otherwise dismissed. (4) No order as to costs. CATCHWORDS: COSTS - Sanderson order - cases against defendants not alternative or interdependent - order not made. CATEGORY: Consequential orders Besterman v British Motor Cab Co. Ltd [1914] 3 KB 181 CA Bullock v The London General Omnibus Company & Ors [1907] 1 KB 269 CA Goldsworthy v Brickell [1987] Ch 378 CA Gould v Vaggelas [1985] HCA 85, 157 CLR 215 Johnson v Nominal Defendants [2003] NSWCA 153 CASES CITED: Johnsons Tyne Foundry Pty Ltd v Maffra Corporation [1948] HCA 46, 77 CLR 544 Norwest Refrigeration Services Pty Ltd v Bain Dawes (WA) Pty Ltd [1984] HCA 59, 157 CLR 149 RTA v Dederer [2007] HCA 42, 234 CLR 330 RTA & Ors v Palmer (No. 2) [2005] NSWCA 140 Sanderson v Blyth Theatre Company [1903] 2 KB 533 CA Kathleen Mary Dominello (Appellant 40045/08 ) PARTIES: The Nominal Defendant (First Respondent 40045/08) Kathleen Mary Dominello (First Respondent 40048/08) The Nominal Defendant (Second Respondent 40048/08) FILE NUMBER(S): CA CA 40045/2008; 40048/2008 COUNSEL: R Royle - Kathleen Mary Dominello D Russell SC - The Nominal Defendant SOLICITORS: Stacks Goudkamp - Kathleen Mary Dominello Ferguson Bolton - The Nominal Defendant LOWER COURT JURISDICTION: District Court LOWER COURT FILE NUMBER(S): DC 2987/2003 LOWER COURT JUDICIAL OFFICER: Balla DCJ LOWER COURT DATE OF DECISION: 13 December 2007 IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL 40048/08 BEAZLEY JA MACFARLAN JA HANDLEY AJA Wednesday 26 August 2009 JOSEPH DOMINELLO v KATHLEEN MARY DOMINELLO & ANOR; KATHLEEN DOMINELLO v THE NOMINAL DEFENDANT & ANOR [NO 2] CATCHWORDS COSTS - Sanderson order - cases against defendants not alternative or interdependent - order not made. HEADNOTE The plaintiff was injured when her husband lost control of their vehicle on a patch of diesel fuel that had been spilled on a bend in the Pacific Highway south of Grafton. Her case against the driver was based on excessive speed. Her case against the Nominal Defendant was based on the inferred negligence of the driver of an unidentified heavy vehicle in failing to replace the cap on the diesel tank which allowed the fuel to spill out on the bend. The liabilities of the defendants were not alternative or interdependent. The fact that one was or was not liable threw no light on the liability of the other. The trial judge gave judgment for the plaintiff against the driver but found for the Nominal Defendant. The Court of Appeal gave judgment against the Nominal Defendant and found for the driver. The plaintiff sought a Sanderson order against the Nominal Defendant. HELD: Although the plaintiff, in her own interest, had to sue both defendants a Sanderson order should not be made. The liabilities of the defendants were not alternative or interdependent and the Nominal Defendant had no personal knowledge of the facts and had not misled the plaintiff. ORDERS (1) Vacate the order made on 8 May 2009 that the Nominal Defendant pay the plaintiff's costs of the action. (2) In lieu thereof substitute orders that the Nominal Defendant pay the plaintiff's costs of the action on the ordinary basis until and including 22 July 2007 and thereafter on the indemnity basis. (3) Notice of Motion of 23 May 2009 otherwise dismissed. (4) No order as to costs. ********** IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL 40048/08 BEAZLEY JA MACFARLAN JA HANDLEY AJA Wednesday 26 August 2009 JOSEPH DOMINELLO v KATHLEEN MARY DOMINELLO & ANOR; KATHLEEN DOMINELLO v THE NOMINAL DEFENDANT & ANOR [NO 2] Judgment (Costs) 1 BEAZLEY JA: I agree with Handley AJA. 2 MACFARLAN JA: I agree with Handley AJA. 3 HANDLEY AJA: On 8 May 2009 this Court allowed with costs the appeal by the plaintiff from the judgment of Balla DCJ and entered judgment for her for $2,775,000.35 and costs against the Nominal Defendant. It also allowed with costs the appeal by the first defendant and entered judgment for him in the action with costs. The Court reserved liberty to apply for a variation of these costs orders. 4 Pursuant to leave reserved the plaintiff applied for orders that the Nominal Defendant pay her costs on an indemnity basis from 23 June 2007 the date of a formal Offer of Compromise made on her behalf, and for a Bullock or Sanderson order for the costs of the trial. Very properly Senior Counsel for the Nominal Defendant did not oppose the order for indemnity costs that was sought, and this will be made. 5 The plaintiff seeks a Bullock or Sanderson order because, in the result, she failed against the first defendant and succeeded against the Nominal Defendant. 6 The plaintiff was badly injured when her husband lost control of their van on a bend in the Pacific Highway which had become very slippery because of a spillage of diesel fuel. The speed limit in the area was 100 kph. The trial judge held that the driver was travelling at an excessive speed and this was a cause of the accident, but the plaintiff had failed to prove her case against the Nominal Defendant. 7 This Court has held that the case against the Nominal Defendant was proved. We also held that the plaintiff had failed to establish her case against the driver, the majority because she had not proved that the accident would not have happened if he had been driving at a safe speed and causation had not been established. 8 The principles which the Court applies when making a Bullock or Sanderson order were summarised by Gibbs CJ in Gould v Vaggelas [1985] HCA 85, 157 CLR 215 at 229-30: "It is sometimes said that the Court may make an order of that kind … where it was reasonable in all the circumstances for the plaintiff to bring the action against two or more defendants … There are some statements in the authorities which appear to support that view … in my respectful opinion, however, the mere fact that the joinder of two defendants was reasonable does not mean that the unsuccessful defendant should be ordered to pay, directly or indirectly, the costs of the successful defendant. Obviously a judge should make a Bullock order only if he considers it just that the costs of the successful defendant should be borne by the unsuccessful defendant, and, if nothing that the unsuccessful defendant has said or done has led the plaintiff to sue the other defendant, who ultimately was held not to be liable, it is difficult to see any reason why the unsuccessful defendant should be required to pay for the plaintiff's error or overcaution. The ground on which a Bullock order may be made is, in my opinion, more accurately stated … that the costs which the plaintiff has been ordered to pay to the defendant who succeeded, and which the plaintiff recovers from the defendant who has failed 'are ordered to be paid by the unsuccessful defendant, on the ground that … those costs have been reasonably and properly incurred by the plaintiff as between him and the [unsuccessful] defendant … In my respectful opinion the true position [is] that 'there is a condition for the making of a Bullock order, in addition to the question whether the suing of the successful defendant was reasonable, namely that the conduct of the unsuccessful defendant has been such as to make it fair to impose some liability on it for the costs of the successful defendant'". 9 Gibbs CJ then approved a statement by Blackburn CJ that "there is a condition for the making of a Bullock order … namely that the conduct of the unsuccessful defendant has been such as to make it fair to impose some liability on it for the costs of the successful defendant." 10 See also RTA v Dederer [2007] HCA 42, 234 CLR 330, at 382-6 per Kirby J and at 415-7 per Heydon J. 11 It was entirely reasonable for the plaintiff to sue both defendants, and, as the history of the litigation demonstrates it would have been most unwise not to have done so. However the plaintiff is in difficulties on the other requirement. 12 Counsel for the plaintiff relied on the admission of liability by the Nominal Defendant on 26 February 2001, and its withdrawal shortly afterwards on 7 March. On 17 January 2002 the Nominal Defendant indicated a willingness to compromise the claim but said it was attempting to negotiate liability with the insurer for the driver. The plaintiff commenced proceedings on 2 July 2003 joining both the driver and the Nominal Defendant. 13 On 17 July the solicitors for the Nominal Defendant drew the attention of the plaintiff's solicitors to the decision of this Court in Johnson v Nominal Defendants [2003] NSWCA 153 in which judgment was delivered on 13 June. In that case the plaintiff who had been injured when he lost control of his motorcycle on a roundabout because of the presence of diesel fuel on the road failed to establish a case against the Nominal Defendant. However as Ipp JA, who gave the principal judgment, pointed out there were too many possible causes for the presence of the diesel fuel and there was no expert or lay evidence to support an inference of negligence. In their letter the solicitors for the Nominal Defendant invited the plaintiff's solicitors to consider continuing against the driver as the sole defendant. 14 In September 2003 the Nominal Defendant filed a cross claim seeking indemnity or contribution from the driver. The solicitors for the Nominal Defendant were not prepared to discuss settlement unless the driver's insurer was prepared to contribute, and this the latter refused to do. 15 This was a case where it was quite uncertain until the judgment of this Court whether one or other or both of the defendants would be held liable, and the plaintiff and her advisers, acting with ordinary prudence, were bound to sue both defendants. The need to do this arose from the complexity of the evidence and the difficulty in determining liability. 16 There is no reason for thinking that the conduct of the Nominal Defendant after the plaintiff commenced proceedings against both defendants caused the plaintiff and her legal advisers to maintain their action against the driver, or that they would otherwise have discontinued against him. Nothing short of capitulation by either or both defendants would have prevented the action going to trial against both. 17 The letter of 17 July 2003 referred to in para [10] was an argumentative denial of liability with gratuitous advice to continue against the driver. The advice was gratuitous because the decision of the Court of Appeal in Johnson v Nominal Defendant threw no light on the liability of the driver. A finding either way about the liability of the Nominal Defendant could not affect the decision against the driver, and vice versa. 18 The uncertainty which prompted the plaintiff to sue both defendants was not created by the conduct of the Nominal Defendant. It had not refused to disclose objective facts known to it, but not known to the plaintiff, such as the public authority responsible for the maintenance of a bridge as in RTA v Dederer [2007] HCA 42, 234 CLR 330, or the identity of the plaintiff's employer, the occupier of the premises, or the entity in charge of building construction work, as in some of the unreported decisions of this Court. The Nominal Defendant knew no more about this accident than the plaintiff, and possibly less. 19 The statement of principle of Gibbs CJ in Gould v Vaggelas in para [6] establishes that an order of the nature sought is not justified merely because the plaintiff acted reasonably in her own interests in suing both defendants. There must be something in the conduct of the unsuccessful defendant which makes it fair to impose this liability on it. This must be something more than a denial of liability which would be present in every case brought against two or more defendants. 20 That something more will typically involve a positive assertion, express or implied, that the relevant defendant is not liable because the other is. 21 Many of the cases involved alternative claims where the plaintiff could succeed against only one of the defendants but had to sue both. Sanderson [1903] 2 KB 533 CA and Johnsons Tyne Foundry Pty Ltd v Maffra Corporation [1948] HCA 46, 77 CLR 544 were cases of alternative liability where the plaintiff obtained a Sanderson order against the principal for the costs of the agent. 22 In Bullock [1907] 1 KB 269 CA the plaintiff had been injured in a collision between two buses. Faced with a denial of liability by her carrier, which blamed the other, she had to sue both. She succeeded against her carrier and an order was made. In Besterman v British Motor Cab Co. Ltd [1914] 3 KB 181 CA the plaintiff was injured in a collision between a taxi and a bus. The defendants blamed each other (at 182, 187, 189) "upon the basis that their success depended on their proving that the other side to have been to blame" (at 189), and a Bullock order was made. 23 In Gould v Vaggelas [1985] HCA 85, 157 CLR 215, 231, 260 the vendors claimed that the purchasers had not relied on their fraudulent representations but on their own accountants' advice. The purchasers succeeded against the vendors and failed against their accountants, and a Bullock order was made. This was another case of alternative liability. 24 In Goldsworthy v Brickell [1987] Ch 378 CA, 410, 417-8, an undue influence case, a Sanderson order was made against the grantee who had alleged that the grantor affirmed the transaction after receiving independent legal advice from his own solicitors. The grantor had then joined the solicitors and a Sanderson order was made against the grantee. 25 In Norwest Refrigeration Services Pty Ltd v Bain Dawes (WA) Pty Ltd [1984] HCA 59, 157 CLR 149 the plaintiff's fishing vessel had been destroyed by fire. It sued its insurer and the Co-operative that had arranged its insurance. It failed against the insurer because an exclusion clause applied and succeeded against the Co-operative. The High Court held that a Bullock order had rightly been refused. Gibbs CJ, Mason, Wilson and Dawson JJ said at 163: "Norwest sued the insurer on the insurance policy. It was a straightforward action which was not interdependent with or in any real sense alternative to the claim against the Co-operative." 26 This claim against the Nominal Defendant was far from straightforward, but it was not interdependent with or alternative to the claim against the driver. 27 The decision of this Court in RTA & Ors v Palmer (No. 2) [2005] NSWCA 140 is also relevant. The plaintiff, who was injured in a single vehicle accident, sued the RTA, the Council, and, the Council's contractor. She failed against the RTA but succeeded against the other defendants. This Court, for reasons given by Giles JA, refused to make a Bullock or Sanderson order in favour of the plaintiff. He said at para [35]: "It may have been reasonable for the plaintiff in her own interest to join the RTA as a defendant, but I do not think that there was conduct which made it just that the Council, still less Pioneer, pay the costs payable by the plaintiff to the RTA. Neither the Council nor Pioneer created any circumstances of uncertainty as to who was the proper defendant. They were not obliged to concede liability or make admissions in order to remove RTA from contention, there being a respectable argument that the RTA was liable, and there is no reason to think that short of effective capitulation by the Council and Pioneer, the plaintiff would not have maintained her claim against the RTA. In my opinion conduct has not been shown such as to make it fair to impose on the Council and Pioneer liability for the costs of the RTA." 28 That reasoning applies in the present case. 29 In my judgment an order of the nature sought should be refused because the claims were independent and not alternative, the Nominal Defendant knew no more about the circumstances of the accident than the plaintiff did, and the plaintiff was bound, in her own interest, to go to trial against both defendants unless either or both capitulated. 30 The following orders should be made: (1) Vacate the order made on 8 May 2009 that the Nominal Defendant pay the plaintiff's costs of the action. (2) In lieu thereof substitute orders that the Nominal Defendant pay the plaintiff's costs of the action on the ordinary basis until and including 22 July 2007 and thereafter on the indemnity basis. (3) Notice of Motion of 23 May 2009 otherwise dismissed. (4) No order as to 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.