Supreme Court New South Wales Medium Neutral Citation: Ryan v A F Concrete Pumping Pty Limited (No 2) [2013] NSWSC 219 Hearing dates: 14 March 2013 Decision date: 14 March 2013 Before: Adamson J Decision: Reasons given for costs orders earlier made Catchwords: PRACTICE AND PROCEDURE-costs-Calderbank offers-whether plaintiff may make offer directly to defendant through another party PRACTICE AND PROCEDURE-costs-departing from general rule-conduct of parties-unreasonableness of conduct Legislation Cited: - Civil Procedure Act 2005, s 98 Cases Cited: - Baillieu Knight Frank (NSW) Pty Ltd v Ted Manny Real Estate Pty Ltd (1992) 30 NSWLR 359 - Calderbank v Calderbank [1976] Fam 93 - Elite Protective Personnel Pty Limited & anor v Salmon [2007] NSWCA 322 - Messiter v Hutchison (1987) 10 NSWLR 525 -NMFM Property Pty Ltd v Citibank (No 11) [2001] FCA 480; 109 FCR 77 - Re Wilcox; Ex parte Venture Industries Pty Ltd (No 2) [1996] FCA 1942; 72 FCR 151 -Ryan v A F Concrete Pumping Pty Ltd [2012] NSWSC 723 - Jeffrey Ryan & another v A F Concrete Pumping Pty Ltd & another [2013] NSWSC 113 Category: Costs Parties: Jeffrey Ryan (First Plaintiff) Reliance Pools International Pty Ltd (Second Plaintiff) A F Concrete Pumping Pty Ltd (First Defendant) GIO Limited Ltd (Second Defendant) Employers Mutual NSW Ltd (Cross-Defendant Representation: Counsel: RA Cavanagh SC and CJ Callaway (First and Second Plaintiff) AB Parker and AR Davis (First Defendant) N Polin (Second Defendant) S Maybury (Cross-Defendant) Solicitors: Gillis Delaney (First and Second Plaintiff) Walker Hedges & Co (First Defendant) Gadens Lawyers (Second Defendant) Edwards Michael Lawyers (Cross-Defendant File Number(s): 2010/408063 Judgment 1On 26 February 2012 I delivered judgment in this matter: Jeffrey Ryan & another v A F Concrete Pumping Pty Ltd & another [2013] NSWSC 113 (the principal judgment). I was asked to reserve the question of costs and hear further argument. I also asked the parties to prepare short minutes to reflect the reasons and to calculate the amount of the judgment. Accordingly I made orders on 14 March 2012 as follows: Judgment for the first plaintiff in the sum of $2,438,405 with credit to be given for the $100,000 already paid. Judgment in favour of the second plaintiff in the amount of $200,000. 2The parties made various applications for orders other than that costs on the ordinary basis ought follow the event. 3The plaintiffs applied for an order that the first defendant (A F Concrete) pay their costs on the ordinary basis until 26 November 2012 and on an indemnity basis thereafter. It also applied for a Bullock order that AF Concrete pay any costs the plaintiffs might be ordered to pay the second defendant (C & J), against whom they were unsuccessful. 4C & J applied for an order that A F Concrete pay its costs of the whole proceedings on an indemnity basis. In the alternative it sought an order that C& J pay its costs on the ordinary basis until 26 November 2012 and then on an indemnity basis thereafter. 5The cross-defendant (EML) sought an order that A F Concrete pay its costs of its unsuccessful cross-claim against C & J. 6After considering the parties' written submissions and hearing oral argument, I made the following orders on 14 March 2013: (1)Order the first defendant to pay the plaintiffs' costs on the ordinary basis up to 26 November 2012 and thereafter on an indemnity basis. (2)Order the first defendant to pay the second defendant's costs of the proceedings on an indemnity basis. (3)Order there be judgment on the cross-claim by EML against the first defendant in favour of EML in the sum of $279,139.45 inclusive of interest. (4)Order the first defendant to pay EML's costs of the first defendant's cross-claim against EML and EML's cross-claim against the first defendant. (5)Order the first defendant to pay the costs of the second defendant in relation to EML's unsuccessful cross-claim against it. (6)Order the second defendant to pay the costs of EML in relation to the second defendant's cross-claim against EML but the second defendant is entitled to be indemnified by the first defendant in relation to those costs. 7My reasons for making those orders are as follows. The plaintiffs' application for indemnity costs against A F Concrete arising from the Calderbank offer in October 2012 8By letter dated 25 October 2012 and marked "Without prejudice except as to costs" to the plaintiffs' solicitors, C & J's solicitors sought confirmation that the plaintiffs would settle their claims for $1,625,000 inclusive of costs, workers compensation payments and the interim payment and inquired as to the period of time during which the offer was open. 9By letter dated 29 October 2012 and marked "Without prejudice" from the plaintiffs' solicitors to C & J's solicitors, the plaintiffs offered to settle the proceedings on the basis of a payment of $1,625,000 inclusive of costs, workers compensation payments and the interim payment. This offer was expressed to remain open for 28 days. 10C & J's solicitors forwarded these two letters to A F Concrete's solicitors under cover of letter dated 2 November 2012 and offered to contribute 36% to a settlement on that basis. The offer was expressed to remain open until 26 November 2012 and reference to Calderbank v Calderbank [1976] Fam 93 and Messiter v Hutchison (1987) 10 NSWLR 525 was made. This offer was not accepted. It expired on 26 November 2012. The proceedings were not resolved. 11Mr Ryan (the plaintiff) obtained judgment in the amount of $2,438,405 plus costs. The second plaintiff, Reliance Pools International Pty Limited, obtained judgment in the sum of $200,000 plus costs. On any view the plaintiffs substantially bettered their position by litigating their claims. 12The plaintiffs submitted that A F Concrete's refusal of their offer was unreasonable and that the Court should order that A F Concrete pay their costs on an indemnity basis from the last date on which the offer was open. 13A F Concrete submitted that no such order ought be made because the plaintiffs made no offer to it directly. It rejected the proposition that the communication from C & J was effectively a communication from the plaintiff via C & J. It also rejected the proposition that the offer submitted by C & J comprised the plaintiffs' offer to settle the proceedings and C & J's offer of contribution. It did not take the point that the plaintiffs' letter dated 29 October 2012 was marked "without prejudice" rather than "without prejudice except as to costs". 14Section 98 of the Civil Procedure Act 2005 (the Act) confers a power on the Court to order costs to be paid on an indemnity basis. Where an offeror of a Calderbank offer has achieved a result better than the offer, this is a ground for the Court to order costs on the higher basis. That an offer has been made inclusive of costs is no impediment to the making of an order for indemnity costs where it can be concluded that the offeror has bettered its offer through the litigation: Elite Protective Personnel Pty Limited & anor v Salmon [2007] NSWCA 322 at [141] per Basten JA. 15As referred to above, A F Concrete's objection to an order for indemnity costs from 26 November 2012 was that the plaintiffs did not themselves communicate the offer. I do not consider this objection to be sufficient to relieve A F Concrete of the consequences of the correspondence referred to above. That the plaintiffs chose C & J as the conduit for the offer, rather than writing in identical terms to both defendants, or using A F Concrete as the conduit, is not determinative. The plaintiffs' offer was made in a bona fide attempt to resolve the proceedings on what was at the time, and turned out to be, an eminently reasonable basis. A F Concrete's non-acceptance of the offer was unreasonable in all the circumstances. In not responding by accepting the offer it ran the risk, which has ensued, that the plaintiffs would do better in the litigation than the result that would have obtained had their offer been accepted. 16A F Concrete also submitted that, at the time the offer was made, there was still an outstanding question whether the plaintiff would exceed the threshold for permanent impairment so as to entitle the defendants to cross-claim against the employer. Mr Parker submitted that under these circumstances his client ought not be held to have acted unreasonably in not responding to an offer which, in hindsight, would have put it in a much better position than it is in by reason of the orders made in the principal judgment. I do not consider this matter to be sufficient to protect A F Concrete from an order for indemnity costs from 26 November 2012. The Court expects parties to give due attention to offers when made, even if some contentious issues have, at that time, not been fully investigated. 17In these circumstances, I am of the view that it is appropriate that A F Concrete pay the plaintiffs' costs on an ordinary basis up until 26 November 2012, being the last date on which the offer was open, and on an indemnity basis thereafter. The plaintiffs' application for a Bullock order against A F Concrete for any costs for which they are otherwise liable to pay C & J 18I considered that, in order to avoid circularity, it was preferable that I make a Sanderson order in respect of C & J's costs, rather than order the plaintiffs to pay C & J's costs and then order A F Concrete to indemnify the plaintiffs in respect of that costs order. It was not suggested that this would not be an appropriate course. C & J's application for the costs of the proceedings on an indemnity basis against AF Concrete 19A F Concrete does not oppose an order that, in respect of C & J's cross-claim, it pay C & J's costs on the ordinary basis up until 26 November 2012 and on an indemnity basis thereafter because it refused C & J's offer to pay 36% of the plaintiffs' offer to settle the proceedings for $1.625m inclusive of costs. 20A F Concrete does, however, oppose an order that it pay C & J's costs of the proceedings on an indemnity basis. 21C & J submitted that it was appropriate to order that A F Concrete pay its costs of the proceedings on an indemnity basis on the ground that AF Concrete was guilty of "plainly unreasonable conduct". 22The starting point is that costs follow the event and are payable on the ordinary basis: Re Wilcox; Ex parte Venture Industries Pty Ltd (No 2) [1996] FCA 1942; 72 FCR 151 at 152-153. The conduct of the unsuccesful party as a litigant, including its knowledge of its past conduct is relevant to whether cost should be ordered on a higher basis: NMFM Property Pty Ltd v Citibank (No 11) [2001] FCA 480; 109 FCR 77 at [56]. If the unsuccessful party has contributed to the waste of the court's time and the successful party's costs, this is also a relevant factor: Baillieu Knight Frank (NSW) Pty Ltd v Ted Manny Real Estate Pty Ltd (1992) 30 NSWLR 359. 23At times it was difficult to discern during the proceedings the basis of A F Concrete's defence. It did not tender any expert report in defence of the plaintiff's claim or in support of its cross-claim. When invited to open A F Concrete's counsel chose not to expand on the pleadings. 24During the course of the hearing it became apparent that A F Concrete was defending the proceedings on the following two bases: (7)The person who had unfastened the flexible hose that was attached to the bottom of the pool and attached a new flexible hose that was unfastened, was not its employee, but rather an employee of C & J. (8)AF Concrete wanted to blow the pipes down but they were required by C & J to blow the pipes up because C & J had not ordered enough concrete for the job. Because C & J wanted to blow the pipes up, it was necessary for AF Concrete to employ a higher pressure hose than the one attached to its machine, which is why it asked C & J to use its hose. This made C & J responsible for what occurred and it was C & J's responsibility to clear the pool. 25The first defence set out above was put as a positive proposition in the following terms to the plaintiff, who refuted it: Q. I suggest to you at the time of the accident that the person who changed the flexible hose from the 50 mill to the 100 mill-- A. Yes. Q. --did not work for A F Pumping? A. You're asking me that? Q. I'm suggesting to you that that is the case? A. That's incorrect. 26The first defence was put in a more circumspect way to Mr Christian, who also worked for Reliance Pools Pty Limited, in the following terms: Q. Who do you say connected the 4-inch hose in substitution? A. The boys from A and F. Q. When you say boys? A. Two boys. Q. Two boys? A. Yes. Q. Couldn't have been that somebody from C & J did that? A. No. 27The first defence proved untenable when the two witnesses called by A F Concrete, Mr Gillan and Mr Webb, both gave evidence that it was an A F Concrete employee who had changed over the flexible hose. Mr Webb gave evidence that he had collected the substitute flexible hose from the A F Concrete truck and sent it up in the lift to the seventh floor. Mr Webb's evidence, under cross-examination from C & J, was: Q. Let me get this right, this is your concrete pipes that are being cleared? A. Yes. Q. It was your hose that was attached to your concrete pipes? A. Yes. Q. And it was attached to your concrete pipes by one of your employees, one of the AF employees? A. Yes. . . . Q. You were expecting, were you, that if the thing was tied down, it could come out at a reasonable speed but it would just go into the bin? A. Yes. . . . Q. And I take it it was your expectation that either Glen or Scott would disconnect the 2 inch hose from your line and connect the 3 and a half inch hose, which you just sent up? A. Yes. Q. And I take it, it was your expectation that as part of that, that Glen or Scott would put the hose, the other end of the hose, into the bin? A. That's what I told them, yes. Q. And that they would secure the other end of the hose in the bin? A. Mm-hmm. Q. That "mm-hmm" is a yes? A. Yes, yes. 28Mr Gillan volunteered that he would have helped "Spud", an employee of A F Concrete hook up the substitute flexible hose. Mr Gillan agreed that it was important that the flexible hose be secured but volunteered that: "We usually hold it." 29Mr Gillan agreed that he assisted "Spud" to connect the substitute flexible hose and then "simply walked away" to instruct Mr Webb to turn the pressure on. 30Mr Webb and Mr Gillan gave evidence that he had given a statement to a Workcover investigator and also to someone whom I assume was an investigator for A F Concrete's insurer. A F Concrete claimed privilege on these statements and it was accepted that privilege had not been waived since Mr Webb had not used either statement to refresh his recollection. 31In all the circumstances I infer that A F Concrete was aware from the investigation it had done of the claim that its employee was responsible for substituting the flexible hose and for not securing it before commencing the blowing operation. I cannot detect any basis for the proposition on which A F Concrete relied in its defence, its cross-claim or its cross-examination that these acts were done by C & J. Furthermore, Mr Webb accepted that securing the flexible hose was "basic" to the process of cleaning the line and that it was a "mistake" that it was not done. Mr Webb sought to attribute blame to people "at the other end" (on the 7th floor) for not clearing the area. Mr Gillan, who was senior to Mr Webb, agreed that he could not think of any other way the accident could have happened if he had organised to tie down the other end of the line. 32Both Mr Webb and Mr Gillan effectively admitted the primary facts that made A F Concrete liable. In these circumstances, and in light of my finding above that A F Concrete must have known that their evidence would be to that effect, A F Concrete's denial of liability was unreasonable and its maintenance of the first defence was conduct that warrants an order for costs on a higher basis. 33The second defence did not appear to have any basis either. The plaintiff's evidence was, in substance, that what C & J did in arranging for the concrete to be blown upwards was entirely orthodox. He described the technique in the following terms: Q. And on any job involving concrete, you want to be as precise as possible; you don't want to order too much concrete or too little? A. On the seventh floor, they don't want to be bucketing down bucket loads of concrete downstairs. They want it to be accurate, that they have sprayed to a point and they have left just enough of what I call the residue. The residue will finish the job off and not compromise the pool. Q. Equally, you don't want to be bucketing up loads of concrete to the seventh floor, do you? A. Absolutely. Q. So, the idea is, you try and gauge how much concrete is in the lines? A. Yes. Q. Leave an area of the pool unfinished? A. Yes. Q. Clear out the lines? A. Yes. Q. And with the concrete which has been cleared out of lines, you finish off the pool? A. Yes. Q. And, hopefully, you don't have too much or you don't have too little? A. C&J are particularly good knowing that. So, that's exactly right. 34Mr Parker put to the plaintiff's expert, Mr Verma, that the proper way of cleaning the pipes was to blow concrete down. He refuted this proposition. Mr Verma's unshakeable evidence was that it was the sole responsibility of the concrete pump operator to clean the pipes. 35Mr Christian, who worked with the plaintiff said that he had never heard of concrete being blown downwards. He explained the reason as follows: ". . . the concrete should be pushed up slowly than trying to run it down, because it would start to clog up. Then the pipes will start to expand and that's when we start losing pipelines, yes." 36Mr Webb, an A F Concrete employee, said that he did not want to blow the concrete up because the compressor in the concrete pump was in sufficient for the task. This was why he approached C & J so that A F Concrete could have the benefit of C & J's more powerful compressor. Mr Webb and Mr Gillan had never blown the concrete upwards on a high-rise before. They said that they always blew it back. They sought to fortify this evidence with evidence from Dr Cooke, which I had rejected, following A F Concrete's objection, on the basis that he lacked the relevant expertise. 37For the reasons given in the principal judgment I do not accept that Mr Poulianos ever left his compressor or that it was C & J's responsibility to clear the pool area while C & J was blowing concrete. I consider that the former proposition was an invention designed to exculpate A F Concrete. Although A F Concrete or its insurer could not be expected to do other than accept its witnesses' versions, Mr Gillan's evidence of causation set out above indicates that A F Concrete's denial of liability and its cross-claim was, at best, forensically opportunistic, notwithstanding the lack of proper basis for it. The inherent weakness of the proposition that Mr Poulianos, from the ground floor, was responsible for what happened on the 7th floor appears from [61] of the principal judgment. It formed the basis of A F Concrete's alternate defence and cross-claim. 38Mr Parker, for A F Concrete, submitted that since the plaintiffs maintained their case against C & J, it was not open to me to find that A F Concrete's conduct in defending the claim was unreasonable or that it had lured the plaintiffs into maintaining their claim against C & J. Whether or not A F Concrete can accurately be described as having "lured" the plaintiffs into suing C & J as second defendant is hardly to the point. The plaintiffs acted prudently in maintaining their claim against both in circumstances where they did not know, until Mr Webb and Mr Gillan gave evidence, that there was no dispute as to the identity of those who had changed the flexible hose. 39On the seventh day of the hearing, A F Concrete admitted breach of duty but not liability. In final submissions A F Concrete maintained its denial of liability although, somewhat anomalously, it conceded duty, breach, causation and damage. 40Mr Polin, for C & J, also relied on the circumstance that an order for interim payment had been made against A F Concrete but not against C and J (Ryan v A F Concrete Pumping Pty Ltd [2012] NSWSC 723) and that this should have put A F Concrete on notice that it was solely liable for the plaintiffs' losses. Having regard to the different onus that applies with respect to applications for interim payments, I do not consider that this factor adds to the unreasonableness of A F Concrete's conduct of the case. 41In my view, it was unreasonable of A F Concrete both not to admit liability and to maintain its cross-claim against C & J. Its conduct substantially prolonged the hearing. Its forensic decisions were not informed by what it must have known about the conduct of its employees. For these reasons it was appropriate to order that it be liable for C & J's costs of the whole proceedings on an indemnity basis. 42The lack of probative evidence against both EML and C & J should have the effect, in my view, that A F Concrete is liable for EML's costs, even in so far as they arise from C & J's cross-claim against EML. Neither EML, nor C & J ought, in my view, to have been parties to these proceedings because of the lack of arguable case against either of them. In my view, A F Concrete ought be liable for their costs on the bases identified in the orders. ********** 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. Decision last updated: 22 March 2013