District Court New South Wales Medium Neutral Citation: Coote v S & P Jackson Pty Ltd (No. 2) [2014] NSWDC 214 Hearing dates: 5 December 2013; 26 February 2014 Decision date: 25 March 2014 Jurisdiction: Civil Before: Gibson DCJ Decision: (1) As to question (1) in both proceedings 2011/271642 and 2012/275779 each of the plaintiff and the public liability insurer is to pay the costs of the CTP insurer (QBE Insurance (Australia) Limited). (2) As to question (2) and (3) in both proceedings 2011/271642 and 2012/275779 the plaintiff is to pay the costs of each of the CTP insurer (QBE Insurance (Australia) Limited) and the public liability insurer. (3) Plaintiff's application for costs dismissed. Catchwords: COSTS - plaintiff injured in a crane fall brings proceedings against public liability and CTP insured defendants - defendants cross claim against each other - UCPR Pt 28 r 2 order for determination of whether the plaintiff's accident a motor accident within the provisions of s 3 Motor Accidents Act 1999 - plaintiff fails against both insurers but public liability insurer succeeds against CTP insurer - application by public liability insurer for CTP insurer (as well as the plaintiff) to pay its costs - application of the "costs follow the event" rule in circumstances where the plaintiff has failed against both defendants - identification of the costs "event" in relation to the claim and cross-claim issues as identified in the UCPR r 28(2) separate questions for determination - whether the CTP insurer had been brought into the litigation by the conduct of the public liability insurer - whether the plaintiff was entitled to costs of his own action against the CTP insurer by reason of the conduct of the public liability insurer (Ritter v Godfrey [1920] 2 KB 47) Legislation Cited: Civil Liability Act 2002 (NSW) Civil Procedure Act 2005 (NSW), s 98 Legal Profession Act 2004 (NSW), s 347 Motor Accidents Compensation Act 1999 (NSW), ss 3 and 109(1) Uniform Civil Procedure Rules 2005 (NSW), rr 28.2 and 42.1 Cases Cited: Australian Receivables Ltd v Tekitu Pty Ltd [2011] NSWSC 1425 Coote v S & P Jackson Pty Ltd t/as North Coast Cranes (District Court of NSW, Letherbarrow SC DCJ, 8 February 2013) Corbett Court Pty Ltd v Quasar Constructions (NSW) Pty Ltd [2008] NSWSC 1423 Cretazzo v Lombardi (1975) 13 SASR 4 Furber v Stacey [2005] NSWCA 242 Hoffmann v Boland [2013] NSWCA 158 Leading Edge Events Australia Pty Ltd v Kiri Te Kanawa (No 2) [2007] NSWSC 568 McGlinn v Waltham Contractors Ltd [2007] APP. L. R. 03/28 Oshlack v Richmond River Council (1998) 193 CLR 72 Owners Strata Plan No 64970 v Austruc Constructions Ltd (No 5) [2010] NSWSC 568 Probiotec Ltd v University of Melbourne (2008) 166 FCR 30 Ritter v Godfrey [1920] 2 KB 47 Sanderson v Blyth Theatre Company [1903] 2 KB 533 Texts Cited: Dal Pont, Law of Costs (3rd Ed., LexisNexis Australia) Category: Costs Parties: Plaintiff: Matthew Coote Defendant in 2011/271642: S & P Jackson Pty Ltd Defendant in 2012/275799: S & P Jackson Pty Ltd t/as North Coast Cranes Representation: Plaintiff: Mr D Cameron (solicitor) Defendant in 2011/271642: Mr E G Romaniuk SC / Ms O J Dinkha Defendant in 2012/275799: Mr L King SC Plaintiff: Slater & Gordon Defendant in 2011/271642: Curwoods Lawyers Defendant in 2012/275799: McInnes Wilson Lawyers NSW File Number(s): 2011/271642; 2012/275799 Publication restriction: None Judgment 1On 26 March 2013, pursuant to r 28.2 Uniform Civil Procedure Rules 2005 (NSW) ("UCPR"), the Court ordered that the following questions be decided separately from questions pertaining to quantum: (1)Is the accident the subject of 2012/275799 a motor accident within s 3 Motor Accidents Compensation Act? (2)If it is, is the defendant in 2012/275799 liable in negligence to the plaintiff? (3)If it is not, is the defendant in 2011/00271642 liable in negligence to the plaintiff? 2On 18 October 2013 I handed down judgment making orders as follows: (1)I conclude that separate question (1), namely whether the accident the subject of 2012/275799 is a motor accident within s 3 Motor Accidents Compensation Act 1999 (NSW), should be answered in the negative. (2)I conclude that the answer to separate question (2), namely whether the defendant in 2012/275799 is liable in negligence to the plaintiff, should be answered in the negative. (3)I conclude that the answer to separate question (3), namely is the defendant in 2011/271642 liable in negligence to the plaintiff, should be answered in the negative. (4)Costs reserved with liberty to apply. (5)Exhibits retained for 28 days. 3As the affidavit of Mr Cameron (Exhibit XA) sets out, the plaintiff commenced proceedings in the Albury Registry of the District Court (proceedings 2011/271642) as an accident to which the provisions of Civil Liability Act 2002 (NSW) would apply. The matter was unable to proceed in the Albury Registry because the solicitors appearing in the interest of the public liability insurer of the defendant sent the following letter on 23 November 2011: "We refer to your telephone conversation with the writer on 22 November 2011 and confirm in our opinion the plaintiff's claim falls to be determined under the Motor Accidents Compensation Act 1999. In this regard we consider the incident giving rise to this claim clearly falls within the definition of "injury" in the MACA based on the fact that, if liability is found against our client it will be on the basis that there was fault in the owner or driver of the crane in the use or operation of the crane as a result of and caused during such use or operation by a defect in the crane. We also confirm the other person injured in the accident, Brendan Currie, an employee of our client successfully claimed damages through our client's CTP insurer, QBE, earlier this year. We therefore assume Mr Currie made a claim for damages against our client's Workers Compensation insurer who then claimed dual insurance from the CTP insurer on the basis the claim fell under the MACA. We have no details of those proceedings at this stage and are reliant on the information provided to us by our client's managing director, Scott Jackson. We consider the Statement of Claim filed by your client without obtaining an exemption certificate from CARS is void and the subsequent issue of a certificate does not cure the breach: Emad Trolley Pty Ltd v Shigar (2003) 57 NSWLR 636. We await your reply." (Exhibit XA, annexure B) 4A fuller history of the circumstances in which the plaintiff had sought legal advice from the date of his accident on 17 June 2006 up until the date of that letter is set out in the judgment of Letherbarrow SC DCJ: Coote v S & P Jackson Pty Ltd t/as North Coast Cranes (District Court of NSW, Letherbarrow SC DCJ, 8 February 2013). It is not in dispute that having perused this correspondence and certain documents produced under subpoena Mr Cameron came to the view that the plaintiff may need to commence proceedings against the defendant in relation to the insurance company acting in the interest of the defendant's motor vehicle CTP insurer (affidavit, 7 March 2013, paragraph 6). Accordingly, proceedings 2012/275799 were commenced. In those proceedings, the plaintiff by way of summons filed in the Albury Registry on 4 September 2012 sought leave to commence proceedings pursuant to s 109(1) Motor Accidents Compensation Act 1999 (NSW) ("MACA") and to file a statement of claim "for injuries sustained in a motor vehicle accident on 17 June 2006" and that the proceedings be amalgamated with the proceedings against the defendant in 2011/271672. 5When the proceedings came before Letherbarrow SC DCJ, his Honour granted leave, but did not make an order for amalgamation of proceedings. Instead his Honour made orders that the proceedings be heard together, and transferred the proceedings to Sydney. 6Mr Cameron's affidavit of 3 September 2012 (paragraph 10) deposed to the fact that the parties could not agree upon whether the accident was a motor vehicle accident or not and sought to have the issue of liability determined as a preliminary issue or alternatively "to have the issue of whether this accident was a motor vehicle accident or not determined as a preliminary issue". 7The defendants filed defences in accordance with their respective stances as to liability and it was in those circumstances that on 26 March 2013 Truss DCJ ordered that the three questions set out in paragraph 1 above be determined separately and before any other questions in both proceedings pursuant to UCPR r 28.2. 8Following the handing down of my judgment, the defendant in proceedings 2012/275799 brought an application pursuant to s 98 Civil Procedure Act 2005 (NSW) ("CPA") for orders as follows: (1)That the defendant in matter 2011/271642 as a non-party to matter 2012/275799 pay the defendant's costs therein; or (2)Order that CGU Insurance as a non-party to 2012/275799 pay the defendant's costs therein; and, (3)An order that the plaintiff pay the defendants' costs. 9None of the parties dispute that, as an order for costs "following the event", an order for costs of the hearing before me should be borne by the plaintiff. The sole issue for determination is whether any costs order in favour of the defendant in proceedings 2012/275799 should be made against the defendant in proceedings 2011/271642. 10Mr King SC's submissions may be briefly summarised as follows. As to the costs in relation to the dismissal of the plaintiff's claim on liability, he should be entitled to an order for costs in his favour on the basis that the issue of negligence was so inextricably bound up with the issue of which of the insurers is liable, having regard to the provisions of the MACA. Alternatively, he submitted that his client was brought into the litigation at the behest of the defendant in proceedings 2011/271642 and that, but for this step by the public liability insurer, his client would not have been joined to the litigation at all (Ritter v Godfrey [1920] 2 KB 47). 11The defendant in proceedings 2011/271642 opposes this application, principally on the basis that the costs "follow the event" rule (UCPR r 42.1 and CPA s 98) should not be departed from as the public liability insurer was successful in the proceedings against the plaintiff and the 2012 proceedings do not fit within any of the categories which the courts have recognised as justifying departure from the general rule (Oshlack v Richmond River Council (1998) 193 CLR 72 at [40] and [69]; Corbett Court Pty Ltd v Quasar Constructions (NSW) Pty Ltd [2008] NSWSC 1423 at [31]). It was submitted that only in "truly exceptional" circumstances (McGlinn v Waltham Contractors Ltd [2007] APP. L. R. 03/28 at [21]) could a claimant who had lost against both defendants recover the costs of pursuing one defendant against the other, and the same principle should be extended to one successful defendant seeking costs against the other (see also Hoffmann v Boland [2013] NSWCA 158 at [175]). Other bases upon which the costs order was opposed was that there was no entitlement to a Bullock or Sanderson order where both the defendants were successful (written submissions, paragraphs 38-40), that the public liability insurer was a "non-party" in the 2011/271642 litigation and the court's reluctance to determine costs on a "issue by issue" basis rather than considering costs in a global sense (see the cases discussed in Dal Pont, Law of Costs (3rd Ed., LexisNexis Australia) at [8.7] and [8.8]). This is of particular relevance in relation to any claim for costs by the CTP insurer for that portion of the hearing which dealt with the answer to question (1), namely the determination of whether the accident was a motor accident within MACA s 3. Application of the "costs follow the event" rule 12Determining the question of costs, appellate courts have warned against taking a "issue by issue" approach as opposed to a more global approach: Cretazzo v Lombardi (1975) 13 SASR 4 at 16 per Jacobs J. In Leading Edge Events Australia Pty Ltd v Kiri Te Kanawa (No 2) [2007] NSWSC 568 at [10]-[11], Bergin J noted the importance of s 347 Legal Profession Act 2004 (NSW) in this regard. However, this rule is not a "one size fits all" rule, as Professor Dal Pont notes in [8.8]; the challenges are heightened in a case where there are distinct claims on alternative grounds, where there is mixed success, where the litigation involves multiple parties and (at [8.9]) where the party seeking costs is a successful defendant. In addition, the cases to which Mr Romaniuk SC referred me on this issue all related to hearings of the whole proceedings, as opposed to a hearing consisting of my answers to an agreed set of questions set down for a separate hearing pursuant to UCPR r 28.2. 13There are two aspects to the claim for costs by the CTP insurer. The first relates to the determination of whether the plaintiff had established negligence. The second relates to the costs of answering question (1). I assume, since question (1) is the first of three questions, the parties considered it a matter of some importance and capable of being answered in a separate sense. 14Although Mr Romaniuk SC submitted that his client was a successful party in relation to the issue of liability and that this primary victory rendered the determination of the issue in question (1) either de minimis or irrelevant. Leaving aside the essential nature of question (1) in determining whether the accident was a motor vehicle accident, the fact remains that, for the purpose of costs, I must determine what, for the purposes of UCPR r 42.1, is the "event". The need to determine the relevant "event" in cases involving multiple issues or multiple parties has been recognised and explained in a series of decisions including Owners Strata Plan No 64970 v Austruc Constructions Ltd (No 5) [2010] NSWSC 568 and Australian Receivables Ltd v Tekitu Pty Ltd [2011] NSWSC 1425. In Australian Receivables Ltd v Tekitu Pty Ltd, supra, Ward J noted at [25]-[26]: "[25] As to what is the relevant "event" in any particular case, it is clear that this is not limited to consideration of the event in a technical pleading sense. In Fexuto Pty Ltd v Bosnjak Holdings Pty Ltd (No 3) (1998) 30 ACSR 20, at 22, Young J, as his Honour then was, noted in the context of a costs application that "one does not look at issues as if they were pleader's issues, but approaches the matter with a broad brush" [26] The English Court of Appeal in Roache v News Group Newspapers [1992] TLR 551, as cited by the Queensland Court of Appeal in Timms v Clift [1998] 2 Qd R 100, usefully posed the question as to who is to be seen as the successful party "in the event" as being a question as to: "... who, as a matter of substance and reality, had won? Had the plaintiff won anything of value or anything he could not have won without fighting the action through to a finish? Had the defendant substantially denied the plaintiff the prize which the plaintiff fought the action to win?"" 15Similarly, in Owners Strata Plan No 64970 v Austruc Constructions Ltd (No 5), supra, Bergin J found that there were numerous "events" in respect of which costs should follow. In relation to the "event" in question (1), both parties submitted to me that this issue was so inextricably intertwined with the issue of liability that the same costs order should be made in relation to (1) as to questions (2) and (3), and regarded this intermeshing of issues as being such that the court could not "unscramble the omelette". However, when one considers how the proceedings were conducted, and the manner in which evidence was led, the question of whether or not negligence had been established, including the expert evidence, the lay evidence and the submissions, failed to refer to any difference arising from whether or not the accident in question was an accident for the purposes of s 3 MACA. To the contrary, both defendants relied upon the same expert evidence and lay evidence. This was not a case where there were competing theories of negligence about how the accident occurred. In practical terms, the parties split the case into two issues, namely whether the accident was a motor accident within the terms of s 3 MACA (question (1)) and whether the plaintiff could establish liability in negligence against either defendant (questions (2) and (3)). 16As I noted in [12] of my judgment, both parties fought the litigation as if the particulars of negligence in proceedings 2011/271642 were the governing set of particulars for the proceedings. 17Taking all of the above into account, I am satisfied that, given question (1) was the threshold question, the "event" for the purposes of a costs order in relation to question (1) depended upon whether it was answered yes or no. The CTP insurer has succeeded on this issue and the onus of displacing the presumption that costs should follow the event falls upon the parties against whom the CTP insurer was successful. 18The plaintiff in these proceedings essentially endorsed the submissions of the CTP insurer, to the effect that question (1) should be answered no. Clearly the plaintiff must be liable for costs. The question is whether, given the CTP insurer's success on the "event", the CTP may also seek costs against the public liability insurer. 19In relation to these costs, Mr Romaniuk SC drew my attention to the principles set out in Dal Pont, supra, and to the undesirability of determining costs on an issue by issue basis. However, he was unable to take me to any decisions where following the referral of issues to a judge for answers to specific questions (as opposed to conducting the entire hearing), the same general costs order had been made. 20Conformably with the approach taken by Bergin J and Ward J, I am of the view that as the "event" in question (1) was resolved in favour of the CTP insurer, costs should follow the event. Mr Romaniuk SC's urging upon me that success in relation to question (1) was a trivial issue is unpersuasive. Not only was question (1) the other main issue in the proceedings, it was a severable issue capable of resolution by a separate question and answer. It has been answered in favour of the CTP insurer, and the CTP insurer should be entitled to seek its costs not only against the plaintiff but against the public liability. 21Much of the technicality of this costs argument arises from the structure of the claims as two separate files, whereas in reality the case has been conducted as if the plaintiff commenced proceedings against two defendants who separately brought third party claims against each other. If there had been such a pleading, the issue of costs would have been straightforward. 22These two factors - the nature of the "event" and the artificiality of regarding question (1) as a claim against a non-party - are the reasons why Mr Romaniuk SC's submissions based on Oshlack v Richmond River Council, supra, at [40] and [69] do not apply to the first of the three questions. His client should pay these costs on the basis that costs follow the event, and questions such as whether his client is a non-party or successful on liability are not to the point. Costs in relation to questions (2) and (3) 23The costs of answering questions (2) and (3) are straightforward by comparison to the issue of the costs of answering question (1). These two questions relate to the respective negligence of each of the defendants, and in this regard Mr Romaniuk SC's submissions based upon the principles enunciated in Oshlack v Richmond River Council, supra, are applicable. 24Mr King SC drew my attention to the circumstances in which his client, the CTP insurer, had effectively been brought into the litigation by the actions of the public liability insurer, rather than by reason of a decision of the plaintiff. The circumstances in which the plaintiff brought proceedings against the CTP insurer do not demonstrate conduct which is "unreasonable" or "discreditable" (Corbett Court Pty Ltd v Quasar Constructions (NSW) Pty Ltd, supra, at [31] per Hammerschlag J). Mr Romaniuk SC submitted, and I agree, that the bringing of a claim arising from a crane accident framed as both a work injury and a motor vehicle injury is a common occurrence. The fact that the plaintiff did so after this issue was raised by the public liability insurer is irrelevant. 25I note the complex questions which may arise as to whether a Sanderson order (Sanderson v Blyth Theatre Company [1903] 2 KB 533) can be made where both defendants have succeeded against the plaintiff (as opposed to one succeeding against the other in, for example, a cross-claim). In McGlinn v Waltham Contractors Ltd, supra, Coulson J stated that exceptional circumstances would be required for a claimant unsuccessful against both defendants to recover the costs of pursuing one defendant against the other (see also Hoffman v Boland, supra, at [175] per Hoeben J). The key word is "claimant"; as I have noted below, that militates against the plaintiff in these proceedings recovering costs in relation to the proceedings against the CTP insurer, but it does not prevent a successful defendant claiming costs against an equally successful third party, for the reasons explained by Einstein J in Furber v Stacey [2005] NSWCA 242 at [114], where his Honour indicated that there is no overarching "guiding principle", but rather a consideration of what may be just in a particular case. Applying those principles here, Mr King SC's application for costs for his client in relation to questions 2 and 3 fails. The plaintiff's application for costs 26The plaintiff concedes he cannot resist an order for costs in relation to the claim brought against him by the public liability insurer but seeks to argue that costs in relation to the CTP insurer fall within a different category. 27This is not a case where a defendant has delivered a separate defence causing a plaintiff to incur additional costs or where the plaintiff has taken no active part in the argument (Probiotec Ltd v University of Melbourne (2008) 166 FCR 30 at [73]). The plaintiff endorsed and relied upon the submissions of the CTP insurer. The plaintiff has been unsuccessful against both defendants and should pay both defendants' costs: McGlinn v Waltham Contractors Ltd, supra. Form of orders 28I invited the parties to consider the orders appropriate if they were successful, but neither party framed these orders in relation to the questions asked. For example, Mr King SC sought his client's costs for the entirety proceedings 2011/271642 as a non-party (written submissions 5 December 2013, paragraph 9) and in proceedings 2012/275779 as a party. However, the same questions were asked in each claim, and the evidence of one treated as the evidence in the other, and to be framing orders in relation to non-parties is an unnecessary technicality. 29Accordingly, I have made costs orders in both proceedings on the basis that the same questions framed by Truss DCJ were asked in each of those proceedings. 30The costs of the costs application are included in the costs orders set out below, in order to reflect the parties' respective success or failure in relation to questions (1), (2) and (3). Orders (1)As to question (1) in both proceedings 2011/271642 and 2012/275779 each of the plaintiff and the public liability insurer is to pay the costs of the CTP insurer (QBE Insurance (Australia) Limited). (2)As to question (2) and (3) in both proceedings 2011/271642 and 2012/275779 the plaintiff is to pay the costs of each of the CTP insurer (QBE Insurance (Australia) Limited) and the public liability insurer. (3)Plaintiff's application for costs dismissed. ********** 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: 11 December 2014