Supreme Court New South Wales Medium Neutral Citation: Polglase by his tutor Jeffrey Polglase v Coffs Harbour City Council (No 3) [2020] NSWSC 169 Hearing dates: 28 February 2020 Date of orders: 28 February 2020 Decision date: 28 February 2020 Jurisdiction: Common Law Before: Cavanagh J Decision: (1) The first and third defendants pay the costs of the plaintiff. (2) The plaintiff pay the costs of the fourth defendant. (3) The plaintiff pay the costs of the fifth and sixth defendants. (4) The first and third defendants pay the costs of the fourth, fifth and sixth defendants on the cross claims on an ordinary basis. (5) Except that, in respect of the cross-claim between the first and third defendants and the fifth and sixth defendants, the first and third defendants pay the costs on an indemnity basis from 30 August 2016. (6) The plaintiff is entitled to recover his costs against the first and third defendants forthwith. (7) The orders I make in respect of the costs of the fourth, fifth and sixth defendants as against the plaintiff are that those costs are only recoverable on the conclusion of the whole proceedings. Catchwords: COSTS — party/party — orders when proceedings involve multiple parties — Bullock and Sanderson orders — conduct of unsuccessful defendant Cases Cited: ACQ v Cook (No 2); Aircair Moree v Cook (No 2); Cook v Country Energy (No 2); Country Energy v Cook (No 2) [2008] NSWCA 306 Almeida v Universal Dye Works Pty. Limited & Ors [2001] NSWCA 156 Bullock v London General Omnibus Co [1907] 1 KB 264 Calderbank v Calderbank [1975] 3 All ER 333; [1975] 3 WLR 586 Gould v Vaggelas (1985) 157 CLR 271; [1985] HCA 75 Lackerstein v Jones (No 2) [1988] NTSC 72; 93 FLR 442 Sanderson v Blyth Theatre Co [1903] 2 KB 533 Stevedoring Industry Finance Committee v Ronald J Gibson & 4 ORS [2000] NSWCA 179; (2000) NSWCCR 417 Category: Costs Parties: Tedmund Polglase by his tutor Jeffrey Polglase (Plaintiff) Coffs Harbour City Council (First Defendant) Coffs Jetty Foreshore Reserve Trust (Third Defendant) State of New South Wales (Fourth Defendant) Betty Whitton (Fifth Defendant) David Whitton (Sixth Defendant) Representation: Counsel: R S McIlwaine SC with R E Quickenden (Plaintiff) R Sheldon SC (First and Third Defendants) H Chiu (Fourth Defendant) M Hutchings (Fifth and Sixth Defendants) Solicitors: Whitelaw McDonald (Plaintiff) Mills Oakley (First and Third Defendants) Wotton & Kearney (Fourth Defendant) Sparke Helmore (Fifth and Sixth Defendants) File Number(s): 2014/281434 Publication restriction: None revised ex tempore Judgment 1. On 19 December 2019, I gave judgment for the plaintiff against the first and third defendants, that is, the Council and the Trust, and gave judgment for the fourth defendant, the State, and the fifth and six defendants, the grandparents, against the plaintiff. 2. The matter that is before me today is on the question of costs. Mr McIlwaine SC appearing with Mr Quickenden on behalf of the plaintiff submits that the first and third defendants should pay the plaintiff's costs and that there should be a Sanderson [1] or Bullock [2] order in respect of the other defendants. 3. He submits that it was reasonable for the plaintiff to have joined those other defendants and that the conduct and the denials by the first and third defendant justify a Bullock or Sanderson order. 4. Mr Sheldon SC, who appears on behalf of the first and third defendants, accepts that the first and third defendants must pay the plaintiff's costs on an ordinary basis but disputes that the first and third defendant should be paying any other party's costs. 5. Mr Chiu, who appears on behalf of the fourth defendant, adopts Mr McIlwaine's submissions and seeks a Bullock or Sanderson order as against the first and third defendants, or, in the alternative, seeks an order that the plaintiff pay the fourth defendant's costs. 6. Mr Hutchings, who appears on behalf of the fifth and sixth defendants, similarly adopts the plaintiff's submissions in respect of the imposition of a Sanderson or a Bullock order on the first and third defendants. 7. In the alternative, he says that the plaintiff must pay the fifth and sixth defendants' costs. He also seeks indemnity costs as against both the plaintiff, and, on the cross-claim, as against the first and third defendants. I will come back to the application for indemnity costs. 8. Firstly, in accordance with the usual rules, the first and third defendant should pay the plaintiff's costs. I have not been provided with any offers of compromise which would suggest that the first and third defendants should be paying the costs on an indemnity basis. 9. The issues which arise on this application are really whether the first and third defendants should pay the other parties' costs, and then whether the fifth and sixth defendants should obtain some special order for costs. 10. The principles which should be applied in these sorts of applications are well known. The Court has a wide discretion in respect of costs and every case is different but the principles set out in Gould v Vaggelas (1985) 157 CLR 271; [1985] HCA 75 ("Gould") still apply. 11. In Gould, Gibbs CJ said, at 229: "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." 1. These principles have been applied on many occasions. The plaintiff points to what was said by Santow AJA in Almeida v Universal Dye Works Pty. Limited & Ors [2001] NSWCA 156 ("Almeida") as justifying a Bullock or Sanderson against the first defendant. However, I read his Honour's comments in Almeida at [38] as being directed more at the conduct of the unsuccessful defendant prior to joinder of the successful defendant, rather than an analysis of the conduct of an unsuccessful defendant after joinder, up to and including the time of the hearing. 2. In Stevedoring Industry Finance Committee v Ronald J Gibson & 4 ORS [2000] NSWCA 179; (2000) NSWCCR 417 at [128] ("Stevedoring Industry Finance Committee"), the Court referred to and agreed with a summary of the principles set out by Asche J in Lackerstein v Jones (No 2) [1988] NTSC 72; 93 FLR 442 at [24] as follows: "1. It must be seen to have been reasonable and proper for the plaintiff to have sued the successful defendant. 2. The causes of action against two or more defendants need not be the same but they must be substantially connected or dependent the one on the other. 3. While it is essential to find that the plaintiff has acted reasonably and properly that alone is not sufficient. The court must find something in the conduct of the unsuccessful defendant which makes it a proper exercise of discretion. 4. Finally, in considering whether to make such an order, the Court should, in the exercise of its discretion balance overall two considerations of policy: the first, that an unnecessary multiplicity of actions should not be forced on litigants, so that a plaintiff who acts reasonably in joining two or more defendants should not be penalised or lose the fruits of his victory in costs on the basis that he should have either elected or taken separate actions; the second, that an unsuccessful defendant should not have to pay more than one set of costs merely because he is unsuccessful." 1. The emphasis in that summary is consistent with Gould at 229 (Gibbs CJ), that is, it must have been reasonable and proper for the plaintiff to have sued the unsuccessful defendant and the Court must find that there is something in the conduct of the unsuccessful defendant which makes a Bullock or Sanderson order a proper exercise of discretion. 2. Mr McIlwaine has emphasised the overall conduct of the unsuccessful defendant rather than necessarily focusing on the conduct of the unsuccessful defendant prior to the commencement of the proceedings. 3. It is notable that on this application for costs the evidence is limited to two letters passing between the solicitors for the plaintiff and the solicitors for the first and third defendants in April 2016 which relate to the joinder of the fifth and sixth defendants as well as the offer of compromise served by the fifth and sixth defendants. 4. There is no evidence before me which suggests that anything that the first and third defendants did prior to the commencement of the proceedings induced, encouraged or caused the plaintiff to join the fourth defendant. 5. There can be no doubt that it was reasonable for the plaintiff to do so. At least, in my view, this is a complex matter and there were issues between the parties which needed resolution. No party could be sure of the outcome before commencement of the proceedings. So it was quite reasonable for the plaintiff to have joined the fourth defendant. 6. However, as set out in Gould, ACQ v Cook (No 2); Aircair Moree v Cook (No 2); Cook v Country Energy (No 2); Country Energy v Cook (No 2) [2008] NSWCA 306 and again in Stevedoring Industry Finance Committee, there needs to be something more. No evidence has been adduced which would suggest there is that something more in this case. 7. I do not say that there can never be a situation where the conduct of an unsuccessful defendant post-joinder could not be considered as part of the court's discretion in ordering costs. The first and third defendants denied liability, denied the existence of a duty of care and denied that they were occupiers at the relevant time, as did the fourth defendant. Again, it seems to me that these were at least arguments available at the time. It does not seem to me that by denying liability the first and third defendants acted in such an unreasonable, improper or exceptional way that that its post-joinder conduct should be brought to bear in terms of the making of a costs order. 8. In the circumstances, the plaintiff has not established that there was something about the conduct of the first and third defendants which caused him to join the fourth defendant or that there was something exceptional or untoward or unusual, if I use those general terms, about the conduct of the first and third defendants after joinder that necessarily should result in the first and third defendants being responsible for the fourth defendant's costs. The order that I will make in respect of the fourth defendant's costs is that the plaintiff pay the fourth defendant's costs. 9. In respect of the fifth and sixth defendants the issue is slightly different because there was an exchange of correspondence between the parties before the commencement of the proceedings. 10. By letter dated 13 April 2016, the solicitors for the plaintiff wrote to the solicitors for the first and third defendants (in response to a request that the plaintiff consent to the filing of a cross-claim), suggesting that, on their understanding of the law, the fifth and sixth defendants could not be liable because they did not owe a duty of care. They said: "We have doubts as to whether the first cross-claim as proposed by yourselves discloses any cause of action at law. Will you please advise on what legal basis you say the duty of Mr and Mrs Whitton arises to the injured plaintiff." 1. Mills Oakley, on behalf of the first and third defendants, responded saying, "We disagree. Your request is a matter for submissions", and then referred to the existence of a duty of care in other cases. They asked whether the plaintiff would consent to the filing of the proposed first cross-claim. 2. It is not necessary that I repeat the principles to which I have already referred. Again, I accept that it was reasonable for the plaintiff to have joined the fifth and sixth defendants. The question which arises is whether, by this exchange of correspondence, it can be said that the conduct of the first and third defendants was such to have induced the plaintiff into joining the fifth and sixth defendants or, in some way, that the fact that the first and third defendants wanted to join the fifth and sixth defendants to the proceedings was sufficiently unreasonable or such as to induce the plaintiff into joining the fifth and sixth defendants. 3. The first and third defendants maintained a position that the fifth and sixth defendants could be liable to the plaintiff. They informed the plaintiff why they thought the fifth and sixth defendants could be liable on their cross-claim. Nothing was said about the plaintiff joining the fifth and sixth defendants. 4. The mere statement of an opinion as to the state of the law, that is, whether the grandparents owed a duty of care, could not of itself be taken to be an inducement or a suggestion to the plaintiff to join the grandparents. The cases against each of the defendants were completely different. The case against the grandparents, as is apparent from the substantive judgment, was that the grandparents failed to take care in those very moments prior to the accident. 5. In the circumstances, I am not satisfied that the second leg of Gould is satisfied vis-à-vis the first and third defendants and, in the circumstances, the order that I make in respect of the fifth and sixth defendants is that the plaintiff pay the fifth and sixth defendants' costs. 6. I reject the application for indemnity costs as against the plaintiff. I do not accept Mr Hutchings' submission that the conduct of the plaintiff towards the fifth and sixth defendants in terms of the preparation for the hearing was such that there should be an order for indemnity costs against the plaintiff. There would need to be truly exceptional circumstances. There needed to be some detailed exploration of the evidence for such an order to be made. 7. In terms of the offer of compromise served on the day before the hearing I have before me an offer of compromise served by the fifth and sixth defendants on the plaintiff, served late on the afternoon of 16 September 2019 and available to be accepted by 10am on Tuesday, 17 September 2019. I do not accept that that was a reasonable timeframe to allow the plaintiff, who is represented by a tutor, to get instructions on complete abandonment of the plaintiff's claim against the fifth and sixth defendants. 8. So the order will be only on a party-party basis between the plaintiff and the fifth and sixth defendants. 9. The fifth and sixth defendants also rely on a Calderbank [3] letter dated 2 August 2016 addressed to Mills Oakley, the solicitors for the first and third defendants. In that offer the fifth and sixth defendants proposed that the cross-claim being pursued by the first and third defendants be dismissed and there be no order as to costs and the parties enter into a deed of release and indemnity. The offer is only an offer on the cross-claim. The letter sets out the basis on which the fifth and sixth defendants contend that they will be successful. Of course, the fifth and sixth defendants were successful. 10. I consider the offer represents a valid Calderbank offer on the cross-claim and, as such, I am satisfied that the fifth and sixth defendants are entitled to an order for indemnity costs on the cross-claim only from 28 days after the date of the offer, which would be 30 August 2016. Of course, it is a matter for assessment in terms of the difference between indemnity costs and party-party costs on the cross-claim. 11. In the circumstances, I make the following orders: 1. The first and third defendants pay the costs of the plaintiff. 2. The plaintiff pay the costs of the fourth defendant. 3. The plaintiff pay the costs of the fifth and sixth defendants. 4. The first and third defendants pay the costs of the fourth, fifth and sixth defendants on the cross claims on an ordinary basis. 5. Except that, in respect of the cross-claim between the first and third defendants and the fifth and sixth defendants, the first and third defendants pay the costs on an indemnity basis from 30 August 2016. 6. The plaintiff is entitled to recover his costs against the first and third defendants forthwith. 7. The orders I make in respect of the costs of the fourth, fifth and sixth defendants as against the plaintiff are that those costs are only recoverable on the conclusion of the whole proceedings. ********** Endnotes 1. Sanderson v Blyth Theatre Co [1903] 2 KB 533 ("Sanderson"). 2. Bullock v London General Omnibus Co [1907] 1 KB 264 ("Bullock"). 3. Calderbank v Calderbank [1975] 3 All ER 333; [1975] 3 WLR 586. 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: 03 March 2020