Zraika v Walsh (No 2)

1. [1]

   On 30th April 2015, I decided 9 liability questions ordered to be determined separately: Zraika v Walsh [2015] NSWSC 485. I directed the parties to confer to agree on the appropriate order as to costs, and in default of agreement reserved liberty to apply. Exercising that liberty, the parties brought the matter back before me on 2nd July 2015, when I directed that the costs question be determined in chambers on the basis of written submissions to be exchanged by the parties and lodged with my chambers no later than 13th July 2015.

2. [2]

   The parties at issue over costs, the first and second defendants, the third defendant and the fourth defendant each complied with my direction. This judgment deals with the outstanding costs issues.

Recent developments

1. [3]

   The third and fourth defendants are public authorities whose liability was adjudged under the provisions of Pt 5 Civil Liability Act 2002 (NSW). Each of them, I am informed, has filed a notice of intention to appeal and I expect the appeals will be prosecuted. This prompted Mr Fordham SC, who appears for the third defendant, and Mr Sheldon SC, who appears with Mr Knowles for the fourth defendant, to suggest that any question as to costs as amongst the defendants be left in abeyance until the appeal is decided. Whilst there may be sense in that suggestion, it seems to me that better practice requires the questions to be determined by me as “trial judge” in advance of the appeal, otherwise, cost questions may have to be remitted whatever the outcome of the appeal.

2. [4]

   The successful fifth defendant has not made any application, but the orders sought by the first and second defendants seek provision for the fifth defendant’s costs of the separate question proceedings. The first and second defendants are the driver and owner of one motor vehicle involved in the collision with the fifth defendant the driver of the other. In accordance with the usual practice, the litigation was carried by one insurer. But the fifth defendant was separately represented by counsel at the hearing. Provision is sought in respect of counsel’s fees (Mr G Smith) and the costs of and incidental to briefing him.

3. [5]

   As Mr Sheldon points out, my decision on the separate questions did not determine liability in the case, as such. This is because all defendants strongly contested that the plaintiff’s medical condition was caused by injuries received in the car accident when he was en ventre sa mere. Damage being of the gist of negligence, no finding of negligence could be supported until this question, essentially, of medical causation was determined at the subsequent hearing dealing with quantum.

4. [6]

   That question will no longer need to be determined because it has been subsumed in a settlement of the plaintiff’s claim approved by Harrison J under s 76(4) Civil Procedure Act 2005 (NSW). It is unnecessary, and perhaps inappropriate, to set out the terms of that settlement, save as to say, legal responsibility for the damages payable on the plaintiff’s behalf remains subject to the appeal from my separate question decision.

The position of the parties

1. [7]

   The position of each contending party is, of course, subject to any redetermination of the separate questions on appeal. However, for first instance purposes all generally accept that the defendants should bear the plaintiff’s costs of the whole proceedings in accordance with my apportionment for the purposes of s 5 Law Reform (Miscellaneous Provisions) Act 1946 (NSW). That is to say: the first and second defendants as to 50 per cent; the third defendant as to 25 per cent; and the fourth defendant as to 25 per cent. It is a term of the settlement approved by Harrison J that the defendants pay the plaintiff’s costs as agreed or assessed “in proportions agreed between themselves pending further determination of their respective liabilities and/or order by the Court”. In due course, I will make an order giving effect to the position which the parties accept as appropriate, at this stage.

2. [8]

   There is a qualification. Dr Rewell SC, who appears for the first and second defendants points out that his clients admitted breach of duty of care (the fourth defendant emphasises not liability) on 13th December 2013. From this circumstance, the first and second defendants argue that they should not be responsible for the plaintiff’s costs thereafter and the third and fourth defendant should bear them. They also seek an order for costs in their favour “on the issue of liability” from 13th December 2013, and an order for the fifth defendant’s costs, limited as mentioned above.

3. [9]

   The third defendant says if there is to be a determination of the costs amongst the contending parties “on the cross-claims”, they should be worked out according to my “apportionment” in accordance with my answer to separate question 9.

4. [10]

   The fourth defendant adopted a similar position. It also argued that the plaintiff should pay the fifth defendant’s costs in respect of which it would be indemnified pursuant to the undertaking to the Court provided by the first and second defendants following the decision of Rothman J in Zraika v Walsh [2011] NSWSC 1569. The fourth defendant points out that it made no cross-claim against the fifth defendant and argued that it should not be liable for his costs.

Applicable principles

1. [11]

   All counsel reminded me that costs should follow the event, and I remind myself that where separate questions are involved, the event is not always readily discerned. The fourth defendant made reference to Bostik Australia Pty Ltd v Liddiard (No 2) [2009] NSWCA 304 at [38] where the court summarised the principles to be applied when a court is asked to depart from the general rule to make an order reflecting variable success distributed, perhaps unevenly, amongst the parties. I set out that summary in full:

2. [12]

   In Solarus Projects v Vero Insurance (No 9) 2015 NSWSC 503, following Floruit Holdings Pty Ltd v Sebastian – Builders and Developers Pty Ltd [2009] NSWCA 411 at [7] and Ajkay v Hickey & Co. Pty Ltd [2011] NSWSC 822 at [21], I said (at [11]):

Decision

1. [13]

   It is agreed that the plaintiff should have his costs. The parties have agreed that, at this stage (each of them is a “good common law defendant”), those costs should be borne by them in proportion to their likely share of liability in accordance with my answer to question 9: James Hardie and Co Pty Ltd v Wyong Shire Council [2000] NSWCA 107; 48 NSWLR 679.

2. [14]

   The separate hearing before me, in substance, was like the hearing of cross-claims involving liability issues amongst the defendants, the first and second defendants having admitted breach of duty of care to the plaintiff. Although represented by senior and junior counsel, the plaintiff took no real active part in the proceedings, the case against the third and fourth defendants being propounded by the first and second defendants.

3. [15]

   The plaintiff joined the fifth defendant, but it did so defensively, as it were, in view of his joinder by the third defendant by way of cross-claim. As between themselves the fifth defendant and the third defendant were the main contradictors. As I have recorded, the fourth defendant issued no cross-claims contenting itself with defending its own position.

4. [16]

   Before Rothman J, who extended the time fixed by s 109 Motor Accidents Compensation Act 1999 (NSW) for bringing these proceedings, the view was apparently taken that the cross-claims which would have been propounded by the first and second defendant were out of time. For that reason, his Honour made the order granting leave conditional upon the plaintiff joining, at that stage, the third and fourth defendants. As Mr Fordham points out in his written submissions, the view formed by the parties before Rothman J may not have been well-founded: cf Gallagher Bassett Services NSW Pty Ltd v Murdoch [2013] NSWCA 386; 86 NSWLR 13 at [36] – [38], [62] – [63] and [66].

5. [17]

   Adopting as the event, the favourable answer to separate questions, the successful parties were the first, second and fifth defendants. The third and fourth defendants at all times stoutly resisted the claims advanced against them by the successful parties. A court has power to make an order for statutory contribution amongst parties sued by a plaintiff whether or not those defendants have filed a cross-claim seeking that relief: HIH Casualty and General Insurance Limited v Pluim Constructions Pty Ltd [2000] NSWCA 281; 11 ANZ Insurance Cases 61 – 477 at [81] – [82].

6. [18]

   Applying what I regard as the general rule practice in relation to separate question determinations, I am of the view that the first and second defendants should have their costs of those separate proceedings paid by the third and fourth defendants. The fifth defendant’s costs of those proceedings should be paid by the third defendant which was principally responsible for joining him to the action, but limited to the costs of and incidental to briefing counsel, counsel’s fees, and the expenses of witnesses called by him.

7. [19]

   I reject the fourth defendant’s argument that the costs of any successful cross-claim should be borne in shares proportionate to the relevant cross-defendant’s apportioned share of liability. In my view, James Hardie v Wyong Shire Council does not stand as authority for that proposition.

8. [20]

   My orders are:

   1. (1)

      The plaintiff’s costs of and incidental to the proceedings, after they have been agreed or assessed, are to be paid in the following proportions:

   2. (2)

      The third and fourth defendants to pay the first and second defendants costs of and incidental to the determination of the separate questions on the ordinary basis in equal shares.

   3. (3)

      The third defendant to pay the fifth defendant’s costs of the determination of the separate question limited to the costs of and incidental to preparing brief on hearing, counsel’s fees, and the expense of witnesses called by the fifth defendant in his case.

   4. (4)

      The costs of and incidental to this application are the parties costs in the principal proceedings.