Rodriguez & Sons Pty Limited v Queensland Bulk Water Supply Authority t/as Seqwater (No 24)

Following the publication of the principal judgment (Rodriguez & Sons Pty Ltd v Queensland Bulk Water Supply Authority trading as Seqwater (No 22) [2019] NSWSC 1657; “Rodriguez (No 22)”) and a judgment dealing with apportionment (Rodriguez & Sons Pty Limited v Queensland Bulk Water Supply Authority t/as Seqwater (No 23) [2020] NSWSC 650; “Rodriguez (No 23)”), the next round of issues to determine in these proceedings is the appropriate order for costs of the proceedings, the resolution of the remaining causation and quantum issues affecting the sample group members (see Rodriguez (No 22), Chapter 13 at [323]) and motions for the referral of various claims of group members to a referee in anticipation of a later application by the plaintiff for an order under s 177(1)(f) of the Civil Procedure Act 2005 (“CPA”).

This judgment deals with costs. It assumes a familiarity with Rodriguez (No 22) and Rodriguez (No 23). It can be expected that the costs will be very large.

It was not disputed between the parties that, as a consequence of Rodriguez (No 22) and Rodriguez (No 23), the plaintiff is entitled to a joint and several costs order against all of them for the costs of the proceedings on the ordinary basis. Three relatively minor matters should be noted. First, it was also common ground that any such order should not affect any previous specific costs order made in favour of the defendants (see, for example, Rodriguez & Sons Pty Ltd v Queensland Bulk Water Supply Authority trading as Seqwater (No 9) [2017] NSWSC 1116). Second, the plaintiff sought to reserve its ability to seek an indemnity costs order against the Third Defendant (The State of Queensland; “the “State”) depending on the final quantum that may be awarded. The State opposed any such order but did not oppose the reservation of liberty to apply. Third, the plaintiff sought to reserve liberty to apply in respect of applying for a lump sum determination of its costs (CPA, s 98(4)(c)).

The real issue for determination arose between the defendants. The second defendant, SunWater Ltd (“SunWater”), and the State contended that, as between the defendants, they should ultimately bear responsibility for the plaintiff’s costs in the same proportions that were determined in Rodriguez (No 23). The First Defendant, Seqwater Ltd (“Seqwater”), submitted that the plaintiff’s costs should be borne in the proportion of a third for each defendant.

It is necessary to identify the power being exercised. SunWater submitted that orders between the defendants concerning the plaintiff’s costs could be made under s 6 of the Law Reform Act 1995 (Qld) (“Law Reform Act”). Senior Counsel for Seqwater, Mr Stoljar SC, submitted that s 6 is not engaged as, given the plaintiff’s claims are apportionable claims, it follows that the defendants are not persons “liable in respect of the same damage” (s 6(1)(c); Rodriguez (No 22), Chapter 14 at [94]). Senior Counsel for SunWater, Mr Williams SC, submitted that the defendants joint (and several) liability for the plaintiff’s costs amounts to the “same damage”. He relied on James Hardie v Wyong Shire Council (2000) 48 NSWLR 679; [2000] NSWCA 107 (”James Hardie”) which held that the “right to contribution conferred by s 5 [of the Law Reform (Miscellaneous Provisions) Act 1946 (NSW)] extends, as a matter of right, to the costs payable to the plaintiff” (at [23] per Handley JA and at [42] per Giles JA). There is no relevant difference between s 6 of the Law Reform Act and s 5 of the Law Reform (Miscellaneous Provisions) Act 1946 (NSW). I note that Mr Stoljar SC formally submitted that James Hardie was wrongly decided.

Consistent with James Hardie, the reference to the “same damage” in s 6(1)(c) of the Law Reform Act extends to the defendants’ joint liability for the plaintiff’s costs. If that is the source of the power to make an order, then the amount of the contribution recoverable from each defendant is what is “just and equitable having regard to the extent of that person’s responsibility for the damage”, which in this case is the plaintiff’s costs (Law Reform Act, s 7). In addition to s 7, the Court also has the power conferred by s 98 of the CPA which includes the “full power to determine by whom, to whom and to what extent costs are to be paid” (s 98(1)(b)). The application of s 98 of the CPA and s 7 of the Law Reform Act should not, and in this case do not, lead to a different outcome. These sources of power, or at least s 98, are supplemented by the Supreme Court Act 1970, and that which follows from the Court’s status as a superior court of record, to enable the Court to grant the appropriate relief to reflect a determination of the amount of each defendant’s contribution towards the plaintiff’s costs. In this case, as no costs have yet been paid to the plaintiff by the defendants, the appropriate form of relief is a declaration as to the defendants’ respective obligations to each other.

Mr Stoljar SC submitted that any assessment of the proportion of the plaintiff’s costs that each defendant must bear had to be undertaken on the basis that “responsibility in relation to costs is referable to and should be measured by the conduct of the litigation” and “is not referable to or measured by anything that did or did not occur in January 2011”. He submitted that the plaintiff’s case arose out a common stratum of facts (citing Tsu v Nemeth & Anor [2012] NSWCA 29 at [69]) and was very much a joint undertaking, with the defendants adopting the submissions of each other and relying on the evidence adduced by each other. In those circumstances, he submitted that there was nothing that warranted a deviation from each defendant bearing one third of the plaintiff’s costs. Both Mr Williams SC and Mr Horton QC disputed the characterisation of the defence as a “joint enterprise”. They submitted that it was principally carried on by Seqwater. Thus, for example, they noted that the evidence each of their clients adduced was much less than that adduced by Seqwater and certain submissions of Seqwater were disavowed by the State. They submitted that the proportions determined in Rodriguez (No 23) should also be applicable so far as the plaintiff’s costs are concerned.

Regardless of whether the Court is applying s 7 of the Law Reform Act or exercising the power conferred by s 98 of the CPA, the manner in which the proceedings were defended is not the sole determinant of the proportion of the plaintiff’s costs that a defendant in these circumstances must bear. To the contrary, the starting point is that a tort was committed for which the three defendants are responsible in proportions of 50%, 30% and 20% respectively. The necessity for the plaintiff to initiate and maintain the proceedings, and hence incur costs, was occasioned by the commission of that tort as well as the decision of all three defendants to resist the plaintiff’s claim. Thereafter, the occasioning of costs by the plaintiff is a result of the fact of, and the manner of, their defence to its claim. To the extent that the matter is being considered under s 7 of the Law Reform Act, then the “extent” of a “person’s responsibility for the damage”, is in this respect each defendant’s responsibility for the plaintiff’s costs which is a combination of their conduct in committing the tort and the fact and manner of their defence of the claim. The position is no different so far as the exercise of the discretion under s 98(1)(b) of the CPA is concerned.

Thus, the starting point for each defendant is the negligence by each of them, the proportionate responsibility they each bear for the plaintiff’s loss and the necessity for the plaintiff to bring a claim. Thereafter, if some aspect of the defence by any defendant warranted the attribution to them of responsibility for a different or lesser proportion of the plaintiff’s costs, such as the unnecessary lengthening of the proceedings, then the Court’s orders can reflect that. However, in this case, there was nothing in any of the defendants’ conduct of the proceedings which would warrant not making them responsible to each other for the plaintiff’s costs in the proportions identified in Rodriguez (No 23). Even though I do not fully embrace Mr Stoljar SC’s description of the defence of this case as a “joint enterprise”, there were very large areas of common ground between the defendants. To an extent, Seqwater’s larger role in the defence followed from its status as the first defendant and the fact that it was defending the conduct of two flood engineers. The first matter is happenstance and the second matter is already reflected in the determination that it bears 50% of the plaintiff’s loss.

Accordingly, Seqwater, SunWater and the State will bear the same proportions of the plaintiff’s costs as they bear for its loss and damage, namely, 50%, 30% and 20% respectively.

Two matters should be noted about the form of the orders necessary to give effect to this conclusion. First, the parties were content for the Court to make a declaration in a form similar to that made in Lee v Carlton Crest Hotel (Sydney) Pty Ltd (No 2) [2014] NSWSC 1586. Second, order 6 made in Rodriguez (No 23) dismissed the cross‑claims between the parties “[s]ave as they permit each [d]efendant to seek contribution from another in relation to any liability each has to pay the [p]laintiff’s or group members’ costs”. Given the potential for further orders between the defendants in respect of group members’ costs, it is not appropriate to dismiss the balance of the cross‑claims at this point.

Accordingly, the Court orders that: