Skerbic v McCormack & Ors [2008] ACTSC 4 (29 January 2008)

Last Updated: 21 February 2008

REBECCA MARGARITA SKERBIC v PATRICK McCORMACK & ORS

[2008] ACTSC 4 (29 January 2008)

COSTS - plaintiff succeeding against one of three defendants but failing against others - whether Bullock or Sanderson order warranted - Calderbank offer by a successful defendant - effect - principles applicable to exercise of discretion

Trade Practices Act 1974, s 75AD

Jones v Bartlett [2000] HCA 56; (2000) 205 CLR 166

Bullock v London General Omnibus Co [1907] 1 KB 264

Sanderson v Blyth Theatre Co [1903] 2 KB 533

Steppke v National Capital Development Commission (1978) 21 ACTR 23

Gould v Vaggelas (1985) 157 CLR 215

Lipovac v Hamilton Holdings Pty Ltd [1997] ACTSC 3

No. SC 120 of 2001

Judge: Master Harper

Supreme Court of the ACT

Date: 29 January 2008

IN THE SUPREME COURT OF THE )

) No. SC 120 of 2001

AUSTRALIAN CAPITAL TERRITORY )

BETWEEN: REBECCA MARGARITA SKERBIC

Plaintiff

AND: PATRICK McCORMACK

First Defendant

AND: GLIDEROL INTERNATIONAL P/L formerly GLIDEROL GARAGE DOORS

Second Defendant

AND: BRYAN JOHN SHERIDAN t/as SHERIDAN GARAGE DOORS

Third Defendant

ORDER

Judge: Master Harper

Date: 29 January 2008

Place: Canberra

THE COURT ORDERS THAT:

1. The plaintiff pay the costs of the first defendant agreed in the sum of $18,000.00.

2. The second defendant pay the plaintiff's costs of the action, those costs to include an amount of $2,000.00 being part of the costs incurred by the first defendant.

3. The second defendant pay the costs of the third defendant of the third party claim and of the action.

4. The plaintiff pay to the third defendant the difference between the third party's costs as between solicitor and client subsequent to 25 May 2007, and the third party's costs as between party and party subsequent to that date.

1. I delivered judgment in this action on 23 November 2007, and subsequently heard argument on behalf of the parties as to costs.

2. The action was for damages for personal injury. The plaintiff, on 8 December 1999, had been standing under the open roller door of the garage of the apartment she and her husband were renting, when the bracket holding up one side of the door came away from its mounting into the brick wall, causing the door to strike her on the head.

3. The plaintiff commenced the present action on 2 March 2001 against the first defendant, who was the registered proprietor of the apartment and the lessor to the plaintiff and her husband. The statement of claim which accompanied the originating process was defective in that it did not specifically allege, or provide particulars of, the negligence relied on. This was corrected subsequently and is of no significance for present purposes.

4. The first defendant, who was uninsured, instructed solicitors who engaged an engineer, Mr Montgomery, to inspect the premises and provide a report expressing an opinion as to the cause of the accident. His solicitors reached an agreement with the plaintiff's solicitor that Mr Montgomery's fees would be shared between the plaintiff and the first defendant. Mr Montgomery attended the scene on 18 May 2001, in the presence of the plaintiff and her husband. He observed that the problem had been resolved by removing and replacing both brackets holding the door up, a few millimetres from their original position. He looked at the garage doors for two other units in the complex. He observed that the brackets had been fixed by bolts screwed into plastic plugs inserted into the brickwork. He expressed the opinion that plastic plugs were inadequate as anchors for bolts securing brackets which carried a load of the magnitude of a garage roller door. He said that metal anchors should have been used. He identified the manufacturer of the doors, and obtained from the manufacturer a copy of the written instructions which were provided on sale and delivery.

5. The solicitors for the first defendant obtained advice from counsel, and on 16 August 2001, at the time of delivery of defence, they wrote to the plaintiff's solicitors stating that the advice was to the effect that in the light of Mr Montgomery's report the plaintiff had a good claim against the manufacturer under part VA of the Trade Practices Act 1974. Counsel had also advised that in the light of the decision of the High Court in Jones v Bartlett [2000] HCA 56; (2000) 205 CLR 166, the plaintiff's case against the first defendant was a very difficult one which had real prospects of failing altogether. They invited the plaintiff's solicitors to consider discontinuing the action against their client and pursuing the manufacturer instead.

6. The plaintiff did not adopt the suggestion. The first defendant remained and still remains a party. Early in 2002 the plaintiff changed solicitors, and in March 2002 joined the second defendant, the manufacturer. In March 2004 the manufacturer joined the installer of the door as a third party. In August 2005, the plaintiff joined the third party as a third defendant.

7. On 15 November 2005, the manufacturer made its first and only offer of settlement, an offer to bear its own costs in exchange for a verdict in its favour. The offer was not accepted.

8. On 7 March 2007, at a listing hearing before the Deputy Registrar, the action was listed for hearing on 28 May 2007.

9. On 13 March 2007, the solicitors for the first defendant wrote to the solicitors for the plaintiff acknowledging a recent offer from the plaintiff's solicitors to discontinue against the first defendant with each party to bear its own costs. They rejected this offer, and put the plaintiff's solicitors on notice that they would be seeking costs, including counsels fees and other disbursements, of some $18,500.00.

10. On 21 May 2007, the solicitors for the third defendant wrote to the solicitors for the plaintiff making an offer, identified as a Calderbank offer, of $30,000.00 plus costs (in respect of the action against the third defendant only). The offer was expressed to remain open until 25 May 2007, the last business day before the commencement of the hearing, and put the plaintiff on notice that if the plaintiff did no better than the offer, the third defendant would seek indemnity costs from the date of its expiry.

11. At the commencement of the hearing on 28 May 2007, I was informed by counsel for the plaintiff that the action was not pursued against the first defendant, but that there was an outstanding issue as to costs between the plaintiff and the first defendant. I excused the solicitor for the first defendant from attendance during the hearing, which occupied 28, 29 and 30 May 2007. Judgment was delivered on 23 November 2007. I found the second defendant liable in negligence and also under s 75AD of the Trade Practices Act. I found that the installer had not been negligent. I assessed the plaintiff's damages at $84,000.00, and directed the entry of judgment for the plaintiff against the second defendant for that amount. I directed the entry of judgment in favour of the first and third defendants.

12. I heard submissions as to costs on 14 and 21 December 2007. I was informed that the costs of the first defendant had been agreed with the plaintiff at $18,000.00 including disbursements.

13. The second defendant accepts its liability for the plaintiff's costs, and for the third defendant's costs in relation to its claim against the third defendant for contribution.

14. The third defendant seeks an order for costs against the plaintiff, as between party and party up to 25 May 2007, and on an indemnity basis after that date.

15. The plaintiff seeks an order for costs against the second defendant, and in addition a Bullock or Sanderson order against the second defendant in respect of her liability for the first defendant's costs; and a similar order against the second defendant in respect of her liability for the third defendant's costs. The plaintiff argues that notwithstanding the Calderbank offer of 21 May 2007, she should not be subjected to a penal order as to costs, for the reason that it would have been unreasonable to expect her at that stage to predict the outcome of the litigation and to let the third defendant out, when it remained a possibility that, depending on how the evidence came out, she might fail against the second defendant but succeed against the third defendant.

16. The solicitor representing the third defendant was unable to provide me with any information as to the terms of the retainer between his firm and the third defendant's insurer, and accepted that in those circumstances he could not expect the Court to make an order for costs on an indemnity basis, so that any special order would be limited to costs as between solicitor and client rather than party and party.

17. Counsel for the second defendant argued vigorously against a Bullock or Sanderson order being made against his client in respect of the costs of the first defendant.

18. It has long been recognised that actions with a multiplicity of defendants can give rise to special problems. In the first place, the costs of a defended action generally increase quite significantly where there are multiple defendants or additional parties. Secondly, the fruits of a victory by a plaintiff against one defendant can be severely diminished if the plaintiff loses against other defendants and is ordered to pay their costs. To meet some of these problems, the courts over the years have developed special orders. A Bullock order (Bullock v London General Omnibus Co [1907] 1 KB 264) is an order that the plaintiff pay the costs of the successful defendant or defendants but add them as a disbursement to the plaintiff's own costs against the unsuccessful defendant. A Sanderson order (Sanderson v Blyth Theatre Co [1903] 2 KB 533) is an order made direct against an unsuccessful defendant to pay the costs of a successful defendant, as well as the costs of the plaintiff, despite the fact that there may have been no issue on the pleadings between the defendants. The choice of order can be significant where a party is insolvent or impecunious: this is not a factor in the present case.

19. The courts have long accepted that before a Bullock or Sanderson order will be made, it must be seen to have been reasonable and proper for the plaintiff to have sued the successful defendant. It is now clear that there is an additional requirement that there must have been something in the conduct of the unsuccessful defendant which would make such an order a proper exercise of discretion. Blackburn CJ, referring to earlier British and Australian authority, said in Steppke v National Capital Development Commission (1978) 21 ACTR 23 at page 30:

In my opinion there is a condition for the making of a Bullock order, in addition to the question of whether the suing of the successful defendant was reasonable, namely that the conduct of the unsuccessful defendant has been such as to make it fair to impose some liability on it for the costs of the successful defendant.

20. This statement of principle was approved by a number of the justices of the High Court of Australia in Gould v Vaggelas (1985) 157 CLR 215. Gibbs J said at page 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.

21. In similar vein, Brennan J said at page 260:

Although the making of a Bullock order is in the discretion of a trial judge, the mere joinder of two causes of action against separate defendants in the one action is insufficient to support the making of an order against an unsuccessful defendant when the other defendant is exonerated. A judicial discretion can be exercised to make a Bullock order against an unsuccessful defendant in an action brought against two or more defendants for substantially the same damages only if the conduct of the unsuccessful defendant in relation to the plaintiffs' claim against him showed that the joinder of the successful defendant was reasonable and proper to ensure recovery of the damages sought.

22. The principle was accepted by Higgins J as applicable in this court, if there was any doubt about it, in Lipovac v Hamilton Holdings Pty Ltd [1997] ACTSC 3. It must be accepted that it is not sufficient that the joinder of the successful defendant is found to have been reasonable and proper. In the present case, counsel for the plaintiff cannot point to any conduct on the part of the second defendant which led or encouraged the plaintiff to bring proceedings against the first defendant, or to continue with those proceedings. Action was commenced against the first defendant well before the second defendant became a party or knew anything about the plaintiff's injury or the collapse of the door. Whilst the second defendant claimed contribution or indemnity from the third defendant, it made no such claim against the first defendant. The second defendant conducted the litigation entirely without reference to the claim by the plaintiff against the first defendant.

23. It seems to me that the commencement of proceedings against the first defendant can be seen as reasonable and proper in pursuit of the plaintiff's interests. At the time proceedings were commenced, the plaintiff and her husband were no longer living at the apartment and had no right to enter upon it or instruct experts to do so. The rules of the Court did not at that time make any provision for inspection of premises before action. It was the commencement of proceedings against the first defendant which provided the opportunity for expert inspection and assessment of the garage door, and which indirectly brought about the involvement of Mr Montgomery in the matter, leading to the joinder of the second defendant.

24. If the plaintiff had accepted the invitation extended by the first defendant in his solicitor's letter of 16 August 2001 to discontinue against him, the first defendant's costs would have been modest and would have included amounts which could reasonably have been characterised as part of the plaintiff's costs in the cause. They are costs which the first defendant incurred and which, if he had not done so, would necessarily have been incurred by the plaintiff herself. It seems to me just that the plaintiff should be able to recover as part of her own costs some of the costs incurred by the first defendant up to that point, in particular the fees for Mr Montgomery's report, and the solicitor's costs relating to the commissioning of that report. Having regard to the amounts involved, it seems to me preferable to fix a sum rather than to require taxation. The disbursements for the report and colour photocopies were about $1,000.00 and I would allow the same amount for solicitors' costs, making a total of $2,000.00. It is inappropriate to frame an order about this amount as a Bullock or Sanderson order having regard to the absence of any relevant conduct on the part of the second defendant. It seems to me preferable to order that the plaintiff recover as part of her costs against the second defendant the sum of $2,000.00 representing costs and disbursements incurred by the first defendant which, if they had not been so incurred, would necessarily have been incurred by the plaintiff herself in pursuing her claim against the second defendant.

25. The second defendant should pay the plaintiff's costs, which will include that amount of $2,000.00. The second defendant will also be ordered to pay the costs of the third defendant as between party and party, including the costs of the third party claim. I am persuaded that the Court must give some effect to the third defendant's Calderbank offer of 21 May 2007. Whilst I accept that the plaintiff would have run a risk by accepting the offer, and that it may have been a reasonable decision in her own interests not to accept it, I must also look at the issue from the perspective of the third defendant. The third defendant, in making the offer, reasonably took such limited steps as were available to it to bring the litigation against it to a conclusion prior to the commencement of the hearing, which was to last for three days. If the offer had been accepted, the third party's costs would have been considerably less than they are. The Court encourages such efforts towards settlement: not to give some effect to the letter would be to undermine, to the profession and the public, the sincerity of that encouragement. The plaintiff should be ordered to pay to the third defendant the difference between its costs subsequent to 25 May 2007 as between solicitor and client and its costs subsequent to that date as between party and party.

I certify that the preceding twenty-five (25) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Master.

Associate:

Date: 29 January 2008

Counsel for the plaintiff: Mr RJ Mildren

Solicitors for the plaintiff: Higgins Solicitors

Counsel for the first defendant: Mr RD Coen

Solicitors for the first defendant: Pamela Coward & Associates

Counsel for the second defendant: Mr RP Clynes

Solicitors for the second defendant: Holman Webb

Counsel for the third defendant: Mr PJ Robertson

Solicitors for the third defendant: Moray & Agnew

Date of hearing: 14 and 21 December 2007

Date of judgment: 29 January 2008