Suthern v Unilever Australia Ltd [2008] ACTSC 75 (25 August 2008)

Last Updated: 15 September 2008

JOHN WILLIAM SUTHERN v UNILEVER AUSTRALIA LTD

[2008] ACTSC 75 (25 August 2008)

COSTS – costs against successful party – usual order as to costs – award of damages significantly less than those sought – pre proceeding offer of settlement – nominal award of damages – consideration of disentitling conduct of party – Court Procedure Rules 2006 (ACT) – severability of the issues – appropriateness of commencing proceedings in the Supreme Court – costs necessarily and reasonably incurred – successful party entitled to benefit of costs

NEGLIGENCE– product liability – personal injury – temporary disability – causation –Trade Practices Act 1974 (Cth) – public interest in product safety

Court Procedure Rules 2006 (ACT), r 1725, r 1751, r 1754

Trade Practices Act 1974 (Cth), 86(2)

Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72

Quirk v Bawden (1992) 111 FLR 115

Anglo-Cyprian Trade Agencies Ltd v Paphos Wine Industries Ltd [1951] 1 All ER 873

Alltrans Express Ltd v CVA Holdings Ltd [1984] 1 All ER 685

Lipkin Gorman (a firm) v Karpnale Ltd and another [1992] 4 All ER 409

Berrico Estate Pty Ltd v Anderson [2003] NSWCA 23

McDonald v James Hardie & Co Pty Ltd (No 2) [1998] NSWDDT 5; (1998) 17 NSWCCR 178

Waters v PC Henderson (Australia) Pty Ltd [1994] NSWCA No. 40678/92 (unreported, Mahoney JA, 4 July 1994)

Lenning v Alexander Proudfoot Co World Headquarters, NSWCA [1991] No. 40081/91 (unreported, Kirby P, Priestley and Clarke JJA, 22 April 1991)

AMC Caterers Pty Ltd & 1 Or v Stavropoulos [2005] NSWCA 79

Dimento v Dimento & Anor (Costs) [2007] NSWSC 1233

Sheehy v Mitchell Crane Hire Pty Ltd (1991) 102 ACTR 1; 104 FLR 96

No. SC 178 of 1999

Judge: Higgins CJ

Supreme Court of the ACT

Date: 25 August 2008

IN THE SUPREME COURT OF THE )

) No. SC 178 of 1999

AUSTRALIAN CAPITAL TERRITORY )

BETWEEN: JOHN WILLIAM SUTHERN

Plaintiff

AND: UNILEVER AUSTRALIA LIMITED

Defendant

ORDER

Judge: Higgins CJ

Date: 25 August 2008

Place: Canberra

THE COURT ORDERS THAT:

1. The defendant pay the plaintiff’s costs necessarily and reasonably incurred in these proceedings, save and except those costs relating to the issue of the toxicity of liquid mercury and the ongoing injury to the plaintiff.

2. The plaintiff’s costs are to include the costs of this application.

1. This is a most unusual case. The plaintiff claimed damages for personal injury arising from the ingestion by him of liquid mercury contained in ice cream manufactured by the defendant.

2. That ingestion occurred, it has been found, on 13 and 14 June 1996.

3. A hearing took place before Crispin J in November 2005, July and September 2006 and May-June 2007. It occupied, wholly or in part, 45 days of hearing time.

4. The plaintiff had suffered considerably in the period following that initial ingestion. Had that ongoing damage been causally related to the ingestions found to have occurred the monetary damages would have been considerable.

5. However, on 28 September 2007, Crispin J delivered judgment for the plaintiff but only in the sum of $10,000. The reason for the apparent disparity was that though his Honour found the defendant liable he was satisfied that only temporary disability was caused by the initial ingestion of mercury contained in the ice cream.

6. Ongoing symptoms, his Honour considered, were related to further administrations of both mercury and arsenic. The defendant could not have been responsible for those further administrations.

7. There was much controversy as to the source of those further administrations. His Honour found the plaintiff had not knowingly ingested further mercury or arsenic. The plaintiff genuinely believed that his ongoing symptoms were a consequence of his initial ingestion of mercury.

8. There was however, a considerable body of evidence, accepted by his Honour, that the original ingestions of mercury could not have caused long-term injury.

9. The issue of liability was strongly contested. The defendant’s case was that the mercury in the ice cream had not been introduced during the manufacturing process. His Honour found that it had been. Thus the plaintiff succeeded on the product liability count and the negligence count asserted by his statement of claim.

10. Mr Bartley SC, for the plaintiff, in support of his application for a favourable costs order referred to certain statements made by McHugh J in Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72. Although his Honour was in dissent in that case, his expression of principle concerning the discretion as to costs was not in dispute. At [67] his Honour said:

The expression the “usual order as to costs” embodies the important principle that, subject to certain limited exceptions, a successful party in litigation is entitled to an award of costs in its favour. The principle is grounded in reasons of fairness and policy and operates whether the successful party is the plaintiff or the defendant.

11. At [69] his Honour noted that “misconduct” on the part of a party might make it fair to deprive that party of the benefit of a costs order that might otherwise be made in favour of that party.

12. Particularly at issue is the application of the further principle referred to at [70]:

... The Court may award costs in favour of a defendant where the plaintiff has obtained only nominal damages. However, this practice can be justified on the basis that, in reality, the successful party lost the litigation and the unsuccessful party won.

The “event”

13. The defendant submitted that the verdict for the plaintiff should be regarded as a loss. That must be rejected. On no view of it is an award of $10,000 “nominal”. It is true the plaintiff contended for much more but the claim itself succeeded. The defendant was found to have purveyed, and negligently so, a defective product. The public purpose of tort law was fulfilled.

14. Thus, the plaintiff is entitled to the benefit, prima facie, of an order for costs in his favour insofar as such costs have been reasonably and necessarily incurred.

15. Having regard to the complexity of the issues involved, as the defendant itself asserts them to be, it was reasonable for the plaintiff, even if the issue as to damages was as the learned trial judge found it to be, to have sued in the Supreme Court.

16. However, that does not end the matter. On 22 August 1996, before proceedings were commenced, the defendant itself wrote to the plaintiff in the following terms:

We refer to your discussions with our Mr Peter Grinter in connection with the above.

Extensive investigations have been carried out and we are at a loss to understand how this incident could have occurred as our quality control procedures are very rigidly adhered to during the manufacturing process.

It is pleasing to note that you and your family have suffered no lasting effects from this contamination.

For the inconvenience that has been caused to you and your family, on a without prejudice and with no admission of liability basis we are prepared to offer to you the sum of $2,500.00 plus an allowance of $1,500.00 for any out of pocket expenses you may have incurred making a total of $4,000.00.

17. At that stage the plaintiff had not yet developed the ongoing symptoms he attributed to the mercury in the ice cream.

18. The decision of the plaintiff to sue thereafter was based on that reasonable but objectively erroneous assumption.

19. This is not a case where the defendant relies on a Calderbank letter to deny the plaintiff his costs nor is it suggested that the proposal of 22 August 1996 constitutes an offer that the plaintiff could not reasonably reject. At that stage the plaintiff could not reasonably know what his longer term damage might be (see Quirk v Bawden (1992) 111 FLR 115). There was no subsequent offer of settlement from the defendant. Nor, at any time, any admission of responsibility.

20. Rather, the defendant relies on its success on the issue of causation expressed as being both ‘general’ and ‘specific’ to support a proposition that the costs order otherwise to be expected should be modified or displaced, even to the extent of costs being ordered to be paid by the plaintiff to the defendant. The reference to a ‘general’ causation issue was to whether ingestion of liquid metallic mercury could, as a matter of scientific fact, cause mercury toxicity in a person with a normal gastrointestinal tract. The ‘specific’ causation issue was a reference to the issue as to whether the ingestion of liquid metallic mercury on 13 and 14 June 1996 actually caused the ongoing toxicity symptoms the plaintiff suffered from.

21. On those issues, the defendant succeeded. It lost on liability and on the issue as to whether the plaintiff in fact had suffered the ill effects he claimed and on a further issue as to whether he had, so far as his ill health was genuine, induced it himself. The trial judge rejected that latter hypothesis. He accepted that, assuming that further exposures had occurred, the plaintiff had not been aware of them. It follows that, though the defendant succeeded on that issue, the plaintiff’s conduct in proceeding could not be characterised as the kind of disentitling conduct identified by McHugh J in Oshlack (supra).

22. The defendant addressed submissions to specific days of hearing upon which it says the plaintiff was not ready to proceed and so should pay or be denied the costs of those days. However, no specific order as to the costs of any such day was awarded by the trial judge to the defendant. Whether costs should be denied to the plaintiff in respect of any such day of hearing is a matter for a taxing officer in the context of a costs order otherwise favouring the plaintiff.

23. The rules as to costs, in my view, are adequate to deal with those issues.

24. I do note that rule 1725 would restrict the plaintiff’s costs to 67% of the scale. However, given the complexity of the issues as to liability, in my view, the costs should be assessed at 100% of the scale (see Rule 1751). Costs may be disallowed under Rule 1754 if improperly, vexatiously, unreasonably, negligently or unnecessarily incurred. That would be a decision for the taxing officer.

25. The remaining question is whether any costs should be disallowed by reason of the plaintiff’s failure to establish a connection between his ongoing symptoms and the defendant’s wrongful conduct.

26. A number of authorities were referred to on that question.

27. In Anglo-Cyprian Trade Agencies Ltd v Paphos Wine Industries Ltd [1951] 1 All ER 873 the plaintiffs claimed damages for the supply of defective goods. They claimed a total price of £2,028. The defendants contended the defects were removable at a cost of only £52. The plaintiffs at trial, by leave, amended their claim to cover damage under that head. They failed on the main claim but succeeded on the belatedly introduced alternative in the sum of £52.

28. Devlin J considered that the defendants had succeeded on the main claim as only nominal damages could have been awarded in respect of it. His Lordship, at 874, stated:

... No doubt, the ordinary rule is that, where a plaintiff has been successful, he ought not to be deprived of his costs, or, at any rate, made to pay the costs of the other side, unless he has been guilty of some sort of misconduct.

29. However, recovering only nominal damages is not success. The recovery of £52 on the amended basis did not alter the situation that, but for that amendment, only nominal damages could have been recovered.

30. Here, of course, though no doubt disappointing to the plaintiff, the amount recovered was not nominal, nor was there a late amendment depriving the defendant of an earlier opportunity to pay into court or to make a Calderbank offer.

31. In Alltrans Express Ltd v CVA Holdings Ltd [1984] 1 All ER 685, the Court of Appeal considered a situation wherein the respondent to a claim for damages for breach of an agreement for sale of shares was ordered to pay only nominal damages. The breach had not been contested but damages were assessed at only £2. The appellant/defendant was ordered to pay the respondent/plaintiff’s costs. Stephenson LJ stressed that the only issue had been damages. Breach had not been in issue. That there had been no payment into court did not justify the making of an order for costs in favour of the respondent/plaintiff. Griffiths and Purchas LLJ agreed.

32. In the present case, liability was in issue as well as damages.

33. In Lipkin Gorman (a firm) v Karpnale Ltd and another [1992] 4 All ER 409 solicitors sued to recover moneys stolen by a partner who cashed bank drafts with a gambling club. Most of the claim, over £250,000, was rejected but a discrete claim on one draft was allowed in the sum of £3,735. Costs were allowed to the plaintiffs on that claim but the club was also allowed the substantial part of the costs being upon those claims which failed.

34. Berrico Estate Pty Ltd v Anderson [2003] NSWCA 23 was a case in which, on appeal, the Court of Appeal set aside an award of damages, finding that the plaintiff had deliberately set out to deceive the trial judge by exaggerating his losses. He thus fell below the threshold for an award of anything but out of pocket expenses which had been paid. He, therefore, recovered nothing. In the view of Giles, Hodgson JJA and Cripps AJA an order for costs in favour of the defendant was appropriate. I would respectfully agree.

35. I note also the case of McDonald v James Hardie & Co Pty Ltd (No 2) [1998] NSWDDT 5; (1998) 17 NSWCCR 178. O’Meally J decided the issue of liability in favour of the plaintiff but found that the negligence of the defendant had not been causative of any loss or damage to the plaintiff. His Honour referred to a Note in the Supreme Court Practice approved by Mahoney JA in Waters v PC Henderson (Australia) Pty Ltd [1994] NSWCA No. 40678/92 (unreported, 6 July 1994). It is in the following terms:

Where the proceedings involve multiple issues the application of the rule that costs follow the event may involve hardship where a party succeeds on some issues and yet fails on others. Particularly is this so where, for example, a defendant succeeds on issues that occupied the bulk of the time taken by the proceedings. Nevertheless unless a particular issue or group of issues is clearly dominant or separable it will ordinarily be appropriate to award the costs of the proceedings to the successful party without attempting to differentiate between those particular issues on which it was successful and those on which it failed.

36. It is apparent that the severability or otherwise of the issue on which a party, otherwise successful, has failed will be relevant to whether, prima facie, an order for costs without differentiation should be made. As I have noted, to some extent the costs rules accommodate partial lack of success on undifferentiated issues.

37. His Honour noted that in Lenning v Alexander Proudfoot Co World Headquarters, NSWCA [1991] No. 40081/91 (unreported, Kirby P, Priestley and Clarke JJA, 22 April 1991), an order for costs was made against the successful party on the issue as to which she was unsuccessful but that issue was one she had chosen to litigate in defiance of High Court authority.

38. That is certainly a point of distinction from this case.

39. O’Meally J applied the following principle at [41]:

It seems to me that where an issue, upon which a successful litigant fails, is severable, and, where upon that issue the greater proportion of costs were incurred, the successful party may be deprived of such costs. It is only where those costs were incurred unreasonably that the successful party may be ordered to pay them.

I respectfully agree with that statement of principle.

40. In that case it was the defendant who was successful. The plaintiff’s claim totally failed but he had succeeded on one severable issue – general causation. The defendant was given the costs of the action save for the costs of litigating that issue.

41. AMC Caterers Pty Ltd & 1 Or v Stavropoulos [2005] NSWCA 79 (Ipp and McColl JJA, Einstein AJA) was on all fours with Berrico Estate (supra) and the same result followed.

42. Finally, I was referred to Dimento v Dimento & Anor (Costs) [2007] NSWSC 1233. It involved a dispute concerning a contract for the transfer of fishing licences. The plaintiff sought specific performance against the first defendant, or alternatively damages. The second defendant was sued, effectively, for return to the plaintiff of the fishing licences transferred to the second defendant by the first defendant. The second defendant cross-claimed for a declaration as to the ownership of a fishing vessel held by the plaintiff.

43. Brereton J rejected the first defendant’s contentions that there was no binding contract for the transfer of the licences or, alternatively, that the contract had been terminated or abandoned. The claim for specific performance, however, failed because the first defendant was found to have had no title to the licences. Damages were payable but the former issue had occupied most of the hearing. Even on that issue, success was not a result of the plaintiff’s evidence. The second defendant succeeded in his defence. Its cross-claim was left unresolved as it sought no effective relief.

44. Further, his Honour noted, the matter was in the nature of a family dispute, and factoring that consideration in, costs should not be awarded to any party.

45. It should also be noted, as Mr Watson for the defendant conceded, the plaintiff’s claim under the Trade Practices Act 1974 (Cth) (the Trade Practices Act) was not one the ACT Magistrates Court had, in any event, jurisdiction to entertain.

46. I must say that that concession does not seem to me to be consistent with s 86(2) of the Trade Practices Act in so far as monetary damages were being sought. However, that was not in issue so I pass over that question. Nevertheless, I accept that it was, given the issues involved, reasonable and appropriate to commence these proceedings in this Court, even if the plaintiff had been persuaded from the outset that the contamination of the ice cream had not resulted in ongoing injury so that the level of damages would be below $50,000.

47. In the present case, it seems to me, the choice is between allowing to the defendant the costs of the issues upon which it succeeded or simply denying those costs to the plaintiff. In making that choice, the public interest in product safety is a relevant consideration. In Oshlack (supra) the public interest factor led to a departure from the usual rule. In Sheehy v Mitchell Crane Hire Pty Ltd (1991) 102 ACTR 1; 104 FLR 96; [1991] ACTSC 178, I instanced a number of situations in which the general rule might be departed from.

48. This is not a case where the defendant should pay the plaintiff’s costs in their entirety, nor one where the plaintiff should pay the defendant’s costs. I consider that the defendant should pay the plaintiff’s costs, necessarily and reasonably incurred in these proceedings, save and except those costs relating to the issue of the toxicity of liquid mercury and the ongoing injury to the plaintiff upon which issues the defendant succeeded. The plaintiff will be denied those costs.

49. However the plaintiff’s costs are to include the costs of this action otherwise including the costs of this application.

I certify that the preceding forty-nine (49) numbered paragraphs are a true copy of the Reasons for Judgment herein of his Honour, Chief Justice Higgins.

Associate:

Date: 25 August 2008

Counsel for the plaintiff: Mr A J Bartley SC with Mr F Tuscano

Solicitor for the plaintiff: Porter Lawyers

Counsel for the defendant: Mr G M Watson SC

Solicitor for the defendant: Ken Cush & Associates as agents for

Astridge & Murray

Date of hearing: 16 June 2008

Date of judgment: 25 August 2008