Barnett v Council of the City of Gold Coast & Ors [1991] QSC 10

10 30 40 50 60 REVISED COPIES -ISSUED 1 Court P.eporting Dureau ' 1 -~- ., IN THE SUPREME COURT OF QUEENSLAND CIVIL JURISDICTION BEFORE MR. JUSTICE AMBROSE BRISBANE, 4 FEBRUARY 1991 I Date, /2 / 2 1..!:3:_ __ . No. 1700 of 1984 (Copyright in this transcript is vested in the Crown. Copies thereof must not be made or sold without the written authority of the Chief Court Reporter,Court Reporting Bureau.) BETWEEN: MARGARET BARNETT -and- COUNCIL OF THE CITY OF GOLD COAST -and- CECIL ROLAND DANIELS -and- HOOKER REX PTY.LTD. -and- C.R. DANIELS AND SON PTY. LTD. -and- SUNCORP INSURANCE AND FINANCE JUDGMENT Plaintiff First Defendant Second b.efendant Third D.efendant Fourth Defendant Third Party HIS HONOUR: With respect to the costs of the third party proceedings between the third party and the first defendant, I make the following orders: 1. That the first defendant pay to the third party its costs of the third party proceedings to be taxed, limited, however, to the costs properly .J 1 10 20 30 40 50 60 -- 1 of 16 -- 10 20 30 40 50 60 incurred to meet the relief sought in the first defendant's third party Notice and Statement of Claim thereon. 2. With respect to the costs incurred by the third party in defending or preparing to defend any other claim in the action as if it were a party thereto, I make no order for costs. 3. With respect to the issue of costs between the third defendant and the first defendant, I make the following order: I order that the third defendant pay to the first defendant its costs of and incidental to the contribution proceedings between the first defendant and the third defendant to be taxed. I order that costs payable and paid by the first defendant to the third party pursuant to this order be part of the costs recoverable by the first defendant from the third defendant. HIS HONOUR: I give all parties leave to appeal. -Govt. Printer, Old. 2 10 20 30 40 50 60 -- 2 of 16 -- <::.,- 0 /,..., -~ r/ ''-'I 0 IN THE SUPREME COURT OF QUEENSLAND No. 1700 of 1984 BETWEEN: MARGARET BARNETT Plaintiff COUNCIL OF THE CITY OF GOLD COAST First Defendant CECIL ROLAND DANIELS Second Defendant HOOKER REX PTY. LTD. Third Defendant C.R. DANIELS AND SON PTY. LTD. Fourth Defendant SUNCORP INSURANCE AND FINANCE Third Party REASONS FOR ORDER - B.W. AMBROSE J. Delivered the 4th day of February, 1991 -- 3 of 16 -- Counsel: Solicitors: Hearing Dates: Miss Kiefel Q.C. with Mr. G. Martin for Plaintiff Mr. Chesterman Q.C. with Mr. S. Couper for First Defendant Mr. Fleming Q.C. with Mr. Stenson for Third Defendant Mr. Clifford Q.C. with Mr. W.A. Martin for Third Party W.H. Tutt & Quinlan for Plaintiff Primrose Couper and Rudken for First Defendant Dillons for Third Defendant Quinlan Miller & Treston for Third Party 29th January, 1991 -- 4 of 16 -- IN THE SUPREME COURT OF QUEENSLAND No. 1700 of 1984 BETWEEN: MARGARET BARNETT Plaintiff COUNCIL OF THE CITY OF GOLD COAST First Defendant CECIL ROLAND DANIELS Second Defendant HOOKER REX PTY. LTD. Third Defendant C.R. DANIELS AND SON PTY. LTD. Fourth Defendant SUNCORP INSURANCE AND FINANCE Third Party REASONS FOR ORDER - B.W. AMBROSE J. Delivered the 4th day of February, 1991 In this action commenced in 1984 the plaintiff sued the four defendants for damages for negligence allegedly leading to structural damage to a house which occurred firstly in 1980 and continued in the years 1982 and 1983. -- 5 of 16 -- 2 It was the plaintiff's claim that structural damage to the house resulted from negligent reclamation work done by the third defendant in the 1960s. It was alleged that the filling of land ultimately subdivided was performed negligently and that the subsidence of this filling was a cause of the damage to the plaintiff's house. The plaintiff also alleged that the first defendant as local authority was negligent in failing properly to supervise the filling work done by the third defendant and also in failing to properly exercise the supervisory powers it had when considering building plans submitted for its approval for the house ultimately purchased by the plaintiff to ensure that having regard to the nature of the fill the foundations were properly designed and constructed. As against the second and fourth defendants the plaintiff claimed that they were negligent builders in failing to ensure that the foundations were properly and adequately constructed having regard to the nature of the filling upon which it was constructed. The first defendant in March 1988 sought leave to take third party proceedings against the. third party which it contended was its insurer liable to indemnify it not merely with respect to judgment which the plaintiff might obtain against it but also with respect to any liability it might be under consequent upon contribution proceedings taken by the third defendant against it. On 31st March, 1988 the first defendant was granted leave to add the third party. On 28th April, 1988 upon application of the third party presumably pursuant to O. 17 r. 4(4) leave was -- 6 of 16 -- 3 granted to the third party to defend all claims in the action as if it were a party to it. The plaintiff discontinued her action against the first defendant on 9th May, 1988 pursuant to leave granted to do so on 17th December, 1987. On 28th April, 1988 however it was ordered that leave be granted to the first defendant to defend the plaintiff's claim as if she were a party - on the assumption presumably that she would discontinue her action pursuant to the leave granted on 17th December, 1987. On that day also the third party was granted leave to defend all claims as if it were a party thereto. Presumably this had the effect of giving to the third party liberty to defend the plaintiff's claim (although the plaintiff had discontinued as against the first defendant) and as well the various claims to contribution which had been made between various of the defendants. It is unnecessary to deal in more detail with these claims. On 14th November, 1990 the plaintiff discontinued her action also against the second and fourth defendants (the builders). After that_ discontinuance therefore the only defendant to the plaintiff's claim was the third defendant. I was informed when this matter was called on for hearing on the morning of 29th January, 1991 that over the last day or so the action between the plaintiff and the third defendant had been settled. I was requested by the parties to simply adjourn the plaintiff's action against the third defendant (which is the only action involving the plaintiff which has not been -- 7 of 16 -- 4 discontinued) to the settlement list to allow terms of settlement to be carried out. No order for costs was sought or made. Proceedings which were still on foot therefore were the contribution proceedings between the third defendant and the first defendant and the indemnity proceedings between the first defendant and the third party. The first defendant seeks an order that the third defendant pay the costs of those contribution proceedings. This application is not opposed by the third defendant. The first defendant also seeks an order that any costs which the third party might recover against it ought be recoverable by the first defendant against the third defendant in effect by way of Bullock order. The third party seeks against the first defendant an order for its costs of the indemnity proceedings between them. The third defendant however opposes the making of any order the effect of which is to require the third defendant to pay to the first defendant the costs of the third party proceedings. It was contended on behalf of the third defendant that indeed there was on the material no reason why the third party ought recover against the first defendant its costs of the indemnity proceedings. It seems clear enough from what was stated at the bar table that it was never contended on the part of the third party that it was not liable to indemnify the first defendant for any sum for which the third defendant recovered judgment against the first defendant in the contribution proceedings. between them provided that upon the facts established in that proceeding it -- 8 of 16 -- 5 was shown that the liability was covered by one of the many policies of insurance which the first defendant held with the third party at various periods of time when the acts of the first defendant might be held to have rendered it liable to the third defendant in the contribution proceedings between them. I might mention that one of the bases upon which the third defendant sought contribution from the first defendant was that the damage suffered by the plaintiff was at least partly attributable to the negligent way in which the first defendant constructed certain sewerage works in the vicinity of the plaintiff's land in the year 1982. There seems little doubt that the third party did not clearly and unequivocally admit its obligation to indemnify the first defendant against liability to the third defendant in the contribution proceedings between them. I can see no other reason for the first defendant taking the step of joining the third party in the action. Moreover it is clear from the statements made in court that far from the third party giving an unequivocal acknowledgment of its obligation to indemnify the first defendant against any judgment which the third defendant might obtain against it, it adopted a "wait and see" attitude so that at the end of the day it might consider the basis of the liability of the first defendant ( if any) upon which the third defendant obtained judgment in the contribution proceedings and also whether upon that basis it was obliged to indemnify the first defendant under any policy of insurance that was operative at the relevant time. -- 9 of 16 -- 6 On the other hand the third party did not stop at merely "putting to proof" the first defendant's claim against it. It in fact obtained leave to defend "all claims" in the action as if it were a party thereto. It did not exercise what rights of subrogation it may have had against the first defendant as its insured. Why it did not do so has not emerged. Perhaps it did not wish to concede that it was in fact or in law obliged as insurer of the first defendant to indemnify it against any successful action the third defendant took. However that may be having obtained liberty on 28th April, 1988 to defend all claims including the plaintiff's claims - it then proceeded to exercise the rights given under the order - including the rights to deliver interrogatories to persons other than the first defendant. This action was set down for a hearing the estimated time of which was five or six weeks. As I have indicated the action between the plaintiff and the third defendant - the only one which had not been discontinued by the plaintiff was settled a day or two ago. It was not until about 10.30 a.m. on 29th January, 1991 half an hour after the action had been called on for hearing - that counsel for the third defendant stated from the bar table that the third defendant did not propose to proceed with contribution proceedings against the first defendant. In contending that there ought be no order for costs made which will require ultimately the third defendant to pay the costs incurred by the third party counsel for the third defendant referred to the decision of the Court of Appeal in Williams v. -- 10 of 16 -- 7 Buchanan-Alexander (third party) (1890-91) 7 T.L.R. 226. That was an action where a plaintiff sued one of two guarantors on a guarantee. The guarantor issued a third party notice seeking contribution from his co-guarantor. The co-guarantor entered an appearance and chose to appear separately at the trial to oppose the plaintiff's claim against his co-guarantor. In fact the plaintiff failed in his action and the third party then sought to recover his costs against the plaintiff. The third party had been given liberty to defend the action and had delivered a defence to the plaintiff's claim and appeared by counsel at trial in the same way as he would have presumably had the plaintiff sued both guarantors rather than just the one. It was held in the Court of Appeal that upon principle the third party although given leave to defend the plaintiff's action against his co-guarantor as defendant ought not recover his costs against the plaintiff. The Master of the Rolls in the course of delivering judgment said this:- "--- the only question now before them was whether costs should be given to the third party against the plaintiff or against the defendant or at all. It was clear that the court had power in such a case to give the third party costs but the only question was whether they ought to do so. That was a question which wo~ld depend on the circumstances of each particular case. In this case the plaintiff did not want the third party at all. He had sued only one guarantor as he had a perfect right to do. The defendant had an equal right to bring in as a third party his co-guarantor. The third party had chosen to appear separately by different counsel. No one had a right unduly to increase the costs of litigation except at his own expense. The third party had no reason here to think that the defendant would not fight the action to the utmost. It would certainly not be fair to make the plaintiff pay the costs of the appearance of the third party whom he did not want to see. The third party had no reason for going to the expense of a separate appearance. He did not deny that he was the defendant's co-guarantor. Under those -- 11 of 16 -- 8 circumstances in this case the third party ought not to have costs against anybody. He had chosen to indulge in a luxury for which he must pay." In concurring Bowen L. J. observed that "the third party might when he received the notice have gone to the defendant's solicitors and got them to act for him, as his case and the defendants were identical." That case is a strong case in my view. Counsel for the third defendant placed great reliance upon it in opposing the making of any order which would require the third defendant to become responsible for the costs of the third party. The facts of that case however are not on all fours with those of the present case. In that case the defendant succeeded in the plaintiff's action. What would have been the situation had the plaintiff succeeded so that the defendant had a right to contribution from the third party is not entirely clear although I must say looking at the judgments to which I have referred I rather gather that the defendant may have had some difficulty in persuading the court that he ought recover costs against the third party who apparently did not deny that he was co-guarantor and presumably would have had no defence to contribution proceedings by the defendant. On the other hand it is difficult to see how or upon what basis the third party obliged to contribute towards any judgment that the plaintiff recovered against the defendant could have recovered its costs from the defendant. The short answer may well be that the third party could simply have taken no steps to oppose the contribution sought by the defendant or may even have admitted that he would be liable to make contribution in which event the only order for -- 12 of 16 -- 9 costs would have been that the defendant pay the plaintiff's costs. In the present case if one forgets altogether about the action between the plaintiff and the third defendant and as I think appropriate looks only at the contribution proceedings between the third defendant and the first defendant the third defendant really occupies the position of an unsuccessful plaintiff with respect to the first defendant and the third party occupies a position similar to that occupied by the third party guarantor in Williams v. Buchanan-Alexander (supra). However the third party in this case in my view is in a less favourable position even than that of the third party in that case. There is no suggestion that the third defendant in this case may have sued the third party. The only conceivable defendant to the third defendant's contribution claim was the first defendant. The only way the third party came into the picture was the fact that apparently it had not clearly and unequivocally agreed to indemnify the first defendant and it was this failure which I assume induced the first defendant to join it as a third party. As far as the third defendant as plaintiff in the contribution proceedings was concerned, the third party was in no different position from that in which any insurer might find itself if having been made a third party by a defendant asserting a right to be indemnified under an insurance policy it elected to seek leave under O. 17 r. 4(4) that it be permitted to defend the plaintiff's claim against the defendant. So far as the facts have emerged in the present case it seems to me that if it were reasonable for the first defendant to take third party proceedings against Suncorp Insurance and -- 13 of 16 -- 10 Finance having regard to the attitude that insurer displayed to its obligation to indemnify the first defendant against liability in the contribution proceedings then it would be reasonable for the first defendant to obtain against the third defendant an order for the costs incurred in taking those third party proceedings which the abandonment of the third defendant's contribution proceedings made it unnecessary to pursue. Power to make such an order in the present case is given under RSC 0. 91 r. 16. I refer also to R. v. Gold Coast City Council ex parte Raysun Pty. Ltd. (1971) Q.W.N. 13. With respect to the third party's rights against the first defendant it seems to me that to the extent that its obligation to indemnify the first defendant against any liability to the third defendant was reasonably arguable it was entitled to dispute with the first defendant such obligation. To the extent that the third defendant's abandonment of its contribution proceedings against the first defendant makes it unnecessary to determine the issue in the third party proceedings between the first defendant and the third party it seems to me that that first defendant has brought the third party to court claiming an indemnity. It has determined for reasons which are understandable not to proceed with that claim because the claim for contribution has been abandoned by the third defendant. In my view therefore it is proper and just that the third defendant pay to the first defendant the costs thrown away by the first defendant in the contribution proceedings taken by the third defendant against it. These costs will include those costs thrown away by the third party in coming to court to meet the -- 14 of 16 -- 11 first defendant's claim for an indemnity under the insurance policies pursuant to which that claim was made. On the other hand I take the view that to the extent that the third party pursuant to the order of Master Weld made on 28th April, 1988 has taken upon itself the defence of any claims other than the claim by the first defendant against it as its insurer the third party ought not recover the costs of that defence against either the first defendant or the third defendant either directly or indirectly. In spite of the wide power given under RSC 0. 17 r. 14 a plaintiff ought not generally in my view run the risk of incurring the costs of an insurer of a defendant as well as those of that defendant should the insurer having been made a third party at the instance of the defendant elect in effect to occupy the position of a party in the action. The fact that a plaintiff does not oppose an application by a third party under RSC 0. 17 r. 4(4) to conduct its case "as if a party" in the action does not of itself make it liable if unsuccessful in that action for the third party's costs incurred "as if a party". In my view to the extent that the third party as insurer of the first defendant has elected to defend claims in the actin other than the claim which the first defendant has made against it in its third party proceedings it has to use the words of Lord Esher M.R. in Williams v. Buchanan-Alexander "chosen to indulge in a luxury for which he must pay". With respect then to the costs of the third party proceedings between the third party and the first defendant I make the following order:- -- 15 of 16 -- 12 1. That the first defendant pay to the third party its costs of the third party proceedings to be taxed limited however to the costs properly incurred to meet the relief sought in the first defendant's third party notice and statement of claim thereon. 2. With respect to the costs incurred by the third party in defending or preparing to defend any other claim in the action as if it were a party thereto I make no order for costs. 3. With respect to the issue of costs between the third defendant and the first defendant I make the following order - I order that the third defendant pay to the first defendant its costs of and incidental to the contribution proceedings between the first defendant and the third defendant be taxed. I order that costs payable and paid by the first defendant to the third party pursuant to this order be part of the costs recoverable by the first defendant from the third defendant. -- 16 of 16 --