How are costs apportioned in multi-party proceedings (Part 2)?

I was considering an alternative title to this post “What on earth are Sanderson and Bullock orders, and why would I ask for one?” Alas, I thought it might confuse readers to dive straight in without context.

Last week, we discussed how costs work in multiparty proceedings more generally. Although it’s not throwback Thursday, you might recall that where a plaintiff has mixed success against multiple defendants, usually:

• the plaintiff is liable for the successful defendants costs; and,
• the unsuccessful defendant is liable for the plaintiff’s costs (excluding those referable to the successful defendant).

You can see how that might ruffle some feathers – by diminishing the fruits of the plaintiff’s success. This week’s post follows on from that by discussing an alternative - Sanderson and Bullock orders. 

What are Sanderson and Bullock Orders? Is there a difference between them?

Higher courts have the discretion to make a Sanderson or Bullock order. These orders render an unsuccessful defendant liable for a successful defendant’s costs vis a vis the plaintiff. The difference between Sanderson and Bullock orders is that:

• a Sanderson order requires the unsuccessful defendant to pay the successful defendant’s costs directly; whereas,
• a Bullock order requires the unsuccessful defendant to reimburse the Plaintiff for the successful defendant’s costs.

See: Timbercorp Finance Pty Ltd v Collins (No 2) [2017] VSC 65, [22].

Why does the difference between Sanderson and Bullock orders matter?

In many cases the distinction between Sanderson and Bullock orders is without difference. There is some judicial recognition that Sanderson orders are more commonly made because they are a cheaper, more direct way of achieving the same result; Russo v Russo (No. 2) [2015] NSWSC 449, [59].

However, the courts retain the discretion to make a Bullock order if it is in the interests of justice to do so; Global Risk Alliance Group Services Pty Ltd & Anor v Harmer & Ors (No 2) [2024] NSWSC 234, [25]. If there is a dispute over the form of order to be made, the court will focus on which party ought bear the risk of not being able to recover their costs; JJJP Properties Pty Ltd v Colin Peacock (Costs) [2024] VCC 740, [37]. A Bullock order may be in the interests of justice where:

• the unsuccessful defendant is insolvent, in which case the general principal costs follow the event favours the making of a Bullock order because a Sanderson order would effectively deny the successful defendant an indemnity for her costs. However, this is not a hard and fast rule; Quintano v B W Rose Pty Ltd (Costs) [2009] NSWSC 626 [8]-[12].
• there is a likelihood of an appeal involving the plaintiff and unsuccessful defendant, neither of whom intend to involve the successful defendant. Practically speaking, a Bullock order will rid the unsuccessful defendant of the need to drag the successful defendant into the appeal merely to free herself from direct liability for the successful defendant’s costs; Mayer v Harte (1960) 2 All ER 840, at 850.

In a similar vein, a Sanderson order may be in the interests of justice where there is some practical impediment to the plaintiff paying the successful defendant’s costs. For example, where the plaintiff is (also) insolvent; Quintano v B W Rose Pty Ltd (Costs) [2009] NSWSC 626 [8]-[12].

But when will the court exercise its discretion to make either form of order?

This may sound repetitive, but the court will only exercise its discretion make a Sanderson or Bullock order if it is in the interests of justice to do so.

In Gould v Vaggelas [1985] HCA 75; 157 CLR 215, the High Court provided some guidance by identifying two key considerations without fettering the courts’ general discretion as to costs. The two key considerations are:

• it must have been reasonable in all the circumstances for the plaintiff to have brought and maintained the proceedings against the successful defendant; and,
• the unsuccessful defendant must have done something to make it fair to impose the successful defendant’s costs on them.

Despite the High Court not fettering the general discretion as to costs in Gould v Vaggelas [1985] HCA 75; 157 CLR 215, more recent cases treat these considerations as cumulative requirements. For example, in Global Risk Alliance Group Services Pty Ltd & Anor v Harmer & Ors (No 2) [2024] NSWSC 234, Nixon J held the mere fact that the plaintiff was reasonable in bringing proceedings against the successful defendant did not, absent some conduct by the unsuccessful defendant, justify making a Bullock/ Sanderson order against the unsuccessful defendant at [26]-[32].

How does this intersect with apportionment?

There is a persuasive line of authority from New Zealand that a court may exercise its discretion in a way that passes only a portion (not all) of the plaintiff’s costs liability visa vis the successful defendant onto the unsuccessful defendant. The Supreme Court of New Zealand has done so where the plaintiff was only partially successful and did not obtain full relief against the unsuccessful defendant; Norwood v Pokaka Timber Co Ltd [1955] NZLR 827 (SC). This case was referred to, but not considered in detail by the Supreme Court of Victoria in Vucadinovic v Lombardi [1967] VR 81.

Where does this leave us?

The general rule is that if a plaintiff has mixed success against multiple defendants, the plaintiff will be liable for the successful defendants costs, and the unsuccessful defendant will be liable for costs as between them and the plaintiff.

The general rule may be displaced by an application for a Sanderson/Bullock order if the court is satisfied that the plaintiff acted reasonably in bringing and keeping the successful defendant in the proceeding, and the unsuccessful defendant’s conduct justifies making the order.

Where one or more of the parties is insolvent or contemplating an appeal, it is necessary to consider if a Bullock order is more likely to do justice between the parties than a Sanderson order.

It may also be possible for the court to make Sanderson/Bullock order that apportions the successful defendant’s costs between the plaintiff and unsuccessful defendant.