- Unreported Judgment
SUPREME COURT OF QUEENSLAND
Kerle v BM Alliance Coal Operations Pty Ltd & Ors (No 2)  QSC 7
HAROLD FREDRICK KERLE
BM ALLIANCE COAL OPERATIONS PTY LTD
(ACN 096 412 752)
HMP CONSTRUCTIONS PTY LTD (IN LIQUDATION)
(ACN 109 896 013)
AXIAL HR PTY LTD (ACN 110 799 034)
S528 of 2011
Supreme Court of Queensland
13 February 2017
30 January 2017
PROCEDURE – COSTS – RECOVERY OF COSTS – MULTIPLE DEFENDANTS – where plaintiff was successful in suit for damages – where the amount of damages had earlier been agreed between the parties – where there is a dispute as to the appropriate costs orders – where liability as between the defendants as well as between the plaintiff and the defendants was in issue – whether the plaintiff’s costs should be on the indemnity or standard basis – whether there are differences between an mandatory final offer made under a statutory regime and a Calderbank offer – whether the defendants should be ordered to pay the plaintiff’s costs in proportions consistent with the apportionment of liability – whether any certification for senior and junior counsel should extend to the whole of the matter or be limited to the trial.
Law Reform Act 1995 (Qld) s 6, s 7
Personal Injuries Proceedings Act 2002 (Qld) s 4, s 20, s 22, s 23, s 25, s 37, s 39, s 40(8), s 41
Uniform Civil Procedure Rules 1999 (Qld) r 360, r 363, r 703
Workers’ Compensation and Rehabilitation Act 2003 (Qld) s 292, s 312, s 316, s 318B, s 318D
2040 Logan Road Pty Ltd v Body Corporate for Paddington Mews CTS 39149 (No 2)  QSC 65 distinguished
Aircraft Technicians of Australia Pty Ltd v St Clair; St Clair v Timtalla Pty Ltd  QCA 188 considered
Australand Corporation (Qld) Pty Ltd v Johnson & Ors  QSC 128 applied
Baxter v Obacelo (2001) 205 CLR 635 considered
Bulsey v State of Queensland  QCA 158 cited
Chaina v Alvaro Homes Pty Ltd  NSWCA 353 distinguished
Colgate Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225 cited
Cosgrove & Anor v Johns  QCA 157 cited
Gibbings-Johns v Corliss (No 2)  QSC 78 distinguished
Hazeldene’s Chicken Farm Pty Ltd v Victorian WorkCover Authority (No 2)  13 VR 435 considered
Hobbs v Oildrive (No 2)  QSC 52 cited
J & D Rigging Pty Ltd v Agripower Australia Limited & Ors  QCA 23 cited
James Hardie & Co Ltd v Wyong Shire Council (2000) 48 NSWLR 679; (2000) 19 NSWCCR 679;  NSWCA 107 applied
Lawes v Nominal Defendant  QSC 103 cited
OverseaChinese Banking Corporation v Richfield Investments Pty Ltd  VSC 351 cited
Pollock v Thiess Pty Ltd & Ors (No 3)  QSC 121 distinguished
Mizikovsky v Queensland Television Ltd  QCA 68 distinguished
Watkins v State of Queensland  1 Qd R 564;  QCA 430 cited
G Diehm QC with A Luchich for the Plaintiff
R Douglas QC for the First Defendant
R Perry QC with J Rolls for the Second Defendant
R Treston QC for the Third Defendant
Rees R and Sydney Jones for the Plaintiff
HWL Ebsworth for the First Defendant
Barry Nilsson for the Second Defendant
BT Lawyers for the Third Defendant
- McMeekin J: I delivered reasons in this matter on 16 December 2016 (“the Reasons”). Mr Kerle was successful in his suit for damages. The amount of damages had earlier been agreed between the parties. I directed that the parties confer in an endeavour to agree on the orders that should be made to give effect to my reasons. There is a dispute as to the appropriate costs orders. It is not in issue that the plaintiff should receive his costs.
- It is relevant to note that liability as between the defendants as well as between the plaintiff and the defendants was in issue.
- I am advised that the parties have essentially agreed on the form of orders subject to the resolution of the following matters:
- Whether the plaintiff’s costs should be on the indemnity or standard basis given:
- the mandatory final offer (“MFO”) made by the plaintiff to the defendants following a conference held pursuant to the respective legislative regimes that apply (the first and second defendants - s 39 of the Personal Injuries Proceedings Act 2002 (Qld) ("PIPA"); the third defendant – s 292 of the Workers’ Compensation & Rehabilitation Act 2003 (Qld) (WCRA)).
- The offers made by the plaintiff purportedly under the Uniform Civil Procedure Rules 1999 (“UCPR”) provisions;
- The late amendment of the plaintiff’s pleading on the first day of trial;
- The delivery of a report by an expert, Professor Rogers, after the making of the offers.
- Whether the defendants should be ordered to pay the plaintiff’s costs in proportions consistent with the apportionment of liability as I found it to be or equally, one-third to each;
- Whether any certification for senior and junior counsel should extend to the whole of the matter or be limited to the trial.
- The basis of the plaintiff’s claim to be entitled to an order for indemnity costs is the alleged imprudent rejection of his offers to settle by each of the defendants. That is a well-accepted ground for the awarding of costs on the indemnity basis: see Colgate Palmolive Company & Anor v Cussons Pty Limited  FCA 536 at ; Cosgrove & Anor v Johns  QCA 157.
- The effect of my findings is that the plaintiff is entitled to judgment against the first and second defendants for the sum of $1,250,000 and as against the third defendant in the sum of $685,683.94. The defendants are jointly and severally liable.
- On 11 June 2013 following a joint PIPA/WCRA compulsory conference the plaintiff made mandatory final offers to each defendant. To the first and second defendants the plaintiff offered to settle in the sum of $1,050,000 plus costs pursuant to section 39 PIPA. To the third defendant the plaintiff offered to settle in the sum of $500,000 clear of the statutory refund to WorkCover plus regulation costs pursuant to s 292 WCRA. Under the respective pieces of legislation governing the respective proceedings the conference is required to be held in the pre-litigation stage but here the plaintiff had obtained leave to deliver, and had delivered, a Claim and Statement of Claim to the PIPA defendants. No pleading had been delivered to the third defendant.
- On 21 March 2016 the plaintiff made formal offers to settle separately to each defendant purportedly pursuant to Chapter 9, Part 5 of the UCPR. To the first and second defendants the plaintiff offered to settle in the sum of $1,000,000 plus standards costs and outlays. To the third defendant the plaintiff offered to settle in the sum of $444,000 (clear of the statutory refund to WorkCover) plus standards costs.
- I note that the defendants each offered a nil amount to the plaintiff following the compulsory conference and made an offer of a nil amount to each other in respect of contribution proceedings.
The effect of the offers
The WCRA offer
- It is common ground between the plaintiff and the third defendant that given the result of the trial the plaintiff is entitled to an award of costs on the indemnity basis unless the third defendant demonstrates that some other order is appropriate: see ss 312; 318B(2) WCRA.
The PIPA offers
- The parties disagree as to effect of mandatory final offers made under PIPA. Section 40(8) of PIPA provides that the Court must, if relevant, have regard to such offers in making a decision about costs.
- One view is that which I subscribed to in Gibbings-Johns v Corliss (No 2)  QSC 78, where I suggested that the “principles” that I endeavoured to set out there were “uncontroversial”:
- The mandatory final offer … operates much as a Calderbank offer that is bettered at trial – the mere fact that the party making the offer obtains a judgment more favourable than the terms offered does not of itself inevitably demonstrate such special circumstances as would justify departure from the ordinary basis of a costs assessment;
- The fact that such an offer has been made is a significant but not decisive consideration in the exercise of discretion to award costs on the indemnity basis;
- A relevant matter to consider is whether it appears that the party sought to be made liable for costs on the indemnity basis has “imprudently or unreasonably” failed to accept the offer of compromise;
- The onus lies on the party seeking indemnity costs to demonstrate the imprudence or unreasonableness of the other party’s conduct that judgment has to be made on the basis of the relevant strengths and weaknesses of the cases that ought to have been apparent to the parties at the time when the offer was made.
- Those “principles” I derived from the judgment of Byrne J (as he then was) in Lawes v Nominal Defendant  QSC 103. His Honour was there concerned with a mandatory final offer made under the Motor Accident Insurance Act 1994 (Qld) regime.
- I reconsidered those views in Pollock v Thiess Pty Ltd & Ors (No 3)  QSC 121. I concluded there, in the context of that case, that while indemnity costs were not inevitable following a MFO under the PIPA regime it was a “useful prima facie starting point”, and, while the persuasive onus remained on the offeror, the evidential onus lay on the offeree (there the defendant) to demonstrate why some other order was appropriate. That view has not been considered in any other decision to which I have been taken save my own when sitting in the Court of Appeal: Bulsey v State of Queensland  QCA 158 at  to .
- While the defendants urge that the relevant principles are those I set out in Gibbings-Johns and not Pollock, no attempt was made to show that my reasoning in Pollock was wrong. Rather the argument put was that this case was very different to Pollock and so different considerations apply. I readily accept that the cases are very different – the issues involved in this case were both novel and complex, in Pollock they were quite straightforward. Here, while there was no doubt as to the existence of a duty of care owed by the second and third defendants (the employer and host employer) in the employment situation, there was no authority cited in which it had been accepted that the duty extended to risks extant hours after completing work and hundreds of kilometres from the place of employment. Nor was any case cited in which a defendant in the position of the first defendant (the mine owner) had been held liable for such risks. In a relatively straight forward case such as Pollock I held that the evidential onus readily shifted to the offerees. The principal reason for that view was that the defendant was in the best position to explain what it was about the plaintiff’s case that the defendant did not understand, particularly where it was evident that the defendant had investigated the accident and identified its cause, a cause the plaintiff relied on successfully at trial. The issues here are considerably more complex. While not disclaiming the approach I took in Pollock I incline to the view that the evidential onus does not shift quite so readily here.
- In Pollock I endeavoured to demonstrate the material differences between an MFO made under a statutory regime and a Calderbank offer. In my view those differences have the result that the matters relevant to a consideration of whether a rejection of an MFO was unreasonable are more closely confined than those suggested as material by the Victorian Court of Appeal in Hazeldene’s Chicken Farm Pty Ltd v Victorian WorkCover Authority (No 2)  13 VR 435 at 442 , a decision which has been accepted as authoritative in Queensland in relation to Calderbank offers: J & D Rigging Pty Ltd v Agripower Australia Limited & Ors  QCA 23 at . The matters suggested in Hazeldene’s Chicken Farm were:
(a) the stage of the proceeding at which the offer was received;
(b) the time allowed to the offeree to consider the offer;
(c) the extent of the compromise offered;
(d) the offeree’s prospects of success, assessed as at the date of the offer;
(e) the clarity with which the terms of the offer were expressed;
(f) whether the offer foreshadowed an application for an indemnity costs in the event of the offeree’s rejecting it.”
- Where the proceedings concern a personal injury claim governed by PIPA and the offer under consideration is a MFO the significant matters will be those identified in (c) and (d) above. The matters in (a), (b) and to an extent (f) (see s 40(8) PIPA) are laid down in the legislation. Typically, and here, the offer is for the payment of a sum of money by the defendants – it could not be clearer.
- The position advanced by each of the defendants is that the granting of costs on an indemnity basis should be reserved “for unusual cases or cases involving unreasonable conduct” established on “clear grounds” citing Mizikovsky v Queensland Television Ltd  QCA 68; Chaina v Alvaro Homes Pty Ltd  NSWCA 353 at ; 2040 Logan Road Pty Ltd v Body Corporate for Paddington Mews CTS 39149 (No 2)  QSC 65 (per Burns J). Each of those decisions involved a Calderbank offer. While accepting the authority of those decisions I remain of the view that different considerations apply to a mandatory offer made under a statutory regime, and a regime with the avowed aim of endeavouring to encourage settlements at an early pre-litigation stage. In that context it can hardly be said as a justification for the non-awarding of indemnity costs that “there are other competing objectives of equal importance” namely that “[p]otential litigants should not be discouraged from bringing their dispute to the Courts. It is such considerations which underlie the general rule that an order for special costs should only be made in special circumstances” (per Redlich J in Oversea-Chinese Banking Corporation v Richfield Investments Pty Ltd  VSC 351 at  and adopted in J & D Rigging Pty Ltd v Agripower Australia Limited & Ors  QCA 23 at ). The legislative provisions here are intended to discourage litigation. If authority be needed see Watkins v State of Queensland  1 Qd R 564 at ;  QCA 430 per Keane JA (as his Honour then was).
The UCPR offers
- The effect of an offer made by a plaintiff under Chapter 9 Part 5 UCPR is governed by r 360:
Costs if offer by plaintiff
(a) the plaintiff makes an offer that is not accepted by the defendant and the plaintiff obtains an order no less favourable than the offer; and
(b) the court is satisfied that the plaintiff was at all material times willing and able to carry out what was proposed in the offer;
the court must order the defendant to pay the plaintiff’s costs calculated on the indemnity basis unless the defendant shows another order for costs is appropriate in the circumstances.
- It is common ground that the plaintiff has satisfied the two pre-conditions – he has achieved at trial an outcome no less favourable than the compromises that he was prepared to make; and he was at all material times willing and able to carry out what was proposed in the offer.
- However where there are multiple defendants, as here, consideration must be given to r 363. Rule 363(2)(a) UCPR is applicable where there are multiple defendants who are “alleged to be jointly or jointly and severally liable to the plaintiff and rights of contribution or indemnity may exist between the defendants”. That is the position here. The rule relevantly provides:
“(2) However, if defendants are alleged to be jointly or jointly and severally liable to the plaintiff and rights of contribution or indemnity may exist between the defendants, this rule applies to the offer only if—
(a) for an offer made by the plaintiff—the offer is made to all of the defendants and is an offer to settle the claim against all the defendants;
- So to be effective the offer should not be made separately to each defendant as was done here but to all. The failure to comply was described as “real albeit technical” by senior counsel for the first defendant but it nonetheless has the effect of taking the offer outside of the rule. Thus the prima facie mandatory effect of those offers – that the plaintiff should receive his costs on the indemnity basis – does not apply. The offers of course remain a relevant consideration on the costs issue.
- Aircraft Technicians of Australia Pty Ltd v St Clair; St Clair v Timtalla Pty Ltd  QCA 188 is an example where the rule was not complied with but nonetheless indemnity costs orders were made. There the Court accepted (indeed it was not contested) that the correct principle was applied below - it was a matter for the plaintiff to establish that the defendant, in not accepting his offer, acted unreasonably or imprudently at the time. Like here, the offer under consideration there was capable of being accepted, would have led to a valid compromise and the defendant did not contend that the reason it did not accept the offer was that it was irregular in form.
- The relevant principles to apply to each of the offers, save the MFO to the third defendant, it seems to me, is that the making of an order on the indemnity basis is not automatic; the plaintiff bears the persuasive onus of demonstrating that an indemnity costs order ought to be made; the relevant consideration is whether it is shown that the defendants acted unreasonably or imprudently in not accepting the offers made; that the understanding that the defendants had – or ought reasonably to have had - of the case made against them at the time of the offers is a material consideration; and finally that the evidential onus will shift depending on all the circumstances and the proofs available.
- Essentially the defendants argue that there are four reasons why the rejection of the offers was not unreasonable – this is a complex case involving novel features; the case changed materially as late as the first day of trial and long after the offers were made; the expert reports relied on by the plaintiff came in well after the offers were made; and it was hardly unreasonable for a defendant to reject the plaintiff’s offers given that the effect of acceptance would have placed that defendant in the difficult position of having to conduct the plaintiff’s proceedings, effectively without the plaintiff as an interested party, in order to recover from the other defendants any proportion of the monies paid to the plaintiff.
- The plaintiff argues that the amendments made to the pleadings are not shown to have changed the case materially particularly in the context of the overall assessment of the risk of exposure to an eventual judgment; that the provision of expert reports should not be germane to the cost issue as the defendants were obliged themselves to have prepared on the issue of liability by the time of the compulsory conferences and if they needed expert opinion to understand the relevant issues of fatigue they ought to have obtained reports themselves; that no officer of any of the defendants has sworn that the defendants learnt anything new from the expert reports eventually supplied or that whatever was learnt from those reports would have made any material difference to the attitude taken to the offers.
The effect of the amendments
The amendments made to the plaintiff’s pleading on the first day of the trial were two fold. One was to introduce paragraph 13A which read:
“13A.The Defendants knew or ought to have known that control measures for the risk of fatigue for workers commuting from the worksite at the end of a roster needed to include measures that did not depend for their efficacy on the subject appreciation of fatigue by the individual worker.”
The other change was to delete the word “following” and insert the word “before” in paragraphs 14(f) and (g) (in the case against the first and second defendants; to the same effect amendments were made the case against the third defendant - see paragraph 14A(d) and (e)), where particulars of negligence were set out:
“14. The accident was caused by the negligence of the First and/or Second Defendants:
(f) failing to instruct workers to rest in camp following before the completion of a roster before driving their own vehicle on the road;
(g) failing to implement and then enforce a system whereby workers were required to rest in camp following before the completion of a roster before driving their own vehicle on the road.”
- I note that as against the first defendant the plaintiff succeeded on the ground pleaded in paragraph 14(a) – see  of the Reasons. As against the second defendant I found that the plaintiff succeeded on the grounds pleaded in paragraphs 14(a) to (f) - see  of the Reasons and so not 14(g). As against the third defendant the plaintiff succeeded on the grounds in paragraph 14A (a), (d) and (f) – see  of the Reasons.
- Senior counsel for the first defendant submitted that the introduction of paragraph 13A was of considerable significance as the vulnerability of the plaintiff was a key factor underpinning the findings in the case. That is undoubtedly accurate. But the submission misses the point. The question is whether the introduction of that allegation altered the case that the defendants understood they had to meet. The defendants’ argument is considerably weakened by the fact that the allegation then introduced was admitted as correct by the first and second defendants and not contested by the third defendant. BMA pleaded that it acted in accordance with that knowledge – as indeed it seems to have done. It is not said that the defendants were operating on some other basis in assessing the plaintiff’s prospects of success before that amendment was made. No-one on the defendants’ side has sworn that this allegation in any way changed the complexion of the case. The plaintiff’s contention that the amendment was of little real moment to the parties gains force from the failure of the second defendant’s senior counsel to mention the matter in his written outline. The only complaint there was as to paragraph 14.
- I am not persuaded that the introduction of paragraph 13A has any bearing on the costs order that is appropriate.
- The amendment to paragraph 14 was of more significance. While only one word is involved in each case the change from requiring employees to do something after the completion of the shift to doing so before the end of the shift removed a very significant argument that the defendants could quite legitimately have felt was a complete answer to those allegations – that they had no power to “require” the employees to do anything once their allotted employment period was at an end. Counsel for the defendants each made submissions to that effect at the time leave was sought to make the amendments.
- In my view this was a new and different case.
- The defendants’ are each in a slightly different position given the differing findings made against them. The amendments did not directly affect paragraph 14(a), the only ground on which the plaintiff succeeded against the first defendant, but it might be said to have had an indirect effect. As to the second defendant, senior counsel for the plaintiff responds that the plaintiff succeeded on each ground of negligence pleaded (save 14(g)) and that he would have succeeded irrespective of the ground pleaded in paragraph 14(f). That is so. The same can be said of the change to paragraph 14A(d) and (e), the pleading against the third defendant. Senior counsel also points out that there is no evidence from the defendants to show that the amendment in fact had any bearing on their attitude to the offers. Given that the amendment was sought on the first day of the trial and that the trial then continued over the ensuing months extending over six further hearing days indicates quite strongly that the change was not seen as materially altering the defendants’ views on their liability exposure.
- The plaintiff submits that the third defendant is in a different position to the first and second defendants. At the time that the WCRA offer was made there was no pleaded case against the third defendant – a change then to a pleading that came into existence at a later time cannot have any bearing on the question of the defendant’s perception of the case it had to meet at the time of the offer. While that is obviously true the real issue is whether the amendments introduced a change to the case presented at the time of the compulsory conference, and whether that change was influential in the sense of affecting the third defendant’s attitude. There is no evidence on that point although senior counsel for the third defendant points out that there was no suggestion when leave was sought to amend that the point had previously been flagged to any of the parties – it was a novel one. Accepting that, there remains the fact that the defendants do not seek to show that their attitudes would have been any different had the point been raised earlier.
- While the case changed I am not persuaded that it made any difference to the defendants’ assessment at the time the offers were made of whether they should accept the offers put.
The provision of the expert reports
- Both sides (treating the defendants as a single entity for this purpose) obtained expert reports long after the compulsory conference. Professor Rogers’ first report was provided after the defendants had filed their defences. Her supplementary report (in the form of a file note) was provided a week before the trial commenced.
- Again the issue is whether the provision of the reports made any difference to the defendants’ perception of their exposure to a judgment. No evidence was led on that issue and patently the defendants persisted in their robust defence of the proceedings after receipt both of Professor Roger’s reports and those of the expert they retained, Professor Dawson.
- What Professor Rogers’ reports go to is the knowledge available to an employer of the risks involved in the work and the means of meeting those risks. It needs to be borne in mind in this context of litigation by a worker injured in the course of his employment that the law supposes that the employer – or host employer, I mean to refer to both here – has properly assessed and dealt with the risks presented by the work. It is not for the worker to educate the employer through the litigation process. When a finding has been made that an employer is liable for damages there has already been a determination that the employer failed to adequately protect the employee from a risk that the employer should have been cognisant of and by means reasonably open to it and which ought to have been adopted. The expert evidence is needed to educate the Court not the employer. For an employer to complain that it was unaware of the risks or the means to meet those risks, is to argue that it ought not to pay costs on the indemnity basis because it was in breach of duty and did not know it, despite a finding that it ought to have known it. Needless to say that is hardly an attractive argument. That is not to say that the mere obtaining of a judgment means that the costs should necessarily be on the indemnity basis.
- The second defendant submits that the matter was not substantially ready for trial at the time of the conference pointing out that the expert reports were obtained much later. The point might well be right but does not address the relevant issue. I am cognisant of the fact that the requirements of the certificate that a plaintiff’s solicitor was required to provide before the compulsory conference under PIPA changed as and from 1 July 2010. Prior to that date the solicitor was required to certify that the plaintiffs’ claim was ready for both the trial and the conference. Subsequently it applied only to the conference. Here the injury was sustained before 1 July 2010 and the conference held after that date. I have received no submissions on what form of certificate applied. I do not think it matters.
- As senior counsel for the plaintiff points out the defendants make no attempt to identify what it is in Professor Rogers’ reports that so changed the case as to alter the defendants’ view of their prospects. So far as BMA is concerned it seems quite apparent that it was cognisant of the information that Professor Rogers later supplied, or at least the bulk of it, long before the subject accident – see  of the Reasons. As found in the Reasons, BMA’s policies and procedures largely reflected what the experts said ought to be done to meet the risks that the experts said existed. That then raises the point as to why I ought to assume that HMP and Axial were not similarly aware, or why they could reasonably claim that they ought not to have been so aware. No evidence is advanced by them to show that.
- I have been advised that HMP is in liquidation. I have not been given any evidence to explain practically what that circumstance meant. While I could accept that some delay might be involved in obtaining instructions anything beyond that is merely speculation.
- There is nothing in this point.
A novel and complex case
- In my assessment the issues were both novel and complex. That is a factor justifying the defendants contesting the claim. What might be considered a reasonable response to the risks, as the differing views of the experts attest, was plainly not straightforward. I do not think that this factor is necessarily determinative, but it indicates the defendants’ response may not be so unreasonable as to take the case out of the usual.
Acceptance of the plaintiff’s offer would have left that defendant to conduct the case
- The point here is not that put in the second defendant’s submissions – that acceptance of the offer would have left the defendant as a party to the other defendants’ claims. As the plaintiff’s submissions point out, Baxter v Obacelo (2001) 205 CLR 635 at  is authority for the proposition that the defendant so paying is then protected from claims by joint and several co-defendants. The point here is rather that if a defendant went it alone and paid the plaintiff the full amount of his damages – which was the effect of the offers the plaintiff made - that defendant could not recoup any amount from the other defendants without effectively taking over the plaintiff’s cause and proving it, and with the disadvantage of the plaintiff himself as, at best, a disinterested witness. That a defendant thought that may be an unwise course is understandable, particularly in a novel and complex case.
- While I consider the point more closely below, this factor too supports the defendants’ arguments that the decision not to accept the plaintiff’s offers was a not unreasonable one.
- What is involved here is the question of contribution between tortfeasors. Obviously the assessment of the appropriate apportionment between the defendants, and assessing contributory negligence, involved questions on which minds could reasonably differ. That adds to the complexity of the assessment.
- Again each of the defendants is in a different position when assessing their probable exposure. BMA is in the strongest position. BMA could legitimately argue that looking at its position prospectively at the time of the offers it could reasonably have thought that its eventual exposure might be considerably less than that of the other defendants. Why then pay out $1M to the plaintiff when the likely end pay-out for BMA (assuming the other defendants were solvent or insured) was likely to be a small fraction of that, as indeed has occurred? And in the meantime incur the risks and hazards of litigation where the primary witness, the plaintiff, was an unknown quantity? HMP was in the weakest position as it ought to have realised, given past decisions on host employer liability, that its potential exposure was the greatest.
- The unattractive aspect of the argument is that it means that a plaintiff, who at all times has demonstrated a willingness to avoid incurring very significant costs by settling for a sum substantially less than the eventual judgment, pays a heavy price for the resolution of the defendants’ uncertainties.
- The considerations seem to me to be very finely balanced.
- With respect to the first and second defendants the question is whether they acted unreasonably or imprudently in failing to accept the various offers made by the plaintiff. I cannot conclude that they did. Where the plaintiff bears the persuasive onus I conclude that it has not been discharged.
- With respect to the third defendant the question is a different one. The onus is reversed. There needs to be good reason shown not to give effect to the legislative intent to protect seriously injured workers (with an impairment greater than 20%). Effectively the reasons given, and which I accept are open, are that the matter was novel and difficult and that it was in Axial’s (or more accurately WorkCover’s) financial interests to ensure that the plaintiff proved his claims against the other defendants. That latter point loses most of its force when it is appreciated that what is being put is that the plaintiff’s financial interests (he being significantly disabled) should be sacrificed to protect WorkCover’s. Where the third defendant bears the onus – namely under the WCRA – again I think it has not been discharged.
- The first and second defendants should pay costs on the standard basis. The third defendant should pay costs on the indemnity basis.
The apportionment of costs between the defendants
- While the defendants each have an obligation to meet the plaintiff’s costs there is a dispute as to what proportion of those costs each should be ultimately liable for. HMP argues that the burden should fall equally – one-third each. BMA and Axial argue that the burden should be in accordance with the respective apportionments.
- In James Hardie & Co Ltd v Wyong Shire Council (2000) 48 NSWLR 679; (2000) 19 NSWCCR 679;  NSWCA 107 the majority concluded that the contribution proceedings between joint tortfeasors brought pursuant to the NSW analogue of sections 6 and 7 of the Law Reform Act 1995 (Qld) determined the question of the contribution to costs. Giles JA said (at -):
“The effect of s 5(2) [Qld analogue: s 7] is that the contribution as to costs is by the same measure as the contribution as to damages, that which is just and equitable having regard to the extent of the contributing tortfeasor's responsibility for the damage. There is no room to adjust the contribution as to costs if it be thought the tortfeasor's conduct of the litigation unreasonably increased the plaintiff's costs. But self-interest is a powerful influence on conduct, and mis-management is not to be assumed. The tortfeasor's own interests call for minimisation of the plaintiff's costs, and I do not see this as sufficient reason to conclude that the contribution does not extend to contribution as to costs.
The wording of s 5 permits the contribution to extend to contribution as to costs, and construing it as extending to costs gives effect to fundamental principle.”
- Heydon JA (as his Honour then was) agreed (at ).
- Essentially the finding there was that the word “damage” in the contribution legislation was not restricted to damages but meant “the whole liability of the tortfeasor” (see Heydon JA at ). Their honours held that in the circumstances no discretion (beyond that already exercised under the apportionment legislation) arose.
- I cannot see any justification for departing from that principle here.
- No different result follows from s 318D of the WCRA.
- In case it becomes relevant I observe that had I needed to exercise a discretion I would not have varied the burden of the costs orders as the second defendant requests for the reasons identified by senior counsel for the first defendant in his submission.
Senior and Junior Counsel
- Given the complexity of the matter no party opposed the involvement of senior and junior counsel. The issue is whether any “certification” for senior and junior counsel should extend to the whole of the matter or be limited to the trial.
- Senior counsel for the plaintiff suggested that the order not be to “certify” for two counsel but rather that the order be that the assessment of the plaintiff’s costs be made on the basis that, except so far as they are of an unreasonable amount, the fees of senior and junior counsel be regarded as “necessary or proper for the attainment of justice”, the phrase used in r 702(2) UCPR. That was the form of order adopted by McMurdo J (as his Honour then was) in Australand Corporation (Qld) Pty Ltd v Johnson & Ors  QSC 128. That decision was followed by Daubney J in Hobbs v Oildrive (No 2)  QSC 52. I propose to do the same.
- The defendants’ concern is that if I do not restrict the approval to trial then the costs assessor will have no discretion to reject a claim for costs incurred in having junior counsel perform work in the course of preparation, whatever his view might be as to its necessity. I think that concern is justified. The discretion given in the form of order proposed is limited to amount, not to whether junior counsel ought to have been involved. By making the order the plaintiff seeks I will have determined that his involvement was necessary and proper in all aspects of preparation. I do not mean to decide now that it was not “necessary or proper” for junior counsel to have been involved in preparatory work. I know nothing of the facts here. What I think is important is that the assessor has a discretion to disallow such fees if he or she considers that such work ought not to have been done by junior counsel.
- So far as my approval now is concerned the costs of two counsel are to be limited to trial. I consider that such fees were both necessary and proper for the attainment of justice.
- The judgment and orders will be in accordance with the draft initialled by me and attached to these reasons.
SUPREME COURT OF QUEENSLAND
NUMBER: RS528 of 2011
Plaintiff: HAROLD FREDERICK KERLE
First Defendant: BM ALLIANCE COAL OPERATIONS PTY LTD [ACN 096 412 752]
Second Defendant: HMP CONSTRUCTIONS PTY LTD (IN LIQUIDATION) [ACN 109 896 013]
Third Defendant: AXIAL HR PTY LTD [ACN 110 749 034]
Before: The Honourable Justice McMeekin
Date: 13 February 2016
Originating Document: Judgment after trial on claim filed 5 October 2011, third party notice of the first defendant against the second defendant filed 23 September 2015, notice claiming contribution by the first defendant against the third defendant delivered 17 August 2015, notice claiming contribution by the second defendant against the first defendant delivered 7 October 2015, notice claiming contribution by the second defendant against the third defendant delivered 10 August 2015, notice claiming contribution by the third defendant against the first defendant delivered 16 July 2015 and notice claiming contribution by the third defendant against the second defendant delivered 20 July 2015.
- THE JUDGMENT OF THE COURT IS THAT:
- Judgment for the plaintiff against the first defendant and second defendants in the sum of $1,250,000.00.
- Judgment for the plaintiff against the third defendant in the sum of $685,683.94.
- (a) The first and second defendants pay the plaintiff’s costs of the proceeding to be assessed on the standard basis;
- The third defendant pay the plaintiff’s costs of the proceeding to be assessed on the indemnity basis;
- Further in each case the costs be assessed on the basis that, except insofar as they are of an unreasonable amount, the fees of two counsel should be regarded as costs necessary and proper but limited to fees for trial, otherwise to be in the discretion of the assessor.
- The second defendant pay the first defendant’s costs of the third party proceeding between them to be assessed on the standard basis.
THE COURT DECLARES THAT:
- (a) the judgement sum referred to in paragraph 2 is a portion of the damages referred to in paragraph 1, to the extent of gross primary damages of $1,200,000.00 less $514,316.06 (being the statutory refund pursuant to the Workers’ Compensation and Rehabilitation Act 2003 (Qld));
the sum of $514,316.06 referred to in paragraph 5(a) goes in diminution of the judgment sum referred to in paragraph 1;
THE COURT ALSO ORDERS THAT
- (a) recovery of any sum by the plaintiff from any defendant upon a judgment referred to in paragraphs 1 or 2 goes in diminution of judgment against any other defendant;
as between the defendants, the damages payable to the plaintiff by the defendants under paragraphs 1 and 2 be borne to a measure of:
- $125,000.00 (being 10% of the judgment sum in paragraph 1) by the first defendant;
- $432,000.00 (being 36% of the of the gross primary damages sum referred to in paragraph 5) by the third defendant; and
- $693,000.00 (being the judgment sum in paragraph 1 less the amounts referred to paragraphs 6(b)(i) and (ii)) by the second defendant;
as between the defendants:
- the first defendant pay to the plaintiff $125,000.00 (being the sum referred to in paragraph 6(b)(i));
- the second defendant pay to the third defendant $82,316.06 (being the sum of $514,316.06 referred to in paragraph 5(a) less the sum of $432,000.00 referred to in paragraph 6(b)(ii));
- the second defendant pay to the plaintiff $610,683.94 (being the sum of $693,000.00 referred to in paragraph 6(b)(iii) less $82,316.06 referred to in paragraph 6(c)(ii));
- each such sum to be paid within 21 days of the receipt by the defendants of the last of the statutory clearances or charges under Commonwealth legislation, in respect of the judgment sums in paragraphs 1 and 2;
- In the event that the first defendant is obliged to pay the judgment sum referred to in paragraph 1 in an amount in excess of $125,000.00, judgment may be entered for the first defendant against the second defendant for such excess amount.
- In the event that the second defendant omits to pay to the third defendant the sum of $82,316.06 referred to in paragraph 6(c)(ii) or any part thereof, judgment may be entered for the third defendant against the second defendant for such unpaid sum.
- In the event that the third defendant is obliged to pay the judgment sum in paragraph 2 in any amount, judgment may be entered for the third defendant against the second defendant for such paid sum.
- As between the defendants, the costs referred to in paragraph 3, to the extent of the standard costs of the proceeding, be borne in the proportion of 10% by the first defendant, 54% by the second defendant and 36% by the third defendant respectively.
- In the event that any defendant is obliged to pay the costs referred to in paragraph 3 in a sum in excess of that defendant’s proportion referred to in paragraph 10 (“the excess amount”), judgment may be entered for that defendant against each other defendant for so much of the excess amount which is that other defendant’s proportion of the costs under paragraph 10 unpaid by that other defendant.
- Any judgment sought to be entered pursuant to paragraphs 7, 8, 9 or 11:
- may be entered only upon the filing of an affidavit by a solicitor for the applicant defendant deposing as to the relevant obliged payment by the applicant defendant, or sum unpaid by the respondent defendant, together with the filing of an affidavit proving service of such applicant solicitor’s affidavit by at least 5 clear business days’ notice of proposed application for entry of judgment to the respondent defendant;
- will be in the sum in question together with interest thereon pursuant to s 58 of the Civil Proceedings Act 2011 (Qld) at the rate of 5.5 percent per annum on the sum in question from the date it was paid by the applicant defendant, or was due but remained unpaid by the respondent defendant, to the date of entry of judgment.
- Upon any objection being raised by a served respondent defendant to entry of judgment under paragraphs 7, 8, 9 or 11, the registry refer the application for judgment to a judge.
- The parties have liberty to apply in respect of the above judgments and orders.
 Kerle v BM Alliance Coal Operations Pty Ltd & Ors  QSC 304.
 Reprint 3A in force as at the date of the subject accident - 30 October 2008.
 Section 37(2)(a) of PIPA was amended to delete the reference to being ready for the trial as and from 1 July 2010: s 41 Act No 9 of 2010.
- Published Case Name:
Kerle v BM Alliance Coal Operations Pty Ltd & Ors (No 2)
- Shortened Case Name:
Kerle v BM Alliance Coal Operations Pty Ltd (No 2)
 QSC 7
13 Feb 2017
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