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- WorkCover Queensland v Klinger Limited[2022] QDC 201
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WorkCover Queensland v Klinger Limited[2022] QDC 201
WorkCover Queensland v Klinger Limited[2022] QDC 201
DISTRICT COURT OF QUEENSLAND
CITATION: | WorkCover Queensland v Klinger Limited [2022] QDC 201 |
PARTIES: | WORKCOVER QUEENSLAND (plaintiff) v KLINGER LIMITED (ACN 008 679 838) (defendant) |
FILE NO: | D692/2019 & D1342/2019 |
DIVISION: | Civil |
PROCEEDING: | Application |
ORIGINATING COURT: | District Court of Queensland |
DELIVERED ON: | 31 August 2022 |
DELIVERED AT: | Brisbane |
HEARING DATE: | 8 June 2022 |
JUDGE: | Jarro DCJ |
ORDERS: |
|
CATCHWORDS: | APPLICATION – COSTS – PROCEDURE – whether costs arise from leave to discontinue including reserve costs – whether an order for costs thrown away as a result of amendments to defence – where parties sought to recover costs on standard and indemnity basis against one another. |
LEGISLATION: | Uniform Civil Procedure Rules 1999 (Qld) Workers’ Compensation and Rehabilitation Act 2003 (Qld) |
COUNSEL: | K Holyoak for the plaintiff R Ashton QC with A Giurtalis for the defendant |
SOLICITORS: | BT Lawyers for the plaintiff Baker McKenzie Lawyers for the defendant |
- [1]There are two proceedings involving the plaintiff and the defendant where the parties have substantially resolved the litigation between them, subject to the exercise of judicial discretion of leave to discontinue the proceedings and costs. These reasons principally concern the aspect of costs because there is no reason why the court should not grant leave for the plaintiff to discontinue the proceedings, especially when the defendant does not oppose the discontinuance.
- [2]By way of brief background, the plaintiff commenced a proceeding (D692/2019) against the defendant by a claim and statement of claim filed 27 February 2019 (“the Jones proceeding”). The plaintiff also commenced a separate proceeding (D1342/19) against the defendant, as well as four other defendants, by claim and statement of claim filed 17 April 2019 (“the Simpson proceeding”). Regarding the Simpson proceeding, the claims against the four other defendants were not pressed, the result of which left only the plaintiff and the defendant in each proceeding. Essentially in both proceedings, it was asserted by the plaintiff that the defendant was negligent in exposing Mr Jones (deceased) and Mr Simpson (deceased) to the defendant’s products. The plaintiff sought recovery against the defendant pursuant to its rights of subrogation under s 207B(8)(b) of the Workers’ Compensation and Rehabilitation Act 2003. There have been a number of interlocutory matters, including an order that both proceedings be heard together as it was intended there would be lay and expert witnesses who would give common evidence on the issue of foreseeability in both proceedings.[1]
Jones Proceeding
- [3]In the Jones proceeding, the plaintiff seeks:
- (a)costs of its application filed 19 January 2021;
- (b)costs thrown away as a result of the defendant’s amendments to its defence filed 22 September 2021 pursuant to UCPR 386;
- (c)leave to discontinue the proceedings pursuant to UCPR 304(2) and an order, pursuant to UCPR 307(2), that the costs payable by the plaintiff, upon discontinuance, exclude the defendant’s costs of attendances that relate to the issue that it knew or ought to have known that inhaling chrysotile asbestos was injurious to health and could cause mesothelioma;[2]
- (d)costs of its application filed 6 April 2022.
- (a)
- [4]Whilst the defendant does not oppose leave to discontinue the proceedings and an order that the costs payable by the plaintiff be met, it opposes that:
- (a)it pays the plaintiff’s cost of the application filed 19 January 2021;
- (b)it pays certain of the plaintiff’s costs claimed to have been thrown away as a result of the amendments to its defence filed 22 September 2021;
- (c)the plaintiff should be excluded from paying the defendant’s costs of attendances pertaining to the issue that it knew or ought to have known that inhaling chrysotile asbestos was injurious to health and could cause mesothelioma;
- (d)it pays the plaintiff’s costs of the application filed 6 April 2022.
- (a)
- [5]The defendant cross-applies for orders that the plaintiff pay the defendant’s costs of the proceeding on the standard basis up to and including 8 April 2019, and on the indemnity basis thereafter, or in the alternative that the plaintiff pay the defendant’s costs of the proceeding on the standard basis.[3]
Costs Arising from the Plaintiff’s Application filed 19 January 2021
- [6]The plaintiff filed an application on 19 January 2021 seeking orders with respect to the defendant’s disclosure. The parties appeared before me on 5 May 2021. Consent orders were made that the application be adjourned and the question of costs be reserved. The purpose of the adjournment was to allow the parties time to attempt to resolve the issues informally.
- [7]On 27 May 2021, the parties conferred with one another to narrow or resolve the issues in the application filed 19 January 2021. Minutes were exchanged by the parties. There was no agreement about what was to be agreed.
- [8]It was contended by the plaintiff that the majority of the application filed 19 January 2021 has since resolved, by further action or explanation provided by the defendant, and only after the parties appeared on 5 May 2021. It was said that it culminated with the defendant denying the plaintiff its costs of the application on the basis that the order sought was “either (a) capable of resolution through informal discussions between the parties, or (b) without merit”. It was said that no attempt was made by the defendant to resolve the issues between when the plaintiff first raised the issues in correspondence which were the subject of the 19 January 2021 application and service of the application on 22 January 2021, or after that date and prior to the hearing on 5 May 2021. That is why the plaintiff has therefore relisted the application for costs submitting that it ought to have its costs of the application said to have been properly brought to achieve the defendant’s compliance with its disclosure obligations. It was argued that the plaintiff has enjoyed some success of its application.
- [9]The argument advanced by the defendant is that it should not be ordered to pay the costs of the plaintiff’s application filed 19 January 2021. Reliance has been placed on UCPR 698 which provides that:
“If the court reserves costs of an application in a proceeding, the costs reserved follow the event, unless the court orders otherwise.”
- [10]I was referred to the decision of Jackson J in Mio Art Pty Ltd v Macequest Pty Ltd & Ors (No 2) [2013] QSC 271, where his Honour stated at [4]:
“As I interpret that rule, it is intended to make it unnecessary to make a specific order dealing with reserved costs, unless they are not to follow the order for costs of the application. That interpretation means that the practice followed under previous rules of court that reserved costs must be specifically dealt with does not generally apply in making an order for costs of an application under the UCPR. However, I accept that the scope of the particular order for reserved costs I made on 31 January 2013 relating to each of the applications is not as clear as it could be, so that there is reason to order that the costs on each of the applications should include the costs which were reserved on 31 January 2013.”
- [11]The plaintiff has submitted that the “event” is the application filed 19 January 2021 and also emphasises the phrase “unless the court orders otherwise”. On the other hand, the defendant has submitted the “event” is the discontinuance of the proceeding.
- [12]It is evident that the application filed 19 January 2021 has not required the court’s adjudication on the substantive matters relating to the defendant’s disclosure. It has not required an adjudication because, only after the parties appeared at the hearing of 5 May 2021 initiated by the filing of the 19 January 2021 application, the majority of the plaintiff’s application of 19 January 2021 has since been resolved by further action between the parties. Some of it, for reasons not necessarily to do with negotiations concerning the 19 January 2021 application, remain unresolved. In argument before me, the plaintiff conceded as much. I am of the view that the plaintiff has not been wholly successful because some aspects of the 19 January 2021 application have not been resolved and importantly there has been no need for court intervention on the substantive matters, the subject of the 19 January 2021 application. The full merits of the 19 January 2021 application have not been adjudged. I am not satisfied therefore that the plaintiff should have its costs of the 19 January 2021 application. Nor am I satisfied that the plaintiff should, by virtue of the costs being reserved, bear the defendant’s costs of the application because it was only after the hearing before me on 5 May 2021, the defendant sought to address at least some of the plaintiff’s concerns about its disclosure. Efforts were made to do so, and the majority of the plaintiff’s disclosure requests have since been resolved, without court intervention. The result is that there is no order as to costs of the 19 January 2021 application.
Application for Costs Thrown Away as a Result of the Defendant’s Amendment to its Pleading
- [13]UCPR 386 provides that unless otherwise ordered, the party making an amendment to its pleading under UCPR 378 should pay the responding party’s costs thrown away as a result of the amendment. Accordingly, the plaintiff seeks its costs thrown away by the defendant’s amendment to its defence filed 22 September 2021, namely paragraphs 19(g) to (j).
- [14]It was highlighted on behalf of the plaintiff that before the amendment, the defendant’s pleaded position was that it only ever manufactured products containing chrysotile asbestos and that it did not know that chrysotile asbestos was injurious to health or could cause mesothelioma.[4] It was submitted that the effect of the defendant’s amendment was that:
- (a)the defendant no longer denied that it knew or ought to have known inhaling chrysotile asbestos was injurious to health and could cause mesothelioma;
- (b)it admitted that it knew or ought to have known:
- inhaling all types of asbestos was injurious to health;
- inhaling all types of asbestos could cause mesothelioma, but not trivial quantities of chrysotile asbestos.
- (a)
- [15]Mr Holyoak of counsel who appeared for the plaintiff submitted that the fundamental position advanced by the defendant significantly changed. Reliance was placed on UCPR 5 of the defendant’s obligation to plead its case coherently at the outset in accordance with the procedural rules to facilitate the just and expeditious resolution of the “real issues”, identifiable on the pleadings, without undue delay and expense to the parties. The defendant’s failure to do so caused the plaintiff to prepare its case to prove those issues now admitted and those costs have been wasted. It was submitted the reason for the amendment was not because the defendant genuinely disputed the issues up to the point of the amendment, rather it was because the defendant had inadequately pleaded its case and was called upon to make its position plain on the face of its pleadings. Despite the defendant having notice, long before the informal conference, that the plaintiff understood the issues to be put in dispute by the defendant, the defendant: maintained its position on the pleadings; did not provide further particulars sought by the plaintiff to clarify its position; disputed all facts that pertained to the historical literature and consensus as to the dangers of asbestos, including chrysotile asbestos, in the plaintiff’s notice to admit facts; and was unresponsive to the plaintiff’s attempts to resolve the issues. It was highlighted that the plaintiff had made multiple attempts throughout the litigation to seek clarification of the defendant’s true position and resolve issues it considered untenable due to historical literature, the defendant’s disclosure and expert evidence, but the defendant maintained the robust position of leaving all issues in dispute and reminded the plaintiff that it beared the onus of proving every issue at trial. It was submitted that that approach should be discouraged in civil proceedings in Queensland by UCPR 5.
- [16]It was argued by the plaintiff that it made an application to have the Jones and Simpson proceedings heard together because, inter alia, the plaintiff intended to call the same lay and expert witnesses at trial to give evidence on the issue on foreseeability, that is: the historical public awareness of the known dangers of asbestos, including chrysotile asbestos, and its ability to cause mesothelioma from 1958 to 1998, and the common and foreseeable uses of Klingerit and its ability to release asbestos dust and fibres when used.[5]
- [17]It was submitted that the defendant now admitted that it knew or ought to have known at all material times that inhalation of all types of asbestos could cause mesothelioma, but denied knowledge that trivial quantities of chrysotile asbestos could cause mesothelioma. That admission significantly confined the scope of the evidence now required by the plaintiff to prove foreseeability – which was no small issue in these proceedings – and resulted in significant costs to the plaintiff being thrown away. It was submitted that the plaintiff is entitled to those costs to be determined by a cost assessor, or the court may be minded to make an order pursuant to UCPR 684 to obviate any further agitation of these issues in the costs assessment process. In this respect, the plaintiff has estimated that 25-35 percent of all work on the matter (excluding work related to applications already subject to orders for costs) is attributable to these issues.
- [18]The defendant submitted that the circumstances of the pleading point needed to be considered in the context of the informal conference between the parties. A review of the pleadings, in that setting, demonstrated that paragraph 19(g) to (j) of the further amended defence was always to be properly understood to be connected to the use of Klingerit products, having regard to the correspondence and relevant allegation in the statement of claim.
- [19]It is perhaps convenient at this juncture to note that the second further amended defence responds to paragraph 1(b)(iii) of the amended statement of claim. The allegation in the amended statement of claim is that the defendant knew or ought to have known that:
- (a)Klingerit contained asbestos;
- (b)inhaling asbestos was injurious to health;
- (c)inhalation of even trivial quantities of asbestos could cause mesothelioma;
- (d)mesothelioma was an incurable and terminal disease.
- (a)
- [20]Relevantly, the amended defence pleads:
“19 The defendant –
…
(g) says that, if (which is denied as set out above) at any material time it knew or ought to have known, that inhaling asbestos was injurious to health, such knowledge –
(i) was confined to knowledge that inhaling asbestos other than chrysotile asbestos from the intended and/or reasonably foreseeable use of its products was injurious to health;
(ii) did not extend to knowledge that inhaling chrysotile asbestos from the intended and/or reasonably foreseeable use of its products was injurious to health;
(h) denies so much of paragraph 1(b)(iii) of the statement of claim as asserts that at any material time it knew, or ought to have known, that inhalation of even trivial quantities of chrysotile asbestos could cause mesothelioma;
(i) asserts that denial –
(i) because the allegation denied is untrue;
(ii) because at no material time was the state of scientific and medical knowledge and the dissemination of that scientific and medical knowledge, such that the fact that inhalation of even trivial quantities of chrysotile asbestos could cause mesothelioma was a matter –
A known to the defendant;
B which ought to have been known to the defendant;
(j) says that, if (which is denied) at any material time it knew, or ought to have known, that inhalation of even trivial quantities of asbestos could cause mesothelioma, such knowledge –
(i) was confined to knowledge that inhaling even trivial quantities of asbestos other than chrysotile asbestos from the intended and/or reasonably foreseeable use of its products could cause mesothelioma;
(ii) did not extend to knowledge that inhaling even trivial quantities of chrysotile asbestos from the intended and/or reasonably foreseeable use of its products could cause mesothelioma.”
- [21]Mr Ashton QC who led Mr Giurtalis of counsel for the defendant highlighted that the plaintiff had the advantage of an unambiguous explanation of exactly what the amendment was intended to mean and to achieve in a pleading sense.[6] It was also highlighted that the plaintiff overlooked that paragraph 19(g) of the further amended defence was introduced by a preservation of the denial. It was not credible for the plaintiff to now contend that the amendment is a relevant admission. It was accepted that an order for costs thrown away may be appropriate in respect of costs reasonably incurred that relate to work done, but wasted, as a result of a party’s error of failure to comply with the applicable procedure or direction, however such was not the case in the present instance. It was submitted that any costs wasted were due to the discontinuance, not of the complained pleading. It was argued that as the evidence demonstrated, the amendment now relied upon by the plaintiff for its application:
- (a)was made with the parties’ mutual agreement;
- (b)arose out of a wider good faith process, in which the parties engaged to resolve outstanding procedural issues as to pleadings and disclosure, which were aspects of the case management and had been brought before the court in the application filed 19 January 2021;
- (c)was merely clarificatory and arose as an uncontroversial and not strictly necessary product of the wider cooperation achieved between the parties in their conferencing.
- (a)
- [22]Having reviewed the pleadings and amendments, it is my assessment that, prior to the amendment, there was initially a material distinction between the defendant’s knowledge of the effects of inhaling asbestos generally and not specifically chrysotile asbestos. I accept the submission made by Mr Holyoak on behalf of the plaintiff that paragraph 19(g) of the defence is indicative of an additional plea, and more relevantly a positive assertion. This is in the face of the purported denial. The allegation in paragraph 19(g) is interpreted to be that “at any material time it knew or ought to have known that inhaling asbestos was injurious to health. Such knowledge was to confined knowledge that inhaling asbestos … from the intended and/or reasonably foreseeable use of its products was injurious to health”. Up until then what had been put expressly in issue, as a positive assertion even in the face of the purported denial, was that the defendant did not know (or ought to have known) that inhaling chrysotile asbestos was injurious to health.[7]
- [23]It is not unsurprising then that the plaintiff highlighted, which I accept, that:
- (a)The plaintiff sought disclosure of documents it considered relevant to the issue of knowledge and foreseeability of the injurious nature of asbestos. This was relevant to the denial that inhalation of chrysotile asbestos, even in trivial amounts, was not injurious to health.
- (b)The defendant denied that such matters were in dispute until its attention was drawn to the precise terms of its denial in subparagraphs 19(g) to (j) of its defence resulting in the amendment made to the second further amended defence.
- (c)That amendment was necessary to remove that as an issue and make its position clear.
- (d)The defendant had no need to request the plaintiff’s consent or want of opposition to the proposed amendment. It could so without leave.
- (e)In fact, the defendant had a duty to plead its position coherently as required by the UCPR. It did so to remove it as an issue or to avoid further disclosure and because, patently, it was not a sustainable defence to allege that asbestos, even chrysotile asbestos, if inhaled was not injurious to health.
- (a)
- [24]I accept Mr Holyoak’s submission that subparagraph 19(g) maintains the denial set out above, but is intended to go further than the maintenance of that denial (“says that”) and assert positively that, even if it knew or ought to have known that inhaling asbestos was injurious to health, such knowledge was confined to knowledge that inhaling asbestos other than chrysotile asbestos was injurious to health. In other words, even if it was denied that the defendant knew that inhaling asbestos in consequence of the intended and reasonably foreseeable use of its products was injurious to health, the defendant further asserted, positively, that it only had knowledge that inhaling asbestos other than chrysotile asbestos was injurious to health. I therefore accept that the words introduced by the amended pleading fundamentally changed the meaning of subparagraphs 19(g) and (j) of the defence. I am therefore satisfied that this is a discrete issue upon which costs have been expended and I am not persuaded that an order other than the costs thrown away as a result of an amendment should be paid by the party who made the amendment.[8] This is consistent with UCPR 386. The plaintiff is therefore entitled to its costs even though the proceeding is ultimately to be discontinued. I am not prepared to embark upon an assessment of how much time the plaintiff’s representatives devoted to proving the plaintiff’s position prior to the amendment. If the parties are unable to agree, a cost assessment can be made in the usual manner.
Costs Arising from Leave to Discontinue
- [25]The plaintiff seeks leave to discontinue the proceedings subject to orders for costs. Whilst the plaintiff is prepared to pay the defendant’s costs on the standard basis, it seeks an order that it should not pay the defendant’s costs of attendances that relate to the issue that it knew or ought to have known that inhaling chrysotile asbestos was injurious to health and could cause mesothelioma.[9]
- [26]The defendant does not oppose the grant of leave for the plaintiff to discontinue the proceedings, however by cross-application[10], the defendant seeks that the plaintiff pay the defendant’s standard costs up to and including 8 April 2019, and on the indemnity basis thereafter, or alternatively that the plaintiff pay the defendant’s costs of the proceeding on the standard basis.[11]
- [27]It has been identified by the plaintiff that the defendant has relevantly rejected that the plaintiff should not be liable for the defendant’s costs of attendances relating to the issues now admitted. Those costs would include the defendant’s attendances with respect to the plaintiff’s attempts to resolve the issues such as receiving, reading and responding to the plaintiff’s notice to admit facts pertaining to this issue, the plaintiff’s expert reports, the plaintiff’s request for particulars, the plaintiff’s application for disclosure relating to these issues, the plaintiff’s request to amend the defendant’s pleadings to reflect its true position and amend its pleadings.
- [28]The court is empowered to grant leave to discontinue the proceedings and order costs it considers appropriate.[12]
- [29]Mr Ashton QC and Mr Giurtalis referred to the analysis of Bond J, as his Honour then was in Fairfield Services Pty Ltd (in liq) v Leggett (2020) 5 QR 50 where the following six principles were identified:
“[19] First, costs discretions are truly discretionary and there are no absolute rules. In each case the discretion must be exercised judicially, so that the Court arrives at the order it thinks just in the particular circumstances of the case: Johnson v Clancy [2010] NSWSC 1301, [21](a), [21](m).
[20] Second, under r 681, the general rule is that costs follow the event unless the Court orders otherwise. In Oshlack v Richmond River Council (1998) 193 CLR 72, McHugh J explained the principle and policy underlying that general rule:
“The principle is grounded in reasons of fairness and policy and operates whether the successful party is the plaintiff or the defendant. Costs are not awarded to punish an unsuccessful party. The primary purpose of an award of costs is to indemnify the successful party. If the litigation had not been brought, or defended, by the unsuccessful party the successful party would not have incurred the expense which it did. As between the parties, fairness dictates that the unsuccessful party typically bears the liability for the costs of the unsuccessful litigation. As a matter of policy, one beneficial by-product of this compensatory purpose may well be to instil in a party contemplating commencing, or defending, litigation a sober realisation of the potential financial expense involved. Large scale disregard of the principle of the usual order as to costs would inevitably lead to an increase in litigation with an increased, and often unnecessary, burden on the scarce resources of the publicly funded system of justice.”
[21] Third, where the proceedings are discontinued prior to any hearing on the merits, the r 681 general rule cannot be applied in terms. As McHugh J observed in Lai Qin, a court is necessarily deprived of the factor that usually determines whether or how it will make a costs order. The Court cannot try a hypothetical action between the parties to determine the question of costs: Johnson v Clancy [2010] NSWSC 1301, [21](f); see also Petavrakis v Hirst & Co [2001] QSC 224, [9]; Kennedy v Griffiths [2014] QSC 43, [66]; Rushbrook v Chalmers [2015] QSC 145, [19]. At the time of discontinuance, usually it will be impracticable to assess the eventual prospects of success in the action: Johnson v Clancy [2010] NSWSC 1301, [21](f).
[22] Fourth, it may nevertheless be appropriate to make an order that costs are borne by one side. Each case will depend on its own facts, but it may be relevant to consider the following:
- (a)(in a particular case) the conduct of the defendant prior to the commencement of the proceeding, where such conduct may have precipitated the litigation (Johnson v Clancy [2010] NSWSC 1301, [21](h));
- (b)the whole of the proceeding, including whether the plaintiff has acted reasonably in commencing and continuing to prosecute the proceeding and whether the defendant has acted reasonably in defending it (Johnson v Clancy [2010] NSWSC 1301, [21](g) and Ralph Lauren 57 Pty Ltd v Byron Shire Council [2014] NSWCA 107, [33] per Preston CJ of LEC (with whom Beazley P and Ward JA agreed)), but bearing in mind that the question of reasonableness may not be one capable of determination absent a full hearing on the merits (see Bitannia Pty Ltd v Parkline Constructions Pty Ltd [2009] NSWCA 32, [43], [57] per Hodgson JA (with whom Tobias and Basten JJA agreed)); and
- (c)the reasons for discontinuance (Johnson v Clancy [2010] NSWSC 1301, [21](g)), but bearing in mind that the subjective considerations of one party not put before the other party will generally be immaterial so that the discretion will be exercised on the basis of the objective circumstances established on the evidence (see Bitannia Pty Ltd v Parkline Constructions Pty Ltd [2009] NSWCA 32, [81] (Basten JA); Ralph Lauren 57 Pty Ltd v Byron Shire Council (2014) 199 LGERA 424, 433 [34] per Preston CJ of LEC (with whom Beazley P and Ward JA agreed)).
[23] Fifth, when evaluating the relevant considerations, there is an important distinction between: (1) cases in which one party, after litigating for some time, effectively surrenders to the other, and; (2) cases where some supervening event, or settlement, so removes or modifies the subject of the dispute that, although it could not be said that one side has simply won, no issue remains between the parties except that of costs: ONE.TEL Ltd v Deputy Commissioner of Taxation (2000) 101 FCR 548, 553 [6]. As to this:
- (a)In the former type of case, the surrender or capitulation will usually provide a strong reason to award costs against the party who has surrendered or capitulated: Zhao v Suzhou Haishun Investment Management Co Ltd [2020] VSCA 34. It seems to me that this must be a partial reflection of the principles and policies which underlie the r 681 general rule, as identified by McHugh J in Oshlack v Richmond River Council (1998) 193 CLR 72. A classic illustration of the type of case where one party has effectively surrendered to the other is a case where proceedings are dismissed or discontinued because the applicant chooses not to proceed with them: Kiama Council v Grant (2006) LGE-RA 441, 453-454 [57] per Preston CJ.
- (b)In the latter type of case, there may be difficulty in discerning a clear reason why one party, rather than the other, should bear the costs, and that might provide good reason to decide that each party should bear its own costs. Lai Qin is one example of a case falling into this category, but other examples include Commonwealth Bank of Australia v Daleport Pty Ltd (in rec) (No 6) [2019] NSWSC 958, where the proceeding was assessed to have become futile in light of the fact that sequestration orders had been entered against defendants, and True Conservation Association Inc v Minister Administering the Threatened Species Conservation Act 1995 [2008] NSWLEC 221, where the passage of legislation rendered the proceeding futile.
[24] Sixth, the Queensland rules are silent as to onus. Care must be taken in the application of authorities from other jurisdictions where the rules are different. But as McMeekin J observed in Jones v Jones [2012] QSC 342, [45], “obviously r 307(1) does provide some guide”. The principle and policy underlying the r 681 general rule as explained by McHugh J in Oshlack v Richmond River Council (1998) 193 CLR 72 support the outcome dictated by r 307(1). It seems to me to follow that if the only information before the Court is that the proceeding was discontinued but at a date after the first defence had been filed, there would be no reason not to exercise the r 307(2) discretion in the same way as suggested by r 307(1). In such a case, it would be difficult to see why plaintiffs who discontinue before the first defence must pay their opponent’s costs, but plaintiffs who wait to discontinue for months or years after the first defence should not. Without more, those facts would normally be regarded as demonstrating a strong ground to award costs against the discontinuing plaintiffs: cf Zhao v Suzhou Haishun Investment Management Co Ltd [2020] VSCA 34. But there might well be some particular reason why the discontinuing plaintiffs should not pay an opponent’s costs, or indeed, why the opponent should pay the costs of the discontinuing plaintiffs. Ordinarily, the law expects that “he who asserts must prove”: Cook’s Construction Pty Ltd v SFS 007.298.633 Pty Ltd (2009) 254 ALR 661, 672-673 [43] per Keane JA. At least on that basis, the party seeking a particular exercise of the costs discretion must demonstrate why it is appropriate.”
- [30]It was submitted by the defendant that the exclusion order sought by the plaintiff is not reasonably capable of performance. There is no finding of the court that inhaling chrysotile asbestos in the circumstances relevant to the worker and alleged by the plaintiff was injurious to health and could cause mesothelioma. Nor, if that were so, is there any finding whether or when the defendant knew it or not. It was submitted that to use the court to adjudicate such matters on this application is to seek to try proceedings which have been abandoned. As was stated by Hill J in Australian Securities Commission v Aust Homes Ltd (1993) 44 FCR 194 at [201]:
“It will rarely, if ever, be appropriate, where there has been no trial on the merits, for a court determining how the costs of the proceeding should be borne to endeavour to determine for itself the case on the merits or, as it might be put, to determine the outcome of a hypothetical trial.”
- [31]It was argued on the defendant’s behalf that this is a case of “effective surrender”, to use Bond J’s words in Fairfield Services, and there is no occasion from departure from the usual rule. In addition, it was also highlighted on behalf of the defendant that the plaintiff’s case on the present application seems to proceed from the basis that it wasted costs and expenses in trying to prove something which it claims was subsequently admitted by the defendant. It was submitted that this basis is not made out on the evidence. However, even if it is made out, it is not satisfactorily explained why, having (allegedly) achieved the probative position it had been seeking, the plaintiff then decided to abandon the case. If the plaintiff was in any doubt at all on this matter, that surely could not have been so after the informal conference. Yet the plaintiff continued in active prosecution of the action for at least another six months. The plaintiff seems to have made serious allegations in these proceedings in the hope that the necessary evidence will present itself during the course of the proceedings. This is not the way to prosecute such a case and the disappointments of doing so should not be laid at the defendant’s feet.
- [32]The defendant has sought indemnity costs after 8 April 2019 because on 8 April 2019, it made an offer to settle this proceeding on terms, inter alia, that:
- (a)the proceeding be dismissed;
- (b)each party bear its own costs of the proceeding.
- (a)
- [33]That offer was open for acceptance until 5.00 pm on 24 April 2019. However, by letter dated 11 April 2019, the plaintiff expressly rejected the defendant’s offer.
- [34]It was submitted that the defendant’s offer is demonstrably more favourable to the plaintiff than the order it now seeks. In the circumstances, the plaintiff’s refusal of the defendant’s offer was said to be imprudent and unreasonable. It was argued that the court is presented with no evidence to demonstrate that the plaintiff’s refusal of the defendant’s offer was prudent or reasonable.
- [35]It was highlighted on behalf of the defendant that the power to award costs on the indemnity basis is within the exercise of the court’s general discretion, such discretion being “truly discretionary” and with “no absolute rules”.[13]
- [36]The court’s discretion to make orders for costs it considers appropriate also arises from UCPR 307(2). The power to award costs on the indemnity basis is contained within the court’s discretion and arises under UCPR 703.
- [37]It was submitted on behalf of the defendant that in dealing with the application regarding costs, it is not appropriate nor necessary for the court to attempt to determine the likely outcome of the proceedings on its merits had it gone to trial. Rather, the court may be satisfied by reference to matters of procedure and the facts not in dispute.[14] It was submitted that it is well established that an imprudent refusal of an offer to compromise provides a basis to warrant the exercise of the discretion to award costs on the indemnity basis.[15] I accept these propositions. It was highlighted that a defendant who has been completely successful and has made an offer to settle better than the result for the plaintiff should not be in a worse position than a partly unsuccessful defendant who made such an offer, as contemplated by UCPR 361.[16] It was highlighted that the making of the offer by a defendant, which is not accepted by a plaintiff, is a very relevant circumstance to be taken into account when exercising the discretion as to costs. If there are no prevailing circumstances, the order for indemnity costs is likely to be made.[17]
- [38]The defendant therefore submitted that, in the circumstances and on the basis of the facts not in dispute, the appropriate orders as to costs be:
- (a)the plaintiff pay the defendant’s costs of and incidental to this proceeding calculated on the standard basis up to and including 8 April 2019;
- (b)the plaintiff pay the defendant’s costs of and incidental to this proceeding, calculated on the indemnity basis after 8 April 2019.
- (a)
- [39]As was highlighted though by Mr Holyoak, the defendant bears the onus to satisfy the court that the offer on which it relies is not less favourable than the “order”. The defendant points to the order however that it is only an order of discontinuance. The offer by the defendant was that the proceedings be dismissed (i.e., that there be a judgment). It was argued that there is a vast difference between dismissal by way of judgment, which evidences a success for a defendant (and could create res judicata) and a discontinuance. The rules “are consistent with a long-held view of the nature of a discontinuance is not destroying a complainant’s right of action”.[18] Relevantly in Re Sailport Pty Ltd [1990] 2 Qd R 395 at 396, McPherson J said:
“The importance of the difference between discontinuing and dismissing the application rests with their consequences. If the application is discontinued, its discontinuance will not have the effect of a judgment on the merits. If, however, it is dismissed it may very well have such an effect.”
- [40]It was submitted that in fact the plaintiff by discontinuing, obtains an order “more favourable to the plaintiff” than the offer. It was also submitted that the submission of the defendant also appears to assume that “favourability” ought to take into account the offer of each party bearing their own costs. However according to the plaintiff, the defendant’s submission about this is misdirected. It was highlighted that UCPR 361 is taken into account in deciding costs. It presupposes that the order under UCPR 307(2) will be that the plaintiff is ordered to pay costs. The defendant’s submission seeks to invert that process. The offer as to costs is irrelevant to UCPR 361. UCPR 357(3) provides that if an offer is not accepted, no communication about the offer may be made to the court at the trial or hearing of the proceeding until all questions of liability and a relief be given other than costs, had been decided.
- [41]It was also argued on behalf of the plaintiff that an application for leave to discontinue will not determine questions of liability. Assuming the order sought for discontinuance is a form of “relief”[19] (the offer otherwise being expressed in a Calderbank format also), the UCPR 361 offer is directed to the questions of liability and relief, and not the costs. It was contended that the defendant’s submissions on this topic proceed from the erroneous premise that the offer was more favourable. It demonstrably was not when properly considered even as a Calderbank offer. It was submitted that there is no basis and none can be demonstrated to establish any unreasonable conduct or other special feature which will attract an award of indemnity costs.
- [42]It is my view that based upon the authority of Re Sailport and the terms of the offer made by the defendant, which were rejected by the plaintiff do not justify an award for indemnity costs. The plaintiff cannot be seen to have acted imprudently or unreasonably. At the time the offer was made, the defendant had not provided any disclosure or expert evidence in support of its defence, the plaintiff had not had the opportunity to obtain expert opinions on the relevant issues in dispute and the plaintiff held a belief, prima facie, that it had prospects of succeeding on its claim based on the remaining issues in dispute, its experience with asbestos-related litigation, its knowledge regarding the historical known dangers of working with asbestos containing products and the information held by it regarding the worker’s use of the defendant’s asbestos-containing products.[20] The circumstances, at that stage of the proceeding, did not justify a dismissal (as sought by the defendant).[21] The offer made by the defendant, based on the authority of Re Sailport, was for dismissal. As has been identified to me on behalf of the plaintiff that is a vast difference between someone having their case dismissed by way of judgment which evidences success for a defendant and creates a res judicata and a discontinuance. Perhaps it is accurate that Re Sailport provides authority for the proposition that the plaintiff is now in a better position than the defendant, however I do not need to consider that issue because I am not satisfied overall that indemnity costs should be granted. The plaintiff determined to no longer pursue its claim after considering the value of the plaintiff’s claim, the significant costs already incurred by the plaintiff in litigating this matter and the costs to be incurred if a trial of all the issues that remained in dispute proceeded. I take the view that considering the conduct of the proceeding, bearing in mind of course the proceeding was discontinued prior to any hearing on the merits, the plaintiff has acted reasonably in continuing to prosecute the proceeding up until the point which it has. Consequently, the plaintiff should only pay the defendant’s costs on a standard basis.
- [43]Given my view about the costs thrown away by the amended pleading, it would be easy to order that the plaintiff only pay some of the defendant’s costs. However I am not inclined to order that the costs to be paid by the plaintiff exclude the defendant’s costs of attendances that relate to the issue that it knew or ought to have known that inhaling chrysotile asbestos was injurious to health and could cause mesothelioma. To do so would validate some sort of artificial, hypothetical separation, not otherwise properly provided under the UCPR.[22] There is no evidence before me which I am prepared to act upon to find that prior to the defendant’s amended pleading concerning this aspect, its actions were imprudent or unreasonable so as to justify the order sought by the plaintiff. I take the view too that the defendant acted reasonably in defending its position up until the present point in time and there should not be an order excluding the plaintiff having to pay the defendant’s costs of attendances that relate to the issue that it knew or ought to have known that inhaling chrysotile asbestos was injurious to health and could cause mesothelioma.
Costs of the Present Application
- [44]Both parties have been comparatively successful in respect to their various applications before the court. There has been a mixed ultimate result such that there, in my view, should be no order as to costs with respect to the finalisation of these costs issues.
- [45]Therefore, the orders in respect to the Jones proceeding is as follows:
- (a)There is no order as to costs of the application filed 19 January 2021.
- (b)Pursuant to UCPR 386, the defendant pay the costs thrown away as a result of the defendant’s amendments to its defence filed 22 September 2021.
- (c)There is no order as to costs of the application filed 6 April 2022.
- (d)The defendant’s application filed 4 May 2022 is dismissed.
- (e)Pursuant to UCPR 304(2), there is leave for the plaintiff to discontinue the proceeding and pursuant to UCPR 307, the plaintiff is to pay the defendant’s costs of the proceeding on the standard basis.
- (a)
Simpson proceeding
- [46]In the Simpson proceeding, the plaintiff seeks:
- (a)the costs of its application filed 9 February 2021;
- (b)costs thrown away as a result of the defendant’s amendments to its defence file 22 September 2021 pursuant to UCPR 386;
- (c)leave to discontinue the proceedings pursuant to UCPR 304(2) and an order, pursuant to UCPR 307(2), of the costs payable by the plaintiff, upon discontinuance, exclude the defendant’s costs of attendances that relate to the issue that it knew or ought to have known that inhaling chrysotile asbestos was injurious to health and could cause mesothelioma – issues no longer in dispute on the pleadings due to the amendments made to the defence filed 22 September 2021;
- (d)costs of its application filed 6 April 2022.
- (a)
- [47]Whilst the defendant does not oppose leave to discontinue the proceedings and an order that the costs payable by the plaintiff be met, it opposes:
- (a)that it pay the plaintiff’s costs of the application filed 9 February 2021;
- (b)that it pay certain of the plaintiff’s costs claimed to have been thrown away as a result of the amendments to its defence filed 22 September 2021;
- (c)the plaintiff should be excluded from paying the defendant’s costs of attendances that relate to the issue that it knew or ought to have known that inhaling chrysotile asbestos was injurious to health and could cause mesothelioma;
- (d)costs of the application filed 6 April 2022.
- (a)
- [48]For reasons largely reflective of the orders made with respect to the Jones proceeding:
- (a)the defendant pay the plaintiff’s costs thrown away as a result of the defendant’s amendments to its defence filed 22 September 2021 pursuant to UCPR 386;
- (b)the plaintiff has leave to discontinue the proceedings and pay the defendant’s costs of the proceeding;
- (c)there be no order as to costs with respect to the application filed 6 April 2022.
- (a)
- [49]However for the reasons to follow, I am satisfied that the plaintiff should have its costs of the application filed 9 February 2021. I will address each matter where relevant having regard to the material differences between the two proceedings insofar as it relates to the various applications.
Costs Arising from Application filed 9 February 2021
- [50]The plaintiff’s application filed 9 February 2021 sought orders that:
- (a)the defendant amend its list of documents to correctly identify the legal entities that created documents and describe them in a distinguishable and consistent way so the plaintiff can ascertain which documents were authored and received by the defendant from the list of documents;
- (b)the amendments comply with UCPR 382;
- (c)the defendant deliver documents by way of universal serial bus (USB);
- (d)the time for the plaintiff to serve expert evidence under UCPR 429 be extended to a time after the defendant delivered copies of its disclosure to the plaintiff.
- (a)
- [51]Following the filing of the plaintiff’s 9 February 2021 application, the defendant filed a cross-application seeking the court’s indulgence to extend the time for it to rely on its amended defence which was out of time under UCPR 385.
- [52]The parties appeared before me on 5 May 2021. Consent orders were made that:
- (a)granted the defendant leave to rely on its defence filed 22 February 2021;
- (b)extended the time for the plaintiff to serve its expert evidence to 3 August 2021;
- (c)adjourned the plaintiff’s 9 February 2021 application;
- (d)reserved the costs of the applications.
- (a)
- [53]It was highlighted on behalf of the plaintiff that the plaintiff’s application has been relisted for costs but can eventually be discontinued, together with the principal proceeding if the court deems it fit.
- [54]Relevantly, on 27 May 2021 the parties attended a conference with a view to resolving the remaining issues in the application. It was suggested by the plaintiff that resolution was achieved by the defendant amending its list of documents to provide proper descriptions for authors and recipients of documents and delivering documents by way of USB.[23] It was submitted that the defendant conceded to the orders sought in the application only after appearing at the hearing of 5 May 2021 to oppose it. It was argued that the defendant’s opposition to the whole of the application was manifestly unreasonable and it ought to be liable for the plaintiff’s costs of the application.
- [55]No real challenge was made by the defendant to the assertion by the plaintiff that resolution of the application was achieved by the defendant amending its list of documents to provide proper descriptions for authors and recipients of documents and delivering documents by way of USB.[24] I accept the defendant provided further disclosure in the manner sought by the plaintiff. I am satisfied in circumstances where the filing of the application caused the parties to informally negotiate, and resolution was subsequently achieved by the defendant amending its list of documents to provide proper descriptions for authors and recipients of documents and delivering documents by way of USB. The plaintiff should therefore have its costs. Costs of the application are therefore ordered in favour of the plaintiff.
Application for Costs Thrown Away as a Result of the Amendment
- [56]The issues essentially replicate those in the Jones proceeding. The effect of the defendant’s amendments to its defence filed 22 September 2021 (namely paragraphs 4(g) to (j)) is that:
- (a)it no longer denied that it knew or ought to have known inhaling chrysotile asbestos was injurious to health and could cause mesothelioma;
- (b)it knew or ought to have known;
- inhaling all types of asbestos was injurious to health;
- inhaling all types of asbestos could cause mesothelioma, but not trivial quantities of chrysotile asbestos.
- (a)
- [57]The material difference though in respect to this amendment as was highlighted by the plaintiff, was that despite the defendant having noticed, long before the informal conference, that the plaintiff understood the issues to be put in dispute by the defendant, the defendant maintained its position on the pleadings, disputed all facts that pertained to the historical literature and consensus as to the dangers of asbestos, including chrysotile asbestos, in the plaintiff’s notice to admit facts and disclosed 1,326 documents which purportedly related to its knowledge of the dangers of asbestos. In addition, the plaintiff argued that it is entitled to those costs to be determined by a costs assessor, or the court may be minded to make an order pursuant to UCPR 684 to obviate any further agitation of these issues in the costs assessment process.[25]
- [58]For reasons similar to the Jones proceeding, the defendant should be required to pay the costs thrown away by the amendment. By the amended pleading, the defendant has now admitted that it knew or ought to have known that at all material times inhalation of all types of asbestos could cause mesothelioma, but denies knowledge that trivial quantities of chrysotile asbestos could cause mesothelioma. That admission significantly confined the scope of the evidence required by the plaintiff to prove foreseeability which would have been no small issue in this proceeding and has resulted in significant costs to the plaintiff being thrown away. The defendant ought to pay the plaintiff’s costs of requiring the court to determine the issue under UCPR 386.
Leave to Discontinue
- [59]For the reasons given with respect to the Jones proceeding, the order will be that there be leave to discontinue the proceedings and that the plaintiff pay the defendant’s costs of the proceedings on a standard basis.
Costs of the Application filed 6 April 2022
- [60]Again, for reasons similar to the Jones proceeding, I consider it appropriate that each party bear their own costs of the application given the success or otherwise with respect to the various matters agitated at this hearing.
- [61]The orders will therefore be that:
- (a)The defendant pay the plaintiff’s costs of the application filed 9 February 2021.
- (b)The defendant pay the costs thrown away as a result of the defendant’s amendments to its defence filed 22 September 2021 pursuant to UCPR 386.
- (c)There is no order for costs of the application filed 6 April 2022.
- (d)The plaintiff has leave to discontinue the proceedings pursuant to UCPR 304(2) and an order, pursuant to UCPR 307, that it pay the defendant’s costs on the standard basis.
- (a)
Footnotes
[1]See WorkCover Queensland v Klinger Ltd [2021] QDC 55.
[2]These issues are no longer in dispute on the pleadings due to the amendments made to the defence filed 22 September 2021.
[3]As per the defendant’s written submissions however the defendant’s application filed 4 May 2022 does not state the alternative, that is that costs be assessed only on the standard basis.
[4]Paragraph 19 of the defence.
[5]WorkCover Queensland v Klinger Ltd [2021] QDC 55.
[6]Letter from Baker McKenzie dated 17 June 2021 as exhibited to the affidavit of Burke 4.5.22, Exhibit BDB-43.
[7]I adopt the same approach with paragraph 19(j) of the Second Further Amended Defence.
[8]UCPR 386.
[9]In other words, issues no longer in dispute on the pleadings due to the amendments made to the defence filed 22 September 2021.
[10]Filed 4 May 2022.
[11]See footnote 3.
[12]See UCPR 307(1) and 307(2). See also UCPR 685. I was also referred to Fairfield Services Pty Ltd (in liq) v Leggett (2020) 5 QR 50, [52].
[13]See for instance Rathie v ING Life Limited [2004] QSC 146 and Fairfield Services Pty Ltd (in liq) v Leggett [2020] QSC 183.
[14]See Petavrakis v Hirst & Co. [2001] QSC 224, [41] and Rathie v ING Life Limited [2003] QSC 429, [35].
[15]See Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225, [24] and Anderson v AON Risk Services [2004] QSC 180.
[16]Emanuel Management Pty Limited (in liq) v Fosters Brewing Group Ltd [2003] QSC 299, [37].
[17]Emanuel Management Pty Ltd (in liq), supra, [39].
[18]Cormie v Orchid & Anor [2001] QCA 546, [22].
[19]Relief is not defined in the dictionary in the UCPR but may broadly include a remedy sought by plaintiff in the action.
[20]Para 2 of the Affidavit of Yates, 18 May 2022.
[21]Kennedy v Griffiths [2014] QS 43, [34].
[22]Australian Securities Commission v Aust Homes Limited (1993) 44 FCR 194, 201.
[23]Para 24 and Exhibit LJCY-9 to the Affidavit of Yates, 6 April 2022 and Exhibit LJCY-7 to LJCY-9 to the Affidavit of Yates, 18 May 2022.
[24]Para 24 and Exhibit LJCY-9 to the Affidavit of Yates, 6 April 2022 and Exhibit LJCY-7 to LJCY-9 to the Affidavit of Yates, 18 May 2022.
[25]It was deposed that 25 – 30 percent was attributable to this issue.