Thomson v State of Queensland & Anor (No 2)

This case concerned the appropriate costs order in a personal injuries proceeding against two defendants. Because the plaintiff’s offer to settle against the first defendant was less than the sum awarded, there was no dispute that he was entitled to a costs order on an indemnity basis against the first defendant. Having failed to make an effective offer against the second defendant he was not entitled to a costs order against the second defendant. The key issue was whether the indemnity costs order against the first defendant should include the costs of proceeding against the second defendant. Applegarth J concluded that it would be just in the circumstances for such an order to be made, on the basis that the proceedings against the second defendant were only required because of the unmeritorious denial of liability by the first defendant.

Applegarth J

8 May 2019

Background

The plaintiff was employed by the second defendant and injured while working at a site owned by the first defendant. In an earlier judgment, the plaintiff was successful in his personal injuries claim against both the first and second defendant. This judgment concerns the costs of those proceedings. [1].

Because the plaintiff had made an offer to settle with the first defendant, and obtained more than that amount after trial, it was not in dispute that he was entitled to costs assessed on an indemnity basis as against it. [2]. The noteworthy and contentious issue was whether the plaintiff was also entitled to receive from the first defendant the costs of pursuing the second defendant. [3].

Issue – obtaining from the first defendant the costs of pursuing the second defendant

In contrast to the offer made to the first defendant, the plaintiff’s offer to the second defendant was not matched or exceeded at trial. [6]. By reason of s 316(2)(a) of the Workers’ Compensation and Rehabilitation Act 2003 (“WCRA”), a plaintiff is only entitled to costs, on the standard basis, against an employer if the amount they are awarded after trial is equal to or more than their final written offer. [6]. Accordingly, there was no entitlement to costs against the second defendant. However, the plaintiff submitted that he was entitled to receive the costs of pursuing the second defendant from the first defendant, also on an indemnity basis. [3].

The plaintiff’s alleged basis for the entitlement was that it had been the first respondent’s unmeritorious denial of liability which had necessitated his pursuit of the second defendant. [3]. Reliance was placed on the decision of Paskins v Hail Creek Coal Pty Ltd (No 2) [2018] 2 Qd R 518 (per McMeekin J), in which a similar issue arose. [3]. In that case, McMeekin J had considered whether the WCRA, which denied the plaintiff’s entitlement to costs against his employer, should operate to protect the other defendant. His honour determined the objects and purposes of the WCRA would not be offended by requiring the other defendant to bear the plaintiff's costs of pursuing the employer. [9], [12]. Having reached that view, McMeekin J said:

“The question then is whether it is just, that the plaintiff, who was successful against both defendants, obtain an indemnity … against the expense to which he has been put by reason of the second defendant’s unsuccessful stance, that led to the plaintiff incurring this increased costs burden? I cannot see why, in fairness, the second defendant [should] not be required to bear that burden itself.”

The relevant order in Paskins was made on a standard basis because it was common ground that the second defendant be ordered to pay Mr Paskins costs of the proceeding on the standard basis. [24].

Resolution of the issue

In this case, the first defendant contended that it would be a “curious state of affairs” if a plaintiff who had not made an effective final written offer were able to obtain costs, not on a standard basis, but on an indemnity basis, against the first defendant in respect of proceedings brought against the second defendant. [20].

Applegarth J considered that the submission as to the result sought being “curious” had “some attraction”. [21]. However, it did not fully engage with the point that a plaintiff who not only fails to make an effective final written offer, but who “completely fails against another defendant, may seek to have the costs of pursuing” that claim “recovered by way of a costs order made against an unsuccessful defendant” (through a so-called Sanderson or Bullock order). [11], [21].

As to the alleged inconsistency with s 316 WCRA, his Honour considered that s 316 only restricted an order for costs against an employer; it “does not purport to prohibit or regulate an order as to costs against another defendant”. [17]. His Honour agreed with the analysis of McMeekin J in Paskins that the order sought did not offend the WCRA.  His Honour also dismissed the submission that Paskins was distinguishable. [4]. His Honour said the fact that issues of indemnity and contribution between defendants in this case were resolved by agreement (unlike in Paskins), was “not a valid point of distinction”. [15].

His Honour concluded that it was appropriate to make the order sought by the plaintiff, in the exercise of discretion as to costs. The fact that the plaintiff may have protected himself better by making an offer to the second defendant did not disentitle the plaintiff from seeking an order against the first defendant in respect of the additional costs incurred by reason of the first defendant’s denial of liability. [23]. The plaintiff would not have been put to that cost if the first defendant had admitted liability. In this matter, the plaintiff was entitled to indemnity costs because he had made an effective offer.  His Honour concluded those circumstances made the indemnity costs order against the first defendant should include the plaintiff’s costs of pursuing the second defendant on an indemnity basis. [25].

His Honour made orders accordingly.

W Isdale