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[2024] QCA 220
This is an important decision for a number of reasons. The Court of Appeal addressed whether s 136 Workers’ Compensation and Rehabilitation Regulation 2014 operated to qualify the assessment of costs on the indemnity basis by displacing rr 360 and 703 Uniform Civil Procedure Rules 1999. Additionally, the Court considered whether a contractual indemnity clause which was void under s 236B Workers’ Compensation and Rehabilitation Act 2003 could in any event affect the discretion to award costs as between the contractor and the employer. Ultimately, the Court determined that neither altered the respondents’ respective liabilities for costs.
Bowskill CJ, Boddice JA and Henry J
12 November 2024
Judgment had been awarded for Mr Bilson (“Bilson”) against both Vatsonic Communications Pty Ltd (“Vatsonic”) and Townsville City Council (“the Council”), with the former being held 70 percent liable for the injury caused to him and the latter being held 30 percent liable. [1]. Having regard to an offer to settle which Bilson had made, the parties agreed that he should recover his costs on the indemnity basis. [11].
The potential significance of s 136 Workers’ Compensation and Rehabilitation Regulation 2014
Vatsonic submitted that 136 Workers’ Compensation and Rehabilitation Regulation 2014 (“the regulation”) displaces the operation of rr 360 and 703 Uniform Civil Procedure Rules 1999 (“UCPR”), to redefine what “indemnity basis” means, or how such costs are to be assessed. [19]. The parties’ agreement that Bilson was entitled to indemnity costs was the direct result of r 360(2) UCPR, instead of s 312 Workers’ Compensation and Rehabilitation Act 2003 (“the Act”). [15]. Rule 360 UCPR applies in matters where the plaintiff makes an offer, under Ch 9, Pt 5 UCPR, that is rejected by the defendant and the plaintiff obtains an order no less favourable than the offer. Unless the defendant demonstrates that another order for costs is appropriate, r 360(2) provides that the court must order the defendant to pay the plaintiff’s costs calculated on the standard basis up to the day of service of the offer and calculated on the indemnity basis after the day of service of the offer. [14].
Chapter 17A UCPR applies to “costs payable or to be assessed under an Act, these rules or an order of the court”.
Vatsonic and WorkCover argued that s 136 qualified the assessment of costs in the current matter, since it restricted the frame of reference to “the relevant scales of costs” (s 136(2)), by contrast to the wider scope allowed for under r 703(3) UCPR. Conversely, Bilson contended that s 136 does not operate to exclude the operation of r 703 UCPR, in instances where an order has been made that a party is to be awarded costs on the indemnity basis under the UCPR. [19].
Bilson was successful in his submission. The Court was persuaded that had it been the legislature’s intention upon enacting s 136 to exclude the recovery of indemnity costs (either under s 312 of the Act or r 360(2) UCPR), to alter the meaning of “indemnity basis”, or the manner in which such costs are to be assessed, clear and express words would have been used. That had not occurred. In addition, the interactions between s 312 of the Act and s 136 of the Regulation and also the applicable provisions of the UCPR and s 136 were not straightforward. The Court held that rr 360 and 703 UCPR were not overridden by the Workers’ Compensation legislation, either expressly or by necessary implication. [20]. It followed that it was appropriate that the assessment of Bilson’s costs be undertaken in accordance with r 703(3) UCPR. [21].
Did a contractual indemnity clause in an agreement between Vatsonic and the Council which was void under s 236B Workers’ Compensation and Rehabilitation Act 2003 affect the discretion to award costs by requiring that Vatsonic indemnify the Council for all of its costs?
The Court did not accept the Council’s proposition that a clause in an agreement between it and Vatsonic, which purported to indemnify it for any injury or loss arising specifically from Vatsonic’s performance of the contract or negligent act, meant that Vatsonic should be ordered to indemnify it for the entirety of its costs together with its liability for Bilson’s costs, comprising those incurred at first instance and on the appeals.
Whilst noting that ordinarily where a contractual right to costs exists, the discretion should be exercised in accordance with it, the Court observed that to make an order reflecting the indemnity would be inconsistent with s 236B of the Act. Additionally, given the scope of the word “damage” in contribution legislation extends to “the whole liability of the tortfeasor”, including costs, as such, “s 236B(3) is appropriately construed as rendering void the agreement to the extent it provides for, or has the effect of requiring, Vatsonic to indemnify the Council for the contribution claim, including damages and costs. Even if that were not strictly so, as a matter of construction of the words used in s 236B(3), to make an order requiring Vatsonic to indemnify the Council for all of its costs, and its liability for costs to Mr Bilson, would be inconsistent with the intent and practical operation of s 236B, such that it would not be appropriate to exercise the discretion in that way.” [34].
Disposition
Orders were made which specified the liabilities of each of the Council and Vatsonic as to (a) the payment of Bilson’s costs of the proceedings at first instance on the indemnity basis and (b) Bilson’s costs of the appeals on the standard basis. It was also ordered that the Council and Vatsonic each pay their own costs of the proceedings at first instance and the appeals.
A Jarro