Bilson v Vatsonic Communications Pty Ltd; Vatsonic Communications Pty Ltd v Bilson [No 2] [2024] QCA 220

SUPREME COURT OF QUEENSLAND

CITATION: Bilson v Vatsonic Communications Pty Ltd; Vatsonic Communications Pty Ltd v Bilson [No 2] [2024] QCA 220

PARTIES: In Appeal No 5634 of 2024: / LEIGH BILSON / (appellant) / v / VATSONIC COMMUNICATIONS PTY LTD / (ACN 093 786 004) / (first respondent) / TOWNSVILLE CITY COUNCIL / (second respondent) / In Appeal No 5563 of 2024: / VATSONIC COMMUNICATIONS PTY LTD / (ACN 093 786 004) / (first appellant) / WORKCOVER QUEENSLAND / (second appellant) / v / LEIGH BILSON / (first respondent) / TOWNSVILLE CITY COUNCIL / (second respondent)

FILE NOS: Appeal No 5634 of 2024 / Appeal No 5563 of 2024 / DC No 130 of 2021

DIVISION: Court of Appeal

PROCEEDING: General Civil Appeal – Further Orders

ORIGINATING COURT: District Court at Townsville – [2024] QDC 42 (Coker DCJ)

DELIVERED ON: 12 November 2024

DELIVERED AT: Brisbane

HEARING DATE: 30 October 2024

JUDGES: Bowskill CJ and Boddice JA and Henry J

ORDERS: “The second respondent (Townsville City Council) is entitled to recover 70% of the damages assessed against the first respondent (Vatsonic Communications Pty Ltd) from Vatsonic pursuant to s 6(c) of the Law Reform Act 1995**.”**

CATCHWORDS: PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – COSTS – where judgment was awarded for Mr Bilson against Vatsonic and the Council – where Vatsonic was held 70% liable, and the Council 30% liable, for the injury caused to Mr Bilson – where the parties are agreed Mr Bilson should recover his costs of the trial on the indemnity basis, having regard to an offer to settle made under the Uniform Civil Procedure Rules 1999 – whether the assessment of Mr Bilson’s costs of the trial on the indemnity basis ought to be limited by s 136 of the Workers’ Compensation and Rehabilitation Regulation 2014 – whether Vatsonic and the Council ought to contribute to Mr Bilson’s trial costs according to the apportionment of their liability for his injury – where the parties are also agreed that Mr Bilson should recover his costs of the appeals on the standard basis – whether Vatsonic and the Council ought to equally contribute to Mr Bilson’s costs of the appeals, having regard to their respective roles in both appeals – whether the discretion as to costs ought be exercised by giving effect to the indemnity clause in the agreement between Vatsonic and the Council, notwithstanding the conclusion reached in relation to the operation of s 236B of the Workers’ Compensation and Rehabilitation Act 2003 / Law Reform Act 1995 (Qld), s 6, s 7 / Uniform Civil Procedure Rules 1999 (Qld), r 360, r 388, r 703 / Workers’ Compensation and Rehabilitation Act 2003 (Qld), s 236B, 310, s 311, s 312, s 313, s 314, s 318D / Workers’ Compensation and Rehabilitation Regulation 2014 (Qld), s 134, s 135, s 136, s 137 / Anderson v Pickles Auctions Pty Ltd [2023] QCA 205, cited / Autodesk Inc v Dyason [No 2] (1993) 176 CLR 300; [1993] HCA 6, cited / De L v Director-General, New South Wales Department of Community Services [No 2] (1997) 190 CLR 207; [1997] HCA 14, cited / McGee v Independent Assessor [No 2] [2024] QCA 7, cited / Reddock v ST&T Pty Ltd [2022] QSC 293, cited / Unsworth v Commissioner of Railways (1958) 101 CLR 73; [1958] HCA 41, cited

COUNSEL: In Appeal No 5634 of 2024: / J G Greggery KC, with R J Armstrong, for the appellant / G W Diehm KC, with M A Rothery, for the first respondent / D P de Jersey KC for the second respondent / In Appeal No 5563 of 2024: / G W Diehm KC, with M A Rothery, for the first and second appellants / J G Greggery KC, with R J Armstrong, for the first respondent / D P de Jersey KC for the second respondent

SOLICITORS: In Appeal No 5634 of 2024: / Purcell Taylor Lawyers for the appellant / King & Company Solicitors for the second respondent / In Appeal No 5563 of 2024: / Jensen McConaghy for the first and second appellants / Purcell Taylor Lawyers for the first respondent / King & Company Solicitors for the second respondent

1. THE COURT: Judgment in relation to these appeals was delivered on 13 September 2024.¹ The orders made on that day included directions for the filing of material and submissions in relation to costs. The submissions filed were complex and raised many issues. A further oral hearing was therefore required. Vatsonic has also applied for an amendment to be made to order 7, under the “slip rule”.

Amendment to orders for contribution

2. Orders 6 and 7 made on 13 September 2024 were as follows:

“6.The first respondent (Vatsonic Communications Pty Ltd) is entitled to recover 30% of the damages assessed against Vatsonic from the second respondent (Townsville City Council) pursuant to s 6(c) of the Law Reform Act 1995.

7.The second respondent (Townsville City Council) is entitled to recover 70% of the damages assessed against the Council from the first respondent (Vatsonic Communications Pty Ltd) pursuant to s 6(c) of the Law Reform Act 1995.”

3. Vatsonic submits that, articulated in this way, there is an error in order 7, because it has the consequence of requiring Vatsonic to contribute 70% of the damages assessed against the Council (rather than 70% of the damages assessed against Vatsonic). This would not matter if the damages assessed against each party were in the same amount. But it matters in this case because the basis for assessment of damages payable by Vatsonic (under the statute) and the Council (under the common law) is different. Vatsonic asks the Court to correct the error under r 388 of the Uniform Civil Procedure Rules 1999 (Qld). The Council submits that r 388 does not apply in the circumstances, but agrees that an error had been made.

4. We are satisfied an error has been made in order 7. The relevant principle is stated in Unsworth v Commissioner of Railways,² namely, that for the purposes of contribution under s 6(c) of the Law Reform Act 1995 (Qld), the amount of the liability to pay contribution cannot be greater than the amount of the primary liability. As Fullagar J said in Unsworth at 87:

“Contribution can only be recovered from one who ‘is, or would if sued have been, liable’ to pay damages to the person injured. A person cannot be said to be so liable except to the extent to which damages can be recovered from him at law.”

5. Similarly, Taylor J at 93 said:

“… the provision assumes the existence of a liability in the party from whom a contribution is sought and may fairly be taken to intend that, within the limits of that liability only, he may be called upon to make contribution to the first tortfeasor.”

6. The error was accidental, in the sense that, whilst Vatsonic included in the list of authorities for the appeal(s) a case which in turn referred to Unsworth,³ no written or oral submission was made about it, as a result of which the Court inadvertently overlooked the point. In our view, r 388 of the UCPR is engaged in these circumstances. But even if it were not, it is appropriate to correct the error in the exercise of the Court’s inherent jurisdiction.⁴

7. Order 7 will be amended as follows:

“7.The second respondent (Townsville City Council) is entitled to recover 70% of the damages assessed against the first respondent (Vatsonic Communications Pty Ltd) from Vatsonic, pursuant to s 6(c) of the Law Reform Act 1995.”

8. The damages assessed against Vatsonic are set out in [187] of the reasons of the primary judge. The relevant figure is $539,447.05 (that is, the total before deduction of the statutory refund due to WorkCover).

9. At the hearing, the Court questioned whether order 6 should also be amended in an equivalent way. On reflection, we accept Vatsonic’s submission that this is not necessary. It is appropriate that Vatsonic only recover 30% of the damages assessed against Vatsonic (not the higher amount of damages assessed against the Council).

Costs of the trial at first instance

10. The next issue is the costs of the proceedings at first instance. The trial judge did not give the parties an opportunity to be heard, before making an order as to costs. This was one of the grounds of Mr Bilson’s appeal, which it was agreed would be dealt with after determination of the appeals.

11. In broad terms, the parties agree that Mr Bilson’s costs of the proceedings at first instance ought to be paid by Vatsonic and the Council on the indemnity basis, having regard to an offer to settle made by Mr Bilson on 21 January 2021.

12. In so far as Vatsonic is concerned, there is one qualification to this, which arises from s 136 of the Workers’ Compensation and Rehabilitation Regulation 2014 (Qld).

13. To understand that point, it is necessary first to mention the relevant provisions of the Workers’ Compensation and Rehabilitation Act 2003 (Qld). The provisions in relation to costs are contained in part 12. Division 1 (ss 310-314) applies if the claimant is a worker who has a “DPI” (degree of permanent impairment) of 20% or more. The parties agree that Mr Bilson has a DPI of more than 20%. Section 311 provides that, relevantly, if a court makes an award of damages in a claimant’s proceeding for damages, it must apply the principles in ss 312 to 314. Section 312 provides that, where the claimant makes a written final offer that is not accepted by the insurer, and the court later awards an amount of damages to the claimant that is equal to or more than the written final offer, the court “must order the insurer to pay the claimant’s costs, calculated on the indemnity basis”. Section 313 deals with the situation where the insurer makes a written final offer that is not accepted by the claimant, and the outcome is less favourable than the offer. Section 314 requires interest to be disregarded in making this assessment.

14. Rule 360 of the UCPR applies if the plaintiff makes an offer, under chapter 9, part 5 of the UCPR, that is not accepted by the defendant and the plaintiff obtains an order no less favourable than the offer. Unless the defendant shows 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.

15. The parties’ agreement that Mr Bilson should recover his costs on the indemnity basis flows from the operation of r 360(2) of the UCPR, not s 312 of the Workers’ Compensation and Rehabilitation Act 2003. The ultimate outcome for Mr Bilson was better than the UCPR offer he made in January 2021, but not better than Mr Bilson’s “written final offer” under the legislation.

16. Chapter 17A of the UCPR contains provisions dealing with costs. It applies to “costs payable or to be assessed under an Act, these rules or an order of the court”. Division 2 (rr 701 to 704) deals with the basis of assessment of costs. It applies to “costs in a proceeding that, under an Act, these rules or an order of the court, are to be paid to a party to the proceeding by another party or out of a fund”. Relevantly, r 703 provides:

“703 Indemnity basis of assessment

The court may order costs to be assessed on the indemnity basis.

Note –

Costs on the indemnity basis were previously solicitor and client costs—see rule 743S (Old basis for taxing costs equates to new basis for assessing costs).

…

When assessing costs on the indemnity basis, a costs assessor must allow all costs reasonably incurred and of a reasonable amount, having regard to –

the scale of fees prescribed for the court; and

any costs agreement between the party to whom the costs are payable and the party’s solicitor; and

charges ordinarily payable by a client to a solicitor for the work.”

17. Section 584 of the Workers’ Compensation and Rehabilitation Act 2003 provides for the making of regulations in relation to the things listed in schedule 1, including item 12 – “costs, including costs before and after a proceeding is started, and the type and amount of costs that may be claimed by or awarded to a claimant during any stage before or after the start of a proceeding”.

18. The Workers’ Compensation and Rehabilitation Regulation 2014 deals with costs in part 8. Relevantly, part 8, division 2 (ss 134-137) applies to a worker, like Mr Bilson, whose DPI is 20% or more. Section 136 provides:

“136 Costs after proceeding started

This section prescribes the legal professional costs of a claim after a proceeding is started.

The costs are chargeable under the relevant scales of costs for work done for or in a proceeding in the court.

However, the costs do not include –

the cost of work performed before the proceeding is started; or

the cost of work performed before the proceeding is started that is performed again after the proceeding is started.”⁵

19. Vatsonic and WorkCover submit that the effect of s 136 of the Regulation is to qualify the assessment of costs on the indemnity basis, by limiting the frame of reference to “the relevant scales of costs” (s 136(2)), rather than the broader scope contemplated by r 703(3) UCPR. Mr Bilson submits that s 136 should not be construed as excluding the operation of r 703 UCPR, where a party is entitled to an award on the indemnity basis under the UCPR.⁶

20. Mr Bilson’s argument is accepted. If it was the intention of the legislature when enacting s 136 of the Regulation to exclude the ability to recover indemnity costs (either under s 312 of the Workers’ Compensation and Rehabilitation Act or r 360(2) of the UCPR), to redefine what “indemnity basis” means, or how such costs are to be assessed, one would expect clear and express words to have been used. That is not the case. Within the context of the Workers’ Compensation legislation itself, the relationship between s 312 of the Act and s 136 of the Regulation is unclear. The relationship between the relevant provisions of the UCPR and s 136 is even less clear. We do not accept that the relevant provisions of the UCPR, rr 360 and 703, have been displaced by the Workers’ Compensation legislation, either expressly or by necessary implication.⁷

21. In those circumstances, in our view, since it is accepted that r 360(2) UCPR applies, as the basis on which Mr Bilson ought to recover his costs of the trial on the indemnity basis, the assessment of those costs ought to be undertaken in accordance with r 703(3) UCPR.

22. For completeness, we note that Vatsonic and Mr Bilson were otherwise agreed that s 137 of the Regulation applies in relation to Vatsonic’s liability for outlays after court proceedings were commenced (presumably, on the basis of the construction in Anderson v Pickles Auctions Pty Ltd [2023] QCA 205, that s 137 does not limit or prevent the recoverability of counsels’ fees as an outlay).

23. Our conclusion in relation to s 136 (that it does not operate to limit or affect Vatsonic’s liability for costs on the indemnity basis) and the parties’ agreement in relation to s 137 are reflected in the orders which will be made.

24. There is also an issue between Vatsonic and the Council, as to how their liability to Mr Bilson for the costs of the proceedings below should be apportioned, and whether the Council should be required to pay some part of Vatsonic’s costs of those proceedings.

25. The latter issue depends in part upon how an offer made by Vatsonic to the Council on 22 January 2021, based on Mr Bilson’s offer, is analysed (in simple terms, by reference to the dollar amount or the percentage contribution reflected in the offer).

“If more than 1 party in a proceeding for damages has a liability to pay the same costs under this part, or under this part and another law about costs, the court may apportion the costs payable by each party according to the proportion of liability of the parties and the justice of the case.”

29. In our view, it is appropriate that the defendants bear an equivalent proportion of the costs, to their proportion of liability for Mr Bilson’s injury.

30. As between the defendants, we consider there should be no order as to costs of the proceedings below.

Costs of the appeals

31. The parties are also broadly agreed that Mr Bilson is entitled to recover his costs of the appeals (and the Council’s notice of contention), albeit on the standard basis. As between Vatsonic and the Council, however, there were a number of areas of disagreement. Without traversing in detail all of the arguments, our relevant conclusions are as follows.

32. First, in our view both defendant/respondent parties should be liable to Mr Bilson for his costs of both appeals. Appeal number 5563 of 2024 was commenced by Vatsonic and WorkCover. Appeal number 5634 of 2024 was commenced by Mr Bilson, but raised only narrow issues that were essentially conceded by all parties. The Council filed a notice of contention in this proceeding, which was effectively an appeal against a broad range of factual findings. Both respondent parties were fully involved in arguing all, or almost all, of the points raised in both appeals. It is artificial to try to separate out the many issues raised on the appeals, and the parties’ involvement in them, and in that way arrive at some equitable division of responsibility for the costs.

33. As between the respondents:they ought to each contribute 50% of Mr Bilson’s costs – that reflects a more appropriate division of the contribution to the time and cost of the appeals, rather than the proportion of liability for Mr Bilson’s injury; andthey ought to simply bear their own costs of the appeals.

34. Finally, we reject the Council’s argument that, in the exercise of this Court’s discretion, Vatsonic should be ordered to indemnify the Council for all of its costs, and its liability for Mr Bilson’s costs, both at first instance and on the appeals, having regard to clause 1.39 of the agreement between them.¹⁰ We acknowledge the principle that, where there is a contractual right to costs, the discretion should ordinarily be exercised so as to reflect that contractual right.¹¹ However, there are compelling reasons in this case for exercising the discretion otherwise. To make an order, reflecting clause 1.39, would be inconsistent with s 236B of the Workers’ Compensation and Rehabilitation Act 2003.¹² It has been held, in effect, that the word “damage” in contribution legislation (such as s 6 of the Law Reform Act) is not restricted to damages awarded by a court but means “the whole liability of the tortfeasor”, including costs.¹³ Consistently, 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.

Footnotes

1. Bilson v Vatsonic Communications Pty Ltd [2024] QCA 171 (the judgment). ↩

2. Unsworth v Commissioner of Railways (1958) 101 CLR 73 at 87 per Fullagar J and at 93 per Taylor J. ↩

3. Reddock v ST&T Pty Ltd [2022] QSC 293 at [125]. ↩

4. Autodesk Inc v Dyason [No 2] (1993) 176 CLR 300 at 302-303 per Mason CJ; *De L v Director-*General, New South Wales Department of Community Services [No 2] (1997) 190 CLR 207 at 215-216. ↩

5. Underlining added. ↩

6. Referring, by analogy, to the conclusion reached in Anderson v Pickles Auctions Pty Ltd [2023] QCA 205, in relation to the proper construction of s 137 of the Regulation (which deals with outlays). ↩

7. Cf Anderson v Pickles at [33]. ↩

8. On the appeal, damages were assessed against the Council in the amount of $590,801.57. The Council is entitled to recover contribution from Vatsonic of 70% of the damages assessed against Vatsonic ($539,447.05 x 70% = $377,612.94). The difference is just over $213,000. (Cf paragraph 9 of WorkCover and Vatsonic’s costs submissions, filed 20 September 2024, where a slightly different figure appears. As it does not affect our conclusions, it is unnecessary to address this further.) ↩

9. And recently summarised in McGee v Independent Assessor [No 2] [2024] QCA 7 at [21]-[26]; see also SHA Premier Constructions Pty Ltd v Niclin Constructions Pty Ltd (No 2) [2020] QSC 323 at [8]-[14]. ↩