Corbett v Toll Stevedoring Pty Ltd & Ors

Civil Procedure Act 2005 Workers Compensation Act 1987 LEGISLATION CITED : Law Reform (Miscellaneous Provisions) Act 1946 Uniform Civil Procedure Rules Workers Compensation Regulation 2003

Corbett v Toll Stevedoring Pty Ltd & Ors [2007] NSWSC 656 Gould v Vaggelas (1983-85) 157 CLR 215 CASES CITED : Roads and Traffic Authority & Ors v Palmer [2005] NSWCA 140 Bullock v London General Omnibus Co & Ors (1907) 1 KB 264 Sanderson v Blyth Theatre Co (1903) 2 KB 533 Leichhardt Municipal Council v Green [2004] NSWCA 341

Gary John Corbett (Plaintiff) Toll Stevedoring Pty Ltd (formerly known as BHP Stevedoring Pty Ltd) (First Defendant) Oldendorff Carriers GMBH & Co (Second Defendant) PARTIES : Rosewater Maritime Inc (Third Defendant) Illawarra Stevedores Pty Ltd (Fourth Defendant) BHPB Freight Pty Ltd (formerly known as BHP Transport and Logistics Pty Ltd & BHP Transport Pty Ltd) (Fifth Defendant) Employers Mutual Indemnity (Workers Compensation) Limited (Cross Defendant to Third Cross Claim)

H N Kelly SC/J Menary (Plaintiff) P Morris (First Defendant) COUNSEL : Dr A Bell SC/D Kelly (Fourth Defendant) S. Hay (Fifth Defendant) D Hooke (Cross Defendant to Third Cross Claim)

W G McNally & Co Lawyers (Plaintiff) Clayton Utz (First Defendant) SOLICITORS : Norton White Lawyers (Fourth Defendant) Piper Alderman (Fifth Defendant) Edwards Michael Morony (Cross Defendant to Third Cross Claim)

• 18 - IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION

20179/04 GARY JOHN CORBETT v TOLL STEVEDORING PTY LIMITED & ORS

JUDGMENT 1 HIS HONOUR: On 27 June 2007 I expressed findings and orders and directed that the matter be relisted on 29 June 2007 for the purpose of considering short minutes of orders and, in the absence of agreement, for the purpose of hearing submissions on issues remaining in dispute: Corbett v Toll Stevedoring Pty Ltd & Ors [2007] NSWSC 656. 2 Short minutes presented on 29 June 2007 indicated that the contentious issues were interest and costs. I will presently make orders reflecting the agreement that has been reached. Where there has been agreement as to the appropriate orders, there is no reason for me to here express reasons for the making of those orders. They follow from the findings I made earlier and, where relevant, they reflect the effect of payments that have been made by way of workers' compensation benefits. 3 Of the contentious issues, I deal firstly with the plaintiff's claim for interest and for costs.

Interest 4 There is no dispute as between the plaintiff and the first defendant on the question of interest. The claim against the first defendant is one concerning the provisions of s 100 of the Civil Procedure Act 2005. The plaintiff and the first defendant have agreed on the interest to which the plaintiff is entitled as against the first defendant, and the agreed amount is included in the amount for which judgment is to be entered as against the first defendant, namely the sum of $760,463.66. 5 Unlike the claim for interest against the first defendant, the claim for interest against the fourth defendant calls for consideration of s 151M(4) of the Workers Compensation Act 1987. This provision is as follows: "(4) (a) Interest is not payable (and a court cannot order the payment of interest) on damages unless: (i) information that would enable a proper assessment of the plaintiff's claim has been given to the defendant and the defendant has had a reasonable opportunity to make an offer of settlement (where it would be appropriate to do so) in respect of the plaintiff's full entitlement to all damages of any kind but has not made such an offer, or (ii) the defendant has had a reasonable opportunity to make a revised offer of settlement (where it would be appropriate to do so) in the light of further information given by the plaintiff that would enable a proper assessment of the plaintiff's full entitlement to all damages of any kind but has not made such an offer, or (iii) the defendant has made an offer of settlement, the amount of all damages of any kind awarded by the court (without the addition of any interest) is more than 20% higher than the highest amount offered by the defendant and the highest amount is unreasonable having regard to the information available to the defendant when the offer was made. (b) The highest amount offered by the defendant is not unreasonable if, when the offer was made, the defendant was not able to make a reasonable assessment of the plaintiff's full entitlement to all damages of any kind. (c) For the purposes of this subsection, an offer of settlement must be in writing." (Emphasis added) 6 Mr Kelly here submitted that information was provided to the fourth defendant putting it in a position to make an offer and no offer was made by the fourth defendant. Hence, an order for interest was warranted. 7 Mr Kelly read the affidavit of David Trainor sworn 29 June 2007 for the purpose of establishing that the fourth defendant had the necessary information on which to determine an appropriate offer. I do not need to go to the detail of that affidavit because it is acknowledged that the plaintiff served a Pre-Filing Statement and that the employer, having denied liability, exercised its right to decline to participate in mediation. It was acknowledged that there had been no offer for the purposes of s 151M. 8 Mr Hooke, however, submitted that interest should not be awarded for the following reasons:

(i) the fourth defendant was only one of five defendants named in the proceedings and there were cross claims between the defendants, inter alia, seeking contribution under s 5(1)(c) of the Law Reform (Miscellaneous Provisions) Act 1946;

(ii) damages, if recoverable, against defendants other than the fourth defendant were to be assessed without the restraints imposed on the assessment of damages under the Workers Compensation Act . Restraints, of course, there are under the Civil Liability Act . However, the plaintiff, if successful against a defendant other than the fourth defendant, was going to recover appreciably more in that alternative claim. That, indeed, is what occurred here;

(iii) there is no evidence that the plaintiff would have accepted an offer from the fourth defendant limited to damages for economic loss had it been made and there was no evidence that any other defendant made an offer of settlement to the plaintiff or was willing to contribute to a settlement;

(iv) because of the cross claims, had the fourth defendant settled with the plaintiff that would not have concluded proceedings from its point of view;

(v) liability and contribution were contentious issues, as evidenced by the manner in which the trial was conducted. 9 With the above considerations in mind, Mr Hooke submitted that the fourth defendant's failure to make an offer was not unreasonable and that the case was one where, for the purposes of s 151M(4)(a)(i), it was not appropriate for an offer to be made. 10 In my opinion, the submissions advanced by Mr Hooke are persuasive. There was agreement between the parties that in the event that it was considered appropriate to award interest, it should be quantified at $10,797. However, having regard to the statutory scheme in force and having regard to the various claims and cross claims which this case presented, I do not consider that an entitlement to interest has been made out as against the fourth defendant. Costs 11 The plaintiff seeks an order for costs as against the fourth defendant, having proved negligence and having become entitled to a verdict. Under Pt 42 r 42.1 of the Uniform Civil Procedure Rules, costs follow the event unless it appears to the court that some other order should be made. However, the costs application in this case as against the fourth defendant is governed by regulation under the Workers Compensation Act scheme. Clauses 89-94 of the Workers Compensation Regulation 2003 require consideration. These provisions are as follows: "89 Costs where claimant no less successful than claimant's final offer If a claimant obtains an order or judgment on a claim that is no less favourable to the claimant than the terms of the claimant's final offer of settlement in mediation under the 1998 Act as certified by the mediator under section 318B of the 1998 Act, the court is to order the insurer to pay the claimant's costs on the claim assessed on a party and party basis. 90 Costs where claimant less successful than insurer's final offer or insurer found not liable (1) If a claimant obtains an order or judgment on a claim that is less favourable to the claimant than the terms of the insurer's final offer of settlement in mediation under the 1998 Act as certified by the mediator under section 318B of the 1998 Act, the court is to order the claimant to pay the insurer's costs on the claim assessed on a party and party basis. (2) If a claimant does not obtain an order or judgment on a claim (that is, if the court finds the insurer has no liability for the claim), the court is to order the claimant to pay the insurer's costs on the claim assessed on a party and party basis. 91 Costs in other cases Except as provided by this Subdivision, the parties to court proceedings for work injury damages are to bear their own costs. 92 Deemed offer where insurer denies liability and no mediation If: (a) the insurer wholly denies liability, and (b) the matter is not referred to mediation, and (c) the claimant obtains an order or judgment on the claim, costs are to be awarded in accordance with this Subdivision as if: (d) the insurer had made a final offer of settlement at mediation of $0, and (e) the claimant had made a final offer of settlement at mediation of the amount of damages specified in the pre-filing statement served under section 315 of the 1998 Act. …………………. 94 Multiple parties Where 2 or more defendants are alleged to be jointly or jointly and severally liable to the claimant and rights of contribution or indemnity appear to exist between the defendants, this Subdivision does not apply to an offer of settlement unless: (a) in the case of an offer made by the claimant - the offer is made to all the defendants and is an offer to settle the claim against all of them, and (b) in the case of an offer made to the claimant: (i) the offer is to settle the claim against all the defendants concerned, and (ii) where the offer is made by 2 or more defendants - by the terms of the offer the defendants who made the offer are jointly or jointly and severally liable to the claimant for the whole amount of the offer." 12 It is to be observed from consideration of cl 91 that, except as otherwise provided, the parties to proceedings for "work injury damages" are to bear their own costs. The exceptions to that are to be found in cls 89, 90 and 92. 13 Here, there was no mediation, so cl 89 does not apply and neither does cl 90. So far as cl 92 is concerned, the plaintiff did not better the amount of damages specified in the "Pre-Filing Statement". 14 This leaves cl 94 which is specifically directed to a case where there are two defendants or more. I was informed that the only offer made by the plaintiff to all the defendants was the offer made on 7 June 2007, the terms of the offer being: "1. The Plaintiff offers to settle these proceedings against all of the Defendants on the following terms: a) The Plaintiff will accept the sum of $900,000.00 ('the settlement amount'). b) The settlement amount is to be inclusive of all payments made pursuant to the Workers Compensation Act and any liability to refund Centrelink, the Department of Social Security and Medicare. c) The Defendants to pay the Plaintiff's costs. 2. This offer is open for acceptance up until 10.00 am on Tuesday 12 June 2007. 3. This offer is made pursuant to Part 20 of the Uniform Civil Procedure Rules." 15 Having regard to the assessments of damages in this case, it is recognised by Mr Kelly that the plaintiff has recovered less than the sum for which he was prepared to settle as at 7 June 2007. 16 Mr Kelly submitted that because cl 94 does not apply, this is a case involving multiple parties to which the Workers Compensation Regulation 2003 has no application at all. I note the submission but I am not attracted to it. I find myself unable to construe the Regulation in such a way. The offer made was an offer "to all the defendants", thus satisfying cl 94(a). Moreover, cl 94 is only addressing joint offers, but its presence in the Regulation does not exclude a role for cl 91. 17 I consider cl 91 applies. 18 I see no reason as between the plaintiff and the fourth defendant for departure from the position under cl 91. Each party should pay his and its own costs of the proceedings as between the plaintiff and the fourth defendant.

The plaintiff's application for costs against the first defendant 19 The plaintiff has succeeded against the first defendant and costs of the proceedings as between the plaintiff and the first defendant should be borne by the first defendant. 20 Mr Kelly submitted that the first defendant be ordered to pay the plaintiff's costs not only incurred in the pursuit of the first defendant but the costs incurred in pursuit of the fourth defendant. I see no justification for the making of such an order. It was the plaintiff's decision to pursue the fourth defendant and the circumstance that the plaintiff is prevented from recovering any costs against the fourth defendant because of the Workers Compensation Regulation 2003 does not provide any reason for burdening the first defendant with the costs incurred by the plaintiff in his proceedings against the fourth defendant. 21 It is now desirable that I consider the question of the fifth defendant's costs, responsibility for which has been a controversial issue.

The costs of the fifth defendant 22 It is important to have regard to the circumstances in which, and the time at which, the fifth defendant was brought into these proceedings. The fifth defendant was joined after the first defendant applied successfully by notice of motion filed on 16 June 2006 for leave to withdraw an admission in the defence that had been filed by it on 4 January 2005. In that pleading, the first defendant had admitted that it entered into a contract with the fourth defendant for the latter to provide it with suitable securing personnel. What prompted the first defendant's application was its contention that the fourth defendant's agreement for the provision of services was with the fifth defendant. 23 The first defendant filed a cross claim against the fifth defendant on 12 July 2006. It alleged that the fifth defendant was responsible for the coordination of the stevedoring activities and that, indeed, after the plaintiff's accident, it introduced the change in the system. 24 That pleading by the first defendant prompted the joinder by the plaintiff of the fifth defendant as a defendant in the amended statement of claim filed on 10 April 2007. There then followed a cross claim by the fourth defendant against the fifth defendant filed on 19 April 2007. Then the fifth defendant put on its cross claim against the fourth defendant seeking, inter alia, contractual indemnity. 25 The flurry of activity in the joinder of the fifth defendant and the subsequent cross claims was triggered by the conduct of the first defendant. It was apparent at the trial that the plaintiff and the fourth defendant were dependent upon the first defendant to implicate the fifth defendant, and this it failed to do. There was a document prepared contemplating the fifth defendant and the fourth defendant working in conjunction at Port Kembla and it contained provision for a contractual right of indemnity in favour of the fifth defendant. However, the evidence did not establish that that document was ever executed or that there ever was any relevant contract between the fourth and the fifth defendants. In short, the first defendant failed to prove the fifth cross claim and, consistent with my findings, the parties are agreed that one of the orders to be made is that there should be a judgment for the fifth defendant on the fifth cross claim. 26 The fifth defendant, having successfully resisted the plaintiff's claim against it, is entitled to an order in its favour in relation to the costs incurred in the proceedings brought against it by the plaintiff. Who should pay those costs? 27 It seems to me that, having regard to the conduct of the first defendant in bringing the fifth defendant into the proceedings in the manner in which it did and in pleading a case against the fifth defendant in the manner in which it did, it is reasonable as between the plaintiff and the first defendant that the first defendant should ultimately bear responsibility for those costs incurred by the fifth defendant in resisting the plaintiff's actions: see Gould v Vaggelas (1983-85) 157 CLR 215 and in particular the judgment of Gibbs CJ at 229-230; the judgment of Wilson J at 246-247; and the judgment of Brennan J at 260. See also Roads and Traffic Authority & Ors v Palmer [2005] NSWCA 140 and in particular the judgment of Giles JA at [30]. 28 Mr Parker, in his written submissions, submitted that if I was minded to make an order of the type I have concluded ought to be made, it would be more appropriate to make a Bullock order (Bullock v London General Omnibus Co & Ors (1907) 1 KB 264) than the other type of costs order contemplated in Sanderson v Blyth Theatre Co (1903) 2 KB 533, ordering the payment by the first defendant of the fifth defendant's costs. It was submitted that a Bullock order was the more appropriate order because in the event that the first defendant appeals, the alternative order would have the effect of drawing the fifth defendant into the appeal process. I consider there is merit in that submission, and I propose therefore to include in the costs payable by the first defendant to the plaintiff the costs the plaintiff is required to pay to the fifth defendant. 29 The fifth defendant seeks costs on an indemnity basis. I will address this issue later after consideration of a similar application by the fifth defendant against the first defendant in relation to the costs of that defendant's unsuccessful cross claim. 30 This brings me to the cross claims.

The cross claims as between the first defendant and the fourth defendant 31 Following on my findings as to liability and apportionment, there are to be judgments for each of these cross claimants against the other on the respective cross claims. This being so, costs would ordinarily follow the event or, alternatively, no order for costs on the cross claims would be made. However, there is in this case the added consideration that the fourth defendant was separately represented because of the question that arose as to whether the third cross defendant would respond to any liability in the fourth defendant having regard to the claims pleaded by the first defendant against the fourth defendant in the first defendant's cross claim. I accept, as Mr Hooke submitted, that introduction of the contractual claims created the potential contention as between the fourth defendant's workers' compensation insurer and its other liability insurer. 32 Notwithstanding the submissions of Mr Morris to the contrary, it seems to me to have been proper that the third cross defendant was joined in the proceedings and that there was separate representation for the fourth defendant and for its workers' compensation insurer. Whilst the contractually based claims against the fourth defendant failed, the pursuit of them led to the joinder by the fourth defendant of the third cross defendant, and to the extent that the fourth defendant cannot recover on its cross claim against the third cross defendant, its costs referable to the third cross claim I consider, accepting Dr Bell's submission, that it is appropriate that the first defendant pay the fourth defendant's costs on the cross claims as between them to the extent that they are not recoverable from the third cross defendant under the statutory policy. Save to that limited extent, I do not intend to make any order as to costs as between the first defendant and the third defendant in respect of the cross claims for contribution under the Law Reform (Miscellaneous Provisions) Act 1946.

The cross claim as between the first defendant and the fifth defendant 33 The first defendant brought a cross claim against the fifth defendant, being a claim for contribution. That claim failed. There was no cross claim by the fifth defendant against the first defendant. 34 I accept Mr Parker's submission that costs should follow the event on the cross claim brought by the first defendant and that the first defendant should pay the fifth defendant's costs in relation to that cross claim. 35 I am asked to make an order that those costs be paid on an indemnity basis because of offers of compromise that were made. There were two such offers. The first such offer was on 26 August 2006. What was proposed was a verdict in favour of the fifth defendant, with each party to pay its own costs. The offer was made pursuant to Pt 20 r 20.26 of the Uniform Civil Procedure Rules. The offer was not accepted. A later offer was made on 19 April 2007, and it was in the same terms. 36 It was submitted on the fifth defendant's behalf that Pt 42 r 42.15A entitles it to costs on an indemnity basis from the day following the offer "unless the court otherwise orders". It was submitted that there is no circumstance to displace the prima facie entitlement to an order for indemnity costs as from 26 August 2006. 37 Mr Morris resisted the application for costs on an indemnity basis and submitted that to enliven the relevant rule there must be a real and genuine element of compromise. I accept that this is so. The distinction between a genuine offer of compromise and a demand to capitulate has to be recognised. See the discussion in Leichhardt Municipal Council v Green [2004] NSWCA 341 and in particular the judgment of Santow J at [22] and following. 38 Mr Morris submitted that the first offer of compromise was made only six weeks after the cross claim against the fifth defendant was filed. It amounted to a "walk away" offer and was unaccompanied by any explanation as to why the cross claim was likely to fail. There is merit in that submission, having regard to the timing of that earlier offer. However, by the time the second offer of compromise was made, a significant further period of time had elapsed and, doubtless, significant further costs were incurred by the fifth defendant in preparing for trial. Each party ought to have been in a position to be able to assess the issues, and, having considered submissions by Mr Morris, the prima facie entitlement to indemnity costs as from 19 April 2007 has not been displaced. Accordingly, I consider the fifth defendant is entitled to an order that the first defendant pay its costs on the cross claim brought against it by the first defendant, with such costs to be paid on an indemnity basis as from 19 April 2007.

The claim by the fifth defendant for indemnity costs against the plaintiff 39 At about the same time as the second of the offers of compromise referred to above was made to the first defendant, the fifth defendant made an offer of compromise to the plaintiff. The date of that offer was 18 April 2007. Whilst the joinder by the plaintiff of the fifth defendant was, of course, a deliberate joinder, it was made at a time when the fifth defendant had already been a party to the proceedings as a cross defendant for nine months. However, the offer that was made by the fifth defendant was an offer made that the proceedings against the fifth defendant be dismissed, with each party to his and its own costs. Bearing in mind that only six days had elapsed from the time of the filing of the second further amended statement of claim joining the fifth defendant as a defendant, any costs incurred in meeting the plaintiff's claim in that eight day period would have been negligible. 40 It seems to me that the timing of the offer, so soon after the joinder of the fifth defendant, had been effected, made the offer more of a "demand to capitulate", in the language used in Leichhardt Municipal Council v Green (supra) than a genuine offer to compromise. In addition, I am mindful of the fact that the fifth defendant will have the benefit of an indemnity order relating to its cross claim against the first defendant effective, as from 19 April 2007. I refuse the application made against the plaintiff that he be ordered to pay the fifth defendant's costs on an indemnity basis.

The cross claims as between the fourth defendant and the fifth defendant 41 The sixth cross claim is a cross claim brought by the fourth defendant against the fifth defendant. The seventh cross claim is a cross claim brought by the fifth defendant against the fourth defendant. Those cross claims must fail, and this is reflected in the short minutes presented on 29 June last. 42 Mr Parker has submitted that costs on the sixth cross claim should follow the event. 43 Attention has been drawn to offers of compromise concerning the sixth cross claim on 18 April 2007 and 1 May 2007. I am asked to allow indemnity costs from one or other of those two dates. What was on offer was a proposal that the fourth defendant consent to judgment in the fifth defendant's favour, with each party to pay its own costs of the sixth cross claim. There was no proposal for the disposition of the seventh cross claim, in which the fifth defendant pleaded a contractual right of indemnity, after picking up the assertion of a contractual relationship made by the first defendant. 44 I do not consider that the offer of compromise was a real one when it was restricted to the sixth cross claim and contemplated that the fifth defendant would keep on foot its cross claim against the fourth defendant. I am not persuaded that costs should be allowed on an indemnity basis. In this case, Mr Parker submitted that I should still make an order for costs against the fourth defendant on the sixth cross claim, leaving open the making of an order in the nature of a Bullock order against the first defendant. 45 It would follow logically that the same course could be taken for the disposition of the seventh cross claim. 46 Since each cross defendant has successfully resisted the cross claim brought against it, I consider the better course is to make no order as to costs on these two cross claims. Indeed, to adopt the contrary approach and to order that costs follow the event in each case would lead to the making of orders, the effect of one being that it would meet the effect of the other. This alternative course ought not to be adopted simply as a vehicle for the making of Bullock orders against the first defendant for costs on those two cross claims.

The issues on the cross claim by the fourth defendant against the third cross defendant 47 The short minutes make provision for listing before the registrar in relation to any outstanding issue arising under prayer 3(a) of the amended third cross claim. I propose to make provision in the orders in this matter to enable a listing before the registrar if that need still arises having regard to the conclusions expressed in this judgment.

Formal orders 48 1. Verdict and judgment for the plaintiff against the first defendant in the sum of $760,463.66.

Verdict and judgment for the plaintiff against the fourth defendant in the sum of $553,403.00.

It is noted that the judgments in orders 1 and 2 are not cumulative and that any satisfaction of either will pro tanto satisfy the other.

Verdict and judgment for the fifth defendant against the plaintiff.

Verdict and judgment for the cross claimant on the first cross claim to the extent of its entitlement to contribution pursuant to s 5(1)(c) of the Law Reform (Miscellaneous Provisions) Act 1946.

Order that the fourth defendant indemnify the first defendant with regard to its liability to the plaintiff in the amount of $276,701.50.

Order that the cross defendant on the third cross claim indemnify the fourth defendant in respect of the judgment in para 2 and the order in para 6.

Verdict and judgment for the cross claimant on the fourth cross claim against the first cross defendant.

Order that the first defendant indemnify the fourth defendant with regard to its liability to the plaintiff in the amount of $276,701.50.

Order that the first defendant pay the sum of $37,604 to Employers Mutual New South Wales Limited in right of the fourth defendant.

Prayer 3(a) in the amended third cross claim is to be listed if need be for directions before the registrar on 26 July 2007.

Verdict and judgment for the cross defendant on the fifth cross claim.

Verdict and judgment for the cross defendant on the sixth cross claim.

Verdict and judgment for the cross defendant on the seventh cross claim.

In the proceedings between the plaintiff and the first defendant, order that the first defendant pay the plaintiff's costs, including costs ordered to be paid by the plaintiff to the fifth defendant.

In the proceedings between the plaintiff and the fourth defendant, order that each party pay his and its own costs.

In the proceedings between the plaintiff and the fifth defendant, order that the plaintiff pay the fifth defendant's costs.

On the cross claims as between the first defendant and the fourth defendant, order that the first defendant pay the fourth defendant's costs to the limited extent such costs are not recoverable by the fourth defendant against the third cross defendant, being those costs referable to the claim brought by the first defendant for contractual indemnity. Save to that extent, the first defendant and the fourth defendant are to pay their own costs on their respective cross claims the one against the other.

On the cross claims as between the first defendant and the fifth defendant, order that the first defendant pay the fifth defendant's costs on the fifth cross claim and that such costs be paid on an indemnity basis from 19 April 2007.

On the cross claims as between the fourth defendant and the fifth defendant, no order as to costs. **********

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