Nawaf Hawchar v Dasreef Pty Ltd

Blair v Curran (1939) 62 CLR 464 Smith v Leech Brain Pty Ltd [1962] 2 QB 405 Malec v JC Hutton Pty Ltd (1990) 169 CLR 638 Fordyce v Fordham (2006) 67 NSWLR 497 CASES CITED: Australian Wide Airlines Ltd (t/a Regional Express) v Aspirion Pty Ltd [2006] NSWCA 365 Abigroup Contracts Pty Ltd v ABB Service Pty Ltd (formerly ABB Engineering Construction Pty Ltd) [2004] NSWCA 181 O'Neill v Mann [2000] FCA 1680 Ritter v Godfrey [1920] 2 KB 47 Bitannia Pty Ltd v Parkline Constructions Pty Ltd [2009] NSWCA 32 Berowra Holdings Pty Ltd v Gordon (2006) 225 CLR 364

DATES OF HEARING: 29/6/2009 and 3/7/2009. Mr A J Bartley SC with Mr F Tuscano instructed by Keddies Lawyers appeared for the plaintiff LEGAL REPRESENTATIVES: Mr T G R Parker SC with Mr D T Miller instructed by Moray and Agnew appeared for the defendant

Dust Diseases Tribunal of New South Wales Matter Number 7323 of 2007 Nawaf Hawchar v Dasreef Pty Ltd 15 July 2009 RULING CURTIS J

1. On 22 May 2009 I entered judgment for the plaintiff in the sum of $131,130.43. Costs should follow the event unless it appears to the court that some other order should be made as to the whole or any part of the costs (UCPR Pt 42 r42.1).
2. The defendant submits that I should otherwise order because, (a) the plaintiff unreasonably rejected offers of compromise made by the defendant, and (b) the plaintiff, after the close of evidence, sought and obtained an order for the dismissal of proceedings in relation to a substantial part of his claim. The offer of compromise
3. On 8 October 2008 the defendant made an offer of compromise pursuant to Part 6 of the Dust Diseases Tribunal Regulation 2007 in the sum of $500,000 clear of workers compensation payments made to date, plus costs as agreed or assessed. A similar offer was made in a Calderbank letter. The offers were not accepted by the plaintiff. The consequences of not accepting a Part 6 offer are addressed in r88 of the regulation. 88 Where offer not accepted and judgment as or less favourable to plaintiff (1) This clause applies if the offer concerned is made by the defendant, but not accepted by the plaintiff, and the plaintiff obtains an order or judgment on the claim concerned as favourable to the plaintiff, or less favourable to the plaintiff, than the terms of the offer. (2) Unless the Tribunal orders otherwise in an exceptional case and for the avoidance of substantial injustice: (a) … (b) the defendant is entitled to an order against the plaintiff for the defendant's costs in respect of the claim, assessed on an indemnity basis: (i) if the offer was made before the first day of the trial, as from the beginning of the day following the day on which the offer was made, and (ii) … (3) …
4. In the event there has been judgment on the claim less favourable to the plaintiff than the offer by the defendant. Nevertheless I am of the opinion that this is an exceptional case, and that an order that the plaintiff pay the defendant's costs would cause substantial injustice to Mr Hawchar.
5. At the time the offer was made, Mr Hawchar was in receipt of continuing workers compensation payments in respect of his extremely disabling condition of scleroderma. The capital value of these weekly payments together with payments under s66 and s67 of the Workers Compensation Act 1987, and future medical expenses and domestic assistance exceeded $1,000,000. Had Mr Hawchar accepted the offer of $500,000, s151A of the Workers Compensation Act 1987 would have denied him any future entitlement to these payments. At no time did Mr Hawchar seek an award of damages if those damages were to be assessed pursuant to the Workers Compensation Act 1987.
6. When the trial commenced, Mr Hawchar was still in receipt of weekly payments of compensation in respect of his scleroderma. The substantive contest appeared to be whether the defendant was in breach of its duty, whether scleroderma was a dust disease, and the quantum of damages.
7. After the offer was made, and after the first day of the trial, the defendant served and relied upon the medical report of Dr Englert in which, contrary to her earlier expressed opinion, she denied that Mr Hawchar's disease of scleroderma resulted from exposure to silica in the employment of the defendant. The defendant had not previously served any report which questioned the causal relationship between the plaintiff's working conditions and this disease.
8. The plaintiff had qualified Professor Henderson, whose opinion, expressed in a report, properly served by the plaintiff's solicitors, supported that relationship. The trial was complicated by the fact that those solicitors had failed to serve the report of Dr Patapanian who expressed an opinion in similar terms. Unfortunately Mr Bartley SC thought it necessary to seek leave to serve Dr Patapanian's report out of time. Although this action allowed the defendant to obtain leave to serve and rely upon Dr Englert's report, the fact remains that when the trial commenced the defendant was precluded by UCPR Pt 31 r31.28(3)(c) from calling any expert evidence contrary to the opinion expressed by Professor Henderson.
9. Resolution of this medical question was important to both parties. It remained so in the event, as transpired, that the plaintiff failed to obtain damages for scleroderma. This was because he sought no award of damages in respect of the scleroderma if those damages were to be assessed pursuant to the Workplace Injury Management and Workers Compensation Act 1998, and, as alternative relief, sought and obtained both an order pursuant to Pt 29 r29.8 of the Uniform Civil Procedure Rules 2005 that the claim for damages for scleroderma be dismissed, and an order pursuant to s11A of the Dust Diseases Tribunal Act 1989 reserving his entitlement to claim further damages in the event that he contracted scleroderma lung.
10. S11A of the Act permits an award of provisional damages in circumstances "in which there is proved or admitted to be a chance that at some…time in the future [the plaintiff] will, as a result…of the breach of duty giving rise to the cause of action, develop another dust related condition".
11. The claim for provisional damages enlivened a contest as to the plaintiff's entitlement to the order pursuant to s11A, depending as it did upon a finding that the scleroderma resulted from inhalation of silica in the course of his employment with Dasreef.
12. Both the plaintiff's scleroderma and his silicosis (which on the evidence materially contributes to the scleroderma) create the relevant chance of developing scleroderma lung. The adverse finding that the scleroderma was caused by inhalation of silica dust in the course of the plaintiff's employment with the defendant has estopped the defendant from: (a) denying in any future workers' compensation proceedings that Mr Hawchar's scleroderma was an injury within the meaning of the Workers Compensation Act 1987, that is, a disease contracted by him in the course of his employment to which the employment was a contributing factor; and, (b) denying in any future claim for damages for scleroderma lung that that condition developed as a result, or partly as a result of, the breach of duty which gave rise to the successful action for damages for silicosis.
13. The finding on causation "necessarily established…the legal foundation" for the order that further damages may be made with respect to scleroderma lung (Blair v Curran (1939) 62 CLR 464).
14. The defendant addresses three arguments to the contrary of this conclusion.
15. First, it submits that there is no such discrete condition as "scleroderma lung" as distinct from scleroderma, and that scleroderma lung cannot be another dust related condition within the meaning of s3 or s11A of the Dust Diseases Tribunal Act 1989. I do not accept this submission. The definition of dust related condition in s3 includes, in addition to the nominated diseases, "any other pathological condition of the lungs, pleura or peritoneum that is attributable to dust".
16. Dr Frankel gave this evidence at T 369.23: Q: Does [scleroderma] affect lung tissue additionally to the fibrosis of the silicosis? A: It can. I mean, scleroderma can affect the lung in a number of ways, one being by causing of pulmonary fibrosis in its own right. It can also cause pulmonary hypertension both as a consequence of lung disease, so called pulmonary-hypertension is raised blood pressure in the pulmonary arteries, or it can be a primary factor relating to the pathophysiology of scleroderma, and those can both lead to significant lung disease causing morbidity and ultimately mortality.
17. The term scleroderma lung, which was also used by Professor Henderson, may be understood as an omnibus phrase to describe all or any of the pathological conditions to which Dr Frankel refers.
18. Secondly, the defendant submits that the finding creates no estoppel useful to the plaintiff in any workers' compensation proceedings, because the defendant did not in the trial put in issue the plaintiff's allegation that his scleroderma resulted from exposure to dust in the course of his employment with the defendant; merely asserting that the relevant dust was not liberated in consequence of any breach of duty.
19. Mr Parker SC said in the course of the costs argument that: We were submitting that if there was fault, that fault was not causative. We did not need to go so far, and I resisted in argument going so far as putting the proposition, that is, silica exposure with Dasreef taken as a whole, containing fault and non fault, that that total exposure was not causative. That is the issue under workers' compensation legislation.
20. This submission cannot stand with the pleadings or the defendant's conduct of the trial.
21. In paragraph 14 of his Statement of Claim, the plaintiff pleaded that "As a consequence of his exposure to an inhalation of silica dust in the course of his employment with the defendant the plaintiff has suffered injury". The injuries particularised were: "(a) silicosis (b) scleroderma".
22. In its Defence, the defendant said that it "does not admit that the plaintiff inhaled silica dust at all", and, in the alternative; "does not admit that the plaintiff's actual exposure (if any)…caused or made a material contribution to any injury". This pleading directly raised the issue of causation.
23. The defendant not only relied upon the opinion of Dr Englert to the effect that the plaintiff could not establish that his exposure at Dasreef caused or made any material contribution to his scleroderma, but also, by its counsel, drafted the affidavit in which that opinion was expressed for adoption by the doctor.
24. Counsel wrote: (a) It is not possible to say in any scientific way that Mr Hawchar's exposure to silica, as distinct from some other agent (s), was a cause of his scleroderma; and (b) Still less is it possible to say that, assuming the cause of Mr Hawchar's scleroderma was silica exposure, it was his exposure while employed by Dasreef, or some part of that exposure, as distinct from some other silica exposure he might have had that was a cause or contributing factor in his case. (Emphasis added).
25. In Mr Parker's submissions of 9 April 2009, he asserted that "There is no direct observational testimony upon which a finding of causation could be made in this case", and that the plaintiff's case on causation rested upon epidemiological studies, which studies "Do not even allow a rational evaluation to be carried out as to whether the cause of Mr Hawchar's scleroderma was occupational exposure or something else entirely".
26. In oral submissions Mr Parker said: "What the plaintiff has to persuade your Honour as a starting point , is…that in this particular case, this particular man's scleroderma, is caused by silica. How does the plaintiff do that when the plaintiff is unable to present any evidence that will allow the court to consider rationally whether in this particular man's case it was not caused by something else entirely, including, but not limited to, background?" (Emphasis added).
27. The threat that the defendant would cease compensation payments in reliance upon Dr Englert's amended opinion, if that opinion prevailed at trial was real. In earlier correspondence the defendant's solicitors had, not improperly, asserted that, if, as the plaintiff claimed, the scleroderma was a dust disease within the meaning of the Workers' Compensation (Dust Diseases) Act 1942, (a contention advanced by the plaintiff, and resisted by the defendant at trial), then, "In those circumstances our client would have no option but to forthwith discontinue all payments of workers compensation benefits and further, take steps to recover the payments made to date".
28. Thirdly, the defendant submits that the amendment to reserve future damages in respect of scleroderma lung was futile, and no contest was enlivened as to the plaintiff's entitlement to such an order, because the plaintiff's claim for damages for scleroderma has been dismissed and he will be met with a plea of res judicata if he later develops, and claims damages for, scleroderma lung.
29. This argument does not take into account the changes that s11A has wrought upon the common law.
30. At common law a plaintiff had but one cause of action for damages in respect of the breach of duty pleaded against the defendant. His entitlement to damages for injuries not proven, not claimed, not anticipated, or not yet developed, merged in the judgment.
31. The legislation has modified this once and for all rule. S11A is in the following terms: 11A Award of provisional damages (1) This section applies to proceedings of the kind referred to in section 11 (1) that are brought after the commencement of this section and in which there is proved or admitted to be a chance that at some definite or indefinite time in the future the person who is suffering from the dust related condition in respect of which the proceedings are brought ( "the injured person") will, as a result or partly as a result of the breach of duty giving rise to the cause of action, develop another dust related condition. (2) The Tribunal may, in accordance with the Rules: (a) award damages assessed on the assumption that the injured person will not develop another dust related condition, and (b) award further damages at a future date if the injured person does develop another dust related condition.
32. The section alters the common law in accordance with its precise terms. It permits an award of further damages for a dust related condition that develops after provisional damages have been awarded.
33. It follows that where the existence of a particular dust related condition is in dispute, the plaintiff may, against the possibility that he fails on the issue, seek damages in respect of that condition, and, in the alternative, ask that the damages be assessed on the assumption that he does not suffer from, and will not develop that condition.
34. Mr Hawchar sought concurrently both an order reserving his right to claim further damages if he developed scleroderma lung, and an order dismissing his claim for damages for scleroderma. He abandoned his claim for damages for scleroderma because it was not a dust disease, and it is arguable that, in doing so, he abandoned only so much of the claim as related to those parts of his illness that did not affect his lung. Although this outcome was not possible at common law, it appears to be within the contemplation of s11A.
35. In any event, is not to the point that Mr Hawchar has, at common law, forfeited any entitlement to damages for his scleroderma. He was entitled to seek an award of damages for silicosis assessed on the assumption that he will not develop scleroderma lung in the future in consequence of the silicosis (see Smith v Leech Brain Pty Ltd [1962] 2 QB 405), and obtain a further order of damages if he does develop that condition in the future. Scleroderma lung is, within the meaning of s3 and s11A, a pathological condition of the lungs that is attributable to dust. On the medical evidence, if it occurs in Mr Hawchar's lungs, it will be because the silicosis has materially contributed to its development. In the words of s11A(1), the scleroderma lung will occur partly as a result of the breach of duty giving rise to the cause of action [for damages for silicosis]. S11A(2)(b) expressly authorises the Tribunal to award further damages in this circumstance.
36. Nor is it relevant that the plaintiff in his abandoned claim for damages for scleroderma claimed a Malec v JC Hutton Pty Ltd (1990) 169 CLR 638 allowance against the contingency that he may contract scleroderma lung. At common law the entitlement to additional damages if the condition developed in consequence of scleroderma was lost whether the claim was made or not.
37. Insofar as any such contingent claim may have been advanced as part of the damages flowing from silicosis, Mr Hawchar's award of damages included no allowance for that possibility. The Tribunal may not award Malec v JC Hutton damages in respect of a condition which has been reserved pursuant to s11A(2)(a). This is because, pursuant to s11A(2)(a), the award of provisional damages is assessed on the assumption that the injured person will not develop another dust related condition. Such an award is incompatible with a Malec v JC Hutton allowance, contingent as it is upon there being a quantifiable chance that the injured person will develop another dust related condition.
38. I regard the following matters as relevant to the exercise of my discretion: (a) The rejection of the offer was reasonable in circumstances where the plaintiff renounced any claim to damages assessed pursuant to the Workers Compensation Act 1987. (b) The pleadings raised a factual contest as to whether Mr Hawchar's disease of scleroderma resulted from exposure to silica dust in the course of his employment by the defendant. (c) At the time the offer was made and refused, the defendant had served no medical opinion disputing the causation of scleroderma. (d) The plaintiff's success on that issue secured a contested order that he may claim further damages in the event that he contracts scleroderma lung. (e) The litigation has also secured the plaintiff's valuable continuing workers' compensation entitlements, without the additional expense of further litigation, which would mirror the evidence and arguments canvassed in this action. (f) Every witness, both lay and expert, called in the plaintiff's case was required to rebut the pleaded defence that Mr Hawchar's silicosis was not caused by his work with the defendant. This was the pleaded issue upon which the plaintiff succeeded at trial, and in respect to which he recovered damages. The additional evidence given by the medical experts relating to the aetiology of scleroderma did not greatly increase the cost of the trial, and, in so far as it did, that increase was proportional to the advantage gained by the plaintiff.
39. I have concluded that this is an exceptional case, and, to avoid substantial injustice: I decline to order that the plaintiff pay the defendant's costs from the day following the offer of compromise.
40. In reliance upon the same considerations I decline to give effect to the Calderbank offer. The order dismissing the claim for scleroderma
41. Throughout the trial, the plaintiff's counsel maintained that the plaintiff sought no award of damages in respect of scleroderma if those damages were to be assessed pursuant to the Workplace Injury Management and Workers Compensation Act 1998, and, in the event that I concluded that this regime applied he asked that that claim for damages be dismissed pursuant to Pt 29 r 29.8, so as to preserve the plaintiff's workers' compensation rights. In consequence, after making findings that the plaintiff's damages were to be assessed pursuant to the Act, I ordered that the claim for damages for scleroderma be dismissed.
42. It is plain that the quantum of damages assessed pursuant to the Workplace Injury Management and Workers Compensation Act 1998 (in the defendant's submission $323,884.22), was a fraction of the value of the continuing workers' compensation payments.
43. UCPR Rule 42.20 provides as follows: 42.20 Dismissal of proceedings etc (1) If the court makes an order for the dismissal of proceedings, either generally or in relation to a particular cause of action or in relation to the whole or part of any claim, then, unless the court orders otherwise, the plaintiff must pay the defendant's costs of the proceedings to the extent to which they have been dismissed. (2) …
44. The plaintiff must provide some good reason for departure from an order that he pay the defendant's costs (Fordyce v Fordham (2006) 67 NSWLR 497). It is not sufficient that he/she acted reasonably in commencing or continuing the proceedings. (Australian Wide Airlines Ltd (t/a Regional Express) v Aspirion Pty Ltd [2006] NSWCA 365). In the exercise of his or her discretion the judge may look at the discontinued claims in the "whole landscape comprising the course of the proceedings" (per Giles JA, Abigroup Contracts Pty Ltd v ABB Service Pty Ltd (formerly ABB Engineering Construction Pty Ltd) [2004] NSWCA 181 at [168]).
45. The conduct of the parties, and the reasons for discontinuance are relevant (O'Neill v Mann [2000] FCA 1680). An unsuccessful plaintiff may have been induced to commence proceedings by the unreasonable conduct of the defendant (Ritter v Godfrey [1920] 2 KB 47). Even if it is otherwise appropriate to allow a defendant their costs of discontinued proceedings, there may be specific issues upon which the defendant has failed and should either pay, or not recover costs (Bitannia Pty Ltd v Parkline Constructions Pty Ltd [2009] NSWCA 32 per Basten JA at [77]).
46. The plaintiff's workers' compensation rights in respect of scleroderma were always more valuable than any damages awarded pursuant to the Workplace Injury Management and Workers Compensation Act 1998 for the pure economic loss caused by that disease. The defendant cannot have been unaware of this fact. It explains that concession in the defendant solicitor's letter of 20 June 2008 to the plaintiff's solicitor that, notwithstanding the plaintiff's failure to comply with the procedural requirements of the Act, "In the circumstances, we are not presently instructed to take the point relevant to the procedural competence of your client's proceedings".
47. I infer that the defendant well knew after this correspondence that the plaintiff's decision to take none of the procedural steps necessary, in the absence of waiver, to secure an award of damages for scleroderma pursuant to the Workplace Injury Management and Workers Compensation Act 1998 was deliberate.
48. When the trial commenced Mr Bartley opened upon the basis that the plaintiff would not seek damages for scleroderma if those damages were subject to the Workplace Injury Management and Workers Compensation Act 1998. I think this is tolerably clear from his statements that "Whilst it is convenient from the defendant's point of view to attempt to drag the case into an area where the defendant is protected by the legislation, by the Workplace Injury Management Act…" and "The assessment of the plaintiff's damages [for scleroderma] will fall under the common law system…the plaintiff will not be limited by the Workplace Injury Management Act. If that not be the case then the plaintiff remains with an entitlement unaffected by the Workplace Injury Management Act for damages for the silicosis".
49. The defendant complains that in this respect the plaintiff was having his cake and eating it too. The plaintiff wished to advance a claim for damages at common law in respect of his scleroderma, while yet, if he failed in that claim, preserve his workers' compensation rights.
50. In similar vein, the defendant complains that the plaintiff wished to advance a claim for damages in respect of scleroderma yet, in the event that he failed, preserve the right to claim further damages if he developed scleroderma lung. I have already addressed these arguments.
51. The plaintiff may similarly complain that the defendant wished to advance a contention that there was no causal nexus between the plaintiff's silicosis and scleroderma and his employment, and yet, if it failed in that, still escape liability for continuing workers' compensation payments by compelling the plaintiff to accept a relatively modest sum of damages calculated pursuant to the Workplace Injury Management and Workers Compensation Act 1998.
52. The defendant at trial, conscious of the plaintiff's continuing intention to eschew an award of damages pursuant to that Act, waived the plaintiff's non-compliance with the procedural steps required by the Workplace Injury Management and Workers Compensation Act 1998, (see Berowra Holdings Pty Ltd v Gordon (2006) 225 CLR 364). Further, concerned that the plaintiff may not have by evidence satisfied the substantive requirements of s151H of the Workers Compensation Act 1987, Mr Parker formally admitted that the degree of Mr Hawchar's impairment was at least 15 per cent.
53. In determining whether the plaintiff has provided good reason for departure from an order that he pay the defendant's costs in relation to his claim for damages for scleroderma, I am entitled to look at the "whole landscape comprising the course of the proceedings". In this regard I take into account the conduct of the defendant which belatedly put in issue the medical basis upon which the plaintiff's entitlement to workers' compensation benefits depended, the overall result achieved by the plaintiff in recovering damages and preserving those rights, the success of the plaintiff in establishing a contingent right to damages for scleroderma lung, and the relatively modest increase in the costs of the trial occasioned by the ventilation of the scleroderma issue in addition to the silicosis issue upon which the plaintiff succeeded. I have concluded that these circumstances justify departure from an order in accordance with the rule.
54. I decline to make a blanket order that the plaintiff pay the defendant's costs of the proceedings to the extent to which they have been dismissed. The appropriate costs orders
55. Although I have concluded the defendant ought pay for the costs incurred in the ventilation of the medical issues in the course of the trial, the assessment of damages at common law in respect of scleroderma is clearly separable.
56. It is appropriate that the plaintiff should pay such costs as were incurred by the defendant in obtaining reports from the forensic accountant and from the occupational therapist.
57. Is also appropriate that the plaintiff should pay the defendant's costs incurred in the preparation of written submissions upon the medico-legal question whether scleroderma was a dust disease within the meaning of the Workers' Compensation (Dust Diseases) Act 1942, and upon the assessment of damages in the event that the plaintiff succeeded in his claim for common law damages for scleroderma.
58. Pages 49 to 69 of the defendant's submissions of 9 April 2009, and pages 11 to 43 of the submissions in reply, are specifically directed to these questions. In total 42 pages out of 112 pages.
59. The plaintiff recovered a modest verdict, which should not be excessively depleted by the liability to pay costs the quantum of which he could not control. The costs orders in the defendant's favour should not reduce his damages below $100,000. Orders
60. The defendant is to pay the plaintiff's costs of the action excluding the costs incurred in obtaining reports from the forensic accountant and occupational therapist.
61. The plaintiff is to pay, on a party party basis, the defendant's costs incurred in obtaining reports from the forensic accountant and occupational therapist, and is also to pay 40 per cent of the defendant's costs incurred in the preparation of written submissions.
62. The sum of those costs is not to exceed $31,130.43.
63. The amounts payable by the plaintiff to the defendant pursuant to these orders are to be set off against any amount payable by the defendant to the plaintiff as costs.
64. Judgment, in so far as it exceeds $100,000, is stayed pending assessment of the respective costs orders.
65. Each party to bear its own costs in relation to this costs argument.

Mr A J Bartley SC with Mr F Tuscano instructed by Keddies Lawyers appeared for the plaintiff Mr TGR Parker SC with Mr D T Miller instructed by Moray and Agnew appeared for the defendant

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