Court of Appeal (WA)|2012-01-31|Before: Newnes JA

PARLIN PTY LTD -v- CHOICEONE PTY LTD [2012] WASCA 19 (31 January 2012)

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

CITATION : PARLIN PTY LTD -v- CHOICEONE PTY LTD [2012] WASCA 19

Jurisdiction : DISTRICT COURT OF WESTERN AUSTRALIA

Citation : BARNS -v- PARLIN PTY LTD & ORS [2010] WADC 92

Negligence - Employee of labour hire firm sent to work for client of firm on drilling rig - Employee injured when high pressure hose on rig failed - Client negligent in failing to inspect hose - Labour hire firm negligent in failing to require client to conduct safety inspection of drilling rig before employee started work - Whether client entitled to contribution from labour hire firm to damages payable to employee - Law Reform (Contributory Negligence and Tortfeasors' Contribution) Act 1947 (WA), s 7 - Trial judge found client not entitled to contribution - Trial judge erred in finding that labour hire firm not culpable for failing to require client to conduct safety inspection - Contribution of 20% ordered

Respondent ordered to make contribution of 20% to damages payable by appellant

Andar Transport Pty Ltd v Brambles Ltd [2004] HCA 28; (2004) 217 CLR 424

Barns v Parlin Pty Ltd [2010] WADC 92

Czatyrko v Edith Cowan University [2005] HCA 14; (2005) 79 ALJR 839

Dib Group Pty Ltd t/as Hill & Co v Cole [2009] NSWCA 210

Esso Australia Pty Ltd v Victorian WorkCover Authority [2000] VSCA 74; (2000) 1 VR 246

Fennell v Supervision & Engineering Services Holdings Pty Ltd (1988) 47 SASR 6

Fugro Spatial Solutions Pty Ltd v Cifuentes [2011] WASCA 102

Hodge v CSR Ltd [2010] NSWSC 27

James Hardie & Coy Pty Ltd v Roberts [1999] NSWCA 314; (1999) 47 NSWLR 425

Kondis v State Transport Authority [1984] HCA 61; (1984) 154 CLR 672

Leighton Contractors Pty Ltd v Fox [2009] HCA 35; (2009) 240 CLR 1

Maricic v Dalma Formwork (Australia) Pty Ltd [2006] NSWCA 174

Northern Sandblasting Pty Ltd v Harris [1997] HCA 39; (1997) 188 CLR 313

Placer (Granny Smith) Pty Ltd v Specialised Reline Services Pty Ltd [2010] WASCA 148

Podrebersek v Australian Iron & Steel Pty Ltd [1985] HCA 34; (1985) 59 ALJR 492

Pollard v Baulderstone Hornibrook Engineering Pty Ltd [2008] NSWCA 99

Signet Engineering Pty Ltd v Melvan [2003] WASCA 313

TNT Australia Pty Ltd v Christie [2003] NSWCA 47; (2003) 65 NSWLR 1

Victorian WorkCover Authority v Carrier Air Conditioning Pty Ltd [2006] VSCA 63

1 NEWNES JA: This appeal concerns a claim for contribution by the appellant, a drilling contractor, against the respondent, a labour hire company, following an accident on the appellant's drilling rig in which a workman provided by the respondent was seriously injured.

2 The workman brought an action against the appellant for damages for negligence. The appellant settled the action by the payment to the injured workman of some $1 million. The appellant then sought contribution from the owner of the mine and the respondent, pursuant to s 7 of the Law Reform (Contributory Negligence and Tortfeasors' Contribution) Act 1947 (WA) (the Act). The mine owner settled the appellant's claim but the respondent denied that it was liable under the Act.

3 In the District Court, Yeats DCJ found that the respondent was not liable to make contribution: Barns v Parlin Pty Ltd [2010] WADC 92. The appellant appeals against her Honour's decision.

4 In June 2003, the appellant, which traded as Drill Power, submitted a tender to carry out drilling work for Barrick Gold of Australia Ltd and Barrick Mining Services Pty Ltd (collectively Barrick) at Barrick's Plutonic Mine (Plutonic), some 200 km north of Meekatharra. The appellant intended to use a Rotary Air Blast (RAB) drilling rig to carry out the work. Shortly after the tender was submitted, Barrick's head of development at Plutonic and two other employees of Barrick inspected the drilling rig at the appellant's workshop in Meekatharra. No details of that inspection were given in evidence.

5 The appellant's tender was subsequently accepted by Barrick and the appellant commenced work on site on or about 9 July 2003. It was a requirement of Barrick that whenever a new drilling contractor came on site its equipment had to undergo a safety check audit at the BGC Contracting on-site workshop. Accordingly, before the appellant commenced work the drilling rig was taken to the BGC workshop to be inspected. No representative of the appellant was present at the inspection and the appellant was not informed of its nature or findings. There was, however, no objection raised to the appellant commencing work with the drilling rig.

6 Subsequently, on 8 August 2003, a Barrick representative took a video film of the drilling rig while it was operating and carried out some sort of inspection related to the risk of crush type injuries.

7 The appellant had a safety and health manual which prescribed a system of safety checks of the drilling rig. The manual specified, among other things, that routine on-site safety inspections were to be carried out on a monthly basis and that a safety audit was to be carried out by the appellant's managing director, Mr Lorne, at three monthly intervals. The manual also specified that at the start of each shift, before drilling commenced, a check was to be carried out of all high pressure hoses for signs of damage. Mr Lorne said in evidence at trial that that involved a visual check. The manual further recommended that a safety check of components which were prone to fatigue should be carried out each time the rig was set up. Again, Mr Lorne said in evidence that that was a visual check. There was evidence that the pre-shift checks were carried out. The evidence is unclear in relation to the other checks.

8 It seems that shortly after the appellant commenced work at Plutonic Mr Lorne realised that additional staff would be needed to cater for the extra shifts that would have to be worked. To that end, Ms Desley Lorne, Mr Lorne's wife, contacted the respondent to obtain two 'driller's offsiders' to work on the drilling rig. This was the first occasion on which the appellant had used the respondent's services (ts 227).

9 The respondent is a recruitment and employment agency which provides staff for clients around Australia and overseas, although the majority of its clients are located in Western Australia. The respondent is principally involved in recruiting employees for clients. That work followed a fairly common pattern. When contacted by a client concerning a position the client wished to fill, the respondent would identify potential candidates, conduct face-to-face interviews, and, when a suitable candidate had been identified and their skills and qualifications verified, recommend that candidate to the client. If the client accepted the recommendation, the respondent would engage the candidate as its employee and place the candidate with the client on a temporary basis for a period of up to three months. After the expiration of that period, if it was satisfied with the candidate's performance the client would be able to employ the candidate as its own employee without the payment of any further fee to the respondent. When that occurred, the placement was described as a 'permanent placement'.

10 Evidence was given by an employee of the respondent that in the 18 months between 1 July 2003 and the end of 2004, the respondent had arranged 11,279 temporary placements, 153 contract placements and 321 permanent placements. They included 74 temporary, 4 contract and 11 permanent placements in the 'industry/mining/engineering' skill group. However, not all of those placements involved different candidates; some of the placements would simply have involved different placements of the same person (ts 326). No figures were given of the number of different individuals involved.

11 In this instance, the placement was arranged by Mr Elliot, a recruitment consultant employed by the respondent who specialised in mining and industrial placements. Mr Elliot spoke to Ms Lorne and obtained from her the appellant's requirements in relation to driller's offsiders. He was told that the driller's offsiders would be working on an RAB drilling rig. Mr Elliot had worked in the mining industry prior to his employment with the respondent and had seen RAB drilling rigs in operation. He understood the nature of the work on such a rig, which he knew to be dangerous. Mr Elliot had no knowledge of the appellant's safety procedures, but it was his experience that Barrick required all of its contractors to comply with Barrick's safety requirements and that Barrick attached great importance to safety.

12 On 28 July 2003, in response to a newspaper advertisement for one of the positions, Mr Tyson Barns wrote to the respondent enclosing a resumé. He was interviewed by Mr Elliot on 11 August 2003 and, on 30 September 2003, signed a casual employment contract with the respondent.

13 Mr Barns commenced work at Plutonic on 5 October 2003 on a three-month temporary placement with the appellant. He was employed by the respondent on a contract providing for three weeks consecutive work followed by one week off. As a temporary placement, Mr Barns was paid weekly by the respondent, based on invoices rendered by the appellant.

14 The respondent had earlier placed another driller's offsider, Mr Ben Foley, with the appellant. Mr Foley had commenced work on 23 August 2003 on the same basis. Mr Foley became an employee of the appellant on 22 November 2003.

15 The drilling rig used by the appellant was mounted on the back of a truck. Among a large number of hydraulic hoses on the drilling rig was a high pressure hose which carried a mixture of inflammable hydraulic fluid and air between the compressor and the air receiver. The hose was approximately 2.2 m long and 67 mm in diameter. It consisted of an outer polymer sheath which covered the internal steel braiding in order to protect the braiding from corrosion. Mr Lorne had modified the hose by wrapping half its length in fibreglass lagging which was held in place by chicken wire. The purpose of the fibreglass lagging was to protect the hose from the heat of the turbo. It did not, however, prevent deterioration of the hose and while in place it concealed the condition of the part of the hose it covered. Mr Lorne gave evidence that no-one had ever removed the fibreglass lagging to inspect the condition of the hose underneath it (ts 207).

16 On 5 December 2003, the hose failed while the drilling rig was in operation, resulting in hydraulic fluid being sprayed in the vicinity of the engine and turbo. The engine and turbo reached very high temperatures when the drilling rig was operating and the hydraulic fluid ignited, causing a fireball which engulfed the drilling rig. Mr Barns, who was on the rig at the time, suffered burns to 60% of his body. It was not in issue on the appeal that the hose failed at a point beneath the fibreglass lagging.

17 Mr Barns sued the appellant, the respondent, and Barrick. On 27 February 2007, the appellant paid Mr Barns the sum of $1,013,498.50, plus agreed costs of $30,000, in settlement of his claim. The appellant then claimed contribution from Barrick and the respondent, pursuant to s 7 of the Act. The appellant's claim against Barrick was dismissed in 2010 in consideration of a payment of $190,000 by Barrick to the appellant. The respondent denied that it was liable to contribute and the appellant's claim against the respondent went to trial.

18 The appellant alleged (relevantly) that the respondent was negligent in that before Mr Barns was sent to work on the rig the respondent:

(a) failed to conduct a proper safety inspection of the drilling rig or to ensure that such an inspection was conducted;

(b) failed to detect that the hose had been modified by the addition of the fibreglass and chicken wire, and that the hose was heavily gouged and lacerated and the internal steel braiding had corroded; and

19 In its defence, the respondent pleaded that, as from 5 October 2003, Mr Barns' services had been completely transferred to the appellant, who had the sole and exclusive direction, control and supervision of Mr Barns in his work on the drilling rig, and that the respondent's only role was in relation to the payment of Mr Barns. The respondent denied that any duty of care it owed to Mr Barns extended to the state of the drilling rig or to conducting an inspection of the drilling rig of a kind which would have revealed the defect in the hose. It denied that it bore any responsibility for the accident.

20 Shortly before the trial, the respondent admitted that it was the employer of Mr Barns. The appellant, for its part, conceded that it was the primary tortfeasor but contended that in light of the respondent's complete failure to ensure that care was taken for Mr Barns' safety, the respondent should contribute 15% to 25% of the damages paid to Mr Barns [61].

21 The primary judge found that the fire was caused by a failure of the high pressure hydraulic hose at a point underneath the fibreglass lagging. Her Honour further found that if the fibreglass lagging and chicken wire had been removed prior to the accident for the purpose of inspecting the hose, gouges and lacerations in the hose would have been visible and the hose would have been replaced. The primary judge concluded that the accident was caused by the failure to remove the fibreglass lagging and chicken wire to inspect the condition of the hose underneath the covering [20]. It is implicit in her Honour's reasons that the defects in the hose would have been ascertainable upon an inspection at the time Mr Barns was sent to work on the drilling rig.

22 The primary judge found that operating the drilling rig was 'very dangerous' work and that the appellant and the respondent were well aware of that. The risk to the workers when a high pressure hose containing flammable liquids was used on a hot drilling rig was readily apparent. Her Honour found that it would have been a simple measure to remove the fibreglass lagging to inspect beneath it and that the safety checks carried out on the drilling rig were inadequate because that was not done. Her Honour concluded that the appellant was in breach of its duty of care to Mr Barns by failing adequately to inspect the hose. Her Honour noted that that finding was consistent with the appellant's consent to judgment in the action brought against it by Mr Barns.

23 Turning to the respondent's liability for contribution, the primary judge noted that the respondent owed a non-delegable duty of care to Mr Barns. Her Honour found that the respondent, through Mr Elliot, was aware that Mr Barns would be involved in 'very dangerous' work as a driller's offsider on an RAB drilling rig. There was, however, no evidence that the respondent had done anything to ensure that care was taken for Mr Barns' safety. The respondent had, as her Honour put it, 'purported to delegate its entire duty of care to [the appellant] and Barrick' [56]. Her Honour rejected a contention by the respondent that it bore no liability because even if it had required a complete safety inspection that would not have prevented the accident. Having delegated its duty to the appellant, the respondent could not avoid its own liability for the failure by the appellant properly to inspect the hose [58].

24 Her Honour then turned to the question of what, if any, contribution the respondent should be required to make. She accepted that it was not reasonable to expect the respondent personally to conduct safety inspections of the drilling rig and that it was reasonable to delegate safety inspections to those on site. Her Honour reiterated that the respondent, through Mr Elliott, knew that working on an RAB drilling rig was very dangerous. While the respondent had some knowledge of Barrick's good safety record, there was no evidence that it had any knowledge of the appellant or its safety procedures. Her Honour concluded:

In such circumstances where [the respondent] was sending an employee to engage in dangerous work as an offsider on an RAB drill rig it should have required a complete safety inspection of the rig before sending its employee to work on the site. At the very least [the respondent] should have had protocols in place to make specific enquiries of its client [the appellant] as to the system of work and the provision and maintenance of plant and equipment at the mine site. Before sending its employee to a mine site, [the respondent] should have satisfied itself that appropriate procedures were in place by [the appellant] to ensure Mr Barns' safety. As it was sending its employee to a dangerous work site for a three month period, [the respondent] should have taken steps to ensure that care was taken for Mr Barns' safety at the work site. It failed entirely to do that or to do anything to ensure the safety of Mr Barns [76].

25 The primary judge found, however, that the respondent was not liable to make any contribution. Her Honour accepted that given the remote location of the mine site, the specialised drilling equipment used by the appellant, and the need for regular maintenance and inspection of the high pressure hose, any regular inspection and maintenance necessarily had to be carried out on site and the appellant carried the primary responsibility for doing that [86].

26 Her Honour also concluded that if the respondent had required a complete safety inspection of the drilling rig before sending Mr Barns to the site, the appellant would have met that requirement by providing details of the safety inspections conducted prior to the appellant's commencement at Plutonic, as well as details of the most recent routine monthly safety inspections, the three monthly safety audits, the visual inspection of the high pressure hoses for signs of damage at the start of every shift, as well as the safety check of components prone to fatigue each time the drill was set up [86].

I am satisfied based on all of the evidence at trial that [the appellant] was very safety conscious and would easily have met any requirement by [the respondent] for a complete safety inspection. [The appellant] believed it adequately and regularly inspected and maintained the drill rig. Mr Lorne well knew how dangerous the work was. He worked on the drill rig as a driller. Yet the large high pressure hose was never unwrapped and adequately inspected for gouges or abrasions that may have caused it to fail. In these circumstances, as a matter of common sense, [the respondent's] failure to require a complete safety inspection could not be seen to be causally related to the damage suffered by Mr Barns. Nor is [the respondent's] failure to ensure that safety protocols and safety procedures were in place causally related to the damage suffered by Mr Barns. Mr Barns' safety was completely in the hands of [the appellant] and realistically [the respondent] had no capacity to shield him from this particular danger (Bourke v Hassett at [42]) [87].

28 Her Honour concluded that it would not be just and equitable to require the respondent to make a contribution. The appellant's claim for contribution was accordingly dismissed.

29 The appellant relied upon the following ground of appeal:

The learned trial judge erred in law in the exercise of her discretionary judgment by exempting the respondent from paying contribution, in that her judgment was founded on errors of fact and law and she failed to give any or sufficient weight to relevant considerations.

PARTICULARS

1.1 The learned trial judge erred in fact and in law in finding at Reasons [58] that the respondent had delegated its safety inspection duties to the appellant and to Barrick.

The finding was an error of fact because it was contradicted by Her Honour's factual finding at [55], [56] that the respondent did nothing at all regarding safety inspections or to ensure the safety of its employee Mr Barns;

The finding was an error of law because there was no evidence that the respondent had done anything to delegate its safety inspection duties to anyone;

1.2 Her Honour erred in law in finding at [87] that Mr Barns' safety was completely in the hands of the appellant and the respondent had no capacity to shield him from this particular danger in that the finding was not supported by evidence and was not the respondent's case at trial;

1.3 Her Honour erred in law and in fact in finding at [87] that the appellant's failure to require a 'complete safety inspection of the rig' was not causally related to the injury suffered by Mr Barns.

Her Honour erred in law because Her Honour's reasoning is not clearly revealed in her reasons for decision and was contradicted by her finding at [59] that the injury to Mr Barns was caused by a lack of reasonable care by the appellant and that the respondent was a tortfeasor who was liable in respect of the injury;

Her Honour erred in fact in that in the hypothetical circumstance of no breach of duty by the respondent a proper safety inspection of the drill rig would have required removal of the lagging and chicken wire to enable inspection of the large hydraulic pressure hose that ultimately failed; and Her Honour found at [20] that if the lagging and chicken wire had been removed gouges and lacerations would have been seen and the large hose would have been replaced;

1.4 Her Honour did not give weight or sufficient weight to the following findings made by her:

1.4.1 The respondent was liable for the negligence of 'its delegate' and was a tortfeasor liable in respect of the injury caused by the appellant: [58], [76];

1.4.2 The respondent should have required a complete safety inspection of the rig before sending its employee to work on the site [76];

1.4.3 The respondent was sending its employee to a dangerous worksite for a three month period and it should have taken steps to ensure that care was taken for Mr Barns' safety at the worksite and that it failed to do that or anything to ensure his safety: [76].

30 It was not in issue on the appeal that, as found by the primary judge, the respondent was in breach of the (non-delegable) duty of care it owed to Mr Barns to ensure that reasonable care was taken for his safety, and that if sued the respondent would have been liable in respect of Mr Barns' injuries: see Kondis v State Transport Authority [1984] HCA 61; (1984) 154 CLR 672; Northern Sandblasting Pty Ltd v Harris [1997] HCA 39; (1997) 188 CLR 313, 331, 367 - 368; Pollard v Baulderstone Hornibrook Engineering Pty Ltd [2008] NSWCA 99 [33] - [34]; Leighton Contractors Pty Ltd v Fox [2009] HCA 35; (2009) 240 CLR 1 [21]. The only issue on the appeal was whether the respondent should have been found liable to contribute to the amount paid to Mr Barns by the appellant.

31 Section 7 of the Act provides (relevantly) as follows:

(1) ...[W]here damage is suffered by any person as the result of a tort -

(c) any tortfeasor liable in respect of that damage may recover contribution from any other tortfeasor who is or would if sued have been liable in respect of the same damage whether as a joint tortfeasor or otherwise but so that no person shall be entitled to recover contribution under this section from any person entitled to be indemnified by him in respect of the liability for which contribution is sought.

...

(2) In any proceedings for contribution under this section the amount of the contribution recoverable from any person shall be such as may be found by the court to be just and equitable; and the court shall have power to exempt any person from liability to make contribution, or to direct that the contribution to be recovered from any person shall amount to a complete indemnity.

32 The relevant general principles applicable to a claim for contribution are not controversial. The making of an apportionment involves a comparison both of culpability, that is, of the degree of departure from the standard of care of the reasonable man, and of the relative importance of the acts of the parties in causing the damage. It is the whole conduct of each negligent party in relation to the circumstances of the accident which must be subjected to comparative examination: Podrebersek v Australian Iron & Steel Pty Ltd [1985] HCA 34; (1985) 59 ALJR 492, 494; Fugro Spatial Solutions Pty Ltd v Cifuentes [2011] WASCA 102 [187]. In Podrebersek, the court pointed out:

A finding on a question of apportionment is a finding upon a 'question, not of principle or of positive findings of fact or law, but of proportion, of balance and relative emphasis, and of weighing different considerations. It involves an individual choice or discretion, as to which there may well be differences of opinion by different minds': British Fame (Owners) v Macgregor (Owners) [1943] AC 197 at 201. Such a finding, if made by a judge, is not lightly reviewed (494).

33 The assessment of what is just and equitable involves a discretionary judgment to which the principles in House v The King [1936] HCA 40; (1936) 55 CLR 499 apply: Norbis v Norbis [1986] HCA 17; (1986) 161 CLR 513, 517 - 518. An appellate court can only intervene if there is a material error of fact or law discernible in the reasons of the primary judge, or if the result is manifestly unreasonable when error may be inferred.

34 The primary judge found, in effect [76], (and it was not challenged on the appeal) that the respondent breached the duty of care it owed to Mr Barns by sending him to work on the drilling rig without requiring a complete safety inspection of the rig and without satisfying itself that the appellant had appropriate safety procedures in place to ensure Mr Barns' safety. As I understand her Honour's reasons, she found, however, that the respondent's failure to require a complete safety inspection of the rig was not causative of the accident and that its liability arose solely because the appellant did not have in place an adequate system for the inspection of the hose. On that basis, her Honour found that it was not just and equitable that the respondent be required to contribute to the damages payable to Mr Barns.

35 Her Honour appears to have reached that conclusion based upon the assumption (there being no evidence on the point) that had the respondent required a complete safety inspection of the drilling rig, the appellant would have satisfied that requirement by providing details of the safety inspections conducted prior to the appellant's commencement at the Plutonic site and details of the procedures set out in the appellant's safety manual. It is implicit that her Honour considered that that material would reasonably have satisfied the respondent that the drilling rig was safe and that all appropriate safety measures were being taken. It would have done so because the material would not have brought to light the deficiency in the safety inspections which ultimately led to the accident.

36 However, I consider, with respect, that her Honour's finding was not one which could reasonably be made on the evidence. On the evidence, the only recent safety inspection that had been carried out was in July 2003 by Barrick, for its own purposes, when the drilling rig arrived on site. No representative of the appellant was present for the inspection and the appellant did not know what it had involved. The appellant had not been provided with any documents describing the extent of the inspection or the findings. There was no evidence as to whether Barrick would have made a copy of the inspection report available to the appellant if requested to do so. I note, too, that it appears from the inspection report (a copy of which was discovered by Barrick and became exhibit 18) that the inspection was concerned with the condition of the truck on which the drilling rig was mounted, and not with the components of the drilling rig itself.

37 Earlier, in May 2003, Mr Lorne had arranged for the drilling rig to be inspected by Air Receiver Inspection Services. That inspection, however, does not appear to have included a safety inspection of the hydraulic hoses. The inspection by the Barrick representatives in June 2003, before the drilling rig went to site, was not regarded by Mr Lorne as constituting a safety inspection. At trial, he described the Barrick representatives as geologists who would not be familiar with the hoses on the drilling rig (ts 189). The subsequent inspection by a Barrick representative in August 2003, after the drilling rig commenced work, was concerned with crush type injuries and not with the state of the hydraulic hoses.

38 What the appellant would have done if faced with a requirement for a complete safety inspection of the drilling rig before Mr Barns was sent to work on it was not canvassed in the evidence. But in the circumstances it cannot be concluded that had such a requirement been made the appellant would not have carried out a proper inspection which would have detected the defect in the hose and remedied it. Had the respondent required such an inspection there must have been a 'real prospect' that the accident would not have occurred: see Victorian WorkCover Authority v Carrier Air Conditioning Pty Ltd [2006] VSCA 63 [65].

39 In my view, on the facts of this case her Honour's finding that it was just and equitable that the respondent should make no contribution fell outside the limits of a sound discretionary decision. It failed to give proper weight to the degree of the respondent's culpability. Mr Barns was sent by the respondent to work with equipment which was known to be very dangerous, for a de facto employer with whose safety practices the respondent was not familiar, in circumstances where, as the primary judge found, in the exercise of reasonable care the respondent should have required, as a condition of Mr Barns' placement, that the appellant undertake a complete safety inspection of the rig but failed to do so.

40 The observations of Mason P in TNT Australia Pty Ltd v Christie [2003] NSWCA 47; (2003) 65 NSWLR 1 [67], [97] (in the context of a claim by a labour hire company for a full indemnity from its client), are apposite:

In my view, it would be contrary to principle to enable or even to encourage an employer that operates a labour hire business to treat the normal incidents of the employment relationship as modified simply because its employees are sent off to work for a client. Indeed, the very fact that employees are dispatched to external venues and placed under the de facto management of outsiders will, in some cases, have the practical effect of requiring the employer to adopt additional measures by way of warning or training in order to discharge its continuing common law duty of care to its employees.

41 I would uphold the appeal and set aside her Honour's decision.

42 It is necessary then to determine what apportionment should be made. I do not accept the appellant's submission that there is something in the nature of a tariff of a 20% to 25% contribution by labour hire companies in cases where an employee is injured in the course of their work due to the negligence of the de facto employer. We were referred to some New South Wales cases in support of that proposition. It is unnecessary to canvass those cases. Suffice it to say that, as might be expected, each case turned on its own facts and, whilst some limited guidance may be derived from other cases which are of a similar kind, nothing in the nature of a general tariff can be drawn from the previous cases - a point made in Maricic v Dalma Formwork (Australia) Pty Ltd [2006] NSWCA 174 [74] and reiterated in Pollard [52].

43 I have already set out the relevant circumstances. The appellant accepted that it was more blameworthy because it had control of the drilling rig and was in a much better position to take steps to avoid injury to Mr Barns. That is plainly the case. But for its part the respondent did not, as the primary judge found it should have done, take reasonable steps to ensure that appropriate care was taken for Mr Barns' safety.

44 In the circumstances, I consider that an appropriate assessment of the respondent's contribution is 20%.

45 On the hearing of the appeal, it was conceded by the appellant that any apportionment should apply to the amount of the damages paid to Mr Barns, less the contribution of $190,000 paid by Barrick. The amount of the damages payable to Mr Barns was $1,013,498.50 [2]. After deduction of the amount paid by Barrick, the amount to be apportioned is therefore $823,498.50. A contribution of 20% of that amount is $164,699.70.

(2) set aside the decision of the primary judge; and

(3) order that the respondent pay to the appellant contribution in the sum of $164,699.70.

47 MURPHY JA: This appeal concerns a claim by the appellant, a drilling contractor, against the respondent, a labour hire company, for contribution in respect of damages awarded to a workman following an accident on the appellant's drilling rig when a hydraulic hose failed, which had not properly been inspected. The workman, whose services were provided by the respondent, was seriously injured.

48 The workman sued the appellant for damages for negligence. The appellant settled the workman's action by the payment of approximately $1 million. The appellant then sought contribution from the owner of the mine and from the respondent, pursuant to s 7 of the Law Reform (Contributory Negligence and Tortfeasors' Contribution) Act 1947 (WA) (the Act). The mine owner settled the appellant's claim but the respondent denied that it was liable under the Act.

49 In the District Court, Yeats DCJ found that the respondent was a tortfeasor who, if sued, would have been liable to the workman for the injury he suffered, but was, nevertheless, not liable to make a contribution: Barns v Parlin Pty Ltd [2010] WADC 92. The appellant appeals against her Honour's decision.

50 The respondent does not challenge the judge's findings that it was a tortfeasor who, if sued, would have been liable to the workman for the injury he suffered. There was no notice of contention.

51 I gratefully adopt the exposition of the relevant background and grounds of appeal as set out in the reasons of Newnes JA.

52 In the case before the primary judge, the appellant alleged relevantly, in effect, that the respondent was negligent in that before the workman (Mr Barns) was sent to work at the mine, the respondent had failed to ensure that a proper safety inspection of the rig was undertaken, had failed to conduct a proper safety inspection of the drilling rig, and had permitted Mr Barns to work on a dangerous drilling rig.

53 The respondent denied any responsibility for the accident, although at trial it eventually conceded that it was an employer of Mr Barns.

54 It was admitted on the pleadings that the June inspection, and a subsequent inspection on 8 August 2003 were 'for the purpose' of determining whether the drill was safe for use in the mine. However, no details of the June inspection or what occurred at it were given in evidence.

55 As Newnes JA has noted, the appellant, for its part, accepted that it was the primary tortfeasor, but contended that the respondent should contribute 15% - 25% of the damages paid to Mr Barns [61]. On this basis, the appellant, in effect, accepted that its responsibility was in the range of 75% - 85%.

56 The primary judge found, in effect, that a complete safety inspection, involving a safety inspection of the hydraulic hose including under the lagging, had not been done and that there was no evidence that it had ever been done: reasons [17], [19](3), [20] - [21]. It was implicit that had the hose been inspected under the lagging, the defect would have been revealed (reasons [20]).

57 Her Honour's reasons in relation to the respondent's liability are, with respect, not entirely easy to follow. The primary judge appears to have found, in general terms, that the respondent, as an employer, owed to Mr Barns, its employee, a personal (non-delegable) duty of care which it breached and that the breach was causative of Mr Barns' injuries, resulting in it being a tortfeasor liable in respect of the same damage as the appellant.

58 Her Honour held, in effect, that an employer owes a personal duty of care to take reasonable steps to provide employees with suitable and safe plant and equipment, and to provide a safe system of work (reasons [25]). Her Honour found that the appellant, at the place of work (the mine site), had not exercised reasonable care for Mr Barns' safety because it had not undertaken a complete inspection of the hose, and she held (correctly) that at law, the respondent could not excuse any non-performance by it of its personal duty by saying that it had delegated responsibility to the appellant (reasons [50] - [59]).

59 On the question of the steps, if any, taken by the respondent in connexion with the positive performance of its personal duty to Mr Barns, the primary judge found the following.

60 She found, in effect, that the respondent understood the nature of the drilling work in question, and knew that it was dangerous (reasons [76]). Her Honour held, in effect, that the respondent should have taken reasonable steps to ensure that care was taken for Mr Barns' safety at the work site and that it did not do so. In particular, her Honour found that before sending Mr Barns to work on the site, the respondent had failed to take reasonable care in three respects, namely, to:

require that a complete safety inspection of the rig be undertaken;
have any protocols in place to make specific inquiries of the appellant's system of work and in respect of the provision and maintenance of the appellant's plant and equipment at the site; and
satisfy itself that appropriate procedures were in place by the appellant to ensure Mr Barns' safety.

61 These findings are not challenged by the respondent. As noted earlier, the judge found that the respondent's breach of duty was causative of the appellant's injuries.

62 On the question of contribution, her Honour, nevertheless, went on to find that the respondent's breach of duty 'could not be seen to be causally related to the damage suffered by Mr Barns' (reasons [86] - [87]).

63 On that basis, her Honour concluded that it would not be just and equitable to require the respondent to make a contribution. The appellant's claim for contribution was accordingly dismissed.

64 In Andar Transport Pty Ltd v Brambles Ltd [2004] HCA 28; (2004) 217 CLR 424 [34], Gleeson CJ, McHugh, Gummow, Hayne and Heydon JJ said:

It is well accepted that, in the absence of statutory provisions to the contrary, an employer owes a common law duty to its employees to take reasonable care for their safety. The duty encompasses an obligation to take reasonable steps to provide safe plant and machinery and a safe system of work. Of particular significance in the present case are two features of the duty. The first is its non-delegability. In Kondis v State Transport Authority, Deane J said:

'[I]n the context of the particular relationship of employer and employee and of the undertaking by the employee of the general obligation to work in the interests of the employer, the content of the employer's duty to take reasonable care to provide a safe system and conditions of work for the employee is not discharged by delegation unless the delegate, be he employee or independent contractor, in fact provides the reasonable care which the employer was under an obligation to bring to bear.'

The second feature to be noted is that the duty is imposed upon all employers, however the business be formed or structured. As Lord Wright noted in Wilsons and Clyde Coal Co Ltd v English:

'[T]he whole course of authority consistently recognises a duty which rests on the employer and which is personal to the employer, to take reasonable care for the safety of his workmen, whether the employer be an individual, a firm, or a company, and whether or not the employer takes any share in the conduct of the operations.' (emphasis in original) (footnotes omitted)

65 Similarly, in Czatyrko v Edith Cowan University [2005] HCA 14; (2005) 79 ALJR 839, the High Court said at [12], [16]:

An employer owes a non-delegable duty of care to its employees to take reasonable care to avoid exposing them to unnecessary risks of injury. If there is a real risk of an injury to an employee in the performance of a task in a workplace, the employer must take reasonable care to avoid the risk by devising a method of operation for the performance of the task that eliminates the risk, or by the provision of adequate safeguards. The employer must take into account the possibility of thoughtlessness, or inadvertence, or carelessness, particularly in a case of repetitive work.

...

An employer has another obligation. It is to provide employees with suitable plant and equipment to enable them to carry out their work safely. (footnotes omitted)

See also Placer (Granny Smith) Pty Ltd v Specialised Reline Services Pty Ltd [2010] WASCA 148 [17] - [19].

66 Labour hire companies, and companies to whom they second employees, both owe duties of care to the employee: TNT Australia Pty Ltd v Christie [2003] NSWCA 47; (2003) 65 NSWLR 1; Maricic v Dalma Formwork (Australia) Pty Ltd [2006] NSWCA 174 [57]; Esso Australia Pty Ltd v Victorian WorkCover Authority [2000] VSCA 74; (2000) 1 VR 246 (overturned on a different point); Victorian WorkCover Authority v Carrier Air Conditioning Pty Ltd [2006] VSCA 63; Bourke v Hassett [1998] VSCA 24; [1999] 1 VR 189.

67 In Dib Group Pty Ltd t/as Hill & Co v Cole [2009] NSWCA 210 (a case in which an occupier unsuccessfully sought contribution from an employer), Basten JA (Beazley & McColl JJA agreeing) said [25]:

The authorities ... suggest that matters relevant to the scope of an employer's duty to take reasonable care for the safety of its employee can often be identified by reference to the following questions:

(1) Did the circumstances which gave rise to the employee's injury require some antecedent conduct on the part of the employer which was not taken?

(2) If so, did the conduct fall within the scope of the obligation -

(a) to provide proper and adequate plant and equipment;

(b) to engage reasonably competent workers or contractors, and

(c) to provide a reasonably safe system of work?

(3) If so, and the circumstances were within the immediate control of the employer, did the employer fulfil those requirements, either itself, or through its employees, agents or contractors?

(4) If the circumstances were not within the immediate control of the employer, did the employer take such steps as were reasonable in all the circumstances, to provide reasonable protection to its employees?

In Dibb v Cole the employer was not a tortfeasor who if sued would have been liable to the plaintiff, because, although it breached its duty as an employer, the breach had not been a cause of the plaintiff's injury: Dibb v Cole [57], [61] - [62], [66].

68 Section 7 of the Act provides (relevantly) as follows:

(1) ... [W]here damage is suffered by any person as the result of a tort -

...

(c) any tortfeasor liable in respect of that damage may recover contribution from any other tortfeasor who is or would if sued have been liable in respect of the same damage whether as a joint tortfeasor or otherwise but so that no person shall be entitled to recover contribution under this section from any person entitled to be indemnified by him in respect of the liability for which contribution is sought.

...

(2) In any proceedings for contribution under this section the amount of the contribution recoverable from any person shall be such as may be found by the court to be just and equitable; and the court shall have power to exempt any person from liability to make contribution, or to direct that the contribution to be recovered from any person shall amount to a complete indemnity.

69 As Newnes JA has observed, the general principles applicable to a claim for contribution have been described as follows. The making of an apportionment involves a comparison both of culpability, that is, of the degree of departure from the standard of care of the reasonable person, and of the relative importance of the acts of the parties in causing the damage. It is the 'whole conduct' of each negligent party in relation to the circumstances of the accident which must be subjected to comparative examination: Podrebersek v Australian Iron & Steel Pty Ltd [1985] HCA 34; (1985) 59 ALJR 492, 494. Those principles were articulated in the context of contributory negligence, but have been treated as having equal application to apportionment between tortfeasors: James Hardie & Coy Pty Ltd v Roberts [1999] NSWCA 314; (1999) 47 NSWLR 425 [90] - [92]. See also Fugro Spatial Solutions Pty Ltd v Cifuentes [2011] WASCA 102 [187].

70 In Podrebersek, the court observed (493 - 494):

A finding on a question of apportionment is a finding upon a 'question, not of principle or of positive findings of fact or law, but of proportion, of balance and relative emphasis, and of weighing different considerations. It involves an individual choice or discretion, as to which there may well be differences of opinion by different minds': British Fame (Owners) v Macgregor (Owners) [1943] AC 197 at 201. Such a finding, if made by a judge, is not lightly reviewed.

71 The assessment of what is just and equitable involves a discretionary judgment to which the principles in House v the King apply: Norbis v Norbis, (517 - 518).

72 There is no standard percentage figure for apportionment between 'employers' in cases involving labour hire companies, and contributions must be assessed by reference to the particular facts and circumstances of each case: Maricic v Dalma [74]. It is, nevertheless, not irrelevant to have regard to the range of percentages which have been attributed to employers in similar situations: Pollard v Baulderstone Hornibrook Engineering Pty Ltd [62].

73 As noted earlier, the primary judge found, in effect, that the respondent breached the duty of care it owed to Mr Barns to take reasonable steps to provide him with safe and suitable machinery and a safe system of work, and that the respondent's breach of those duties was causative of his injuries.

74 For the purposes of contribution, however, her Honour found, in effect, that the on-site failure by the appellant to provide a safe system of work was the only effective cause of the accident, and that the respondent's failures prior to sending him to site (see [60] above) had no causal effect at all (reasons [86] - [88]).

75 Her Honour preceded this part of her reasons by reference to the decision of Hislop J in Hodge v CSR Ltd [2010] NSWSC 27, and her Honour appears implicitly to have placed considerable reliance on that case in formulating her reasons on contribution. In Hodge v CSR, Hislop J had found that the labour hire company should bear no responsibility in apportionment proceedings. Hislop J said that 'the question' was whether there was a 'direct' breach of duty by the labour hire company 'which contributed' to the plaintiff's injury, and his Honour found that there was no 'direct' negligence by the labour hire company in that case (see [44] - [45]).

76 In the case under appeal, her Honour found that there were three failures by the respondent which she implicitly regarded as 'direct' breaches. However, the judge found that those 'direct' breaches made no contribution to the accident.

77 The word 'direct' in this context is used, presumably, to emphasise, for apportionment purposes, the particular negligent acts and omissions by the labour hire company which have been identified, separately from the particular negligent conduct of the 'host' employer, for whose conduct the labour hire company cannot escape liability by simply contending that it had divested its responsibility for the task of care by delegating the performance of the task to the 'host' employer.

78 However, sight should not be lost of the fact that the overarching duties by the respondent were to take reasonable steps to provide safe plant and equipment and a safe system of work, and it was the respondent's breach of those duties which was causative of Mr Barns' injury. The appellant owed its own, separate, duty to Mr Barns of the same kind, which it breached and the breach of which was causative. The two torts are separate. Causal potency in the contribution context involves an evaluative judgment. In some cases at least (unlike in Hodge v CSR), where the labour hire company is in breach, it may be difficult to disentangle so as to exclude, with any real confidence or precision, the likely causative potency of the various threads of the breach in the first tort for the purposes of assessing contribution with respect to the second.

79 In this case, it could not be said that the respondent's 'direct' breaches lacked any causative potency.

80 There was no direct evidence before her Honour that had the respondent taken the particular steps identified by the judge to care for Mr Barns' safety which it ought to have taken, Mr Barns would still have been injured. The judge appears to have assumed that had the proper steps been taken by the respondent, the appellant would still have failed to do a complete inspection of the hose, including that part of it covered by lagging. The reason she gave was, in effect, that the appellant regarded itself as very safety conscious and that any particular steps taken by the respondent, prior to placement, to ensure Mr Barns' safety, would have been futile because anything required by the respondent would have led to no change in what were shown to be the appellant's defective safety inspection procedures (reasons [85] - [87]).

81 In my view, that conclusion was not open. As I have said, there was no direct evidence on the point. The high self-regard which the appellant had with respect to its safety procedures was evidently misplaced, but not necessarily beyond further examination or correction. It could not be assumed that the omission from its procedures in relation to inspecting the hose under the lagging would have subsisted had the respondent required, as a condition of Mr Barns' placement, a complete safety inspection to be undertaken or made the other enquiries identified by her Honour. On the contrary, there must at least have been a 'real prospect' that the appellant's safety procedures would have been examined and that the omission of any system to check under the lagging would not have been left undetected:

cf Victoria WorkCover Authority v Carrier Air Conditioning [65]. Her Honour's finding seems to me to be conjecture rather than a permissible inference from the evidence.

82 This was not a case, contrary to the respondent's submissions, where it could be said that, in substance, the respondent's liability to Mr Barns arose only in circumstances after 'de facto control ... had passed to' the appellant: cf Signet Engineering Pty Ltd v Melvan [2003] WASCA 313 [58]; Fennell v Supervision & Engineering Services Holdings Pty Ltd (1988) 47 SASR 6, 7. On the contrary, the effect of the judge's findings was that the respondent's negligence occurred at or around the time of his placement, prior to the appellant exercising any control over Mr Barns.

83 For these reasons, her Honour's justification for finding that it was just and equitable that the respondent should make no contribution was made in express error; alternatively, it was outside a sound discretionary range. Grounds 1.3 and 1.4 have in substance been established. It is unnecessary to consider grounds 1.1 and 1.2.

84 I would uphold the appeal. It is necessary then to determine what apportionment should be made.

85 The appellant conceded that it is more blameworthy, to the extent of 75% - 85%. The concession was correctly made. The appellant's absence of proper safety procedures likely had a more immediate and direct effect on the cause of the accident than did the respondent's failures identified by the judge. In all the circumstances, I consider that an appropriate assessment of the respondent's contribution is 20%. I agree with the proposed orders of Newnes JA.

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

CITATION : PARLIN PTY LTD -v- CHOICEONE PTY LTD [2012] WASCA 19 (S)

Jurisdiction : DISTRICT COURT OF WESTERN AUSTRALIA

Citation : BARNS -v- PARLIN PTY LTD & ORS [2010] WADC 92

Practice and procedure - Contribution proceedings - Determination of monetary amount of judgment - Whether appellant entitled to contribution by respondent to amount paid by appellant to plaintiff by way of costs

Practice and procedure - Indemnity costs - Calderbank and O 24A offers - Relevant principles - No grounds for indemnity costs

Judgment for the appellant in the sum of $170,699.70

Ace-Semi Trailer Sales Pty Ltd v Zurich Australia Insurance Ltd [2009] NSWCA 381

Barns v Parlin [2010] WADC 92

Colgate-Palmolive Co v Cussons Pty Ltd [1993] FCA 536; (1993) 46 FCR 225

Elvidge Pty Ltd v BGC Construction Pty Ltd [2006] WASCA 264 (S)

Flotilla Nominees Pty Ltd v Western Australian Land Authority [2003] WASC 122 (S); (2003) 28 WAR 95

Ford Motor Company of Australia Ltd v Lo Presti [2009] WASCA 115; (2009) 41 WAR 1

Insurance Commission of Western Australia v Weatherall [2007] WASCA 264 (S)

Parlin Pty Ltd v ChoiceOne Pty Ltd [2012] WASCA 19

1 JUDGMENT OF THE COURT: On 31 January 2012, this court allowed an appeal against a decision of Yeats DCJ in the District Court in which her Honour had dismissed a claim for contribution by the appellant against the respondent: Parlin Pty Ltd v ChoiceOne Pty Ltd [2012] WASCA 19. At the time the reasons of this court were delivered, orders were made allowing the appeal and setting aside her Honour's decision but no orders were made as to the monetary sum to which the appellant was entitled or as to costs, pending submissions from the parties on those matters. Issues have now been raised as to the proper amount of the judgment sum and costs. Before turning to those issues it is appropriate to describe briefly the relevant background.

2 The appeal arose out of an accident on the appellant's drilling rig in which a workman provided by the respondent, a labour hire company, was seriously injured. The workman (Mr Barns) brought an action for damages for negligence against the appellant, the respondent, and the owner of the mine at which the drilling rig was operating (Barrick). The appellant settled the action by the payment to Mr Barns of the sum of $1,013,498.50 by way of damages plus agreed costs of $30,000, a total sum of $1,043,498.50. The appellant then sought contributions from Barrick and the respondent, pursuant to s 7 of the Law Reform (Contributory Negligence and Tortfeasors' Contribution) Act 1947 (WA) (the Act). Barrick settled the contribution claim by payment to the appellant of the sum of $190,000 (inclusive of the appellant's costs), but the respondent denied that it was liable to contribute. The appellant's contribution claim against the respondent went to trial.

3 Her Honour found that the respondent was not liable to make any contribution. However, in the course of considering the contribution claim, the primary judge made the observation that any contribution by the respondent fell to be calculated as a proportion of the sum of $1,013,498.50 less the $190,000 paid by Barrick, an amount of $823,498.50: Barns v Parlin [2010] WADC 92 [97]. Her Honour noted that the payment by Barrick apparently included an amount towards the appellant's costs but concluded that any such amount could not be determined and the appropriate course was simply to deduct it in full from the amount the appellant had paid to Mr Barns.

4 This court held that the primary judge had erred in concluding that the respondent was not liable to contribute and found that the appellant was entitled to a contribution of 20% to the damages paid by the appellant to the injured workman, less the sum of $190,000 paid by Barrick by way of contribution. The amount of the respondent's contribution was expressed in this court's reasons to be 20% of the sum of $1,013,498.50 less the $190,000 paid by Barrick, an amount of $823,498.50. The contribution was therefore the sum of $164,699.70.

5 The appellant says that the respondent's contribution should extend to the costs of $30,000 which the appellant paid to Mr Barns by way of costs; that is, to the total sum of $1,043,498.50, rather than simply the amount of $1,013,498.50 paid by way of damages. The total amount of the respondent's contribution should therefore be $170,699.70, rather than $164,699.70. In support of that contention, the appellant points out that its pleaded claim was for contribution to 'the damages and costs paid to [Mr Barns]' and at trial counsel for the appellant had expressly put the claim to the primary judge on the basis that it was for contribution to the sum of $1,043,498.50 less the amount paid by Barrick.

6 The respondent does not contest that the appellant paid the total sum of $1,043,498.50 to Mr Barns or contend that the amount was unreasonable but it opposes an order that it contribute to the component of $30,000 paid by way of costs. It says that the question of a contribution in respect of the costs of $30,000 was not argued before the primary judge and her Honour's finding that any contribution was to be calculated as a proportion of the sum of $1,013,498.50 less the Barrick contribution was not challenged on the appeal. It is now too late to raise the matter.

7 That submission must be rejected. The appellant's claim was pleaded and put at trial on the basis that the appellant sought a contribution by the respondent to the total sum of $1,043,498.50 which the appellant had paid to Mr Barns less the contribution by Barrick (trial ts 102, 485 - 487). It is clear from an exchange at trial involving the primary judge and counsel on both sides in the course of the appellant's closing submissions that both parties were proceeding on the basis that the starting point was $1,043,498.50, not $1,013,498.50 (trial ts 485 - 487). We do not consider that the reference of the primary judge to the figure of $1,013,498.50 is of significance. Having regard to the way the appellant's case was pleaded and put at trial, it is, in our view, properly to be regarded as simply an error by her Honour.

8 Whilst the matter was not specifically addressed by either party on the appeal, in the course of argument counsel for the appellant referred to the contribution sought from the respondent as being a proportion of the 'total amount' paid by the appellant of '[$]1,143,000', less the $190,000 paid by Barrick (ts 53). It can readily be accepted that counsel was referring to the sum of $1,043,498.50. In concluding that the contribution of 20% should apply to the damages of $1,013,498.50 less the Barrick contribution, this court simply repeated the error of the primary judge.

9 The respondent did not contend that it is not open to the court under the Act to order contribution in respect of the amount paid by the appellant to Mr Barns by way of costs. (As to which, see the discussion in Ace-Semi Trailer Sales Pty Ltd v Zurich Australia Insurance Ltd [2009] NSWCA 381 [27], [115]). In the circumstances of this case it is just and equitable that the contribution by the respondent of 20% should apply to the total sum of $1,043,498.50, less the sum of $190,000 paid by Barrick. That contribution is an amount of $170,699.70.

10 The other matter in contention is the appellant's application for indemnity costs. That application is based on two offers made by the appellant before trial. The first was an offer made on 29 July 2008, pursuant to O 24A of the Rules of the Supreme Court 1971 (WA), in the sum of $156,525 plus costs to be taxed. That offer was made some considerable time before the trial, which commenced on 12 April 2010. The second was an offer made shortly before the trial, by letter dated 16 March 2010, in the sum of $140,000 plus costs of $45,000. The second offer was expressed to be open for acceptance until close of business on 18 March 2010. Both offers, it turned out, were significantly less than the sum of $170,699.70 which the appellant ultimately recovered on the appeal.

11 It is convenient to deal with the offers in turn. Before doing so it is necessary to observe that the O 24A offer related to the proceedings below and does not apply to the appeal, although it may be relevant to the exercise of the court's discretion as to the costs of the appeal: Elvidge Pty Ltd v BGC Construction Pty Ltd [2006] WASCA 264 (S). In our view, the same applies to the Calderbank offer.

12 Turning to the first offer, O 24A provides that where an offer made by a plaintiff is not accepted by a defendant and the plaintiff obtains a judgment more favourable than the terms of the offer, unless the court otherwise orders the plaintiff is entitled to an order for costs from the date of the offer on a party and party basis. However, whilst O 24A contemplates that ordinarily non-acceptance of an O 24A offer will lead to an order for party and party costs, it does not follow that an order for indemnity costs can never be made. The court may make an order for indemnity costs if it is satisfied that there is some special or unusual feature of the case to justify the court exercising its discretion in that way. Thus such an order may be made where there has been some element of improper or unreasonable conduct by a party or the party's legal advisers: see Colgate-Palmolive Co v Cussons Pty Ltd [1993] FCA 536; (1993) 46 FCR 225, 233 (Sheppard J); Flotilla Nominees Pty Ltd v Western Australian Land Authority [2003] WASC 122 (S); (2003) 28 WAR 95 [9]; Insurance Commission of Western Australia v Weatherall [2007] WASCA 264 (S) [10]. Whether the conduct of a party in rejecting an O 24A offer is unreasonable will depend upon the particular facts and circumstances of the case. It is clear, however, that it will not be sufficient for the offeror simply to show that it obtained a judgment more favourable than the terms of the offer.

13 Moreover, even when conduct which would justify an indemnity costs order is made out, such an order will ordinarily be made only in circumstances where, in the absence of such an order, the successful party is unlikely to recover the full amount of their costs. While an order for indemnity costs reflects the court's disapproval of the conduct of the unsuccessful party (Flotilla Nominees [25]), such an order is intended to be more than simply an expression of judicial indignation. Its purpose is to provide substantive relief as to costs to the successful party.

14 In this case, nothing has been shown in connection with the respondent's non-acceptance of the O 24A offer which would justify a departure from the usual order that the costs of the trial be on a party and party basis. It is not sufficient for the appellant to contend, as it does in substance, that given the stage which the proceedings had reached (and the material therefore available to the respondent through the interlocutory processes) at the time the offer was made, the offer should have been accepted. There was nothing which took the respondent's rejection of the offer beyond the bounds of the sort of circumstances contemplated by O 24A and into the realm of the unreasonable. There is also nothing to suggest that in the absence of an order for indemnity costs the appellant is unlikely to recover the full amount of its costs.

15 It is necessary to turn then to the Calderbank offer made on 16 March 2010. We should say at the outset that it would be an odd result if a plaintiff was more likely to obtain an order for indemnity costs if the offer that was rejected was a Calderbank offer rather than an offer made under O 24A. We do not think that is the case. The effect of a Calderbank offer must be considered in the context of the express provision in the Rules that ordinarily the rejection of an O 24A offer will lead to an order for party and party costs: see Ford Motor Company of Australia Ltd v Lo Presti [2009] WASCA 115; (2009) 41 WAR 1 [44] - [45]. As with O 24A, there can be no presumption that the rejection of a Calderbank offer gives rise to an entitlement to indemnity costs. A party which serves a Calderbank offer is not entitled to indemnity costs simply because it obtains a judgment more favourable than the terms of the offer. Rather, the offeror must satisfy the court that an order for indemnity costs is appropriate because the other party's conduct in rejecting the offer was unreasonable: Lo Presti [16] - [17]. Whether the offeree's conduct was unreasonable is to be determined by a consideration of all of the relevant facts and circumstances.

16 As with the appellant's O 24A offer, we do not consider that the conduct of the respondent was such as would justify an order for indemnity costs. The basis of the claim for indemnity costs is in essence no different to that advanced in respect of the O 24A offer. In addition, as we have said, there is nothing to indicate that there is likely to be a shortfall between the appellant's actual costs and its costs if taxed on a party and party basis, in the absence of which an order for indemnity costs is unnecessary to do justice between the parties.

17 We would dismiss the application for indemnity costs in respect of the trial. The appropriate order is that the respondent is to pay the appellant's costs of the trial to be taxed.

18 In respect of the costs of the appeal, the appellant is entitled to its costs of the appeal, save that there should be no order as to the costs of the current application, each party having been successful in part. For the sake of completeness, we would add that there is nothing which would justify an order for indemnity costs on the appeal.

There be judgment for the appellant in the sum of $170,699.70;
The respondent pay to the appellant interest on the sum of $170,699.70 for the period from 26 February 2007 to 2 March 2011 at the rate of 6% per annum;
The respondent pay the appellant's costs of the action in the District Court to be taxed;
Each party bear its own costs of the appellant's application on the appeal in relation to the amount of the judgment sum and for indemnity costs; and
The respondent otherwise pay the appellant's costs of the appeal to be taxed.

Reform (Contributory Negligence and Tortfeasors' Contribution) Act 1947

PARLIN PTY LTD -v- CHOICEONE PTY LTD [2012] WASCA 19 (31 January 2012)

At a glance

Court

Decision date

Before

Catchwords

Source

Catchwords

Judgment (184 paragraphs)

PARLIN PTY LTD -v- CHOICEONE PTY LTD [2012] WASCA 19 (31 January 2012)

Legislation Cited (1)

Cases Cited (15)