Pollock v Thiess Pty Ltd & Ors

Judgment (183 paragraphs)

[1]

[1] McMeekin J: What is in issue between the parties is the effect of a mandatory final offer ("MFO") made by the plaintiff to the first and second defendants to settle his claim for $750,000 following a conference held pursuant to s 39 of the Personal Injuries Proceedings Act 2002 (Qld) ("PIPA") and prior to the issuing of these proceedings.

[2]

[2] On 16 May 2014 I delivered my reasons in these proceedings. Liability was not in issue. I indicated that there should be judgment for the plaintiff against the first and second defendants in the sum of $865,158.88 and judgment for the plaintiff against the third defendant in the sum of $758,839.45. I invited submissions on costs.[1]

[3]

[3] The proceedings concerned a claim for damages by an injured worker. The plaintiff's employer was a labour hire company, in liquidation at the time proceedings were commenced. WorkCover Queensland, the third defendant, stands in its shoes. The plaintiff's labour was hired to the second defendant, Australian Bearings Corporation Pty Ltd. That company had agreed to perform work for the first defendant, Thiess Pty Ltd, the owner of the mine where the relevant work was being performed.

[4]

[4] While the defendants had exchanged notices of contribution or third party notices, liability for the injury was admitted both to the plaintiff and as between the three defendants by the time of trial, the first defendant conceding liability on the day of trial. I was required to assess damages.

[5]

[5] There are presently two issues between the parties relevant to costs:

[6]

(a) Given the offer to settle made by the plaintiff should he receive standard or indemnity costs?

[7]

(b) Should the plaintiff receive the costs incurred but reserved of an application filed 16 January 2014 and if so on what basis?

[8]

[6] The third defendant is unconcerned with these issues. I will deal first with the proceedings overall and then the interlocutory hearing.

[9]

[7] The plaintiff seeks indemnity costs. The first and second defendants concede that the plaintiff should be awarded costs on the standard basis, but argue that it is inappropriate to award costs on the indemnity basis.

[10]

[8] The plaintiff argues that the issue of liability to the plaintiff was quite straight forward, that liability as between the defendants was joint and several, and (implicitly) that the proceedings did not settle not because there was any doubt about their liability to him but because the defendants were intent on seeking to each minimise their exposure to his claim. This had the effect that he was required to prepare fully on both liability and quantum of damages. He points out too that the eventual judgment substantially exceeds the offer he made - by over $115,000 - and so (again implicitly) that this was not a line ball decision confronting the defendants and on which reasonable minds might differ.

[11]

(a) the plaintiff has not attempted to demonstrate why an order on the indemnity basis is appropriate and it is incumbent on him to do so. The mere making of a pre-proceedings offer less favourable to the plaintiff than the eventual judgment does not inevitably result in an order for indemnity costs. A failure to show more should result in the usual order;

[12]

(b) at the time of the pre-proceedings conference, and at the time when the MFO was open:

[13]

(i) liability as between the defendants, as well as between the defendants and the plaintiff, was in issue;

[14]

(ii) the defendants had not obtained a statement from a principal liability witness;

[15]

(iii) the plaintiff had not obtained an expert report on liability which he later did obtain and disclose;

[16]

(iv) the plaintiff failed to warn the defendants that indemnity costs would be sought if he went ahead and sued and obtained a less favourable result;

[17]

(c) the plaintiff failed to include an analysis of his offer to demonstrate why it should be accepted and this was of particular importance given the early stage at which the offer was made.

[18]

[10] In support of its submission the first defendant cites my own decision in Gibbings-Johns v Corliss (No 2) [2010] QSC 78, describing the principles that I endeavoured to set out there as "uncontroversial":

[19]

(a) The mandatory final offer ... operates much as a Calderbank offer that is bettered at trial - the mere fact that the party making the offer obtains a judgment more favourable than the terms offered does not of itself inevitably demonstrate such special circumstances as would justify departure from the ordinary basis of a costs assessment;

[20]

(b) The fact that such an offer has been made is a significant but not decisive consideration in the exercise of discretion to award costs on the indemnity basis;

[21]

(c) A relevant matter to consider is whether it appears that the party sought to be made liable for costs on the indemnity basis has "imprudently or unreasonably" failed to accept the offer of compromise;

[22]

(d) The onus lies on the party seeking indemnity costs to demonstrate the imprudence or unreasonableness of the other party's conduct that judgment has to be made on the basis of the relevant strengths and weaknesses of the cases that ought to have been apparent to the parties at the time when the offer was made.

[23]

[11] Those "principles" I derived from the judgment of Byrne J (as he then was) in Lawes v Nominal Defendant [2007] QSC 103. Byrne J said of a mandatory final offer made under the Motor Accident Insurance Act 1994 (Qld) regime that the principles applicable to a Calderbank offer were analogous and he summarised those principles as follows:

[24]

"...the mere fact that the party making the offer obtains a judgment more favourable than the terms offered does not of itself inevitably demonstrate such special circumstances as would justify a departure from the ordinary basis of a costs assessment: See Crump v Equine Nutrition Systems (No 2) [2007] NSWSC 25 at [39]- [41]; Gove v. Black [2006] WASC 298 at [43]- [47]; Balderstone Hornibrook Engineering Pty Limited v Gordian Runoff Limited [2006] NSWSC 583 at [30]- [37]; Fordyce v Fordham (No 2) [2006] NSWCA 362 at [16], [21]; Devprov v Seamark Pty Ltd [2007] QSC 31 at [4]; Westpac Banking Corporation v Commissioner of State Revenue [2004] QSC 19; QSC 19 at [30]-[32]; at - ; , at ; and at .

[25]

Among the pertinent considerations is whether it appears that the party sought to be made liable for costs on an indemnity basis has imprudently or unreasonably failed to accept a Calderbank offer of compromise.

[26]

That will often involve an attempt to form a view about the relevant strengths and weaknesses of the cases that ought to have been apparent to the parties when the offer was made: cf Baulderstone Hornibrook Engineering at [34]-[35]; and Brymount Pty Ltd v Cummins (No 2) [2005] NSWCA 69 at [11]- [14]."

[27]

[12] On further refection I am not sure that my summary in Gibbings-Johns is accurate or complete. I note that the three Queensland decisions cited by Byrne J are not directly on point.

[28]

[13] In Devprov v Seamark Pty Ltd [2007] QSC 31 Wilson J was concerned with a commercial dispute, not a dispute governed by the PIPA.

[29]

[14] In Westpac Banking Corporation v Commissioner of State Revenue [2004] 55 ATR 72; [2004] QSC 19 White J was concerned with a Calderbank offer in a commercial dispute, not a MFO under the PIPA. Her Honour there referred to a statement by the Court of Appeal in Tector v FAI Insurance Company Limited [2000] QCA 426; [2001] 2 Qd R 463 at 464 that: "The ordinary rule is that costs when ordered to be paid in adversary litigation are to be recovered on the standard basis and should only be departed from where the conduct of the party against whom the order is sought is plainly unreasonable...". Of this White J observed: "Tector concerned an application for indemnity costs of an appeal in light of an offer to settle the appeal made prior to the hearing of the appeal. The rules of court relating to offers to settle did not apply to appeals. The introduction of 'plainly' adds nothing to 'reasonable' and does not depart from the proposition reflected in cases like Pirrotta and Smec Testing Services that all of the circumstances must be considered in deciding whether an order should be made. The reason to give effect to Calderbank type offers is to encourage settlement to save public costs and private costs both financial and personal associated with litigation by indemnification of a party who makes an offer to settle which is not less favourable in the judgment. This is to be encouraged. Where, as in Tector, the ultimate difference between the offer and the outcome on appeal was only a few dollars it could not be said to be unreasonable to reject the offer."[2]

[30]

[15] In Grice v The State of Queensland [2005] QCA 298 the Court of Appeal was concerned with a dispute governed by the PIPA but with the costs on appeal, not trial. The same can be said of the authority cited by the first defendant in its submissions: Wright v KB Nut Holdings Pty Ltd [2013] QCA 153 at [9].

[31]

[16] There are two issues. One is the quirk that the evidential burden is thrown onto the offeror where what is really in issue is why, from the offeree's perspective, it was not imprudent or unreasonable to not accept the offer. The offeree is in the better position to explain that. The general principle was identified by Lord Mansfield: "It is certainly a maxim that all evidence is to be weighed according to the proof which it was in the power of one side to have produced, and in the power of the other to have contradicted."[3]

[32]

[17] The defendants' principal argument is that it was incumbent on the plaintiff to show why it is that they should not have appreciated that his offer was a good one that a defendant, acting prudently and reasonably, should accept. This has the difficulty that the plaintiff is not to know what it is that the defendant did not know or understand.

[33]

[18] The second issue is that such an offer is made in the context of duties and obligations mandated by legislation, and legislation with obvious purposes to which full weight should, of course, be given. The "principles" set out above, if anything, have a tendency to undermine rather than support those obvious objectives. The assumption that the prima facie position is that there is no relevant imprudence in not accepting an offer that, if accepted, would avoid expensive litigation seems on reflection difficult to justify. Rather I am inclined to think that the approach of Gillard J in MT Associates Pty Ltd v Aqua-Max Pty Ltd (No 3) has much to recommend it:

[34]

"Any offer made in litigation should be carefully considered and a party and his solicitor ignores or rejects the offer at his peril."[4]

[35]

[19] That I am here concerned with a pre-litigation offer does not seem to me to compel a different approach given the statutory context.

[36]

[20] That statutory context I will detail in a moment but it suggests to me that if there is an evidential burden on the successful offeror it is relatively easily discharged so that the default position should not be one of the offeror justifying their position but the offeree explaining why it is not just that the claimant be protected from any costs burden. I note that there is no complaint that the plaintiff failed to comply with his obligations under the PIPA.

[37]

[21] The relevant point is, it seems to me, in the considerations mentioned in (d) above. Offers made under the PIPA process should be made at a time, if the parties have complied with their obligations, when the "relevant strengths and weaknesses of the cases... ought to have been apparent to the parties."

[38]

[22] This can be contrasted with Calderbank offers. Such offers can be made in a wide variety of circumstances and the various cases dealing with the applicable principles reflect those varying fact situations. The understanding of the offeree of the case he or she must meet, the probable prospects of success, the method of assessment of any possible damages, the availability of witnesses and documents all can vary widely from one case to another. Hence the validity of an offer and its purpose and effect can be entirely obscure to the offeree. Many of these concerns have prompted a more cautious approach to the awarding of indemnity costs following a Calderbank offer, and a closer scrutiny of the circumstances prevailing at the time of the offer.

[39]

[23] However if parties comply with their obligations and duties under the PIPA these concerns should not be present when the MFO is made; and the whole point of the elaborate procedures that lead up to the MFO is to avoid litigation, a matter that all parties are acutely aware of. It is entirely consistent with the PIPA that the party that insists on litigation pay for it.

[40]

[24] My focus of course is on this case and it has some particular features not found in all cases. The case involves a work place injury where the liability issues do not seem at all complex at least as between the claimant and those responsible for providing the safe place and system of work; the law is clear in expecting that a safe place and system of work will be provided by employers and those akin to employers;[5] the defendants themselves were employers in the industry and so presumably thoroughly familiar with the work involved and safe practices; and the case otherwise involves an assessment of damages in the personal injury setting where the principles have long been worked out, this case having no exceptional features.

[41]

[25] I will set out those several features of the legislation which I think justify a ready shifting of the evidential onus onto the offeree.

[42]

[26] Section 4 of the PIPA, so far as relevant, provides:

[43]

(1) The main purpose of this Act is to assist the ongoing affordability of insurance through appropriate and sustainable awards of damages for personal injury.

[44]

(2) The main purpose is to be achieved generally by -

[45]

(a) providing a procedure for the speedy resolution of claims for damages for personal injury to which this Act applies; and

[46]

(b) promoting settlement of claims at an early stage wherever possible; and

[47]

(c) ensuring that a person may not start a proceeding in a court based on a claim without being fully prepared for resolution of the claim by settlement or trial; and

[48]

(d) putting reasonable limits on awards of damages based on claims; and

[49]

[27] Under the PIPA the claimant is required to provide a complying Notice of Claim in the approved form (s 9). The information set out must meet the requirements of s 3 of the Personal Injuries Proceedings Regulations. That document alerts the respondent to the nature of the claim, how the injury was sustained, why the claimant alleges the respondent is liable and gives substantial details about the injury sustained and the claim made. The respondent is given time to investigate the claim and then must make a response. Section 20 provides in part that a respondent, within six months of receiving a complying Notice of Claim, must:

[50]

"(a) take reasonable steps to inform himself, herself or itself about the incident alleged to have given rise to the personal injury to which the claim relates; and

[51]

(d) make a fair and reasonable estimate of the damages to which the claimant would be entitled in a proceeding against the respondent; and

[52]

(e) make a written offer, or counteroffer, of settlement to the claimant setting out in detail the basis on which the offer is made, or settle the claim by accepting an offer made by the claimant."

[53]

[28] Section 21, which appears in Division 2 of Chapter 2, Part 1 of the PIPA, which Division includes sections 21 to 34, provides:

[54]

"The purpose of this division is to put the parties in a position where they have enough information to assess liability and quantum in relation to a claim."

[55]

[29] Section 22 places an obligation on the claimant to provide relevant documents and information both about the incident and the injury. If required the claimant must verify information by statutory declaration: s 22(7). A joint expert report can be obtained: s 23. If necessary the respondent can have the claimant medically examined: s 25. The parties must hold a compulsory conference to discuss settlement and before doing so the party, or a solicitor acting, must certify certain matters. Section 37(2) sets out what that certificate must state:

[56]

(2) The certificate of readiness must state that, having regard to the documents in the party's possession -

[57]

(a**)** the party is in all respects ready for the conference; and

[58]

(b) all investigative material required by the party for the trial has been obtained, including witness statements from persons, other than expert witnesses, the party intends to call as witnesses at the trial; and

[59]

(c) medical or other expert reports have been obtained from all persons the party proposes to call as expert witnesses at the trial; and

[60]

(d) the party has fully complied with the party's obligations to give the other parties material required to be given to the parties under this Act.

[61]

[30] The parties then meet and the MFO must then be made.

[62]

[31] The only reference to the effect of a mandatory final offer is, for present purposes, to be found in s 40 of the PIPA. So far as it is relevant s 40 of PIPA provides:

[63]

(4) A mandatory final offer must remain open for 14 days and a proceeding in a court based on a claim must not be started while the offer remains open.

[64]

(5) If the claimant starts a proceeding in a court based on the claim, the claimant must, at the start of the proceeding, file at the court a sealed envelope containing a copy of the claimant's mandatory final offer.

[65]

(6) A respondent must, before or at the time of filing a defence, file at the court a sealed envelope containing a copy of the respondent's mandatory final offer or, if a joint final offer is made by multiple respondents, a copy of the respondents' mandatory final offer.

[66]

(7) The court must not read the mandatory final offers until it has decided the claim.

[67]

(8) However, the court must, if relevant, have regard to the mandatory final offers in making a decision about costs.

[68]

[32] It is against this statutory background that the effect of the offer must be judged.

[69]

[33] The pre-court proceedings mandated under the PIPA evidently have two principal aims. The first and primary one is to attempt to avoid litigation - sub-paragraphs 4(2)(a) and (b) of the PIPA are relevant. The second aim supports the first - to ensure that the parties are fully prepared by the time of the conference and before starting litigation, such that they know or should know the strengths and weaknesses of their respective cases: ss 4(c) and 37(2). Section 21 could not be clearer. Prima facie s 40(8) too should be construed to support these aims - if a defendant is not at risk of an indemnity costs order should it not accept a claimant's offer the key objective of avoiding litigation will be undermined.

[70]

[34] The usual rule is that costs follow the event (r 680 of the Uniform Civil Procedure Rules 1999 (Qld)). Indemnity costs can be awarded in the discretion of the Court (r 703 UCPR). The rules provide for only those two bases on which costs can be assessed - standard and indemnity. There is no point to s 40(8) if it is not to alter what would otherwise be the usual result in costs - and from a successful plaintiff's perspective the awarding of indemnity costs when appropriate. The legislative direction that the court "must have regard" to offers, where relevant, is a strong indication that indemnity costs are intended to be ordered. Otherwise, where the claimant is the successful party, how is the offer to be "regarded"? The approach that I adopted in Gibbings-Johns was that the offer should, prima facie, be ignored not regarded.

[71]

[35] It is the absence of a direction that an indemnity costs order is the default position that has resulted in a distinction being drawn between an offer under the UCPR and an offer under the PIPA. The plaintiff's submissions refer to this as an "anomaly." I am not sure that it is. The legislature has been cautious not to tie the Court's hands, conscious no doubt that the range of possible factual scenarios is infinite. However that may be, in the absence of such a legislative direction the ultimate burden of persuading the Court that the order on the indemnity basis should be made rests on the offeror. But it seems to me that the evidential burden readily shifts to the offeree.

[72]

[36] And the point is not without some significant effect. It has long been recognised that the awarding of standard costs leaves a party out of pocket: Colgate Palmolive Co v Cussons Pty Ltd [1993] FCA 536; (1993) 46 FCR 225 at 4. The discrepancy now is much greater than it was 20 years ago. Where a plaintiff has reasonably sought to avoid litigation entirely, and so avoid this imposition on him which significantly decreases his award, but has been frustrated by the attitude of those who have injured him, then I am not persuaded it is just to assert that it is the plaintiff who must do the explaining and justifying.

[73]

[37] In summary, a mandatory offer is required from a prospective plaintiff for the very purpose of ensuring that the claimant states precisely the amount of the judgment he or she seeks. The prospective defendant knows then where they stand. The offers exchanged set the parameters of the debate. The legislation presumes that each side have had time to investigate the matter and are substantially ready for trial. The whole point of the litigation that follows an exchange of offers is for each side to demonstrate the reasonableness of their position. If the respondent later appreciates the validity of the offer the effect of it for costs purposes can easily be neutralised, or substantially so, by the making of an offer in precisely the same amount.

[74]

[38] These considerations have led me to doubt the view that I have earlier expressed that aligns a MFO too closely with a Calderbank offer. I doubt that it is right to assert, as I have, that as a general proposition "the onus lies on the party seeking indemnity costs to demonstrate the imprudence or unreasonableness of the other party's conduct," in the sense of requiring much more than the making of an offer after compliance with the legislation.

[75]

[39] Speaking generally it could only be prudent to reject an offer if there is a significant change in the case from the perspective of the defendant - and the defendant in question would be in a much better position to know that than the plaintiff. The making of an order on the indemnity basis where the MFO is less than the claimant eventually recovers, while not inevitable, would seem to me to be a useful prima facie starting point. Discretionary considerations can of course still impact on the decision.

[76]

[41] The issues are: what knowledge did the defendants have, or should they have had, of the relevant facts as at the time of the making of the MFO? And was there any good reason to think that liability considerations meant that a rejection of the offer was a reasonable course?

[77]

[42] The plaintiff was injured carrying out a fairly straightforward task. A tub plate weighing 150kgs fell on the plaintiff's foot. Another worker, Holmes, was carrying out the gouging of the welds that provided its supports. Nothing was put in place to support the large weight in case he misjudged the effectiveness of the existing welds. Who was responsible for that failure was the essential issue raised in the pleadings. Before trial, and essentially in the days leading up to trial,[6] the defendants worked out an apportionment of responsibility among themselves.

[78]

[43] While in their pleadings the defendants denied responsibility and asserted contributory negligence, by the time of trial it was not alleged, nor does it seem that it could ever reasonably have been maintained, that the plaintiff was responsible for his injury.

[79]

[44] That is so because it appears that the plaintiff was the junior employee on the job. The plaintiff was brought onto the site under a labour hire contract between the second defendant and the now defunct labour hire company. The second defendant, who should know, pleads that the plaintiff was "subject to the directions" of another employee of the second defendant - Holmes - and that Holmes was subject to the supervision of a Theiss employee, Heikkinen.[7] Holmes was the man who gouged out the existing welds of the plate that fell.

[80]

[45] The relevant point is that the plaintiff was not in charge of the workplace or the work system. There was acceptance by the second defendant of the allegation that the relevant job safe practise did not respond to all reasonably foreseeable risks - only "obvious" ones[8] and that the risk that eventuated was reasonably foreseeable.[9] These considerations suggest that the liability of one of the defendants to the plaintiff was virtually certain.

[81]

[46] What really was in issue was who among the defendants was responsible for what seems to have been a very unsafe system of work carrying with it the potential for very serious injury.

[82]

[47] Those then are the facts that seem evident to me now.

[83]

[48] The first defendant submits that as at the date of expiry of the MFO (10 May 2013):

[84]

(a) It was not possible to assess the extent to which each of the defendants was liable to the plaintiff;

[85]

(b) It was not possible to assess if the first defendant would be held liable to the plaintiff at trial;

[86]

(c) The first defendant did not complete its investigations relating to its liability to the plaintiff until the month before the trial;

[87]

(d) It was not possible to assess the likely amount of damages which the plaintiff might be awarded at any trial because of the uncertainty as to the plaintiff's capacity to return to work.

[88]

[49] No officer of either defendant has sworn to their knowledge of the facts as at the date of the PIPA conference on 24 April 2013. Lawyers sometimes forget that it is not their understanding of the facts that is important but their client's knowledge. While time is needed to provide legal advice on those facts the two week period in which the mandatory offer was open provided ample time here, assuming some lack of knowledge until the conference. As I will explain there seems to have been ample time well before that to assess liability issues.

[89]

[50] The defendants argue that because there were three of them and that they each had uncertainty as to who should bear responsibility to the plaintiff that that in itself introduced a complexity that justified a non acceptance of the offer. In context of this case this is an unattractive argument. It effectively seeks to make the plaintiff suffer costs in preparing fully on the liability issue for what was in reality an issue that concerned only the defendants' interests.

[90]

[51] In my view the relevant question for each defendant when considering the position of the plaintiff is not what apportionment might I achieve vis à vis my fellow defendants but rather the much narrower and far less complex issue of what prospect do I have of avoiding liability entirely as against the plaintiff. Of course there was the issue of recovering contribution from the other defendants but no issue is raised that there was any concern about that.

[91]

[52] The issue was so confined because, as the plaintiff contends, if a defendant did not manage to avoid liability entirely then that defendant was jointly and severally liable to the plaintiff - so only a modest contribution by way of fault nonetheless would result in liability for the whole of the damage suffered. So in assessing their response to the claimant's offer the issue for each defendant - so far as liability issues impacted on that decision - was: am I likely to be held responsible to an extent of even 1% for this accident? I put to one side the issue of contributory negligence, no argument having been advanced that that was ever a serious issue.

[92]

[53] As I have mentioned neither defendant has advanced evidence that by 24 April 2013 they did not know the relevant facts. Examination of the evidence shows that each defendant knew or should have known all relevant matters.

[93]

[54] The plaintiff was injured on 7 April 2010. By 16 April 2010 the first defendant's employees had prepared a report on the incident.[10] That report records that all relevant witnesses had been interviewed. The witnesses listed include Holmes and the plaintiff, describing them as the persons involved. Their statements were attached to the report. The report records that "Shane", a reference to Holmes, "assumed the role of supervising the task" and instructed "Scott", a reference to the plaintiff, as to "the process that was to be followed".[11] A JSEA (a Job Safety Environment Analysis) was completed[12] and signed off by Mark Heikkinen, the dragline supervisor employed by the first defendant. The report records that the hazard of the tub plate falling was not identified and the controls to prevent this were similarly not considered.[13] Section 9 of the report is headed "Contributing Factor Identification Guide". It records in response to the query whether the actions of "other persons" were contributory: "The boilermaker that was working on the plate that 'let go' [ie Holmes] assumed a lead role in the task, defining the methods to be used to complete the task ie no supporting structure to be used whilst worn plate being removed".[14] Recommendations were made that included that the task was only to be performed "using jacks or weld brackets (dogs) to control any unexpected movement involving gravity"; that high level training in hazard identification needed to be provided to supervisors; and that there needed to be a review of the supervisor appointment process. [15] Section 11 of the report concluded that there had been a failure to identify a major cracking in the original welds.[16]

[94]

[55] Presumably the first defendant appointed a competent person to carry out the investigation, one in whom the senior officers of the first defendant with statutory responsibility[17] for safety at the mine site had confidence. In summary his conclusions were that a hazard that should have been identified was not, that an alternative approach to that adopted would have avoided the hazard, that the supervisor responsible for identifying hazards involved in the task (Holmes) needed better training and that the first defendant needed to review its procedures for the appointing of supervisors responsible for identifying such hazards - in other words Holmes erred and was not trained adequately for the job and implicitly that the more senior person responsible for reviewing the JSEA (Heikinnen) had also erred.

[95]

[56] Assuming the facts identified in the report were correct and the analysis accurate how either defendant properly advised thought that they could avoid liability for the injury sustained by the plaintiff escapes me.

[96]

[57] No evidence is advanced by either defendant that they had any reason to doubt the accuracy of the report and its findings, or that their understanding of the material facts changed from the time of that report. The second defendant's pleading of factual matters, so far as it goes, is consistent with it.

[97]

[58] The principal matters advanced in the defence submissions are that the witness Holmes could not be found and an expert report was not provided by the plaintiff until much later.

[98]

[59] As to the expert report - the legislation does not require that expert reports be gathered before the conference: s 37(2)(b). There is good reason for that. They are expensive and while necessary to prove breach of duty when before a Court the opinions are not always necessary for experienced litigators to understand where liability will likely fall. The usual practise is to obtain expert reports before a conference only when there is a perceived need for one - the more obvious the liability then the less is the perceived need to expend monies, and often substantial sums, on experts.

[99]

[60] There is the further consideration here that the defendants are themselves employers in the field of work in question - it is they who should know what system of work was a reasonable one without being told by an expert engineer retained by the plaintiff. The task was a simple one - the gouging out of welds on an unsupported object weighing 150kgs. I can well understand the plaintiff not perceiving a need to obtain an expert report to convince these defendants of the unsafe aspects of the work system adopted and, given the report of the first defendant, who might be responsible for it. If they needed expert guidance then the defendants had the opportunity to obtain a report before the settlement conference and a duty to obtain that guidance themselves. It was not incumbent on the plaintiff to do it for them. No defendant has sworn that they needed an expert report to comprehend the nature of the task or the risks involved.

[100]

[61] Thus I cannot see that the plaintiff was under any obligation to obtain an expert report or can be criticised for obtaining one only when it became evident to him that no admission of liability would be forthcoming in what seems an entirely straightforward case. It is not irrelevant that two of the defendants felt it necessary to seek leave to withdraw admissions going to liability - in fact potentially determinative of liability - when the plaintiff attempted to set the matter down for trial in January 2014.

[101]

[62] In any case I am told that the report that the plaintiff obtained from an engineer, Mr McDougall, in December 2013 did not assert any fact contrary to that identified in the first defendant's own investigation that I have discussed above or contrary to the information contained in a statement supplied by Mr Heikkinen to the first defendant a week or so before the compulsory conference at which the MFO was made.[18] Mr McDougall's opinions were consistent with the first defendant's investigator's views as to both cause and remedy.

[102]

[63] The first defendant's solicitor says that the statement of Mr Heikkinen was made available only the day before the conference.[19] In other words the first defendant's position is that it did not obtain a comprehensive statement from Mr Heikkinen, the person in their employ having responsibility for the work in question, until 15 April 2013 (the date the statement bears) which was nine days before the agreed conference date and then failed to supply that statement to their solicitors until the last moment. No explanation is proffered as to why the statement was obtained so late or provided to the solicitors so late. The inference is that prima facie the first defendant made no effort to comply with its obligations under the PIPA. Even so, the solicitors had that statement, and presumably access to an experienced employee, at the time of the conference and thereafter. No argument is mounted that the statement in some way changed the solicitor's understanding of the case or gave them cause to think that they were likely to avoid liability to the plaintiff. Indeed it is not suggested that it altered their view on liability at all.

[103]

[64] Mr McDougall's report was supplied 11 days after his engagement. The plaintiff initially gave notice of his claim to the defendants on 22 October 2010. A Part 2 Notice under the PIPA was delivered on 1 March 2011. If the defendants needed an expert report to comprehend the liability issues then they had years in which to obtain one. One could have been obtained long before the conference in April 2013. There is no reason to think that one was needed.

[104]

[65] The first defendant's solicitor swears that further investigation was carried out after the receipt of Mr McDougall's report.[20] She spoke with Mr Heikkinen and the first defendant's plant and engineering manager. What the first defendant's evidence and submissions do not address is what was new in Mr McDougall's report that prompted the enquiries or what those enquiries were and why they could not and should not have been made in the light of the first defendant's knowledge as at 24 April 2013.

[105]

[67] The issue is whether the witness, Holmes, could and should have been located prior to the conference in April 2013 or perhaps the expiration of the offer on 10 May 2013.

[106]

[68] Holmes' street address appears in the first defendants' investigative report, discussed above. The plaintiff's solicitor advises that on 2 June 2014 he contacted Holmes by telephone and was advised by Holmes that he had resided at that address since the time of the accident. The plaintiff's solicitor was minded to make that enquiry only after material was filed by the defendants on the costs argument asserting that they had had difficulty locating Holmes. It took the plaintiff's solicitor a matter of days at most to find and to speak with Holmes.

[107]

[69] The first defendant first instructed solicitors on 17 April 2013 - a week before the compulsory conference. If the argument is that the presence of three defendants introduced a complexity that required expert legal analysis then this late retainer is stark evidence of a complete disregard for the obligations imposed by the PIPA.

[108]

[70] I am told that prior to that appointment the first defendant had engaged a Drew Takken from the "LKA Group" to interview witnesses. I am not told of his expertise but he is described as an "external investigator".[21] I am not told when the LKA Group were engaged or what steps they took to locate and interview witnesses, prepare reports or otherwise advise on liability issues. All that I am told is that Mr Takken had attempted to, but was not able to, locate Holmes by the time of the expiry of the MFO. Indeed Ms Long's affidavit is deliberately obscure: "Mr Takken found it difficult to make contact with him in 2013 and prior to the expiry of the plaintiff's mandatory final offer".[22] The evidence is as consistent with the first attempt being made after 24 April 2013 as any other date in 2013. I can only assume that full disclosure of relevant facts, such as the date of instruction and of the efforts actually made, would not assist the first defendant.

[109]

[71] I note that the third defendant had instructed investigators on 9 March 2012 and those investigators obtained a statement from Holmes on 31 March 2012.[23] It records his address as in the first defendant's investigative report. There is no report of any difficulty locating him. A comprehensive statement was obtained from him at that time. He observed that the plaintiff had complied with the system of work in place. He asserted that the correct system was adopted - a statement at odds with the independent analysis of the first defendants' investigator.

[110]

[72] That report was obviously given to the other defendants (as the second defendant produces it) but I am not told when. No complaint is made that it was not made available prior to the compulsory conference.

[111]

[73] The efforts made by the second defendant to prepare for the compulsory conference are quite obscure. No affidavit has been filed from that party on this issue of indemnity costs and on whether the second defendant acted prudently or reasonably in not accepting the offer. I do not know when the solicitors were retained, what preparation they did for the conference, or what preparation their client undertook independently. What is known is that Holmes asserts that he reported the event to the appropriate officer of the second defendant, one Fredrickson, an investigation was carried out by Fredrickson on the day of the incident,[24] that he gathered relevant documents, that an investigator employed by the third defendant heard Mr Smith instruct the second defendant's workplace health and safety officer not to co-operate with that investigator and not to supply any documents,[25] and that if an incident report exists, as Holmes asserts, then it has not been produced. Presumably again full disclosure would not assist the second defendant's arguments.

[112]

[74] So far as there is evidence from the second defendant it comes from that side's material filed in response to the plaintiff's application to set the matter for trial. That shows that the first attempt that the second defendant's solicitors made to contact Holmes appears to have been on 14 August 2012 - nearly two years after the claim was initially made - when a telephone call was made to an unidentified mobile number that did not, by then, belong to Holmes. On 5 December 2012 again a call was made to a mobile number and this time a land line, both unidentified, but said to be "on file for Mr Holmes". The mobile number was again (or still) not assigned to Mr Holmes but the person spoken to informed the caller that Mr Holmes worked for DHG Engineering. No effort was made to contact that company or firm until, on 3 April 2013, a graduate lawyer spoke with an employee there who advised that Mr Holmes no longer worked there and he had no contact details. On 4 April 2013 an electoral roll search revealed that Mr Holmes still lived at the address noted on file.[26] It is said that Mr Holmes did not respond to the solicitor's efforts to contact him. So far as the evidence shows it is not apparent why Mr Holmes would necessarily know that the solicitors wanted to speak with him. Perhaps messages were left on an answering machine but that is not said. No attempt was made apparently to retain an investigator to locate Holmes or visit his address. Whether further efforts should have been made depends on how important Mr Holmes was to the proper understanding of the case. No effort was made to contact him in the three weeks leading up to the conference or in the two weeks that the MFO was open.

[113]

[75] The next attempt, apparently, made was in February 2014 and after the plaintiff applied to set the matter down for trial.[27] That attempt too was unsuccessful. Whether Holmes was ever found is not disclosed. While not particularly relevant to the present issue the long delay reflects on just how critical the knowledge that Mr Holmes might shed on the liability issue was seen at the time. I note that even then the efforts were ineffectual and even desultory. That solicitor reports she was unable to contact Holmes but her efforts were restricted to telephoning on four occasions over 4 and 5 February 2014 (including a mobile number, presumably the number that had failed twice before). She reports that on one occasion she was greeted by an answering machine which presumably confirmed that she was indeed ringing Mr Holmes' number. Apparently no further efforts were made.

[114]

[76] The first defendant's solicitor swears that her belief was, as at 10 May 2013, that Holmes was a critical witness.[28] If that was evident to her then presumably it would be evident to any competent person managing the investigation for the first defendant up and until her firm was retained, and to the second defendant. If Holmes was so critical then it was incumbent on the defendants to make diligent efforts to locate Holmes before certifying that it was ready for the compulsory conference: s 37(2)(a), (b) and (d) PIPA. Either he was not critical or the first defendant was completely careless of its obligations under the PIPA.

[115]

[77] While the second defendant appears to have made greater efforts to locate Holmes than the first defendant they were hardly exhaustive. Four phone calls, two to a mobile number that was no longer his and known not to be his after the first call, and an electoral roll search that seems not to have led to any activity, are, with respect, merely the start not the finish of reasonable efforts. Ignoring advice as to his present workplace for several months is the antithesis of a diligent attempt to locate him.

[116]

[78] Only the third defendant appears to have taken what I consider to be the appropriate course of retaining a competent investigator at an early stage after the claim was made who located and visited the witness - within a few weeks - and obtained a detailed statement. All the evidence suggests strongly that with reasonable diligence Holmes could easily have been located and spoken to in good time before the conference in April 2013.

[117]

[79] I observe however that whether speaking with Holmes was as critical as is now asserted is far from established. While I can well understand those representing the first and second defendants wishing to speak with Holmes it is not shown why he was considered indispensable. What question he was to address that remained obscure is nowhere explained. He had given a detailed statement. It was known from his statement that he effectively exonerated the plaintiff from any responsibility for the accident. It was known that he had signed the JSEA as the participating supervisor. A presumably competent investigator had identified the weakness in that system. Holmes' view as to how reasonable was his system of work was unlikely to carry much weight - if that was to be the argument then more expert opinion than his would be needed and it was never sought.

[118]

[80] The real issue seems to have been how liability was to be apportioned between the defendants. The second defendant argues that the 14 day period following the making of the MFO was insufficient time for the defendant to work out the question of an appropriate apportionment. But that assumes that consideration of the question of apportionment properly began on the day the offer was made. That approach ignores the obligations that the defendants had to fully prepare for the compulsory conference.

[119]

[81] The strong impression that I have is that the defendants had not prepared properly for the compulsory conference, if indeed they had prepared at all, as was their duty. If they had so prepared I have great difficulty seeing how they could not have had a clear view of the facts and the probable outcome.

[120]

[82] That the defendants had not been able to sort out who bore responsibility for the injury and its consequences is no reason to deny the plaintiff the protection of an order for costs assessed on the indemnity basis.

[121]

[83] The issue confronting the defendants was whether the offer of $700,000 was a reasonable estimate of the plaintiff's likely award. No defendant has advanced any submission as to what was a reasonable estimate based on the knowledge that they then had. Quite evidently the plaintiff thought the evidence available at the time of the conference in April 2013 supported his claims given his MFO.

[122]

[84] The principal issue in the assessment of damages was the extent to which the obvious impairment to the plaintiff's earning capacity would be likely to be productive of the financial loss. Ms Long on behalf of the first defendant asserts that the assessment of this component was "uncertain". That is true of virtually every personal injury case where there has been an impairment to earning capacity. Obviously the legislature expects parties to make reasonable estimates despite the usual and inevitable uncertainty. Experienced litigators do that every working day.

[123]

[85] In my judgement I held that approximately $730,000 of a total award of about $865,000 related to past and future economic loss and related heads. For present purposes that, prima facie, was a reasonable estimate of the loss. Approximately $135,000 I apportioned to non economic heads of loss. I do not understand the defendants to argue that anything new emerged in relation to those various heads of loss.

[124]

[86] The issue then was whether the defendants ought reasonably to have anticipated that an award of about $565,000 would be likely in relation to economic loss.

[125]

[87] The medical evidence seems reasonably straight forward and generally consistent. It indicated that the plaintiff could not do the full range of duties of a boilermaker. He was plainly not fit to work in the field. He had significant restrictions in working in a workshop eg difficulty on ladders or uneven floors. He plainly had a residual capacity. The defendants were in a particularly good position to judge his employability in their industry. Not only was no lay evidence led to counter the plaintiff's case but a director of the second defendant, Mr Smith, gave evidence that he would not employ someone with the plaintiff's disabilities. There is no good reason to assume that Mr Smith's views were idiosyncratic.

[126]

[88] The plaintiff had averaged about $1,600 per week net in the two years before his accident. He had averaged $1,700 net per week in his last period of employment before that in which he sustained his injury. There was no evidence led that he was not well regarded and competent. The defendants do not assert that they had any reason to think otherwise. By the time of the PIPA conference the plaintiff had lost his well paid employment as a supervisor in more sedentary employment two months before, employment that he had held for about 12 months, and was unemployed. His evidence was that he struggled to maintain that employment because of his injuries and consequent disabilities and pain.

[127]

[89] The assessment of past economic loss should not have presented much difficulty. As at 24 April 2013 I would estimate that an award of $130,000 for income forgone, superannuation and interest would have seemed appropriate. That is simply to apply the average pre-accident earnings over the intervening period with an allowance for actual earnings, some discounting for the downturn, interest and superannuation at about 9%.

[128]

[90] Was $435,000 then a reasonable figure to adopt for future economic loss? The plaintiff was aged only 26 years when injured - 29 at the conference. $435,000 equates to a net weekly loss to age 65 years (allowing 11% for superannuation) of about $455. $455 represents a loss of 27-28% of the plaintiff's earning capacity. Given Mr Smith's evidence I have some difficulty seeing why the offer did not appear well within the boundaries of the likely award. No evidence was led at trial or on this application that any different view was entertained by the defendants at the time of the conference. It is notorious that for men like the plaintiff who rely on their physical skills to earn a living there is a very sharp drop in income if they are unable to maintain employment in the mining industry.

[129]

[91] I note that at trial my own assessment was higher. I allowed a loss of $650 per week to age 65 discounted for contingencies by 20% - equal to about $520 net per week lost.

[130]

[92] The defendants assert that material was received from the plaintiff after the conference and before trial. What the defendants' affidavits and submissions do not address is how that material made any significant difference to their view of this crucial aspect of the case and the probable award.

[131]

[93] Particular arguments were raised by the second defendant. I will deal with each in turn.

[132]

[94] Given the detailed claims and responses required by the PIPA provisions and the investigations that should have taken place there is no scope here for a defendant to complain, as the second defendant does, that the plaintiff did not analyse his offer so as to render it explicable to them. The legislation assumes that each side understands the position of the other. Where what is in issue is a relatively straight forward damages claim the onus is very much on the defendant to explain why it is that they did not fully comprehend the offer made, if that is indeed the case, and its potential effect. No one has sworn that there was any confusion here. The heads of loss are typical of such claims.

[133]

[95] Complaint is made that the plaintiff did not advance the wages of a comparable employee until well into the litigation - but the complaint comes from those who themselves employed boilermakers in the industry in question. Mr Smith gave evidence that he employed dozens of such men. The defendants do not lead evidence or submit that they were not fully aware of the wages available in the industry at all times.

[134]

[96] There was a complaint of relatively late disclosure of a large sheaf of documents that represented the plaintiff's unsuccessful efforts to obtain employment. I do not understand what difference this made to the defendants' understanding of the assessment of damages. I am not told of the dates of the various applications but the plaintiff had been in employment until the previous February so presumably many of those applications were made after the compulsory conference and so could not have been disclosed. That the plaintiff made "dozens and dozens" of unsuccessful applications for employment[29] only confirmed what Mr Smith already knew or had good reason to suspect - that the plaintiff would struggle to find work in the industry.

[135]

[97] In my view it was imprudent and unreasonable of the defendants to not accept the plaintiff's MFO.

[136]

[98] On 16 January 2014 the plaintiff filed an application with the principal aim of having the matter set down for trial in February. The orders sought included various directions and the application runs to three pages.

[137]

[99] The plaintiff was not successful in obtaining all of the orders sought. He seeks that his costs be paid on the indemnity basis.

[138]

[100] The defendants contend that given the eventual outcome there should be no order as to costs.

[139]

[101] The reasons against awarding costs on the indemnity basis include:

[140]

(a) The Request for Trial date form was served along with the expert engineers' report. While there is no reason to think that there was anything new in the report nonetheless the defendants had the right to have a reasonable period of time to consider it before being compelled to address the Request. The report was supplied only eight days before the Christmas break;

[141]

(b) The first defendant responded within seven days seeking time to address the report - that was not unreasonable;

[142]

(c) The trial dates nominated in the Request were in the two weeks commencing 28 April. The application sought a trial in the week commencing 17 February. There was no prior notice of the change. The bringing on of the trial at such very short notice was not justified by any contingency. The defendants were successful in resisting this aspect of the application.

[143]

(d) Other orders sought were machinery orders, not usually contested and which were uncontroversial - directions about expert evidence and telephone evidence. There had been no prior request that the defendants agree to the orders. There was no demonstrated need for any application;

[144]

(e) The application itself only sought a costs order on the standard basis.

[145]

[102] The matter that justifies a costs order against the defendants is that the plaintiff was successful in the significant point of the application - the dispensing with the signatures of the defendants on the request for trial. The plaintiff contended then that the matter was ready for trial, or would have been if the defendants had bothered to prepare themselves in a timely way.

[146]

[103] The plaintiff argued that liability had effectively been conceded by two of the defendants on the pleadings or by way of a failure to respond to a Notice to Admit Facts. The defendants subsequently sought leave to withdraw those admissions. The plaintiff argued that the engineer's report, while recently delivered, was uncontroversial. I agree.

[147]

[104] I reserved costs principally to allow myself to have a better view of the overall significance of the engineer's report which I assumed would become apparent after a trial. I have discussed my view of it above. The plaintiff was right - the matter in reality was or should have been ready for trial on all issues by January 2014. The picture that I now have is that the defendants had done little to get themselves ready for trial. The significant matter was not whether they were liable to the plaintiff but how they could apportion blame among themselves.

[148]

[105] The defendants argue that the litigation was still at an early stage - only seven months after the filing of the Claim. I reject this submission. As discussed above, by the completion of the PIPA process the matter is supposed to be substantially ready for trial. In truth the plaintiff had been pursuing his claim against the defendants for over three years as at December 2013. There had been ample time to prepare long before January 2014.

[149]

[106] The only significant outstanding matter that would seem to need addressing in the standard case after a compulsory conference is the obtaining of non medical expert reports. So far as the defendants are prepared to reveal they have not at any stage obtained such a report and have not sought to identify why they might have needed to. The engineer's report told them nothing new.

[150]

[107] In my view there was plainly a need to bring the application, the plaintiff was successful in prompting the defendants into action and he should have his costs, but that no good reason is shown as to why those costs should be on the indemnity basis and some reason why they should not.

[151]

[108] The plaintiff and the third defendant (WorkCover Queensland) are agreed. The third defendant should pay the plaintiff's costs on the standard basis from the date the plaintiff made an offer to settle in the sum of $750,000 - a mandatory final offer made pursuant to s 292 of the Workers' Compensation and Rehabilitation Act 2003 (Qld) ("the Act"). The eventual judgment was more than that amount. Section 316(1) and 316(2)(a) of the Act mandates the result.

[152]

[109] As to the reserved costs s 318C of the Act proscribes the awarding of costs in an interlocutory application, unless certain conditions are met. The plaintiff does not contend those conditions are met and so no costs can be awarded.

[153]

[110] The first and second defendants have agreed with the third defendant on the appropriate indemnity it should receive relating to the plaintiff's costs.

[154]

[111] The defendants have not agreed on the appropriate orders.

[155]

[112] I agree with the draft proposed by the first defendant but varied to accord with these reasons. The indemnities proposed by the second defendant could only be ordered if there was agreement which plainly there is not. I have already given judgment to the plaintiff on his claim.

[156]

(a) The first and second defendants pay the plaintiff's costs of and incidental to the proceeding (excluding the costs reserved on 24 January 2014) on the indemnity basis to be agreed or assessed, in the proportions of 35% and 65% respectively;

[157]

(b) The first and second defendants pay the plaintiff's costs of and incidental to the plaintiff's application filed on 16 January 2014;

[158]

(c) The third defendant pay the plaintiff's costs of the proceedings from 24 April 2013 (excluding the costs reserved on 24 January 2014) to be agreed or assessed;

[159]

(d) The first and second defendants indemnify the third defendant in respect of the costs payable by it to the plaintiff, in the proportions of 35% and 65% respectively.

[160]

[1] Pollock v Thiess Pty Ltd & Ors (No 2) [2014] QSC 95

[161]

[2] Westpac Banking Corporation v Commissioner of State Revenue [2004] QSC 19 at [33]

[162]

[3] Blatch v Archer [1774] EngR 2; (1774) 1 Cowp 63 at 65

[163]

[4] [2000] VSC 163 [67] and [126]

[164]

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

[165]

[6] The trial was commenced on 5 May and agreement reached as to the third defendant's contribution on 2 May (second defendant) and 5 May (first defendant), the third defendant having made an offer to each on 22 April - affidavit of Scott Andrew Macoun sworn 30 May 2014 paras 3 - 5. See also the transcript of the first day's proceedings.

[166]

[7] Para 6 of the Amended Defence of the Second Defendant

[167]

[8] Para 8 b of the Amended Defence of the Second Defendant

[168]

[9] Para 8 d of the Amended Defence of the Second Defendant

[169]

[10] See Ex RJS2 to the affidavit of Mr Suthers filed 10 June 2014

[170]

[12] According to a statement by Heikkinen dated 15 April 2013 the JSEA was completed by Holmes as the "participating supervisor" - see Ex RJS1 at p 7 para 59. The JSEA is attached to the report at Attachment "H" - Ex RSJ2 at p27

[171]

[13] Ex RJS2 to the affidavit of Mr Suthers filed 10 June 2014 at p4/10

[172]

[17] Coal Mine Safety and Health Act 1999 s 41

[173]

[18] Affidavit of Mr Suthers filed 10 June 2014 at para 13

[174]

[19] Affidavit of Ms Long filed 11 June 2014 para 5

[175]

[20] Affidavit of Ms Long filed 10 June 2014 para 7

[176]

[21] Affidavit of Ms Long filed 11 June 2014 para 4

[177]

[22] Affidavit of Ms Long filed 2 June 2014 para 9

[178]

[23] Affidavit Emma Jane Hardy filed 21 February 2014 - see exhibit EJH-1

[179]

[24] Para 21 of Holmes' statement exhibited to the affidavit Emma Jane Hardy filed 21 February 2014 - see exhibit EJH-1 at p8

[180]

[25] Affidavit Emma Jane Hardy filed 21 February 2014 - see exhibit EJH-1 at p2

[181]

[26] Affidavit of Shelley Nicole Clark filed 21 February 2014 para 4

[182]

[27] Affidavit Emma Jane Hardy filed 21 February 2014 para 2 - I say "apparently" as I have not been given comprehensive submissions or affidavit detailing matters but am endeavouring to piece together snippets of information to determine what has occurred.

[183]

[28] Affidavit of Ms Long filed 2 June 2014 para 9

(1993) 46 FCR 225

At a glance

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Judgment (183 paragraphs)

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Legislation Cited (4)

Cases Cited (2)