(re Smith, Daly, Allars, Bennett, Lewis, Payne, Derepas and Pajkovic) State... [2012] NSWCA 154 | Case summary

(1) provisional damages claim; (2) final damages claim

The Dust Diseases Tribunal Regulation 2013 makes some provision for costs following determination of a cross-claim by the Tribunal where there has been a contributions assessment determination (CAD). There are two clauses as follows: Clause 56 1. An agreement or determination as to apportionment among defendants for the purposes of this Division is conclusively binding on the defendants for the purposes of the settlement, or determination by the Tribunal, of the plaintiff's claim and payment of the plaintiff's damages. 2. The agreement or determination is not binding for the purposes of the subsequent taking, or determination by the Tribunal, of a dispute between defendants as to apportionment in a separate proceeding. 3. If a defendant disputes the contribution that the defendant is liable to make to damages recovered by the plaintiff and the judgment of the Tribunal in the dispute does not result in the defendant materially improving the defendant's position, the defendant is liable to pay the costs of each other party to the dispute occasioned by the dispute, assessed on an indemnity basis. 4. Even if the Tribunal's judgment does not result in the defendant materially improving the defendant's position, the defendant is not liable to pay costs under subclause (3) if: 1. the Tribunal determines that the defendant is not liable on the claim, and 2. the ground on which the Tribunal makes that determination is a ground on which the defendant disputed liability on the claim and of which the defendant provided evidence in the defendant's reply to the claim, and 3. the Tribunal determines that the ground was the principal or only ground on which the defendant disputed liability on the claim. 1. To the extent of any inconsistency between this clause and Part 6 (Offers of compromise), this clause prevails. 2. For the purposes of this clause, the defendant is considered to materially improve the defendant's position only if the Tribunal's determination of the dispute results in a reduction of the defendant's contribution of at least 10% of the amount of the defendant's agreed or determined contribution or $20,000, whichever is the greater. Clause 57 If the reply of a defendant (the innocent defendant) to a claim or cross-claim disputes liability on a ground that the innocent defendant's reply provides evidence of, any other defendant who disputes that ground is liable to pay the innocent defendant's costs, assessed on an indemnity basis, occasioned by the dispute if: 1. subsequently that ground is established in the proceedings by the evidence provided in the reply or admitted for the purpose of the proceedings by the disputing defendant, and 2. the Tribunal determines on that ground that the innocent defendant is not liable on the claim or cross-claim, and 3. the Tribunal determines that the ground was the principal or only ground on which the innocent defendant disputed liability on the claim.
Clause 57 is not applicable.
The principal provision is cl 56(3). It provides for the payment of costs in the case where "the judgment of the Tribunal in the dispute does not result in the defendant materially improving the defendant's position".
Clause 56(4) provides an exception to the application of cl 56(3) and is not applicable here.
The question then is whether cl 56(3) applies.
Both Amaca and CSR are defendants for the purposes of the clause (cl 51(1)). Both Amaca and CSR disputed the contributions they were liable to make to the damages recovered by each of the underlying plaintiffs with one exception. That exception was in the Derepas matter where there was no CAD involving CSR. For cl 56(3) to apply, there must be a case where Amaca and/or CSR did not materially improve its position with the result in the Tribunal compared to the CAD.
The submissions of Amaca and CSR make some concessions as to which were the cases where those parties did not materially improve their position.
Amaca concedes it did not materially improve its position in Lewis, Pajkovic and Payne. No one submits that there is any other case in which Amaca did not materially improve its position.
CSR concedes it did not materially improve its position in Allars, Bennett, Daly, Lewis and Pajkovic. In addition to these matters, Amaca submits that CSR did not materially improve its position in Payne. Amaca's submission is correct. In Payne, the percentage contribution attributed to CSR by the CAD was 18.915%. I found 14%. The respective figures are $29,773.44 and $20,939.38. That is a reduction of "at least ten percent", but it is not a reduction of $20,000 and it has to be a reduction of the greater to be a material improvement (cl 56(6)).
The cases in respect of which indemnity costs orders are appropriate are thus identified.
In Lewis, Pajkovic and Payne, where neither Amaca nor CSR materially improved their position, Amaca submits that it should be ordered to pay the costs on an indemnity basis of both the State and CSR and CSR should be ordered to pay the costs on an indemnity basis of both Amaca and the State. This result is said to follow from the wording of cl 56(3).
Amaca and CSR are both defendants within the meaning of cl 56. They both disputed the contribution they were liable to make. They both failed to materially improve their position. Therefore, "the defendant" (that is the disputing defendant) is liable to pay indemnity costs of "each other party to the dispute occasioned by the dispute". Amaca submits that each other party is the State and CSR where Amaca is the disputing defendant and the State and Amaca where CSR is the disputing defendant.
The interpretation of cl 56(3) is troublesome and I am not entirely convinced that the view I have come to is correct, but I think Amaca's submission is not correct. This is for these reasons: 1. Under clause 56(2), the CAD is not binding for the purposes of the subsequent determination by the Tribunal "of a dispute between defendants as to apportionment in a separate proceeding". It is true that a reference to a defendant includes a reference to a cross-defendant (cl 51(1)). That does not tell us, however, that in respect of all defendants and cross-defendants in proceedings there is a dispute "between defendants". It is not unknown, as in these cases, for a defendant to add a cross-defendant or even a cross-defendant to add further cross-defendants. Some of these parties may have no relationship to the cross-claimant at all. An obvious example might be a party added by a cross-defendant adding yet another party being an insurer. The point is simply that just because there are several parties to a claim, all of whom might be described as a "defendant" within the meaning of the clause, that does not mean that every issue involves a dispute between all of them. That is the case here. In reality, the only dispute between Amaca and CSR was one under their partnership agreement and the State had no interest in that at all. The "dispute between defendants" in these cases was a dispute between the State and Amaca as to Amaca's hypothetical liability to the underlying plaintiffs and as to apportionment between them and a dispute between Amaca and CSR as to their rights and obligations between themselves. 2. Clause 56(3) then uses the word "dispute" as a noun three times. It does so with the use of the definite article. It seems to me that must be a reference to the dispute referred to earlier in cl 56 and that is in cl 56(2). Accordingly, the dispute in cl 56(3) is the dispute joined between the parties. 3. That is fortified in this case by the fact that no order was sought against CSR by either the State or Amaca in respect of any separate liability to any of the underlying plaintiffs for the supply of its products used at the Dockyard. CSR's liability was merely contractual and was to Amaca. Any variation in its contribution was merely consequential on a variation in Amaca's contribution. It was tied 50/50 with Amaca in contribution to the State in respect of partnership product. It was the variation in Amaca's contribution that determined the State's entitlement. This distinction can be seen in [27], [38] and [40] of CSR v Wallaby Grip [2012] NSWCA 154.
I do not think CSR Limited v Wallaby Grip Limited cuts across this analysis. That was a case concerning what orders may be made in claims resolution proceedings as distinct from ordinary litigation. This distinction is made by Basten JA at [29] and following. These proceedings involve ordinary litigation.
It is appropriate, therefore, that I order Amaca to pay the State's costs on an indemnity basis in Lewis, Pajkovic and Payne. It is appropriate also that I order CSR to pay Amaca's costs on an indemnity basis in Allars, Bennett, Daly, Lewis, Pajkovic and Payne.
In the State's cases against Amaca, there remain the cases of Allars, Bennett, Daly, Derepas and Smith. Clause 56 does not deal with these cases, nor does any other provision of the Regulation. The power to award costs, accordingly, is to be found in the Civil Procedure Act 2005, s98. The normal rule is that costs will follow the event. There are well known exceptions. The debate here is centred on what the event was.
In my view, the event for the purpose of determining costs was the liability issue. Amaca in contesting the contributions assessment put the State in a position where in real terms it either had to surrender what it received under the CAD or it had to institute proceedings - CSR v Wallaby Grip [35]. To recover anything at all, the State had to sue. Amaca contested not just quantum, but also that the State was entitled to recover anything. That was an issue in respect of which the State enjoyed success.
Amaca used the Smith proceedings in argument to demonstrate why bettering the CAD should be the event. That case demonstrates why liability should be seen as the event. That was a case almost certainly where the State could look forward to success, but because of the state of the evidence, it could succeed only for a relatively small amount. The Contributions Assessor did not have the benefit of all the evidence and his assessment had to be made on set Standard Presumptions and his result had to be within a fairly narrow band. Neither the Standard Presumptions nor that band bound the Tribunal which had to determine the case on the whole of the evidence. When Amaca disputed the CAD, the State was in a position where if it wanted to recover any amount at all, it had to proceed with a cross-claim against Amaca. It was essential for it to incur costs to do so and Amaca must have been aware of that. Amaca made no effort to make any contribution or offer of any contribution to the State. It could have done so by, for example, an offer of compromise. In the result that would not have been inconsistent with cl 56 of the Regulation. The failure to make any attempt at contribution or offer of contribution meant the State was stuck on a path of pursuing litigation to enforce its right to contribution. Its liability was very much the event for the purpose of determining costs. A suitably made offer of compromise was capable of changing that event. Liability was not something merely ancillary to a contest on quantum. It was critical to the State recovering anything.
Amaca cannot really claim it succeeded on the event being the quantum issue. The only basis on which it can make that claim is if there is some yardstick on which the quantum issue can be judged. The only yardstick is the CAD. The only purpose of that yardstick is to see if Amaca did not materially improve its position. It does not operate as a yardstick where a defendant does materially improve its position. If Amaca wanted a yardstick for this purpose, it could have made an offer of compromise. This analysis means that Sze Tu v Lowe (No 2) [2015] NSWCA 91, in dealing with costs where a party is only partially successful, can have no application.
I do not consider what Basten JA said at [38] of CSR v Wallaby Grip is binding in the way submitted by Amaca. It was submitted that I am bound to accept that the event for this purpose is an improvement made on the CAD. What Basten JA said there needs to be seen in its context. It follows immediately after a reference to and a quoting of the precursor to cl 56(3) which was relevantly in the same terms. His Honour said "The relevant outcome in respect of costs depends on whether that defendant materially improves its position, by reference to the assessor's determination, which becomes the standard." In context, that is presumably a reference to what the clause provided and it provided a standard of "not result in the defendant materially improving the defendant's position". If that standard, that is defendant not materially improving position, is met, then the "relevant outcome" will be an order for indemnity costs against that defendant. If that standard is not met, that is defendant materially improves position, then the "relevant outcome" will be an order depending on the circumstances which will include consideration of offers of compromise, if any.
The State should have its costs against Amaca in the matters of Allars, Bennett, Daly, Derepas and Smith. The remaining matter as between the State and Amaca is the basis on which those costs should be assessed. The State seeks indemnity costs on the basis that it enjoyed resounding success, it is entitled to indemnity costs in respect of three of the cases and in reality this was really one piece of litigation. The submission certainly has the advantage of relative simplicity in the costs assessment process. I do not think I should accede to the submission especially in circumstances where the Regulation provides for indemnity costs, but not in this situation, and where the State could have availed itself of the facility of offers of compromise. In these cases, the State should have its costs on the ordinary basis.
I take the same approach to the cross-claims by Amaca against CSR. Amaca should have its costs on the indemnity basis in Allars, Bennett, Daley, Lewis, Pajkovic and Payne. It should have its costs on the ordinary basis in the matter of Smith.

(re Smith, Daly, Allars, Bennett, Lewis, Payne, Derepas and Pajkovic) State of New South Wales v Amaca Pty Limited; Amaca Pty Limited v CSR Limited

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Judgment (7 paragraphs)

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