WorkCover Queensland v Asbestos Injuries Compensation Fund Ltd

Consideration

A summary of the three categories identified in Re Buckton is given in Warton v Yeo [2015] NSWCA 115 at [78]: In the first, the applicants are trustees of a will who ask the court to construe the will for their guidance, in order to ascertain the interests of the beneficiaries. In the second class, the application is made not by the trustees (who are respondents) but by some of the beneficiaries because, for whatever reason, that course has been deemed more convenient. In the third class of case, the application is made by a beneficiary who makes a claim adverse to other beneficiaries, and as such, the proceedings are properly characterised as adversary litigation. In the first two classes of case, the costs of all parties are borne by the estate; in the third class, the costs are borne by the parties themselves.
Three points may be made at the outset. First, the current proceedings do not strictly fall within categories 1 or 2, because WorkCover Queensland is not a "beneficiary".
Secondly, it is also quite clear that the categories are not exhaustive. L Tucker et al, Lewin on Trusts (Sweet & Maxwell, 2020, 20th ed) identify at [48-039]-[48-040] a fourth and a fifth category.
Thirdly, it is very clear that costs are discretionary and there are no hard and fast rules of universal application. That point was made by Kekewich J in Re Buckton itself. Despite his Lordship's endeavour to provide clear guidance, he noted at 413-414 that "costs are so largely in the discretion of the judge that it is more difficult to secure uniformity in that department than in any other, and it is well nigh impossible to lay down any general rules which can be depended on to meet the ever varying circumstances of particular cases". It has been reiterated in subsequent decisions. In McDonald v Horn [1995] 1 All ER 961 at 970-971, Hoffmann LJ said: [in] proceedings brought by trustees to have the guidance of the court as to the construction of the trust instrument or some question arising in the course of administration … the costs of all parties are usually treated as necessarily incurred for the benefit of the estate and ordered to be paid out of the fund.
In this Court, the same point was made in BE Australia WD Pty Ltd (Subject to a Deed of Company Arrangement) v Sutton (2011) 82 NSWLR 336; [2011] NSWCA 414 at [213] ("where the costs should fall in litigation is always a matter of discretion"). However, Campbell JA also observed in the same paragraph that "very commonly costs are paid from the fund for non-adversarial proceedings, and by the loser for adversarial proceedings".
In short, the "rule" that WorkCover Queensland invokes is the opposite of a strict legal entitlement. Instead, like most procedural "rules", it is a common or usual practice, from which a Court may in appropriate cases depart.
Both the trustee and WorkCover Queensland exchanged submissions directed to the third category in Re Buckton. WorkCover Queensland asserted that it was not acting "adversarially", and the trustee asserted that WorkCover Queensland was acting "adversarially". Neither party developed its assertion, save that WorkCover Queensland pointed to [28] of this Court's decision. But all that was said there was that: It is not necessary to express views on all aspects of WorkCover Queensland's entitlements under statute, and in point of principle, it would be inappropriate in proceedings in a New South Wales court for judicial advice, in which no party claimed he or it was acting adversarially, for questions of the construction of the Queensland statute to be determined unnecessarily.
As the trustee points out, that is not a finding that WorkCover Queensland was not acting adversarially. It is merely a description of what was claimed.
The litigation may fairly be described in a variety of ways. From the perspective of the trustee, the advice in substance turned on the construction of a complex regime for the payment of certain asbestos liabilities, with no facts in issue. On the other hand, WorkCover Queensland's involvement in the litigation was directed to ensuring that the trustee was entitled and obliged to make payments to natural persons who had received payments from or were entitled to receive payments from WorkCover Queensland, in respect of which it would enjoy rights of contribution or recovery.
It is far from clear that the resolution of what is left of the controversy between these two parties is resolved by forming an impressionistic view of whether the litigation answered the description of "adversarial" or "non-adversarial". It is also far from clear that "adversarial" in the sense used by Kekewich J is well-defined, or bears the same meaning in the 21st century.
It is to be steadily borne in mind that it is common ground that WorkCover Queensland's costs will be paid by the trustee. The only question is whether those costs are to be quantified on the standard or on the indemnity basis. As put in Lewin on Trusts (Sweet & Maxwell, 2020, 20th ed) at [48-041], there is no inflexible rule: "In cases within Buckton categories (1) and (2), beneficiaries' costs will, as indicated above, normally be ordered to be paid out of the trust, fund, whatever the outcome, and such costs are often, perhaps usually, assessed on the indemnity basis".
In short, the Re Buckton classification is not of especially great assistance to resolve the present dispute, which has a number of unusual features. Accordingly, we return to first principles.
First, the question is one of substance not form. There were three separate proceedings in the Equity Division and in this Court. That was in part a consequence of the urgency in which the litigation was brought, and in part because of WorkCover Queensland's decision originally to commence in the Supreme Court of Queensland. But all proceedings were heard together and determined in the same reasons for judgment. We do not consider that the exercise of the discretion as to costs as between the trustee and WorkCover Queensland should be any different than if there was a single proceeding brought by the trustee to which WorkCover Queensland was joined.
Secondly, it is relevant to have regard to the way the litigation was prosecuted. In this Court, WorkCover Queensland sought to "supplement" the submissions of Messrs Coveney and Davis both in chief (written submissions para 8) and in reply (written submissions para 1). It adopted the written and oral submissions of Messrs Coveney and Davis. It addressed third, after senior counsel for each of Messrs Coveney and Davis had addressed. The same occurred at first instance. Senior counsel who then appeared for WorkCover Queensland addressed last, and his oral submissions occupied slightly more than 1 page of transcript (transcript, 30 July 2024, pages 57.6 - 58.24). We are not to be taken as suggesting that WorkCover Queensland was not properly joined as a party, or was not entitled to bring its own appeal. Nor are we to be taken to be suggesting that it was not entitled to be represented separately. Still less are we to be understood as suggesting or implying that what was said in writing and orally on behalf of WorkCover Queensland was other than of assistance.
However, the fact that WorkCover Queensland properly incurred costs in litigation to which it was properly joined and provided real assistance to the Court does not mean that a third set of costs assessed on the indemnity basis should be borne by the trust fund. It cannot be the case that an endless number of beneficiaries, together with persons with a commercial interest who are not beneficiaries, should expect to participate in this litigation, separately represented, with their costs being borne by the trust fund on an indemnity basis. By way of analogy, an unsuccessful party in ordinary inter partes litigation not involving a trust may be ordered to pay only one set of the successful parties' costs, even where there are multiple parties all of whom were entitled to separate representation: see Local Democracy Matters Incorporated v Infrastructure NSW (No 2) [2019] NSWCA 118 at [20]-[23], affirming what had been said in HP Mercantile Pty Ltd v Hartnett [2017] NSWCA 79 at [14]: the ultimate question is not (as the respondents submit) whether they have acted reasonably, nor whether there has shown to be duplication. The question is whether it is reasonable for the unsuccessful litigant to bear more than one set of costs.
As Kekewich J himself pointed out when outlining the second class of trust litigation, the fundamental question is not the identity of the parties, but whether "[t]he application is necessary for the administration of the trust, and the costs of all parties are necessarily incurred for the benefit of the estate regarded as a whole": Re Buckton at 415. It is difficult to see how the additional costs of WorkCover Queensland, which retained its own lawyers and two counsel at first instance, and three counsel in this Court, were "necessarily" incurred for the benefit of the trust as a whole.
We also have regard to the fact that WorkCover Queensland, although having a direct financial interest in the operation of the trust, was not a beneficiary. That is a clear distinction between WorkCover Queensland and each of Messrs Coveney and Davis, which favours a departure from the special principles applicable to the exercise of the discretion as to costs in litigation as between trustees and beneficiaries.
Finally, in Pohlner v Pfeiffer, which was a case on the construction of a will, Menzies J (with whom all other members of the Court agreed, albeit in the case of Windeyer J with reservations) considered at 71 the "ordinary rule" that costs should be paid out of the residuary estate. Nothing in that decision supports WorkCover Queensland's application for indemnity costs.
In all the circumstances, we consider that the appropriate order is that proposed by the trustee: namely, that it pay WorkCover Queensland's costs on the ordinary basis.
Finally, the costs incurred in relation to the outstanding issue of costs are severable from the balance of the costs. We do not consider that the trustee should have to pay WorkCover Queensland's costs of its unsuccessful application to obtain costs on an indemnity basis.
For those reasons, we make the following orders: 1. The First Respondent is advised that it is justified in paying the whole of the liability of Amaca Pty Limited in respect of judgments obtained in the Dust Diseases Tribunal of New South Wales, including the liability under and in connection with those judgments to pay pre and post judgment interest and costs, by: (a) Eric Thomas Coveney on 21 February 2024 in proceeding no. 2023/255894 in the Dust Diseases Tribunal of New South Wales; and (b) Barry Edward Davis on 22 February 2024 in proceeding no. 2023/232314 in the Dust Diseases Tribunal of New South Wales. 2. The First Respondent pay the costs of the Appellant, WorkCover Queensland, of the following proceedings: (a) In the Equity Division of the Supreme Court of New South Wales (Case No. 2024/00121682); and (b) In the Court of Appeal of the Supreme Court of New South Wales (Case No. 2024/00372881) to be assessed on a standard basis, excluding WorkCover Queensland's costs of its application for indemnity costs. 3. There be no order as to costs in respect of the Second Respondent and the Third Respondent.

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Cases Cited (9)