Costs: mandatory offers under PIPA & WCRA in multiparty novel claim

Kerle v BM Alliance Coal Operations Pty Ltd & Ors (No 2) [2017] QSC 7

McMeekin J

I refer to the previous post, the plaintiff was successful in his claim for damages arising from a motor vehicle accident during the commute from his workplace caused by fatigue from work. In issue was:

  1. Whether the plaintiff’s costs should be on an indemnity or standard basis;
  2. Whether the defendants should pay costs in proportions as found in the liability decision or equally; and
  3. Whether certification for senior and junior counsel should extend to the whole matter or limited to the trial.

Costs order – Indemnity or standard basis

As to whether costs should be assessed on an indemnity or standard basis, McMeekin J reasoned as follows:

[4] The basis of the plaintiff’s claim to be entitled to an order for indemnity costs is the alleged imprudent rejection of his offers to settle by each of the defendants…

[17] The position advanced by each of the defendants is that the granting of costs on an indemnity basis should be reserved “for unusual cases or cases involving unreasonable conduct” established on “clear grounds” …

Relevantly, the third defendant was in a different position than that of the first and second defendants:

[34] At the time that the WCRA offer was made there was no pleaded case against the third defendant – a change then to a pleading that came into existence at a later time cannot have any bearing on the question of the case it had to meet at the time of the offer … the real issue is whether the amendments introduced a change to the case presented at the time of the compulsory conference, and whether that change was influential in the sense of affecting the third defendant’s attitude … there remains the fact that the defendants do not seek to show that their attitudes would have been any different had the point been raised earlier.

[35] While the case changed I am not persuaded that it made any difference to the defendants’ assessment at the time the offers were made of whether they should accept the offers put.

As to whether the provision of expert reports presented a change to the defendants’ perception of an exposure to a judgement, his Honour held:

[38] …The expert evidence is needed to educate the Court not the employer. For an employer to complain that it was unaware of the risks or the means to meet those risks, is to argue that it ought not to pay costs on the indemnity basis because it was in breach of duty and did not know it, despite a finding that it ought to have known it. Needless to say that is hardly an attractive argument…

Another argument advanced by the defendants was that it was not unreasonable to reject the plaintiff’s offer because:

[44] … if a defendant went it alone and paid the plaintiff the full amount of his damages – which was the effect of the offers the plaintiff made – that defendant could not recoup any amount from the other defendants without effectively taking over the plaintiff’s cause and proving it, and with the disadvantage of the plaintiff himself as, at best, a disinterested witness.

His Honour found that the first and second defendants did not act unreasonably or imprudently in failing to accept the plaintiff’s offers, but found in relation to the third defendant that:

[51] With respect to the third defendant the question is a different one. The onus is reversed. There needs to be good reason shown not to give effect to the legislative intent to protect seriously injured workers (with an impairment greater than 20%). Effectively the reasons given, and which I accept are open, are that the matter was novel and difficult and that it was in Axial’s (or more accurately WorkCover’s) financial interests to ensure that the plaintiff proved his claims against the other defendants. That latter point loses most of its force when it is appreciated that what is being put is that the plaintiff’s financial interests (he being significantly disabled) should be sacrificed to protect WorkCover’s. Where the third defendant bears the onus – namely under the WCRA – again I think it has not been discharged.

Accordingly, the third defendant’s costs were assessed on an indemnity basis while the first and second defendants’ costs were assessed on a standard basis.

Apportionment of costs & senior and junior counsel

The first defendant argued that costs should be apportioned equally, while the second and third defendants claimed respective apportionments under the decision. McMeekin J referred to James Hardie & Co v Wyong Shire Council where Giles JA stated at [41]:

the contribution as to costs is by the same measure as the contribution as to damages, that which is just and equitable having regard to the extent of the contributing tortfeasor’s responsibility for the damage.

McMeekin J found no reason to depart from Giles JA in this regard. As to the involvement of senior and junior counsel, his Honour found at [63] that the costs of two counsel were limited to the trial.

David Cormack – Brisbane Barrister & Mediator

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