Paskins v Hail Creek revisited over WCRA costs

Thomson v State of Queensland & Anor (No 2) [2019] QSC 115

Applegarth J

The Supreme Court of Queensland has found that there was “no contest” that a defendant who was ordered to pay more than what was requested by reason of the plaintiff’s mandatory final offer should pay the plaintiff’s costs incurred in pursuing both the first and second defendant.  Such an order was made on the basis that if the first defendant had admitted liability and accepted the plaintiff’s pre-court mandatory final offer, the plaintiff would not have incurred the increased costs of pursuing both the first and second defendant to trial [25].

 Facts

The plaintiff, Stephen Thomson, was successful in obtaining a judgment against the State of Queensland (‘the first defendant’) and his former employer, the Queensland Police-Citizens Youth Welfare Association (‘the second defendant’) for damages for personal injuries after developing Q-Fever Debility Syndrome and a subsequent psychiatric injury while refurbishing animal pens at Southport State High [1].

Issues

The threshold test of whether the plaintiff was entitled to an award of costs from the first and second defendant required consideration of the Workers’ Compensation and Rehabilitation Act 2003 (Qld) s 316(1) (‘the Act’), which relevantly provides that: [6]

Principles about orders as to costs

(1) No order about costs, other than an order allowed under this section, is to be made by the Court in the claimant’s proceedings.

(2) If a claimant or an insurer makes a written final offer of settlement that is
refused, the court must, in the following circumstances, make the order about costs provided for –

  • if the court later awards an amount of damages to the worker that is equal to or more than the worker’s written final offer—an order that the insurer pay the worker’s costs on the standard basis from the day of the written final offer;
  • if the court later dismisses the worker’s claim, makes no award of damages or awards an amount of damages that is equal to or less than the insurer’s written final offer—an order that the worker pay the insurer’s costs on the standard basis from the day of the final offer”

(emphasis added).

As the plaintiff’s mandatory final offer to settle to the first defendant was less than the sum awarded against the first defendant at trial, there was “no contest” that the first defendant should be ordered to pay the plaintiff’s costs on an indemnity basis [2]-[3].

Turning to the second defendant, it was plainly observable that the plaintiff was not entitled to a costs order against the second defendant, as his mandatory final offer far exceeded the judgement sum against the second defendant.[1]  The pre-court mandatory final offer of the plaintiff reflected a ‘broad brush’ approach of Counsel, which did not appear to give any consideration to the fact that the second defendant had no liability exposure for the significant claim for past and future care and assistance [6].

The issue of contention was therefore whether the costs order made against the first defendant ought to include the costs of pursuing the second defendant and, moreover, whether the plaintiff could seek costs for the fees of two counsels [3].  His Honour summarised that this can be understood as a question of whether the protection given to an employer against a costs order when the plaintiff does not make an effective mandatory final offer extend to protect the other defendant [5].

Submissions

The plaintiff relied on the decision of McMeekin J in Paskins v Hail Creek Coal Pty Ltd (No 2) [2018] 2 QD R 518 (‘Paskin’), and submitted that in circumstance in which he succeeded against both defendants, his indemnity should include the expense to which he has been put by reason of the first defendant’s stance which necessitated his pursuit of the second defendant and increased his costs [3].

Counsel for the defendant submitted that: [4]

  • The plaintiff was not entitled to a costs order against the second defendant because the judgment against the second defendant fell short of any offer of settlement made by the plaintiff to the second defendant;
  • Even if the plaintiff had made an effective written final offer to the second defendant, he would only have been entitled to standard costs against the second defendant from the date of the offer, and therefore the plaintiff’s argument seeks to place him in a far better position than if he had made an effective written final offer against the second defendant;
  • The costs order sought by the plaintiff would be contrary to, and would circumvent, s 316(1) of the Act which provides that “no order about costs, other than an order allowed under this section, is to be made by the court in the claimant’s proceeding”; and
  • the decision of McMeekin J in Paskins is distinguishable as there the Court ordered the second defendant to indemnify the first defendant in respect of the claim of the plaintiff.

Decision on the issues

Is Paskins distinguishable?

Parallels between Paskins and the matter before the Court were drawn by the plaintiff.  In Paskins, the plaintiff successfully sued for damages for injuries sustained in the course of employment against two defendants.  Both defendants denied liability but were otherwise found liable by the Court.  The plaintiff requested the Court to exercise its discretion in allowing an order for costs against the second defendant to include costs incurred by the plaintiff in pursuing the second defendant and his employer [9].

In Paskins, McMeekin J cited the well-accepted authority that if a plaintiff pursues more than one defendant and fails against one and so incurs an adverse costs order, the unsuccessful defendant can be ordered to pay those costs directly to the successful defendant (‘a Sanderson order’) or the Court can order the plaintiff pay the costs of the successful defendant, but recover from them the unsuccessful defendant (‘a Bullock order’) [11].[2]  Of course, in both Paskins and the present matter, the plaintiff did not fail against one defendant but succeeded against both.

Applegarth J opined that he was “not persuaded” by the defendant’s submission that the issues of indemnity and contribution between defendants being judicially determined in Paskins, and were resolved by 80:20 agreement by the defendants after the evidence concluded in this case is not a valid point of distinction.  The essential issue of whether it remains just that the plaintiff, who succeeded against both defendants, should have included in the order for costs to be made against the first defendant the additional costs incurred in pursuing the second defendant because of the first defendant’s unsuccessful stance in denying liability remains [15].

His Honour held that section 316 of the Act is concerned with an order for costs made in the “claimant’s proceedings” against the employer; it does not purport to prohibit or regulate an order as to costs against another defendant.  The order sought does not, therefore, offend the objectives of the Act, nor does it circumvent the operation of section 316 [17-18].

Instead, the fact that the plaintiff has not been able to recover the costs of pursuing the second defendant by virtue of section 316 of the Act is a relevant consideration.  That said, the plaintiff was not unsuccessful in his pursuit of the second defendant.  He succeeded in obtaining judgment against the second defendant, but not to the extent that would entitle him to a costs order against the second defendant in light of the settlement offers made by him [18].

If the plaintiff had failed entirely against the second defendant, and succeeded only against the first defendant, there would have been a basis, in accordance with general principles governing costs in such an event, for him to seek a costs order against the first defendant with respect to his unsuccessful pursuit of the second defendant.  In circumstances in which he has succeeded against the second defendant, his ability to engage this principle must be the same, if not stronger.  His Honour held that there was no reason to doubt the reasonableness of the course taken by him in pursuing both defendants, neither of whom admitted liability [19].

Would such an order create a ‘curious’ state of affairs?

The first defendant further submits that it would be a curious state of affairs that allowed a plaintiff who had not made an effective written final offer, to seek costs, not on a standard basis, but on an indemnity basis against the first defendant in respect of proceedings he brought against the second defendant, in the present circumstances.  The first defendant submits that the plaintiff’s argument seeks to place him in a far better position than if he had made an effective written final offer against the second defendant at the compulsory conference [20].

His Honour held that this submission does not entirely engage with the factual matrix, relevantly, that the first defendant’s unmeritorious denial of liability placed the plaintiff in a position of an increased costs burden of pursuing a proceeding against the second defendant.  If the plaintiff had admitted liability and accepted the plaintiff’s mandatory final offer, then the plaintiff would have avoided incurring costs in pursuing both the first and the second defendant to trial [22].

While it is true that the plaintiff might have placed himself in a better position by making an effective mandatory final offer to the second defendant which gave him an entitlement to a costs order against the defendant in his proceedings against it, this does not disentitle the plaintiff from seeking an order against the first defendant in respect of the additional costs he incurred by reason of the first defendant’s denial of liability and unsuccessful stance at trial, which led to the plaintiff incurring the increased costs burden [23].

The relevant order made in Paskins was for costs to be assessed on the standard basis. However, this was because it was common ground that the second defendant should be ordered to pay Mr Paskins’ costs of the proceeding against the second defendant on the standard basis. In this matter, the plaintiff is entitled to indemnity costs against the first defendant because of the effective offer or offers which he made to it, and which were rejected by the first defendant [24].

Is the plaintiff able to recover the costs incurred for two counsel?

 The plaintiff sought an additional order that his costs be assessed on the basis that the fees of two counsel should be regarded as necessary and proper insofar as they are unreasonable, and limited only to fees incurred in preparation for trial.  His Honour held that the proper question was whether it was necessary and proper for the attainment of justice or for the defending of rights of the plaintiff to brief two counsel.

His Honour held that the plaintiff’s claim:

“…was a complex one, with liability, causation and quantum disputed by both defendants.  The brief was in excess of 1,500 pages and included multiple experts and lay witnesses, with a five day trial anticipated.  The quantum of the claim exceeded $1 million.”

His Honour held that the extent of the evidence, the number of expert witnesses and the number and complexity of issues relating to liability, causation and quantum made it necessary and proper for the plaintiff to brief two counsel to prepare for and appear at trial.[3]

Orders

His Honour ordered: [27]

  • the first defendant pay the plaintiff’s costs of and incidental to the proceeding to be assessed on an indemnity basis, including those costs incurred by the plaintiff to in proceeding against the second defendant; and
  • the plaintiff’s costs be assessed on the basis that the fees of two counsel should be regarded as costs necessary and proper, limited only by being unreasonable and necessary for the preparation for trial.

David Cormack,  Barrister-at-Law & Mediator

Nadia El Moslemani, Research Assistant

[1] Workers’ Compensation and Rehabilitation Act 2003 (Qld) s 316(2)(a).

[2] Thomson v State of Queensland & Anor (No 2) [2019] QSC 115 at [11] citing Paskins v Hail Creek Coal Pty Ltd (No 2) [2018] 2 QD R 518.

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

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