BI (Contracting) Pty Ltd v TOC Pty Ltd - [2011] SADC 74

DISTRICT COURT OF SOUTH AUSTRALIA
(Civil)
In the Estate of LATE LOUIS SAGRILLO
BI (CONTRACTING) PTY LTD v TOC PTY LTD
[2011] SADC 74
Judgment of His Honour Judge Gilchrist
26 May 2011
PROCEDURE - COSTS
INTERLOCUTORY PROCEEDINGS - AMENDMENT TO PLEADINGS
The third party sought an order striking out parts of the third party's statement of claim. The application was opposed by the defendant however it subsequently sought leave to amend the third party statement of claim in terms that deleted the allegations that the third party objected to. Both sought costs. The third party did so, on the basis that the position eventually taken by the defendant in respect of the pleadings vindicated its issue of the application. The defendant did so on the basis that the third party's strike out application was destined to fail.
HELD: that the defendant should pay the third party's costs on a party/party basis because it sought the indulgence of the Court in seeking leave to amend the third party's statement of claim.
Workers Rehabilitation and Compensation Act 1986 s54, 105, referred to.

In the Estate of LATE LOUIS SAGRILLO
BI (CONTRACTING) PTY LTD v TOC PTY LTD
[2011] SADC 74

The plaintiff Louis Sagrillo issued a claim for common law damages against BI Contracting Pty Ltd. The claim was based upon alleged exposure to asbestos in about 1972, when the plaintiff whilst working in was employed as a plumber at the Modbury Hospital and in about 1980 again whist working in employment as a plumber at the retail department store of John Martins in the City.
The claim as against BI (Contracting) Pty Ltd was on the basis that in both places the plaintiff was exposed to asbestos that had been manufactured, complied, or installed either by it or by employees or contractors engaged by it.
The plaintiff’s claim against BI Contracting has been resolved. BI Contracting now seeks to recover contribution or indemnity damages from TOC Pty Ltd on the basis that at various relevant times it was the plaintiff’s employer and that through its negligence, breach of contract, and breach of statutory duty it failed to provide to the plaintiff or maintain for his benefit a safe system of work or a safe place of work, and it thereby exposed him to toxic substances.
In particular, it alleged that the relevant periods of employment were between about late 1974 and 1975, in about 1982, and of particular importance for the purposes of the matter presently before the Court, in the middle to late 1980’s.
The solicitors acting for the statutory reserve fund who are representing the interests of TOC wrote to the solicitors who are acting for BI Contracting on 5 November 2010 seeking clarification of the allegation of exposure in the period from the mid to late 1980’s.
In particular, they enquired as to how it was intended to prosecute an action based on employment for the period beyond 30 September 1987. That was the date upon which the Workers Rehabilitation and Compensation Act 1986 came into operation. The significance of that is that s 54 of the Act seemingly places a prohibition from the prosecution of a claim for damages at common law in respect of a disability arising out of employment that occurs after 4pm on 30 September 1987.
By letter dated 14 December 2010 the solicitors acting for BI Contracting responded and indicated that they were instructed to seek indemnity or contribution in respect of the entire period of the plaintiff’s employment from about late 1974 or early 1975 until about 1990.
That in turn prompted an interlocutory application by TOC seeking an order striking out from the third party statement of claim any allegation of injury loss or damage occurring as a result of exposure in employment after 30 September 1987.
That application was listed for hearing before me on 6 April 2011.
During the course of the hearing of that application I raised with Mr Harms, counsel for TOC, whether his client had any interest in relation to any liability that might arise out of an allegation of injury loss or damage resulting from exposure after 30 September 1987. I did so by reference to s 105 of the Act, which provides:
An employer who is registered under this Act, and any employer who is not required to be registered because of an exemption under the Regulation is insured by the Corporation, subject to terms and conditions prescribed by regulation, against any liability that may arise apart from this Act in respect of a compensable disability arising from the employment (being employment to which this act applies) by the employer.
I suggested that in light of this, if notwithstanding the terms of s 54 of the Act an action for damages could lay in respect of the plaintiff’s exposure in employment after 30 September 1987 it might be that the WorkCover Corporation would be obliged to provide indemnity in respect of that liability.
Over the course of argument, there seem to be some uncertainty as to whether BI Contracting was in fact alleging a right to contribution or indemnity for employment related exposure after 30 September 1987 as against TOC. It seemed to me that the first step forward was to require BI Contracting to make that position clear one way or the other. I then indicated that if the pleadings made it clear that it was contending an entitlement to recovery in respect of exposure after 30 September 1987, it might be necessary for Mr Harms’ client to consider its position in relation its interest in respect of such an allegation because it seemed to me that the entity that might have an interest might be the WorkCover Corporation and, if so, it needed to be informed.
Accordingly, having directed BI Contracting to file an amended statement of claim so as to make its position clear I adjourned further consideration of the application for directions. Both parties sought costs in respect of that attendance. I reserved the question of costs.
When the matter came back before me on 16 May 2011 I was informed that an amended statement of claim had not been filed but it was proposed that one would be filed and that it would be confined to allegations of exposure in employment with TOC up to but not beyond 30 September 1987.
Both parties then made an application for costs. Indeed TOC went further and asked for costs on an indemnity basis. Mr Harms contended that his client had no choice but to issue the interlocutory application and that its position had been vindicated by the advice that BI Contracting was limiting its allegation that exposure up to but not beyond 30 September 1987.
Mr Bell and later Mr Hillary opposed that application and sought an order in their client’s favour on the basis that the application to strike out portions of the statement of claim was destined to fail because the strike out application could only succeed if the allegation was bad beyond argument. They submitted that notwithstanding s 54 of the Act it was at least arguable that there was a right to indemnity or contribution in respect of exposure after 30 September 1987. Secondly, they contended that in any event, for the reasons raised by me during the course of argument, it was clear that those instructing the solicitors on the record for TOC had no actual interest in respect of any liability flowing from exposure after 30 September 1987.
Both positions have some merit and for a time I was contemplating that the fairest order was for each party to bear their own costs. However, upon further reflection, I think that such an order would fail to recognise that in the end the application has led to BI Contracting seeking the indulgence of this Court to grant it leave to amend its third party statement of claim. Consistent with the general principal that the party seeking the indulgence of the court should pay the costs associated with it leads me to conclude that BI Contracting should pay TOC’s costs. This is not a matter that warrants an order for indemnity costs. I order BI Contracting should pay TOC’s costs on a party/party basis.