Ewins v BHP Billiton Ltd (No 2) - [2005] SASC 164

SUPREME COURT OF SOUTH AUSTRALIA
(Civil)
EWINS v BHP BILLITON LIMITED & WALLABY GRIP LIMITED (No 2)
Judgment of The Honourable Chief Justice Doyle
4 May 2005
PROCEDURE - COSTS
PROCEDURE - SUPREME COURT PROCEDURE - SOUTH AUSTRALIA - PRACTICE UNDER RULES OF COURT
In a negligence action the Court awarded the plaintiff $197,287.85 in damages - several weeks before trial the defendant had offered to consent to judgment for $180,000 - issues as to the costs of the proceedings relating to the interpretation and application of Supreme Court Rules 1987 r 40.05 - whether, in all the circumstances and with all the information available to the defendant, the offer was 'adequate'
Supreme Court Rules 1987 (SA) r 40.05, referred to.

EWINS v BHP BILLITON LIMITED & WALLABY GRIP LIMITED (No 2)
[2005] SASC 164
Civil

DOYLE CJ: On 17 March 2005 I ordered that judgment be entered for the plaintiff Mr Ewins against the defendant for the sum of $197,287.85.
Mr Ewins had sued the defendant (“BHP”) for damages. He suffers from malignant epithelial mesothelioma of the right pleural space. He claimed that his condition is attributable to exposure to asbestos while employed by BHP. He claimed that the exposure was caused by BHP’s negligence. BHP admitted liability. The action proceeded before me as an assessment of damages.
The award of damages encompassed general damages, damages in respect of medical expenses in the past and in the future, and damages in respect of services provided gratuitously to Mr Ewins.
After I delivered judgment Mr Walsh QC, counsel for BHP, informed me that on 14 January 2005 BHP offered to consent to judgment for $180,000.
Rule 40.05 of the Supreme Court Rules 1987 provides as follows:
40.05Where a plaintiff has not accepted a payment into Court or an offer to consent to judgment and:
(a)     the sum recovered, or as the case may be, the proportion of the debt, the damages or the relief recovered by the plaintiff, is no greater than that offered or paid into Court; or
(b)    the Court is of the opinion that the amount, percentage or relief offered was adequate
the Court, unless it thinks proper to order otherwise shall order:
(i)      that the plaintiff recover against the defendant his costs incurred until 14 days after the service of the offer or the notice of the payment into Court;
(ii)     that the defendant making such offer, recover against the plaintiff his costs incurred 14 days after the service of the offer, or the notice of the payment into Court.
Relying on r 40.05(b), Mr Walsh submits that BHP is entitled to an order in the terms contemplated by sub-pars (i) and (ii), although he informed me that BHP would be content with an order that there be no order as to costs as from 14 days after 14 January 2005.
Mr Walsh relied on a number of aspects of the case. I will summarise them. He argued that BHP’s offer was relatively close to the amount finally awarded, and that Mr Ewins’ advisers were in a better position to estimate the damages than were BHP’s advisers. He argued that the difference between the offer and the amount of the judgment is attributable to the amount I awarded in respect of special damages, which were largely medical expenses. He argued that a significant component of those expenses was attributable to the cost of treatment with a relatively new drug, Alimta, and that the proposed use of Alimta did not arise until after the offer was made and relatively shortly before trial. It is relevant, with reference to that point, to record that the matter was cross vested to this Court and first came on for a directions hearing in January 2005. Because of Mr Ewins’ state of health the action was brought to trial quickly, the trial beginning on 7 March 2005. Mr Walsh also relied on the fact that Mr Rush QC, counsel for Mr Ewins, had contended for an award of general damages at a level substantially higher than that adopted by me. Referring in particular to the costs claimed in respect of the use of Alimta, he argued that a defendant who makes a realistic offer should not suffer the consequences, in the form of an order for costs, of the plaintiff bettering that offer “by the addition of a last minute claim”.
Mr Rush opposed the making of the order sought. In general terms, he argued to the contrary on each of the points made by Mr Walsh. He pointed out that the award for general damages was substantially more than the amount for which BHP had contended. He argued that BHP had considerable experience in litigation resulting from exposure to asbestos, and that BHP could have anticipated a claim including the cost of chemotherapy, a point with which I agree, and that there were indications to BHP before it made its offer that the claim would or might include the cost of treatment with Alimta.
Each party sought to rely on aspects of settlement negotiations preceding the trial. In my view the Court should be cautious about entering into that topic. There is a danger that if the Court does that too readily, parties will conduct pre-trial negotiations with an eye to how they might later be used.
In any event, the aspects of the negotiations that were brought to my attention are not of any significance in making the decision that I have to make.
The parties’ submission reflects an assumption that I am to exercise a discretion in making the decision that I have to make.
The first issue for me does not involve the exercise of a discretion. The first issue is to decide whether the amount offered by BHP was adequate. If the amount offered was adequate, I am required to make an order in the terms contemplated by sub-pars (i) and (ii) of r 40.05 unless I think it proper to order otherwise. It is only at that second stage that an element of discretion arises. I agree that the discretion that I then must exercise is a broad one, but it is to be exercised in the context of a rule that requires me to make a particular order, unless circumstances exist that persuade me that it is proper to order otherwise.
The purpose of r 40.05 is well known. It is to encourage parties to settle their disputes by providing an incentive to a defendant to make a sensible offer, and an incentive to a plaintiff to accept a sensible offer. The incentive lies in the order as to costs that the Court will make under r 40.05, unless it considers it proper to order otherwise.
Rule 40.05 operates against the background of costs being in the court’s discretion. The usual rule, established by long practice, is that costs follow the event. However, the circumstances may well justify a different approach.
Rule 40.05 deals with two situations. First, a case in which a plaintiff fails to better an offer that is made. Second, a case in which, although the plaintiff has bettered the offer that was made, the offer is regarded as “adequate”.
Rule 40.05(a) states a clear and precise principle. Unless the plaintiff betters the defendant’s offer, an order in terms contemplated by sub-pars (i) and (ii) is to be made, unless the court thinks it proper to order otherwise. That is a provision of a kind found in the rules of this Court, and other courts, for many years.
Rule 40.05(b) takes things further, and gives a defendant added protection. But in what circumstances?
Rule 40.05(b) could not have been intended to produce a situation in which a plaintiff is at risk on costs merely because the offer made by a defendant is less than but close to the amount awarded to the plaintiff. That, in my opinion, would not be a sensible or fair approach to take, bearing in mind the usual rule as to costs. The primary protection for a defendant lies in the provisions of r 40.05(a), and depends on the defendant making an offer that the plaintiff is not able to better.
An interpretation of r 40.05(b) that means it applies whenever a defendant’s offer is fairly close to a plaintiff’s judgment would make r 40.05(a) redundant.
Rule 40.05(b) must be intended to deal with a case in which, in the light of the information available to the defendant when an offer is made, the offer that the defendant made was an adequate one, meaning one that provided sufficient compensation, and the fact that the plaintiff obtained judgment for a larger amount is attributable to or reflects an aspect of the case for which the defendant could not be expected to have allowed in the offer. In other words, in my view, there are two aspects to the question of whether an offer is adequate. First, the relationship between the amount of the offer and the information available to the defendant about the plaintiff’s claim when the offer was made. Second, a consideration of the reason why the amount awarded exceeded the offer, to the extent that that can be ascertained.
I make those observations with the present case in mind, that is, bearing in mind that it is a claim for damages for personal injury. A different kind of case might involve different considerations. I should add that I do not intend to suggest that what I have said is anything more than a general guide to the application of r 40.05(b).
There was nothing exceptional about this case. In the end, it is a claim for damages for personal injuries. It may be the first, or one of the first asbestos related claims to have been heard by the Court in recent times. However, the facts of the case were relatively straightforward, and it did not involve any novel or difficult questions of law.
The parties would have been unsure whether I would award general damages at a level consistent with awards made by the Dust Diseases Tribunal of New South Wales or not. But all that means is that there was an added uncertainty in what is always a difficult matter, that is, anticipating the likely level of the award of general damages in a personal injury case. Mr Rush was correct to observe that BHP contended for a lower standard than I adopted, while Mr Ewins sought a higher standard, namely, that applied by the Dust Diseases Tribunal of New South Wales. BHP was not at a disadvantage compared to Mr Ewins when it came to anticipating the amount to be awarded for general damages.
I accept the submission by Mr Walsh that the question of whether it was appropriate to include an allowance for treatment using Alimta, and the question of the cost of that treatment, arose relatively late in the matter. But it also has to be borne in mind that the case came to trial quickly. As well, as I understand the evidence, it is not uncommon for persons suffering from asbestos related diseases to undergo chemotherapy, and while the use of Alimta gave rise to an added cost, in the end that is all that is involved. The added cost attributable to the use of Alimta was not a substantial part of the damages awarded.
There was a substantial dispute about the appropriate award of general damages for pain and suffering and loss of amenities and a lesser but not insignificant dispute about the appropriate allowance for the cost of treatment. BHP was at a slight disadvantage on the latter issue, because some of the relevant information came to light relatively close to trial, but it would be inappropriate to focus on this particular aspect of what, after all, is only one issue in the case. Overall, BHP was not at a significant disadvantage when it came to estimating what would be an adequate award of damages.
I am not persuaded that the offer made by BHP was adequate in the light of the information then available to BHP. I emphasise that this is not a criticism of, or reflection on, BHP’s legal advisers. The offer was, as the amount of the judgment demonstrates, a sensible and realistic one. It was not far off the amount awarded.
But, for reasons that I have explained, I would conclude that the offer is adequate only if I was satisfied that on the material available to BHP the offer was sufficient and that the amount awarded to Mr Ewins exceeded the amount of the offer by an amount that could be attributed to factors that could not reasonably have been anticipated by BHP when it made its offer. I do not regard the difficulty of anticipating the amount that I would award by way of general damages as such a factor. I regard that as one of the ordinary risks and contingencies of litigation, not as a factor in respect of which BHP was at any disadvantage in its capacity as a defendant. I accept that the allowance to be made for the costs of treatment using Alimta is a matter in respect of which BHP was at a slight disadvantage, but to focus on that one aspect of the allowance for future medical expenses would be to give that particular element of the award of damages a disproportionate significance.
Not being satisfied that the amount offered was adequate for the purposes of r 40.05(b), I need go no further. There is no reason why I should not make the usual order as to costs, which is that the defendant pay the plaintiff’s costs of the proceedings.
As will be apparent, I have approached the issue in fairly broad terms. I realise that the costs at stake are substantial. That, unfortunately, is a feature of litigation in this Court. But although the amounts at stake are substantial, I adhere to the view that questions of costs are usually, although not always, best dealt with on a broad basis. There are two reasons for this. First, because if they are not, civil proceedings are likely to become even more protracted than they tend to be, as a result of parties arguing the question of costs in detail. Second, because my own experience is that at the end of the day, for better or worse, disputes over orders as to costs can only be resolved satisfactorily on a broad basis. An attempt to descend to points of detail rarely if ever yield a satisfactory result, because the conduct and outcome of civil litigation is influenced by so many factors that an attempt to allocate costs according to a nice analysis of these matters is usually both unsatisfying and impractical.
I order that the defendant pay the plaintiff’s costs of the proceedings.
There is one other matter that I must mention. The parties made written submissions on the question of costs. Mr Walsh asked me to list the matter for oral argument, because he wished to raise with me the propriety of certain comments reported in “The Advertiser”, a daily newspaper, and attributed to Mr Ewins’ solicitors. The comments related to the outcome of the case. He wished to argue that these comments were an attempt to influence either BHP or the Court, presumably on the question of costs.
Accordingly, I listed the matter for oral submissions. Mr Rush objected, as he was entitled to, to an attempt by Mr Walsh to prove the matters of complaint by handing to me a copy of the item from “The Advertiser”. That was the end of the issue. In light of that, Mr Rush asked that I order that the costs of the hearing be paid by BHP on an indemnity basis. He made the point that he had appeared because Mr Ewins’ solicitors did not necessarily accept that whatever was said was reported accurately, and because the complaint made by Mr Walsh might have been viewed seriously by the Court. The matter had come to nothing because BHP failed to establish by proper means the subject matter of its complaint.
It is a pity that this matter was given the significance that it was given. I am not sure whether or not I read the comments at the time, but by the time I received the written submissions I had already forgotten whatever it was that was attributed to Mr Ewins’ solicitors in “The Advertiser”. Whatever was said, I would have put it out of my mind on the question of costs, as the parties would have expected me to.
This is not a matter that can influence my decision on the question of costs. A complaint about the conduct of Mr Ewins’ solicitors, if it is to be made, should be addressed to the appropriate professional body, not to me. Raising the matter before me, at least before the issue of costs was decided, would have had the paradoxical effect of reminding me, with considerable emphasis, of matters that I would be obliged to put out of my mind, when I came to decide the issue of costs.
In the circumstances I order that the defendant pay the costs of the hearing on 13 April 2005 on a solicitor client basis, because the application to have the matter listed for oral argument was misconceived.