Furka v Allianz Australia Insurance Ltd (re Torok)

[2023] NSWDDT 4

Dust Diseases Tribunal

New South Wales

Medium Neutral Citation:

Furka v Allianz Australia Insurance Ltd (re Torok) [2023] NSWDDT 4

Hearing dates:

20 July 2023

Date of orders:

31 July 2023

Decision date:

31 July 2023

Before:

Russell SC DCJ

Decision:

(1)   Order the defendant to pay the plaintiff’s costs of the proceedings on a party and party basis up to and including 15 March 2023, and on an indemnity basis from the beginning of 16 March 2023.

(2)   Order the defendant to pay the plaintiff’s costs of this costs determination, such costs being on an indemnity basis as a result of Order (1).

Catchwords:

COSTS – indemnity costs – offer of compromise – judgment no less favourable to plaintiff – discretion to order otherwise under cl 89 of the Dust Diseases Regulation 2019 – whether "exceptional case" and "substantial injustice" on facts – where plaintiff served additional evidence after offer of compromise expired – indemnity costs ordered

COSTS – Calderbank offer – defendant’s non-acceptance not unreasonable where offer open for very short period of time

Legislation Cited:

Dust Diseases Tribunal Regulation 2019 (NSW), cll 86, 88, 89

Evidence Act 1995 (NSW), s 67

Uniform Civil Procedure Rules 2005 (NSW) 2005

Cases Cited:

Leichhardt Council v Serratore [2005] NSWCA 406

Tinyow v Lee [2006] NSWCA 247

Torok v Allianz Australia Insurance Ltd [2023] NSWDDT 2

Vale v Eggins No. 2 [2007] NSWCA 12

Category:

Costs

Parties:

Christopher Furka (Plaintiff)
Allianz Australia Insurance Ltd (Defendant)

Representation:

Counsel:
S Tzouganatos (Plaintiff)
D Toomey SC (Defendant)

Solicitors:
Segelov Taylor (Plaintiff)
Rankin Ellison (Defendant)

File Number(s):

DDT 2022/212443

Judgment

Introduction

1. The original plaintiff Mr Attila Torok has died from the disease of mesothelioma. By a Further Amended Statement of Claim filed on 28 February 2023 he had sued Allianz Australia Insurance Ltd (Allianz) as the insurer responsible for the liabilities of Cockatoo Dockyard Pty Ltd (Cockatoo Dockyard). The proceedings have been continued by Mr Christopher Furka as legal personal representative of the estate of the late Mr Torok.

2. The substantive proceedings were heard on 23, 24 and 27 March 2023 and 17,18 and 19 May 2023. Judgment for the plaintiff in the amount of $457,500 plus costs was delivered on 23 May 2023: Torok v Allianz Australia Insurance Ltd [2023] NSWDDT 2 (the primary judgment).

3. By a Notice of Motion filed on 19 July 2023 the plaintiff sought indemnity costs as follows:

1. Up to 15 March 2023 on a party and party basis and from 16 March 2023 on an indemnity basis, based upon an Offer of Compromise.

2. In the alternative, up to 11 April 2023 on a party and party basis and from 12 April 2023 on an indemnity basis, based upon a Calderbank offer.

4. The plaintiff relied upon the affidavit of Ms Segelov solicitor dated 18 July 2023 (PX 20) and the defendant relied upon the affidavit of Ms Gardiner solicitor dated 19 July 2023 (DX 4).

Issues at the Trial Identified by Allianz

5. Senior Counsel for Allianz identified the following issues for determination:

1. The dates when Mr Torok worked at Cockatoo Dockyard (Tcpt 15/25).

2. Whether Mr Torok had more than de minimis exposure to asbestos during his employment at Cockatoo Dockyard (Tcpt 15/25).

3. While there is no dispute that there was asbestos used at Cockatoo Dockyard, where it was and whether the plaintiff had any contact with or exposure to asbestos remains in issue (Tcpt 115/50 – 116/2).

The Plaintiff’s Offer of Compromise

6. The solicitors for the plaintiff served an Offer of Compromise in the amount of $380,000 on 15 March 2023. The Offer was open for 7 days.

7. Part 5 of the Dust Diseases Tribunal Regulation 2019 (NSW) (the DDT Regulation) contains a code for Offers of Compromise which displaces the cognate provisions in the Uniform Civil Procedure Rules 2005 (NSW) 2005 – cl 86 of the DDT Regulation.

8. Clause 88 of the DDT Regulation deals with the formalities required for a valid Offer of Compromise. There is no dispute that the Offer of Compromise upon which the plaintiff relies is formally valid.

9. Clause 89 of the DDT Regulation sets out the consequences when an Offer of Compromise is made by a plaintiff, but is not accepted by a defendant, and the plaintiffs goes on to obtain a judgment for an amount more favourable than the terms of the offer. That is what has occurred in the present case, since the offer was to accept $380,000, but the final judgment was for $457,500. Clause 89 provides:

“89 Where offer not accepted and judgment no less favourable to plaintiff

(1) This clause applies if the offer concerned is made by the plaintiff, but not accepted by the defendant, and the plaintiff obtains an order or judgment on the claim concerned no less favourable to the plaintiff than the terms of the offer.

(2) Unless the Tribunal orders otherwise in an exceptional case and for the avoidance of substantial injustice, the plaintiff is entitled to an order against the defendant for the plaintiff’s costs in respect of the claim—

(a) assessed on a party and party basis up to the time from which those costs are to be assessed on an indemnity basis under paragraph (b), and

(b) assessed on an indemnity basis—

(i) if the offer was made before the first day of the trial, as from the beginning of the day following the day on which the offer was made, and

(ii) if the offer was made on or after the first day of the trial, as from 11 am on the day following the day on which the offer was made.

(3) If the Tribunal in an exceptional case and for the avoidance of substantial injustice otherwise orders as referred to in subclause (2), the Tribunal must give its reasons for so ordering.”

10. Senior Counsel for the defendant submitted that the Tribunal should exercise its power under cl 89(2) of the DDT Regulation to order “otherwise in an exceptional case and for the avoidance of substantial injustice”. The primary basis for the submission was that the plaintiff served a significant amount of his evidence upon the defendant after the Offer of Compromise had expired.

11. It is necessary to set out some of the procedural history of the matter before returning to the detail of the submissions.

Procedural History: Before Expiry of the Offer of Compromise

12. On 20 July 2022 the Statement of Claim was filed and served.

13. On 23 August 2022 the plaintiff’s Form 1 Statement of Particulars was served. This became Exhibit PX 1 at the trial.

14. The matter proceeded through the Claims Resolution Process, but a mediation was unsuccessful. The mediator’s certificate was issued on 16 January 2023. The matter then returned to the Tribunal for hearing.

15. On 2 February 2023 the Dust Diseases Authority (the Authority) produced on subpoena a large volume of material being the Industrial Histories given to the Authority by workers who had made a compensation claim to the Authority. These Industrial Histories were given by workers who were engaged at Cockatoo Dockyard between 1975 and 1985. These claimants sought compensation for an asbestos-related disease (often mesothelioma) contracted as a result of exposure to asbestos materials while working at Cockatoo Dockyard.

16. On 6 February 2023 the matter was listed before Judge Strathdee for directions. The matter was set down for hearing before me on 23 and 24 March 2023. No orders were sought from or made by her Honour for the service of affidavits, witness statements or evidence.

17. Trials in the Tribunal are traditional common law hearings, in the sense that unless directions are made for the service of evidence, the parties simply turn up to the hearing and call their witnesses and tender their documents. The informal practice of serving an affidavit by the plaintiff, who is terminally ill in a mesothelioma case, has been in place in the Tribunal for decades. But there is no rule or practice direction which mandates such an affidavit. Often there is a plaintiff’s affidavit provided, sometimes (as in this case) the plaintiff adopts the material in his Form 1 (which he has already declared to be true), and (less frequently) the plaintiff simply goes into the witness box and gives evidence-in-chief orally. Thereafter witnesses are called and documents are tendered, without prior notice being given by the plaintiff. The same applies to the defendant’s case.

18. On 15 February 2023 the solicitor for the defendant received copies of the 653 pages of the Cockatoo Dockyard Industrial Histories which had been produced on subpoena by the Authority.

19. On 27 February 2023 the plaintiff’s solicitor served an affidavit of Mr Daniel Tennyson dated 24 February 2023. Mr Tennyson gave his evidence-in-chief orally at the trial, but the (voluntary) service of this affidavit gave the defendant some notice of what he was going to say.

20. On 7 March 2023 the defendant served a Notice Disputing Facts, in response to the plaintiff’s Notice to Admit Facts served on 21 February 2023. While most facts were put in dispute, the defendant said:

“1. As to paragraph 1, the Defendant admits the Plaintiff was employed as a painter and docker in accordance with the attached employment cards but otherwise disputes as fact the matters set out therein.

2. …

3. As to paragraphs 24 and 25, the Defendant admits that if the Plaintiff establishes beyond de minimus [sic] exposure, it knew that inhalation of asbestos dust and fibre created a risk of personal injury and could cause mesothelioma.”

21. On 15 March 2023 the plaintiff’s solicitor served an affidavit of Mr Frank Giuffre dated 8 March 2023 (which became Exhibit PX 3) and the Form 1 Statement of Particulars of Mr Paul Kuether (which became Exhibit PX 2).

22. On 15 March 2023 the plaintiff’s solicitor served the Offer of Compromise in the amount of $380,000, as recited above.

23. On 22 March 2023 the Offer of Compromise expired. The trial commenced the next day.

24. In summary, by 22 March 2023, the defendant had the following material:

1. The plaintiff’s Form 1 Statement of Particulars.

2. The affidavit of Mr Tennyson.

3. The affidavit of Mr Giuffre.

4. The Form 1 Statement of Particulars of Mr Kuether.

5. The 653 pages of Industrial Histories of workers from Cockatoo Dockyard who had contracted an asbestos-related disease.

25. To deal with the submission for the defendant that the Tribunal should decline to order indemnity costs because this is an exceptional case and to avoid substantial injustice, I will review this material by reference to the primary judgment.

Mr Torok

26. The evidence of Mr Torok in relation to his work at Cockatoo Dockyard and his exposure to dust is summarised in pars [14]-[17] of the primary judgment. While he did not say he was exposed to asbestos dust, he gave evidence which I accepted that his work involved dirty and dusty jobs which were carried out in confined spaces. He was close by when other trades performed dusty work. He breathed in dust generated by his own work and the work of others.

Mr Tennyson

27. The primary judgment dealt with the evidence of Mr Tennyson in pars [22]-[46]. Mr Tennyson was an important witness in the case, as he was the only worker who gave direct evidence of working alongside Mr Torok at Cockatoo Dockyard. My conclusion about his evidence was expressed in at [45] of the primary judgment as follows:

“45 I accept the evidence of Mr Tennyson when he says that he worked on a few occasions at Cockatoo Island with Mr Torok. I also accept the evidence of Mr Tennyson when he speaks of the dusty nature of some of the work upon which he and Mr Torok were engaged at Cockatoo Island. In particular I accept his evidence that he and Mr Torok worked together in the engine room of a merchant ship, doing painting, sweeping and cleaning up.”

Mr Giuffre

28. The primary judgment summarised the affidavit of Mr Giuffre at [121] and [122]. He worked as a painter and docker at Cockatoo Dockyard, performing labouring work similar to that done by Mr Torok. The work he did was set out in at [122] as follows:

“122 Mr Giuffre worked on both submarines and ships. He said that inside the submarine there were cables and insulated pipes. Painters and dockers worked in close proximity to other trades including laggers. Inside the submarine he scraped, painted and did the work of picking up and sweeping waste materials dropped by tradesmen, including laggers, as they removed and installed things during the refit process. He said this work was very dusty. The inside of the submarine was always dusty from the work being done by him and by others. The cleaning up work was done by painters and dockers at Cockatoo Island during the time he was there. The work done below deck on ships was similar to the work done on the inside of the submarines. Again, he picked up rubbish created during the strip out process or repair. When he worked close to others who were doing their job, it was always dusty.”

Mr Kuether

29. The primary judgment summarised the evidence of Mr Kuether at [119] and [120]. He was a loftsman, not a painter and docker. However, his description of dust in the air created by other trades matched that of Mr Torok, Mr Tennyson and Mr Giuffre.

Industrial Histories

30. At the trial two large folders of 66 Industrial Histories produced by the Authority were tendered. The primary judgment dealt with this material at [99]-[107] as follows:

“99 Accompanying the affidavit of Mr Gardner were two lever arch folders (PX 8 and PX 9) containing 66 Industrial Histories taken by the Dust Diseases Board. The 66 histories relate to workers who suffered from an asbestos-related disease, where there was exposure to asbestos while working at Cockatoo Dockyard.

100 The two volumes of histories run to 549 pages. A 19-page summary of the histories was provided by the plaintiff (MFI 4). There were no submissions about any particular part of the Industrial Histories made by either side.

101 Suffice it to say that the 66 Industrial Histories which come from a variety of trades, including painters and dockers, amply demonstrate that there were many jobs on Cockatoo Island which exposed workers to asbestos.

102 Many of the painters and dockers whose Industrial History was tendered were workers doing lagging or de-lagging work. This was not the work done by Mr Torok during his time on Cockatoo Island. However, some of the Industrial Histories were taken from painters and dockers who worked as general labourers. For example, Industrial History 35 for Mr Camilleri (1954-1967) says that he spent the majority of his time cleaning up after tradesmen, which often included cleaning work carried out in engine rooms. Pipe lagging material was often among the material he swept and shovelled up.

103 Industrial History 47 for Mr Denaro (1962-1966 and 1981-1990) referred to cleaning up after tradesmen on board ships that were undergoing refit, repair or maintenance.

104 Industrial History 53 for Mr Carr (1981-1984) spoke of being in attendance in engine rooms, boiler rooms, bilges, tanks, paint lockers and other areas in confined spaces when asbestos lagging was removed and/or replaced on ships including steam pipes and valves.

105 It is not necessary to multiply examples. In the absence of any particular submission concerning the two volumes of 549 pages, I will operate on the basis that the summary in MFI 4 is correct. Every one of the 66 workers who gave an industrial history spoke of regular and heavy exposure to asbestos dust at Cockatoo Island.

106 Some were working directly with asbestos products, but many were simply close by when other trades were working with asbestos products. For example, Industrial History 2 for Mr Cedillo (1966-1991), said that as a boilermaker welder he had bystander exposure from 1966 to 1985 on board ships at Cockatoo Dockyard.

107 Industrial History 6 for Mr Fraser (1976-1991) said that he was a production planner engineer. This required him to visit vessels under refit on a regular basis. He was on board when lagging was removed. Even when lagging work was done outside working hours, when he arrived the removal of the lagging would not be completed, and lagging would still remain in work areas.”

Procedural History: After Expiry of the Offer of Compromise but Before the Calderbank Offer

31. On 24 March 2023 the plaintiff’s solicitors gave notice pursuant to s 67 of the Evidence Act 1995 (NSW) that the plaintiff would seek to rely upon the evidence of the following witnesses from previous litigation between claimants for compensation and the Authority:

1. Berto Zupicic (summarised at [129]-[131] in the primary judgment).

2. Ivan Adams (summarised at [132]-[134] in the primary judgment).

3. Alan Mahony (summarised at [135] in the primary judgment).

4. Robert Galleghan (summarised at [136]-[139] in the primary judgment).

5. James Morton (summarised at [123]-[128] in the primary judgment).

32. On 12 April 2023 the plaintiff provided to the Tribunal and the defendant a note to indicate which parts of the evidence the plaintiff relied upon in relation to Mr Morton, Mr Zupicic, Mr Adams, Mr Mahony and Mr Galleghan. That document became MFI 3 in the proceedings.

33. This note also gave reference to the intention of the plaintiff to tender the interrogatories in Tribunal proceedings brought by Mr Lake against Cockatoo Dockyard. The admissions contained in the interrogatories are summarised at [140]-[144] in the primary judgment. Suffice it to say that the defendant in those proceedings admitted the extensive use of asbestos insulation material during the refit and maintenance of ships and submarines at Cockatoo Dockyard. One of the admissions was that during refits, “it was possible to see fine dust particles in the light rays indicating the presence of the dust”.

34. Also on 12 April 2023 the plaintiff’s solicitors served the defendant’s solicitors with an affidavit of Mr John Panuccio and an affidavit of Mr Ross Gardiner. Part of Mr Gardiner’s evidence concerned the process involved in taking Industrial Histories at the Authority. The two folders of histories (PX 8 and PX 9) were tendered via the affidavit of Mr Gardiner. All of that material had been obtained by the defendant’s solicitor on 15 February 2023.

35. The evidence of Mr Gardiner was summarised at [74]-[98] of the primary judgment. The evidence of Mr Panuccio was summarised at [108]-[117] of the primary judgment.

36. All of the material served after the expiry of the Offer of Compromise but before the Calderbank Offer added to the strength of the plaintiff’s case. Apart from providing further instances of the extensive use of asbestos at Cockatoo Dockyard, and the heavy exposure of workers to such asbestos, the additional evidence did no more than multiply examples of the use of and exposure to asbestos and was similar to the material served by the plaintiff’s solicitors before the expiry of the Offer of Compromise.

Procedural History: The Calderbank Offer

37. On 12 April 2023 the plaintiff’s solicitors wrote to the defendant’s solicitors and made a Calderbank Offer. The offer was:

1. Verdict and judgment for the plaintiff in the sum of $380,000 plus costs as agreed or assessed.

2. Judgment monies to be paid within 14 days.

38. While the letter is dated 12 April 2023, the Tribunal was informed during submissions that it was “served” at 9.11pm on 12 April 2023. In effect, the time granted to the defendant to consider and react to the offer was two business days, being 13 and 14 April 2023.

39. The Calderbank Offer was made in the same email which served the affidavits of Mr Panuccio and Mr Gardiner. It was also on 12 April 2023 that the plaintiff, by the note MFI 3, made plain which parts of the evidence of Morton, Zupicic, Adams, Mahony, Galleghan and Lake were to be relied upon. This was a substantial volume of material that had to be absorbed by the defendant’s solicitors. There were only two business days provided in which to digest that material, advise the defendant insurer in relation to the material and the Calderbank Offer, and obtain instructions upon the Calderbank Offer.

Procedural History: After Expiry of the Calderbank Offer

40. On 3 May 2023 the plaintiff’s solicitors served the report of Associate Professor Klebe. Her report is summarised at [149]-[153] of the primary judgment. There was no cross-examination of Associate Professor Klebe. That report went to matters of causation, if the plaintiff proved exposure to asbestos dust as he alleged. It is to be noted that causation was not in issue in the case. Rather, the issue was whether, as a fact, the plaintiff could establish more than de minimis exposure to asbestos.

41. On 17 May 2023 the plaintiff served the affidavit of Mr David Taylor solicitor which annexed docking records found in the National Archives, listing the ships and submarines berthed at Cockatoo Island during the period of the plaintiff’s employment at Cockatoo Dockyard. That was material in the public domain, which the plaintiff relied upon to show that there were vessels at Cockatoo Dockyard undergoing refits during his time there.

42. The hearing resumed on 17, 18 and 19 May 2023 when judgment was reserved.

43. The primary judgment was delivered on 23 May 2023.

Submissions for the Plaintiff re the Offer of Compromise

44. Counsel for the plaintiff submitted that the formal requirements to obtain an indemnity costs order had been satisfied, in that the Offer of Compromise was formally valid, and the plaintiff obtained a judgment no less favourable than the terms of the offer. He submitted that this was not an exceptional case. Counsel referred to it as a “standard case” involving Cockatoo Dockyard. The presence of asbestos at Cockatoo Dockyard was notorious and indeed was admitted.

45. Counsel for the plaintiff acknowledged that the plaintiff’s Form 1 described what he did but did not state that the dust to which he was exposed was asbestos dust. The plaintiff’s case required an inference to be drawn that Mr Torok was exposed to asbestos dust at Cockatoo Dockyard, in the absence of direct evidence of exposure.

46. To borrow phrases from another area of law, this was a “strands in the cable” case not a “links in the chain” case.

47. Counsel for the plaintiff pointed out that prior to the expiry of the Offer of Compromise, the defendant had received the plaintiff’s description of the work he did, which included cleaning up after tradesman and working in dusty atmospheres. Three weeks before the Offer of Compromise, the defendant was served with the affidavit of Mr Tennyson. The defendant also had 653 pages of Industrial Histories, all of which related to tradesmen being exposed to asbestos at Cockatoo Dockyard. Further, the material of Mr Giuffre and Mr Kuether was served on 15 March 2023. This was also circumstantial evidence of a general nature concerning exposure to asbestos dust at Cockatoo Dockyard.

48. Counsel for the plaintiff submitted that in effect the defendant took a risk in not accepting the Offer of Compromise, in the hope that the plaintiff would fail to convince the Tribunal of his exposure to asbestos at Cockatoo Dockyard. It is up to a defendant whether or not to act upon evidence, such as the affidavit of Mr Tennyson, who may or may not come up to proof. But to leave the matter in the hands of the Tribunal, which will have to make a judgment about which evidence to accept and which evidence to reject, means that the defendant does so at its own risk.

49. Counsel for the plaintiff submitted that there was no “substantial injustice” created, because the defendant had sufficient material supplied by the plaintiff prior to the expiry of the Offer of Compromise, to form the view that the plaintiff had a case which would succeed on the balance of probabilities. Counsel submitted that all evidence served after 15 March 2023 was “more of the same”.

50. Counsel for the plaintiff pointed out that no order was sought or made for the service of evidence prior to commencement of the trial. The defendant could not assume that the plaintiff would not have witnesses who could give evidence on the crucial issue in the case.

51. Counsel for the plaintiff also pointed out that the defendant had run cases involving Cockatoo Dockyard in the Tribunal for many years. He also submitted that there was no evidence about what the defendant’s position would have been if all of the material had been served prior to the expiry of the Offer of Compromise.

52. Counsel for the plaintiff submitted that it was the nature of common law litigation in the Tribunal that a defendant had to make its own judgment about whether or not there was a risk that the plaintiff could call evidence to establish exposure to asbestos dust and fibre which was causative. Even evidence which had been served had not been tested when the Offer of Compromise was served. Again, it was up to the defendant to safeguard its own interests and make a decision about the likely prospects in the litigation.

53. Counsel for the plaintiff submitted that the Industrial Histories, which provided strong support for an inference that the plaintiff was exposed during 90 days of work at Cockatoo Dockyard, were available to the defendant, and the defendant should have read that material and formed a view about its strength. It was pointed out that not only was the material available on subpoena, but the evidence showed that the material was copied and delivered to the defendant’s solicitor a month before the Offer of Compromise.

54. Senior Counsel for the defendant pointed out that on the third day of the trial the plaintiff sought an adjournment for over six weeks to obtain additional evidence. It was submitted that the plaintiff must have been concerned that he had insufficient evidence at that time.

55. In relation to the Industrial Histories, Senior Counsel submitted that the defendant ought to have been told what use the plaintiff would make of the Industrial Histories. The defendant was not put on notice until 12 April 2023, when the Gardiner affidavit was served, which of the histories would be relied upon. That was the same day the Calderbank Offer was “served" at 9.11pm.

56. At the time of the Offer of Compromise, the matters known to the defendant were as follows:

1. The plaintiff’s Form 1 did not establish exposure to asbestos in his employment.

2. No particulars had been provided of the ships that the plaintiff worked on, or the types of ships he worked on, save for reference to one submarine.

3. While the defendant had been served with the affidavit of Mr Tennyson, some things in the affidavit were wrong, as was exposed during cross-examination.

4. The evidence of Mr Giuffre and Mr Kuether was not evidence which was persuasive.

57. Senior Counsel for the defendant submitted that service of the additional evidence after the Offer of Compromise was crucial to the result, and that the provision of that later evidence meant that there were exceptional circumstances and the need to avoid substantial injustice. He referred to Vale v Eggins No. 2 [2007] NSWCA 12. This case is considered below.

58. Senior Counsel for the defendant pointed to the “sheer volume of evidence” served after the Offer of Compromise, which included an expert report of Associate Professor Klebe.

Vale v Eggins (No. 2)

59. The discretion in cl 89 to make an order which would deny indemnity costs could arise in a wide variety of circumstances.

60. Senior Counsel for the defendant relied upon the decision of the Court of Appeal in Vale referred to above. Proceedings had been brought in the District Court for damages arising out of a motor vehicle accident. At the time the relevant District Court Rule provided that if the defendant made an offer and the plaintiff did not obtain a more favourable result at trial, the plaintiff would only be entitled to costs on a party and party basis up to the date of the offer, and the defendant would be entitled to an order against the plaintiff for costs after that date. The rule said that such an order should be made “unless the Court in an exceptional case and for the avoidance of substantial injustice otherwise orders”.

61. The defendant in the proceedings made two separate Offers of Compromise. The first was to compromise the issue of liability on terms that the plaintiff was 70% responsible for the accident and the defendant was 30% responsible. No expert liability report had been served before that Offer of Compromise, but such a report was served by the defendant after the offer expired and before the trial began.

62. The second Offer of Compromise was for a monetary judgment. At trial the plaintiff obtained judgment for a lesser amount. When the defendant made that Offer of Compromise, it had only served one medical report, but had four additional expert reports from three experts in different medical fields, which had not been served.

63. The Court of Appeal found that the later service of that evidence had a “profound effect on the conduct of the trial”.

64. The plaintiff submitted that he should not be subject to an adverse costs order “when the case significantly changed after the date of the offers”. The majority of the Court of Appeal found that the introduction of expert evidence just prior to trial was such as to require the plaintiff to meet a quite different case at trial than that which was under consideration at the time the offers were made. The Court, by majority, found that the introduction of this expert evidence after the Offer of Compromise constituted “exceptional circumstances” within the meaning of the rule. The court was of the view that given the exceptional circumstances that were found, “a different order ought to be made so as to avoid substantial injustice”.

65. Having made those findings, the Court of Appeal made an order that the defendant was to pay the plaintiff’s costs at trial and on the appeal. In other words, the court otherwise ordered because of the exceptional circumstances and for the avoidance of substantial injustice.

66. The decision in Vale turned upon its own facts, but the ratio of the case is that the service of evidence after an Offer of Compromise has expired, which requires a party to meet a quite different case at trial, than that which was under consideration at the time the offer was made, can constitute “exceptional circumstances” and lead to a “substantial injustice.”

67. In Leichhardt Council v Serratore [2005] NSWCA 406 the Court of Appeal considered that the late service of an expert’s report by the plaintiff did not warrant an order displacing the general rule. The Court said that the defendant was “plainly aware of the [plaintiff’s] case” and the report was “essentially confirmatory of what the [defendant] already knew”.

Consideration re the Offer of Compromise

68. I have come to the conclusion that the ordinary costs consequences of failure to accept an Offer of Compromise should apply, and that I should not otherwise order to deny the plaintiff indemnity costs after the date of the Offer of Compromise.

There was no Significant Change in the Plaintiff’s Case

69. It cannot be ignored that the defendant in these proceedings had been involved in many other claims in the Tribunal arising out of exposure of the workers at Cockatoo Dockyard to asbestos dust leading to the contraction of an asbestos-related disease. There was no evidence put before the Tribunal in this case as to how many such claims had been made in the past (there are 14 reported cases[1] involving Cockatoo Dockyard), but the submission of counsel for the plaintiff is accepted, that this was not a unique case, and that the defendant had been involved in many Tribunal cases of the kind brought by the present plaintiff.

    1. Harradine v Cockatoo Dockyard and Ors [2008] NSWDDT 8 (*motion only)

70. By contrast, the plaintiff in Vale could not know what was coming in the defendant’s case.

71. It was plain from the material served by the plaintiff before the expiry of the Offer of Compromise, that while the plaintiff could not directly establish that he was exposed to asbestos dust, the work he did over 90 days at Cockatoo Dockyard exposed him on a regular basis to dust, often in confined spaces inside ships or submarines, and that on the probabilities some of that dust was asbestos dust. Even when all of the evidence was served and tendered in the case, there was still no direct evidence of exposure of the plaintiff to asbestos dust, and that was a matter of inference arising from consideration of the evidence.

72. I find that the defendant had sufficient material, at the time of the expiry of the Offer of Compromise, to make an informed decision as to whether or not the plaintiff could establish the inference sought. In particular, the hundreds of pages of Industrial Histories provided example upon example of workers doing similar tasks as those performed by Mr Torok, which resulted in exposure to asbestos and the contraction of an asbestos-related disease.

73. For those reasons the decision in Vale can be distinguished, as in Vale the material held back by the defendant was unknown to the plaintiff. The nature of the case brought by the plaintiff in the present proceedings did not change as a result of the service of later evidence. This is to be contrasted with Vale, where the nature of the defendant’s case did change by service of later material, in particular the expert medico-legal reports and the expert liability report. I accept the submission made by counsel for the plaintiff that the material served after the expiry of the Offer of Compromise simply comprised “more of the same”. The only exception to this is the report of Associate Professor Klebe, which went to causation. This was not in issue in the case.

74. Further, that additional material could not have come as a surprise to the defendant, as much of it was material from previous claims made by workers at Cockatoo Dockyard, albeit in the context of seeking compensation rather than common law damages. That material was in the possession of the defendant’s solicitor a month before the Offer of Compromise was made. There was no point in obtaining copies of the hundreds of pages of material produced on subpoena by the Authority, unless some consideration was going to be given by the defendant to whether that material might assist the plaintiff in proving his case.

75. As recited in the primary judgment, some of the Industrial Histories were provided by workers who were painters and dockers at Cockatoo Dockyard, performing labouring work in circumstances very similar to those of Mr Torok.

There was No Obligation to Serve Any Material

76. There is a second reason for rejecting the submission made by Senior Counsel for the defendant that this is an exceptional case and there is a need to avoid substantial injustice. There was no obligation whatsoever on Mr Torok to serve any material before the trial commenced. Even if all this evidence was tendered at the trial, or his witnesses were called at the trial, without any prior warning, the defendant could make no complaint at all.

77. It is difficult to see why Mr Torok should be in a worse position in relation to indemnity costs through providing prior notice of substantial parts of his case, when if he had remained silent, all of that evidence could simply have been tendered without prior notice to the defendant.

78. Indeed, if the defendant’s argument be accepted, then in every case where nothing is served by a plaintiff before the trial commences, such cases would be exceptional and there would be substantial injustice because no material had been provided to the defendant to assess the worth of the Offer of Compromise.

79. In common law litigation as it is conducted in the Tribunal, it is always incumbent upon a defendant to make its own assessment of each plaintiff’s prospects of success and likely quantum of damages. As Justice Bryson said in dissent in Vale at [29]:

“Neither party is the custodian of the interests of the other, and the object of the Rule of Court is to put risk and burden on the party who receives and does not accept an Offer of Compromise: that party is, at its own risk, to assess what it should do.”

What Difference would any Additional Material have Made?

80. A relevant matter to take into account is whether, if all of the evidence had been served with the Offer of Compromise, the defendant would have taken a different approach. In Leichhardt Council (cited above) the Court of Appeal said at [43]:

“There was no explanation for the late service of the report, but the late service did not of itself provide a basis for an order otherwise. It must be asked what effect the report had on the appellant’s assessment of its prospects in the proceedings, a matter on which the appellant gave no evidence.” 

81. This is a third reason why the submission for the defendant fails. Even when all of the evidence tendered at the trial for the plaintiff was served, the defendant maintained its position that the plaintiff had not proved exposure to asbestos at Cockatoo Dockyard, let alone causative exposure. After all the evidence was in, Senior Counsel for the defendant properly and vigorously submitted that the plaintiff had not proved his case, and had not established that there was any more than de minimis exposure to asbestos during his 90 days of work at Cockatoo Dockyard. This suggests that even if every piece of evidence upon which the plaintiff ultimately relied had been handed to the defendant when the Offer of Compromise was made, the defendant would not have accepted the offer. The defendant maintained a fixed position, in spite of the evidence served, that the plaintiff could not establish exposure to asbestos, or any more than de minimis exposure to asbestos.

Orders in Relation to Offer of Compromise

82. For the reasons set out above, I find that this is not a case where the Tribunal should otherwise order under cl 89 of the DDT Regulation. There will be an order that the defendant pay the plaintiff’s costs on the ordinary basis up to and including 15 March 2023 and on an indemnity basis from the beginning of 16 March 2023.

Consideration of the Calderbank Offer

83. As previously recited, the Calderbank Offer was sent after business hours on 12 April 2023. It was served with a large volume of material. This meant that the defendant’s solicitors had all of Thursday 13 April 2023 and up to 5.00pm on Friday 14 April 2023 in which to absorb the material, consider how it fitted into the plaintiff’s existing case to that point, formulate advice to its institutional client, convey that advice, and give the client time to consider the advice and respond.

84. The making of a Calderbank Offer does not automatically translate into an indemnity costs order. It must be demonstrated that the rejection of the offer was unreasonable in all the circumstances of the case. One of those circumstances is the length of time for which the offer is left open: Tinyow v Lee [2006] NSWCA 247.

85. I find that the short time period which was granted to the defendant to complete all of the matters referred to above did not afford the defendant or its lawyers sufficient time to consider and properly respond to the Calderbank Offer. For that reason I find that the non-acceptance of the Calderbank Offer was not unreasonable in all of the circumstances.

86. It is hard to see why such a short period of time was proposed in the Calderbank Offer. The proceedings had been adjourned, at the request of the plaintiff, on 27 March 2023. They were not to resume until 27 May 2023. A more realistic timeframe could have been included in the Calderbank Offer, which could have resulted in a different view being taken of it.

87. My conclusion in relation to the Calderbank Offer is that it does not form a basis for ordering the defendant to pay indemnity costs.

Conclusion and Orders

88. The plaintiff has succeeded in its costs argument based upon the Offer of Compromise and has failed in relation to its argument based upon the Calderbank Offer.

89. The orders of the Tribunal are:

1. Order the defendant to pay the plaintiff’s costs of the proceedings on a party and party basis up to and including 15 March 2023, and on an indemnity basis from the beginning of 16 March 2023.

1. Order the defendant to pay the plaintiff’s costs of this costs determination, such costs being on an indemnity basis as a result of Order (1).

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Endnote

Gifford v Cockatoo Dockyard Pty Limited [2007] NSWDDT 22

(Re Keith A Stephen) Cockatoo Dockyard Pty Ltd v Commonwealth of Australia [2006] NSWDDT 10 (*motion only)

(Re Olsen) Eraring Energy v Babcock Australia Pty Ltd [2006] NSWDDT 8 (*settled)

Russell v Cockatoo Dockyard Pty Ltd and Anor [2004] NSWDDT 7

Griffith v Cockatoo Dockyard Pty Ltd and Anor [2004] NSWDDT 24

Virtu v Cockatoo Dockyard Pty Ltd [2003] NSWDDT 16

Hill v Cockatoo Dockyard Pty Ltd [2003] NSWDDT 14

Lake v Cockatoo Dockyard Pty Ltd [2003] NSWDDT 4

Stewart v Cockatoo Dockyard Pty Ltd and ors [2002] NSWDDT 5 (*motion only)

Cockatoo Dockyard Pty Limited v Campbell [2001] NSWCA 468 (*appeal)

Sheehan v Cockatoo Dockyard Pty Ltd & Others [2001] NSWDDT 16

Davis v Cockatoo Dockyard Pty Ltd [2000] NSWDDT 6

David Charles Browne v Cockatoo Dockyard Pty Limited [1999] NSWDDT 22

Decision last updated: 31 July 2023