Krkovski v Jacobs Group (Australia) Pty Ltd
[2019] WADC 124
•26 AUGUST 2019
JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CHAMBERS
LOCATION: PERTH
CITATION: KRKOVSKI -v- JACOBS GROUP (AUSTRALIA) PTY LTD [2019] WADC 124
CORAM: PRINCIPAL REGISTRAR MELVILLE
HEARD: 30 JULY 2019
DELIVERED : 26 AUGUST 2019
FILE NO/S: CIV 279 of 2016
BETWEEN: NIKOLA KRKOVSKI
Plaintiff
AND
JACOBS GROUP (AUSTRALIA) PTY LTD
Defendant
Catchwords:
Special costs order
Legislation:
District Court Rules 2005, r 47A
Legal profession Act 2008
Rules of the Supreme Court 1971, O 24A
Result:
The application for costs on an indemnity basis is refused
Special costs order made for discovery
Representation:
Counsel:
| Plaintiff | : | Mr D Campbell SC |
| Defendant | : | Mr C Rimmer |
Solicitors:
| Plaintiff | : | Foyle Legal |
| Defendant | : | Sparke Helmore Lawyers |
Case(s) referred to in decision(s):
Ellis (by his Next Friend Christopher Graham Ellis) v East Metropolitan Health Service [2018] WADC 36
Fox v Wood (1981) 148 CLR 438
MacDonald v Woolworths Group Ltd [2019] WADC 66
Sino Iron Pty Ltd v Mineralogy Pty Ltd [No 2] [2017] WASCA 76
Sulub v Tyres4U Pty Ltd [2018] WADC 139
PRINCIPAL REGISTRAR MELVILLE:
By writ issued 27 January 2016 the plaintiff commenced an action against the defendant for damages as a result of injuries he received on 20 January 2014 said to be caused by the defendant's negligence and breach of statutory duties pursuant to the Occupational Safety and Health Act 1984 (WA).
The action proceeded with minor amendments to the writ, amendments to the defence, discovery, interrogatories, the provision of particulars, medical review, the pre-trial return of subpoenas, pre-trial conferences, and mediation.
On 14 March 2019 the defendant made an offer pursuant to O 24A of the Rules of the Supreme Court 1971 (WA) (RSC) in the sum of $250,000 exclusive of payments made pursuant to the Workers' Compensation and Injury Management Act 1981 (WA). On 29 March 2019 the plaintiff's solicitors accepted the offer.
By summons dated 12 April 2019 the defendant applied for leave to withdraw the offer, which application was supported by an affidavit of Ms E C McLennan. The basis of the application was that shortly after having made the offer and before it was accepted, documents that had been produced under subpoena came to the attention of Ms McLennan. These documents were said to have revealed the plaintiff had a conviction for an offence involving dishonesty and someone's opinion that the offence was 'motivated by financial gain'. It was contended that circumstances had changed in that the defendant considered the prospects of adverse findings being made as to the plaintiff's credibility, which already was an issue, were significantly strengthened.
The plaintiff sought to cross-examine Ms McLennan on her affidavit and on 8 May 2019 procedural orders were made including the requirement that the plaintiff file a notice in this regard forthwith, with that issue being listed for hearing on 3 July 2019 and the hearing of the defendant's application for leave to withdraw the offer being listed for hearing on 30 July 2019.
In the meantime, on 14 May 2019 the plaintiff made his own O 24A offer to the defendant in the amount of $245,000 exclusive of payments made under the Workers' Compensation and Injury Management Act.
On 3 July 2019 the plaintiff's request for an order that Ms McLennan be cross-examined on her affidavit was argued and the decision reserved to 12 July 2019. The plaintiff's counsel foreshadowed an application for discovery of documents relating to advice and instructions as between the defendant's solicitors and its insurer on the basis that legal professional privilege had been waived. On 11 July 2019 the plaintiff filed a chamber summons seeking orders in this regard which was also listed for 12 July. On 12 July 2019, as reasons for decision were being published, I was advised the defendant's application was withdrawn. Accordingly, I declined to publish my reasons.
The position then was that the plaintiff was entitled to apply for judgment pursuant to O 24A r 3(9). However, the plaintiff chose not to move for judgment at that time because he wanted to apply for costs in respect of defending the defendant's application for leave to withdraw the offer and for pursuing his own application for discovery of documents on an indemnity basis.
Procedural orders were made timetabling the filing of affidavit evidence on this issue and both applications were adjourned to 30 July 2019. On that day the plaintiff argued costs should be ordered to be paid by the defendant on a party/party basis up to 14 May 2019 (when the plaintiff's O 24A offer was made) and thereafter on an indemnity basis, or alternatively as between law practice and its client. The plaintiff also argued for an order pursuant to the Legal Profession Act 2008 s 280 that the costs be taxed without regard to limits imposed by the applicable scale limits in the Legal Profession (Supreme and District Courts) (Contentious Business) Determination 2018 and its predecessors. At par 56 of the plaintiff's submissions, removal of the limit in the determination was sought in respect of:
1. Discovery.
2. Preparation of the case.
3. Counsel fee on brief.
The contention advanced by the plaintiff for an order under the Legal Profession Act s 280 is that the court should be satisfied firstly, that the costs allowable under the scale would be inadequate and secondly, the inadequacy arises because of the unusual difficulty, complexity or importance of the matter.
The contention advanced by the plaintiff for indemnity costs is that notwithstanding the District Court Rules 2005 (WA) (DCR) at r 42A provide for costs in respect of the claim from the date on which the offer was made be taxed as between law practice and its client, this rule does not conflict with RSC O 24A r 10(5A) which provides that if satisfied the failure by the defendant to accept the plaintiff's offer was unreasonable, costs from the date on which the offer was made should be taxed on an indemnity basis, unless the interests of justice require otherwise. The plaintiff submits the failure to accept the offer was unreasonable and there are no other reasons why costs in those circumstances should not be taxed on an indemnity basis.
District Court Rules 2005 r 42A and Rules of the Supreme Court 1971 O 24A r 10(5A)
The DCR by r 42A provide that if a plaintiff obtains judgment no less favourable to the plaintiff than the terms of the offer made, then 'unless the Court otherwise orders', the plaintiff is entitled to an order against the defendant, for costs taxed on a party/party basis up to the date on which the offer was made, and after the date of the offer taxed as between a law practice and its client.
The RSC by O 42A r 10(5A) provides:
[I]f the court is satisfied that the failure by the defendant to accept the offer made by the plaintiff was unreasonable, the plaintiff's costs from the date on which the offer was made are to be taxed on an indemnity basis, unless the interests of justice require otherwise.
A debate has arisen as to whether RSC O 24A r 10(5A) is inconsistent with DCR r 42A, in which case the DCA prevails, or whether O 24A r 10(5A) operates concurrently with DCR r 42A or as supplementary to DCR r 42A.
Gething J in Ellis (by his Next Friend Christopher Graham Ellis) v East Metropolitan Health Service [2018] WADC 36 has previously considered this issue. At [39] he expressed a preliminary view that the two provisions were inconsistent and that accordingly DCR r 42A would prevail. However, he did not have to decide the issue.
Glancy J in Sulub v Tyres4U Pty Ltd [2018] WADC 139 was required to decide the issue. Her Honour agreed with the preliminary view of Gething J and at [26] said 'accordingly, I find that DCR r 42A(3) and r 42A(4) govern how costs are to be awarded in this matter'.
In my view the decision of Glancy J is binding on me and RSC O 24 r 10(5A) has no application. Accordingly, the application for indemnity costs is refused.
The Legal Profession Act s 280
Section 280 provides that if a court of judicial officer is of the opinion that the amount of costs allowable in respect of a matter under a costs determination is inadequate because of the unusual difficulty, complexity or importance of the matter, the court officer may:
(a)order the payment of costs above those fixed by the determination;
(b)fix higher limits on costs than those fixed in the determination;
(c)remove limits on costs fixed in the determination; and
(d)make any order or give any direction for the purpose of enabling costs above those in the determination to be ordered or assessed.
The statutory purpose of s 280 has been considered by the Court of Appeal in Sino Iron Pty Ltd v Mineralogy Pty Ltd [No 2][2017] WASCA 76. The considerations taken into account of being drawn together conveniently in the decision of MacDonald v Woolworths Group Ltd [2019] WADC 66 where it was said:
47.If an order is made removing the limits on costs fixed for certain items in the applicable determination, 'it nevertheless remains the task of the taxing officer to consider the reasonableness of and necessity for the work undertaken, and to make a judgment about the remuneration reasonably required'.
48.The court can either remove the scale limits generally or for specific items.
49.The principles for making an order pursuant to LPA s 280(2) are well established:
(a)the court must first form an opinion that the costs otherwise allowable would be inadequate and second form an opinion that such inadequacy arises because of the unusual difficulty, complexity or importance of the matter;
(b)the requirement of inadequacy will be demonstrated if the applicant shows that there is a fairly arguable case that the bill to be presented to the taxing officer may tax at an amount which is greater than the limit that would be imposed by the relevant costs determination;
(c)because the determination would ordinarily be made in advance of taxation, it is a matter of impression, rather than a matter of detailed evaluation, precision or science;
(d)the word 'unusual' in LPA s 280(2) qualified 'difficulty' only and not 'complexity' or 'importance';
(e)the characteristics of unusual difficulty, complexity or important qualify the matter before the court, rather than the work done or services provided in respect of each applicable item of the costs determination; and
(f)there must be a causal connection between the unusual difficulty, complexity or importance of the matter brought before the court and the inadequacy of the costs allowable under the relevant determination.
Was the matter unusually difficult, complex or important?
The plaintiff's case as discerned from the statement of claim and the particulars of damage is that the plaintiff was a plumber who was sent by his employer to work on a project at Cape Lambert at which the defendant was the engineering, procurement and construction management contractor. He was directed in his work by a servant or agent of the defendant who led the plaintiff over a clay surface that had become wet and slippery as a result of a downpour of rain. The plaintiff slipped and injured his knee and back. The pathological changes are pleaded, including a disc protrusion in the back, and it is alleged the plaintiff experienced anxiety and depression. He pleads particulars of the treatment medical appointments, knee arthroscopy, chondroplasty and the consumption of various medications including anti-inflammatory medication, anti-depressant medication and narcotic medication.
The plaintiff then pleads out his continuing and permanent disabilities, a number of which appear to be somewhat repetitious and that as a result of the injury and residual disabilities he suffered a past and future loss of earning capacity some of which was compensated under the provisions of the Workers' Compensation and Injury Management Act, loss of superannuation benefits, the need for past and future gratuitous services, and past and future medical expenses.
The particulars of damage filed pursuant to DCR r 45C(3) has copied and pasted a large number of the particulars found in the statement of claim. The particulars provide calculations for the Fox and Wood component (Fox v Wood (1981) 148 CLR 438); future economic loss; loss of superannuation; future medical expenses including for the possibility of the total joint replacement to the left knee, right knee arthroscopic chondroplasty; in respect of the back, Rhizolysis/Radiofrequency ablation, discectomy and posterolateral fusion; and psychological counselling including cognitive behavioural therapy, psycho-education pain management techniques; gratuitous services and travel expenses.
The defence filed 1 July 2016 either denies or does not admit each and every material fact and particulars thereof pleaded in the statement of claim. The defence was amended on 15 September 2017. The amended defence introduced as issues:
1.The injury to the knee if it occurred did not occur at the Cape Lambert site but occurred at the plaintiff's employer's premises.
2.At the material times the plaintiff was not under the control or direction of the defendant.
3.The Occupational Safety and Health Act 1984 did not apply to the Cape Lambert site by reason of s 4(2).
4.In the event the alleged injuries were caused by a breach of duty owed by the defendant, the injury was also caused or contributed to by the negligence of the plaintiff.
5.In the event the plaintiff did suffer depression and anxiety, those conditions were caused by:
(a)an investigation into the plaintiff's work practice following a fire on 16 January 2014;
(b)being disciplined by his employer in respect of the above and other (unspecified) alleged unsafe work practices;
(c)the termination of his employment by his employer on 21 March 2014;
(d)the plaintiff's involvement in unfair dismissal proceedings in 2014 and 2015 against his employer in the Fair Work Commission; and
(e)the breakdown of the plaintiff's marriage and his relationships with his children in 2016.
6.Further and in the alternative if the plaintiff has suffered economic loss or loss of superannuation benefits such losses were not caused by the accident but due to the termination of his employment and that the circumstances of his termination and (unspecified) adverse findings of the regulator would have affected his ability to obtain employment as a plumber.
In my view almost every issue that can be raised in a personal injury case and needs to be proven was put in issue. The defendant initially even refused to admit that it was incorporated in accordance with the provisions of the Corporations Act 2001. The amended defence filed some 18 months later, whilst admitting the plaintiff was employed with Lyons and Pierce on the Cape Lambert project and the defendant was the E P and C M contractor on the project at the same time, raised further issues and raised more issues than it admitted. Overlaying all of these issues was the issue of the plaintiff's credibility which would require his advisers to carefully scrutinise all documentary evidence for any suggestion of prior inconsistent statements, which if discovered would call for further investigation. There were a lot of documents.
In MacDonald v Woolworths Group Ltd Gething J said at [72]:
The word 'unusual' in the context of LPA s 280(2) 'means unusual having regard to what one might describe as the usual run of civil cases determined in the court'. This 'essentially involves the making of a value judgment by the court, having regard to the court's experience of the particular case when compared with the usual run of cases' (footnote references omitted).
His Honour went on to observe at [73] – [74] the case before him was an unusually difficult one compared to the usual run of civil cases in the court. He made particular reference to two issues he regarded as raising complex factual and legal issues, those issues being determining which injuries and losses were accident related and the quantification of economic loss of the plaintiff who was a self-employed entrepreneur. At [74] his Honour stated that the case profile he had earlier set out, which was one in which liability and quantum were in issue with allegations of contributory negligence, four discrete injuries said to have arisen from a slip and fall accident, extensive residual disabilities, past and future economic loss, the need for gratuitous services, the issue of numerous subpoenas, the discovery of documents running to thousands of pages and how the analysis of transactions as they progressed often lead to identification of other transactions resulted in the conclusion that this personal injury case was both unusually difficult and complex.
In my view, there are significant parallels between this case and MacDonald's case. It is not possible always to compare one case against another as the facts are inevitably different. There will always be harder or easier cases. It is not difficult to think of cases that would be harder than this. On the other hand, it is not difficult to think of cases that would be easier. A large part of this court's work also involves personal injury matters arising out of liability admitted motor vehicle acts accidents. Of that cohort of cases it is not infrequent to see cases with little if any financial loss and loss of earning capacity and which are constituted by little more than a claim for general damages for pain and suffering, loss of enjoyment of life, loss of amenities and a small amount of expenses for a little medical treatment.
Whilst there is no need to analyse financial records covering many years of entrepreneurial activity in this case as there was in MacDonald's case, it appears to me that exploration of the issues raised in the pleadings including the service of subpoenas for medical records gave rise to further investigations, for example further subpoenas for the production of Department of Justice records and consequently evidence bearing on the plaintiff's criminal record.
It is my impression that given the few facts that were admitted by the defendant on the pleadings and the disparity in opinion between the experts engaged by the various parties that this case was unusually difficult and complex.
Are the costs allowable under the scale inadequate?
The application for a special costs order was supported by affidavits of Christian Foyle dated 22 July 2019 and 24 July 2019. Reference was also made to affidavits made in respect of opposition to the defendant's application for an order allowing it to withdraw its offer. The affidavits reveal that considerable time appears to have been recorded for work done by the plaintiff's solicitor.
However, it is far from clear that all of the work was related to this action. A large body of work needed to be undertaken in pursuit of the plaintiff's applications in the Workers' Compensation Arbitration Service. Those applications needed to address a number of issues that also arise for determination in this action, namely whether the plaintiff's injury resulted in permanent total incapacity, whether there was a consequential right knee pathology, a consequential back injury and consequential psychiatric condition arising out of the left knee injury and whether some cognitive problems were caused by those conditions or was an unrelated and an independent cause of incapacity. This necessarily must have required the plaintiff's solicitors and/or counsel to marshal evidence in support of the issues presented to the arbitrator and to prepare to challenge contrary evidence presented by his employer at that arbitration.
It appears to me that much of the work that would ordinarily be expected to be done in addressing the issues raised in this litigation has already been canvassed by the plaintiff in preparing and presenting his workers compensation cases and appeal.
The plaintiff's solicitor estimates total costs inclusive of counsel fees would exceed $200,000, of which he estimates Foyle Legal's costs to be over $140,000. That evidence is not particularly helpful without some further breakdown. A draft bill of costs, being Annexure CJF19 to his affidavit sworn 22 July 2019, attributes what appears to be something in excess of $100,000 to preparation of the case for trial but provides nothing to indicate what that work was.
Discovery
Both the 2016 and 2018 determinations provide for a maximum of 10 hours for giving discovery of documents. Apart from the requirement to prepare a list of documents verified by affidavit in accordance with forms prescribed under the RSC, discovery is an ongoing obligation. I also observe that in this case a number of medical records and other records were subpoenaed and inspected. Copies taken of Inspected documents need to be discovered as part of a party's ongoing obligations for discovery. It appears to me a large volume of documents have been created or generated over time. My impression is that it is arguable that 10 hours is insufficient time to give full discovery in this case and I would remove the limit in the costs determinations for item 7 (discovery).
Preparation
Item 17 of the 2016 determination and item 18 of the 2018 determination provides for 120 hours in preparation for the case for a senior practitioner. Given that this case only reached the listing conference stage, and notwithstanding it had several pre-trial conferences and a mediation, all of which are subject to their own discrete cost items, and mindful and much of the preparation that needed to be done in respect of this case may have been done in respect of the workers compensation matters, I am not of the impression or opinion 120 hours allowed under the Costs Determination for preparation is inadequate.
Counsel fee on brief
In my opinion counsel fee on brief is a cost item, not a disbursement. The 2018 Determination at item 21 and the 2016 Determination at item 21 provide for counsel fee on brief, ie first day of trial and preparation (including submissions) 3 1/2 days preparation and first day of trial. I am not of the opinion that the amount allowed under the costs determination is inadequate.
Conclusion
Accordingly, I would order:
1.That the defendant to pay the plaintiff's costs of and incidental to the action including reserved costs up to 14 May 2009 on a party and party basis and thereafter as between law practice and its client to be taxed if not agreed.
2.Pursuant to the Legal Profession Act the costs payable to the plaintiff for discovery be taxed without regard to the limits imposed by the applicable scale limits in the Legal Profession (Supreme and District Courts) (Contentious Business) Determination 2018 and its predecessors.
I certify that the preceding paragraph(s) comprise the reasons for decision of the District Court of Western Australia.
TS
Court Officer23 AUGUST 2019
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