Lowes v Amaca Pty Ltd (formerly James Hardie and Co Pty Ltd)
[2011] WASC 287 (S)
•12 JULY 2012
LOWES -v- AMACA PTY LTD (formerly James Hardie & Co Pty Ltd) [2011] WASC 287 (S)
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2011] WASC 287 (S) | |
| Case No: | CIV:1980/2009 | 9 NOVEMBER 2011, 22 FEBRUARY & 2 MARCH 2012 | |
| Coram: | CORBOY J | 12/07/12 | |
| 25 | Judgment Part: | 1 of 1 | |
| Result: | Application for indemnity costs dismissed Judgment sum amended Plaintiff ordered to pay the costs of applications to reopen his case | ||
| B | |||
| PDF Version |
| Parties: | SIMON LOWES AMACA PTY LTD (formerly James Hardie & Co Pty Ltd) |
Catchwords: | Practice and procedure Applications for costs of part of the action to be assessed on an indemnity basis, to correct errors and omissions in the judgment and for the costs of applications to reopen the plaintiff's case following trial No new principles Turns on its own facts |
Legislation: | Rules of the Supreme Court 1971 (WA), O 21 r 10 |
Case References: | Amaca Pty Ltd (formerly James Hardie & Co Pty Ltd) v Hannell [2007] WASCA 158; 34 WAR 109 Amaca Pty Ltd (under NSW administered winding up) v Booth [2011] HCA Trans 152 Amaca Pty Ltd v Ellis [2010] HCA 5; 240 CLR 111 Brookvista Pty Ltd v Meloni [2009] WASCA 180 Calderbank v Calderbank [1975] 3 All ER 333; (1993) 3 WLR 586 Colgate-Palmolive Co v Cussons Pty Ltd [1993] FCA 536; 46 FCR 225 Flotilla Nominees Pty Ltd v Western Australian Land Authority [2003] WASC 122; (2003) 28 WAR 95 Ford Motor Company of Australia Ltd v Lo Presti [2009] WASCA 115; 41 WAR 1 Lowes v Amaca Pty Ltd (formerly James Hardie & Co Pty Ltd) [2011] WASC 287 Premier Building & Consulting Pty Ltd v Spotless Group Ltd (No 13) [2007] VSC 516 Swansdale Pty Ltd v Whitcrest Pty Ltd [2010] WASCA 129 The State of South Australia v Ellis [2008] WASCA 200; 37 WAR 1 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CIVIL
- Plaintiff
AND
AMACA PTY LTD (formerly James Hardie & Co Pty Ltd)
Defendant
Catchwords:
Practice and procedure - Applications for costs of part of the action to be assessed on an indemnity basis, to correct errors and omissions in the judgment and for the costs of applications to reopen the plaintiff's case following trial - No new principles - Turns on its own facts
Legislation:
Rules of the Supreme Court 1971 (WA), O 21 r 10
(Page 2)
Result:
Application for indemnity costs dismissed
Judgment sum amended
Plaintiff ordered to pay the costs of applications to reopen his case
Category: B
Representation:
Counsel:
Plaintiff : Mr J R C Gordon & Mr M J Magazanik
Defendant : Mr D M McKenna
Solicitors:
Plaintiff : Slater & Gordon
Defendant : Jarman McKenna
Case(s) referred to in judgment(s):
Amaca Pty Ltd (formerly James Hardie & Co Pty Ltd) v Hannell [2007] WASCA 158; 34 WAR 109
Amaca Pty Ltd (under NSW administered winding up) v Booth [2011] HCA Trans 152
Amaca Pty Ltd v Ellis [2010] HCA 5; 240 CLR 111
Brookvista Pty Ltd v Meloni [2009] WASCA 180
Calderbank v Calderbank [1975] 3 All ER 333; (1993) 3 WLR 586
Colgate-Palmolive Co v Cussons Pty Ltd [1993] FCA 536; 46 FCR 225
Flotilla Nominees Pty Ltd v Western Australian Land Authority [2003] WASC 122; (2003) 28 WAR 95
Ford Motor Company of Australia Ltd v Lo Presti [2009] WASCA 115; 41 WAR 1
Lowes v Amaca Pty Ltd (formerly James Hardie & Co Pty Ltd) [2011] WASC 287
Premier Building & Consulting Pty Ltd v Spotless Group Ltd (No 13) [2007] VSC 516
Swansdale Pty Ltd v Whitcrest Pty Ltd [2010] WASCA 129
The State of South Australia v Ellis [2008] WASCA 200; 37 WAR 1
(Page 3)
1 CORBOY J: It was found in Lowes v Amaca Pty Ltd (formerly James Hardie & Co Pty Ltd) [2011] WASC 287 that the defendant had breached a duty of care owed to a class of persons that included the plaintiff and that the breach had caused or materially contributed to the plaintiff developing peritoneal mesothelioma. Judgment was entered against the defendant for approximately $2.068 million.
2 The plaintiff subsequently made two applications: first, for an order that the defendant pay the costs of the action, with the costs to be assessed on an indemnity rather than party and party basis from the date on which the plaintiff made an offer to compromise his claim and second, to amend the judgment so as to correct what were contended to be errors in calculating a component of the damages as assessed and awarded.
3 The defendant opposed the application for indemnity costs. It accepted that the question of whether the judgment should be amended depended on what had been intended by the assessment of the relevant component of the damages awarded to the plaintiff. It also applied for the costs of two unsuccessful applications made by the plaintiff to reopen his case following the trial. That application was opposed.
4 I have concluded that the application for indemnity costs should be dismissed; that the judgment should be amended according to the plaintiff's application and that the plaintiff should pay the defendant's costs of the applications to reopen his case to be agreed or taxed.
The application for indemnity costs
The grounds on which an indemnity costs order was sought
5 The plaintiff submitted that costs ought to be awarded on an indemnity basis as:
(a) Approximately three months before the trial he made a Calderbank offer (Calderbank v Calderbank [1975] 3 All ER 333; (1993) 3 WLR 586) to compromise his claim for $1.6 million. The defendant rejected the offer and damages were awarded for a greater amount. It was contended that the defendant had acted unreasonably in rejecting the offer.
(b) The defendant or its legal advisors had acted improperly or unreasonably in the course of conducting the defence to the plaintiff's claim.
(Page 4)
The relevant principles
6 The principles relevant to awarding indemnity costs where a Calderbank offer had been rejected were identified by the Court of Appeal in Ford Motor Company of Australia Ltd v Lo Presti [2009] WASCA 115; 41 WAR 1. Buss JA (with whom Wheeler JA agreed) summarised the relevant principles as follows:
(a) A Calderbank offer will not justify an award of indemnity costs unless its rejection was unreasonable [16].
(b) All of the relevant facts and circumstances must be considered in determining whether a party's rejection of a Calderbank offer was unreasonable [17].
(c) The rejection of a Calderbank offer was not unreasonable merely because the recipient of the offer was ultimately worse off than it would have been if it had accepted the offer [18]. There was no presumption that indemnity costs will be awarded merely because the offeror bettered the offer in a subsequent judgment [31].
(d) Whether a party acted unreasonably in rejecting a Calderbank offer will involve matters of judgment and impression. It is not desirable or possible to identify all of the circumstances that may be relevant to the assessment of the party's conduct in rejecting the offer. However, regard should be had to, at least, the following matters:
(i) the stage of the proceedings at which the offer was received;
(ii) the time allowed to the offeree to consider the offer;
(iii) the extent of the compromise offered;
(iv) the offeree's prospects of success, assessed as at the date of the offer;
(v) the clarity with which the terms of the offer were expressed; and
(vi) whether the offer foreshadowed an application for indemnity costs in the event of it being rejected [19].
(Page 5)
- (e) The onus rests on the offeror to demonstrate that an order for indemnity costs should be made. However, the offeree is under an onus to raise any other matter relied on to justify its decision to refuse an offer apart from the prospects of success [20] - [21] (Buss JA citing with approval the observations of Byrne J in Premier Building & Consulting Pty Ltd v Spotless Group Ltd (No 13) [2007] VSC 516).
(f) A party may reasonably reject a Calderbank offer where for good reason it lacked sufficient information to make an assessment of its prospects of success or the circumstances on which the assessment was based subsequently changed [20].
(g) The notion of 'unreasonableness' for the purpose of assessing the conduct of a party in rejecting a Calderbank offer is not to be qualified by words such as 'manifestly' or 'plainly' or 'so' [28].
7 The circumstances in which an indemnity costs order may be made on grounds other than the unreasonable rejection of a Calderbank offer were considered by the Court of Appeal in Swansdale Pty Ltd v Whitcrest Pty Ltd [2010] WASCA 129(S). I adopt without reproducing the summary of the relevant principles that appeared at [10] of the court's reasons. The principles identified included that:
(a) An indemnity costs order may be appropriate in situations which are shown to involve some element of improper, or at least unreasonable, conduct by a party or the party's legal advisers: see Colgate-Palmolive Co v Cussons Pty Ltd [1993] FCA 536; 46 FCR 225, 233 (Sheppard J), referred to by Pullin J (as his Honour then was) in Flotilla Nominees Pty Ltd v Western Australian Land Authority [2003] WASC 122(S); (2003) 28 WAR 95 [9].
(b) An indemnity costs order will constitute an appropriate sanction marking the court's disapproval of improper or unreasonable conduct: see Brookvista Pty Ltd v Meloni [2009] WASCA 180 [32]; Flotilla [25].
8 The emphasis in the court's reasons generally in Swansdale was on whether the conduct in question could be characterised as unreasonable or improper. I adopt that as the standard against which the defendant's conduct in this action should be assessed for the purpose of the plaintiff's application.
(Page 6)
9 I also note that in Flotilla, Pullin J also observed that:
(a) The court has jurisdiction to make an indemnity costs order whenever justice requires such an order. However, an order for indemnity costs will only be made if there is some special or unusual feature in the case that justifies a departure from the ordinary practice of awarding party and party costs [8].
(b) There ought not to be a significant gap between party and party costs and solicitor-client costs having regard to the basis upon which the scale of costs is determined in this jurisdiction. That fact, together with the power of the courts to formulate special costs orders, should obviate the need for indemnity costs orders in many instances. However, there was still a place for indemnity costs orders; such orders would be appropriate in cases where there had been improper or unreasonable conduct on the part of a party or its legal advisers so that the order would be a mark of disapproval by the court [25].
The Calderbank offer
10 The plaintiff's application for indemnity costs was supported by an affidavit made by Michael James Magazanik on 8 November 2011. Mr Magazanik is a lawyer employed by the firm of solicitors that appear on the record for the plaintiff.
11 Mr Magazanik attached to his affidavit correspondence exchanged between his firm and the defendant's solicitors. In summary, the correspondence disclosed that:
(a) The defendant offered by facsimile dated 22 December 2009 to settle the plaintiff's claim for $250,000, inclusive of costs (attachment 'MJM 1').
(b) The plaintiff rejected the defendant's offer by letter dated 4 January 2010. The letter proposed that the defendant accept liability for the plaintiff's claim and that only damages be determined by a trial. The letter set out in some detail the basis for that proposal. The matters to which the letter referred are summarised immediately below (attachment 'MJM 2').
(c) The defendant's solicitors replied by facsimile dated 11 January 2010 indicating that they were still investigating the plaintiff's claim and were awaiting expert reports (attachment 'MJM 3').
(Page 7)
- (d) The plaintiff's solicitors subsequently made the Calderbank offer on which the plaintiff relies by letter dated 27 January 2010 (attachment 'MJM 4'). The offer to compromise the plaintiff's claim for $1.6 million plus costs was expressed to be open until 10 February 2010. The letter contained no further information relating to the defendant's liability for the plaintiff's claim other than to note that another witness statement and substance of evidence had been served by the plaintiff's solicitors since their letter of 4 January 2010. It was apparent from the letter that a schedule of damages had already been served on the defendant's solicitors.
(e) The defendant's solicitors replied by facsimile transmitted on 28 January 2010. Their facsimile indicated that they were still waiting for expert reports. However, some short observations on the merits of the claim were made (attachment 'MJM 5'; the reply is further summarised below and see attachment 'MJM 6' which was a short reply by the plaintiff's solicitors to the facsimile dated 28 January 2010).
(f) The defendant did not further respond to the plaintiff's offer prior to its expiry. It made another offer to settle the plaintiff's claim by facsimile transmitted on 9 March 2010 (attachment 'MJM 7'). The offer was for a payment of $350,000 plus costs to be agreed or taxed.
(g) The plaintiff rejected the defendant's offer by letter dated 17 March 2010 (attachment 'MJM 9').
12 The letter of 4 January 2010 from the plaintiff's solicitors stated that:
(a) The letter would be relied on in support of an application for indemnity costs if the defendant refused to admit that it was liable for the plaintiff's claim and the plaintiff succeeded on liability at the trial.
(b) The plaintiff's expert evidence had been served together with 'significant lay evidence'. The 'lay' evidence that had been served was not identified in the letter.
(c) The plaintiff's solicitors would provide the defendant with three further witness statements. The witnesses who had or were to make those statements were not identified. Rather, the letter merely asserted that:
- …one witness, a student at Castledare, will say that he played with the dumped asbestos right up until he left school at the end of 1973; another student will detail how he was forced to spread the asbestos by the brothers at the school; the third witness, a former James Hardie employee, will say that he was aware that the asbestos was being dumped at Castledare and that one of the James Hardie staff was involved in the Castledare Miniature Railway.
13 The balance of the letter referred to documents that were said to demonstrate that the defendant knew or ought reasonably to have known of the risk of harm from exposure to the asbestos waste dumped at Castledare. The letter did not refer to when it was alleged that the asbestos waste had been dumped, the amount of waste that had been deposited or the composition of the waste. It also did not refer to the issues of causation raised by the plaintiff's claim.
14 The facsimile dated 28 January 2010 from the defendant's solicitors included the following statements:
We do not however agree with you that this matter is a straightforward claim in that it occurs in novel circumstances. Contrary to your assertion, the waste was laid at the request of the occupier of the premises, with the permission of relevant authorities, and in accordance with prevailing industry standards.
You will recognise that the concerns raised by Dr McNulty do not relate to the dumping, but rather to a later use which was beyond Amaca's control. We are sure you will acknowledge that the dangers associated with asbestos have been refined and have emerged over time.
There is then the issue of causation …
The defendant's submissions
15 Although it was for the plaintiff to establish that an indemnity costs order should be made, it is convenient to commence with the defendant's submissions on why it had acted reasonably in rejecting the Calderbank offer. The defendant identified seven matters that it contended were relevant:
(a) The circumstances surrounding the plaintiff's claim were unusual and, in some respects, novel;
(b) The claim was not straightforward as was demonstrated by the length of the plaintiff's submissions in closing and indeed, 'even a brief examination' of the submissions highlighted that the claim was unusual and novel;
(Page 9)
- (c) The complexity and novelty of the questions to be determined regarding the defendant's liability were demonstrated by the judgment;
(d) The plaintiff's case on liability was not settled at the time that he made his offer to compromise. It was found that 'key' witnesses relied on by the plaintiff were 'incorrect or confused about their observations' and it was only through the trial that the facts surrounding the plaintiff's claim were established. The defendant was entitled to test the evidence.
(e) Expert reports continued to be exchanged between the parties following the plaintiff's offer to compromise his claim. There was a clear conflict in the expert evidence and the defendant was entitled to test that evidence at trial.
(f) The evidence relied on by the plaintiff was not settled at the time of the Calderbank offer. The plaintiff was granted leave at trial to elicit further evidence from witnesses that he called.
(g) The plaintiff's case on damages had not settled at the time that the Calderbank offer was made. Evidence was led at trial extending the plaintiff's life expectancy and so increasing several aspects of his claim for damages.
Considerations relevant to the defendant's submissions
16 I considered that the following matters were relevant to the defendant's submissions and the plaintiff's application generally:
(a) Litigation over harm caused by exposure to asbestos fibres and dust generally raises difficult issues. Mesothelioma, in particular, has a long latency period so that the courts are required to determine allegations of duty and breach at a considerable distance from the relevant events and circumstances. That raises evidentiary questions concerning proof of the defendant's knowledge about the risks of exposure. Those questions are complicated by the variable relationships between the risk of harm and dose and the type of asbestos fibre implicated in the claimant's disease and by the fact that knowledge about those relationships was accumulated incrementally over time, commencing with the study published by Dr Wagner and his colleagues in 1960.
(Page 10)
- (b) The defendant and its advisors have, of course, acquired considerable knowledge and experience about those matters and the conduct of asbestos litigation generally. They are well placed to make the assessments required by a Calderbank offer. However, there were aspects of the plaintiff's claim in this matter that were novel or which, at least, in my view presented difficulties in assessing the prospects of success. In particular, much uncertainty surrounded the circumstances of the plaintiff's exposure to asbestos dust at Castledare. As was noted in the reasons, 'nearly every aspect of the circumstances surrounding the dumping of waste material by the defendant at Castledare and the plaintiff's alleged exposure to asbestos dust during his childhood visits was contested' notwithstanding that the defendant admitted that it dumped asbestos cement waste at Castledare between early 1971 and early 1973 [51]. At issue was the composition of the waste dumped at Castledare, how much waste material was deposited, where the waste material was dumped within the grounds of Castledare and when it was dumped. The answers to those questions were immediately relevant to determining the likelihood of the plaintiff establishing that the defendant owed a duty of care that had been breached and that the breach had caused or materially contributed to the development of his disease. Two matters were particularly significant:
(i) The plaintiff sought to establish that the defendant had dumped asbestos cement waste at Castledare much earlier than had been admitted. That was so as to prove that the asbestos cement waste contained crocidolite. The relationship between the risk of harm and exposure to crocidolite was much more extensively researched and better understood by the late 1960s than the risk of harm from exposure to other types of asbestos. The possibility that the defendant had dumped asbestos waste containing crocidolite fibres was also significant for establishing causation as it is the most lethal form of asbestos mineralisation.
(ii) The extent to which the plaintiff may have been exposed to asbestos dust when visiting Castledare was relevant to duty, breach and causation because of the relationship between dose and the risk of harm.
(Page 11)
- (c) The plaintiff referred at trial to two cases in which claims had been made for harm allegedly caused by childhood exposure to asbestos: CSR Ltd v Young (1998) Aust Torts Rep 81-468 and Margereson v JW Roberts Ltd (1996) TLR 238 (17 April 1996). The facts of those cases were markedly different to the circumstances of this matter. I accept that the plaintiff's claim was novel in that it concerned exposure to asbestos waste dumped at a place to which visitors had intermittent access and which the plaintiff had only visited on four to six occasions.
(d) The evidence relied on by the plaintiff to establish the circumstances surrounding the dumping of asbestos waste by the defendant at Castledare was summarised at [53] of the reasons. I do not know the date on which the various witness statements referred to in that paragraph were served on the defendant. The letter of 4 January 2010 foreshadowed three further witness statements being provided to the defendant. I infer that the witnesses to which the letter referred were Mr Tavani (who attended Castledare for schooling in 1972 and 1973 and who stated in his witness statement (exhibit 22) that he recalled playing in asbestos waste); Mr Holmes (who gave evidence about being required to spread asbestos waste (exhibit 25)); and Mr Polinelli (who had been employed in the defendant's Rivervale and Welshpool factories and who referred in his witness statement (exhibit 8) to the disposal of waste at Castledare and to Mr Clifton having been involved with the miniature railway at Castledare). However, Mr Tavani's statement was dated 4 March 2010; Mr Polinelli's statement was dated 12 April 2010 and Mr Holmes' statement was dated 25 March 2010 - that is, all of the statements were apparently made well after the date on which the Calderbank offer expired. It cannot be inferred that the statements were provided to the defendant prior to the expiry of the offer notwithstanding the statement made by the plaintiff's solicitors in their letter of 4 January 2010. Further:
(i) The statements of Mr Tavani and Mr Polinelli were not inconsistent with the defendant's admission about when it disposed of asbestos waste at Castledare.
(ii) Mr Holmes' statement suggested that construction of the miniature railway commenced in about 1961 and that asbestos waste had been used transported to Castledare from that time. That was much earlier than when the
- defendant admitted that the dumping of waste material had commenced and there were considerable differences between the evidence of Mr Holmes and Mr Clifton. Those differences were significant as, on Mr Holmes' account, the asbestos waste deposited at Castledare would inevitably have included crocidolite.
- (iii) Mr Polinelli only stated in his witness statement that waste from the defendant's Welshpool factory was sent to Castledare and elsewhere. He briefly described the source of the waste but stated that he was not involved in organising or supervising the disposal of waste from the factory and gave no evidence about the volume of waste dumped at Castledare or where it was dumped within the grounds. He also did not give evidence about the type of asbestos fibre that would have been found in the waste.
- (e) Only an affidavit made by Ms Lowes, which briefly described the plaintiff's childhood visits to Castledare, was dated as having been made prior to the Calderbank offer (exhibit 4). I infer from the admissions made by the defendant in its defence that its solicitors had interviewed Mr Clifton some time prior to the Calderbank offer even though his statement was dated 15 April 2010. No inference can be drawn as to when the defendant's advisors first conferred with Mr Winters.
(f) The plaintiff's solicitors also obtained Dr McNulty's affidavit in November 2009. I assume that it was served on the defendant prior to the Calderbank offer. Dr McNulty's affidavit and its annexures contained important evidence concerning how much asbestos waste had been dumped at Castledare and where it had been placed around the grounds. However, the statements made by Dr McNulty were consistent with the defendant's admissions about when it dumped asbestos waste at Castledare and provided no evidence suggesting that the waste contained crocidolite. Further, there were aspects of Dr McNulty's evidence that the defendant submitted reasonably supported its case.
(g) There were also documents discovered by the defendant that were relevant to establishing the circumstances surrounding the dumping of the asbestos cement waste at Castledare. However, I accept that, as at the date of the Calderbank offer and during the period that it remained open, aspects of the plaintiff's case on
- liability remained 'unsettled'. It was not clear at that time what the plaintiff would be able to establish about the composition of the waste that had been dumped, when the dumping had occurred, the volume of material that had been deposited and where it had dumped or dispersed within the grounds of Castledare. Those matters occupied a significant part of the trial as was evident from the reasons for decision. They were not matters about which the defendant could be said to have particular corporate knowledge given the length of time since the asbestos waste was dumped at Castledare.
- (h) Medical knowledge of the pathogenesis of mesothelioma is imperfect. There have been significant differences in how courts have dealt with the uncertainty when determining causation. Those differences are reflected in decisions in this jurisdiction and issues concerning causation and asbestos related diseases have twice been recently considered by the High Court. In my view, the relevant legal principles could reasonably be regarded as contestable at the time of the Calderbank offer - and subsequently - notwithstanding the decisions of the majority of the Court of Appeal in Amaca Pty Ltd (formerly James Hardie & Co Pty Ltd) v Hannell [2007] WASCA 158; 34 WAR 109 and The State of South Australia v Ellis [2008] WASCA 200; 37 WAR 1. The decision of the High Court in Ellis was not delivered until 3 March 2010 (Amaca Pty Ltd v Ellis [2010] HCA 5; 240 CLR 111).
(i) The plaintiff had obtained a report from Dr Leigh and some reports by Professor Musk (letters dated 13 June, 20 July and 19 August 2009) prior to the Calderbank offer. I also assume that the substance of evidence to be given by Professor Musk (exhibit 35) was the substance of evidence referred to in the correspondence from the plaintiff's solicitors that was exchanged around the time of the Calderbank offer. However, Professor Robinson's report was not provided until early April 2010. Professor Musk's reports expressed a conclusion on causation but provided no explanation for that conclusion.
(j) The defendant obtained Professor Berry's report on the day after the Calderbank offer closed and Dr Gardiner's report one day later. It had received Mr Pickford's report prior to the Calderbank offer being made and Professor Fox's report was dated 5 February 2010. I assume that the defendant's advisors were aware of the
- opinions likely to be expressed by Professor Berry and Dr Gardiner by the time that the Calderbank offer expired; alternatively, I accept the plaintiff's submission that a request could have been made for the period of the offer to be extended to enable their reports to be received given that the reports must have been close to completion by 10 February 2010.
- (k) There were significant differences between the experts over whether the plaintiff's exposure to asbestos cement waste during his childhood visits to Castledare caused or materially contributed to the development of his disease. Those differences reflected, at least in part, different theories about the pathogenesis of mesothelioma. As I endeavoured to explain in the reasons at [617] and following, the medical controversies surrounding mesothelioma have directly impacted on the legal principles to be applied in determining causation. Obviously, the defendant was well aware of those controversies and the related legal issues at the time that the plaintiff made his Calderbank offer. It was clear from the trial and the relevant case law that the defendant and its advisors were familiar with the opinions of Dr Leigh, Professor Robinson and Professor Musk and that they well understood the differences between Dr Leigh, Professor Fox and Dr Gardiner.
(l) However, as was noted earlier, the relevant legal principles for determining causation were - and remain - contestable; see for example the basis upon which the applicant sought special leave in Amaca Pty Ltd (under NSW administered winding up) v Booth & Anor [2011] HCA Trans 152 (10 June 2011) and Stapleton J, 'Actual Causation In Asbestos Cancers' (2010) 126 LQR 351 referred to in the reasons at [618]. In my view, the defendant was reasonably entitled to have regard to the possibility that the legal principles to be applied in determining causation might be further clarified on appeal in a way that was favourable to its case even if it failed on that issue at first instance.
(m) The findings on dose and fibre type were significant for causation. Those findings depended on the evidence relating to when the asbestos waste was dumped at Castledare and the circumstances of the plaintiff's exposures.
(n) Peritoneal mesothelioma is a less common disease than pleural mesothelioma. That had implications for the issues of duty, breach and causation. For example, less was known about the
- relationship between exposure to asbestos fibres and the development of peritoneal mesothelioma at the time that the defendant disposed of asbestos waste at Castledare and it appeared that the epidemiological evidence relating to peritoneal mesothelioma was less well defined.
- (o) The plaintiff's solicitors had raised with Professor Musk the possibility that the plaintiff had been exposed to asbestos while working in the mining industry by the time that the Calderbank offer was made. However, the evidence on the plaintiff's possible exposure was limited. As at February 2010, the defendant had been provided with the first of the plaintiff's two witness statements (exhibit 2). That set out the plaintiff's employment history, including the various mines at which he had worked. The plaintiff indicated that the work at those mines was very dusty but there was no express reference to possible exposure to asbestos. The possibility that the plaintiff had been exposed to asbestos fibre while working in the mining industry was a factor that the defendant was reasonably entitled to take into account in considering the prospects of success. Professor Fox and Dr Gardiner expressed opinions on that possibility that were favourable to the defendant's case.
(p) Two expert reports that were relevant to the assessment of the plaintiff's damages were dated at about the time of the Calderbank offer: Ms Nestler's report (exhibit 194) was dated 7 February 2010 and Ms Pass's report (exhibit 195) was dated 14 February 2010. I do not know when Ms Nestler's report was served on the defendant. However, I accept that the defendant had sufficient information concerning the plaintiff's circumstances to form a view about the likely award of damages if his claim succeeded for the purpose of assessing the Calderbank offer.
The plaintiff's contentions
17 The plaintiff contended that:
(a) The Calderbank offer represented a 'discount' of approximately 20% on the damages awarded following trial.
(b) The defendant apparently considered that it was in a position to assess the prospects of success prior to the Calderbank offer being made as it made an offer in December 2009. Further, the defendant's subsequent offer in March 2010 indicated that the
- defendant was confident of its position and considered that there was little risk of it being found liable to the plaintiff. There were a number of matters denied in its defence that the defendant either abandoned or failed to establish at trial (the matters were listed at par 34 of the plaintiff's submissions). The defendant acted unreasonably in denying many of the matters alleged in the statement of claim and its assessment of the prospects of success was also unreasonable.
- (c) The defendant's solicitors had stated in their facsimile of 28 January 2010 that the defendant had deposited asbestos waste at Castledare with the permission of 'relevant authorities'. However, no evidence to that effect was adduced at trial and the statement was 'without foundation and entirely unreasonable' (plaintiff's submissions, par 41). Similarly, the facsimile had stated that the waste material had been disposed of according to prevailing industry standards. However, the defendant ought to have known that the dumping of the waste material was contrary to industry, government and health authority standards and its own policies. It was found at trial that the disposal of the waste material at Castledare was contrary to 'existing policies'.
(d) A number of other aspects of the defendant's case were also 'unreasonable':
(i) the interpretation of the concerns expressed by Dr McNulty in the contemporaneous documents attached to his affidavit;
(ii) the defendant’s position on causation - 'the defendant has produced no evidence to sustain a reasonable basis for a well founded belief that it would succeed on this issue, and its rejection of the plaintiff's Calderbank offer, insofar as it was based on its consideration of its causation position, was unreasonable' (par 67) and 'moreover, it cannot be said that the defendant's position was so objectively strong that it was entitled to a verdict on the question to vindicate its position, and that this might be a reason for its refusal of a reasonable compromise offered by the plaintiff' (par 68);
(iii) the defendant's 'position that [the plaintiff] had developed mesothelioma as a result of exposures in the mining
- industry was completely unreasonable in the absence of any evidence that [the plaintiff] was so exposed' (par 69);
- (iv) the defendant had 'no basis for confidence in its position on either duty of care or foreseeability' (par 72).
18 The plaintiff also made lengthy submissions that were critical of Mr Pickford's report and the defendant's reliance on his report. The submissions reflected, in part, criticisms made of Mr Pickford's evidence at trial and, in part, findings that were made about his evidence (see at [743] and following). It was said that the 'shortcomings' in Mr Pickford's report should have been known to the defendant.
19 Finally, the plaintiff submitted that, 'rejecting [the] Calderbank offer was unreasonable in light of the defendant's past experience of asbestos litigation, and in light of its awareness of other decisions in Australian courts concerning asbestos matters' (par 75).
Considerations relevant to the plaintiff's contentions
20 In my view:
(a) The time that the offer was open for acceptance and the clarity with which it was expressed provided the defendant with a reasonable opportunity to consider the proposed compromise.
(b) The nature and complexity of the issues raised by the plaintiff's claim were such that it could not be said that the defendant had acted unreasonably merely by rejecting an offer that was approximately 20% less than the damages awarded following the trial.
(c) It was not entirely clear what the defendant had in mind when it stated that the asbestos waste had been disposed of with the permission of the relevant authorities. As to the reference in the defendant's facsimile of 28 June 2010 to various standards, there were regulations and industry codes that sought to specify exposure levels for workers in the asbestos industry and for persons who worked with asbestos products and there were also guidelines by the late 1960s for disposing of asbestos waste. The defendant argued that the plaintiff's exposure to asbestos fibre and dust at Castledare was less than the levels prescribed by the regulations and codes. It also contended that, on the basis of the evidence of Mr Clifton and Mr Winters, the waste was dumped in
- a swamp area where it hardened. It was open to submit that disposal of the waste in that way was not a significant departure from industry guidelines - dumping the waste in the swamp area in the manner described by Mr Clifton in his witness statement might be regarded as similar to covering the waste. Further:
- (i) Much of the plaintiff's proposed evidence on the dumping of the asbestos waste at Castledare was served after the Calderbank offer was made.
(ii) There was no evidence as to when the defendant learnt that Dr McNulty was not able to attend the trial. I am unable to conclude that it knew at the time of the offer that Dr McNulty would not be available to be cross-examined on his evidence. Exhibit 75, which was a letter from Dr McNulty's consulting physician, was dated 14 April 2010. Dr McNulty's affidavit had been made approximately 10 weeks before the Calderbank offer.
- (d) The defendant's position on causation was reasonable for the reasons that have already been mentioned. Similarly, it was reasonable for the defendant to have regard to the possibility that the plaintiff may have been exposed to asbestos while working in the mining industry. It was, perhaps, surprising that the defendant had not made more extensive enquiries in an attempt to establish the precise location of the mines at which the plaintiff had worked in relation to the known location of asbestos mineralisation in the Pilbara and the Goldfields. However, the issue had been raised by the plaintiff's solicitors in correspondence with Professor Musk. Further, the reasonableness or otherwise of the defendant's decision to refuse to accept the Calderbank offer cannot turn on one forensic aspect of the case given the complexity and nature of the issues that were raised by the plaintiff's claim.
(e) The matters that the plaintiff contended that the defendant had unreasonably denied and which had provided no reasonable basis for assessing the prospects of successfully defending the action (the matters identified at par 34 of the plaintiff's submissions) were extracted from allegations made in the particulars to par 2 of the statement of claim and in par 6. Some of the matters to which the plaintiff referred in his submissions concerned allegations about the defendant's knowledge of the risks of harm from exposure to asbestos. The difficulty with the pleading of those
- allegations was that no time was specified at or by which defendant was alleged to have known of the various matters pleaded (see par 6 of the statement of claim). It was, accordingly, reasonable to deny the allegations that were made; as was explained in the reasons for decision, knowledge about the risks of harm from inhaling asbestos was acquired over time. Further, a party is strictly not required to plead to particulars. The defendant's position on what was admitted about the actual dumping of the waste material at Castledare was made clear prior to the trial by the witness statements of Mr Clifton and Mr Winters. Its position on that matter was not, in my view, unreasonable.
Conclusion on the defendant's refusal to accept the Calderbank offer
21 As the Court of Appeal noted in Lo Presti, the question of whether the defendant unreasonably rejected the plaintiff's Calderbank offer involves matters of impression and judgment. In my view, it was not unreasonable for the defendant to have rejected the offer having regard to the amount of the offer and the various considerations that have been identified above as relevant to the parties' contentions. Those considerations shaped the impression that I formed.
22 In particular, I do not consider that it could be inferred that the defendant had adopted an unreasonable view of its prospects of successfully defending the plaintiff's claim in rejecting the Calderbank offer. The course of the trial, the parties' submissions in closing and the reasons that were delivered indicate that there were numerous issues raised by the claim that would have been difficult to assess at the time of the offer. It was not surprising that both parties made allegations that were not established by the evidence adduced at the trial given that the relevant events occurred in the late 1960s/early 1970s. As has been noted, the plaintiff, for example, endeavoured unsuccessfully to prove that the defendant had dumped asbestos waste at Castledare much earlier than it admitted.
23 There was no evidence about when the plaintiff's solicitors served the witness statements of Mr Tavani, Mr Wagland, Mr Holmes and Mr Dalton. However, I consider that it would have been reasonable for the defendant to have rejected the plaintiff's Calderbank offer even if a draft of their statements or the substance of their evidence had been provided to the defendant prior to the offer. I formed that view having regard to the contents of the statements, the evidence proposed to be given
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- by Mr Clifton, the time that had passed since the events about which they were to give evidence and the nature of the issues to be determined in the plaintiff's claim.
24 Similarly, I do not consider that the defendant’s position on causation could be characterised as unreasonable having regard to the expert evidence that had been served by the time of the Calderbank offer, the fact that the plaintiff has peritoneal mesothelioma, the imperfect state of medical knowledge on the pathogenesis of mesothelioma and the differences in the case law on the principles to be applied to determine causation.
The other grounds for seeking an indemnity costs order
25 The plaintiff further contended that the defendant's conduct of the litigation was improper or unreasonable according to the test identified by Pullin J in Flotilla Nominees:
(a) The defendant had withheld 'key' documents from Mr Pickford - dust counts that had been taken by an employee of the defendant (exhibit 66) and dust samples recorded in a bundle of documents discovered by the defendant (exhibit 69). The other 'shortcomings' in Mr Pickford's report were such that the report 'should not have been provided to the court given the defendant's decision to withhold documents and the other errors and unfounded assumptions' (par 93(a)).
(b) The defendant sought 'to incriminate alleged mining exposure for the plaintiff's mesothelioma despite having no evidence of such exposure and despite its expert Mr Pickford - on whose report it relied - having concluded the mining exposure was less than one-third the Castledare exposure and hence meaningless' (par 93(b)). It did not draw Mr Pickford's conclusion to the attention of Dr Gardiner or Professor Fox (par 93(b)).
(c) The defendant did not provide Professor Berry's report to Professor Fox and Dr Gardiner 'despite knowing of the problems of Mr Pickford's report' (par 93(c)).
(d) The defendant failed to discover the documents that resulted in the applications that were made to reopen the plaintiff's case (par 93(d)).
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- (e) The defendant 'asserted' many matters in its defence that could not be sustained (pars 93(e)).
26 In my view, those matters do not establish that the defendant conducted the litigation in a way that requires the court to express its disapproval whether they are considered separately or together:
(a) It was not apparent why Mr Pickford was not provided with the dust sample records forming exhibits 66 and 69 as part of his instructions. However, the documents had been discovered. It was not alleged that the defendant's solicitors deliberately withheld the documents in instructing Mr Pickford and I do not consider that such an allegation could have been properly made.
(b) Mr Pickford made significant concessions in cross-examination and it was found that there was force in the criticisms of his evidence offered by Dr Leigh and submitted by the plaintiff in closing: [747] - [749]. However, in my view the criticisms were not of a kind or severity that required the court's sanction and an order for indemnity costs would have been disproportionate.
(c) Dr Gardiner and Professor Fox accepted Mr Pickford's estimates of the plaintiff's exposure to respirable asbestos fibres during his visits to Castledare. They disclaimed the expertise required to assess the validity of Mr Pickford's estimates. However, I do not consider that the defendant's solicitors were obliged to draw any particular conclusion or opinion expressed by Mr Pickford to the attention of Dr Gardiner or Professor Fox. They were briefed with his report. It was for them to draw whatever information from the report that they considered relevant and that they could derive according to their expertise and to apply that information in whatever way that they regarded as being appropriate consistent with their expertise.
(d) There were differences between the opinions expressed by Mr Pickford and Professor Berry. Professor Berry, Dr Gardiner and Professor Fox were instructed by the defendant's solicitors at about the same time (see exhibits 62, 78 and 117). It might have been desirable to refer Professor Berry's report to Dr Gardiner and Professor Fox for further comment. However, I do not consider that the failure to provide to do so could be described as unreasonable or improper so as to require the court to mark its disapproval according to the principle identified by Pullin J in
- Flotilla. It is relevant to note that Dr Gardiner and Professor Fox were not cross-examined on Professor Berry's report.
- (e) The documents that the plaintiff contended ought to have been discovered concerned a donation made by the defendant to the Castledare Miniature Railway Inc in 1999 to assist with the rehabilitation of the site of the railway. The documents were discovered by the defendant after the first application by the plaintiff to reopen his case. It was noted in the reasons that it was a moot point whether the documents ought to have discovered on the Peruvian Guano test but (at [899]):
(i) the documents themselves did not contain an admission and were not relevant given that the donation was made many years after the events relevant to the plaintiff's claim;
(ii) the evidential value of the Richard Noble reports and related documents - documents which the plaintiff argued would have been uncovered had the defendant discovered the documents relating to the donation - was slight.
In my view, it cannot be said that the failure to discover the documents relating to the donation was unreasonable or improper.
(f) The matters that were said to have been 'asserted' by the defendant were, in fact, the matters that were denied by the defendant in its defence and which were referred to in par 34 of the plaintiff's submissions. Obviously, there is a difference between an assertion and a denial. In any event, the defendant did not unreasonably deny matters by its defence for the reasons that have been explained on why it did not unreasonably reject the plaintiff's Calderbank offer.
The application to 'correct' the judgment
27 It was found that the plaintiff's life expectancy was two years from the completion of the trial in June 2010 [843]. It was further found that the plaintiff would require care during that period [869]. Future care was assessed according to a report by a nursing consultant, Ms Nestler. Ms Nestler's report, dated February 2010, was tendered by consent (exhibit 194).
28 Findings on the assessment of the cost of providing future care for the plaintiff according to Ms Nestler's report were made at [869] of the
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- reasons for decision. Some aspects of Ms Neslter's assessment of the plaintiff's future requirements for care were not accepted. However, her estimates of the costs of providing care were accepted.
29 The plaintiff identified three matters in the assessment of his loss for the cost of future care which he contended did not reflect the findings that had been made according to Ms Nestler's report. The matters concerned the calculations appearing at [869] and [870] of the reasons. The defendant did not dispute that the judgment could be corrected if the calculations that appeared in those paragraphs contained unintended errors or omissions of the kind that may be corrected by the 'slip rule'.
30 I accept that the calculations that the plaintiff has identified contained errors that were unintended and that they arise from accidental slips or omissions within the meaning and for the purpose of O 21 r 10 of the Rules of the Supreme Court:
(a) Ms Nestler referred to months in the body of her report. However, the schedules to her report used weeks. The intention was to replicate the approach taken in the schedules rather than to approximate the loss by adopting four weeks for each month. It was intended by that means to ensure that the plaintiff was compensated as completely as possible for the two year period of his estimated life expectancy rather than to approximate the loss. Accordingly, the judgment ought to have referred in par [869(b)] to an amount of $31,712 rather than $29,273.
(b) An amount was inadvertently omitted from the calculation appearing in par [869(c)] for the first nine month period of future care. The relevant passage of the judgment should have read: '[a]ccordingly, the amount assessed for these periods is $34,944 (being eight hours x $40 per hour x 39 weeks and $576 per week (see exhibit 194, schedule 1) x 39 weeks).
(c) A period of approximately eleven weeks was inadvertently omitted from the calculations as a result of disallowing an aspect of Ms Nestler's assessment [869(b)]. Consistent with the reasons in [869(c)], that period should have been split between the period for which eight hours per week care had been allowed and the period for which a higher level of care had been allowed. The relevant calculation is eight hours per week x $40 per hour x 6 weeks for the first period and $576 per week x 5 weeks for the second period. The resulting amount is $4,800.
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31 The effect of those errors is that the amount stated as assessed for future care in [870] and [871] ought to have been $85,184 ($13,728 + $31,712 + $34,944 + $4,800) and the total damages stated in [871] as having been assessed should have been $2,089,843.93. The judgment should be amended to record that the judgment sum is $2,089,843.93.
The costs of the application to reopen the plaintiff's case
32 The plaintiff's applications to reopen his case were dismissed. The reasons why the applications were refused appear at [882] of the reasons for decision and following.
33 The plaintiff contended that the defendant should pay the costs of the applications notwithstanding that they were dismissed as:
(a) The defendant ought to have accepted his Calderbank offer. The applications and the trial would have been unnecessary had it accepted the offer.
(b) The documents relating to the donation made by the defendant to the Castledare Miniature Railway Inc ought to have been discovered. The documents would have disclosed that asbestos waste had been removed from the grounds at Castledare. That would have led the plaintiff's solicitors to discover the existence of the Richard Noble reports and documents related to those reports.
34 It has been found that the defendant's rejection of the plaintiff's Calderbank offer was reasonable. Consequently, it is only the second of those reasons that could provide a basis for ordering that the defendant pay the costs of the applications to reopen.
35 It is fundamental to the proper administration of justice that parties conscientiously discharge their obligations of disclosure in court proceedings. A party that fails to discover relevant documents will ordinarily be required to pay the costs of any resulting application. However, I consider that costs should follow the event in this instance having regard to the reasons for why the applications to reopen were refused. I have also taken into account the following matters in reaching that conclusion:
(a) I accept that the documents were discoverable on the extended Peruvian Guano test. Although the documents would have revealed a train of enquiry, they were at the periphery of what was discoverable. It was not suggested that the defendant deliberately
- withheld discovery of the documents. That suggestion could not be made having regard to the content of the documents and the nature and magnitude of this matter.
- (b) The plaintiff's solicitors had, in fact, pursued the train of enquiry that it was submitted they would have pursued had the documents been discovered. The fact that they did not ascertain prior to the trial that asbestos had been removed from the grounds of Castledare was not due to the failure by the defendant to discover documents. At most, the plaintiff's solicitors might have been more confident that remedial work had been performed when making their enquiries had they been armed with the documents relating to the donation made by the defendant.
(c) The Richard Noble reports and the related documents would have been relevant to the plaintiff's allegation that the asbestos waste was dispersed more widely across the grounds of Castledare than was suggested by Mr Clifton. However, the reports raised several evidentiary issues, their relevance was limited and the main point that emerged from the reports was that there was no crocidolite in the samples that had been taken and analysed (a matter that was contrary to the plaintiff's case).
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