Pratt v Hismelt Corporation Pty Limited(S)

[2008] WADC 164

JURISDICTION     :   DISTRICT COURT OF WESTERN AUSTRALIA

IN CIVIL

LOCATION:   PERTH

CITATION:   PRATT -v- HISMELT CORPORATION PTY LIMITED(S) [2008] WADC 164

CORAM:   MAZZA DCJ

HEARD:   ON THE PAPERS

DELIVERED          :   17 NOVEMBER 2008

FILE NO/S:   CIV 2884 of 2001

BETWEEN:   DAVID ANTHONY PRATT

Plaintiff

AND

HISMELT CORPORATION PTY LIMITED
Defendant

Catchwords:

Practice and procedure - Costs - Turns on own facts

Legislation:

Rules of the Supreme Court 1971O 66 r 1

Result:

Costs orders made

Representation:

Counsel:

Plaintiff:     Mr L Gandini

Defendant:     Ms F Davis

Solicitors:

Plaintiff:     Chapmans

Defendant:     DLA Phillips Fox

Case(s) referred to in judgment(s):

Cretazzo v Lombardi (1975) 13 SASR 4

Foster v Chief Executive Officer of the Department of Agriculture [2006] WASCA 95

Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Ltd (1988) 81 ALR 397

Hewitt v Benale Pty Ltd (2002) 27 WAR 91

Hismelt Corporation Pty Ltd v Pratt [2007] WASCA 192

Lo Presti v Ford Motor Company of Australia Ltd (No 2) [2008] WASC 12(S)

Mannix v Loumbos Pty Ltd [2000] NSWCA 32

Pratt v Hismelt Corporation Pty Ltd & Anor [2008] WADC 133

MAZZA DCJ: 

Introduction

1. On 10 September 2008 I delivered judgment in this matter (Pratt v Hismelt Corporation Pty Ltd & Anor [2008] WADC 133) and I dismissed the plaintiff's action against the defendant.

2. In essence, I found that the defendant was the plaintiff's deemed employer pursuant to s 175(1) of the Workers' Compensation & Rehabilitation Act 1981 ("the Act") as a result, the defendant was entitled to the protection afforded it by Pt 4 Div 2 of the Act.  The effect of these provisions was to disentitle the plaintiff to an award of common law damages.

3. I made an order dismissing the plaintiff's claim but I did not, at that time, make an order with respect to costs.  The parties wished to consider their positions so far as costs were concerned and so it was agreed that they would each provide me with submissions on the matter and they were content for me to deal with the point on the papers.  What follows are my reasons and orders on costs.

4. As expressed in his outline of submissions, the plaintiff sought the following orders:

   1.The defendant pay the plaintiff's costs, to be taxed if not agreed, between the commencement of the action to 3 December 2007.

   2.The plaintiff pay the defendant's costs between 3 December 2007 and 10 September 2008 to be taxed if not agreed.

5. In addition, the plaintiff says that there should be no costs order with respect to the costs issue.

6. The defendant sought an order that the plaintiff pay the defendant's costs of the action to be taxed on a party/party basis up to 2 April 2004 and thereafter on an indemnity basis as a result of a Calderbank offer made by the defendant on 11 March 2004.  The defendant asks that any cost order include the submissions it made on the issue of costs.

The plaintiff's submissions

1. The plaintiff provided a chronology of the proceedings.  The plaintiff commenced the proceedings against the first and second defendant on 6 November 2001.  A statement of claim was filed and served on 12 March 2002 and on 14 March 2002 the first defendant filed and served its defence.  In that defence the defendant did not plead the s 175 defence.

2. On 19 June 2002 the Court of Appeal delivered its decision in Hewitt v Benale Pty Ltd (2002) 27 WAR 91. That decision, the plaintiff submitted, should have prompted the defendant to amend its defence to plead that the defendant was the plaintiff's deemed employer under s 175 of the Act. The plaintiff submitted that the defendant did not amend its defence to introduce the s 175 plea until 24 March 2004. At or around that point, it is said, the defendant should have pursued the matter by applying to stay the proceedings or apply for summary judgment or seeking a trial of preliminary issue, but it did not. Rather, the defendant pursued along with the second defendant an application for summary judgment, on different grounds, which succeeded before Deputy Registrar Wallace but failed on appeal to Her Honour Judge Wager. Instead of leaving the matter there, the plaintiff argued, the defendant chose to appeal Judge Wager's decision, an appeal which proved ultimately unsuccessful.

3. In these circumstances, the plaintiff submitted that the defendant unnecessarily protracted the proceedings and that its conduct was so bad that I should, in my discretion, order the defendant to pay the plaintiff's costs up until 3 December 2007 which was the date the defendant brought the application which ultimately saw the plaintiff's claim dismissed.

4. The plaintiff conceded that he must pay the defendant's costs between 3 December 2007 and the date of judgment, 10 September 2008 but says that he should not pay the defendant's costs with respect to the issue before me now.  The plaintiff has not provided any reason why I should make this order.

The defendant's submissions

1. The defendant submitted that as it had been successful in the action it was entitled to its costs from the outset including any costs with respect to the issue before me now.

2. The defendant submitted that it had not unduly protracted the proceedings and it should not be met with any costs order against it.  The defendant pointed to the fact that it sent a Calderbank letter to the plaintiff's solicitors on 11 March 2004 in the following terms (omitting the formal parts):

   "My client offers to settle your client's claim on the basis that each party bears its own costs of the action to date, if your client consents to an order that the action be dismissed with (sic) [within] 21 days.

   My client will not reinstate the above offer and it will pursue your client for indemnity costs if he does not accept the offer and is no better position at the conclusion of the action that he would have been had he done so."

3. The 21 days expired on 2 April 2004.  The plaintiff's solicitors did not reply to the letter.

4. The plaintiff, it is said, should have accepted the offer because, properly advised, he should have known that he had no chance of success and that he acted unreasonably in rejecting the offer.  Accordingly, the defendant submits that the plaintiff should pay its costs on an indemnity basis from 2 April 2004.

The law

1. Pursuant to O 66 r 1 of the Rules of the Supreme Court the costs of proceedings are in the discretion of the Court but generally a costs order will be made in favour of a successful party.  However, if a successful party behaves in a way which has resulted in costs being unnecessarily or unreasonably incurred it may deprive that party of his costs in whole or in part and may order the successful party to pay the costs of the unsuccessful party either wholly or in part.  I accept that a party who unnecessarily protracts proceedings may be deprived of their costs or in an exceptional case be ordered to pay the unsuccessful party's costs see Mannix v Loumbos Pty Ltd [2000] NSWCA 32 at [13] and Cretazzo v Lombardi (1975) 13 SASR 4 at 11 – 12.

2. With respect to the defendant's Calderbank offer, a failure to accept such an offer may give rise to an award of costs on an indemnity basis, if the failure to accept the offer was so unreasonable, that in all of the circumstances, an order for costs on a party/party basis would not be just: Lo Presti v Ford Motor Company of Australia Ltd (No 2) [2008] WASC 12(S) per Beech J at [19]. An example of unreasonable conduct would be where a party, properly advised, knew or ought to have known that their claim or defence had no chance of success: Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Ltd (1988) 81 ALR 397 at 401.

3. In light of the terms of O 66 r 1 and the decisions which I have just referred to, I have the power to grant the costs orders sought by the parties. The question is what orders should I make in my discretion having regard to the circumstances and the justice of the case.

Did the defendant unnecessarily protract the proceedings?

1. I have carefully reviewed the entire file and thoroughly familiarised myself with the history of this litigation.  It is not necessary for me to refer to every step of the way but, I make the following findings:

   1.From the time the Writ was issued in November 2001 up until Deputy Registrar Wallace's orders of 7 June 2005, the plaintiff failed to prosecute the action in a timely way.  Orders had to be obtained for the plaintiff to file a number of documents including a statement of claim, further particulars of claim, further and better discovery and expert evidence.  The plaintiff defaulted on a number of interlocutory court orders which required the defendants to take measures to enforce compliance.  The defendant already has a number of costs orders in its favour which the plaintiff must pay in any event.

   2.In my opinion the defendant should not have pursued an appeal from Judge Wager's decision which, had the effect of delaying the proceedings between 25 November 2005 to 24 September 2007.  The Court of Appeal when it refused the defendant leave to appeal against Judge Wager's decision described the appeal as having "no reasonable prospect of success", Hismelt Corporation Pty Ltd v Pratt [2007] WASCA 192 at [23].

2. Once the Court of Appeal delivered its decision, the defendant took prompt action to bring the matter back before this Court.  Thereafter, it seems to me, both parties acted sensibly in having the s 175 point litigated as a preliminary issue and had the matter heard relatively quickly.

3. While the defendant might have chosen to bring the s 175 point to a head back in 2004, I do not see how the failure by the defendant to do that has caused the plaintiff to pay more costs than he reasonably should have.

4. Even if the defendant had sought to bring the matter to a head back in September 2004, there still would have had to be a trial of the preliminary issues.  Looking at the Court file, it seems to me that after Judge Wager's decision on the plaintiff's appeal, the plaintiff would have incurred few legal costs, if any, on the proceedings before this Court.  Rather, any costs he incurred would have been with respect to the proceedings before the Court of Appeal and I assume that as he was successful, a costs order in his favour would have been made with respect to those proceedings.

5. In my opinion the proceedings have been protracted as a result of both parties conduct at different stages in the proceedings.  I certainly do not think the blame for the delay was solely the defendant's responsibility.  While the defendant should not have appealed Judge Wager's decision, the delay caused by the defendant's appeal would not, in my view, have resulted in the plaintiff incurring costs in this Court.  In these circumstances, I am not prepared to make any cost order against the defendant who, it must be borne in mind has been successful.

Should the defendant recover all of its costs

1. The plaintiff's allegation of negligence against the defendant has never been tested and now never will.  The defendant was successful because of the s 175 point.  That point was not raised until the defendant sought to amend its defence on 24 March 2004.  It could have been raised earlier particularly after the decision in Hewitt v Benale Pty Ltd (supra) was handed down.

2. In these circumstances, I believe that the best way to do justice to the parties is to make an order that they each bear their own costs up until 24 March 2004 when the defendant amended its defence to include the point which ultimately led it to success.  This order is subject to any costs order made in any event.  Those orders must stand.

Should the plaintiff be required to pay costs on an indemnity basis?

1. The mere provision of a Calderbank letter does not entitle a successful to indemnity costs.  I would not be prepared to award indemnity costs unless I came to the view that the plaintiff's refusal to accept the offer contained in the defendant's solicitor's letter dated 11 March 2004 was so unreasonable as to justify an award of indemnity costs.

2. In my opinion, the plaintiff's position was not so unreasonable as to justify an award of indemnity costs.  The interpretation of s 175 of the Act is not without difficulty and, as Wheeler JA acknowledged in Foster v Chief Executive Officer of the Department of Agriculture [2006] WASCA 95 the approach of the Courts of Appeal in this State to the interpretation of the section has not been consistent.

3. In the circumstances, the plaintiff must pay the defendant's costs on a party/party basis from 24 March 2004.  I can see no reason why those costs should not include the submissions with respect to the matters presently before me.

Final orders

1. The final orders I make with respect to costs are:

   1.The parties bear their own costs up to 24 March 2004.

   2.From 24 March 2004 the plaintiff shall pay the defendant's costs on a party/party basis to be taxed if not agreed.

2. So that it is completely clear all costs orders made in any event stand, as do of course, the costs orders made by Judge Wager.