Roseanne Cleary as the legal personal representative of the estate of the late Fortunato (aka Frank) Gatt v Amaca Pty Limited

[2021] NSWDDT 7

Dust Diseases Tribunal

New South Wales

• Amendment notes

Medium Neutral Citation:

Roseanne Cleary as the legal personal representative of the estate of the late Fortunato (aka Frank) Gatt v Amaca Pty Limited [2021] NSWDDT 7

Hearing dates:

8 October 2021

Date of orders:

1 December 2021

Decision date:

01 December 2021

Before:

Strathdee, J

Decision:

(1)   I make an order in accordance with prayer 2 of the plaintiff’s Notice of Motion filed 28 September 2021, with the following addition:

# Defendant to pay plaintiff’s costs on an ordinary basis up to and including 31 July 2020; and

# Defendant to pay plaintiff’s costs on an indemnity basis from 1 August 2020 to the conclusion of these proceedings, including this motion.

(2)   I make an order in accordance with prayer 5 of the defendant’s Notice of Motion filed 17 September 2021 and dismiss all other orders sought.

I further make no order with respect to the costs of this motion

Catchwords:

COSTS – indemnity costs – ordinary costs – discretion to award costs – power to impose personal costs orders – notice to be given

APPEALS – stay awarded of primary judgment – whether a stay should be sought from the appellate court – monies becoming non-recoverable

Legislation Cited:

Civil Procedure Act 2005 (NSW)

Dust Diseases Tribunal Regulation 2013

Cases Cited:

Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225

Edwards and Ors v Endeavour Energy and Others; Precision Helicopters Pty Limited v Endeavour Energy and Ors; Endeavour Energy v Precision Helicopters Pty Limited and Anor(No. 1) [2012] NSWSC 1659

Hamod v State of New South Wales [2011] NSWCA 375

Harrison v Schipp [2001] NSWCA 13

King v Muriniti (2018) 97 NSWLR 991

Lemoto v Able Technical Pty Ltd (2005) 63 NSWLR

Medcalf v Mardell [2003] 1 AC 120

Muriniti v Mercia Financial Solutions Pty Ltd [2021] NSWCA 180

Newell v De Costi [2018] NSWCA 49

Ridehalgh v Horsefield [1994] Ch 205

Oshlack v Richmond River Council (1998) 193 CLR 72

TCN Channel 9 Pty Ltd v Antoniadis (No 2) (1999) 48 NSWLR 381; [1999] NSWCA 104

Treadwell v Hickey [2010] NSWSC 119

Woolworths Ltd v Strong (No 2) (2011) 80 NSWLR 445; [2011] NSWCA 72

Category:

Procedural rulings

Parties:

Roseanne Cleary as the legal personal representative of the estate of the late Fortunato (aka Frank) Gatt (Plaintiff)
Amaca Pty Limited (Defendant)

Representation:

Counsel:
Mr J Sharpe appeared for the Plaintiff
Mr D Hooke SC appeared for the Defendant
Mr D Lloyd SC and Mr Smith for Mr Simic

Solicitors:
Taylor & Scott (Plaintiff)
Rankin Ellison (Defendant)
K+L Gates (Mr Simic)

File Number(s):

256/2018 2020/00163145

Publication restriction:

None

Judgment

Introduction

1. On 6 September 2021, I delivered judgment in the substantive proceedings, in the following terms:

1. Judgment for the plaintiff against the defendant in the sum of $540,000.00.

2. Defendant to pay the plaintiff’s costs as agreed or assessed.

3. If any alternate costs order is sought, parties must notify my associate within 14 days.

2. The plaintiff filed a Notice of Motion on 28 September 2021 seeking an order that the defendant pay the whole of the plaintiff’s costs of the proceedings on an indemnity basis.

3. The defendant filed a Notice of Motion on 17 September 2021 which seeks an order that various of its costs be payable by the plaintiff on an indemnity basis and, separately, an order that the Tribunal’s judgment be stayed until further order of the Tribunal or the Court of Appeal.

4. The parties requested a further hearing date to argue the question of costs. At a directions hearing before me on 20 September 2021, I gave notice to counsel for the plaintiff pursuant to s 99 of the Civil Procedure Act 2005 (NSW) (‘CPA’) that I was contemplating making a personal costs order against the solicitor for the plaintiff with regard to the costs associated with the conclave and the Joint Expert Report (‘the JER’). I directed the parties to file and serve submissions by 5 October 2021.

5. On 7 October 2021, my associate received an email from K+L Gates who now act for Mr Simic. The email sought leave for Mr Simic to be represented at the costs argument, and provided an affidavit of Mr Simic sworn 7 October 2021. I granted that leave, and at the hearing of the costs argument, Mr Simic was represented by Mr D Lloyd SC and Mr Smith. Mr D Lloyd SC provided written submissions by email on 7 October 2021.

6. The costs argument proceeded before me on 8 October 2021.

Background

7. The details of the substantive proceedings are well known to the parties and are set out in my Judgment of 6 September 2021.

8. An issue that arose at trial was the effect of the conclave between Mr Kottek and Mr Pickering, the JER that arose from the conclave and the subsequent events. These matters are dealt with extensively in the written submissions of the parties on the costs argument, the closing written submissions of the parties and the transcript of the trial.

9. The events can be summarised as follows:

10. The conclave was organised at short notice and on 30 October 2020 the parties jointly provided written instructions to the experts, which contained the following:

‘For the purpose of the joint report assume that Mr Gatt’s exposure to asbestos as described by him in paragraphs [15]-[27] of his affidavit and the transcript of his evidence given on 6 March 2019 at page 3/line 17 to page 4/ line 3, copies of which are enclosed.’ (see letter Rankin Ellison 30 October 2020)

11. Mr McIntyre SC was arranged as a facilitator to assist the conclave and a stenographer was also arranged. The letter does not provide any further documentation to the experts, or guidance as to how the JER was to be prepared.

12. The experts were to give their evidence concurrently before me in the week commencing 9 November 2020.

13. It is common ground that the conclave proceeded and on Thursday 5 November 2020, the two experts, namely Mr Kottek and Mr Pickford agreed and signed the JER (Exhibit DD) which was sent to the solicitor for the defendant, Mr Prentice. It was then provided it to the plaintiff’s solicitor, Mr Simic, on 6 November 2020. There is no suggestion that Mr Prentice failed to provide the report to Mr Simic, it is just disappointing that it was not sent to mr Simic at the same time it was sent to Mr Prentice.

14. It is submitted by the plaintiff that on its face, the JER included material which was not the subject of the request by the parties in the letter of instruction dated 30 October 2020, and in fact relied on other material.

15. That material, the plaintiff asserts, included Mr Pickford’s opinion evidence which included:

1. Reliance on his employment experience at Wunderlich and at the defendant, but for a different period of time to when the deceased was exposed (June 1962 – July 1964); and

2. His belief that the mixers had ‘hatches’ (so that there was no dust): see letter from Mr Kottek dated 9 November 2020 (Exhibit PP).

16. I accept that upon the receipt of the JER, Mr Simic sought to clarify the evidence of Mr Kottek, given the letter of instruction dated 30 October 2020. There were extensive discussions between Mr Simic and Mr Kottek over the Friday, Saturday and Sunday. Documents were forwarded to Mr Kottek by Mr Simic over the weekend.

17. On Monday 9 November 2020, Mr Kottek provided to Mr Simic a letter addressing the conclave and his opinion. It is clear in that letter that his opinion had changed, as he stated as follows:

‘… since the transcript was produced, I have been supplied with the document ‘Dust Control Notes on Discussion 17.1.63’ and the ‘Notes on exposure Indices’ attached to this document. I had not previously seen the ‘Notes on Exposure Indices’.

And then further ‘… I withdraw my answers contained in the conclave transcript. I have attached an appendix which outlines my revised opinions on the questions posed to the conclave.’

18. The plaintiff asserts that once Mr Simic became aware that Mr Kottek wished to withdraw his answers in the conclave, it was incumbent upon Mr Simic as an officer of the Court to bring this to the attention of the defendant and the Tribunal. The details of the steps taken by Mr Simic will be discussed later.

19. When this was brought to my attention on 9 November 2020, I was concerned that Mr Kottek’s changed opinion, could create a risk that the Tribunal could have been misled if Mr Kottek’s revised opinion was not before me (T153.4–153.7).

20. Then ensued argument between the parties as to whether Mr Kottek could give evidence as to what occurred in the conclave. This was opposed by the defendant as they were entitled to do. I did not allow evidence to be adduced as to what occurred in the conclave (Judgment [113]).

21. Mr Kottek and Mr Pickford gave evidence jointly before me over a number of days. I accept that the plaintiff had flagged her intention to cross-examine Mr Pickford (T260–T341). The plaintiff submits that the defendant had also flagged its intention to cross-examine Mr Kottek (T193–T260, and Judgment [99]–[101]).

Indemnity Costs

22. Part 5 of the Dust Diseases Tribunal Regulation 2019 (‘the Regulations’) deals with Offers of Compromise and the circumstances in which such offers affect final costs orders:

‘DUST DISEASES TRIBUNAL REGULATION 2019 - REG 89

Where offer not accepted and judgment no less favourable to plaintiff

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.’

23. The plaintiff issued an Offer of Compromise in accordance with the Regulations on 17 January 2019, which was after the compulsory Mediation which had occurred on 23 October 2018 (reg 89(4)(c)).

24. Regulation 86 displaces any other rules of Court in relation to an Offer of Compromise. The plaintiff’s offer complied with reg 88.

25. Section 98(1) of the CPA provides as follows:

‘98 COURTS POWER AS TO COSTS

(1) Subject to rules of court and to this or any other Act –

(a) costs are in the discretion of the court, and

(b) the court has full power to determine by whom, to whom and to what extent costs are to be paid, and

(c) the court may order that costs are to be awarded on the ordinary basis or on an indemnity basis.’

26. The defendant did not accept the offer and the plaintiff has obtained a Judgment which was more favourable than the terms of the Offer of Compromise. Accordingly, the plaintiff submits, that under reg 90(2)(b), costs are to be ordered on an indemnity basis. In accordance with the Regulations, the plaintiff further asserts that the defendant was in a position to deal with the plaintiff’s claim by the time that the Offer of Compromise was made.

27. On 6 March 2019, in the substantive proceedings, the defendant cross-examined the plaintiff after the Offer of Compromise had expired. The defendant did not cross-examine the plaintiff as to his exposure to asbestos.

28. The principles relevant to assessing whether there is some special or unusual feature to entitle a party to indemnity costs of the case are well-established: Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225 at 233–234 (Shepherd J) (cited in, inter alia,Harrison v Schipp [2001] NSWCA 13 at [139] (Giles JA, Handley and Fitzgerald JJA agreeing)).

29. The defendant submits that it has not recklessly caused the parties to occasion costs, and as such there has been no relevant delinquency: Oshlack v Richmond River Council (1998) 193 CLR 72 at [44] (Gaudron and Gummow JJ).

30. The defendant asserts that their rejection of the Offer of Compromise dated 17 January 2019, was reasonable in the circumstances because:

1. the offer had expired either 7 or 14 days after it was served;

2. at that point in time, the trial had not commenced;

3. the plaintiff had not served all her evidence;

4. Mr Gatt’s oral evidence had not been taken; and

5. the issue of whether Mr Gatt suffered asbestosis was not yet an issue between the parties.

31. The question of the diagnosis of asbestosis, I accept, was not raised until August 2020, immediately before the trial was to re-commence. It was such a significant issue that the proceedings had to be adjourned, and I made a costs order in favour of the defendant with regards to the costs thrown away by way of the adjournment, such order being on an indemnity basis.

32. The diagnosis of asbestosis was a critical issue in the proceedings and is referred to in my Judgment as follows:

‘[261] … I find that the inhalation of the asbestos dust and fibre made a material contribution to his development of lung cancer on the scientific evidence as I find that the fibre burden was sufficient to cause asbestosis.’

33. I accept the submission by the defendant, that as at January 2019 when the Offer of Compromise was made, the defendant had reasonable prospects of success as the case was, at that point in time, a case of lung cancer in the absence of asbestosis in circumstances where Mr Gatt had a significant smoking history.

34. Accordingly, the defendant submits that as the offer was made so early in the litigation, and made in the context of a profoundly different case from the one which ultimately went to trial and in which the plaintiff was successful, the rejection of the offer was not reckless or delinquent. I accept that as correct.

35. The defendant then addresses the conduct of the solicitor for the plaintiff, and asserts that such conduct is a powerful factor against indemnity costs. This is referred to in the Judgment at [95]–[114], including:

‘[113]   The conduct of Mr Simic in this regard has occasioned a significant increase in the Tribunal’s time to hear the evidence of these experts, which delayed the proceedings and no doubt occasioned significant costs to the parties…’

36. I refer later in this Judgment as to the events surrounding the conclave and the JER.

37. The plaintiff asserts that the defendant refused to engage with them after the Offer of Compromise was served. At [30] of Mr Prentice’s affidavit of 5 October 2021, it is demonstrated that there were a number of exchanges between the parties concerning settlement of the matter. The fact that the parties agreed quantum of damages and contributory negligence on 31 July 2020 evidences the fact that negotiations must have been taking place between them, and therefore I do not accept that the defendant refused to engage in further settlement discussions.

38. The plaintiff submits that the defendant ran the case as a ‘test case’ with regard to lung cancer and cigarette smoking, and that as such the defendant was acting unreasonably.

39. The plaintiff’s claim was not straightforward as it involved lung cancer having arisen in a heavy cigarette smoker. The issues to be examined included:

• whether Mr Gatt did in fact suffer from asbestosis;

• the cumulative fibre burden to which he was exposed; and

• the epidemiology of lung cancer in the context of a heavy smoker.

40. In my view, the defendant was entitled to test and contest the plaintiff’s claim, and adopting that course is not demonstrative of ‘relevant delinquency’, such that would entitle the plaintiff to indemnity costs for all of the proceedings.

41. Whilst I accept that the Offer of Compromise made on 17 January 2019 was at a point in time where the defendant could not reasonably assess the proceedings and the evidence, I note that a further offer was made to the defendant to resolve the proceedings on 1 October 2019 in the sum of $325,000.00 plus costs, or in the alternative, $395,000.00 inclusive of costs, which was not accepted.

42. Clearly, there were further discussions between the parties with regard to resolution of the proceedings, as on 31 July 2020 the parties agreed that if the plaintiff was to obtain a verdict in her favour, damages are assessed in the sum of $600,000.00 less an agreed deduction of $60,000.00 for an agreed 10% for contributory negligence, which gave a final agreed verdict of $540,000.00.

43. In an email of 31 July 2020 the plaintiff’s solicitor wrote to the defendant’s solicitor confirming the above agreement, and then making a Calderbank v Calderbank offer of $520,000.00 plus costs agreed in the sum of $200,000.00 inclusive of GST (Annexure I to Simic affidavit of 15 September 2021).

44. In paragraph 30 of Mr Prentice’s affidavit of 5 October 2021, Mr Prentice deposes that there was an email from the plaintiff’s solicitor dated 31 July 2020, and no further correspondence is detailed as passing between the parties. That email of 31 July 2020 from Mr Simic to Mr Prentice contains a Calderbank offer in a sum less than the amount awarded to the plaintiff in damages by agreement at the conclusion of the trial.

45. In my view, an application of the regulations as demonstrated above, to the facts as described, it is appropriate for the defendant to pay the plaintiff’s costs on an ordinary basis up to and including 31 July 2020, and on an indemnity basis from 1 August 2020 onwards. The offer was a reasonable one in circumstances of the agreed verdict.

46. The defendant’s motion seeks an order that various costs, as set out in prayer 2 of the motion, be payable by the plaintiff on an indemnity basis. These costs are concerned with the conclave between Mr Pickford and Mr Kottek, the admissibility of the JER (Exhibit DD), the 9 November letter (Exhibit PP), and the increased costs of the trial occasioned by the plaintiff’s solicitor’s conduct and the admission into evidence of the 9 November letter.

47. The defendant submits that a considerable portion of time allotted for the trial in November 2020 was spent dealing either with the admissibility of the JER and the 9 November letter, or cross-examining Mr Pickford and Mr Kottek as to the cumulative fibre burden to which Mr Gatt was exposed and the appropriate conversion factor to be used, in circumstances where these matters had been agreed following the conclave and as set out in the JER (Judgment [114]). They further submit that the conclave process was, in essence, a waste of time and expense, and the defendant’s costs were increased significantly by reason of those matters, and as such the conduct of the plaintiff’s solicitor was the antithesis of the manner in which Courts and Tribunals try to achieve in accordance with s 56 of the CPA. It is on that basis that they seek indemnity costs as detailed in the motion.

48. The final submission by the defendant is as follows:

‘31.   The upshot is that the defendant’s costs of these matters should be paid by the plaintiff. Given the seriousness of the conduct occasioned by the plaintiff’s solicitor and its effect, noted above, it is appropriate that these costs be payable on the indemnity basis’.

49. The circumstances of the conclave and the JER are discussed later in this Judgment, and as such the costs order sought by the defendant.

Personal Costs Order

50. At the directions hearing on 20 September 2021, I gave notice that I was contemplating making a personal costs order against Mr Simic, the plaintiff’s solicitor. Mr Simic retained legal representation, and swore an affidavit on 7 October 2021 upon which he relies and also on the relevant material that was before the Court during the hearing. I granted leave to Senior Counsel to appear in the motions for costs.

Power To Make The Orders Sought

51. Section 99 of the CPA relevantly provides:

‘(1)   This section applies if it appears to the court that costs have been incurred:

(a)   by the serious neglect, serious incompetence or serious misconduct of a legal practitioner, or

(b)   improperly, or without reasonable cause, in circumstances for which a legal practitioner is responsible.

1. After giving the legal practitioner a reasonable opportunity to be heard, the court may do any one or more of the following:

(a)   it may, by order, disallow the whole or any part of the costs in the proceedings:

1. in the case of a barrister, as between the barrister and the instructing solicitor, or as between the barrister and the client, as the case requires, or

2. in the case of a solicitor, as between the solicitor and the client,

(b)   it may, by order, direct the legal practitioner:

1. in the case of a barrister, to pay to the instructing solicitor or client, or both, the whole or any part of any costs that the instructing solicitor or client, or both, have been ordered to pay to any other person, whether or not the solicitor or client has paid those costs, or

2. in the case of a solicitor, to pay to the client the whole or any part of any costs that the client has been ordered to pay to any other person, whether or not the client has paid those costs,

(c)   it may, by order, direct the legal practitioner to indemnify any party (other than the client) against costs payable by that party.

…’

52. At paragraphs [112]–[114] of my Judgment I found that it was completely inappropriate for Mr Simic to attempt to exert any influence over Mr Kottek at any time, but particularly after the JER had been signed, and that is was completely inappropriate for Mr Simic to forward additional material to Mr Kottek after the JER had been sent to him. I have reflected on those statements in the context of what has now been put to the Tribunal.

53. Mr Simic accepts that this Tribunal has the power to make a personal costs order under s 99 of the CPA, and that he was given appropriate notice under the Act.

General Principles Regarding Section 99

54. The central concepts in s 99(1) of ‘neglect’, ‘incompetence’, ‘misconduct’, ‘improperly’ or ‘without reasonable cause’ are not defined in the section or otherwise in the CPA.

55. In Ridehalgh v Horsefield [1994] Ch 205, the Court of Appeal of England and Wales considered the meaning of ‘improper’, ‘unreasonable’ and ‘negligent’ in equivalent provisions in the United Kingdom. The Court said this (at 232–233):

‘“Improper” means what it has been understood to mean in this context for at least half a century. The adjective covers, but is not confined to, conduct which would ordinarily be held to justify disbarment, striking off, suspension from practice or other serious professional penalty. It covers any significant breach of a substantial duty imposed by a relevant code of professional conduct. But it is not in our judgment limited to that. Conduct which would be regarded as improper according to the consensus of professional (including judicial) opinion can be fairly stigmatised as such whether or not it violates the letter of a professional code.

“Unreasonable” also means what it has been understood to mean in this context for at least half a century. The expression aptly describes conduct which is vexatious, designed to harass the other side rather than advance the resolution of the case, and it makes no difference that the conduct is the product of excessive zeal and not improper motive. But conduct cannot be described as unreasonable simply because it leads in the event to an unsuccessful result or because other more cautious legal representatives would have acted differently. The acid test is whether the conduct permits of a reasonable explanation. If so, the course adopted may be regarded as optimistic and as reflecting on a practitioner’s judgment, but it is not unreasonable.

The term “negligent” was the most controversial of the three. It was argued that the Act of 1990, in this context as in others, uses “negligent” as a term of art involving the well known ingredients of duty, breach, causation and damage. Therefore, it was said, conduct cannot be regarded as negligent unless it involves an actionable breach of the legal representative’s duty to his own client, to whom alone a duty is owed. We reject this approach…

But for whatever importance it may have, we are clear that “negligent” should be understood in an untechnical way to denote failure to act with the competence reasonably to be expected of ordinary members of the profession.

In adopting an untechnical approach to the meaning of negligence in this context, we would however wish firmly to discountenance any suggestion that an applicant for a wasted costs order under this head need prove anything less than he would have to prove in an action for negligence: “advice, acts or omissions in the course of their professional work which no member of the profession who was reasonably well-informed and competent would have given or done or omitted to do;” an error “such as no reasonably well-informed and competent member of that profession could have made;” see Saif Ali v Sydney Mitchell & Co [1980] AC 198, 218, 220, per Lord Diplock.

We were invited to give the three adjectives (improper, unreasonable and negligent) specific, self-contained meanings, so as to avoid overlap between the three. We do not read these very familiar expressions in that way. Conduct which is unreasonable may also be improper, and conduct which is negligent will very frequently be (if it is not by definition) unreasonable. We do not think any sharp differentiation between these expressions is useful or necessary or intended.’

56. It is settled that the jurisdiction to make personal costs orders against legal practitioners is to be exercised with caution and sparingly: Lemoto v Able Technical Pty Ltd (2005) 63 NSWLR 300 at [92] (McColl JA, Hodgson and Ipp JJA agreeing); Treadwell v Hickey [2010] NSWSC 1119 at [34(Barrett J).

57. Recently, Bell P said this in Muriniti v Mercia Financial Solutions Pty Ltd [2021] NSWCA 180 (‘Muriniti’) at [73]:

‘… a costs order against a solicitor is only to be made with care and discretion and only in clear cases …’

58. In that same case at [79], Bell P referred to this passage from the reasons of Basten JA in King v Muriniti (2018) 97 NSWLR 991 at [46]:

‘... it would be an abuse of process for the solicitor to be allowed to challenge the findings made in the substantive proceedings. It was open to him to call such evidence as he wished by way of confession and avoidance or mitigation, but that he did not do.’

59. Of that passage, Bell P said at [82]:

‘The proposition contained in the first sentence of [46] of Basten JA’s decision concerning “abuse of process” did not form part of the ratio of the decision in King v Muriniti. There were three separate judgments of the members of the Court. Neither Gleeson JA nor Emmett AJA expressed their agreement with Basten JA’s statement that it would be an abuse of process for the solicitor to be allowed to challenge the findings made in the substantive proceedings. Certainly, in some cases that may be so, but whether or not it would invariably be so is not necessary to decide.’

60. The principle that personal costs orders should only be made in clear cases is well established. It is also established that a Court or Tribunal may be constrained from making findings that the case for a personal costs order is a clear one if there is or may be relevant material which is not before the Court or Tribunal. One circumstance in which this principle applies is where the lawyer is constrained from asserting a full answer to the complaint by a claim of legal professional privilege: see Medcalf v Mardell [2003] 1 AC 120 (‘Medcalf’) at 135:

‘Only rarely will the court be able to make “full allowance” for the inability of the practitioner to tell the whole story or to conclude that there is no room for doubt in a situation in which, of necessity, the court is deprived of access to the full facts on which, in the ordinary way, any sound judicial decision must be based.’

61. Although these observations are directed at constraints imposed by legal professional privilege, they are equally relevant to any circumstance where the solicitor is constrained from placing material that may be relevant to the costs order before the Court or Tribunal.

62. In these proceedings, when it became apparent to Mr Simic that the conclave had departed from their instructions in the preparation of the JER, he took certain steps, including asking if the documents used in the conclave could be provided to him. The defendant opposed that course as it was entitled to do.

63. Similarly, when Mr Kottek and Mr Pickford were giving evidence concurrently, the defendant objected to any questions which might traverse what happened in the conclave, as they were entitled to do. I did not allow any questions put with regard to the manner in which the conclave proceeded.

64. I now accept that this put Mr Simic in a difficult position. He knew that something had happened to derail the conclave, but the defendant opposed any evidence about what happened in the conclave to be adduced. The effect of this was that Mr Simic was unable to put “the whole story” before the Tribunal.

65. In the present case, Mr Simic contends that the Tribunal must be satisfied of the following matters before making a personal costs order:

1. that Mr Simic engaged in serious neglect, serious incompetence or serious misconduct or that he has acted improperly or without reasonable cause;

2. that this is the kind of ‘rare’ or ‘exceptional’ case where there is nothing which Mr Simic could have said to resist the order if unconstrained by the circumstance that there is no evidence of what occurred during the conclave between Mr Kottek and Mr Pickford;

3. that in all of the circumstances, the Tribunal ought to exercise its discretion to make the personal costs order; and

4. that costs have been incurred as a result of the conduct.

66. I will address each of these matters individually.

Whether Mr Simic engaged in serious neglect, serious incompetence or serious misconduct or that he has acted improperly or without reasonable cause

67. Mr Simic has acknowledged the serious nature of the Tribunal’s findings at [112]–[114] of the Judgment. Those matters are addressed in turn, in the written submissions for Mr Simic as follows:

That it was completely inappropriate for Mr Simic to attempt to exert any influence over Mr Kottek at any time, but particularly after the JER had been signed

68. In his affidavit of 7 October 2021 at [15], Mr Simic contends that the Tribunal should not make a finding that his conduct involved serious misconduct or serious neglect. It could only be a finding of ‘serious incompetence’.

69. Mr Simic accepts that while in making contact with Mr Kottek on 6 November 2020, and any attempt to exert influence over Mr Kottek, Mr Simic contends that that influence was permissible and did not involve serious incompetence. Solicitors attempt to exert quite legitimate influence over experts all the time — including by the assumptions they are asked to make, conferring with them and discussing their draft reports with them. This may extend to involve permissible testing of the rationale for the expert’s opinion. There can be no complaint about this kind of influence being exerted by solicitors.

70. What plainly is impermissible influence is attempting to have an expert alter their properly and reasonably held views. Mr Simic submits that, with respect, there is no basis in the evidence for a finding that Mr Simic attempted to impermissibly influence Mr Kottek. In his 13 November 2020 affidavit at [5]–[15], Mr Simic set out the relevant communications with Mr Kottek. That evidence was unchallenged. That evidence does not support a conclusion that Mr Simic impermissibly tried to influence Mr Kottek. Rather, the thrust of Mr Simic’s point to Mr Kottek was that it appeared that he and Mr Pickford had not made critical assumptions that both parties had asked them to make. Mr Simic made that point to Mr Kottek: see Simic affidavit 13/11/20 at [5]. Mr Kottek in response volunteered that he was in error and that error affected his opinion in the JER.

71. Mr Simic submits that it was open to him in the exercise of his professional judgment to bring this problem to the attention of Mr Kottek, and that he was not seriously incompetent in doing so.

72. A similar kind of situation arose in Edwards v Endeavour Energy (No. 1) [2012] NSWSC 1659. In that case, the experts in conclave had referred to and relied upon inadmissible material in preparing their joint report. Justice Johnson said this when the matter was brought before the Court:

‘[23] There is need for care in this process being undertaken at the present time. Paragraph 27 of Practice Note SC GEN 11 "Joint Conferences of Expert Witnesses" makes clear that, prior to signing a joint report, there are limits upon contact that can take place between the relevant participating experts and the legal representatives for the parties.

[24] Where a point has been reached where the experts will be invited to look again at certain matters and to look at some additional matters, for the purpose of providing a further joint report, there is the need for care in settling the appropriate document which forms the communication from the legal representatives for the parties to the experts.

[25] Considerations of this type were considered, in a different context, in my judgment in KF By Her Tutor RF v Sydney Children's Hospital Specialty Network (known as the Children's Hospital Westmead) and Anor [2011] NSWSC 874 at [7] and following. Indeed, Mr McIlwaine SC submitted that, for reasons disclosed in that judgment, it would not be appropriate for there to be any further contact with the experts in the manner which has been foreshadowed.

[26] I do not accept that submission. It seems to me that the effective preparation of a joint expert report which will be deployed at the hearing, in the context of concurrent evidence, involves the experts having placed before them for proper consideration a range of documents going beyond what they have seen so far, and removing from consideration things which they may have considered so far which are impermissible. The result of this will be a joint expert report which constitutes an appropriate foundation for their evidence when the time comes.’

73. This passage does raise an issue as to whether Mr Simic adopted the appropriate means to address the problem with the JER, however, Mr Simic acknowledges that the better course when faced with an issue of this kind would have been the course adopted in Edwards. It may be that other solicitors would have responded differently to Mr Simic. Further, I note that Mr Simic did telephone Mr Prentice on the Friday afternoon (Simic affidavit 13.11.21 [11]), and sent a detailed letter to Mr Prentice setting out the plaintiff’s position later that evening (Simic affidavit 13.11.21, Annexure A).

74. In assessing whether Mr Simic’s conduct amounts to ‘serious incompetence’, the circumstances facing him and his client deserve weight:

1. he considered that the experts had ignored critical assumptions in preparing the JER;

2. he considered that the experts has instead assumed facts which were not in evidence;

3. he received the JER at about 11.30 am on Friday 6 November 2020, that is, approximately 5 and a half business hours before the trial was scheduled to commence. There was no time for anxious reflection on the proper course; and

4. it may be inferred that if the JER was tendered without Mr Kottek being advised of the issues raised, the Tribunal would be misled, and further, that Mr Simic’s client may be at a real disadvantage.

75. In summary, while Mr Simic accepts that a different approach may have been adopted by him on the receipt of the JER, he contends that the appropriate response was a matter of professional judgment, and such conduct could not be construed as serious misconduct or serious neglect. Mr Simic, very openly, submits it could only be a finding of “serious incompetence”.

That it was completely inappropriate for Mr Simic to forward additional material to Mr Kottek after the JER had been sent to Mr Simic

76. Mr Simic sent some additional material to Mr Kottek on Saturday 7 November 2020: (Simic affidavit 13/11/20). The circumstances in which that material was provided are set out in Mr Simic’s 13 November 2020 affidavit at [8]–[10], [13]–[14]. It was Mr Kottek who asked for further documents to be sent to him. Mr Kottek told Mr Simic that he considered that there were some further documents which were relevant. In response, Mr Simic located the documents requested by Mr Kottek and provided them to him. The documents evidently were among the defendant’s discovered documents.

77. It is plain that these documents could have been sent to the experts for the purpose of the conclave, and Mr Simic accepts this. However, Mr Simic submits, with respect, that the Tribunal should not find that it was seriously incompetent for Mr Simic not to have done so. There is no evidence about the manner in which the brief to the experts was prepared, and I also accept that there were significant time constraints on Mr Simic which, to some extent, did not allow him the luxury of time in which to exercise appropriate professional judgment.

78. In his 13 November 2020 affidavit at [5]–[15], Mr Simic sets out the relevant communications with Mr Kottek. That evidence was not challenged. It appears that the thrust of Mr Simic’s submission is that it appeared to Mr Simic that Mr Kottek and Mr Pickford had not made critical assumptions that the parties, jointly, had asked them to make. Upon Mr Simic pointing that out to Mr Kottek, Mr Kottek volunteered that he was in error and that error affected his opinion in the JER.

79. I accept that it was open to Mr Simic, in the exercise of his professional judgment, to bring this to the attention of Mr Kottek, and that he was not seriously incompetent in raising these matters with Mr Kottek.

That this is the kind of ‘rare’ or ‘exceptional’ case where there is nothing which Mr Simic could have said to resist the order if unconstrained by the circumstance that there is no evidence of what occurred during the conclave between Mr Kottek and Mr Pickford

80. Bell P made clear in Muriniti, before an order is made under s 99, the Court or Tribunal must be satisfied that the lawyer has engaged in conduct of the kind in subs. (1), and the Court in the exercise of its discretion must consider that it is appropriate to make the order.

81. In the present case, by reason of the principles set out above, the plaintiff submits that the Court should, in the exercise of its discretion, not make any personal costs order, for the following reasons.

1. The defendant took the point, and objected to the events at the conclave being admitted into evidence, as it was entitled to do. The defendant instructed Mr Pickford not to permit the release of that material: Judgment [108].

2. The consequences of the defendant’s position are relevant to the exercise of my discretion because Mr Simic’s unchallenged evidence at [5] of his 13 November 2020 affidavit, is that, and I accept that, the events which occurred at the conclave would have been relevant to the exercise of my discretion.

3. Accordingly, Mr Simic is unable to tell the Tribunal the ‘whole story’ which may be relevant to the Tribunal’s exercise of discretion.

Other Factors Relevant to the Exercise of the Tribunal’s Discretion

82. Mr Simic relies upon the following additional factors on the exercise of the Tribunal’s discretion.

1. He has had a long career as a solicitor and there has been no occasion where any adverse findings under s 99 or in a disciplinary context have been made against him: Simic affidavit 7/10/21 [11].

1. There were the time pressure factors that have already been addressed. Mr Simic was acting in a high pressure situation with very limited time to act.

2. There is no basis to suggest that Mr Simic intended to act improperly and that his conduct could only be regarded as being inadvertence.

Whether costs have been incurred as a result of the conduct

83. Mr Simic accepts that the Tribunal has found that costs were incurred as a result of Mr Simic’s conduct. However, the Tribunal must be satisfied that costs have been incurred as a consequence of the solicitor’s conduct: see Newell v De Costi (2018) NSWLR 398 at [228]–[232]; [253]–[257]

84. However, the plaintiff suggests, a question about whether those costs or even greater costs may have been incurred in any event arises, because Mr Kottek changed his view after he signed the JER. That position was bound to be conveyed to the Tribunal at some stage. If that did not occur in the way it did as a consequence of Mr Simic’s conduct, it was bound to occur at some other time, otherwise the Tribunal would have been misled. That is, costs were bound to be incurred as a result of what occurred during the conclave. Whether or not those costs were increased by Mr Simic’s conduct is unclear.

DISCUSSION

85. It is apparent that something happened in the conclave that caused it to go off the rails.

86. Mr Simic received the JER at approximately 11.30 am on Friday 6 November 2020, with approximately 6 business hours before the trial continued. I accept that after Mr Simic read the JER and that the opinions expressed by Mr Kottek departed substantially from the opinions that he had expressed in his earlier reports of 29 July 2020 and 1 October 2020.

87. I accept that later that afternoon, Mr Simic (‘IS’) telephones Mr Kottek (‘MK’) and had a conversation with words to the effect of the following: (from Simic affidavit 13 November 2020 at [5]);

‘IS:   Why did you change your opinion?

MK:   Geoff made some good points that were persuasive.

IS:   Like what?

MK:   Well Geoff worked at Hardies and said that the mixers had lids and hatches. Also Geoff made the point that most lay people would not really know if they were covered head to toe in asbestos dust or in cement dust.

IS:    But they are not the facts you were asked to assume, as set out in Mr Gatt’s affidavit and in the transcript of Mr Gatt. Geoff and you never worked with Mr Gatt or even at the same time as Mr Gatt. You have assumed facts that are not in evidence. You two have been specifically directed to assumed facts as per the affidavit and transcript of cross examination for the conclave.

MK:   Well in that case I admit we are in error that affected my opinion. I should not have accepted such assertions of fact put to me by Geoff, I felt there were “underlying documents” missing from Peter Russell’s count.

IS:   Can I have a copy of all emails between Geoff and you during the conclave and all the “ADDITIONAL DATA” or documents you had “found” during the conclave.

MK:   I would like to give them to you but only if I had Geoff’s consent.’

88. The history of what followed has been referred to earlier in this Judgment.

89. Both Mr Kottek and Mr Pickford gave evidence before me over 11, 12 and 13 November 2020, and the issue with the JER was put to them both.

90. Mr Pickford gave the following evidence under cross examination: T 291.31

‘Q:   Then at page 6 of 12, the joint report enters some more data, that’s right.

A:   That’s correct.

Q:   That data, except from your report, is not otherwise in the proceedings. Where did you get the data from?

A:   I got it from some work sheets that I had to show that – I’m sorry.”

91. And then further at T307.39 – 308.2;

‘Q:   You see, the point I am trying to make is that the figures generated by you are so low that a reasonable expert would have seen that they were low and checked them. What do you say to that?

A:   I have no comment on that.

Q:   You knew that Mr Kottek had much higher figures, correct.

A:   Yes, but unfortunately though, Mr Kottek really supports it according to the expert witness rules and I don’t see transparent calculations that I can check his answer.

Q:    What I am trying to get at is that the circumstances were such that the very low figures generated by you should have put you on notice that you had made an error; do you agree or disagree with it.

A:   As it stood at the time, no I don’t agree with it, otherwise I would have done something. As I said, I corrected it in the later report, so I don’t know why this emphasis on something that is now irrelevant.

Q:   Because if this report had gone forward and had not been challenged by Mr Kottek, this would have been the report before the Court, Mr Pickford and it is completely wrong is it not.

A:   Yes and haven’t you made mistakes before too?’

92. In the course of this costs argument and submissions, Mr Simic’s conduct has been explained in far greater detail that at the trial. Mr Simic’s affidavit of 13 November 2021 is quite frank about what occurred. That evidence is unchallenged.

93. In short, Mr Simic read the JER, noticed that the experts appeared to have ignored that assumptions that both parties asked them to make and identified that in doing so, the plaintiff would be unfairly prejudiced. I accept that on 6 November 2020, when Mr Simic telephoned Mr Kottek to enquire why he had changed his position, Mr Kottek indicated that the JER is not as its seems, it is actually not his opinion and he resiles from it.

94. It is important to note that in Edwards, a case with a similar set of circumstances to this case, Johnson J held that there is no barrier to a solicitor contacting an expert after a joint report is signed to raise issues of a kind which arose in the present case, as to the conduct of the conclave.

95. I accept that Mr Simic was duty bound to the plaintiff to bring those matters to the attention of Mr Kottek, the defendant and the Court, and I accept that he was acting in his fulfilment of his duty to his own client. Furthermore, I also accept that in doing so, he was fulfilling his duty to the Court because if he did nothing, the Tribunal would have been misled.

96. The circumstances of the convening of the conclave occurred very shortly before the trial was due to recommence. The joint letter of instruction for the conclave was dated 30 October 2020 and instructed the experts to assume the correctness of Mt Gatt’s evidence and extracted the affidavit and portions of the transcript where Mr Gatt had given detailed descriptions about what he did whilst in the employ of James Hardie.

97. The JER was sent to Mr Prentice at about 4:56 pm on 5 November 2020, but Mr Simic did not receive it until 11.27 am on 6 November 2020, and the trial was due to start again at 10:00 am the following Monday. I accept that the options that were available to Mr Simic in the exercise of his professional judgment to address the problem, were somewhat limited having regard to the timeframe involved.

98. Unfortunately, the genesis of the problem seems to my mind, to be the introduction by Mr Pickford of the documents, and comments about his experience at James Hardie which called into question Mr Gatt’s account.

99. This is in my view, where the wheels started to come off, as that information was not in evidence, nor was it referred to the conclave upon which to base its report. This had the effect that the assumptions that the experts were asked to rely upon, evidenced in the joint letter of instruction, were not assumed.

100. Mr Kottek then asked Mr Simic to provide to him with the documents, and Mr Simic found the documents, sent them by email to Mr Kottek, and further discussions continued over the weekend.

101. In the 9 November letter (Exhibit PP), Mr Kottek makes his position clear in the last two sentences on page 1 as follows:

‘… I withdraw my answers contained in the conclave transcript. I have attached an appendix which outlines my revised opinions on the questions posed to the conclave.’

102. Mr Kottek was cross-examined by learned Senior Counsel where it was expressly put to him that in effect it was Mr Simic’s intervention that caused him to change his opinion. However, at [100] of my Judgment, I detailed the passage from the transcript where Mr Kottek concedes that whilst Mr Simic’s intervention that caused him to reflect on his opinions, he was absolutely clear in his answers that he was not asked by Mr Simic to look for a way to get around the agreement contained in the JER.

103. The net result was that the evidence that came before the Court was not false or based upon false assumptions or undue influence by Mr Simic. The effect of what happened was that evidence which otherwise may have misled me, was corrected which was satisfactory and proper.

104. Given the circumstances detailed above, and based on the authorities above, I believe that I was wrong at paragraphs 112, 113 and 114 of my Judgment. Now that the circumstances have been explained, I accept that in fact Mr Simic was doing what a solicitor in his position, and given the time constraints that he faced, acted in accordance with his duty to his client. I regret making those statements in the judgment, and I apologise to Mr Simic for any hurt or embarrassment that may have been caused by my comments.

105. I find that Mr Simic did not set out to mislead anyone, nor produce a report that was misleading. Further, I do not now believe that Mr Simic’s conduct created any lengthening of the proceedings or any real additional costs, and again I regret my comments in the Judgment suggesting otherwise, and the upset that it may have caused.

106. The situation arose out of things that occurred in the conclave, the details of which are somewhat unknown. Unfortunately, these events are something that happens in hard fought litigation from time to time, and is no fault of either party. What has occurred here is just part and parcel of the nature of adversarial litigation.

107. Upon examination of all the relevant information, it is clear that Mr Simic did not engage in serious neglect, serious incompetence or serious misconduct, nor that he acted improperly or without reasonable cause. I also accept that Mr Simic did not attempt to exert any influence over Mr Kottek and his resiling from the JER and in preparation of the 9 November letter.

108. Implicitly therefore, Mr Simic’s conduct does not fall within the concepts of s99(1)of the CPA of neglect, incompetence, misconduct, improperly or without reasonable cause. I accept that the power to make of personal costs orders against legal practitioners is to be exercised with caution and used sparingly (Lemoto at [92]), and I decline to make any personal costs order against Mr Simic.

Stay

109. The defendant has appealed the Tribunal’s decision and Prayer 5 of the defendant’s motion seeks a stay of the Tribunal’s decision pending the determination of the appeal.

110. I accept that I have the power to stay proceedings (s 67 of the CPA) and, specifically, in relation to stays on enforcement of its own decisions (s 135(2) of the CPA).

111. In Woolworths Ltd v Strong (No 2) (2011) 80 NSWLR 445; [2011] NSWCA 72 at [68], Campbell JA (Handley AJA and Harrison J agreeing) noted the ‘usual practice of staying judgments pending appeal where there is a risk that the plaintiff will be unable to repay the money without difficulty or delay if the appeal were to succeed’. His Honour said that it was ‘appropriate … to reiterate the importance of that practice’.

112. In the present case, the plaintiff does not bring the proceeding in her personal capacity. The recipient of the award of damages is the estate of the late Mr Gatt. In the ordinary case, a payment into the estate would then be distributed to the beneficiaries of the estate. Challenges (including issues of tracing) which might arise if the Judgment were not stayed, and the money distributed, if the appeal was successful. The plaintiff and the estate are protected by the accrual of interest, as noted in TCN Channel 9 Pty Ltd v Antoniadis (No 2) (1999) 48 NSWLR 381; [1999] NSWCA 104 at [15].

113. I will therefore grant a stay of the proceedings pending the outcome of the appeal.

ORDERS

114. I make the following orders:

1. I make an order in accordance with prayer 2 of the plaintiff’s Notice of Motion filed 28 September 2021, with the following addition:

# Defendant to pay plaintiff’s costs on an ordinary basis up to and including 31 July 2020; and

# Defendant to pay plaintiff’s costs on an indemnity basis from 1 August 2020 to the conclusion of these proceedings, including this motion.

2. I make an order in accordance with prayer 5 of the defendant’s Notice of Motion filed 17 September 2021 and dismiss all other orders sought.

I further make no order with respect to the costs of this motion.

***

Amendments

02 December 2021 - Case Name: “Rosanne” amended to read “Roseanne”

Cases Cited: “shlack” amended to read “Oshlack”

Parties: “Rosanne” amended to read “Roseanne”

Paragraph 98: “Pickering” amended to read “Pickford”

Paragraph 100: “sendt” amended to read “sent”

Decision last updated: 02 December 2021