Stavar v Caltex Refineries (Qld) Pty Ltd No 2

[2008] NSWDDT 26

Dust Diseases Tribunal

of New South Wales

CITATION:	Stavar v Caltex Refineries (Qld) Pty Ltd No 2 [2008] NSWDDT 26
PARTIES:	Beverley Dawn Stavar (Plaintiff) Caltex Refineries (Qld) Pty Ltd (First Defendant) Amaca Pty Limited (Second Defendant) Wallaby Grip Limited (Third Defendant) Wallaby Grip (BAE) Pty Limited (Fourth Defendant) Wallaby Grip (NSW) Pty Limited (Fifth Defendant)
MATTER NUMBER(S):	7349 of 2007
JUDGMENT OF:	O'Meally P
CATCHWORDS:	DUST DISEASES TRIBUNAL :- Costs - Indemnity costs - Mediation - Issues agreed before mediator - Defences filed - Further issues raised - Liability admitted by second defendant at hearing - Whether defendants should pay indemnity costs - Offer of compromise - Failure to comply with Dust Diseases Tribunal Regulation - Whether failure prevents making order for indemnity costs - Whether Dust Diseases Tribunal Regulation ousts Civil Proceedure Rules on indemnity costs - Whether order for indemnity costs may be made only in accordance with Dust Diseases Tribunal Regulation - Plaintiff failed on one issue - Whether defendant should have costs of that issue - whether plaintiff should bear these costs - Whether plaintiff should have costs of solicitor travelling from Brisbane and accommodation in Sydney - Whether plaintiff should have costs of copying and providing material to defendant
LEGISLATION CITED:	Dust Diseases Tribunal Act 1989 Dust Diseases Tribunal Regulation 2007 Civil Procedure Act 2005 Asbestos Rule 1971 (Qld) Factories Shop and Industry Act 1960 (Qld)
CASES CITED:	Mok v The Minister for Immigration, Local Government and Ethnic Affairs and Anor (1993) 47 FCR 81 Jones v Bradley No 2 [2003] NSWCA 258 SMEC Testing Services Pty Limited v Campbeltown City Council [2000] NSWCA 323 X v Y (by her tutor X) v PAL (BC9101914) [1991] NSWCA 302
DATES OF HEARING:	30 September 2008
DATE OF JUDGMENT:	30 September 2008
EX TEMPORE JUDGMENT DATE:	30 September 2008
LEGAL REPRESENTATIVES:	J A McIntyre SC with S Tzouganatos instructed by Turner Freeman appeared for the Plaintiff G J Parker instructed by HWL Ebsworth appeared for the First Defendant J C Sheller instructed by DLA Phillips Fox appeared for the Second Defendant D J Russell SC instructed by Middletons appeared for the Third, Fourth and Fifth Defendants

JUDGMENT:

RULING

O’MEALLY P

1. On 29 July last a verdict for the plaintiff was entered against each defendant and damages were assessed in the sum of $339,000. The defendants were ordered to pay the plaintiff’s costs as agreed or assessed. The first defendant sought and obtained a stay of the order it pay costs and damages. The plaintiff now seeks orders for indemnity costs against each defendant.

2. So that these reasons may be read independently of the reasons for judgment it is appropriate to recite that the plaintiff alleged that she contracted mesothelioma as a result of inhaling asbestos dust and fibre transported from the premises of the first defendant’s refinery to homes in which she lived and in the process of shaking out and washing her husband’s work clothes and in cleaning out the inside of the car.

3. The plaintiff’s husband worked at the Ampol Refinery from 1964 until 1991. As noted in the reasons of 29 July 2008, there were three relevant periods of his work and thus of exposure to the plaintiff. The first was for a period of about 18 months commencing in 1964, the second was between 1965 and 13 January 1974 and the third was from 14 January 1974 until 1 March 1991. In the third period he was employed by the first defendant. In the first period he was employed in the construction of the refinery by a subcontractor to the company responsible for its construction, and in the second period he was employed by a contractor to the first defendant as one of a number of maintenance workers. In the result I determined that the first defendant owed no duty of care to the plaintiff in the first and second periods, but did during the third period, and during that period (and from at least the mid 1960s) there was a foreseeable risk of injury to people in the class of which the plaintiff was a member.

4. The trial began before me in Brisbane on 24 June 2008. Before that date, in conformity with the requirements of the Dust Diseases Tribunal Regulation 2007 (the Regulation), a mediation and a contribution assessment had taken place. Pursuant to cl 37 of the Regulation the mediator filed a certificate. Relevantly, it contained the following:

2. The parties agree that the issues in between them are:

(a) With respect to the first defendant:
(i) Did it owe a duty of care to the plaintiff?
(ii) If it did owe a duty of care to the plaintiff did it breach such duty?
(b) With respect to all defendants and cross-defendants:
(i) Determination of apportionment of liability.
(ii) Quantum of damages subject to proof of exposure.

5. On 7 April 2008 I ordered all defendants to file defences within 14 days. On 21 April 2008 defences were filed. The second, third, fourth and fifth defendant raised defences beyond those agreed before the mediator. Each defendant put in dispute all matters other than that the plaintiff suffered mesothelioma. When the trial began the issues raised by the first defendant in its defence were maintained. The remaining defendants then informed me that, subject to proof of exposure to asbestos from their products, the issue was damages. On the second day of the trial the second, third and fourth defendants conceded that the plaintiff was entitled to a verdict. So far as they were concerned the only issue was the quantum of damages.

6. The plaintiff seeks an order for ordinary costs until 2 May 2008 and indemnity costs thereafter.

7. The general power concerning costs is contained within s 98 of the Civil Procedure Act 2005 which provides:

(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.

(2) Subject to rules of court and to this or any other Act, a party to proceedings may not recover costs from any other party otherwise than pursuant to an order of the court.

(3) An order as to costs may be made by the court at any stage of the proceedings or after the conclusion of the proceedings.

8. The plaintiff did not succeed in establishing that, in the first and second periods of her husband’s work at the refinery, the first defendant owed her a duty of care. Notwithstanding that, the plaintiff submits that it was reasonable to contest the case as she did and, pointing to the finding that it was foreseeable from at least the mid 1960s that exposure to small quantities of asbestos dust was capable of causing mesothelioma, says that her conduct in so framing her case was reasonable.

9. My attention has been drawn to the decision of Keely J in the Federal Court of Australia in Mok v The Minister for Immigration, Local Government and Ethnic Affairs and Anor (1993) 47 FCR 81. At 84 his Honour said:

In my opinion the Court’s power to order a successful applicant to pay the costs in respect of an issue raised by the applicant, on which the applicant has failed, ought to be exercised only where the Court, on a consideration of all the circumstances, has concluded that the raising of that issue by the applicant was so unreasonable that it is fair and just to make the order.

10. This observation is more relevant to the application of the first defendant that the plaintiff pay its costs in relation to the first and second periods. Mr McIntyre SC submits that in the circumstances of this case the raising of the issue of a duty of care in these periods was not unreasonable, and it is fair and just to make the order.

11. It was necessary for the plaintiff to prove not only foreseeability, but also that the first defendant owed her a duty of care. The cases to which reference was made in the reasons for judgment all lead to the conclusion that no duty of care was or could have been owed to her in the first and second periods, and in my view her costs should not include the costs of litigating her entitlement to damages consequent upon exposure to asbestos dust and fibre between 1964 and 1974. She must bear these costs herself. The assessment of the amount of preparation and evidence in the case on that issue is best left to a costs assessor. It will be assisted by a reading of the transcript and of the extensive written submissions provided to me.

12. As noted, the plaintiff seeks indemnity costs from 3 May 2008. On 2 May 2008, the plaintiff’s solicitors forwarded letters to the solicitors for the defendants enclosing an offer of compromise which bore the same date. Relevantly, that document was in these terms:

The plaintiff offers to compromise the claim in the following manner:

This offer is made in accordance with Pt 20.26 of the Uniform Civil Procedure Rules 2005.

13. The damages awarded to the plaintiff were in a sum no less favourable, indeed were more favourable by $19,000, than the offer put forward in the offer of compromise.

14. It is argued by the first defendant that the plaintiff is not entitled to an order for indemnity costs. In support of that submission my attention has been directed to Pt 6 of the Regulation. Clause 84 which begins Pt 6, is in these terms:

84 Part displaces rules

This Part displaces any provision of rules of court with respect to the acceptance or rejection of an offer of compromise.

Note. This Part applies to all claims, not just claims that are subject to the claims resolution process under Part 4.

15. Further clauses in Pt 6 relate to the form an offer must take and the consequences of accepting or rejecting one. Relevantly, cl 86 (3) provides:

(3) A notice of offer:

(a) must bear a statement to the effect that the offer is made in accordance with this clause, …

16. The offer of compromise bears no such statement and the first defendant says it is thus ineffective to permit an order for indemnity costs.

17. In my view cl 84 ousts the Civil Procedure Rules relating to offers of compromise in the Tribunal. However, the Civil Procedure Rules are not the only basis upon which an order for indemnity costs might be made. In Jones v Bradley (No 2) [2003] NSWCA 258 at [5] the Court said:

“Calderbank offers” are well recognised means of making offers of settlement in circumstances where the party making the offer ultimately seeks a cost advantage if the offer is not accepted: see Calderbank v Calderbank (1975) 3 WLR 586. Such offers do not comply with the Rules of Court for making offers of compromise. Accordingly the Rules which govern costs in those circumstances do not apply and the matter remains one for the exercise of the Court’s discretion.

18. The offer of compromise served by the plaintiff on 2 May 2008 was a genuine offer of compromise and gave the defendants an appropriate opportunity to deal with it. In my view it was unreasonable not to accept that offer.

19. Calderbank

expresses the common law and the order to which it gave its name did not have its source in a rule, regulation or statute. Section 98 of the Civil Procedure Act is expressed to be subject, amongst other things, to itself, i.e. the Civil Procedure Act, as well as any other Act and rules of court. No mention is made of regulations; specifically no mention is made of the Regulation (the Dust Diseases Tribunal Regulation). Section 98 gives full power to a court to determine by whom, to whom and to what extent costs are to be paid, and to award costs on an ordinary basis or an indemnity basis. Clause 84 of the Dust Diseases Tribunal Regulation may not override s 98 of the Civil Procedure Act, but in any event cl 84 is not the only source of power authorising an order for indemnity costs. Such an order may be made under s 98 independently of the Regulation. In my view the notice served by the plaintiff’s solicitor on 2 May 2008 was effective to trigger an entitlement to indemnity costs.

20. Dealing first with the plaintiff’s claim for indemnity costs against the second, third, fourth and fifth defendants, it should be borne in mind that on 25 June 2008 each of them admitted liability. The case then proceeded on a number of days during most of which they were absent because the issues then being litigated did not affect them. The second, third, fourth and fifth defendants say that they should be subject to no order for indemnity costs.

21. In SMEC Testing Services Pty Limited v Campbelltown City Council [2000] NSWCA 323 the question a court has to determine in deciding whether to award indemnity costs was said to be:

…whether the offeree’s failure to accept the offer, in all the circumstances, warrants departure from the ordinary rule as to costs,…
It was also said:
…that the offeree ends up worse off than if the offer had been accepted does not of itself warrant departure.

22. The fact is that each defendant filed defences putting in issue matters which went far beyond the issues agreed before the mediator. For my part I would not have permitted the defendants to litigate the case beyond what was certified by the mediator, or not without making special costs orders. I am told, however, that not all judges of the Tribunal adopt that attitude and because of that the plaintiff prepared the case on the basis that issues other than causation, that is to say, proof of exposure, would be litigated. It is my view that indemnity costs should be paid by the second, third, fourth and fifth defendants, but should extend only to those costs incurred between 3 May 2008 and 25 June 2008, that is to the second day of the hearing when they admitted liability, plus one day when submissions on damages were made.

23. In determining that the plaintiff should not have the costs of litigating her entitlement as a result of exposure during the first and second periods, or more accurately the existence of a duty of care, reference should also have been made to the decision of the Court of Appeal in X v Y (by her tutor X) v PAL (BC9101914) [1991] NSWCA 302. On the second page of the decision handed to me, Clarke JA said:

Costs are in the discretion of the court. This discretion must be exercised judicially. The principles which bear on its exercise are generally: (1) Ordinarily, costs follow the event; (2) In particular circumstances it may be reasonable to require that a litigant who has succeeded only upon a portion of his claim should bear the expense of litigating the other portion or portions; and (3) Circumstances may dictate that a successful party who has failed on certain issues may not only be deprived of those costs in those issues but may be ordered as well to pay the other party’s costs of them.

24. Here it should be observed that Mr Parker, for Caltex has sought an order that the plaintiff pay its costs of the issue upon which the plaintiff failed, namely, the existence of a duty of care in the first and second periods. However, I think in the circumstances of the case the appropriate course to adopt is the second principle of those recited by Clarke JA in the passage quoted, that is to require the plaintiff to bear the expense of litigating that portion of the case. The observations of Keely J in Mok (supra) are also relevant.

25. The other areas requiring consideration in respect of the plaintiff’s costs are two. First, whether the first defendant should bear the costs of the plaintiff’s solicitor travelling from Brisbane to Sydney after the case was adjourned. After evidence was taken from the plaintiff and her husband and the plaintiff’s industrial hygienist the case was adjourned to Sydney. Evidence was taken by video link from Professor Henderson in Adelaide, and from Dr Leigh and from Mr Rogers, the defendant’s industrial hygienist, both of whom came to court. It was always contemplated that evidence would be taken in Sydney after evidence in Brisbane. The Sydney evidence all related to issues maintained by the first defendant. In my view the question of costs incurred in the travel of the plaintiff’s solicitor from Brisbane to Sydney and accommodation here should be left to a costs assessor.

26. Section 25(3) of the Dust Diseases Tribunal Act 1989 is, insofar as I am aware, a unique provision. The usual practice of the Tribunal is to require a party intending to rely upon s 25(3) to identify to each other party the material which will be relied upon at the hearing. On 29 May 2008 the plaintiff’s solicitor wrote to the first defendant’s solicitor identifying the material which would be relied upon under s 25(3). The first defendant did not have in its possession the material identified and asked that it be provided with copies. On 26 May 2008 my colleague, Curtis J, ordered the plaintiff to provide s 25(3) material by 4pm on Friday, 30 May 2008. Copies were provided and I am informed that some five thousand pages of material were copied by the plaintiff’s solicitor and delivered to the solicitor for the first defendant. Also, a summary of that material which was some one hundred pages in length was provided. Not a great deal of that material was placed into evidence and it has been submitted that much of it was irrelevant to the issues raised by the first defendant.

27. I do not consider it appropriate that I should now examine five thousand pages of material to determine what was reasonable to provide to the first defendant. It should also be recorded that though the first defendant sought copies of the material to be tendered under s 25(3) it ultimately submitted that s 25(3) did not authorise the admission of that material, it being a provision of a substantive nature and could not apply to proceedings in respect of a tort committed in Queensland. Nevertheless, the material which was tendered under s 25(3) was not admitted under s 25(3) but on the basis referred to in my reasons. My view is that the task of examining material which was copied, should be undertaken by a costs assessor. The plaintiff should have the costs of providing material which went to the issues raised in the defence of the first defendant, which embraced causation, foreseeability, duty and breach, but only such material as was reasonable without unnecessary duplication of papers, reports or transcripts. That is a task which, with sympathetic understanding, I assign to the costs assessor.

28. I think it also appropriate to record that Mr Parker has submitted that no order for indemnity costs should be made against Caltex because the plaintiff changed the basis of her claim shortly before the hearing commenced and after it had been set down.

29. On 19 June 2008 the plaintiff gave notice to the first defendant that she intended to amend her statement of claim to include a statutory count based upon the Asbestos Rule 1971 (Qld) (the Asbestos Rule) made pursuant to the Factories Shop and Industry Act 1960 (Qld). In my reasons I did not specifically or separately deal with the plaintiff’s claim alleging negligence and breach of statutory duty, though without having to go through the divination of a soothsayer I think the reasons sufficiently disclose that the plaintiff had established a breach of a duty of care owed to her under the common law as well as a duty imposed by the Asbestos Rule.

30. In summary then, the plaintiff should have ordinary costs until 2 May 2008 from each defendant and indemnity costs thereafter against the first defendant. She should have indemnity costs against the second, third, fourth and fifth defendant from 3 May 2008 to 25 June 2008 and one day thereafter. Costs should be apportioned between the defendants.

31. The plaintiff should not have costs incurred in respect of the first and second periods. The costs of those periods should be determined by a costs assessor as should the entitlement to costs of travel of the plaintiff’s solicitor from Brisbane and accommodation in Sydney.

32. The costs of producing the material, compendiously called s 25(3) material, should cover only material which related to the issues of causation, foreseeability, duty and breach excluding unreasonable duplication of material.

33. Mr Parker has drawn to my attention that in para 26 of my reasons for judgment I did not record that the first defendant disputed that it owed a duty of care to the plaintiff. It is correct that that is not specifically recorded, however, he did make that submission and it will be apparent that I determined that issue against him.

34. Mr Parker has also drawn to my attention that the correct identity of the first defendant should be or is Caltex Refineries (Qld) Pty Limited. It is named Caltex Refinery (NSW) Pty Limited because that is the title given to the first defendant in the amended statement of claim filed in court on 24 June 2008. Observations about that were made in para 5 of the reasons for judgment; however, Mr Parker has asked me to alter the record so as to identify the first defendant as Caltex Refineries (Qld) Pty Limited and that I do.

J A McIntyre, SC with S Tzouganatos instructed by Turner Freeman appeared for the Plaintiff

G J Parker instructed by HWL Ebsworth appeared for the First Defendant

J C Sheller instructed by DLA Phillips Fox appeared for the Second Defendant

D J Russell, SC instructed by Middletons appeared for the Third, Fourth and Fifth Defendants