Van Soest v BHP Billiton Limited (No 3)

[2014] SADC 6

DISTRICT COURT OF SOUTH AUSTRALIA

(Civil)

In the Estate of WILLEM VAN SOEST

VAN SOEST v BHP BILLITON LIMITED  (No 3)

[2014] SADC 6

Judgment of Her Honour Judge Parsons

24 January 2014

PROCEDURE - COSTS

Costs - formal offer of settlement by the plaintiff - not accepted - plaintiff recovered in excess of offer - whether entitled to indemnity costs - solicitor/client costs for the whole proceedings ordered save for two specific interlocutory applications.

Van Soest v BHP Billiton Limited [2013] SADC 81; Van Soest v BHP Billiton Limited (No 2) [2013] SADC 95, considered.

In the Estate of WILLEM VAN SOEST
VAN SOEST v BHP BILLITON LIMITED  (No 3)
[2014] SADC 6

1. On 17 June 2013 I entered declaratory judgment in favour of the plaintiff, Willem Michael Adrianus van Soest that the defendant, BHP Billiton Limited was liable in negligence for the damages which he suffered as a result of mesothelioma, which was caused or contributed to by his exposure to asbestos dust and fibre when working at the Whyalla Shipyards in 1962.[1]

   [1] van Soest v BHP Billiton Limited [2013] SADC 81

2. On 28 June 2013 I entered judgment assessing the plaintiff’s damages in the sum of $358,151.30.[2]

   [2] van Soest v BHP Billiton Limited (No 2) [2013] SADC 95

3. The plaintiff died on 24 July 2013 and on 16 September 2013 an order was made appointing his son, Jordan Lucas Adrianus van Soest as the legal personal representative of Mr van Soest’s estate and substituting him as the plaintiff in the proceedings. The plaintiff seeks an order that the defendant pay the costs of the action on an indemnity basis.

4. On 30 April 2012 the plaintiff’s solicitors filed and served a formal offer of settlement in accordance with Rule 187 of the District Court Civil Rules 2006 (6DCR 187) in the sum of $250,000 plus costs and disbursements to be agreed or taxed. As the plaintiff bettered that formal offer at trial he is entitled to the whole of his costs of action on a solicitor client basis, and the defendant is not entitled to any costs unless otherwise ordered.[3] 

   [3] 6DCR 188(6)(b)(ii)

5. However the plaintiff seeks an order that the defendant pay his costs for the whole of the action on an indemnity basis relying on the defendant’s conduct in these proceedings and its history of involvement in Dust Diseases litigation in the District Court of South Australia. The plaintiff also seeks certification from the Court that the trial is fit for senior and junior counsel.

6. On the latter point, the defendant agreed that the trial should be certified fit for senior and junior counsel. I am satisfied that the complexity and importance of the case warrants such a certification and I certify accordingly.

7. The defendant’s position as to an order for indemnity costs is that the plaintiff has not established any reason why there should be a departure from the ordinary consequences of bettering a filed offer. It concedes that the plaintiff should have its costs of the action on a solicitor client basis.

8. However it is also the defendant’s position that two interlocutory applications should be excluded from any such order. The first is an interlocutory application which it filed on 30 March 2012 for His Honour Judge McCusker to recuse himself from hearing the plaintiff’s action. Judge McCusker dismissed that application and ordered that the defendant pay the plaintiff’s costs. An application for judicial review was then filed in the Supreme Court on 4 April 2012. On 20 April 2012, His Honour Gray J granted the orders sought by the defendant. By consent, the question of costs of and incidental to both the application before Judge McCusker and the application in the Supreme Court were reserved for later argument. Mr Possingham, counsel for the plaintiff, does not oppose an order excluding the recusal application from any order for costs which I now make. In view of that consent position I exclude costs of and incidental to the recusal application from any order for costs made in relation to the action generally.

9. The second interlocutory application which the defendant proposes should be excluded is the plaintiff’s application to reopen the proceedings. This application was made after judgment was reserved. The affidavit in support of the application sworn by Anne Margaret Hoffman on 10 April 2013 deposed to a change in Mr van Soest’s medical condition as exhibited by the report of Dr Fraser Brims dated 5 March 2013. The application to reopen was opposed by the defendant. On 22 May 2013 the Court dismissed the application and reserved the costs of the application. The defendant seeks an order that it is entitled to costs of the application on an indemnity basis and relies on the affidavit of Scott Andrew Hay affirmed 12 April 2013.

10. I dismissed that application to reopen principally because I considered Dr Brims’ report to be of limited probative value; it did not add anything new to the evidence about Mr van Soest’s anticipated medical needs and life expectancy. As the application was dismissed the defendant should have its costs of the application. There is no basis to depart from the general rule that such costs should be awarded on a party and party basis and I so order, therefore such costs constitute “costs otherwise ordered” for the purposes of 6DCR 188(6)(b)(ii). 

11. As to the major issue between the parties, the distinction between solicitor client costs and indemnity costs is contained in 6DCR 264(5)(a) and (b).

    (5) In exercising its general discretion as to costs, the Court may—

    (a)     award costs as between solicitor and client (that is, on the basis that the party will be fully reimbursed for costs reasonably incurred by the party in the conduct of the litigation); or

    (b)     award costs on the basis of an indemnity (that is, on the basis that the party will be fully reimbursed for costs incurred by the party in the conduct of the litigation except to the extent that the party liable for the costs shows them to have been unreasonably incurred; or

    ...

12. In both circumstances the plaintiff will be fully reimbursed for costs reasonably incurred. The significance of an indemnity order is that on taxation the defendant bears the onus of establishing that a particular item is unreasonably incurred.

13. Mr Possingham detailed the basis upon which he sought an order for indemnity costs. He referred to the Objects Rule, DCR6 3(b) and (e) whereby parties are encouraged to try to resolve civil disputes by agreement and to minimise the cost of civil litigation to the litigants and the State. He submitted that the defendant acted inconsistently with those objects as it made no offer of settlement to the plaintiff either before or after the filing of the plaintiff’s formal offer. As a consequence, although Mr van Soest was gravely ill, with a reduced life expectancy, he had no opportunity to resolve this claim without having to proceed to a lengthy and expensive hearing. Furthermore there were no admissions or concessions made in the pre-trial stage which might have reduced the issues or the hearing time of 18 sitting days.

14. Mr Possingham submitted that the defendant’s conduct in these proceedings should be considered in the context of its earlier involvement in Dust Diseases litigation in South Australia. Reference was made to the earlier matter of Parker v BHP Billiton Limited[4] in which His Honour Judge Lovell handed down judgment on 18 July 2011 awarding the plaintiff damages for the condition of asbestosis which he was found to have contracted following exposure to asbestos dust at the Whyalla Shipyards for a period of 12 months in about 1971. He also referred to Cadoo v BHP Billiton Limited[5] in which Lovell J handed down judgment on 29 February 2012 awarding the plaintiff damages for the condition of asbestosis which it was found he had contracted when exposed to asbestos as a result of working on the PJ Adams at the Whyalla Shipyards in 1962. Finally he referred to the matter of Hamilton v BHP Billiton Limited[6] a decision of His Honour Judge McCusker in which it was found that the defendant was liable in negligence to Mr Hamilton’s estate in relation to the condition of mesothelioma which he contracted as a result of his employment at the Whyalla Shipyards in 1964. Mr Possingham submitted that in each of these earlier cases the defendant made no admissions in relation to liability and the plaintiff in each case was required to prove every element of the cause of action save for employment.

    [4] [2011] SADC 104

    [5] [2012] SADC 31

    [6] [2012] SADC 25

15. Mr Possingham pointed to the defendant’s unsuccessful defence of these three separate actions concerning employees who were found to have been exposed to asbestos at the Whyalla Shipyards one of whom, Mr Cadoo was employed on the same ship as Mr van Soest. He also pointed to the defendant’s unsuccessful appeal of Judge Lovell’s decision in Parker noting that in BHP Billiton Limited v Parker[7] the Full Court dismissed the appeal and by majority upheld Judge Lovell’s award of exemplary damages. It was said to be notable that, against the background of findings of liability in negligence as a result of exposure to asbestos, particularly on the PJ Adams, the defendant went to trial in this matter without making any offers of settlement.

    [7] [2012] SASCFC 73

16. Whilst Mr Possingham conceded that a defendant has a legal right to require a plaintiff to be put to proof he submitted that, in this instance, given the history of the defendant’s earlier involvement in Dust Diseases litigation in this State it was wholly unreasonable to make no attempt to resolve the matter in respect of a plaintiff who as a result, was put to unnecessary cost in the conduct of the proceedings.

17. By way of response Mr Fragos, counsel for the defendant, referred to the defendant’s written submissions[8] which highlighted factual differences between this and earlier cases, pointed to additional evidentiary material available in this matter compared with earlier cases and commented upon the significance of the defendant’s  failure to put any offer of settlement prior to the commencement of the trial.

    [8] Filed on 13 November 2013

18. The question is whether in all the circumstances it is reasonable to order the payment of indemnity costs. Such costs are directed “to compensate and not to punish”[9]. As the Rules provide that a party will ordinarily recover solicitor client costs when a judgment exceeds the filed offer, it must be intended that an order for indemnity costs will be reserved for cases where there are additional reasons warranting a reversal of the onus on taxation. It may seem a small difference to shift the onus, as suggested by Mr Possingham, but it is an important point of distinction. 

    [9] Patrick v Capital Finance Corporation (Australasia) Pty Ltd (2004) 211 ALR 272 at 281

19. Earlier Australian cases, dealing with the costs rules of various jurisdictions, have used the expressions “solicitor client costs” and “indemnity costs” interchangeably. Nevertheless cases such as Casley-Smith and Others v F.S. Evans & Son Pty Ltd and District Council of Stirling (No 6)[10] are helpful in defining the circumstances in which indemnity costs may be awarded in the context of 6DCR 264 (5)(b). Such an order is to be reserved for circumstances where a party has wilfully disregarded known facts and continues litigation in circumstances where it should have know that it has no chance of success and as a consequence has caused the other party to incur costs beyond what was reasonably necessary for such litigation.

    [10] 1989 148 LSJS 483 at 487-488

20. I am not satisfied that the defendant’s conduct fits that description. Although there were obvious similarities in the issues which arose in this case and the earlier matters of Parker, Cadoo and Hamilton there were important differences.

21. There were factual differences between the nature and extent of the asbestos exposure of those plaintiffs and Mr van Soest. The period of his employment with the defendant was very brief, giving rise to a legitimate question about whether his exposure to asbestos whilst working on the PJ Adams was sufficient to cause the onset of mesothelioma.

22. This may have influenced the defendant’s attitude to the formal offer which was filed on 30 April 2012. Significantly the offer was filed after Mr van Soest gave evidence on commission. As I have indicated in the judgment[11] there were inconsistencies in his evidence about his specific duties and the proportion of time he spent on such duties. It also became clear that he was mistaken about the period of his employment and that he had given differing histories to various of his medical advisers on that issue. Ultimately those matters were resolved in his favour however at the time that the offer was made it was not unreasonable for the defendant to question whether the plaintiff would prove his case.

    [11] Supra [2013] SADC 81 paras 35, 42 and 135

23. Other differences between the evidence presented in this case and that presented in Parker, Cadoo and Hamilton included a large number of summonsed documents including transcripts from Industrial Proceedings in the Australian Conciliation and Arbitration Commission and memoranda and reports from the South Australian Department of Labour and Industry and the Health Department. Those materials provided further details about the defendant’s knowledge about the dangers of asbestos which had not been the subject of earlier judicial consideration. Reliance on this material may well have increased the length of the hearing and, as it transpired, much of the material was found to support Mr van Soest’s case. However it cannot be said that it was wholly unreasonable for the defendant to rely on that material. The same can be said of the defendant’s reliance on the evidence of Mr Douglas, its former Superintendent (Industrial Relations) whose evidence related to BHP’s knowledge of the dangers of asbestos exposure in 1962, and to the way in which work was done at the fitting-out wharf and the defendant’s relationship with its contractors.

24. Much of this new material was presented to rebut the statutory presumption of actual knowledge and although the defendant’s submissions to that effect were unsuccessful it cannot be said that the defendant knew that it had no chance of success.

25. It appears that the defendant made an assessment of its prospects of success, and declined to accept the formal offer of settlement. As a consequence it is liable to pay the plaintiff’s costs of action on a solicitor client basis. To order costs on an indemnity basis would be to punish rather than compensate.

26. I order that the plaintiff is entitled to his costs of the action on a solicitor client basis save for the application to reopen in respect of which the defendant is entitled to its costs on a party and party basis. I also exclude the costs of and incidental to the recusal application before Judge McCusker from this order.

27. I certify the trial fit for senior and junior counsel.