Victorian WorkCover Authority v Origin Energy Limited and Anor (Ruling)
[2017] VCC 813
•26 June 2017
| IN THE COUNTY COURT OF VICTORIA AT MELBOURNE COMMON LAW DIVISION | Revised Not Restricted Suitable for Publication |
| GENERAL LIST |
Case No. CI-11-02605
| VICTORIAN WORKCOVER AUTHORITY | Plaintiff |
| v | |
| ORIGIN ENERGY LIMITED (ACN 000 051 696) | First Defendant |
| DON WRIGHT ENGINEERING | Second Defendant |
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JUDGE: | HER HONOUR JUDGE MORRISH | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 4 and 5 August 2016 | |
DATE OF RULING: | 26 June 2017 | |
CASE MAY BE CITED AS: | Victorian WorkCover Authority v Origin Energy Limited & Anor (Ruling) | |
MEDIUM NEUTRAL CITATION: | [2017] VCC 813 | |
RULING AS TO COSTS
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Subject: COSTS
Catchwords: Application for indemnity costs
Legislation Cited: County Court Civil Procedure Rules 2008, o26, o27, o63A, o78A; Accident Compensation Act 1985, s138, s134AB; Evidence Act 2008, s13(6), s63, s165(1)(c)
Cases Cited:Williams v Omeo District Health & Ors (Ruling) [2015] VCC 652; Calderbank v Calberbank [1975] 3 All ER 333; Legal Practitioners Complaints Committee v A Practitioner (1987) 46 SASR 126; Formfile Infosoft Pty Ltd v Fastfile Pty Ltd [2003] VSC 56; Hazeldene’s Chicken Farm Pty Ltd v Victorian WorkCover Authority (No 2) (2005) 13 VR 435; House v R (1936) 55 CLR 499; Victorian WorkCover Authority v Roman Catholic Trusts Corporation for Archdiocese of Melbourne [2013] VSC 26
Ruling: Application for indemnity costs dismissed.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr G A Worth | Wisewould Mahony |
| For the First Defendant | No appearance | Wotton + Kearney |
| For the Second Defendant | Mr P J Hayes | Sparke Helmore |
HER HONOUR:
Background
1 Geoffrey Williams (“the worker”) was an employee of Omeo District Health, the operator of a hospital. The worker commenced work at the hospital in May 1996, initially as a maintenance man/general hand. Some time in the 2000’s, he was promoted to maintenance manager and supervisor when a $5-million upgrade of the hospital commenced. On 13 December 2013, the worker was injured during the course of his employment.
2 On 13 December 2006, LP gas storage tanks at the hospital were replaced as part of the upgrade. Origin Energy Ltd (“Origin”) was the supplier of the relevant part of the LP gas system and was contracted to upgrade it. Origin sub-contracted Don Wright Engineering (“Don Wright”) to carry out part of the works. The replacement works involved turning off the gas supply. Once the replacement had been completed, the worker relit a hot water boiler burner which was located in a big boiler room. As he depressed the pilot button and then pressed the electronic starter button on the unit, there was a sudden explosion and flames leapt from the boiler. As a consequence, the worker sustained serious bodily and mental injuries.
3 The worker brought common law proceedings seeking damages in negligence and for breach of statutory duty, inter alia, against his employer, Omeo District Health (the first defendant), Origin (the second defendant) and Don Wright (the third defendant) in proceeding number CI-11-03093 (“the principal proceeding”). That proceeding was listed to commence before me on 1 August 2016.
4 The Victorian WorkCover Authority (“the VWA”) brought proceedings against the second and third defendants for recovery and/or indemnity under s138 of the Accident Compensation Act 1985 (“the Act”). Origin, the second defendant in the principal proceeding, was named as the first defendant in these recovery proceedings and Don Wright, the third defendant in the principal proceeding, was named as the second defendant in these recovery proceedings. The recovery proceeding was listed to commence immediately after the principal proceeding.
5 Following negotiations between the parties, the principal proceeding settled and on 3 August 2016, I made orders for costs and otherwise dismissed the proceeding. That meant that the worker was no longer a party to any proceeding before the Court. He was never a party to the recovery proceeding. His status in the recovery proceeding was as a potential witness to be called by the VWA.
6 The recovery proceeding was settled very soon after the principal proceeding settled.
7 By consent, on 4 August 2016, I made the following Order in respect of the recovery proceeding as against the first defendant, Origin:
“1That the proceeding against the First Defendant be dismissed with no order as to costs.”
8 That completed Origin’s involvement in the proceeding, leaving Don Wright as the only defendant.
9 On the same day as the proceeding against Origin was dismissed, 4 August 2016, counsel for the VWA, Mr G A Worth, announced that the VWA withdrew its proceeding against Don Wright. Mr Worth also announced that the VWA consented to an order for costs being made against it in favour of Don Wright in the current recovery proceeding (CI-11-02605) and for non-common costs in the principal proceeding (CI-11-03093).[1] Mr Worth proposed orders in the following terms:
“The plaintiff pay the second defendant’s costs of proceeding CI-11-02605 on a standard basis, such costs to be assessed by the Costs Court in default of agreement.”[2]
[1]Transcript (“T)” 20-22
[2]T27
10 Mr P J Hayes, who appeared on behalf of Don Wright, agreed that the plaintiff should pay his client’s costs, but he submitted that those costs should be paid on a standard basis up until, and including, 6 July 2016 and thereafter, on an indemnity basis.[3] He noted that on 4 July 2016, Don Wright had served an Offer of Compromise in accordance with the County Court Civil Procedure Rules 2008 (“the Rules”), which offer, he contended, had been rejected unreasonably by the plaintiff. Accordingly, he submitted that an award of indemnity costs in his client’s favour was justified from the date nominated.
[3]Exhibit 2, paragraph 2, cf. T29-30
11 On the other hand, Mr Worth submitted that no order for indemnity costs should be made, because the VWA had not acted unreasonably in rejecting the offer in all the circumstances.
The issue
12 The issue for determination is whether an award for indemnity costs should be granted in favour of Don Wright.
The Offer of Compromise served under cover of explanatory letter
13 On 4 July 2016, an Offer of Compromise was served on behalf of Don Wright. The Offer of Compromise was expressed to be made under Order 26 of the Rules (“the Offer of Compromise”). It was served under cover of a letter of the same date.
The offer of compromise
14 The Offer of Compromise was addressed to the VWA’s solicitors on the record and, omitting formal parts, it was in the following terms:
“TAKE NOTICE in accordance with Order 26 of the County Court Civil Procedure Rules 2008 the Second Defendant offers to compromise its claim against the Plaintiff as follows:
1The Second Defendant is to pay the Plaintiff $0 inclusive of costs and interest;
2The Plaintiff’s claim against the Second Defendant is dismissed;
3No Order as to costs.
This Offer of Compromise remains open for acceptance for 14 days after the date of service of this Offer.
DATED: 4 July 2016.”
The covering letter to the Offer of Compromise
15 The covering letter attaching the Offer of Compromise, dated and served 4 July 2016,[4] was in these terms:
[4]Exhibit “GNW-5” to Mr Wijeratne’s affidavit, exhibit 1
“…
We do not believe your client will be able to establish our client is liable to your client in relation to the abovementioned claim pursuant to section 138 of the Accident Compensation Act 1985 given:
1.Our client carried out the installation and removal of tanks at the Omeo District Hospital with due care and skill in accordance with industry accepted practice, the Origin Energy Gas Safety Case and the relevant Australian Standards;
2.The subject incident did not occur as a result of our client’s installation of LPG tanks;
3.Our client was never requested or instructed by Omeo District Health and/or Origin Energy Ltd, or their servants, to inspect the boiler room or the pipes, valve and water heater downstream of the first stage regulator;
4.Our client’s responsibility is limited from the outlet up to the first stage regulator in accordance with Australian Standard AS1596.2002 The Storage and Handling of LP Gas, the Origin Energy Gas Safety Case and industry accepted practice;
5.Our client checked all leaks in the connections up to and including the outlet of the first stage regulator;
6.Our client was not required to supervise the worker, …, whilst he reignited the pilot light in the boiler room;
7.It is not industry accepted practice for our client to check the downstream supply to the Employer’s boiler room, nor was our client licensed to do so; and
8.In any event, our client also checked the connections at the downstream supply to the hot water service after the incident occurred, and those connections passed testing at that time.
In the circumstances, we do not believe your client’s claim against our client will succeed.
Nevertheless, our client is prepared to resolve your client’s claim prior to mediation and avoid unnecessary costs being incurred by both of our respective clients.
To that end, we enclose, by way of service, our client’s Offer of Compromise dated 4 July 2016.
… .”
16 As can be seen, the explanatory letter asserted that the VWA would fail to establish liability based on any assertion of act or omission on the part of Don Wright. No part of the letter referred to the worker’s reliability (or lack thereof) as a witness due to his mental or behavioural disturbances or disorders, there being no dispute that the worker suffered from such disturbances or disorders as a consequence of the explosion.
17 Mr Worth submitted that the proceeding against Don Wright was withdrawn, not because of any lack of confidence in the strength of the case in liability. To the contrary, he was confident that, based on the expert and other evidence to be given, liability would be established. He submitted that a decision was made to withdraw the case against Don Wright for an unforseen reason that was unconnected with the grounds referred to in the covering letter attaching the Offer of Compromise.
18 Mr Worth asserted that the VWA decided to withdraw the proceeding because it was unlikely that the worker would be mentally fit to give evidence. Mr Worth stated that he had only been able to have a conference with the worker on 3 August 2016, once the principal proceeding had settled and final orders had been made. It was only then, in that conference, that it became apparent to Mr Worth, and to his instructing solicitor, that the worker’s mental state appeared so fragile that it would be detrimental to his welfare if he were to be called to give evidence and face cross-examination. Although no additional medical opinion was tendered to support that assessment, the asserted reason for withdrawal is not challenged, and I accept it. It is, in any event, consistent with medical evidence to which I shall soon refer.
19 To understand the circumstances in which the Offer of Compromise was made, and whether it was reasonable to reject it in all the circumstances, it is necessary to trace some of the history relevant to both the principal and the recovery proceedings, given their common features.
Interlocutory orders, directions and Court documents
20 Both the principal and the recovery proceedings followed the usual path in this Court, with various interlocutory orders and directions being made and given along the way. I shall refer to the orders, directions and other documents that have a bearing on the current application:
DATE DOCUMENT 06/06/07 Dr Timothy Entwisle, psychiatrist, reports to the authorised insurer, CGU (“the Insurer”). He considers that the worker appears to be suffering from a treatment-resistant depression, and should be referred to a psychiatrist for assessment. In any event, he considers that the worker cannot return to work. He also notes the possibility that the worker may require hospitalisation given his condition (Plaintiff’s Court Book (“PCB”) 163 – 167). 20/02/08 Dr Timothy Entwisle, psychiatrist, reports to the Insurer. He confirms his earlier opinion (6 June 2007) regarding the worker’s mental condition and notes that the worker will need to continue to attend his psychologist and remain on his psychotropic medication regime (PCB 168 – 171). 28/01/09 Dr Stephen Stern, psychiatrist, reports to the Insurer. He diagnoses that the worker is suffering from Post-Traumatic Stress Disorder. He considers the worker is psychiatrically incapacitated for all work (PCB 153 – 158). 30/07/09 John de Jong, psychologist, provides a report to the Insurer. He notes:
“… when [the worker] last went to Melbourne in January 2009 for three assessments he became lost, was late for one assessment, suffered several panic attacks as a result, became so distressed that he locked himself in his hotel room, not leaving to eat an evening meal or breakfast, and not sleeping because of his distress. It was the worst possible experience for a man already beset by severe PTSD. It took literally months for him to recover his former functioning. We resolved that should he ever need to return to Melbourne we would ensure he had the support of a carer. Upon that background I phoned you and made my appeal.”
(PCB 121).
18/08/09 The Insurer accepts the worker’s claim for permanent impairment benefits in accordance with s98C of the Act. 22/03/10 Dr Timothy Entwisle, psychiatrist, reports to the Insurer. He notes that the worker’s condition has continued as per previous reports. He considers that the worker requires review by a psychiatrist in regard to his psychotropic medication regime. He further considers that the worker suffers from a chronic psychiatric condition that prevents him from engaging in any work-related activities. He requires referral to a psychiatrist in regard to management of his major depressive illness (PCB 172 – 175). 05/11/10 Geoffrey Williams, the plaintiff worker in the principal proceeding, swears an affidavit in support of his application under s134AB of the Act (PCB behind tab B).
In the affidavit, the worker deposed to the circumstances in which the gas explosion occurred at his workplace and his resulting injuries. Of specific relevance to the present proceeding is the elaboration of the consequences affecting his mental condition, including suicidal ideation. He deposes to an admission at a psychiatric hospital.
11/11/10 A Serious Injury Certificate for pain and suffering and economic loss is granted. 27/01/11 Associate Professor Mendelson, consultant psychiatrist, reports on the worker’s condition. He considers that the worker has had suboptimal treatment for his diagnosed condition of Post-Traumatic Stress Disorder and Depression (PCB 177 – 187). 12/05/11 John de Jong, psychologist, seeks the Insurer’s approval for the worker to be admitted to a psychiatric hospital for assertive management of his depression “which has deteriorated to a point that I am seriously concerned for his safety if nothing is done” (PCB 122). 22/05/11 John de Jong, psychologist, writes a letter to the psychiatric hospital seeking admission of the worker for treatment and review (PCB 124 – 126). 08/06/11 Recovery Proceeding under s138 of the Act instituted against Origin. 28/06/11 Writ and Statement of Claim filed on behalf of the worker in the principal proceeding naming the employer as the sole defendant. 19/07/11 John de Jong, psychologist, reports to the Insurer that following the worker’s admission to the psychiatric hospital there has been some improvement in his condition; however, further approval is sought for another admission to the hospital for a period of seven days (PCB 127). 21/09/11 John de Jong, psychologist, reports to the Insurer confirming a diagnosis for the worker of Post-Traumatic Stress Disorder. As a result of this condition, the worker is wholly incapacitated for work. His prognosis for return to work is very pessimistic as he still suffers severe chronic Post-Traumatic Stress Disorder from which he has not fully recovered despite assertive evidence-based trauma focused psychological treatment, inpatient psychiatric treatment, and a range of pharmacological treatments:
“… He remains very easily overwhelmed by stress and has no realistic capacity for work for the foreseeable future.
… [His] mental disorder has stabilised and reached maximum recovery…
... [The worker] has found a stable level of functioning that is acceptable given the severity of his ordeal. The only significant disruption to this equilibrium is occasioned by the unhelpful intrusion of the Workcover process and the need for regular medical review which for him re-activates and exacerbates memories of the trauma of his experience.” (PCB 128 – 129).
22/09/11 John de Jong, psychologist, writes to the psychiatric hospital noting that the worker’s mental state has deteriorated and that he is “inconsolably tearful”.
He states:
“… [He] is clearly unable to effectively cope. He was never comfortable with his own emotions and he is now overwhelmed by the force of it. I have serious concerns about the risk of self harm and in my view the risk of harm necessitates urgent re-admission to the [psychiatric hospital] … .” (PCB 130)
03/10/11 Her Honour Judge Davis makes a number of orders based on signed Minutes of Consent Orders dated 22 August 2011. Her Honour fixes 8 June 2012 as the trial date for the recovery proceeding (Order 2). 13/03/12 John de Jong, psychologist, writes to her Honour Judge Davis expressing extreme concern about the harm posed to the worker’s mental state by the ongoing adversarial nature of the principal proceedings:
“… There have been a number of episodes in the past year where [the worker’s] distress and feelings of hopelessness has been so severe that he has actively contemplated suicide. Twice in 2011 he was admitted to the Hobart Clinic for assertive inpatient treatment to manage his depression.
…
… Most importantly, I am concerned [the worker] cannot endure much longer in the present circumstances. Your Honour would be aware that, while not the cause of his difficulties, the WorkCover process is an obstacle to [his] recovery. The fact of the continuing adversarial legal dispute re-opens and irritates a psychological wound that needs to be left alone for it to resolve. In the last two weeks [the worker’s] already severe depression has again become further exacerbated. … I question the reasonableness of requiring an injured worker to accommodate repeated psychiatric admissions simply to allow the defendants the benefit of unfettered natural justice … .
…
… The matter was listed for hearing in June 2012, but they advise[d] me they will seek an Order for further adjournment to enable the defendant parties to resolve the issue of responsibility.
...
…. It may be that [the worker’s] matter can be more assertively case managed and that, given this knowledge, he will be minded to persevere a little longer and survive the process to recover some better quality of life in the future.” (PCB 132 - 133)
04/06/12 Her Honour Judge Davis makes a number of orders based on signed Minutes of Consent Orders dated 1 May 2012.
Relevantly, the trial date fixed for the recovery proceeding, 8 June 2012, is vacated. At this stage Don Wright is not yet a party to any of the proceedings.
08/06/12 Trial date for recovery proceeding. As mentioned earlier, the date was vacated by Order of her Honour Judge Davis made 4 June 2012. 14/09/12 John de Jong, psychologist, writes to the Insurer, again noting the significant deterioration in the worker’s mental health. A further admission to the psychiatric hospital is proposed (PCB 134). 19/04/13 Dr Gregory White, consultant psychiatrist, reports to the Insurer. He considers the worker has been suffering from three psychiatric conditions. First, a Major Depressive Disorder, Single Episode, characterised by low mood and other biological and psychological and social symptoms of depression, including melancholic features and suicidal ideation. Second, he is suffering Post-Traumatic Stress Disorder. Third, he is also suffering from a Pain Disorder associated with both psychological factors and a general medical condition, characterised by a Chronic Pain Syndrome with a tendency to be worse when stressed (PCB 192 – 200). 22/05/13 His Honour Judge Carmody orders that the recovery proceeding be listed for hearing immediately after the principal proceeding, subject to the direction of the trial judge.
His Honour makes further orders regarding “discovery of the worker’s application for leave to bring Workcover proceedings together with the defendant’s response material”.
25/11/14 Summons issued on behalf of the worker seeking orders that Origin and Don Wright be joined as defendants to the principal proceeding. 12/12/14 His Honour Judge O’Neill grants leave to the worker to join Origin and Don Wright as parties to the principal proceeding. 16/12/14 The Amended Writ and Statement of Claim is served on Origin and Don Wright. 18/03/15 The worker applies for an extension of the limitation period within which to bring an action for damages in the principal proceeding. 11/05/15 John de Jong, psychologist, writes to Dr Barstad of the Patrick Street Clinic seeking review of the worker’s condition. He considers that the worker needs to be readmitted to the psychiatric hospital because his condition has deteriorated following rejection by the Insurer for specific treatment to manage his ongoing pain (PCB 135). 22/05/15 His Honour Judge O’Neill extends the limitation period to allow proceedings to be brought against both Origin and Don Wright so that they may be joined as defendants in the principal proceeding.
At the hearing of the application before his Honour Judge O’Neill, no witnesses were called to give evidence or be cross-examined. The worker swore an affidavit, the contents of which are summarised in his Honour’s ruling (exhibit C). That affidavit was not placed before me. In any event, there is nothing in his Honour’s summary of that affidavit to indicate that any delay in progressing the worker’s cause was due to his mental ill-health.
In determining whether it was appropriate to extend time, his Honour considered the question whether there was an arguable case against Don Wright. His Honour found that there was sufficient evidence, based on expert reports, to establish an arguable case against both Origin and Don Wright. His Honour found:
“[36] In my view, there is sufficient evidence available from the reports of the experts, in particular, Mr Barnes and Mr Brook, to indicate there is an arguable case to be maintained by the plaintiff against Origin and [Don] Wright.
[37] The Barnes’ report points to the following:
· Given Mr Wright admitted that he went to look for Mr Williams to advise that he was ready to light the pilot lights, Mr Williams was entitled to expect that all necessary safety procedures and checks had been conducted before he attempted to do so;[5]
· Had all the necessary safety measures been followed at the time of the installation of the LPG vessels, including inspection of the relevant gas control valve and ensuring it was cleaned or replaced, the incident would not have occurred.[6] The report said:
‘This contaminant material has come from the pipework leading from the LPG storage tanks and possibly also from the replaced tanks themselves. This contaminant material should have been removed prior to service of the system.’[7]
· Wright was contracted to provide the installation of the new LPG containers. They were provided by Origin. The implication from the report of Mr Barnes is that either Origin or Wright, or both, had an obligation to ensure the pipes were inspected and any contaminant material removed.
[38] According to the report of Mr Brook:
· When Mr Wright arrived at the site on the day of the incident, he met with Mr Williams at the tanks and explained what he was going to do that day, including not to reignite the pilot lights until Mr Wright had finished transferring the gas to a new tank;[8]
· Mr Wright inspected the room where the gas boilers were with Mr Williams;[9]
· Mr Wright went to find Mr Williams after he completed his work but by that time, the explosion had occurred;[10]
· There was evidence of unsafe practices:
§ There was a report that the gas installation became depressurised which would indicate a gas escape, as suggested by Mr Wright;
§ Mr Wright left the hospital site when he had reason to believe the gas installation was unsafe;
§ There is some conflict between information provided by Mr Wright in his report, and to his solicitors, about testing for tightness in the isolation valve;
§ Mr Wright failed to communicate the status of the gas installation to Omeo before leaving.[11]
[39] I am satisfied, on the basis of these reports, there is sufficient evidence for the plaintiff to found an arguable case. That is not to suggest that the evidence of Mr Barnes or Mr Brook will be accepted. That will be a matter to be determined at trial. The failure to plead a duty of care against Wright can be cured by amendment. Given the role played by Wright and the knowledge that at some stage Mr Williams would light the burner, it is hard to imagine there was not duty of care owed.”
His Honour was not persuaded that Don Wright was prejudiced to such a degree that it could not mount a defence to the principal proceeding (at paragraph 43 of the Ruling).
08/01/16 Order made by his Honour Judge Misso in chambers on 8 January 2016 in this recovery proceeding (based on signed Minutes of Consent Orders dated 18.12.15):
1. “The Plaintiff has leave to amend Writ and Statement of Claim by adding Don Wright Engineering as the Second Defendant to this proceeding.
2. By 15 January 2016 the Plaintiff is to file and serve amended Writ and Statement of Claim, together with a copy of this order on all other parties to this proceeding.
3. The proceeding is set down for trial on 1 August 2016 as a Cause (estimate 3-5 days).
4. The trial of this proceeding is to be listed together with proceeding number CI-11-03093 [the principal proceeding] subject to any Order to the contrary by the Trial Judge.
5. The evidence in [the principal proceeding] be used as evidence in this proceeding.
6. The parties have leave to rely upon the discovery and interrogatories and the answers thereto in … [the principal proceeding].
7. Any application to vacate the trial date is to be made at least 28 days prior to the trial date to the Judge in Charge of the Common Law Division General List.
8. By 22.02.2016 the Plaintiff is to pay the setting down for trial fee. In default, the Defendant may pay the fee within a further 21 days. If the fee is not paid the trial date will be vacated.
9. The parties are to cooperate in completing the interlocutory processes in accordance with the Rules of Court so that the action is brought to trial as quickly as is reasonably practicable.
10. By 15 January 2016 the parties have leave to serve any Notice for Discovery on each other.
11. By 26 February 2016 the party served with a Notice for Discovery must make discovery (including full inspection) of the following documents:
a) each document referred to in the party’s pleadings or the particulars of the pleadings;
b) any document which may be produced by the party during evidence at the trial;
c) any document which may harm the party’s case;
d) any document or class of documents which any other party reasonably requests the party to discover.
12. By 25 March 2016 the parties have leave to serve Interrogatories for the examination of each other.
13. By 22 April 2016:
(a) the parties are to exchange any medical and/or expert reports concerning damages and liability;
(b) the Plaintiff is to serve particulars of compensation paid.
14. [Order for mediation]
15. [Conduct of mediation]
16. [Information to be provided about mediation]
17. [Costs of mediation to be costs in the cause]
18. [Notification required if mediation results in settlement of the action]
19. By 1 June 2016 any subpoena under Order 42A is to be issued.
20. No later than 28 days before the trial date:
(a) the parties are to exchange any further medical and/or expert reports concerning damages and liability, along with supporting documentation;
(b) the Plaintiff is to serve any final particulars of compensation paid.
21. Court Books must be prepared by the parties (either jointly or separately), served 7 days prior to trial, and filed at the commencement of the trial with the Judge’s Associate.
22. Liberty to apply to the Judge in Charge of the Common Law Division General List for further directions upon reasonable notice to all other parties.
23. Costs reserved.”
15/01/16 The VWA files an Amended Statement of Claim. Until now, the recovery proceeding named only Origin as defendant. Now, Don Wright is joined.
The Amended Statement of Claim alleges that the worker was injured at work when a gas explosion occurred. It alleges that Don Wright was subcontracted to perform work, which it alleges was carried out negligently, causing the explosion and resulting physical and mental injuries to the worker. With regard to the mental injuries, the document particularises the injuries to include:
“i. Post-traumatic stress disorder.
j. Nervous shock.
k. Depression.
l. Anxiety.
m. Panic attacks.
n. Aggravation of hypertension as a result of anxiety, stress and depression.”
(PCB 9)
22/01/16 Don Wright serves a Notice for Discovery on the VWA pursuant to the Order made by his Honour Judge Misso in chambers on 8 January 2016. 15/03/16 Don Wright files a Defence to the Amended Statement of Claim. 16/05/16 Don Wright files a Statement of Expert Evidence in accordance with Order 44.03. The expert witness, Mr Ross Thomas Brown, is expected to give evidence about the cause of the incident the subject of the principal proceedings (the gas explosion in which the worker sustained physical and mental injuries) and about the conduct of each of the parties in those proceedings. The witness would also address the expert evidence upon which other parties intended to rely (see Exhibit “GNW-4” to the affidavit of Gihan Neil Wijeratne affirmed 5 August 2016, Exhibit 1). 25/05/16 Order made by his Honour Judge O’Neill in chambers:
1. “By 31.05.2016 [Don Wright] is to file and serve a Defence to the Amended Statement of Claim … .”
31/05/16 Don Wright files a Defence to the Amended Statement of Claim pursuant to the Order made by his Honour Judge O’Neill in chambers on 25 May 2016. Don Wright denies any negligence on its part (PCB 20 - 28). 31/05/16 Dr Gregory White, consultant psychiatrist, provides an update report regarding the worker’s mental condition. Dr White notes that the worker’s presentation is almost identical to his presentation in April 2013 (see report at PCB 192 - 200). He further notes that the worker’s psychiatric conditions have been resistant to psychiatric pharmacotherapy and psychological counselling. His prognosis is poor, and he appears to be suffering from a total and permanent psychiatric incapacity, with marked deficits in terms of his activities of daily living and work capacity (PCB 204 – 213). 01/08/16 Order made by me varying order No. 5 of the Consent Orders made by his Honour Judge Misso in chambers on 8 January 2016, by substituting these Orders in lieu thereof:
“The evidence in proceedings CI-11-03093 shall stand as evidence in this proceeding subject to:
(a) the right of the parties to object to the admissibility or use of any such evidence; and
(b) the right of the parties to call or tender any further evidence; and
(c) the right of the parties to recall any witness who gave evidence in those proceedings.”
[5]Reference omitted
[6]Reference omitted
[7]Reference omitted
[8]Reference omitted
[9]Reference omitted
[10]Reference omitted
[11]Reference omitted
21 As can be seen from the above chronology of documents, the history of the worker’s mental or behavioural disturbances or disorders has been longstanding and is well-known to all parties. Indeed, the worker was seeking damages in part because of his permanent psychological and psychiatric injuries.
22 The material filed on behalf of the VWA demonstrates that it had in its possession evidence, which it accepted, that the worker had a diagnosed history of Post-Traumatic Stress Disorder and Depression and that he suffered anxiety and panic attacks. On numerous occasions he was admitted as an inpatient for psychiatric treatment for conditions that were so severe that his psychologist wrote to a judge of this Court expressing his concerns about the effect of ongoing proceedings on, and the attitude of the VWA to the welfare of the worker. The worker had expressed suicidal ideation and has a documented history of being unable to cope with the stresses of daily life, as well as with an inability to cope with the ongoing procedures associated with the litigation.
23 The VWA had approved the worker’s various admissions to psychiatric hospitals and, indeed it was claiming recovery of the costs and damages associated with the worker’s treatment for his various psychological and psychiatric conditions. It should have come as no great surprise to the VWA that the worker’s mental condition was fragile and that litigation posed a real risk that his symptoms would deteriorate.
24 On the other hand, it does not appear from his Honour Judge O’Neill’s Ruling in the principal proceeding dated 22 May 2015[12] that there was anything in the worker’s affidavit in support of an application to extend time that his mental condition was responsible in any way for the delay in issuing his common law proceeding to recover damages against Origin and Don Wright.
[12]Williams v Omeo District Health & Ors (Ruling) [2015] VCC 652 – Exhibit C
25 On the first day that the principal proceeding came on for trial before me, there was no indication that the worker was mentally unfit to give evidence in his own cause. Had the matter not settled, I expect he would likely have been the first witness to be called. Had he given evidence, that evidence, subject to the orders referred to above, would have stood as evidence in the recovery proceeding. As a Serious Injury Certificate was granted without a need for a court hearing, neither Don Wright nor the VWA have ever had the opportunity to observe how the worker would perform as a witness.
26 Mr Hayes did not suggest that Mr Worth could, in the circumstances, have held a conference with the worker while the worker was a party to the litigation against his employer. Rather, he argued that both parties suffered under the same disadvantage – neither had the opportunity to confer with the worker or assess his performance as a witness, but they both had access to the medical material. Thus, so it was submitted, when the offer was both made and rejected, the state of the worker’s fluctuating mental health was a known risk factor that ought to have been counted.[13]
[13]Exhibit 2, paragraph 13
The costs application hearing
27 The costs application commenced on 4 August 2016 and continued the next day. Both parties tendered a number of exhibits on the second day of the hearing. The following exhibits were tendered on behalf of the plaintiff:
Exhibit Description A Plaintiff’s written submissions on costs B Affidavit of Wilson Yap sworn 5 August 2015 C Ruling made by his Honour Judge O’Neill dated 22 May 2015 [2015] VCC 652 in the principal proceeding.
28 The following exhibits were tendered on behalf of the defendant:
Exhibit Description 1 Affidavit of Gihan Wijeratne affirmed 5 August 2016 2 Second Defendant’s written submissions on costs 3 Indexes to the parties’ court books in the principal proceeding 4 Indexes to the parties’ court books in the recovery proceedings
Chronology of documents and events relating to Don Wright’s Offer of Compromise
29 The following is a chronology of documents and events from the date of the Offer of Compromise to the first trial day of the recovery proceeding:
Date Event 04/07/16 The Offer of Compromise is served on the VWA under cover of letter detailing contentions as to why the case against Don Wright would fail (Exhibit 1, and exhibit “GNW-5” attached thereto). I shall set out the contents of the Offer of Compromise and the covering letter later, but in short, the offer is that the proceeding be withdrawn against Don Wright with no order as to costs. The offer is open to be accepted for a period of 14 days. 15/07/16 The parties attend mediation. 19/07/16 The Offer of Compromise lapses. 03/08/16 The principal proceeding settles and orders dismissing that proceeding are made. The worker is no longer a party to any proceeding before the Court. His status in the recovery proceeding is as a potential witness.
At approximately 4.30pm, counsel for the VWA, Mr Worth, and his instructing solicitor, Mr Yap, first confer with the worker at the offices of the worker’s solicitors, and in the presence of the worker’s solicitors. The conference concludes at approximately 5.30pm. The legal representatives for the VWA form the opinion that the worker would be unable to give evidence in the recovery proceeding. In his affidavit, Mr Yap deposes:
“6. During the first few minutes of the conference with the worker, I very quickly formed a tentative view that the worker would not be able to give proper or cogent evidence in court let alone to withstand the rigours under cross examination by Counsel for the Defendants due to the very severe state of his psychiatric injury.
7. By the conclusion of the conference with the worker, my initial view was fortified when Mr Worth also held similar views concerning the ability of the worker to give evidence and to withstand the rigours of cross examination.
8. We immediately sought, and were given, instructions that evening to withdraw the proceeding against the Defendants given the very unique situation placed before the … [VWA] due to the worker’s very serious psychiatric injury.”
(Exhibit B)
04/08/16 The recovery proceeding is settled. The case against Origin is dismissed and the case against Don Wright is withdrawn.
30 In the chronology immediately above, I have referred to the critical passages of Mr Yap’s affidavit.
31 Mr Wijeratne’s affidavit sets out the history of the proceedings and confirms that the Offer of Compromise was served under cover of the letter set out earlier. A number of exhibits are attached to the affidavit including copies of the indexes to the Court Books filed in both the principal and the recovery proceedings. These indexes list the various medical and other reports. Also, a copy of the expert’s report (non-medical) sent to the VWA’s solicitors is attached as exhibit “GNW-3” to the affidavit. Mr Wijeratne’s affidavit makes no reference to the prospect of the worker becoming a potentially unreliable witness because of his mental ill health.
32 Neither Mr Wijeratne nor Mr Yap was required to be called to be cross-examined on the contents of their respective affidavits. Those affidavits may be accepted safely as providing an accurate account of the facts.
The applicable principles
33 Relevantly, Order 26 of the Rules provides:
26.02 Offers of compromise generally
(1)A party may, in respect of any claim in a proceeding, serve on another party an offer of compromise on the terms specified in the offer.
(2)An offer of compromise in respect of a claim may be on terms that take into account any other claim made in the proceeding between the parties.
(3) An offer of compromise must—
(a)be in writing and prepared in accordance with Rules 27.02 to 27.04; and
(b)contain a statement to the effect that it is served in accordance with this Order.
(4) An offer of compromise must state either—
(a)that the offer is inclusive of costs; or
(b)that costs are to be paid or received, as the case may be, in addition to the offer.
26.03 Time for making, accepting etc. offer
(1)An offer of compromise may be served at any time before verdict or judgment in respect of the claim to which it relates.
(2) A party may serve more than one offer of compromise.
(3)An offer of compromise may be expressed to be limited as to the time the offer is open to be accepted after service on the party to whom it is made, but the time expressed shall not be less than 14 days after such service.
(4)A party on whom an offer of compromise is served may accept the offer by serving notice of acceptance in writing on the party who made the offer before—
(a)the expiration of the time specified in accordance with paragraph (3) or, if no time is specified, the expiration of 14 days after service of the offer; or
(b)verdict or judgment in respect of the claim to which the offer relates—
whichever event is the sooner.
(5)An offer of compromise shall not be withdrawn during the time it is open to be accepted, unless the Court otherwise orders.
(6)An offer of compromise is open to be accepted within the period referred to in paragraph (4) notwithstanding that during that period the party on whom the offer is served makes an offer of compromise to the party who served the offer of compromise, whether or not the offer made by the party served is made in accordance with this Part.
(7)Upon the acceptance of an offer of compromise that states that costs are to be paid or received in addition to the offer, then, unless the offer otherwise provides or the Court otherwise orders—
(a)such costs are to be paid or received in respect of the claim up to and including the day the offer was served;
(b)liability for any costs in respect of the claim in relation to any subsequent period shall be in the discretion of the Court; and
(c)any party to the accepted offer may apply for the taxation of the costs.
…
26.04 Effect of offer
An offer of compromise made in accordance with this Part shall be taken to be an offer of compromise made without prejudice, unless the offer otherwise provides.
26.05 Disclosure of offer to Court
…
(2)Where an offer of compromise has not been accepted, then, except as provided by Rule 26.08(6), no communication with respect to the offer shall be made to the Court on the trial of the proceeding until after all questions of liability and the relief to be granted have been determined.
(3)Paragraphs (1) and (2) do not apply where an offer of compromise provides that the offer is not made without prejudice.
…
26.08 Costs consequences of failure to accept
(1)This Rule applies to an offer of compromise which has not been accepted at the time of verdict or judgment.
…
(4)Where an offer of compromise is made by a defendant and the plaintiff unreasonably fails to accept the offer and the claim to which the offer relates is dismissed or judgment on the claim is entered in favour of the defendant, then unless the Court otherwise orders—
(a)the defendant shall be entitled to an order against the plaintiff for the defendant's costs in respect of the claim until 11.00 a.m. on the second business day after the offer was made, taxed on the ordinarily applicable basis; and
(b)the defendant shall be entitled to an order against the plaintiff in respect of the defendant's costs after the time referred to in paragraph (a) taxed on an indemnity basis.
… .”
34 Order 27 sets out the technical prerequisites for such an offer. It is not suggested that the Offer of Compromise should be rejected because it does not comply with the formal requirements prescribed in Order 27.
Should the Offer of Compromise be regarded as a “Calderbank” offer? [14]
[14]See Calderbank v Calderbank [1975] 3 WLR 586
35 Mr Worth submitted that the Offer of Compromise should be read down because Order 26.08(1) only applies where a verdict has been returned or a judgment has been given. Since the proceeding was withdrawn, there would be no verdict or judgment.[15]
[15]T40-41
36 As King CJ observed in Legal Practitioners Complaints Committee v A Practitioner:[16]
“There is no completely satisfying definition of either ‘judgment’ or ‘order’ and no exhaustively definitive way of distinguishing between judicial acts which should be characterised as judgments and judicial acts which should be characterised as orders. ….
A judgment or order is a judicial act which decides the question or one of the questions which is raised for decision in the particular proceedings then before the court or judge. The question decided may be the substantive question or one of the substantive questions raised in the action; or it may be the question or one of the questions raised in interlocutory proceedings taken in the course of the progress of the action. Judgments and orders on the one hand are to be distinguished from incidental rulings given in the course of hearing and determining such questions. Examples of such incidental rulings are those which relate to adjournments, the time and place of hearing, admissibility of evidence and the exclusion or otherwise of witnesses from the hearing, as well as decisions upon submissions as to matters of fact law or procedure made during the course of a hearing. Such incidental rulings are not judgments or orders … .”[17]
[16](1987) 46 SASR 126 at 127
[17]Cited with approval in Formfile Infosoft Pty Ltd v Fastfile Pty Ltd [2003] VSC 56 at paragraph [7]
37 The authors of Civil Procedure Victoria (Williams)[18] note that to an extent, the distinction between “judgment” and “order” is preserved in the Rules.
“‘Judgment’ is reserved for the final determination, subject to appeal, of a proceeding the equivalent of what formerly would have been an action at law. In any other proceeding, final determination is an order. ‘Order’ also describes the determination of an interlocutory application in a proceeding of whatever kind. Today the difference between judgment and order has no other practical significance.”[19]
[18]LexisNexis Looseleaf service
[19]Chapter [I 59.01.10]
38 Whether the Offer of Compromise be characterised as an offer under Order 26 or as a Calderbank offer, similar principles apply. The Court has jurisdiction to make an award for indemnity costs under the general powers of the Court[20] and under other orders contained within the Rules, such as Order 63A. The critical issue is whether the plaintiff can establish that it was not unreasonable to reject the offer in all the circumstances as they existed at the time the offer was made.[21]
[20]County Court Act 1958 s 78A
[21]I have assumed that the plaintiff bears the burden of proof on this issue
Factors relevant to whether an offer is unreasonably rejected
39 In Hazeldene’s Chicken Farm Pty Ltd v Victorian WorkCover Authority (No 2)[22] the Court of Appeal identified a non-exhaustive list of factors to be considered when assessing whether a Calderbank offer has been refused unreasonably. In their unanimous judgment, Warren CJ, Maxwell P and Harper AJA observed:
[22](2005) 13 VR 435
“Factors relevant to assessing reasonableness
[25]The discretion with respect to costs must, like every other discretion, be exercised taking into account all relevant considerations and ignoring all irrelevant considerations.[23] It is neither possible nor desirable to give an exhaustive list of relevant circumstances. At the same time, a court considering a submission that the rejection of a Calderbank offer was unreasonable should ordinarily have regard at least to the following matters:
[23]See House v R (1936) 55 CLR 499 at 505
(a)the stage of the proceeding at which the offer was received;
(b)the time allowed to the offeree to consider the offer;
(c)the extent of the compromise offered;
(d)the offeree’s prospects of success, assessed as at the date of the offer;
(e)the clarity with which the terms of the offer were expressed;
(f)whether the offer foreshadowed an application for indemnity costs in the event of the offeree’s rejecting it.”
40 The parties agree that these factors are also relevant to offers of compromise made under Order 26 of the Rules.
(a) The stage of the proceeding at which the offer was received
41 In terms of timing, the Offer of Compromise was made after the parties’ documents had been disclosed. All parties were aware of the expert and medical evidence likely to be introduced into the trial. The offer was proximate to the trial date and to the mediation.
42 There had been no order made for lay evidence to be given in chief on affidavit in either proceeding. There was no interlocutory process that would have enabled Don Wright to have the worker medically examined in the recovery proceeding, although it had that right in the principal proceeding because the worker was a party.
43 Both parties likely expected that the worker would give evidence in his common law proceeding and all parties understood that any such evidence would, subject to further order, stand as evidence in the recovery proceeding, then listed to follow on for hearing immediately after the principal proceeding had completed.
44 The order regarding the timing for the listing of the recovery proceeding was made by consent.[24]
[24]See Order 4, made 8 January 2016 by his Honour Judge Misso, set out in the chronology above
45 There is no evidence before me explaining when the worker’s mental health declined to the point that the VWA’s legal representatives formed the view that he should not be called to give evidence.
(b) the time allowed to the offeree to consider the offer
46 The time allowed for the VWA to consider the offer was sufficient. The time allowed conformed to the relevant Rule. In any event, there is no suggestion that had the offer remained open for an additional week or two, it would have made any difference.
(c) the extent of the compromise offered
47 The Offer of Compromise was, in effect, for the VWA to walk away, bearing its own costs and not being liable for any of Don Wright’s costs, but that is not fatal to an application for an award of indemnity costs.[25]
[25]Victorian WorkCover Authority v Roman Catholic Trusts Corporation for Archdiocese of Melbourne [2013] VSC 26 at paragraphs [26]-[30]
48 At trial, once the legal representatives had determined not to call the worker to give evidence, it withdrew the proceeding forthwith and agreed to pay Don Wright’s costs. That constituted a total capitulation on terms less favourable than those contained in the Offer of Compromise.
(d) the offeree’s prospects of success, assessed as at the date of the offer
49 I have mentioned that in the application made on behalf of the worker to extend time, his Honour Judge O’Neill arrived at the conclusion that the worker had an arguable case in liability against both Origin and Don Wright. His Honour summarised how, if accepted, the evidence contained in some of those reports could establish liability. I repeat and adopt the passages cited in the chronology above. In particular, it is worth recalling his Honour’s observation at paragraph [39] of his Ruling:
“[39]I am satisfied, on the basis of these reports, there is sufficient evidence for the … [worker] to found an arguable case. That is not to suggest that the evidence of Mr Barnes or Mr Brook will be accepted. That will be a matter to be determined at trial. The failure to plead a duty of care against [Don] Wright can be cured by amendment. Given the role played by Wright and the knowledge that at some stage … [the worker] would light the burner, it is hard to imagine there was no duty of care owed.”
50 On the expectation that the worker would give evidence, the strength of the parties’ respective cases cannot be assessed with any greater degree of precision. Both sides had expert evidence that was based on assumed facts. Those assumed facts included the assertions of facts contained in the pleadings.[26] The result was not inevitable. The trial would involve a clash of experts.
[26]See for example pages 11 and 15 of the expert report of Ross Thomas Brown dated 17 May 2016, part of “GNW - 4” to the affidavit of Mr Wijeratne, exhibit 1
51 The mediation, which took place on 15 July 2016, was conducted for both the principal and recovery proceedings. The worker and his wife were both present,[27] although there is no suggestion that the representatives for either the VWA or Don Wright had opportunity to make an assessment of the worker’s fitness to give evidence at trial.
[27]See paragraph 15 of the affidavit of Mr Wijeratne, exhibit 1
(e) the clarity with which the terms of the offer were expressed
52 I am satisfied that the terms of the Offer of Compromise were clear. As mentioned above, the compromise offered, taken together with the covering letter, was effectively: “walk away and we each bear our own costs - because the expert evidence and standard industry practice will favour Don Wright on the question of liability”.
(f)whether the offer foreshadowed an application for indemnity costs in the event of the offeree’s rejecting it
53 Neither the Offer of Compromise nor the covering letter foreshadowed that in the event of the VWA rejecting it, Don Wright would make application for indemnity costs. However, so much may be implied from the fact that the Offer of Compromise was made under Order 26. Had the offer been contained in a Calderbank letter, it would have been necessary to foreshadow that such a costs application would be made.
The submissions on behalf of Don Wright
54 As mentioned earlier, Mr Hayes submitted that the VWA unreasonably rejected the offer. He contended that the VWA had all the relevant information necessary to make its own assessment about its prospects of success, and it was in no worse position than Don Wright to calculate the risk that the worker might become unfit to give evidence.
55 Mr Hayes also submitted that as a matter of policy, his client should not be shut out from having indemnity costs merely because the recovery proceedings were listed to follow on immediately after the principal proceeding had concluded. Two points must be made in response to such a suggestion: First, the listing of the hearing of the recovery proceeding was made because the parties consented to this course. Second, the mere timing of the listing of a recovery action stands as no obstacle to an offer of compromise being made under Order 26. If, for example, the principal proceeding had not settled, and had it run its full course, there would likely have been ample time to make a further offer of compromise before the recovery proceeding commenced.
The submissions on behalf of the VWA
56 As mentioned earlier, Mr Worth submitted that the VWA acted reasonably when it determined to reject the Offer of Compromise. Moreover, it acted under a statutory duty to recover damages from a party who contributed to the loss and damage in respect of which compensation had been paid or was payable. He contended that the VWA acted responsibly in assessing the strength of the competing cases at each relevant stage of the proceeding. Mr Worth submitted that the VWA acted responsibly by bringing the proceeding, and it acted responsibly when it withdrew that proceeding the moment it became apparent that the worker could not give evidence.
Analysis
57 Assuming for the sake of this ruling that the VWA carries the burden of proving that its failure to accept the Offer of Compromise was not unreasonable, I am so satisfied, on the balance of probabilities, for the following reasons:
58 Although I am persuaded that it was a genuine offer of compromise, made at an appropriate time, and in clear terms, I consider that the covering letter was irrelevant to the VWA’s ultimate decision to withdraw the proceeding. The letter was an attempt to convince the VWA that the non-medical expert opinion to be tendered would most probably weigh in favour of Don Wright. It contended that in those circumstances liability would not be established against Don Wright. The covering letter did not advert to the state of the worker’s mental health or to the possibility that the worker may become unfit, unavailable or incompetent to give evidence in the recovery proceeding. Nor was it suggested that if the worker gave evidence in the principal proceeding before a jury, a warning would be sought under s165(1)(c) of the Evidence Act 2008 to the effect that his evidence may be of a kind that is unreliable due to his mental ill health.[28] The state of the worker’s health did not rate a mention in the covering letter, yet Mr Hayes would have me find that the VWA should have accepted the offer on grounds that apparently did not occur to the offeror. In this regard, there is no mention in Mr Wijeratne’s affidavit that the worker’s mental ill health weighed as a factor in the formulation of the Offer of Compromise.
[28]Any such jury warning may have had a flow on effect for the evidence to be given or tendered in the recovery proceeding by virtue of the orders rendering the evidence admissible in both proceedings
59 I am satisfied, on the balance of probabilities, that at the time the Offer of Compromise was made, the parties expected that the worker would give evidence despite his suffering from various forms of mental ill health described above.
60 The worker was presumed to be competent to give evidence unless the contrary was proved.[29] Mr Yap’s unchallenged evidence is:
[29]Evidence Act 2008, s13(6)
“6.During the first few minutes of the conference with the worker, I very quickly formed a tentative view that the worker would not be able to give proper or cogent evidence in court let alone to withstand the rigours under cross examination by Counsel for the Defendants due to the very severe state of his psychiatric injury.
7.By the conclusion of the conference with the worker, my initial view was fortified when Mr Worth also held similar views concerning the ability of the worker to give evidence and to withstand the rigours of cross examination.
8.We immediately sought, and were given, instructions that evening to withdraw the proceeding against the Defendants given the very unique situation placed before the … [VWA] due to the worker’s very serious psychiatric injury.”[30]
(my emphasis).
[30]Mr Yap’s affidavit, exhibit B
61 Until that time, in my view, all parties were entitled to rely on the presumptions of competence and availability.[31] Mr Hayes did not suggest that any further evidence was required to rebut those prima facie presumptions.
[31]Section 63 of the Evidence Act 2008 and definition of “Unavailability of Person” in clause 4(2) of the Dictionary
62 Assumptions of fact in the expert reports were based in large part on the worker’s account as contained in the pleadings. It is trite to say that if the worker could not give evidence, those assumed facts could not be proved through him. It was not suggested that those facts could be established through any other eye witness, admission of fact, or through any admissible document.
63 Once the legal representatives for the VWA assessed that it would be inappropriate to call the worker to give evidence, it acted responsibly by promptly withdrawing the proceeding and agreeing to pay costs. There is no proper basis to find that at the time the Offer of Compromise was made, the VWA had any inkling that the worker would not be competent, compellable, available and/or reliable as a witness when the matter came on for trial.
64 The VWA rejected the offer because it came to the view that the evidence as disclosed to all parties justified that course.[32] In my view, it was not unreasonable to reject the offer in these circumstances.
[32]Exhibit A, Mr Worth’s assertion in his submissions at paragraphs 4, 5, 7, and 10. Ultimately, these assertions were not challenged by Mr Hayes – T103.
Conclusions
65 Having come to the conclusion that the VWA did not unreasonably fail to accept the Offer of Compromise, the application for indemnity costs must be dismissed.
Certification for counsel
66 Mr Worth submitted that I should leave the question of counsel’s fees to the Costs Court in default of agreement. I have jurisdiction to make such an order and consider that I am well placed to make it. I have heard much about the merits of the proceeding. It would be an inefficient use of resources to have the parties re-agitate the matters that were placed before me. There is also the issue of further delay and additional cost to the parties.
67 Taking account of the complexity of the matter, noting that both Omeo District Health and Origin were each represented by two counsel, and of Mr Hayes’ seniority, I consider it appropriate to certify in the amount claimed.
68 As to certification for a fee for counsel to prepare, although there was significant overlap between the evidence in the principal proceeding and the recovery proceeding, that overlap was not complete. I consider it reasonable to allow part of counsel’s preparation to cover the extra work inherent in facing the additional proceeding. Mr Hayes conceded that the one day claimed was not “exclusively” for preparation of the recovery proceeding. Without more, I am unable to apportion precisely preparation fees for the day claimed other than to say I am satisfied that at least half the day should be allowed. I will allow one-half day’s preparation.
Costs associated with the hearing of the costs application
69 The recovery proceeding was withdrawn on 4 August 2016. The transcript indicates that this happened after 3.09pm.
70 The application for costs commenced late in the afternoon of 4 August 2016. Neither party had filed any evidence in support of, or in opposition to, that application given the circumstances in which both proceedings came to a sudden halt. That said, the substance of what was contained in the exhibits tendered on the second day was canvassed on the first day.
71 Mr Hayes asked for the matter to be stood over to the next day so that he could prepare written submissions and present evidence. It was a reasonable request.
72 On 5 August 2016, both parties tendered their evidence as indicated in the list of exhibits above. Although I found the written submissions of both parties helpful, there were no surprises in those submissions or in the affidavits tendered.
73 Both parties sought costs associated with the costs hearing.
74 There was no additional cost incurred to the plaintiff over and above the costs associated with the trial on 4 August 2016. There was, however an additional day’s costs associated with the second day of hearing. There is no reason to depart from the principle that costs should be awarded in favour of a successful party. I would propose ordering that the second defendant pay the reasonable costs associated with the second day of hearing.[33]
[33]The plaintiff addressed the question of costs associated with the second day of hearing in exhibit A, paragraphs 48 and 49
Orders
(1) The application that the plaintiff pay the second defendant’s costs on an indemnity basis from 6 July 2016 is dismissed.
(2) Subject to Order 4 hereof, the plaintiff pay the second defendant’s costs of the proceeding on a standard basis.
(3) Certify second defendant’s counsel’s fee at $5,500.00 per day (inclusive of GST) for the first day of the hearing of this proceeding, plus one half-day of preparation ($2,750.00).
(4) The second defendant pay the plaintiff’s reasonable costs of the second day of the costs hearing (5 August 2016).
(5) The proceeding is otherwise withdrawn against the second defendant.
(6)Certify the plaintiff’s counsel’s fee of attending to take judgment today at $440.00.
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