Sharp v Emicon Pty Ltd

1. [1]

   HIS HONOUR: I published my reasons for judgment in the principal proceedings on 12 August 2014: see Sharp v Emicon Pty Ltd [2014] NSWSC 1072. These reasons deal with the outstanding question of costs of those proceedings.

2. [2]

   Briefly, Mr Sharp successfully recovered damages from his employer Coastwise Constructions in the sum of $754,317 for injuries and associated losses sustained as the result of falling three storeys through partly constructed roof timbers in the course of his employment. He originally sued only the head contractor Emicon Pty Ltd as the occupier in charge of the building site where he was injured. He later sued Coastwise as his employer and Staiger Pty Ltd which was the scaffolder that constructed the platform from which he was working when he fell. He was unsuccessful in his claims against Emicon and Staiger. Emicon was released from the proceedings during the hearing and agreed to pay its own costs. It is therefore not an interested party in the remaining costs dispute. I concluded that Staiger was not liable to Mr Sharp and gave judgment in its favour.

Costs as between Mr Sharp and Coastwise

1. [3]

   Mr Sharp and Coastwise are in dispute about whether Mr Sharp is entitled to his costs of the proceedings as a successful plaintiff, having regard to the terms of the Workplace Injury Management and Workers Compensation Act 1998 and the Workers Compensation Regulation 2010. The presently relevant provisions of the Act and Regulation are as follows:

2. [4]

   Coastwise relies upon reg 106 and maintains that it applies to the circumstances here. Coastwise has submitted that at the date of the mediation the work injury damages claim by Mr Sharp did not involve any other defendant so that reg 109 does not operate to exclude the operation of that part of the Regulation that includes reg 106. If that is correct, reg 106 would have continued to apply and to affect Mr Sharp’s ability to recover costs. Mr Sharp would in those circumstances be required to bear his own costs and would not be entitled to look to Coastwise for payment.

3. [5]

   Mr Sharp’s statement of claim was originally issued only against Emicon on 20 September 2011. Emicon thereafter filed a cross claim on 10 November 2011 against Coastwise and Staiger. Mr Sharp’s notice of the claim for work injury damages against Coastwise was served on 5 September 2012. A Workers Compensation Mediation between him and Coastwise took place on 22 April 2013. Mr Sharp’s solicitors advised the legal representatives of Emicon and Staiger about the mediation and asked them to attend in order to facilitate resolution of the matter. That invitation was not taken up and the mediation did not resolve Mr Sharp’s work injury claim against Coastwise.

4. [6]

   Coastwise has contended that “at the date of the mediation, the work injury damages claim did not involve any other defendant.” That submission places emphasis upon the fact that Mr Sharp had not by the date of the mediation joined either Coastwise or Staiger as a defendant sued by him, even though each had been joined on a cross claim issued by Emicon. Coastwise and Staiger were not joined to the proceedings as defendants until they were sued by Mr Sharp when he filed his amended statement of claim on 13 June 2013. (On 1 July 2013 Coastwise filed a cross claim against Emicon and Staiger. On 10 July 2013 Staiger filed a cross claim against Emicon and Coastwise).

5. [7]

   Mr Sharp has submitted that, as at the date of the mediation, there were “multiple parties” to the proceedings “within the meaning of reg 109, there being at least two defendants, namely Emicon and Coastwise, with respect to which parties it was alleged they were jointly or severally liable to [Mr Sharp]”. Regulation 109 does not in terms refer to “multiple parties” but instead refers only to “two or more defendants.” Emicon was the only defendant in the proceedings at the date of the mediation. Coastwise was not yet a defendant and Mr Sharp’s contention suggesting the contrary is literally and factually incorrect.

6. [8]

   Coastwise contends that as Mr Sharp did not recover damages in excess of the offer of $800,000 made by him at the mediation, and did not make an offer to which reg 109 applied, inasmuch as Emicon was at that time the only defendant, reg 106 applies and Mr Sharp must bear his own costs.

7. [9]

   Mr Sharp has submitted that his offer of settlement at the mediation did not comply with reg 109 “as it did not fulfil the stipulated requirements of the regulation” and that reg 106 does not apply. I take that submission to be based upon the proposition that the offer was not made to “all defendants” as contemplated by reg 109(a). However, as there was only one defendant at the time of the mediation, that submission has no substance.

8. [10]

   In my opinion the result is clear. Regulations 104, 105 and 109 have no application. Regulation 106 applies. Mr Sharp is required to bear his own costs. Mr Sharp formally submitted that the decision of the Court of Appeal in Australian Winch and Haulage Pty Ltd v Collins [2013] NSWCA 327 was wrongly decided. I note that submission.

Costs as between Mr Sharp and Staiger

1. [11]

   Staiger succeeded in defending the claim made against it by Mr Sharp. Staiger also succeeded in the proceedings between it and Coastwise in the sense that I dismissed the cross claims between them. Staiger seeks an order for costs with respect to its cross claim against Coastwise. Coastwise has submitted that there should be no order of the dismissed cross claims.

2. [12]

   However, Staiger seeks costs against Mr Sharp having successfully defended his proceedings against it: see UCPR 42.1. Staiger submits that as the successful party, costs should follow the event. Staiger also contends that as it succeeded in defending both Mr Sharp’s primary claim against it as well as the cross claim by Coastwise, Mr Sharp should be ordered to pay Staiger’s costs of both aspects of the proceedings, unless it appears that some other order should be made.

3. [13]

   Mr Sharp did not advance any contentions that he should not be ordered to pay Staiger’s costs of his failed proceedings against it. I hasten to observe that Mr Sharp’s submissions in this respect included a recitation of the circumstances in which Staiger was joined as a cross defendant and in which it later became a defendant sued by him, and that his claim against Staiger was an adoption of Emicon’s allegations against Staiger in the original cross claim. Be all that as it may, Mr Sharp did not adumbrate in clear or persuasive terms why it appears that some order other than the usual order should be made.

4. [14]

   It does not appear to me that there is any reason to depart from the usual order. Mr Sharp should pay Staiger’s costs of successfully defending his claim against it. I do not consider that Mr Sharp should be ordered to pay Staiger’s costs referable to either of the cross claims between Staiger and Coastwise, quite apart from the obvious effect upon such an order of my conclusion on the following issue.

Costs of the cross claims between Coastwise and Staiger

1. [15]

   I consider that there should be no order with respect to the costs of these cross claims, to the intent that each of Coastwise and Staiger should pay or bear its own costs. Each made a decision in the context of this litigation to sue the other for contribution or indemnity, and in each case before they had been joined as a defendant. Each cross claim failed. There are different reasons that led to the dismissal of the cross claims. None informs the making of any special order for costs to the benefit of one or to the detriment of the other. The costs incurred by these parties to the cross claims should lie where they fall.

Indemnity costs

1. [16]

   Staiger seeks an order against Mr Sharp that any costs that he might be ordered to pay should include costs assessed on a part/party basis up to and including 19 September 2013 but on an indemnity basis thereafter. (Some of the submissions upon this issue refer to a different date but that is inconsequential for the reasons that follow). It is accepted by Mr Sharp and Staiger that on a day in September 2013 Staiger served an offer of compromise upon Mr Sharp offering to settle the proceedings in the following relevant terms:

2. [17]

   UCPR 20.26 provides relevantly as follows:

3. [18]

   The offer made by Staiger did not include an amount for costs and so clearly did not infringe the terms of UCPR 20.26(2)(c). However, why the offer went on further expressly to say that “in accordance with UCPR 20.26(2) this offer is exclusive of costs” is both curious and unclear, and also entirely unnecessary. These words arguably achieve some inadvertent, albeit considerable, significance in the present context when taken in conjunction with the fact that the offer could have provided in accordance with UCPR 20.26(3)(a)(i) for there to be no order as to costs. The clear implication appears to me to be that the offer was made in the anticipation that Mr Sharp would be required to pay or would remain liable for a claim that he pay Staiger’s costs if the offer were to have been accepted. It was submitted on behalf of Staiger that the offer of compromise was expressed in terms that waived its entitlement to costs up to the date of any valid acceptance of its offer and that it offered to release Mr Sharp from having to pay what would otherwise have been an automatic obligation to pay Staiger’s costs. I am unable to understand that submission unless the offer of compromise with which I have been provided differs in some material respect from the one to which these submissions relate.

4. [19]

   Mr Sharp has submitted that Staiger’s offer of compromise was invalid in these circumstances because it was no more than an invitation to him to capitulate or surrender and was effectively devoid of any element of compromise at all. I agree. This area has been considered by the Court of Appeal in Regency Media Pty Ltd v AAV Australia Pty Ltd [2009] NSWCA 368 and more recently by Hall J in Simmons v Rockdale City Council (No 2) [2014] NSWSC 1275.

5. [20]

   In the Court of Appeal in Regency, the Court said this at [30]-[35]:

6. [21]

   Mr Sharp’s claim was neither vexatious nor hopeless. The issue of the state of the scaffolding upon which he stood, who had constructed it, whether it had been altered and if so by whom, and its role in the mechanics of the accident, were difficult and contentious issues in the proceedings, even if they changed in emphasis somewhat late in the day. The offer of compromise was an offer to surrender at the time it was made. It was not in my view unreasonable for Mr Sharp to reject it. It was also in my view inadequate to trigger an order that Mr Sharp pay any part of Staiger’s costs on an indemnity basis.

Sanderson or Bullock orders

1. [22]

   Mr Sharp has asked for an order that Coastwise be ordered to pay any costs that he might be ordered to pay to Staiger as a result of his unsuccessful action against it.

2. [23]

   The applicable principles were helpfully and conveniently summarised by Hall J in Simmons at [70]-[75] as follows:

3. [24]

   It does not seem to me that there is anything to be found in the conduct of Coastwise that makes it proper to order it to pay Staiger’s costs. Even though it was in my view reasonable for Mr Sharp to have sued Staiger as a separate defendant, he was neither encouraged nor forced to do so because of anything that Coastwise did or refused to do. Mr Sharp’s decision to sue Staiger came when it had already been joined as a party to the proceedings by Coastwise, which may have influenced or encouraged Mr Sharp to sue Staiger himself. That was, however, in all relevant respects an independent decision made by him and neither directly nor indirectly referable to the conduct of Coastwise. It does not appear that there is anything to which Mr Sharp can point, including Coastwise’s cross claim against Staiger, that relevantly amounts to anything that Coastwise has “said or done”, in the sense in which those words were used in Gould v Vaggelas [1985] HCA 75;(1985) 157 CLR 215, that led Mr Sharp to sue Staiger.

4. [25]

   There is another possible reason why Coastwise should not be ordered to pay the costs Mr Sharp has been ordered to pay to Staiger. Section 322 of the Workplace Injury Management and Workers Compensation Act defines “costs” to include both “costs actually incurred or to be incurred by a person claiming compensation or work injury damages” as well as “costs incurred in relation to any proceedings in respect of a claim.” The costs that I have concluded Mr Sharp must pay to Staiger would appear to me to fall within either or both of these limbs of the definition of costs. The expression “own costs” in reg 106 is not elsewhere separately defined. If Mr Sharp’s costs liability to Staiger does fall within either or both of these limbs of the definition of costs, they would be part of Mr Sharp’s costs, including his costs contemplated by the expression “own costs” in reg 106, and as such would be costs to be borne by him. Mr Sharp would not in such circumstances, as a party to court proceedings for work injury damages, be entitled to recover those costs from Coastwise.

Conclusions and orders

1. [26]

   In the circumstances I consider that the following orders should be made:

   1. (1)

      Order the plaintiff and the second defendant respectively to bear his and its own costs of the proceedings.

   2. (2)

      Order the plaintiff to pay the third defendant’s costs of the plaintiff’s proceedings against the third defendant.

   3. (3)

      Make no order as to the costs of the cross claims between the second defendant and the third defendant to the intent that the parties to those cross claims shall each pay or bear its own costs.