Scott v Usinch Pty Ltd (No 3)

1. [1]

   In August 2025 I gave judgment for Mr Scott who in 2017, while an employee of Epona, had only been working as a labourer at an abattoir owned by Usinch for a little over two weeks, when he was seriously injured by a stillage which fell from a forklift being operated by another Epona employee: Scott v Usinch Pty Ltd [2025] NSWSC 983. In Scott v Usinch Pty Ltd (No 2) [2025] NSWSC 1314 I dealt with remaining issues about the calculation of his damages.

2. [2]

   The parties were still unable to agree about the appropriate costs order, or the terms of the final orders. Mr Scott proposing:

3. [3]

   These calculations were not disputed. But Epona submitted that the appropriate order as between it and Mr Scott was that each party bear their own costs and Usinch sought an indemnity costs order in its favour, because of Mr Scott’s rejection of an offer of compromise.

4. [4]

   The orders Usinch proposed were annexed to the November affidavit of its solicitor Mr Campbell, which explained the damages calculated and annexed proposed orders:

5. [5]

   Mr Scott agreed with order 2 and 5 and did not oppose orders 4, 6,7 and 8, but order 3 was opposed. The costs orders proposed were:

6. [6]

   In oral submissions it was accepted that a stay may be unnecessary, given that the concern about Mr Scott’s ability to pay Usinch’s costs could be addressed in the calculation of the costs he and it were respectively owed. In the result I do not propose to order the proposed stay.

7. [7]

   Mr Scott agreed that the total amount of his damages was $978,687.82 and that the amount to be deducted under s 151Z(2) was $173,606.35. Further, that the total workers compensation payments he had received were $159,158.71, including a sum of $72,380.19 to which s 66 of the Workers Compensation Act 1987 (NSW) applied. But he contended that was not recoverable, that not being a matter for the Court to determine.

8. [8]

   Given what is in issue about this between the parties, I consider that it is not appropriate to make order 3, which does not now arise for determination. I will amend the orders to require the parties to confer about the appropriate deduction. Section 56 of the Civil Procedure Act 2005 (NSW) still requiring the parties to bend their efforts to resolving this question.

9. [9]

   Mr Scott also agreed with Epona that s 346 of the Workplace Injury Management and Workers Compensation Act 1988 (NSW) applied to his costs against it. But he did not accept that r 96 of the Workers Compensation Regulation 2016 (NSW) applied. This turns on its operation, as well as that of other of the regulations, Mr Scott having accepted that the offers the defendants had made him had been jointly made. But on his case, they were not jointly and severally liable as joint tortfeasors in a common law action, given that the case against Epona was regulated by the Workers Compensation Act and so the regulations did not apply.

The Court’s costs discretion - Usinch

1. [10]

   There is no issue about the nature of the Court’s usual costs discretion, with costs usually following the event: s 98 Civil Procedure Act 2005 (NSW) and r 42 of the Uniform Civil Procedure Rules 2005 (NSW). With the impact of offers of compromise or settlement having in some cases to be taken into account. In this case the parties did not agree about the result, Mr Scott having not accepted or bettered offers which he received from both defendants.

2. [11]

   Usinch relied on the affidavit evidence of its solicitor Mr Campbell, which was not challenged. He explaining the offer of compromise and Calderbank offer it and Epona had made, which Mr Scott did not accept. As well as an offer of compromise Mr Scott had made to them on 19 May 2025, which they did not accept.

3. [12]

   There were no cross claims pursued by Epona or Usinch. Their offer of compromise provided:

4. [13]

   Their Calderbank offer provided:

5. [14]

   This reflected that the case Mr Scott pursued was that both defendants had been negligent and were both responsible for the accident and the injuries he suffered as a result. What was in issue between the parties including the duties which Mr Scott claimed they each owed him; whether they had been breached; their vicarious liability for the acts of the forklift driver Epona employed and supplied Usinch; how they had each contributed to the injuries and damages he had suffered as the result of the forklift accident; and whether Mr Scott had been contributorily negligent.

6. [15]

   The parties having so joined issue over the case Mr Scott pursued, it must be accepted that he alleged that Epona and Usinch were jointly liable for the damage he had suffered as a result of the forklift accident. Their offers reflected an acceptance they were jointly liable to pay what they had both offered.

7. [16]

   Offers of compromise made under the rules must bear a statement to the effect that the offer is made in accordance with the rules: r 20.26(2)(d). It is sufficient for such a statement to refer to Part 20: The Uniting Church v Takacs (No 2) [2008] NSWCA 172 at [6]-[7]. The required statement was included in the 16 May offer, which Usinch and Epona made after the parties’ failed mediation, when $1,400,000 had been offered. The May offer was open for acceptance until close of business on 23 May 2025 and did not deal with costs, as r 20.26 also required.

8. [17]

   The trial was then listed to commence on 2 June 2025.

9. [18]

   Mr Scott did not accept either that offer, nor the offer also made on the same day by the defendants by the Calderbank letter, for settlement on the payment of $1.8 million, inclusive of costs. Mr Scott’s 19 May offer of compromise was for $1.9 million and did not deal with costs.

10. [19]

    At trial Mr Scott did not establish that he was entitled to the offered damages, not bettering any of the offers he had received.

11. [20]

    While Mr Scott obtained an order for damages, the sum later agreed was considerably less than the amount which he had pursued at trial. That outcome reflecting my assessment of all the evidence, particularly that which he gave in cross examination about his past work record and likely future, had he not been injured as he was.

12. [21]

    There is thus no question that Mr Scott would have been better off, had he accepted the offers he received. Still, he disputes that the costs orders Usinch and Epona seek are justly available or permitted, in Epona’s case, because of the claimed operation of the Workers Compensation regime.

13. [22]

    There is no issue that under the Rules, an offer of compromise confers a conditional entitlement to indemnity costs, subject to the Court’s discretion to order otherwise: r 42.14 and Hiller v Sheather (1995) 36 NSWLR 414. There are competing lines of authority about whether the exercise of that discretion requires the existence of exceptional circumstances: Barakat and others v Bazdarova [2012] NSWCA 140 at [42]-[49] and Perisher Blue Pty Ltd v Nair-Smith (No 2) [2015] NSWCA 268 at [36]-[37].

14. [23]

    But it was explained in Walker v Harwood [2017] NSWCA 228 at [17]-[120] that:

15. [24]

    It follows that what is here in issue in relation to the defendants’ offer of compromise must be approached in this way, bearing in mind the requirements of s 56 of the Civil Procedure Act. The fact that Mr Scott had reasonable grounds on which to pursue his claims and that the costs order which the Rules provide for will cause him hardship, not providing a proper basis for departing from the Rules.

16. [25]

    That outcome reflects the risk which Mr Scott accepted in refusing the offer of compromise which he received and going to trial, where he did not better either that offer or the Calderbank offer, or even what he had offered Epona at mediation or what he later offered both defendants.

17. [26]

    While disputed, it must be accepted that it is relevant that Mr Scott himself made an offer of compromise to both defendants within the time available for acceptance of their May 2025 offers. That telling against the conclusion that there was then any real difficulty in him assessing the offers he had received in the time available, in the week before the trial. That the Court could not have made an order in the precise terms of the offer of compromise, does not establish any difficulty in his assessment of the May offers.

18. [27]

    The issue lying between the parties about whether Mr Scott’s claims against Epona were regulated by the Motor Accidents Injuries Act 2017 (NSW) or the Workers Compensation Act, which was resolved in favour of Epona at trial, was then well known to the parties. That affecting the assessment of his damages and the terms of any orders which would have to be made, if the matter did not settle and Mr Scott did not succeed on that point.

19. [28]

    These were all matters which all the parties had to take into account when considering making offers and those which they each received.

20. [29]

    Mr Scott not accepting the joint offer of compromise risked the results arrived at after trial. Not only that his position and that of Usinch, that the Motor Accident Act applied to his claim against Epona was not accepted, but also that his evidence, on which he depended to establish the considerable damages he pursued, was not entirely accepted.

21. [30]

    It is in that context that what was also referred to in Walker at [22] must be taken into account. Namely, the obligations imposed on the Court by s 56 of the Civil Procedure Act “to facilitate the just, quick and cheap resolution of the real issues in the proceedings”. It being Mr Scott who seeks that the Court depart from the usual order under s 42.15, having rejected the joint offer of compromise as he did.

22. [31]

    It having to be borne in mind in respect of an order under that rule, that the statutory purpose “will best be achieved by maintaining a tight leash on the circumstances in which the court should otherwise order, thereby promoting certainty in the operation of the provisions relating to offers of compromise and discouraging offerees from seeking to ‘game the system’”: Walker at [22]:

23. [32]

    I am satisfied that the approach which Walker requires be adopted to an application to order otherwise under r 42.15, as Mr Scott seeks, does not permit the Court’s discretion to be exercised in the way for which he contends in respect of his costs against Usinch. The evidence simply not establishing a proper basis for that outcome, in all of the circumstances which have to be considered, given why he did not better the offer he did not accept at trial.

24. [33]

    That conclusion is supported by Mr Scott not having accepted the other offers which he also received, which would also have left him better off.

25. [34]

    The result is that the costs order Usinch seeks must be made.

Epona - the impact of the Workers Compensation regime on the costs order

1. [35]

   It is s 346 of the Workplace Injury Management and Workers Compensation Act which regulates the costs order in respect of Epona, it providing:

2. [36]

   Regulations 94 to 99 have the effect of restricting costs orders which might otherwise be made. Their operation was considered in Toll Pty Ltd v Harradine (No 2) [2017] NSWCA 75, another case where claims were advanced in the alternative under the Motor Accidents Compensation Act 1999 (NSW) and the Workers Compensation Act.

3. [37]

   There in issue was whether the costs of an appeal also had to be dealt with under s 346 of the Workers Compensation Act, in accordance with r 96. Section 346 of the Workers Compensation Act and r 91 of the Workers Compensation Regulation 2003 (NSW), a predecessor to r 96 of the current Regulation, having displaced s 98 of the Civil Procedure Act 2005, which generally regulates the Court’s costs powers, in a case involving a claim for work injury damages: Smith v Sydney West Area Health Service (No 2) [2009] NSWCA 62.

4. [38]

   The result in Toll was that s 346(1) was attracted and each party was ordered to bear their own costs, in conformity with r 96: Toll at [18]-[19].

5. [39]

   Regulation 96 provides that except as provided by Subdiv 2 of Div 3 Costs recoverable in work injury damages matters, “the parties to court proceedings for work injury damages are to bear their own costs.” Epona relied on it, but Mr Scott disputed that r 96 applied, contending that it should be ordered to pay his costs, subject to Sch 7 of the Workers Compensation Regulation 2016.

6. [40]

   Schedule 7 is concerned with costs for legal services in work injury management matters and sheds no light on what is in issue. Rule 92 fixing maximum costs for legal services specified in Sch 7 and contracting out of such costs being regulated by r 90.

7. [41]

   Epona’s case was that neither rr 94 nor 95 applied, with costs being regulated by r 96. There was no suggestion that it was a self-insurer. While Mr Scott obtained a judgment less favourable than the offer he made at the mediation, Epona made no offer then and so r 95(1) was not engaged. Nor was rr 94.

8. [42]

   Although Mr Scott accepted that the offer of compromise was a joint offer, he submitted that it was relevant that in the proceedings the defendants were not jointly and severally liable; the applicable damages regimes were considerably different; and the Court would have been unable to give judgment in accordance with the offers made against Epona.

9. [43]

   That was not accepted by Epona.

10. [44]

    The restriction on costs awards is dealt with in Subdiv 2. Regulation 99 providing in respect of claims pursued against multiple parties:

11. [45]

    That the regulation applied was disputed. Mr Scott contending that neither r 99(a) nor (b) were satisfied, on his case the May offers not having been capable of acceptance in the terms made. That is difficult to accept and not a difficulty raised by Mr Scott, at the time the offers were made and he himself made an offer in similar terms. Had any of them been accepted, it seems unlikely that the parties would have been unable to agree about the orders the Court would be asked to make to give them effect.

12. [46]

    In 2022 Mr Scott and Epona had participated in a mediation. The 22 March certificate of mediation outcome indicates that Mr Scott made a final offer of $1,400,000 clear of Workers Compensation payments plus statutory costs. With Epona then making no offer because Usinch did not join the mediation conference.

13. [47]

    But in May 2025 the parties made each other the joint offers earlier explained. Given what Mr Scott claimed against them and their contributions to the damages which he pursued, in the alternative under the Motor Accidents and Workers Compensation schemes, as well as what Epona and Usinch finally offered him, there is no issue that they would have been jointly liable to pay Mr Scott what they had both offered, had their offers been accepted.

14. [48]

    Regulations 94 and 95 provide:

15. [49]

    These regulations are not engaged. It follows that like in Toll, the preferable view is that Epona and Mr Scott must bear their own costs of what was in issue between them, given the provisions of r 96.

16. [50]

    Had this regime not applied, given the circumstances I have explained, a costs order in similar terms to that made in relation to Usinch, would have also had to be made in relation Epona. But it must be accepted that Mr Scott established no basis for an order in his favour, as he sought.

Orders

1. [51]

   For these reasons I order that:

   1. (1)

      Noted the parties agree that:

   2. (2)

      Judgment for the Plaintiff against the First Defendant in the sum of $805,081.47.

   3. (3)

      The parties are to confer about the deduction of the Payback from the Judgment Sum in Order 2 and its remission directly to the Second Defendant.

   4. (4)

      Noted the defendants agree that, should the Plaintiff elect to recover judgment against the First Defendant then the Second Defendant is liable to contribute $120,000 to that Judgment.

   5. (5)

      Judgment for the Plaintiff against the Second Defendant in the sum of $400,000.

   6. (6)

      Noted the defendants agree that, should the Plaintiff elect to recover judgment against the Second Defendant, then the First Defendant is liable to contribute $280,000 to that judgment.

   7. (7)

      Satisfaction of the Judgment against the First Defendant discharges the Judgment against the Second Defendant pro tanto.

   8. (8)

      Satisfaction of the Judgment against the Second Defendant discharges the Judgment against the First Defendant pro tanto.

   9. (9)

      The First Defendant is to pay the Plaintiff's costs as agreed or assessed on the ordinary basis until 15 May 2025 and thereafter, the Plaintiff is to pay the First Defendant's costs as agreed or assessed on an indemnity basis.

   10. (10)

       As between the Plaintiff and the Second Defendant, there be no order as to the costs of the proceedings with the result that each party is to bear their own costs.