Supreme Court New South Wales Medium Neutral Citation: Metri v Nestlé Australia Ltd (No 2) [2021] NSWSC 518 Hearing dates: On the papers Decision date: 12 May 2021 Jurisdiction: Common Law Before: Adamson J Decision: (1) Order the first defendant to pay the plaintiff's costs of the proceedings on the ordinary basis up until and including 10 November 2017 and on an indemnity basis thereafter. (2) Order the first defendant/cross-claimant to pay the second defendant/cross-defendant's costs of the proceedings, which comprises its costs of the cross-claim and of defending the plaintiff's claim. Catchwords: COSTS — Party/Party — Exceptions to general rule that costs follow the event — Offers of compromise compliant with Uniform Civil Procedure Rules 2005 (NSW), r 20.26 — No reason to depart from consequence provided for by Uniform Civil Procedure Rules 2005 (NSW), r 42.14 — Public interest in early and efficient disposal of proceedings COSTS — Cross-claim — Whether first defendant ought bear costs of second defendant — Order made Legislation Cited: Civil Procedure Act 2005 (NSW), s 98 Motor Accidents Compensation Act 1999 (NSW) Uniform Civil Procedure Rules 2005 (NSW), rr 20.26, 42.1, 42.14 Cases Cited: Calderbank v Calderbank [1975] 3 All ER 333 Leach v The Nominal Defendant (QBE Insurance (Australia) Ltd) (No 2) [2014] NSWCA 391 Metri v Nestlé Australia Ltd [2021] NSWSC 343 South Eastern Sydney Area Health Service v King [2006] NSWCA 2 The Nominal Defendant v Cordin [2019] NSWCA 85; (2019) 88 MVR 410 Category: Costs Parties: Toufic Metri (Plaintiff) Nestlé Australia Ltd (First Defendant / Cross-claimant) Linde Material Handling Pty Limited (Second Defendant / Cross-defendant) Representation: Counsel: M Cranitch SC / T Hickey (Plaintiff) G Parker SC / D O'Dowd (First Defendant / Cross-claimant) M McCulloch SC / T Berberian (Second Defendant / Cross-defendant) Solicitors: Beilby Poulden Costello (Plaintiff) Sparke Helmore Lawyers (First Defendant / Cross-claimant) Moray & Agnew (Second Defendant / Cross-defendant) File Number(s): 2015/82320 Judgment Introduction 1. On 7 April 2021 I published my judgment on liability and quantum of damages (the principal judgment): Metri v Nestlé Australia Ltd [2021] NSWSC 343. I found that Nestlé Australia Ltd (the first defendant) was liable to Toufic Metri (the plaintiff) as its negligence had caused forklift 432 to eject the plaintiff from his seat in the forklift on 16 August 2012 and sustain injuries, the consequences of which included a below-knee amputation of his leg. 2. The parties agreed that the judgment sum was $2,933,178.51. I reserved the question of costs and invited the parties to make written submissions if any party sought an order other than that costs ought follow the event in accordance with the general rule: Uniform Civil Procedure Rules 2005 (NSW) (UCPR), r 42.1. 3. Between the time of commencement of the proceedings and the hearing, the plaintiff made the following offers, each of which was accepted to comply with UCPR, r 20.26: Offer Date offer made Time during which offer open Amount of offer First Offer 10 November 2017 28 days $2.2m Second Offer 9 August 2018 28 days $2.2m Third Offer 28 August 2020 28 days $2.75m Fourth Offer 28 September 2020 28 days $2.57m 1. The terms of each of the offers were identical, save as to the amount of the offer. For example, the First and Second Offers provided as follows: "The plaintiff offers to compromise the whole of this claim on the following terms: 1. Judgment in favour of the plaintiff in the sum of $2.2 million dollars. 2. This offer of compromise will close immediately following the expiry of 28 days after its receipt by the offeree or his legal representative. 3. This offer of compromise is made in accordance with rule 20.26 of the Uniform Civil Procedure Rules 2005." 1. The plaintiff sought an order that the first defendant pay his costs from the date of the First Offer, on an indemnity basis, pursuant to UCPR, r 42.14. In the alternative, the plaintiff sought an order that the first defendant pay its costs on an indemnity basis from the date of one of the subsequent offers. 2. Further, the plaintiff sought an order that the first defendant pay the costs of Linde Material Handling Pty Limited (Linde), the second defendant, on the basis that it had induced the plaintiff to join Linde as a defendant and had served evidence which implicated Linde, without which the plaintiff would not have sued Linde. 3. Although, as referred to above, the first defendant accepted that each of the four offers complied with UCPR, r 20.26, it nonetheless contended that the appropriate order was that it pay the plaintiff's costs of the proceedings on the ordinary basis. In the alternative, it submitted that only the last offer could have the effect of making it liable to costs on a higher basis as the negligence which was ultimately found was not particularised until later versions of the pleadings. 4. The first defendant opposed the making of any order which would have the effect of making it liable for Linde's costs of defending the plaintiff's claim. 5. Linde sought payment of its costs of the plaintiff's claim and the first defendant's cross-claim on the ordinary basis. Procedural history of the matter in so far as it is relevant to costs 1. The procedural history of the matter is set out in the principal judgment. In so far as this history bears on the question of costs it is summarised below. 2. On or about 10 October 2012, the plaintiff made a claim under the Motor Accidents Compensation Act 1999 (NSW) against the first defendant. He commenced the proceedings against the first defendant by filing a statement of claim on 18 March 2015. In the original statement of claim, he alleged that the first defendant was negligent in the following respects: "(a) Failed to maintain the forklift. (b) Failed to regularly inspect the forklift. (c) Failure to implement a suitable maintenance and inspection regime for the forklift. (d) Failure to monitor and maintain the operation of the kill-switch function, the accelerator function or the brake function on the forklift. (e) Failure to replace the forklift once 5 years had elapsed. (f) Failed to provide an appropriate inspection and maintenance regime with respect to the vehicle. (g) Res ipsa loquitur." 1. On 18 April 2016, the first defendant filed a cross-claim against Linde, which it had engaged to repair and maintain its forklifts, alleging that, if the plaintiff succeeded against the first defendant, Linde was liable, by failing to repair forklift 432. The first defendant alleged that Linde had breached its contract with the first defendant and the duty of care that it owed the plaintiff and had thereby caused the plaintiff's injuries. 2. As referred to above, the First Offer was made on 10 November 2017, after Linde had been joined as a cross-defendant but before Linde had been joined as a defendant. 3. On 11 July 2018, the plaintiff filed an amended statement of claim, which added the following particulars of negligence: "(h) Failure to ensure that the forklift was fitted with a seatbelt. (i) Failure to ensure that the forklift was fitted with a guard rail to prevent the occupant being thrown from the vehicle. (j) Failure to permanently remove the forklift from service in circumstances the vehicle had been tagged out for speed faults. (k) Failure to prevent the plaintiff from being exposed to the forklift in circumstances where the vehicle was not fit for use." 1. On 14 December 2018, the first defendant served further witness statements on the plaintiff, including a statement of Brett Lloyd dated 7 December 2018. The contents of this statement resulted in the plaintiff joining Linde as the second defendant by further amended statement of claim filed on 12 June 2019 (after the Second Offer and before the Third Offer). 2. In this pleading, the plaintiff expanded the allegations against the first defendant. He identified the risk of harm as being "the risk of an employee suffering injury as a result of being required to drive a forklift that presented with a safety defect and/or fault" and the negligence as being the failure to take precautions against the prospect that the risk of harm would ensue. Although the particulars of negligence in (a)-(g) remained substantially the same as in the original statement of claim, the balance of the particulars was amended to add the following: "(h) Failing to implement any, or any adequate, occupational health and safety system with respect to forklifts at the premises. (i) Failing to implement any, or any adequate, tag-out and return to service procedure, guideline or system with respect to forklifts at the premises. Failing to follow to properly follow any procedure relating to the tag-out and return to service procedure, guideline or system with respect to forklifts at the premises. (k) Failing to advise the agents of the Second Defendant of the specific nature of the safety defect and/or fault of the Forklift on 10 August 2012. (I) Allowing the forklift to return to service for use by its employees without confirming that the safety defect and/or fault had been both Identified and remedied. (m) Allowing the forklift to return to service for use by its employees in circumstances where any tag-out and return to service procedure, guideline or system with respect to forklifts at the premises in place had not been followed. (n) Allowing the forklift to return to service for use by its employees in circumstances where the Second Defendant's service notes made no reference to the safety defect and/or fault reported on 10 August 2012. (o) Failing to appropriately replace the seating within the forklift with suitable seating after wear and tear rendered the seating unsuitable without the use of a seatbelt." 1. On 24 March 2021, in the course of the hearing, the plaintiff further amended his statement of claim to add the following allegation of negligence: "(p) Failure to provide a mechanism to restrain an occupant within the vehicle by the provision of a suitable seat, seatbelt or safety bar/guard." Consideration Whether the plaintiff's costs ought be ordered on a higher basis 1. Costs are in the discretion of the Court: s 98 of the Civil Procedure Act 2005 (NSW). UCPR, r 42.1 provides that: "Subject to this Part, if the court makes any order as to costs, the court is to order that the costs follow the event unless it appears to the court that some other order should be made as to the whole or any part of the costs." 1. Division 3 of Part 42 of the UCPR applies to proceedings in respect of which an offer of compromise is made under UCPR, r 20.26 with respect to a plaintiff's claim. 2. UCPR, r 42.14 applies "if the offer is made by the plaintiff, but not accepted by the defendant, and the plaintiff obtains an order or judgment on the claim no less favourable to the plaintiff than the terms of the offer": UCPR, r 42.14(1). As the judgment, in the amount of $2,933,178.51, was "no less favourable to the plaintiff than the terms of the offer", the plaintiff is prima facie entitled to an order for costs up until the date of the offer and on an indemnity basis thereafter: Leach v The Nominal Defendant (QBE Insurance (Australia) Ltd) (No 2) [2014] NSWCA 391 at [27] (McColl JA, Gleeson JA and Sackville AJA agreeing). 3. The first defendant bears the onus of persuading the Court that indemnity costs should not be ordered: South Eastern Sydney Area Health Service v King [2006] NSWCA 2 at [83] (Hunt AJA, Mason P and McColl JA agreeing). The first defendant argued that the plaintiff's case evolved up until and including the hearing and that, in those circumstances, it was not unreasonable for it to reject the plaintiff's offers. Alternatively, it contended that the particulars of negligence, upon the basis of which it was found liable, were not provided until after the Third Offer (which, because of its timing, must be a reference to the Second Offer) and that it was not unreasonable for it to reject the earlier offers. 4. The first defendant's submissions would be apposite if the plaintiff's offers were in the form of Calderbank offers (named after Calderbank v Calderbank [1975] 3 All ER 333). In such cases, the question is whether it was unreasonable of the offeree not to accept the offer. However, in the present case, the plaintiff has the benefit of UCPR, r 42.14, where different considerations apply. 5. In South Eastern Sydney Area Health Service v King, Hunt AJA said, of the statutory predecessor to UCPR, r 42.14: "83 Part 52 rule 22 provides that, where a plaintiff who has made an offer of compromise in accordance with Part 22 (Division I) which is not accepted by the defendant, and where the plaintiff obtains a judgment no less favourable than the terms of the offer, then, unless the Court otherwise orders, the plaintiff will be entitled to an order against the defendant for costs on an indemnity basis in relation to his costs incurred from the day after the offer was made. The onus is on the defendant to persuade the Court that indemnity costs should not be ordered. He must demonstrate the basis on which an order should be made denying the plaintiff's entitlement to indemnity costs. He must establish that he had given serious thought to the risk involved in non-acceptance of the offer, and that he had assessed the plaintiff's case properly and in the context of the rule and the achievement of its purpose — to encourage the proper compromise of litigation, in the private interests of the litigants and in the public interest of the prompt and economical disposal of litigation. Generally, exceptional circumstances are required to justify such an order denying the plaintiff's entitlement. See, generally, Fowdl v Fowdl, Court of Appeal, 4 November 1993, unreported, per Kirby P at 12, 16; Hillier v Sheather (1995) 36 NSWLR 414 at 422-423; Morgan v Johnson (1998) 44 NSWLR 578 at 581-582. 84 Although the Court may take into account the particular features of a case and the difficulty of putting an accurate estimate on its value in advance of the litigation, those considerations do not provide a basis by themselves for denying the party making the offer an order for indemnity costs: Hillier v Sheather (at 423). In Maitland Hospital v Fisher [No 2] (1992) 27 NSWLR 721 at 725, it was said that a miscalculation in a case with large imponderables, where the course taken by the party to whom the offer was made may have been perfectly reasonable, would provide a basis for denying an order, but the subsequent decision in Hillier v Sheather suggests that, whilst 'large' imponderables may be a relevant factor in the particular case in denying an order for indemnity costs, in the general case a party's reasonable belief as to his own chances of success does not alone provide a basis for denying an order for indemnity costs." 1. In the present case, there were no "large imponderables". There was no question that the reason the plaintiff had lost his leg was because he had been run over by a forklift he was operating as an employee of the first defendant. The first defendant can be taken to have known that it owed the plaintiff a non-delegable duty of care. The first defendant regarded the plaintiff as a reliable, experienced forklift operator. It knew that a similar fault had been reported in the same forklift a few days previously by another reliable, experienced forklift operator; that its systems of recording faults were inadequate; that the description of the behaviour of the forklift had not been communicated in any written form to Linde when the forklift was sent to be repaired after the first complaint; and that, within days of the accident, its documented risk management systems attributed several reasons for the accident, each of which was a matter under its control. There were also documents created by the first defendant prior to August 2012 which indicated that it foresaw the risks which ensued on 16 August 2012. 2. Further, the quantum of damages was reasonably predictable. It was plain by the time of the First Offer that the plaintiff could not work as a forklift driver again. The first defendant knew that the plaintiff had no experience in any other field and was likely to be substantially, if not wholly, unemployable for the rest of his working life. Having regard to the age at which the aged pension is paid, it was likely that the plaintiff would, but for the accident, have worked until the age of 67. The assessment of damages for an amputee in the plaintiff's situation was a matter which was capable of calculation within a range. 3. In making these observations, I do not intend to imply that the first defendant had no prospects of success. The results of litigation are difficult to predict, in large measure because some issues depend on the oral evidence of witnesses. The prospects of success in litigation are always clear with hindsight. However, the provisions in the UCPR are designed to encourage the early proper and economic disposal of litigation before trial. 4. The first defendant's contention that it was "reasonable" for it to reject the offers (even if it could be established, which is questionable) is beside the point. A similar argument was rejected by the Court of Appeal in The Nominal Defendant v Cordin [2019] NSWCA 85; (2019) 88 MVR 410 where Simpson AJA (Leeming JA agreeing) said at [163]: "The appellant's contention … that the ultimate test for determination is the reasonableness of the conduct of the offeree party is not only unsupported by authority, it is contrary to authority. In NSW Insurance Ministerial Corporation v Reeve (1993) 42 NSWLR 100 at [102] (also decided under the Supreme Court Rules), Gleeson CJ, with whom Clarke and Cripps JJA agreed, said: 'It is impossible exhaustively to state the circumstances in which a discretion to contrary effect might be exercised, and it would imprudent to attempt any such exhaustive statement. However, I do not read Maitland Hospital v Fisher [No 2] as authority for the proposition that a discretion should be exercised against making an order for indemnity costs in any case in which it was reasonable for the defendant to take the view that it had a good chance of successfully defending the action. The prima facie consequence, which will apply in the ordinary case, is that in the circumstances postulated by the rule an order for indemnity costs will be made.'" 1. Further, the first defendant could have accepted any one of the plaintiff's offers and still pursued its cross-claim against Linde. 2. I am not persuaded that the first defendant has discharged its onus of displacing the consequence for which UCPR, r 42.14 provides. Whether an order ought be made that the first defendant pay the second defendant's costs 1. The plaintiff seeks an order that the first defendant pay Linde's costs of defending the plaintiff's claim. The first defendant resisted the order and argued that it was not guilty of any untoward conduct in the litigation which would warrant such an order. It also contended that, although it had encouraged the plaintiff to join Linde as a defendant, its encouragement was not causative, since the plaintiff had refrained from taking that step until he received the statement of Mr Lloyd in December 2018. 2. I am persuaded that it is appropriate to order the first defendant to pay Linde's costs of defending the plaintiff's claim. The plaintiff's decision to join Linde as a defendant was made as a consequence of the allegation by the first defendant that it had communicated the erratic behaviour of forklift 432 (as described by its employee) to Linde before the forklift was returned to service and operated by the plaintiff and that, accordingly, it was Linde's negligence which had caused the plaintiff's injuries. In these circumstances, the plaintiff was exposed to the risk that the first defendant might defeat the plaintiff's claim on the basis that it was not responsible for the plaintiff's injuries. Whether the first defendant could establish the allegations in its cross-claim substantially depended on the oral evidence of Mr Lloyd, its employee, and Mr Raad, Linde's employee. Mr Raad had no recollection of the work he had done on forklift 432 and was dependent on business records to say what he had done. Mr Lloyd purported to have a recollection which I found to be no more than a reconstruction. Although I found that Mr Lloyd had not told Mr Raad of the fault, this finding was a consequence of an assessment of all of the relevant evidence and was by no means a foregone conclusion. In these circumstances, it would be unjust to require the plaintiff to bear the costs incurred by Linde in defending the plaintiff's claim. Orders 1. For the reasons given above, I make the following orders: 1. Order the first defendant to pay the plaintiff's costs of the proceedings on the ordinary basis up until and including 10 November 2017 and on an indemnity basis thereafter. 2. Order the first defendant/cross-claimant to pay the second defendant/cross-defendant's costs of the proceedings, which comprises its costs of the cross-claim and of defending the plaintiff's claim. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 12 May 2021