Citation: Inspector Orr v Perilya Broken Hill Limited; Inspector Orr v Perilya Limited [2018] NSWDC 131
Court: District Court of New South Wales
Date: 13 April 2018
Judge: Kearns DCJ
Background
These proceedings arose from a work health and safety prosecution against two related mining entities. One entity, Perilya Broken Hill Limited (referred to here as the operating company), was found guilty of a Category 2 offence under the relevant work health and safety legislation following a hearing on 28 February 2018. The other entity, the parent company Perilya Limited, was acquitted.
With the substantive findings made, the court turned to costs. The prosecutor, a WorkCover inspector, had pursued both companies. The acquitted parent company sought a costs order in its favour, while the convicted operating company resisted the full costs sought against it.
The central dispute was how costs should be allocated in circumstances where one defendant succeeded and one failed, and where many of the issues at hearing were common to both.
Legal Issues
- Whether the acquitted parent company was entitled to a costs order in its favour, given that the prosecutor had relied on documentary evidence suggesting it owned and operated the mine
- What proportion of costs the acquitted parent company could recover, including whether the "rule of thumb" (which splits joint defence costs equally between defendants where only one is found liable) applied
- What reduction, if any, should be made to the costs recoverable by the prosecutor from the convicted operating company, given that certain issues were not pursued or were decided against the prosecutor
Decision
Costs in favour of the acquitted parent company
The court held that the acquitted parent company was entitled to a costs order. Although the prosecutor failed to prove that entity was a person conducting a business or undertaking, the prosecutor had reasonably relied on a substantial body of documents in which the parent company described itself as owning and operating the mine. The fact that oral evidence emerged at hearing that contradicted those documents, and that this evidence could not have been anticipated, was insufficient to deprive the acquitted party of its costs entitlement.
However, the court rejected the parent company's submission that it should recover 55% of the total costs of the proceedings. That figure was constructed using the "rule of thumb," which would have attributed half the shared defence costs (90% of proceedings) to the parent company. The court found a flaw in this reasoning: the rule of thumb assumes success on the shared issues, but the parent company had not been found not guilty on those issues. There had simply been no determination against it on that portion of the case. Applying the rule of thumb would not produce a just and fair result. The court limited the parent company's costs recovery to the 10% of proceedings devoted exclusively to the case against it.
Costs against the convicted operating company
The prosecutor sought all its costs from the convicted operating company. The operating company argued that the rule of thumb should reduce that recovery by half. The court again declined to apply the rule of thumb for the same reasons.
The court then considered whether specific issues on which the prosecutor failed or which were not pursued warranted a further reduction. It found that most of the failed particulars were not dominant or separable issues, and had consumed negligible hearing time. However, four alternate methods of performing the relevant task had been advanced by the prosecutor and were not ultimately determined. These involved expert evidence from both sides and an identifiable portion of court time, which the court assessed at 10% of the proceedings. The court determined that neither side should pay the other's costs on those issues. Accordingly, the prosecutor was entitled to recover 80% of its costs from the convicted operating company.
Orders Made
- The prosecutor is to pay 10% of Perilya Limited's costs of the proceedings, as agreed or assessed under s 257G of the Criminal Procedure Act 1986.
- Perilya Broken Hill Limited is to pay 80% of the prosecutor's costs of the proceedings, as agreed or assessed under s 257G of the Criminal Procedure Act 1986.
Key Takeaways
- The District Court declined to apply the "rule of thumb" for splitting joint defence costs, finding it produced an unjust result where the acquitted defendant had not actually succeeded on the shared issues, but simply had no determination made against it on those issues.
- A prosecutor who relies on a defendant's own documentary record to establish liability acts reasonably even if oral evidence at hearing contradicts those documents, and that reasonableness does not necessarily displace the acquitted defendant's entitlement to costs.
- Where a prosecutor fails on issues that are neither dominant nor separable, and those issues consumed negligible hearing time, no reduction in the prosecutor's costs recovery is warranted on account of those failures.
- Issues that occupied a distinct, identifiable portion of hearing time and involved expert evidence on both sides may constitute separable issues justifying a reduction in costs, even where they were ultimately left undetermined rather than decided against the successful party.
- Costs apportionment by percentage of hearing time, while necessarily a broad-brush exercise, was applied consistently across both costs orders in this decision.
Legislation and Cases Referenced
Legislation
- Work Health and Safety Act (s 32, Category 2 offence)
- Criminal Procedure Act 1986 (NSW), s 257G
Cases
- Currabubula & Paola v State Bank NSW [2000] NSWSC 232 (Einstein J's treatment of the rule of thumb)
- King Network Group Pty Ltd v Club of the Clubs Pty Ltd (No 2) [2009] NSWCA 204 (Court of Appeal querying the correctness of the rule of thumb analysis)