Court of Appeal Supreme Court New South Wales

• Medium Neutral Citation: Chubb Insurance Company of Australia Limited v Moore (No 2) [2013] NSWCA 299
• Decision date: 10 September 2013
• Before: Bathurst CJ at [1]; Beazley P at [2]; Macfarlan JA at [3]; Emmett JA and Ball J at [4].

Decision

(1) The Court declares that s 6 of the Law Reform (Miscellaneous Provisions) Act 1946 does not apply in relation to any insurance moneys that are or may become payable by any of the plaintiffs under any of the relevant policies in respect of the claims made by the Transform Claimants in the Transform Proceedings (the first and second defendants), or any class of them, or in respect of the claims made by the PDS Claimants in the PDS Proceedings (the third to eleventh defendants), or any class of them.

(2) The Court orders that the Transform Claimants (the first and second defendants) and the PDS Claimants (the third to eleventh defendants) jointly and severally pay 50 per cent of the plaintiffs' costs of the proceedings, including the proceedings in the Court of Appeal.

[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]

• Catchwords: COSTS - whether exception to general rule that costs follow event - where questions of public interest - where separate questions removed to Court of Appeal on stated case - where questions of significant continuing interest to plaintiff insurers - where other parties shared some measure of success - nature of parties - where insurers large and recurrent litigants; PROCEDURE - civil - judgments and orders - final orders - where multiple questions removed to Court of Appeal on stated case answered but single answer determinative
• Legislation Cited: Law Reform (Miscellaneous Provisions) Act 1946, s 6
• Cases Cited: Bullock v London General Bus Co [1907] 1 KB 264; CSR Ltd v Eddy [2005] HCA 64; (2005) 226 CLR 1
• Category: Costs
• Parties: Chubb Insurance Company of Australia Limited (First Plaintiff); Liberty Mutual Insurance Company t/as Liberty Insurance Underwriters (Second Plaintiff); Allianz Australia Insurance Limited (Third Plaintiff); Chartis Australia Insurance Limited (Fourth Plaintiff); AXIS Specialty Europe Public Limited Company t/a AXIS Specialty Australia (Fifth Plaintiff); QBE Insurance (Australia) Limited (Sixth Plaintiff); Wesfarmers General Insurance Limited (Seventh Plaintiff); Margaret Moore (First Defendant); Michael Snelgrove (Second Defendant); Peter Clarke as Trustee for the Clarke Family Trust (Third Defendant); Samantha Murray (Fourth Defendant); Raymond Drummond (Fifth Defendant); Laurence Hogan (Sixth Defendant); Jaclyne Fisher (Seventh Defendant); Adrian Williams (Eighth Defendant); Mohetishwar Prasad (Ninth Defendant); Janet Micallef (Tenth Defendant); Glenn Ford (Eleventh Defendant); Great Southern Managers Australia Limited (Receivers & Managers Appointed) (in liquidation) (Twelfth Defendant); John Young (Thirteenth Defendant); Cameron Rhodes (Fourteenth Defendant); Phillip Butlin (Fifteenth Defendant); Peter Patrikeos (Sixteenth Defendant); Jeffrey Mews (Seventeenth Defendant); Murray Colvin (Eighteenth Defendant); Steven Cole (Nineteenth Defendant); Robert Jenkins (Twentieth Defendant)
• Representation: Counsel: D L Williams SC, J A Redwood and M F Newton (Plaintiffs); N C Hutley SC and T Prince (First and Second Defendants); A S Bell SC and A Munro (Third to Eleventh Defendants); G K Rich (Fourteenth & Fifteenth Defendants); T W Marskell (Thirteenth, Sixteenth, Seventeenth Defendants); M D Howard SC and J D Steedman (Eighteenth, Nineteenth, Twentieth Defendants); Solicitors: Colin Biggers & Paisley (Plaintiffs); Solomon Brothers (First & Second Defendants); Macpherson + Kelley Lawyers (Third, Fourth, Fifth, Sixth, Seventh, Eighth, Ninth, Tenth & Eleventh Defendants); DLA Piper (Twelfth Defendant); Colin Biggers & Paisley (Thirteenth Defendant); Arnold Bloch Leibler (Fourteenth & Fifteenth Defendants); Moray & Agnew (Sixteenth & Seventeenth Defendants); Karp Steedman Ross-Adjie (Eighteenth Defendant); Lavan Legal (Nineteenth & Twentieth Defendants)
• File Number(s): 13/31425

Judgment

1 BATHURST CJ: I agree with Emmett JA and Ball J.

2 BEAZLEY P: I agree with the reasons of Emmett JA and Ball J and with the orders they propose.

3 MACFARLAN JA: I agree with Emmett JA and Ball J.

4 EMMETT JA and BALL J: On 11 July 2013, the Court published reasons for its conclusions as to certain questions posed for it (see Chubb Insurance Company of Australia Ltd v Moore [2013] NSWCA 212). Terms are used in these reasons as defined in those reasons (the principal reasons).

5 Following publication of the principal reasons, the Court directed the Insurers to bring in short minutes to reflect the conclusions reached by the Court. The other parties were invited to make submissions on the orders proposed by the Insurers. In addition, all parties were invited to make submissions as to the costs of the proceeding, both in the Equity Division and in this Court. The Court has now received short minutes of proposed orders and submissions as to costs.

6 In the principal reasons, the Court answered a series of questions that were posed by a judge of the Equity Division. The first question concerned the application of s 6 of the Reform Act to the PDS Proceedings and the Transform Proceedings. The other questions were concerned with the operation of s 6 if it were held to apply to any of the claims made in the PDS Proceedings or the Transform Proceedings. The Court concluded that s 6 does not apply in relation to the claims made by the Transform Claimants in the Transform Proceedings or to the claims made by the PDS Claimants in the PDS Proceedings. In the light of that answer, the other questions did not arise. Nevertheless, the Court indicated its conclusions on those questions on the assumption that s 6 were applicable.

7 The orders proposed by the Insurers fairly reflect the Court's conclusions and include orders providing answers to all of the questions posed to the Court. None of the defendants in the proceeding, other than the PDS Claimants, has made any submissions concerning the orders proposed by the Insurers. While the PDS Claimants agree with the language of the proposed orders, they submit that it is not necessary to answer questions 2 to 6 or to make any orders in relation to those questions.

8 The primary relief claimed by the Insurers in the amended summons filed on 1 November 2012 was a declaration that, on the proper construction of s 6(1) of the Reform Act, there can be no charge on any insurance moneys that are or may become payable by any of the Insurers under any of the Policies in respect of the liability of any insured to pay damages or compensation to any of the PDS Claimants as claimed in the PDS Proceedings or in respect of the liability of any insured to pay damages or compensation to any of the Transform Claimants as claimed in the Transform Proceedings. In light of the Court's answer to question 1, the Insurers are entitled to a declaration along those lines.

9 In addition to the primary relief claimed, the Insurers also claimed alternative declarations, against the possibility that they did not succeed in obtaining their primary relief. Notwithstanding that the additional relief was claimed in the alternative, the Insurers now seek declarations that would answer all of the questions.

10 As we have said, the Court provided its hypothetical answers to questions 2 to 6, notwithstanding that, in light of the conclusion that s 6 of the Reform Act does not apply to the claims in the Transform Proceedings or the claims in the PDS Proceedings, the other questions do not arise. We consider that it is undesirable to make declarations as to questions 2 to 6 in circumstances where they are hypothetical, having regard to the answer to question 1. Questions 2 to 6 cannot arise as between any of the plaintiffs and defendants in these proceedings in relation to the claims made by the PDS Claimants in the PDS Proceedings or the claims made by the Transform Claimants in the Transform Proceedings. The appropriate course, therefore, is to make a declaration, in the terms proposed by the Insurers, to reflect the answer given by the Court in relation to question 1. The proceedings should be otherwise dismissed.

11 That then leaves the question of the costs of the proceeding, both in the Equity Division and in the Court of Appeal.

12 The Insurers ask for an order that the PDS Claimants and the Transform Claimants jointly and severally pay the Insurers' costs of the proceedings generally. The Insurers also ask the Court to order the Insurers to pay the costs of GSMAL and the Executives, and to order that those costs be included in the costs to be paid by the PDS Claimants and the Transform Claimants. The effect would be that the PDS Claimants and the Transform Claimants would bear the costs of GSMAL and the Executives, as well as the costs of the Insurers (see Bullock v London General Bus Co [1907] 1 KB 264).

13 The PDS Claimants have submitted that the joinder of GSMAL and the Executives was not reasonable and that their taking an active role in the proceedings was unreasonable, since the interests of GSMAL and the Executives were aligned. For the most part, the interests of GSMAL and the Executives coincided with those of the Insurers, although there were some areas where the interests of some of the Executives differed from the interests of others.

14 GSMAL and the Executives were joined in the proceeding as necessary parties, since they were directly affected by the questions raised. Their joinder was neither unnecessary nor undesirable. On the other hand, they contended for the same outcomes as were contended for by the Insurers, or by either the PDS Claimants or the Transform Claimants, where their interests as to some of questions 2 to 6 did not coincide. In the circumstances, we do not consider that the PDS Claimants and the Transform Claimants should bear the costs of GSMAL or the Executives. Whether the Insurers are prepared to pay those costs would be a matter for the Insurers.

15 Both the Transform Claimants and the PDS Claimants contend that the proceedings should be treated as a test case and that, accordingly, there should be no order as to the costs of the proceedings. In addition, the Transform Claimants contend that, since they enjoyed a measure of success on some issues, that is a further reason why there should be no order as to the costs of the proceedings. None of the other parties has made any submission concerning costs.

16 It is fair to say that there has for some time been a climate of uncertainty and confusion surrounding s 6 of the Reform Act. The resolution of the issues in the proceeding was of direct significance to issues that have arisen in connection with the PDS Proceedings and the Transform Proceedings. It is also fair to say that obtaining answers to the questions posed for the Court of Appeal was desirable for the Insurers. Indeed, the Insurers submitted, in the course of argument, that, if the position advanced by the PDS Claimants and the Transform Claimants were accepted, the result could be "an insurance paralysis across a large range of civil litigation in Australia".

17 While the proceedings were of great importance to the PDS Claimants and the Transform Claimants, the resolution of the uncertainty as to the territorial application of s 6 of the Reform Act is of continuing and significant interest to the Insurers. Further, the resolution of uncertainty as to the territorial application of s 6 of the Reform Act and its construction generally are matters of considerable public interest.

18 Where a proceeding can fairly be characterised as a test case, it may be appropriate, in some circumstances, for a successful party to be ordered to pay the costs of the other parties. For example, such a course may well be appropriate in proceedings in the High Court, where an appeal can only be brought by special leave, if a large and recurrent litigant seeks to have questions resolved that are of significance for that litigant in the future (see CSR Ltd v Eddy (2005) 226 CLR 1, at [80]-[81]). However, while questions were stated for this Court, as a means of reducing costs and obtaining something as close to a final decision as quickly as possible, if the proceedings had been prosecuted to finality in the Equity Division, the Insurers and the other parties would have had an appeal as of right to this Court.

19 In the circumstances of this case, no basis has been shown for departing from the general rule that the costs should follow the event. However, while the Insurers were successful in obtaining the primary relief sought by them, they were successful for reasons other than those that they advanced. Further, the Transform Claimants and the PDS Claimants had a measure of success in relation to some of the other questions. Having regard to those considerations and the nature of the issues that have been determined, we consider that the appropriate order is for the Transform Claimants and the PDS Claimants jointly and severally to pay 50 per cent of the costs of the Insurers of the proceedings, including the proceedings in this Court. There should be no other order as to costs.

20 Accordingly, the orders we would propose are as follows:

(1) The Court declares that s 6 of the Law Reform (Miscellaneous Provisions) Act 1946 does not apply in relation to any insurance moneys that are or may become payable by any of the plaintiffs under any of the relevant policies in respect of the claims made by the Transform Claimants in the Transform Proceedings (the first and second defendants), or any class of them, or in respect of the claims made by the PDS Claimants in the PDS Proceedings (the third to eleventh defendants), or any class of them.

(2) The Court orders that the Transform Claimants (the first and second defendants) and the PDS Claimants (the third to eleventh defendants) jointly and severally pay 50 per cent of the plaintiffs' costs of the proceedings, including the proceedings in the Court of Appeal.

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Decision last updated: 10 September 2013