Bates v Certain Underwriters at Lloyds
[2014] VCC 466
•16 April 2014
| IN THE COUNTY COURT OF VICTORIA AT MELBOURNE CIVIL DIVISION | Revised |
COMMERCIAL LIST
EXPEDITED CASES DIVISION
Case No. CI-12-03771
| TONY BATES | Plaintiff |
| V | |
| CERTAIN UNDERWRITERS AT LLOYDS SUBSCRIBING TO CONTRACT NO. TRI0000000946MPC | Defendant |
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| JUDGE: | HER HONOUR JUDGE KENNEDY | |
| WHERE HELD: | Melbourne | |
| DATE OF HEARING: | 14 April 2014 | |
| DATE OF RULING: | 16 April 2014 | |
| CASE MAY BE CITED AS: | Bates v Certain Underwriters at Lloyds | |
| MEDIUM NEUTRAL CITATION: | [2014] VCC 466 | |
REASONS FOR COSTS RULING
APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr M. Black | Nick Logan & Co |
| For the Defendant | Mr M. Purvis | Hall & Wilcox |
| For the BMW entities | Mr G. Moffatt | Mills Oakley Lawyers |
| For Logistic Car Rentals Pty Ltd | Mr M. Randall | MNG Lawyers |
HER HONOUR:
In this proceeding, I delivered reasons for final judgment on 9 April 2014, giving judgment for the plaintiff in the amount of $118,284.55.
I then adjourned the matter until 14 April for the purposes of finalising orders in the matter, including orders relating to costs sought by BMW Australia Ltd and RPBJ Pty Ltd (the BMW entities).
In the result, interest was agreed at $16,935.76 as at 14 April and continuing at the rate of $21.06 per day. However, there were 3 main areas of dispute as to costs:
(a) whether the defendant should pay the plaintiff’s costs on an indemnity basis;
(b) whether the plaintiff should reimburse the defendant for BMW’s costs of $3,300 in relation to the first summons dated 7 May 2013;
(c) what orders should be made in relation to costs relating to the second summons dated 20 June 2013, and also certain subpoenas.
There was, finally, an issue as to what order should be made as to the costs of the hearing on 14 April.
The plaintiff also sought certification of Counsel’s fees, including costs of preparation. However, as I intimated to Counsel at the costs hearing, I consider this issue should be left to the Costs Court, which now deals with such questions on a regular basis.
Indemnity costs
As a general rule the Court will order costs to be taxed on a party/party basis: O 63A r 31. The discretion to make a special costs order is an unlimited one though it must be exercised judicially and not unreasonably and the circumstances should be “special”.[1]
[1] Aljade and MKIC v OCBC [2004] VSC 351 at [10]
Insofar as this case concerned an allegation of fraud, in Thors v Weekes,[2] Gummow J stated that the power to make a special costs order will not be exercised in every case where fraud is alleged and not proved; usually some further factor must be present such as dishonesty or the irrelevance of the allegations to the issues between the parties.
[2] (1989) 92 ALR 131 at [152]
In the present case the plaintiff sought a special costs order, on the basis that the allegation of fraud was “irrelevant” and “knowingly unsubstantiated”. However, in oral submissions, the plaintiff clarified that he did not suggest the allegation was made “knowingly”; rather, it was made when the defendant knew there was no, or very little, probative evidence to support the proposition.[3]
Irrelevant allegation of fraud
[3] Plaintiff’s submissions on costs dated 14 April 2014, paragraph 14
The defendant alleged that it was entitled to deny indemnity on the basis that the plaintiff had failed to establish that the damage was caused by an event insured under the policy (Amended Defence para 13). In alleging this, it relied on a series of particulars (at paragraph 12) which, in substance, were to the effect that the plaintiff had lied as to the circumstances in which the vehicle was damaged and was attempting to obtain a payment he was not entitled to.
It is true that the defendant did additionally allege fraud and, further, that it ultimately accepted that it was not necessary to resolve the fraud issue.[4] However, the particulars on which the allegation of fraud were based were identical to those relied upon to deny indemnity, with no further matters alleged to justify the fraud allegation.
[4] Defendant’s final submissions dated 21 March 2014, paragraph 12; transcript dated 24 March 2014, page 837
The plaintiff accepted that the fraud allegation did not extend the time of the trial. However, he emphasized the adverse impact on his reputation in circumstances where the allegation (first made in the rejection letter, and continued at trial) did not need to be made.
I accept that the particulars at paragraph 12 did raise serious issues concerning the plaintiff’s reputation and credit. However, these credit issues were already raised by reason of the particulars provided to justify denial of the claim. The fact that the defendant also utilised these particulars to explicitly spell out a fraud allegation adds very little, if anything, to what was already being alleged and does not justify an indemnity costs order.
Absence of evidence
The plaintiff further submitted that the defendant knew there was no, or very little, probative evidence to support its fraud allegation. Further, that it generally failed to assess its own case critically, and that it sought to search for evidence to support the position reflected in its rejection letter. In particular, that it sought out Mr Edgerton despite the view of Mr Planko, and that it sought out Mr Tanti after the opinion of Mr Lee was ultimately unfavourable.
The plaintiff did not point to any authority which suggested that an indemnity costs order was appropriate simply because a party knew there was “little” evidence to support a fraud allegation. Rather, consistent with Thors above,[5] indemnity costs have been found to be appropriate where there is a knowingly false allegation.
[5] And see also Colgate–Palmolive Co v Cussons Pty Ltd (1993) 118 ALR 248 at [249]
In any event, there was some evidence which, if accepted, could support the defendant’s position. Thus, the report of Mr Edgerton supported the stance taken by the defendant. Mr Lee also supported the defence (initially) as did Mr Tanti.
There is also nothing improper about seeking out evidence to support a position. A party is entitled to seek to obtain evidence to supports its case.
A special costs order is not warranted on the basis of knowledge of an “absence of evidence”.
The circumstances of this case therefore do not warrant an indemnity costs order on the basis of the allegation of fraud.
Costs of first summons
The defendant sought an order that the plaintiff reimburse it for BMW’s costs of $3,300 ordered in relation to the defendant’s first summons dated 7 May 2013.
The essence of the claim was that the plaintiff should have consented to the orders sought in the summons, and not sold his car.
However, as is evident from the Reasons, I accepted the evidence of the plaintiff that the sale was motivated by financial concerns.[6] Moreover, in opposing the orders sought, the plaintiff’s solicitor properly raised issues as to delay as well as querying the utility of the exercise.[7] The reasonableness of this approach is reflected by the orders of Judge Anderson of 6 June 2013, who required any further application to be supported by cogent evidence that the application would be likely to establish whether the vehicle was moving or stationary.[8]
[6] Bates v Certain Underwriters at Lloyds [2014] VCC 304 at [154]
[7] See e.g. Bates at [114]-[115]
[8] Orders of Judge Anderson of 6 June 2013, order 3
In my view, it was reasonable for the plaintiff to take the position he did, particularly having regard to the stage of the proceeding the summons was issued (over 18 months after the accident had occurred with a trial listed in November 2013).
I refuse the defendant’s application for reimbursement of the amount of $3,300.
Second summons and BMW’s other costs
The BMW entities sought the following orders against the defendant:
1. The defendant pay the reasonable legal and internal costs of BMW Australia Ltd and RPBJ Pty Ltd of and incidental to the summons filed on 20 June 2013 fixed in the amount of $2475.00 up to 8 July 2013 [which had been agreed] and to be taxed thereafter.
2. The defendant pay the reasonable loss or expenses of BMW Australia Ltd and RPBJ Pty Ltd of the subpoenas dated 5 August 2013 in relation to Stephen Lee and Aaron Stokes.
3. The defendant pay the reasonable loss or expenses of BMW Australia Ltd and RPBJ Pty Ltd of the subpoena dated 4 February 2014 in relation to Stephen Lee.
In the result, the defendant agreed to the second and third orders such that only order 1 was contested.
In relation to order 1, the defendant sought its costs in relation to the second summons from the plaintiff and/or Logistic Car Rentals Pty Ltd. Alternatively, it submitted that they should pay the costs of the BMW entities between 8 July and 31 July.
The primary position of the defendant was that it was successful in obtaining the orders sought for access and testing such that costs should “follow the event”.
I do not accept the defendant’s submission. Although it might be true that the defendant obtained the orders sought, the utility of the application could only be known once the data was examined. In the result, as the Reasons show, the data revealed that the airbags had not in fact deployed and that there was no information pertaining to a crash event or a crash telegram stored.[9]
[9] Bates at [136] and [230]
In such circumstances, the orders obtained did not assist the defendant.
The defendant then said that the actions of the plaintiff and Logistics were unreasonable in opposing the orders sought, and (in the case of Logistics) delivering the vehicle to Geelong to clear the faults. Instead, they should have consented to the orders sought earlier than they did (on 10 July 2013) so as to avoid the costs incurred.
However, insofar as the plaintiff was concerned, I consider that he was entitled to oppose the orders sought as already outlined in the Reasons. In particular, as his solicitor highlighted, there were legitimate concerns as to the costs of the exercise which was of unknown utility.[10]
[10] Bates at [118]-[119]
Insofar as Logistics was concerned, I also do not consider the stance taken to be inappropriate given the time the defendant had already had to inspect this vehicle, and given the unknown utility of the orders sought. As the Reasons make clear, the clearing of codes was also a normal part of the process to register a car and make it roadworthy.[11]
[11] Ibid at [151] and [286]-[290]
Insofar as the defendant sought orders for costs between 8 and 31 July, it is also important to note that consent was given by 10 July.
The defendant then suggested that the extra hearings after 10 July (recorded as 17 July and 31 July) were caused because of a misstatement of Mr Lee that the vehicle had been taken to Geelong on 7 April. However, even if this was so, this was no reason to visit these costs on the plaintiff. Instead, such costs are properly payable by the defendant given the making of the application was of its own choosing.
Accordingly, neither the plaintiff nor Logistics should pay the defendant’s costs in relation to the second summons. Rather, the defendant should pay the costs sought by the BMW entities in relation to this summons.
Costs of 14 April
The plaintiff has been unsuccessful in obtaining indemnity costs, but successful in opposing orders for the costs in relation to the summonses.
The defendant has been successful in opposing indemnity costs, but unsuccessful in seeking orders from other parties in relation to the summonses.
BMW has been ultimately successful, although it has not sought to obtain the detailed form of order originally sought (which it accepted involved a taxation of costs which was not appropriate for determination at this stage).
In such circumstances, I consider that each of these parties should bear their own costs of the hearing of 14 April.
Insofar as Logistics was concerned, however, the sole reason for its appearance was to resist the orders sought against it in relation to the second summons. Since it has been successful in this opposition, Counsel for the defendant accepted that it should pay the costs of the appearance of Logistics.
Conclusion
The orders of the Court are:
1. There be judgment for the plaintiff in the amount of $118,284.55 on the claim together with interest calculated up to 16 April 2014 in the sum of $16,977.88 and continuing at the rate of $21.06 per day until paid.
2. The defendant pay the plaintiff’s costs of the proceeding, including all reserved costs and costs of transcript, on a party/party basis.
3. The defendant pay the reasonable legal and internal costs of BMW Australia Ltd and RPBJ Pty Ltd of and incidental to the summons filed on 20 June 2013 fixed in the amount of $2475.00 up to 8 July 2013 and to be taxed thereafter.
4. The defendant pay the reasonable loss or expenses of BMW Australia Ltd and RPBJ Pty Ltd of the subpoenas dated 5 August 2013 in relation to Stephen Lee and Aaron Stokes.
5. The defendant pay the reasonable loss or expenses of BMW Australia Ltd and RPBJ Pty Ltd of the subpoena dated 4 February 2014 in relation to Stephen Lee.
6. There be no order as to the costs of the hearing of 14 April 2014 save that the defendant is to pay the costs of the appearance of Logistics Car Rentals Pty Ltd.
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