Birla Nifty Pty Ltd v International Mining Industry Underwriters Ltd
[2013] WASC 386 (S)
BIRLA NIFTY PTY LTD -v- INTERNATIONAL MINING INDUSTRY UNDERWRITERS LTD [2013] WASC 386 (S)
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2013] WASC 386 (S) | |
| Case No: | CIV:3302/2011 | ON THE PAPERS | |
| Coram: | HALL J | 20/12/13 | |
| 6 | Judgment Part: | 1 of 1 | |
| Result: | No order as to costs | ||
| B | |||
| PDF Version |
| Parties: | BIRLA NIFTY PTY LTD INTERNATIONAL MINING INDUSTRY UNDERWRITERS LTD |
Catchwords: | Costs Application for declaration as to construction of insurance policy Neither party's construction accepted Whether both parties unsuccessful on discrete issues No order as to costs Turns on own facts |
Legislation: | Nil |
Case References: | Amaca Pty Ltd (formerly James Hardy & Co Pty Ltd) v Patricia Margaret Hannell as Executor of the Estate of David Richard Hannell (Dec) [2007] WASCA 158(S) Birla Nifty Pty Ltd v International Mining Industry Underwriters Ltd [2013] WASC 386 City of Belmont v Link Interiors Pty Ltd [2001] WASC 64 J-Corp Pty Ltd v Australian Builders Labourers Federated Union of Workers (Western Australian Branch) (No 2) (1993) 46 IR 301 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA CITATION : BIRLA NIFTY PTY LTD -v- INTERNATIONAL MINING INDUSTRY UNDERWRITERS LTD [2013] WASC 386 (S) CORAM : HALL J HEARD : ON THE PAPERS DELIVERED : 20 DECEMBER 2013 FILE NO/S : CIV 3302 of 2011 BETWEEN : BIRLA NIFTY PTY LTD
- Plaintiff
AND
INTERNATIONAL MINING INDUSTRY UNDERWRITERS LTD
Defendant
Catchwords:
Costs - Application for declaration as to construction of insurance policy - Neither party's construction accepted - Whether both parties unsuccessful on discrete issues - No order as to costs - Turns on own facts
Legislation:
Nil
Result:
No order as to costs
Category: B
Representation:
Counsel:
Plaintiff : No appearance
Defendant : No appearance
Solicitors:
Plaintiff : DLA Piper
Defendant : HWL Ebsworth Lawyers
Case(s) referred to in judgment(s):
Amaca Pty Ltd (formerly James Hardy & Co Pty Ltd) v Patricia Margaret Hannell as Executor of the Estate of David Richard Hannell (Dec) [2007] WASCA 158(S)
Birla Nifty Pty Ltd v International Mining Industry Underwriters Ltd [2013] WASC 386
City of Belmont v Link Interiors Pty Ltd [2001] WASC 64
J-Corp Pty Ltd v Australian Builders Labourers Federated Union of Workers (Western Australian Branch) (No 2) (1993) 46 IR 301
1 HALL J: For reasons delivered on 23 October 2013 I dismissed the plaintiff's application for declarations: Birla Nifty Pty Ltd v International Mining Industry Underwriters Ltd [2013] WASC 386. At the time judgment was delivered I reserved the question of costs and made orders regarding the filing of written submissions on that issue in the event the parties could not reach an agreement.
2 The defendant seeks an order that the plaintiff pay its costs. It also seeks an order in favour of the other insurers of the policy that was the subject of the proceedings. This is on the basis that the defendant acted in a representative capacity. The defendant further seeks orders pursuant to O 66 r 11(2) of the Supreme Court Rules 1971 (WA) and s 280(2) of the Legal Profession Act 2008 (WA) removing the limits of some of the relevant scale items.
3 The plaintiff submits that, notwithstanding it was the unsuccessful party, there should be an order in its favour to the effect that the defendant pay 50% of the plaintiff's costs, including all reserved costs. Alternatively, the plaintiff submits that there should be no order as to costs.
4 The proceedings involved the construction of an excess clause in an insurance policy. The plaintiff had made a preliminary claim under the policy which was rejected by the defendant on the basis that it was below the applicable excess. Whether that was correct depended on how the clause dealing with excess in the insurance contract was interpreted. The plaintiff commenced proceedings seeking declarations that one of two alternative interpretations that it advanced was correct.
5 The defendant opposed the making of the declarations. It contended that the interpretations proposed by the plaintiff were incorrect and relied upon its own interpretation, which had been the basis for the rejection of the preliminary claim. It also contended that its construction of the excess clause had been accepted by the plaintiff following the rejection of the preliminary claim and that an insurance policy for the following year had been entered into on that understanding. This was said to establish that the defendant acted to its detriment on the basis of a representation, or a common assumption, that the defendant's construction was correct. In these circumstances the defendant contended that the plaintiff was estopped from asserting a contrary construction.
6 The proceedings were commenced by way of an originating summons pursuant to O 58 r 10 of the Rules. That rule provides that any person claiming to be interested under a deed, will, or other written instrument, may apply by originating summons for the determination of any question of construction arising under the instrument, and for a declaration of the rights of the persons interested. Generally speaking this procedure is only appropriate where an issue of construction can be resolved on the documents and without the need to rely on evidence. If questions of disputed evidence are involved the more appropriate course will be to proceed by writ: City of Belmont v Link Interiors Pty Ltd [2001] WASC 64.
7 The defendant initially opposed the use of the originating summons procedure. This was because the interpretation of the excess clause was only part of a dispute that revolved around the interpretation of a number of clauses in the policy. Furthermore, the procedure adopted did not allow for the estoppel issue to be ventilated. The defendant's position was that the preferable course of action was to proceed by way of writ with a hearing of a preliminary issue relating to the calculation of the excess. An application seeking orders that the originating summons be dismissed for these reasons was commenced. However, that application did not proceed because the parties agreed that the estoppel argument could be raised in the proceedings and on 19 September 2012 the Master made orders by consent to that effect. This meant that a number of steps which do not generally arise in O 58 r 10 proceedings were taken in this case. They include giving discovery, the issue to a third party of a subpoena to produce documents and the adducing of evidence by affidavit as to the surrounding circumstances of the insurance policy and in regard to the estoppel issue.
8 At the hearing of this matter there were two issues to be determined. First which, if any, of the constructions advanced by the parties was correct. Secondly, whether the plaintiff was estopped from advancing any interpretation inconsistent with that advanced by the defendant having regard to its conduct following the rejection of the preliminary claim. In dismissing the plaintiff's application for declarations I concluded that neither of its proposed constructions could be accepted. I also concluded that the defendant's proposed construction could also not be accepted. In doing so I concluded that the excess clause was ambiguous, or at least was susceptible of different meanings. However, the suggested constructions did not, in my view, fit comfortably with the terms of the policy and were unlikely to reflect the real intentions of the parties.
9 Whilst the defendant was not obliged to advance an interpretation different to those sought by the plaintiff, it did so. In doing so it also sought to justify the basis upon which the preliminary claim had been rejected. Given my conclusion as to the ambiguity of the clause, there was clearly a proper basis for seeking a ruling from the court. Whilst the plaintiff was unsuccessful, the way in which the proceedings were fought required that consideration be given to the defendant's interpretation. It was also necessary to consider the question of estoppel.
10 The general rule as to costs is that the successful party to proceedings should recover its costs of and incidental to those proceedings: O 66 r 1(1) of the Rules. The power exists to apportion costs to make orders relating to different parts of the proceedings where that is appropriate. Order 66 r 1(3) of the Rules provides that where a successful party has introduced an issue upon which he or she has failed and that issue has increased the costs of the proceedings the court may order that party to pay costs in respect of that issue. This provision permits costs to be distributed according to the outcome of particular issues in the action.
11 The power of the court to depart from the general rule that costs follow the event and instead adjust the costs by reference to the failure of a generally successful party on specific and particular issues is well established: Amaca Pty Ltd (formerly James Hardy & Co Pty Ltd) v Patricia Margaret Hannell as Executor of the Estate of David Richard Hannell (Dec) [2007] WASCA 158(S) [6]. It is, however, necessary to identify discrete and severable issues the litigation of which has increased the costs of conducting the proceedings. The exercise of this power should be approached broadly and as a matter of impression and without an attempt at 'mathematical precision' which is likely to prove elusory: Amaca Pty Ltd [6] and J-Corp Pty Ltd v Australian Builders Labourers Federated Union of Workers (Western Australian Branch) (No 2) (1993) 46 IR 301. Where a generally successful party has failed on only a minor issue, which did not add materially to the costs of the conduct of the proceedings, it is not ordinarily appropriate to depart from the general rule unless the conduct of the successful party in relation to that issue was unreasonable: Amaca [7].
12 The defendant maintains that the resolution of the issues determined in this case did not render the overall outcome one that could properly be described as mixed. It is submitted that it is wrong to characterise the proceeding as one in which the parties, together, approached the court for advice as to how the policy operated and in which neither was successful. Rather, it is said, the defendant was put to the expense of resisting the declarations sought by the plaintiff and elected to do so in the most obvious way by proposing an alternative interpretation which, if made out, was inconsistent with those sought by the plaintiff.
13 The defendant's characterisation of the proceedings may appear to be disingenuous in circumstances where the defendant, having rejected the preliminary claim, had no interest in commencing proceedings to determine whether the basis on which it had been rejected was correct. My conclusion regarding ambiguity shows that the defendants comfort with its position was ill-founded. In those circumstances the defendant cannot fairly assert that the lack of success of the plaintiff indicates that the defendant was unnecessarily put to the expense of defending these proceedings. In any event the question is not whether the final outcome was 'mixed' but whether there were discrete issues raised in the proceedings in respect of which one or other of the parties could be said to be unsuccessful.
14 The plaintiff was unsuccessful in regards to its proposed interpretations. The defendant was unsuccessful in regards to its proposed interpretation. The defendant was also unsuccessful in regards to the estoppel claim, though it was strictly unnecessary to determine this claim. The issues on which the defendant was unsuccessful were not minor; rather they added materially to the costs of the proceedings. These issues were supported by affidavit evidence and detailed written and oral submissions.
15 Having carefully considered the filed documents, the transcript of proceedings and the submissions of the parties, my clear impression is that the issues raised by the parties contributed equally to the cost of these proceedings. No useful purpose would be served by awarding costs to each party in respect of individual issues which, on being set off one against the other, would be nullified. In those circumstances, the fair and just outcome is that both parties should bear their own costs. In coming to that conclusion I have also taken into account any costs attributed to interlocutory applications.
16 In the circumstances it is unnecessary to determine the question of whether other insurers to the policy are entitled to costs and whether the defendant would have been entitled to an uplift of the scale items. As to the position of other insurers, their interest in the proceedings arose from a responsibility to share the liability arising from proceedings brought against any one of them. The other insurers have no better claim to costs than the defendant.
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