Chapman v Taylor & Ors; Vero Insurance Ltd. v Taylor & Ors (No.3)

[2005] NSWCA 95

CITATION:	Chapman v. Taylor & Ors; Vero Insurance Ltd. v. Taylor & Ors (No.3) [2005] NSWCA 95
HEARING DATE(S):	Matter dealt with on written submissions in Chambers
JUDGMENT DATE:	1 April 2005
JUDGMENT OF:	Beazley JA at 1; Hodgson JA at 2; Tobias JA at 15
DECISION:	1. Vacate Order 4 made on 9 February 2005, and in lieu thereof order that Mr. and Mrs. Taylor pay Vero's costs before the Master and of the appeal (including the application for leave), assessed in each case on the basis of the briefing of one Counsel at fees appropriate to Junior Counsel, and that they have a certificate under the Suitors' Fund Act if otherwise eligible. 2. Vero's costs of the appeal not to include costs incurred after delivery of judgment on 9 February 2005, and no order as to these costs.

CATCHWORDS:	COSTS - Appeal - Proportionality of costs - Two parties with substantially similar interests - Separate appeals brought - One appellant, an insurer with an interest in establishing a general point, briefed senior counsel - Respondent ordered to pay the appellant's costs, not extending to briefing senior counsel.
PARTIES:	David Neil Chapman - appellant Ernest & Fredericka Taylor - 1st respondents Vero Insurance Ltd - 2nd respondent Consumer, Trader & Tenancy Tribunal - 3rd respondent
FILE NUMBER(S):	CA 40120/04; 41106/03
COUNSEL:	The relevant parties filed written submissions
SOLICITORS:	G.P. Bartels, Eastwood for 1st respondent McLachlan Chilton, Sydney for 2nd respondent

LOWER COURT JURISDICTION:	Supreme Court - Common Law Division
LOWER COURT FILE NUMBER(S):	SC12971/02
LOWER COURT JUDICIAL OFFICER:	Master Harrison

CA 40120/04
CA 41106/03
SC 12971/02
CTTT No.HB 00/83497

BEAZLEY JA
HODGSON JA
TOBIAS JA

Friday 1 April 2004

CHAPMAN V. TAYLOR & ORS.

VERO INSURANCE LTD (formerly ROYAL & SUN ALLIANCE INSURANCE AUSTRALIA LIMITED) V. TAYLOR & ORS.

Judgment No. 3 (Further Judgment On Costs)

1 BEAZLEY JA: I agree with Hodgson JA.

2 HODGSON JA: On 9 February 2005, the Court gave judgment on a question of costs left outstanding in its judgment on the appeal given on 13 December 2004, to the effect that the Taylors were to pay Vero’s costs of the appeal not extending to briefing Senior Counsel.

3 On 10 February 2005, solicitors for Vero sought the opportunity to make further submissions and submit further evidence, on the basis that the point that Vero should be deprived of costs of Senior Counsel because of its wider interests had not been raised against it, and had not been addressed by it. Vero’s solicitors also pointed out that the Court’s orders did not address Vero’s costs before the Master.

4 The Court then permitted Vero to make further submissions, and that has occurred. Vero has also submitted further evidence.

5 The reasons for depriving Vero of the costs of Senior Counsel consisted in a combination of three considerations indicated by par.[7] of the judgment of 9 February 2005:

(1) disproportion between costs and the amount initially in issue;
(2) the incurring of separate costs of two defendants with substantially the same interests; and
(3) Vero’s commercial interest in establishing a general point.

6 When I gave that judgment, my opinion was that the need to address all three of these points was sufficiently signalled by the judgment of 13 December 2004. The disproportion of costs to the amount initially in issue was obvious. The other two points were specifically referred to in par.[46]. Plainly, what was contemplated was that Vero might not be allowed its costs or at least all its costs, and the disallowing of Senior Counsel’s fees was plainly one of the possible ways in which this could be done.

7 However, I have carefully considered the additional submissions and evidence with a view to determining whether that opinion was incorrect, and whether the result should be altered.

8 The additional submissions refer to authorities on the allowance of Senior Counsel’s fees, including Stanley v. Phillips (1966) 115 CLR 470, and to s.208A of the Legal Profession Act 1987; to the circumstance that the Taylors had briefed Senior Counsel before the Master and on appeal; to the difficulty of the case; to its importance to Vero; and to the amount involved in the case, including costs. It was put that the decision involved a novel principle, flying in the face of High Court authority, unfair to Vero and parties in Vero’s position, and with wide ramifications in commercial litigation whenever a defence may have wider importance to a defendant. In any event, it was submitted, there could be no justification for excluding the costs of Senior Counsel, rather than those of Junior Counsel: see Bush v. Condon & Barrett Pty. Ltd. [1975] 1 NSWLR 260 at 263.

9 In my opinion, the Court should make provision for the costs of Vero before the Master, and should make it clear that Vero is entitled to recover fees at a rate appropriate to Junior Counsel for work performed, so that, if any reasonably necessary work was performed by Senior Counsel alone, fees at that rate can be recovered. Otherwise, in my opinion, the submissions do not require any change to the orders.

10 The exclusion of Senior Counsel’s fees was not solely on the basis of the wider importance of the case to Vero, and no principle is being espoused that this consideration alone could justify that result. As made clear in par.[7] of the previous judgment, there are the additional factors of disproportionate costs and two defendants with substantially coinciding interests in the Supreme Court.

11 On the former matter, the Taylors are individuals who, through no fault of their own, had a house left unfinished by a builder, and who claimed on an insurance policy that they reasonably regarded as protecting them against that contingency; and in a tribunal set up to deal expeditiously and inexpensively with consumer claims, the insurer contested $100,000.00 of their claim on a fine legal point, which had its basis in a gap, which must have been unintended, in the relevant consumer protection legislation. That point was upheld by the tribunal; and this decision has proved to be unassailable because no error of law has been shown. In my opinion, it would behove an insurer in those circumstances to be most concerned that disproportionate costs not be incurred at the potential expense of the insured.

12 It was not unreasonable of Vero, in its own interests, to brief Senior Counsel; but in the circumstances I have referred to, Vero should have striven to avoid incurring disproportionate costs, for example by exploring with Chapman ways of avoiding duplication of costs. It is not to the point that Chapman also apparently did not do this: he did not incur the costs of briefing Senior Counsel, and did not have wider commercial interests. In any event, the result awards in effect the same costs to Vero as to Chapman.

13 For those reasons, I adhere to the reasons previously expressed, but would modify the orders in the way indicated. The costs of the appeal awarded to Vero should not include the costs of these latest submissions, which in my opinion could and should have been made in response to the original judgment, if they were to be made. The omission to deal with costs before the Master could simply have been brought to the Court’s attention without elaborate submissions.

14 I propose the following orders:

1. Vacate Order 4 made on 9 February 2005, and in lieu thereof order that Mr. and Mrs. Taylor pay Vero’s costs before the Master and of the appeal (including the application for leave), assessed in each case on the basis of the briefing of one Counsel at fees appropriate to Junior Counsel, and that they have a certificate under the Suitors’ Fund Act if otherwise eligible.
2. Vero’s costs of the appeal not to include costs incurred after delivery of judgment on 9 February 2005, and no order as to these costs.

15 TOBIAS JA: I agree with Hodgson JA.

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