Fitzgerald v CBL Insurance Ltd (No 2) - [2015] VSC 176

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMERCIAL AND EQUITY DIVISION

COMMERCIAL COURT

S CI 2011 05405

LAURENCE ANDREW FITZGERALD AND MICHAEL JAMES HUMPHRIS (in their capacity as Trustees for certain former employees of Huon Corporation Pty Ltd (ACN 115 243 206))	Plaintiffs
v
CBL INSURANCE LIMITED (formerly called Contractors Bonding Limited)	Defendant

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JUDGE:	SLOSS J
WHERE HELD:	Melbourne
DATE OF HEARING:	26 March 2015
DATE OF JUDGMENT:	1 May 2015
CASE MAY BE CITED AS:	Fitzgerald & Anor v CBL Insurance Ltd (No. 2)
MEDIUM NEUTRAL CITATION:	[2015] VSC 176

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COSTS — Consideration of costs ‘thrown away’ by reason of plaintiffs’ change of case — Whether plaintiffs’ conduct exposed defendant to greater than necessary costs burden — Plaintiffs were successful on most but not all pleaded issues — Whether appropriate to depart from the general rule — Supreme Court (General Civil Procedure) Rules 2005 (Vic), rr 13.02, 13.07; Civil Procedure Act 2010 (Vic).

INTEREST — Plaintiffs claimed interest on the judgment sum from the date of issue — Date from which it was unreasonable for insurer to have withheld payment on claim — Application of Insurance Contracts Act 1984 (Cth), s 57; Insurance Contracts Regulations 1985 (Cth), reg 32; Supreme Court Act 1986 (Vic), s 60; Penalty Interest Rates Act 1983 (Vic).

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APPEARANCES:

Counsel

Solicitors

For the Plaintiffs

Mr A J Myers AO QC and

Mr N Evans

Piper Alderman

For the Defendant

Mr R M Garratt QC and

Mr L E Hawas

Rigby Cooke Lawyers

TABLE OF CONTENTS

Background......................................................................................................................................... 1

The plaintiffs’ claim for interest on the judgment sum from the date of issue...................... 3

CBL’s costs ‘thrown away’ by reason of the plaintiffs’ change of case.................................. 11

The costs of the proceeding............................................................................................................ 13

HER HONOUR:

Background

This proceeding concerns a claim made by the plaintiffs, in their capacity as trustees for certain former employees of Huon Corporation Pty Ltd (‘Huon’), against the defendant, a New Zealand company named CBL Insurance Limited (‘CBL’). The claim is one for indemnity under a ‘Financial Insurance Policy’ issued by CBL in favour of the ‘Transferring Employees’ of three businesses which Huon purchased from Nylex Industrial Products Pty Ltd, known as ‘Empire Rubber’, ‘Mills Elastomers’ and ‘Nylex Frankston’.

On 2 October 2014, I delivered my reasons on the issues raised for determination concerning the construction of the policy, rectification, quantum of the Insured Loss, claim for ‘pre-issue’ interest under s 57 of the Insurance Contracts Act 1984 (Cth), and damages and proof of loss.[1] At the same time, I also published a written version of the ruling which I had delivered orally on 2 October 2013 concerning:
[1]Fitzgerald & Anor v CBL Insurance Ltd [2014] VSC 493 (‘reasons’).

(a) the withdrawal and substitution of the plaintiffs’ August 2012 particulars (concerning the calculation of the deficiency in employee entitlements);

(b) the withdrawal and substitution of the plaintiffs’ August 2013 particulars of paragraph 17A of the further amended statement of claim (concerning interest and the…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2015] VSC 176
Decision Date: 1 May 2015

CaseChat Overview and Summary

In Fitzgerald v CBL Insurance Ltd (No 2), the plaintiffs, Fitzgerald, sought costs and interest from the defendant, CBL Insurance Ltd, in the Supreme Court of Victoria. The case involved a dispute over the amount of costs and interest that should be awarded to the plaintiffs, who were successful on most but not all of their pleaded issues. The primary focus of the litigation was whether the plaintiffs' conduct warranted a departure from the usual rule that the losing party should pay the costs of the winning party, and whether the interest on the judgment sum should be calculated from the date of the claim or from a later date.

The court was tasked with determining whether the plaintiffs' change of case, which resulted in the defendant incurring unnecessary costs, justified a deviation from the standard principle of costs allocation. Additionally, the court had to consider the appropriate date from which interest should be calculated under the Insurance Contracts Act 1984 (Cth) and the relevant Supreme Court rules and acts. This involved interpreting statutory provisions and understanding the interplay between federal and state legislation.

The court concluded that the plaintiffs' conduct did indeed expose the defendant to an unnecessary costs burden, warranting a departure from the general rule of costs allocation. The court found that the plaintiffs' change of case was unreasonable and led to the defendant incurring costs that would not have been necessary if the plaintiffs had maintained their original position. Regarding interest, the court held that it should be calculated from the date it was unreasonable for the defendant to withhold payment on the claim. This interpretation balanced the statutory provisions with the principles of fairness and justice.

The final orders of the court included a specific direction on the allocation of costs, recognising the plaintiffs' success but also the defendant's unnecessary costs burden. The court ordered that the plaintiffs pay a proportion of the defendant's costs, reflecting the degree to which the plaintiffs' conduct contributed to the defendant's increased costs. Additionally, interest was to be calculated from the date determined by the court, ensuring that the plaintiffs received appropriate compensation for the delay in payment.

Orders