Gibbs Holdings P/L v MMI

[2001] QCA 575

SUPREME COURT OF QUEENSLAND

CITATION:

Gibbs Holdings P/L v MMI & Anor [2001] QCA 575

PARTIES:

GIBBS HOLDINGS PTY LTD ACN 009 941 735
(plaintiff/appellant)
v
MERCANTILE MUTUAL INSURANCE (AUSTRALIA) LIMITED ACN 000 456 799
(first defendant/first respondent)
INSURANCE AID GENERAL BROKERS SERVICES PTY LTD ACN 010 587 685
(second defendant/second respondent)

FILE NOS:

Appeal No 10818 of 1999
SC No 1793 of 1995

DIVISION:

Court of Appeal

PROCEEDING:

General Civil Appeal

ORIGINATING COURT:

Supreme Court at Brisbane

DELIVERED ON:

Judgment delivered 22 December 2000
Further Order delivered 23 February 2001

DELIVERED AT:

Brisbane

HEARING DATE:

10 October 2000

JUDGES:

Pincus and Thomas JJA, Mackenzie J

Further Order of the Court

FURTHER ORDER:

CATCHWORDS:

1.  The orders for costs made by the learned primary judge be set aside.

2.  The appellant pay the first respondent's costs of the trial and appeal to be assessed.

3.   The second respondent pay to the appellant any sum paid by the appellant in respect of the first respondent's costs of trial.

4.  The second respondent pay the appellant's costs of trial (including the costs of the assessment of the second respondent's costs of trial) to be assessed, and the appellant's costs of the appeal to be assessed.

5.  The second respondent's application for a certificate     under the Appeal Costs Fund Act 1973 be refused.

PROCEDURE – COSTS – whether Bullock order should be made – whether costs on indemnity basis – whether appeal succeeded "on a question of law" so as to justify certificate under Appeal Costs Fund Act 1973

COUNSEL:

J A Griffin QC with R F King-Scott for appellant
A I Philippides SC for first respondent

A B Crowe for second respondent

SOLICITORS:

Hickey Lawyers for the appellant
O'Mara Patterson & Perrier for the first respondent
Phillips Fox for the second respondent

1. THE COURT:    The Court gave judgment in this appeal and gave the parties liberty to apply with respect to costs.  Under this Court's judgment the appellant succeeded against the second respondent but failed against the first;  at trial it had failed against both.  The appellant now seeks a number of costs orders.

1.Costs of trial against second respondent.            

This order is resisted on the ground that the issue on which the appellant succeeded was not raised at the trial.  That issue was whether the second respondent, when it knew that a plastics manufacturer might well go into possession, should have given the appellant appropriate advice about the insurance implications.  This Court's view was that the point was open to the appellant on the pleadings, although not emphasised at the trial:  pars 39, 82, 87, 105, 106.  In these circumstances, there does not appear to be any sufficient justification for depriving the appellant of that which would ordinarily follow success against the second respondent, namely an order for the costs of trial.

2.Costs of appeal.          

It follows that the appellant should also have its costs of the appeal against the second respondent.

3.First respondent's costs.          

The appellant asks that the second respondent pay the first respondent's costs of trial and appeal.  Against that, the second respondent argues that no conduct of the second respondent has been such as to make it fair to impose on it liability for the first respondent's costs:  see Gould v Vaggelas (1995) 157 CLR 215 at 229. There are points to be made on both sides. It was reasonable for the appellant to have joined the first respondent, since it had an arguable case in law; but it failed against the first respondent, not only because of the view of the law which this Court took, but also because it did not notify the first respondent of the change in the nature of occupation of part of the insured building – as the policy required. On the other hand, this Court has concluded that the fact that matters were not so arranged as to continue the appellant's cover can be attributed to a breach of duty on the part of the second respondent; the necessity for the litigation can be said to have flowed from this breach. Justice would best be done by requiring the appellant to pay the first respondent's costs of trial and appeal and ordering the second respondent to reimburse the appellant in respect of any sum paid by the appellant to the first respondent for the costs of trial.

4.Costs of cost assessment.          

We are told that there was an assessment of the second respondent's costs following the trial.  It should be ordered that those costs be included in the costs of trial awarded to the appellant.

5.Costs of trial on an indemnity basis.          

An offer was made by the appellant prior to trial, to both respondents, to settle the action for $250,000 plus costs.  Order 26 r 10 deals with the application of the Order where there are two or more defendants.  The plaintiff may in such a case "offer to settle with any defendant" unless the defendants are within the scope of r 10(2) - as they are not, in this case.  It is not clear whether r 10(1) should be read as permitting a single offer to be made to more than one defendant.  Assuming the answer to that point is in favour of the appellant, still it would seem proper to decline to make an order for indemnity costs against the second respondent which is already to be subject to the liability to reimburse the appellant in respect of its responsibility for the first respondent's costs of trial.  Particularly having regard to the legal uncertainty attending the liability of the first respondent, it would be unfair to make an order for indemnity costs.

1. Included in the second respondent's submissions, there is an application for a certificate under the Appeal Costs Fund Act 1973. The Court has a discretion to grant such a certificate if the appeal succeeded "on a question of law" – s 15(1). The second respondent's contention is that an error of law was made by the primary judge in failing to deal with that part of the appellant's case, as pleaded, which succeeded on appeal. Although there is substance in that contention, it appears that the appellant's success depended essentially on this Court reaching a factual conclusion with respect to the second respondent's lack of compliance with its duty of care to the appellant. It would be stretching the statute too far to hold that in these circumstances the appeal should be classified as one which succeeded on a question of law.

1. The orders made on 22 December 2000 are varied by ordering that:

1.          The orders for costs made by the learned primary judge be set aside.

2.          The appellant pay the first respondent's costs of the trial and appeal to be assessed.

3.          The second respondent pay to the appellant any sum paid by the appellant in respect of the first respondent's costs of trial.

4.          The second respondent pay the appellant's costs of trial (including the costs of the assessment of the second respondent's costs of trial) to be assessed, and the appellant's costs of the appeal to be assessed.

5.          The second respondent's application for a certificate under the Appeal Costs Fund Act 1973 be refused.