Insurance Australia Limited v Albrecht (No 2)

[2015] ACTSC 94

SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY

Case Title:

Insurance Australia Limited & Anor v Albrecht (No 2)

Citation:

[2015] ACTSC 94

Hearing Date:

Determined on the papers.

DecisionDate:

24 April 2015

Before:

Mossop AsJ

Decision:

The defendant is to pay the plaintiffs’ costs of the proceedings as agreed or assessed.

Category:

Costs

Catchwords:

COSTS – where substantive matter determined in favour of the plaintiffs ‑ whether case can be characterised as a test case warranting an order that the successful third party insurer pay other party’s costs – not a test case in the relevant sense – costs follow the event

Legislation Cited:

Road Transport (Third Party Insurance) Act 2008 (ACT)

Cases Cited:

A Goninan & Co Ltd v Gill (2001) 51 NSWLR 441

Hollier v Australian Maritime Safety Authority (No. 2) [1998] FCA 975
Insurance Australia Ltd & Anor v Albrecht [2015] ACTSC 68
Oshlack v Richmond River Council (1998) 193 CLR 72
Perisher Blue v Chubb Fire [2014] ACTCA 43

Parties:

Insurance Australia Limited t/as NRMA Insurance ACN 000 016 722 (First Plaintiff)

Ivan Habus (Second Plaintiff)

Jeffrey Albrecht (Defendant)

Representation:

Counsel:

Mr K Rewell SC (Plaintiffs)

Mr R Crowe SC (Defendant)

Solicitors:

Moray & Agnew (Plaintiffs)

Maliganis Edwards Johnson (Defendant)

File Number(s):

SC 47 of 2015

Introduction

1. In these proceedings I found in favour of the plaintiffs and made a declaration that s 155(3)(c) of the Road Transport (Third Party Insurance) Act 2008 (ACT) (RT Act) applied to the assessment of costs arising out of a consent judgment entered in the ACT Magistrates Court: see Insurance Australia Ltd & Anor v Albrecht [2015] ACTSC 68. The parties have made written submissions in relation to the costs of the proceedings and these reasons deal with that issue. In these reasons I will refer to the parties as NRMA and Mr Albrecht as I did in the primary judgment.

1. Having made the declaration sought by the NRMA over the opposition of Mr Albrecht, the usual order would be that costs followed the event, namely, that Mr Albrecht pay the NRMA’s costs: see Oshlack v Richmond River Council (1998) 193 CLR 72 at [66]-[67]; Perisher Blue v Chubb Fire [2014] ACTCA 43 at [27].

1. However, Mr Albrecht submits that the need for the proceedings arose out of commonly arising situation where, for whatever reason, the limitation period was about to expire before Parts 4.7 and 4.8 of the RT Act had been complied with.  He points to the fact that the legislature has failed to rectify the drafting error in s 150 of the Act and submits that that circumstance led to the case being dealt with in the way that it was.  He submits that he found himself in a situation which will probably be encountered frequently until s 150 is amended and that in those circumstances the determination of the costs consequences of the entry of a consent judgment after settlement was a matter of public interest.  He submits that the determination was for the benefit of all those who might find themselves in a similar situation and was of particular benefit to the CTP insurer.  He submits that the case was run as a test case and that the defendant was required to respond to the CTP insurer’s application to clarify the way in which s 155 would apply to settlements after the commencement of proceedings.  Therefore he submits that the appropriate order would be that the NRMA pay his costs of the proceedings as was ordered in A Goninan & Co Ltd v Gill (2001) 51 NSWLR 441 (Goninan) at [60].

1. In Goninan the issue was the relationship between provisions of the Legal Profession Act 1987 (NSW) on the one hand and provisions of the Workplace Injury Management and Workers Compensation Act 1998 (NSW) and the Compensation Court Act 1984 (NSW) on the other. The question was whether or not the qualifications on the power to award costs under the latter two Acts applied to proceedings in relation to an assessment of costs and the review of the assessment by the Compensation Court. Notwithstanding that the appellant in that case had been successful it was ordered to pay the costs of the respondent worker. Heydon JA, with whom the other judges of the Court of Appeal agreed, said:

[60] The appropriate costs order is that the company pay the worker's costs. It is appropriate because the company's application for leave to appeal was granted and the appeal considered by Bishop CCJ, and the company's application for leave to appeal was granted and the appeal considered by this Court, on the basis that the case was a test case. The case was designed to test the correctness of the line of authority in the Compensation Court. It was thus of general importance to the insurer behind the company, and to other insurers behind employers in the position of the company, but of no significance whatever to the worker. The costs of the appeal must far exceed the $542.50 in dispute. The proceedings were thus of considerable potential benefit to the company and its insurer, but of no benefit, and much potential detriment, to the worker. Further, and less importantly, there was a degree of vacillation and wavering on the company's part in relation to what orders it sought, both before Bishop CCJ and this Court, for which the worker was not responsible. In all the circumstances the company should pay the worker's costs despite the failure of the worker's argument. For the same reasons Bishop CCJ's order that the company pay the worker's costs of the proceedings before him should not be disturbed.

1. The situation in present case is different from that in Goninan.  In my view it is not appropriate to characterise the case as a “test case”.  That descriptor is generally used to describe a case used as a vehicle designed to test the operation of a specific statutory provision or legal principle where the outcome of the individual case is of less significance than the principle of broader application that it establishes.  Where a party with significant resources for whom the wider principle is of significance brings such a case, that broader significance is something to be considered in exercising the discretion in relation to costs with the result that a party “dragged into” such a case may be treated more favourably than he or she otherwise would. 

1. In my view, while the question in this case did involve one of statutory construction of provisions which are general application, the case is not appropriately characterised as a test case.  Rather, it was a case arising out of a particular contest over costs arising in the very particular circumstances of the case.  It was not a case which was brought substantially in order to test some issue of general principle of wider significance.  The fact that the case involved a clarification of the law which may have implications beyond this case is simply a feature of litigation in a common law jurisdiction.  In Hollier v Australian Maritime Safety Authority (No. 2) [1998] FCA 975 the Full Court of the Federal Court pointed out (at p 5):

In a common law jurisdiction decisions of the courts, in private as well as public law, often clarify the law or lay down new law for the benefit of citizens, taxpayers, traders, patentees, insurers and insureds, landlords and tenants, etc etc. To that extent, much litigation has a public interest going beyond the interests of the parties. But this feature is inherent in common law litigation and provides no ground for departure from the usual rule as to costs.

1. As a result I do not accept the submission that the circumstances warrant an approach similar to that in Goninan.

1. Further, as the NRMA points out, there was no explanation as to why the defendant was unable to arrange a compulsory conference and exchange mandatory final offers prior to the expiry of the limitation period.  Thus, even accepting the unsatisfactory state of the legislation, there was no basis for saying that the situation in which the parties found themselves was not one created by Mr Albrecht’s failure to comply with his statutory obligations prior to the commencement of proceedings.

1. In the light of the above, in my view the matters put forward on behalf of Mr Albrecht are not such as to warrant a departure from the usual compensatory approach to orders for costs.  Therefore the appropriate order is that the defendant pay the plaintiffs’ costs of the proceedings as agreed or assessed.

I certify that the preceding nine [9] numbered paragraphs are a true copy of the Reasons for Judgment of his Honour Associate Justice Mossop.

Associate:

Date: 24 April 2015