Kenwright v Insurance Australia Limited (No 2)

[2013] NSWDC 258

District Court

New South Wales

Medium Neutral Citation:

Kenwright v Insurance Australia Limited (No 2) [2013] NSWDC 258

Hearing dates:

20/9/2013

Decision date:

18 October 2013

Jurisdiction:

Civil

Before:

P Taylor SC DCJ

Decision:

(1) Judgment for the plaintiff against the defendant in the sum of $152,455.01.

(2) The defendant to pay the plaintiff's costs.

Catchwords:

COSTS - insurance contract - offer of compromise - indemnity costs - applicable interest rate on judgment sum

Legislation Cited:

Insurance Contracts Act 1984, s 57
Insurance Contracts Regulations 1985, reg 32
Uniform Civil Procedure Rules 2005, r 42.14, 42.16

Category:

Costs

Parties:

Dawn Juliet Kenwright (plaintiff)
Insurance Australia Limited trading as NRMA Insurance ACN 000 016 722 (defendant)

Representation:

Mr T Boyd (plaintiff)
Mr G Carolan (defendant)
Herbert Weller (plaintiff)
William Roberts Lawyers (defendant)

File Number(s):

2011/377445

Publication restriction:

No

Judgment

1. On 20 September 2013 I gave reasons for judgment in this matter in favour of the plaintiff. At the conclusion of those reasons I was reminded that interest was payable in accordance with section 57 of the Insurance Contracts Act 1984 rather than under the statutorily prescribed rate appropriate to claims in general.

1. Accordingly, I reserved the question of interest and costs and received further written submissions from the parties.

Interest

1. The parties are agreed that the rate of interest applicable to the claim in accordance with regulation 32 of the Insurance Contracts Regulations 1985 is 7 per cent.

1. In accordance with my earlier judgment, that rate applies from 1 September 2010 until 15 November 2010 in respect to the sum of $115,800, and from 15 November 2010 in respect of the larger sum of $125,135. The defendant proposed a calculation of interest, which was not disputed by the plaintiff. However, it appears to understate the interest by one day, perhaps because the defendant overlooked that 2012 was a leap year. In any event, that produces a minor increase in the amount of interest.

1. In addition, that interest calculation only extended to 20 September 2013. As no judgment sum has yet been awarded and there is no evidence before me of any payment having been made, it is appropriate that I calculate interest up to today. The total interest on the claim is thus, $27,320.01 and the total judgment sum is thus, $125,135 plus $27,320.01, namely $152,455.01.

Costs

1. There is no dispute that the plaintiff is entitled to costs. The plaintiff seeks an order for indemnity costs based upon an offer of compromise dated 5 February 2013 in the sum of $150,000. Inclusion of interest in the final judgment sum makes it appear that the plaintiff has obtained a judgment more favourable than the offer. However, Uniform Civil Procedure Rule 42.16 provides that for the purposes of determining the costs consequences of an offer of compromise interest is calculated up to the date of the offer, in this case 5 February 2012.

1. The defendant provided a calculation of this sum that is not disputed by the plaintiff. However, again, one day appears to be ignored.

1. On my calculation the appropriate amount of interest at 5 February 2013 is $21,200.39. Thus, the value of the judgment at 5 February 2013 is $146,335.39. As this is less than the offer of compromise the judgment is not one that can properly be described as "no less favourable...than the terms of the offer".

1. Accordingly, Uniform Civil Procedure Rule 42.14 is not satisfied and no special order for costs is warranted.

1. The awarding of an indemnity costs order is unusual. In order to benefit from Uniform Civil Procedure Rule 42.14, a party must comply strictly with its terms. I do not think it is appropriate to adopt an approach in respect of the offer that "near enough is good enough". The offer was near to the amount of the judgment, but in the case of indemnity costs orders under rule 42.14, "near" is insufficient to satisfy the requirements of the provision.

1. I note that the plaintiff made no submissions to the contrary.

1. Accordingly, the orders of the Court are:

(1)   Judgment for the plaintiff against the defendant in the sum of $152,455.01.

(2)   The defendant to pay the plaintiff's costs.

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Decision last updated: 24 January 2014