Norris v Insurance Australia Group Ltd - [2024] VSC 76

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMERCIAL COURT

GROUP PROCEEDINGS LIST

S ECI 2022 02887

Damian Christopher Norris	Plaintiff
v
Insurance Australia Group Ltd	Defendant

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JUDGE:	Nichols J
WHERE HELD:	Melbourne
DATE OF HEARING:	30 June 2023, 18 August 2023, further submissions 9 February 2024
DATE OF RULING:	29 February 2024
CASE MAY BE CITED AS:	Norris v Insurance Australia Group Ltd
MEDIUM NEUTRAL CITATION:	[2024] VSC 76

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GROUP PROCEEDINGS — Costs — Application for a Group Costs Order — Costs to be calculated as a percentage of the amount of any award or settlement recovered — Whether proposed percentage appropriate or necessary — Application granted — Supreme Court Act 1986 (Vic), s 33ZDA — 5 Boroughs NY Pty Ltd v State of Victoria (No 5) [2023] VSC 682, considered.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr A Hochroth with Ms K Lindeman and Mr H Whitwell	Quinn Emanuel
For the Defendant	Mr K Loxley	Allens

HER HONOUR:

Introduction

The proceeding is a group proceeding issued under Part 4A of the Supreme Court Act 1986 (Vic) (Act). The issue for decision is whether the Court should, on the plaintiff’s application, make a Group Costs Order under s 33ZDA of the Act.

The group members represented in the proceeding are those persons who acquired shares in Insurance Australia Group Limited (IAG) between 11 March 2020 and 20 November 2020. IAG is the parent company of a general insurance group operating in Australia and New Zealand. Its subsidiary, Insurance Australia Ltd (IAL) provides business interruption insurance. One of IAG’s principal activities is underwriting general insurance.

On 16 June 2016, the Quarantine Act 1908 (Cth) was repealed and the Biosecurity Act 2015 (Cth) came into force. After the repeal of the Quarantine Act, IAL continued to issue certain business interruption policies which included an exclusion referring to the repealed Act. During 2020, IAG made various statements to the market about its financial position. Certain of the statements were to the effect that IAG’s business interrupt policies excluded coverage ‘in a pandemic scenario’. In November 2020, the New South Wales Court of Appeal determined in a ‘test case’ concerning exclusion clause in the same terms as those contained in unamended IAL policies, that certain exclusions referring to the repealed Quarantine Act were not effective to exclude cover in respect of COVID-19 pandemic-related loss.[1] Shortly thereafter, IAG issued a corrective disclosure to the ASX, estimating the post‑tax impact on earnings of the HDI Global Speciality decision to be $865 million.
[1]HDI Global Speciality SE v Wonkana No 3 Pty Ltd [2020] NSWCA 296.

The plaintiff alleges that IAG failed to inform the market about its potential exposure to cover COVID‑19‑related business interruption claims when it had knowledge of the true position during a period before the corrective disclosure, and that it engaged in misleading or deceptive conduct in relation to the impact of the COVID‑19 pandemic on its…

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: [2024] VSC 76
Decision Date: 29 February 2024

CaseChat Overview and Summary

The case of Norris v Insurance Australia Group Ltd involved a dispute over the appropriate calculation of costs in a group proceeding. The plaintiff sought a Group Costs Order, which would determine the costs as a percentage of the amount recovered in any award or settlement. The matter was heard in the Supreme Court of Victoria.

The central legal issue before the court was whether the proposed percentage for calculating costs was appropriate and necessary. The court needed to assess the proportionality of the costs in relation to the amount recovered, ensuring it was neither excessive nor inadequate. The matter hinged on the interpretation and application of section 33ZDA of the Supreme Court Act 1986 (Vic), as well as relevant case law such as 5 Boroughs NY Pty Ltd v State of Victoria (No 5) [2023] VSC 682.

In delivering its decision, the court considered the nature of the group proceeding and the potential for significant recoveries. The court found that the proposed percentage was appropriate as it balanced the need for reasonable compensation for legal services against the risk of discouraging meritorious claims due to excessive costs. The court's reasoning reflected a careful analysis of the proportionality and fairness of the costs relative to the potential outcomes. Ultimately, the court granted the application for the Group Costs Order, finding that the proposed percentage was both necessary and appropriate.

The final orders of the court confirmed the granting of the Group Costs Order, with costs to be calculated as a percentage of the amount of any award or settlement recovered. This decision provided clarity and guidance on the appropriate approach to cost calculations in group proceedings, ensuring that both claimants and defendants could anticipate and plan for the financial implications of such litigation.

Orders