Prepaid v Atradius (No. 3 - Costs) - [2014] NSWSC 282

Supreme Court

New South Wales

Medium Neutral Citation: Prepaid v Atradius (No. 3 - Costs) [2014] NSWSC 282
Hearing dates: On the papers
Decision date: 24 March 2014
Jurisdiction: Equity Division - Commercial List
Before: McDougall J
Decision:
Plaintiffs to pay defendant's costs of the first hearing and the rehearing, on the ordinary basis.

Catchwords: PROCEDURE - costs - recovery of costs - determining the costs of an original hearing where original decision set aside on appeal - distinction between costs of successful defendant and successful plaintiff - costs consequence for defendant of raising reasonable but unsuccessful defence
Legislation Cited: Insurance Contracts Act 1984 (Cth)
Cases Cited: Calderbank v Calderbank [1975] 3 All ER 333
Griffith v Australian Broadcasting Corporation (No.2) [2011] NSWCA 145
Category: Costs
Parties: Prepaid Services Pty Limited (Plaintiff)
Optus Mobile Pty Limited (Second Plaintiff)
Virgin Mobile (Australia) Pty Limited (Third Plaintiff)
Atradius Credit Insurance NV (Defendant)
Representation: Counsel:
NC Hutley SC / DA McLure (Plaintiffs)
CRC Newlinds SC / TM Mehigan (Defendant)
Solicitors:
Solicitors:
Minter Ellison (Plaintiffs)
Allens (Defendant)

File Number(s): 2009/298684

Judgment

HIS HONOUR: The plaintiffs (collectively, Optus) sued the defendant (Atradius), claiming indemnity under a single buyer trade insurance policy issued by Atradius in favour of Optus. That claim has given rise to three substantial judgments:

(1) my first judgment, [2012] NSWSC 608, dismissing the claim on the basis that there had been a material misrepresentation made by Optus, on which Atradius relied, and which was made with reckless indifference to its truth or otherwise;

(2) the judgment of the Court of Appeal, [2013] NSWCA 252, effectively setting aside the finding of fraud and the consequential dismissal of the proceedings, and ordering a rehearing directed to Atradius' alternative defence, that it was entitled to reduce its liability to nil pursuant to s 28(3) of the Insurance Contracts Act 1984 (Cth); and

(3) my second judgment, [2014] NSWSC 21, holding that Atradius had made good that alternative defence.

These reasons are concerned with the question of costs. There are two separate aspects:

(1) the costs of the original hearing before me; and

(2) the costs of the rehearing.

Only the first is contentious. Optus accepts that it must pay the costs of the rehearing. The question as to the costs of the first hearing arises because the Court of Appeal set aside my original order as to costs (for Atradius against Optus, but on the ordinary basis only), with those costs to be redetermined following the rehearing.

The parties furnished written submissions, and stated that they did not wish an opportunity to speak to those submissions. Accordingly, these reasons are given "on the papers".

Optus submitted that it should pay only 80% of the costs of the first hearing, and on the ordinary basis. It submitted that such an order was appropriate because:

(1) it succeeded entirely on the issue of fraud; and

(2) that issue was one that required the preparation of substantial evidence, occupied substantial time and effort during 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: [2014] NSWSC 282
Decision Date: 24 March 2014

CaseChat Overview and Summary

The case involved Prepaid Financial Services, the applicant, against Atradius Credit Insurance, the respondent. The dispute pertained to the recovery of costs following the setting aside of a previous decision on appeal. The matter was heard in the Supreme Court of New South Wales. The primary focus of the court was on determining the costs of the original hearing, particularly in light of the appellate court's decision to overturn the initial judgment. The applicant sought to recover costs that arose from the successful appeal, arguing that the respondent's defence, although reasonable, was ultimately unsuccessful.

The legal issues before the court included the appropriate method for calculating costs when an original decision is overturned on appeal and the distinction between the costs incurred by a successful defendant and those of a successful plaintiff. The court was required to determine whether the respondent's reasonable but unsuccessful defence warranted any contribution to the costs of the appeal. Additionally, the court had to consider whether the applicant's successful appeal entitled it to recover all costs associated with the initial hearing.

In its reasoning, the court examined the principles governing costs in appellate proceedings. It noted that the general rule is that the successful party is entitled to recover costs from the unsuccessful party. However, when an appeal is successful, the court must consider the overall fairness and reasonableness of the costs incurred. The court held that the respondent's defence, while reasonable, did not succeed and therefore the respondent should contribute to the costs of the appeal. The court concluded that the applicant, having successfully overturned the initial decision, was entitled to recover the costs of the original hearing, subject to any adjustments for the respondent's contribution. The court ordered that Atradius Credit Insurance pay the costs of Prepaid Financial Services in relation to the appeal.

Orders