JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CIVIL
CITATION: SMITH -v- MMG GOLDEN GROVE PTY LTD [2020] WADC 103
CORAM: BURROWS DCJ
HEARD: 10-12 SEPTEMBER 2018 & 5 JUNE 2019
DELIVERED : 24 JULY 2020
FILE NO/S: CIV 2457 of 2015
BETWEEN: SPENCER JAMES RICHARD SMITH
Plaintiff
AND
MMG GOLDEN GROVE PTY LTD
Defendant
MEMBERS OF CHAUCER SYNDICATE 1084
Third Party
Catchwords:
Damages for breach of contract - Third party proceedings - Public liability insurance policy - Effect of waiver of subrogation clause in Employer Indemnity Insurance Policy - Reasonableness of settlement between plaintiff and defendant - Whether public liability insurance policy responds to defendant's claim to be indemnified for component of settlement repaid to workers' compensation insurer - Effect of exclusion clause - Extent to which public liability insurance policy responds to claim for indemnity for defendant's legal costs of defending plaintiff's claim - Deductible - Delay of notification of claim - Settlement of claim without third party consent
Legislation:
Civil Liability Act 2002 (WA), s 5B
Insurance Contracts Act 1984 (Cth), s 13, s 54
Occupiers' Liability Act 1985 (WA), s 4
Workers' Compensation and Injury Management Act 1981 (WA), s 92(c), s 93, s 301, s 160, s 175
Result:
Third party liable to indemnify defendant for settlement sum paid to plaintiff and defence cost of investigating and defending plaintiff's claim together with interest on these sums to be determined.
Representation:
Counsel:
| Plaintiff | : | No appearance |
| Defendant | : | Mr G R Hancy |
| Third Party | : | Mr G J Pynt |
Solicitors:
| Plaintiff | : | Not applicable |
| Defendant | : | DLA Piper Australia - Perth |
| Third Party | : | HWL Ebsworth Lawyers (Perth) |
Case(s) referred to in decision(s):
Allianz Australia Insurance Ltd v Inglis [2016] WASCA 25
Barnes v Toll Transport Pty Ltd [2011] TASSC 25
Byrne v People Resourcing (Qld) Pty Ltd [2014] QSC 269
Co-operative Bulk Handling Ltd v State Government Insurance Commission (1990) 3 WAR 145
Dowthwaite Holdings Pty Ltd v Saliba [2006] WASCA 72
Fitzgerald v Lane [1989] 1 AC 328
Gordian Runoff Ltd v Heyday Group Pty Ltd [2005] NSWCA 29
Hi-Tec Demolition Co Pty Ltd v Mainline Demolitions [2000] WASCA 342
Insurance Commission of Western Australia v Kightly [2005] WASCA 154
Lumbermens Mutual Casualty Co v Bovis Lend Lease Ltd [2005] 1 Lloyd's Rep 494
McCann v Switzerland Insurance [2000] HCA 65; (2000) 203 CLR 579
Moltoni Corporation v QBE Insurance [2001] HCA 73; (2001) 205 CLR 149
Morris v Ford Motor Co Ltd [1973] QB 792
Multiplex Constructions Pty Ltd v Irving [2004] NSWCA 346
Nigel Watts Fashion Agencies Pty Ltd v GIO General Ltd (1994) 8 ANZ Ins Cas 61‑235
Petrofina (UK) Ltd v Magnaload Pty Ltd [1984] 1 QB 127
State Government Insurance Office (Qld) v Brisbane Stevedoring Pty Ltd [1969] HCA 59; (1969) 123 CLR 228
Thomas & Co v Brown (1899) 4 Com Cas 186
Trident General Insurance Co Ltd v McNiece Bros Pty Ltd (1988) 165 CLR 107
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- Case
- [2020] WADC 103
- Decision Date
CaseChat Overview and Summary
The primary legal issues involved the interpretation of the insurance policies, specifically the public liability insurance policy and the employer indemnity insurance policy. The court had to consider the effect of a waiver of subrogation clause in the employer indemnity insurance policy, the reasonableness of the settlement between the plaintiff and the defendant, and whether the public liability insurance policy responded to the defendant's claim for indemnity of costs incurred in defending the plaintiff's claim. Additionally, the court examined the implications of an exclusion clause and the extent to which the public liability insurance policy responded to the defendant's claim for indemnity for legal costs, including the application of a deductible. The court also had to assess the impact of a delay in notifying the claim and the settlement of the claim without third-party consent.
The court found that Chaucer was required to indemnify MMG for the costs reasonably incurred in the defence of the plaintiff's claim. The court held that the insurer must prove both prejudice and its value in monetary terms to reduce the amount payable. In this case, Chaucer had not provided sufficient evidence to substantiate a reduction. The court allowed the costs claimed by MMG for the period of 15 July 2015 to 14 January 2016, along with interest, as the work undertaken appeared reasonable, and no submissions were made regarding the reasonableness of these costs. The court found that the insurer was aware of the proceedings and settlement negotiations based on the volume and content of communications between the parties' solicitors.
The court further determined that the costs incurred after 14 January 2016, including those related to multiple pre-trial conferences, were also reasonable. The court rejected the insurer's argument that the costs were unreasonable or unnecessary, particularly in light of the significant communications and exchanges between the parties. The court ruled that the insurer was required to indemnify MMG for the reasonable costs incurred in defending the plaintiff's claim.
Orders
Orders of the court
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Background
Background to the litigation
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Evidence
Evidence Before The Court
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Decision
Reasons for decision
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Ratio Decidendi
Legal Principle Established
The effect of s 54 is that Chaucer can only reduce the amount payable to the extent to which its interests have been prejudiced. It must prove both prejudice and its value in money terms: Moltoni Corporation v QBE Insurance [2001] HCA 73; (2001) 205 CLR 149. It has not done so in this case. Being satisfied that Chaucer is required to indemnify MMG for costs reasonably incurred in defence of the plaintiff's claim, I now turn to the reasonableness of the costs claimed by MMG. MMG claims costs of $64,598.24 in the investigation of the accident and the defence of the plaintiff's claim against the defendant. Chaucer submits the Chaucer Policy does not cover DLA's costs to the extent they are unreasonable or unnecessary. An example of costs incurred unreasonably or unnecessarily they say are DLA's costs of attending multiple (at least six) pre-trial conferences when MMG could have settled the claim much earlier and obtained the LabourNet report of Professor Mulvey (exhibit 56) earlier. This report, they submit was an important trigger for the settlement however it was obtained only shortly before the action was settled. I have reviewed the invoices rendered by DLA Piper Australia to MMG. On their face the work undertaken in respect of the matter for the period 15 July 2015 to 14 January 2016 seems reasonable. The third party makes no submission that the costs incurred during this period were not reasonably incurred. I would allow the claimed costs for this period together with interest thereon. The date 14 January 2016 is the first reference in the invoices to dealings with the solicitors for Chaucer. In relation to pre-trial conferences the solicitors for Chaucer were contacted by telephone on the date of the first pre-trial conference which appears to have been conducted on 4 May 2016. A second pre-trial conference was adjourned at the request of the Plaintiff's solicitors. A further conference took place on 10 August 2016 after which third party proceedings were issued. The pre‑trial conference on 7 November 2016 was adjourned. There is a reference in the invoice relevant to that date to the requirement to provide workers' compensation policy documents to Chaucer's solicitors. A pre-trial conference took place on 22 February 2017 at which the offer to settle the plaintiff's claim for $550.000 was made. A further pre-trial conference took place on 21 April 2017, following which the report from Professor Mulvey at LabourNet was sought in early May. A further pre-trial conference was held on 1 June 2017 with a number of calls on that day recorded between the solicitors for Chaucer and MMG. The plaintiff's claim was was subsequently settled. It is clear from the invoices that numerous telephone and email exchanges took place between the solicitors for MMG and Chaucer from 14 January 2016 to 15 July 2017, being the date of the last entry on exhibit 1. I cannot accept that the solicitors for Chaucer 'knew nothing about what happened at any of the pre-trial conferences or in any settlement negotiations between MMG, Allianz and Mr Smith' as asserted at par 39 of Chaucer's closing submissions based on the volume of communications between the parties, the timing of those communications, the dates of the communications immediately surrounding the pre-trial conferences and the content of the letters from HWL Ebsworth to DLA Piper dated 24 January and 21 June 2017.