Vero Insurance Ltd v Kassem - [2010] NSWSC 1481

CITATION: Vero Insurance Ltd v Kassem [2010] NSWSC 1481

HEARING DATE(S): 07/09/10

JUDGMENT DATE :
17 December 2010

JURISDICTION: Equity Division
Corporations List

JUDGMENT OF: Barrett J

DECISION: Order that the plaintiff pay the first defendants' costs of the proceedings.

CATCHWORDS: PROCEDURE - costs - where company administrators, as first defendants, serve affidavits but do not seek to be heard at trial - defence left in hands of second defendant - first defendants' affidavits not read - plaintiff unsuccessful - whether first defendants should be awarded costs - whether any such costs should exclude costs of affidavits not read

LEGISLATION CITED: Corporations Act 2001 (Cth), ss 445D, 1321

CATEGORY: Consequential orders

CASES CITED: Barristers Board of Western Australia v Tranter Corporation Pty Ltd (1976) WAR 65
In the Marriage of Crowe [1988] FLC 91-983
Kirwan v Cresvale Far East Pty Ltd [2002] NSWCA 395; (2002) 44 ACSR 21
Leaders Shoes (Aust) Pty Ltd v National Insurance Co of New Zealand Ltd [1968] 1 NSWR 344
Vero Insurance Ltd v Kassem [2010] NSWSC 838; (2010) 79 ACSR 330

PARTIES: Vero Insurance Limited - Plaintiff
Ozem Azzam Kassem and Andrew James Barnden as Joint Administrators of Ungul Properties Pty Ltd - First Defendants
Ungul Properties Pty Ltd - Second Defendant

FILE NUMBER(S): SC 2009/289555

COUNSEL: Mr A P Lo Surdo - Plaintiff
Mr A Spencer - First Defendant
Mr P Harkin - Second Defendant

SOLICITORS: Mills Oakley Lawyers - Plaintiff
Leonard Legal - First Defendants
Colin Biggers & Paisley - Second Defendant

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
CORPORATIONS LIST

BARRETT J

FRIDAY, 17 DECEMBER 2010

2009/289555 VERO INSURANCE LTD v OZEM AZZAM KASSEM & ORS

JUDGMENT

1 I am dealing with a question of costs that remains for determination in these proceedings.

2 Following the publication of reasons on 30 July 2010 (Vero Insurance Ltd v Kassem [2010] NSWSC 838; (2010) 79 ACSR 330), I made orders on 25 August 2010 that the proceedings be dismissed, that the plaintiff (“Vero”) pay the costs of the second defendant (“Ungul”) and that the matter be listed for a hearing on the question of costs as between Vero and the first defendants (now the administrators of a deed of company arrangement executed by Ungul and, at the time of relevant events, the administrators under its voluntary administration).

3 It is that last matter with which I am now concerned, having heard argument on 7 September 2010.

4 As noted in the reasons of 30 July 2010, the administrators, despite having filed defences, tendered no evidence, took no part in the hearing and were given leave to withdraw.

5 Vero’s principal position is that, although it failed in all its claims in the proceedings, the administrators should not have an order for costs against Vero. The secondary submission is that, if costs are awarded at all to the administrators, the costs should be limited to costs of preparing and filing their defence, since the costs of…

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: [2010] NSWSC 1481
Decision Date: 17 December 2010

CaseChat Overview and Summary

Vero Insurance Ltd brought a claim against Kassem, as well as two other defendants, for damages for breach of insurance contract. The insurance company sought indemnity for losses suffered by a client as a result of Kassem's alleged fraudulent activities. The first and second defendants were the administrators of the client company. The case proceeded to trial, with the first defendants serving affidavits but not seeking to be heard at the trial, leaving the defence in the hands of the second defendant. The insurance company was unsuccessful in its claim. Vero Insurance Ltd then sought to have the first defendants, as well as the second defendant, pay its costs of the action.

The central legal issue was whether the first defendants, who served affidavits but did not seek to be heard at the trial, should be liable for costs, and if so, whether any such costs should exclude the costs of the affidavits that were not read. The insurance company argued that, since the first defendants served affidavits, they should be liable for costs. It further argued that, since the affidavits were not read, their costs should be excluded. The first defendants argued that they should not be liable for costs because they did not seek to be heard at the trial.

The court held that the first defendants were liable for costs of the action, as they had served affidavits and participated in the litigation process. However, the court also held that the costs of the affidavits that were not read should be excluded from any costs order, as they did not contribute to the outcome of the case. The court found that the second defendant, who was the only party to seek to be heard at the trial, was liable for the costs of the insurance company. The first defendants were liable for the costs of the second defendant.

In light of the above, the court ordered that the first defendants pay the costs of the second defendant, but not the costs of the affidavits that were not read. The court further ordered that the second defendant pay the costs of the insurance company.

Orders