Vero Insurance Ltd v Kennedy

Local Court of New South Wales

CITATION:	Vero Insurance Ltd v Kennedy [2006] NSWLC 34
JURISDICTION:	Civil
PARTIES:	Vero Insurance Ltd Michelle Louise Kennedy
FILE NUMBER:	2212/05
PLACE OF HEARING:	Downing Centre Local Court
DATE OF DECISION:	07/20/2006
MAGISTRATE:	Magistrate H Dillon
CATCHWORDS:	Costs - Departure from general rule - Indemnity costs - Liability of unsuccessful party under the Legal Aid Commission Act for costs - Whether plaintiff entitled to indemnity costs by virtue of its contract with defendant - Whether plaintiff must elect to rely on contractual term or Rules for costs oder - Whether contractual obligation to indemnify plaintiff a matter to be taken into account by court in considering application for indemnity costs - Whether costs are a species of damage
LEGISLATION CITED:	Legal aid Commission Act 1979 ss42, 47(1) and 47(8)
CASES CITED:	Abigroup Ltd v Sandtara Pty Ltd [2002] NSWCA 45 Maher v Network Finance Ltd (1986) 4 NSWLR 694
REPRESENTATION:	Mr A Casseldon - Counsel Gadens Lawyers - Solicitors Ms M Fraser - Counsel Kydon Segal Lawyers
ORDERS:	The defendant to pay the plaintiff's costs of the proceedings in a sum agreed or assessed on an indenity basis.

JUDGMENT

1. On 10 April 2006 this matter concluded with a verdict and judgment being entered for the plaintiff.

2. The agreement between the parties included a term that the defendant “unconditionally and irrevocably indemnifies” the plaintiff “against all actions, claims, demands, liabilities, losses, damages, costs and expenses of whatever nature including legal costs on a full indemnity basis which [the plaintiff] may suffer, incur or sustain…” Pursuant to that terms of its contract with the defendant, the plaintiff sought costs on an indemnity basis.

3. That application was resisted by the defendant. I sought written submissions on the question as the defendant raised what I considered to be a novel legal issue.

4. In summary, the defendant’s argument is that in seeking costs the plaintiff is, in effect, seeking a form of damages for which the defendant would be personally liable. This, it is said, would require an amendment of the pleadings, for which the court’s leave would be required.

5. The defendant also argues that such an order would be incompatible with s.47(1) of the Legal Aid Commission Act 1979. That section provides:

(1) Where a court or tribunal makes an order as to costs against a legally assisted person:


(a) except as provided by subsections (2), (3), (3A), (4) and (4A), the Commission shall pay the whole of those costs, and


(b) except as provided by subsections (3), (3A), (4) and (4A), the legally assisted person shall not be liable for the payment of the whole or any part of those costs.

6. (In this case none of the exceptions are relevant.)

7. The argument is that the order for costs against the defendant sought by the plaintiff would be incompatible with the scheme of s.47, in particular s.47(1)(b), because the defendant would become liable for the plaintiff’s costs but the Legal Aid…