Young and Cool Pty Limited v Dawes Underwriting Australia Pty Limited

[2003] FCA 610

FEDERAL COURT OF AUSTRALIA

Young & Cool Pty Limited v Dawes Underwriting Australia Pty Limited [2003] FCA  610

YOUNG & COOL PTY LIMITED (ACN 086730261) v DAWES UNDERWRITING AUSTRALIA PTY LIMITED (ACN 050289506)
N 684 of 2003

JACOBSON J
11 JUNE 2003
SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	N 684 of 2003

BETWEEN:	YOUNG & COOL PTY LIMITED ACN 086730261 APPLICANT
AND:	DAWES UNDERWRITING AUSTRALIA PTY LIMITED ACN 050289506 RESPONDENT
JUDGE:	JACOBSON J
DATE OF ORDER:	11 JUNE 2003
WHERE MADE:	SYDNEY

THE COURT:

1Notes the undertaking of the respondent to the Court that any notice which the respondent will give to customers of the applicant for the purposes of s 58 of the Insurance Contracts Act 1984 (Cth) shall be in terms of the sample attached to these orders and Marked “A” and not otherwise.

2Orders that the application be dismissed.

3Orders that the respondent pay the Applicant’s costs of the proceedings.

Note:   Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

“A”
Dawes Motor Underwriting Group

P O Box 20
  TURRAMURRA NSW 2074
  PH:                 02 9144 6700
  1800 807 463
  FAX:              02 9144 6900
  1800 807 462
  WEBSITE:             [email protected]

11 June 2003

Mr………………..

Dear Sir/Madam,

Re: Policy number…………………….

Your policy will expire at 4.00pm on …………. and we are not prepared to renew or extend the cover. We strongly urge you to seek alternative insurance, as your vehicle will not be insured after this date.

Yours faithfully,

Run-off Department
Dawes Underwriting Australia P/L

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	N 684 of 2003

BETWEEN:	YOUNG & COOL PTY LIMITED ACN 086730261 APPLICANT
AND:	DAWES UNDERWRITING AUSTRALIA PTY LIMITED ACN 050289506 RESPONDENT

JUDGE:	JACOBSON J
DATE:	11 JUNE 2003
PLACE:	SYDNEY

REASONS FOR JUDGMENT

Introduction

1. These proceedings have been resolved between the parties except for the question of costs.  Counsel for the applicant, Mr Kunc, has asked me to make an order for indemnity costs in favour of the applicant.  On the other hand, Mr Gruzman, counsel for the respondent, has submitted that the respondent should have its costs paid by the applicant.

2. The proceedings arise out of a letter written by the respondent on 1 May 2003.  The body of the letter was in the following terms:

   “Dear [name]

   Re: Policy Number: [policy number]

   Following the termination of Young & Cool P/L’s insurance facility through Dawes Underwriting Australia Pty Ltd, we have assumed the role of administering all Insurance Business placed with them prior to 11^th March 2003.

   Your policy will expire at 4.00pm on 17^th May, 2003 and renewal, under the foregoing facility, will not be offered.  We strongly urge you seek alternative insurance, as your vehicle will not be insured after this date.

   To access alternative Insurance, we recommend you look in the Yellow Pages phone book for Insurers who advertise they will insure Young Drivers.

   Should you have any questions in relation to your insurance, please do not hesitate to contact us on [phone].

   Yours sincerely,

   Run-off Department
   Dawes Underwriting Australia P/L

3. The letter was purportedly written by the respondent to give effect to its obligations under s 58(2) of the Insurance Contracts Act 1984 (Cth) (“the Act”).

4. However, the applicant complained that the letter was misleading and deceptive and brought proceedings against the respondent seeking inter alia injunctive relief.  The gravamen of the applicant's claim was that the first and third paragraphs of the letter impliedly represented that the applicant had gone out of business.

5. Mr Gruzman submitted that in order to determine the question of costs it was necessary for me to look at the whole of the evidence filed by the applicant to determine where the result would have fallen.

6. However, Mr Kunc says that I need only look at the terms of the undertaking which has been given by the applicant and to compare that against the claim made in the statement of claim and also to take into account the correspondence between the parties when the dispute came to a head in order to decide the costs question.

7. The undertaking which was given this morning has the effect that the first and third paragraphs of the letter of 1 May will be excised. It seems to me that all that was necessary in any event for the respondent to say in the letter in order to give effect to the requirement of s 58(2) of the Act was stated in the second paragraph of the letter which will now be able to be sent by the respondent in those terms.

8. The applicant's solicitors gave what seems to me to be fair warning in a letter of 26 May 2003 that it would seek indemnity costs and there was earlier correspondence in which the applicant's solicitors stated their position in fairly clear terms.  It seems to me that the effect of the correspondence was that the solicitors were prepared to be reasonable.  It is true that they offered a draft which was an attempt to have the respondent make statements in the letter which may have been seen as an endorsement of the applicant.  Mr Gruzman says that they were not entitled to that relief in the proceedings and that is a matter which I ought to take into account on the questions of costs.

9. It seems to me that I have a very wide discretion, which of course I must exercise judicially, but I do not see that it is necessary for me to consider the evidence to determine what the likely result would have been. Even if I were to undertake that course, I do not think that the matters to which Mr Gruzman referred me in the evidence which he tendered would have been an answer to the claim. As Mr Kunc has submitted, the fact that it is possible to discover the correct position does not mean that the conduct is not misleading or deceptive in contravention of s 52 of the Trade Practices Act 1974 (Cth).

10. Looking at the correspondence in exhibit GPB1, it seems to me that the applicant gave the respondent a more than adequate opportunity to resolve the proceedings without coming to court.  It was only at the eleventh hour that Mr Gruzman offered an undertaking which was acceptable.  The undertaking provided for a letter which was in terms fairly close to that which the applicant's solicitors had previously indicated that they would accept.

11. Although I think there is some force in what Mr Kunc says about indemnity costs, I have come to the view that I will not order indemnity costs.  However, in my opinion the appropriate order in all of the circumstances that I have outlined above is that the respondents should pay the applicant's costs of the proceedings.

12. Accordingly, I will make orders in terms of the draft short minutes of order with the words "on an indemnity basis" deleted.

I certify that the preceding twelve (12) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Jacobson.

Associate:

Dated:            18 June 2003

Counsel for the Applicant:	Mr F Kunc & Ms K Vigliants
Solicitor for the Applicant:	A R Walmsley & Co
Counsel for the Respondent:	Mr A M Gruzman
Solicitor for the Respondent:	Gells Lawyers
Date of Hearing:	11 June 2003
Date of Judgment:	11 June 2003