ABC Insurance Pty Ltd v The Law Society of New South Wales

THE COURT: On 9 August 2024, the Court, constituted by the Chief Justice, Meagher JA and Harrison CJ at CL, delivered its reasons in respect of two sets of proceedings which were heard together: The Law Society of New South Wales v Attorney General of New South Wales; ABC Insurance Pty Ltd v The Law Society of New South Wales [2024] NSWCA 90 (the Judgment).

These reasons assume a knowledge of the matters in issue in and resolved by the Judgment.

The first proceeding (2024/107445) was commenced by the Law Society of New South Wales (the Law Society) against the Attorney General of New South Wales (the Law Society Proceeding). The second proceeding (2024/107482) was commenced by ABC Insurance Pty Ltd (the Applicant) against the Law Society (the ABC Insurance Proceeding).

The commercial background to the two sets of proceedings was set out in the Law Society’s written submissions (omitting references) for the principal hearing, and is relevant to issues considered in the present judgment:

Although the Applicant was not a party to the Law Society Proceeding, it had a plain commercial interest in the outcome of the proceeding as it was seeking to promote the availability of a policy of professional indemnity insurance for legal practitioners in New South Wales. The ABC Insurance Proceeding threw up similar issues as the Law Society Proceeding and it was for this reason that, on 14 March 2024, Harrison CJ at CL, ordered that the proceedings be heard together and removed to the Court of Appeal for the hearing of two separate questions stated by his Honour.

The questions were answered by this Court as follows:

The answer to the first question reflected arguments advanced by the Attorney General and supported, albeit in the alternative, by the Law Society. A contrary answer was propounded by the Applicant.

The Attorney General did not seek any order as to costs. As between the Law Society and ABC Insurance, the Court ordered that the Applicant, as the unsuccessful party, should pay the Law Society’s costs of the proceedings.

By notice of motion filed on 5 September 2024, after Meagher JA had retired, the Applicant sought, pursuant to r 36.16(1) of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR), or alternatively UCPR r 36.16(3A), a variation of the costs orders such that there be no order as to costs or, in the alternative, that “ABC Insurance Pty Limited pay the Law Society of New South Wales’ costs of the proceedings from 22 March 2024”. The date 22 March 2024 was just over a week after Harrison CJ at CL had made the orders referred to in [5] above.

The Law Society contended that, ordinarily, costs issues should be addressed during the hearing rather than through subsequent separate applications, citing State of New South Wales v Hollingsworth (No 2) [2023] NSWCA 283 at [22] (Hollingsworth), which in turn referred to this Court’s statement in Fuller v Albert (No 2) [2021] NSWCA 183 at [31]:

Special circumstances will most obviously include cases where Calderbank offers or formal offers of compromise have been made under the Supreme Court Rules that are not appropriately disclosed until the outcome of the appeal has been pronounced and reasons published: see, for example, Novelly v Tamqia Pty Ltd (No 2) [2024] NSWCA 209. There may be other types of cases where it is not appropriate to seek to introduce material relevant to the exercise of the costs discretion prior to the publication of reasons, or where those reasons disclose a misapprehension relevant to the exercise of the costs discretion as a result of oversight or inadvertence on the Court’s part: Dickson v Commissioner of the Australian Federal Police (No 2) [2023] NSWCA 111 at [4]; Hollingsworth at [20]. Another example of special circumstances may be a complex case where there are multiple issues and or multiple parties such that there is a host of possible permutations and costs outcomes with the consequence that it is unproductive to make costs submissions on a large range of hypothetical outcomes. In such cases, it is usual and appropriate for parties to indicate to the Court during the course of the appeal that, because of the range of possible permutations, they would seek to make submissions on costs after the publication of reasons.

The present case does not fall within any of these categories of case and the Law Society contended that, given the Applicant had provided three rounds of written submissions, it could not have held a reasonable expectation to provide further submissions as to costs after the hearing.

The Applicant advanced three broad arguments in support of the costs application.

First, that the Law Society had brought the proceedings in the discharge of its regulatory obligations, and that the proceedings brought against the Attorney General were brought for a “non-adversarial objective”, analogous to “that of a neutral applicant seeking judicial directions, akin to receivers or administrators acting in the interests of proper administration”: citing Preston, in the matter of Sandalwood Properties Ltd (No 2) [2018] FCA 816 at [20]–[22].

Second, the Applicant contended that, while it had been unsuccessful, the Law Society had not been successful as the arguments ultimately accepted by the Court were those advanced on behalf of the Attorney General.

Third, the Applicant submitted that the substantive issues raised by the ABC Insurance Proceeding was that reflected in “Question 2”, which did not arise because of the negative answer to Question 1.

Of these three arguments, the first was one that could and should have been raised by the Applicant in submissions filed during the hearing. It was not.

The second argument was not entirely correct, as the Law Society adopted the Attorney General’s submissions in the alternative, and contended for a negative answer to the first question which was the outcome and “event” which costs followed, to adapt the language of UCPR r 42.1. The litigation, in the form in which it proceeded in the Court of Appeal, was in fact adversarial, and the Applicant was seeking by its participation in the proceedings to advance its commercial interests: see [4] above.

As to the third argument, the Applicant was fully engaged in argument as to Question 1. It filed 20 pages of written submissions on this question to which the Law Society replied, contending for a negative answer to Question 1 and otherwise adopting the Attorney General’s submissions. Mr Lenehan SC who appeared on behalf of the Applicant also made extensive oral submissions in relation to Question 1 which did not prevail. It should also be noted that the Applicant filed separate detailed written submissions on Question 2 to which the Law Society replied. Those submissions only became relevant if the Applicant succeeded on Question 1, which it did not, but this did not mean that the costs incurred in relation to the work undertaken for the purposes of Question 2 should be excised from any costs order.

In these circumstances, we see no reason to depart from or vary the costs order that was identified in the Judgment and which has been made.