Wood v Insurance Australia Group Limited trading as NRMA Insurance (No 2)

1. [1]

   On 6 October 2022, for the reasons set out in Wood v Insurance Australia Group Limited trading as NRMA Insurance [2022] NSWSC 1290; 102 MVR 92 (the Principal Judgment), the Court made orders as follows:

2. [2]

   As provided by order (4), the plaintiff by a notice of motion filed on 12 October 2022, sought orders as follows:

Service on the second defendant

1. [3]

   Since no variation of the costs order or any other order is sought in the notice of motion in relation to the second defendant, the President of the Personal Injury Commission who filed a submitting appearance, it is appropriate to dispense with service of the notice of motion on the second defendant.

Should costs be ordered on an indemnity basis from 22 August 2022?

1. [4]

   The plaintiff seeks orders in effect altering order (3) made on 6 October 2022 so that, instead of the first defendant (NRMA) paying the plaintiff’s costs calculated on the ordinary basis up to and including 22 August 2022 and there being no costs payable after that date, NRMA should be ordered to pay the plaintiff’s costs on the ordinary basis up to and including 11 August 2022 and thereafter on an indemnity basis.

2. [5]

   The relevant procedural history of the matter is explained in the Principal Judgment at [4]-[11].

3. [6]

   After the proceedings were adjourned on 4 August 2022, the parties exchanged correspondence, which was marked “without prejudice save as to costs”, with a view to resolving or assisting to dispose of the matter. In particular, by letter dated 9 August 2022, NRMA’s solicitors offered to compromise the proceedings against it on the following terms:

4. [7]

   In that same letter, it was noted as follows:

5. [8]

   By letter dated 11 August 2022, the plaintiff’s solicitors conveyed an offer to resolve the matter on the basis that:

6. [9]

   Neither offer was accepted by the other party.

7. [10]

   On 22 August 2022, NRMA filed a submitting appearance which stated:

8. [11]

   The final hearing in the proceedings took place on 24 August 2022 and the orders disposing of the matter, which have been set out above, were made on 6 October 2022.

9. [12]

   By letter dated 6 October 2022, the plaintiff’s solicitors referred to the costs order made by the court on that date and asked whether NRMA agreed to vary the order for costs so as to read:

10. [13]

    It was noted in that letter that if the NRMA did not agree to do so, the plaintiff’s solicitors were instructed to file a motion to that effect and seeking costs of that application.

11. [14]

    By letter dated 7 October 2022, NRMA’s solicitors wrote that the insurer did not agree to the variation as proposed.

12. [15]

    The plaintiff and NRMA each relied upon affidavit evidence and provided written submissions. The parties also indicated that they were content for the application to be dealt with on the papers.

13. [16]

    The plaintiff submitted, in effect, that his solicitors’ letter of 11 August 2022 should be regarded as a reasonable offer of settlement and should have been accepted by NRMA. Further, it was contended that the ultimate order of the court “bettered” the offer because an order in the nature of mandamus for the second defendant to refer the plaintiff’s application to a review panel was made rather than the matter being referred back to the delegate of the second defendant to remake the “gateway” decision.

14. [17]

    Next, the plaintiff submitted that an indemnity costs order was appropriate in the present case because NRMA had engaged in “relevant delinquency” because of its failure to accept “the probable result” and its giving instructions to its legal representatives on the first day of the hearing to “not admit” that the delegate of the second defendant had the relevant background documents.

15. [18]

    The plaintiff referred to a number of authorities concerning the awarding indemnity costs and summarised his submissions as follows:

16. [19]

    In relation to the costs of the application to vary the costs orders, the plaintiff submitted that the same principles applied and NRMA could (and should) have resolved the application on the basis proposed by the plaintiff’s solicitors in their letter of 6 October 2022.

17. [20]

    NRMA submitted, in substance, that the plaintiff’s application should be dismissed with costs on the basis that it was not unreasonable for NRMA not to accept the plaintiff’s offer in his solicitors’ letter of 11 August 2022 because it contained no real element of genuine compromise including in relation to costs and on the basis that there was no relevant “delinquency” on the part of NRMA such as to warrant an award of indemnity costs against it. In particular, the fact that NRMA did not accept the plaintiff’s offer did not amount to delinquency. Furthermore, it was noted that, even if the plaintiff’s offer had been accepted, the plaintiff would still have had to establish to the satisfaction of the Court that the decision in question was affected by jurisdictional error and that relief ought to be granted in the Court’s discretion.

18. [21]

    The power to award costs is found in s 98 of the Civil Procedure Act 2005 (NSW) which relevantly provides:

19. [22]

    The Uniform Civil Procedure Rules 2005 (NSW) (UCPR) provide in r 42.1:

20. [23]

    A submitting appearance, as eventually filed by NRMA, is permitted under r 6.11 of the UCPR which relevantly states:

21. [24]

    There does not appear to be any other UCPR rule or provision in any Act dealing with the costs consequences of filing a submitting appearance, whether or not it includes the words “save as to costs”.

22. [25]

    It is well established that the discretion conferred by s 98 is subject to the qualification that it must be exercised judicially “in accordance with established principle and factors directly connected with the litigation”: Oshlack v Richmond River Council (1998) 193 CLR 72; [1998] HCA 11 at [65] (McHugh J) (in dissent but not relevantly for present purposes) (Oshlack). One such principle is that contained in UCPR r 42.1 that costs should follow the event, unless it appears that some other order should be made.

23. [26]

    There are a number of other principles and factors that may be relevant in considering whether to award costs against a party who has filed a submitting appearance, depending on the circumstances. These include the following.

    1. (1)

       There is no prima facie rule that a submitting party will never be ordered to pay costs: Lou v IAG Limited t/as NRMA Insurance (2019) 101 NSWLR 606; [2019] NSWCA 319 (Lou) at [43] (Payne JA, Gleeson JA agreeing).

    2. (2)

       The question of whether a party who has filed a submitting appearance should be ordered to pay costs should be approached according to an appraisal of the circumstances of the case and in particular the context in which the submitting appearance was filed: Kisimul Holdings Pty Ltd v Clear Position Pty Ltd (No 2) (2014) 86 NSWLR 645; [2014] NSWCA 317 at [14] (Beazley P, Barrett and Gleeson JJA).

    3. (3)

       In the case of a successful judicial review application, it will be a relevant consideration whether the submitting party caused the errors which gave rise to the decision being set aside: Lou at [44].

    4. (4)

       The exercise of the supervisory jurisdiction of the Court under s 69 of the Supreme Court Act 1970 is always within the discretion of the Court and thus judicial review proceedings cannot be resolved by consent: Lou at [44] and the authorities there cited.

24. [27]

    As to the awarding of indemnity costs, the relevant principles include the following.

    1. (1)

       An order for indemnity costs is not made to punish an unsuccessful party for persisting with a case that fails, but to compensate a successful party fully for costs incurred, when the Court takes the view that it was unreasonable for the other party to have subjected the successful party to the expenditure of costs: Hamod v New South Wales [2002] FCAFC 97; (2002) 188 ALR 659 at [20] (Gray J, Carr and Goldberg JJ agreeing).

    2. (2)

       Whether an indemnity costs order should be made depends, at least in part, on whether there was a relevant delinquency on the part of the unsuccessful party or conduct that is plainly unreasonable or involves some special or unusual feature justifying departure from the usual rule that costs are to be assessed on the ordinary basis: Oshlack at [44] (Gaudron and Gummow JJ), [69] (McHugh J); James v Douglas [2016] NSWCA 178 at [63] (Meagher JA, Leeming and Simpson JJA agreeing) (Douglas).

    3. (3)

       Examples of the factors which have been held to warrant the exercise of the discretion to award indemnity costs have included: imprudent or unreasonable refusal of an offer of compromise; the making of allegations which ought never to have been made or the undue prolongation of a case by groundless contentions; commencing or continuing proceedings for some ulterior motive or in wilful disregard of known facts or clearly established law; and, making allegations of fraud knowing them to be false and making irrelevant allegations of fraud: Colgate Palmolive Co v Cussons Pty Ltd [1993] 46 FCR 225 at 233 (Sheppard J); Douglas at [64].

25. [28]

    Since the present proceedings were judicial review proceedings under s 69 of the Supreme Court Act, they could not be resolved by the plaintiff and NRMA agreeing to orders being made by consent, as proposed in the plaintiff’s solicitors’ letter of 11 August 2022. Nor did the offer made by the plaintiff to resolve the matter on the basis of the proposed consent orders involve, in my view, any substantial element of compromise on his part. In all the circumstances, it was not unreasonable for NRMA not to accept the plaintiff’s offer to that effect; nor did that refusal amount to relevant delinquency such as would justify an indemnity costs order.

26. [29]

    Furthermore, while it can be accepted that NRMA did not on the first day of the hearing admit that the delegate of the second defendant had the relevant background documents, this was said to be because NRMA did “not know and cannot make any concession as to what, if any, other materials were before the second defendant’s Delegate in determining the plaintiff’s application for review. This is a matter for the second defendant’s Delegate …”. Although not particularly helpful, this response was not unreasonable and did not in my view come close to amounting to delinquency of the type which would justify an indemnity costs order.

27. [30]

    NRMA did not itself make the errors which led to the decision of the second defendant’s delegate being set aside nor did it cause those errors to be made.

28. [31]

    NRMA’s opposition to the orders sought by the plaintiff being made was brought to an end by the filing of the submitting appearance on 22 August 2022. There was nothing in its conduct up to that point or thereafter, which would justify an order that costs be paid on an indemnity basis rather than the ordinary basis.

29. [32]

    In these and all the other circumstances of this matter, it does not appear to me that it would be appropriate to make orders as sought in prayers 2 and 3 of the notice of motion varying the costs order made on 6 October 2022 so that, in effect, NRMA is to pay the plaintiff’s costs of the proceedings on an ordinary basis up to and including 11 August 2022 and thereafter on an indemnity basis.

30. [33]

    For these reasons, apart from dispensing with service of the notice of motion on the second defendant, the substantive part of plaintiff’s application has been entirely unsuccessful.

31. [34]

    Moreover, there are no circumstances which, in my view, would support a costs order other than that costs should follow the event in respect of the notice of motion.

Orders

1. [35]

   For all these reasons, the orders of the Court are:

   1. (1)

      The requirement to serve the notice of motion filed on 12 October 2022 on the second defendant is dispensed with.

   2. (2)

      Otherwise, the notice of motion filed on 12 October 2022 is dismissed.

   3. (3)

      The plaintiff is to pay the first defendant’s costs of the notice of motion.