IAG Ltd t/as NRMA Insurance v Abiad

HIS HONOUR: I published my reasons for judgment in the principal proceedings on 21 September 2018: see IAG Ltd t/as NRMA Insurance v Abiad [2018] NSWSC 1422. At that time I directed the plaintiff and the first and second defendants within 21 days to provide my Associate with written submissions not exceeding three pages addressing the question of who should pay the costs of these proceedings. All parties complied with that direction. These reasons deal with the question of costs.

It will be apparent from my earlier decision that the plaintiff was completely successful in both matters. Unsurprisingly, the plaintiff now contends that costs should follow that event with the result that the first and second defendants should pay the plaintiff’s costs of the proceedings.

The applicable principles are not in dispute. Costs are discretionary: Civil Procedure Act 2005, s 98. UCPR r 42.1 provides as follows:

The most important factor which courts have viewed as guiding the exercise of the costs discretion is the result in the litigation: see Oshlack v Richmond River Council (1998) 193 CLR 72; [1998] HCA 11. The plaintiff submitted that I must be positively satisfied of something if I am to order otherwise than that the costs follow the event in this case.

Judicial review of administrative decisions is to some extent a rather blunt instrument when applied to cases such as the present. Considerable analogical assistance in determining where the burden of costs should fall in this case can in my opinion be derived from the Motor Accidents Compensation Regulation 2015. For example, if the resolution amount is more than $20,000 but not more than $50,000 and the insurer did not admit liability for the claim, the costs recoverable by the claimant’s legal representative is restricted to a base amount of $2,592 plus $0.12 for each dollar by which the resolution amount exceeds $20,000. The first defendant’s claim is for $24,746. The resolution amount in the second defendants claim would appear unlikely to exceed $150,000. The corresponding amounts that can be recovered for costs in such circumstances are a base amount of $13,392 and $0.02 for each dollar by which the resolution amount exceeds $100,000.

I hasten to observe that these calculations of recoverable costs by practitioners in CARS proceedings have nothing directly to say about the calculation of costs recoverable by parties to litigation in this Court or about any decision concerning who should pay them. As the first and second defendants have pointed out, however, the CARS system embodies the “just, quick and cheap” approach to modern litigation and seeks to give practical effect to the concept of proportionality referred to in s 60 of the Civil Procedure Act 2005. That section is in these terms:

In my view, through nobody’s fault, the costs of the proceedings in this Court are likely, if not certain, to be disproportionate to the amounts involved. That is particularly so with respect to the case of the first defendant, even if somewhat less so with respect to the case of the second defendant. It is in that sense that the traditional procedures of judicial review of the decisions made by the assessor in this case are unfortunately ill-designed to accommodate a meaningful or consistent application of the overriding purpose. The practical consequence is that it is difficult to implement the practice and procedure of the Court in matters of this kind in a way that the cost to the parties remains proportionate to the importance and complexity of the subject matter in dispute.

Without wishing unreasonably or improperly to diminish the perceived importance of this litigation to the parties, or to one of them at least, the subject matter of the dispute in this Court was neither particularly important nor complex. It would be an unfortunate result if the burden of the costs, which in my view must necessarily fall upon the first and second defendants, were to operate in a way that wholly or even substantially neutralised any benefit that they might otherwise become entitled to when the matters are returned to an assessor for determination in accordance with my earlier orders.

Doing the best I can, and taking these things into account, I consider that the first and second defendants should pay the costs of the plaintiff of and incidental to the proceedings in this Court, limited to the greater of either costs assessed by reference to and calculated by analogy in accordance with Schedule 1 Table A of the Motor Accidents Compensation Regulation 2015 or the costs, if any, to which the first and second defendants may become separately entitled in accordance with a certificate issued pursuant to the Suitors’ Fund Act 1951. In this last respect I note what was said by Beazley P in Henderson v QBE Insurance (Australia) Ltd (2013) 66 MVR 69; [2013] NSWCA 480 at [57] concerning s 6C of the Suitors’ Fund Act. That section provides as follows: