Solarus Projects Pty Ltd v Vero Insurance (No 9)

1. [1]

   On 14th April 2015 I decided questions ordered to be determined separately under Rule 28.2 Uniform Civil Procedure Rules 2005 (NSW) in favour of the plaintiff (Solarus) by ruling that it was an “insured” within the meaning of sub-paragraph (b) of the extended definition of insured in the Schedule to a Project Contract Works Insurance Policy issued by the defendant (Vero) on 2nd May 2007 (see [2015] NSWSC 412). I did not pronounce any order for costs.

2. [2]

   By written submissions filed on 21st April 2015, with my leave, Solarus submits “Vero should be ordered to pay, on the ordinary basis, Solarus’ costs of and incidental to the separate hearing on 5 September 2014”. (Solarus submissions, p 7[9]). By its written submissions filed on 28th April 2015, Vero argues that the costs of and incidental to the separate hearing should be reserved to the intent that the costs of each party stand as its costs in the principal proceedings under Rule 42.7 UCPR (Vero submissions p 1[1]). In the alternative, Vero submits that the appropriate order is “no order as to costs”. An order in this form may engage Rule 42.7(1)(b), to the same effect.

Background to separate determination

1. [3]

   The order for the determination of the separate question would only have finalised the whole proceedings if I had decided it in favour of Vero. Obviously, identifying itself as an insured within the meaning of the policy in the circumstances of this case was no more than a threshold question. In ordering the determination of the separate question on 17th December 2013, ([2013] NSWSC 1966) I said (at [4] – [5]):

2. [4]

   Notwithstanding these findings I was persuaded to make the order because it was a fundamental issue. Its early determination would allow the parties to concentrate upon the other complex issues, if the proceedings were to continue, confident Solarus was at least entitled to claim on the policy even if that claim ultimately fails: [2013] NSWSC 1966 at [25].

3. [5]

   As I said in the previous judgment there remain 7 other issues which, as I understand them from my management of the case, go to the nature of the occurrence, whether Solarus, which owns the land on which the project was developed, relevantly suffered any loss, and whether pleaded exclusions covered the claim.

The arguments of the parties

1. [6]

   Solarus relies upon, what it says, is a general rule of practice that when a question is determined separately, that determination is treated as an “event” which costs follow. It is the almost invariable practice of the Equity Division that the order Solarus seeks is made. It relies principally on a judgment of Bergin CJ in Eq (sitting as a Judge of Appeal) in Floruit Holdings Pty Ltd v Sebastian – Builders and Developers Pty Ltd [2009] NSWCA 411. Her Honour said (at [7]):

2. [7]

   To demonstrate the “generalness” of the rule many cases are cited where it has been applied including Ajkay v Hickey & Co. Pty Ltd [2011] NSWSC 822 where Pembroke J (at [21]) said:

3. [8]

   Vero argued that, especially in complex litigation, reserving costs on interlocutory questions will often better “reflect the justice of the situation” for the reasons explained by Spender J in O’Keefe Nominees Pty Ltd v BP Australia (No 2) (1995) 55 FCR 591:

4. [9]

   Vero also drew an analogy from the dominant or separable issue approach justifying a departure from the general rule. It argued that Solarus had attacked the question on a very broad front, but only one of its many arguments had penetrated Vero’s stout defence; even then that successful attack required regrouping in the course of oral argument (Vero submissions [16] – [23]). Viewed from this standpoint, Vero said it could credibly argue it was entitled to some consideration as to costs and for this reason, no order, in the alternative, might best reflect the justice of the case.

5. [10]

   Solarus joined issue on the alternative argument. It was not unusual when a question of construction was at stake that a number of contentions might be put, only one or some of which, in the end, would be successful. Moreover, most of the evidence tendered at the hearing went to establishing that Solarus was an associated company of the named insured, the point on which it succeeded.

Decision

1. [11]

   There is much to be said for each side of the argument. I am persuaded, however, that the determination of a separate question is no mere interlocutory ruling relating to practice and procedure attracting the approach of Spender J in O’Keefe Nominees. I do regard Bergin CJ in Eq’s approach in Floruit Holdings as reflecting a general rule of practice. Her Honour recognised that the case might yet be lost by the party who was successful on the separate question for a variety of reasons. As Pembroke J put it, the determination of a separate question almost always decides an issue the parties perceive to have legal or practical significance for the resolution of the litigation. That there may be “much for further hearing” in this case, as in like cases, does not detract from the applicability of the “general rule” (with great respect, I hesitate to regard it as a matter of judicial “policy”). None of Vero’s arguments persuade me that this is an occasion for departure from the general rule.

2. [12]

   However, I do not think that any occasion has arisen for departure from the operation of Rule 42.7(2) UCPR.

3. [13]

   My costs order is:

   1. (1)

      The defendant to pay the plaintiff’s costs of and incidental to the determination of the separate questions on the ordinary basis.