AMP Financial Planning Pty Ltd v CGU Insurance Limited

REASONS FOR JUDGMENT 1 This judgment concerns the appropriate costs order that should be made in respect of CGU Insurance Ltd's cross-appeal which, in turn, challenged a costs order made by the primary judge on 29 October 2004: AMP Financial Planning Pty Ltd v CGU Insurance Ltd (No 2) [2004] FCA 1397. The Court dismissed CGU's cross-appeal on 9 May 2008: AMP Financial Planning Pty Ltd v CGU Insurance Limited [2008] FCAFC 74. The respondent to the cross-appeal, AMP Financial Planning Pty Ltd, submits that it is entitled to its costs in the cross-appeal on an indemnity basis from 24 January 2008. It appears not to be in issue that the cross-appellant, CGU should pay AMPFP's costs of the cross-appeal. 2 AMPFP seeks an indemnity costs order having regard to a letter written by its solicitors to the solicitors for CGU on 24 January 2008 (one of two written that day). At that time, CGU had succeeded in its appeal to the High Court: CGU Insurance Ltd v AMP Financial Planning Pty Ltd (2007) 237 ALR 420, (2007) 81 ALJR 1551, (2007) 62 ACSR 609, [2007] HCA 36 and was, in substance, entitled to its costs of the proceedings before the primary judge (subject to a 10% adjustment), the appeal proceedings before this Full Court and the proceedings in the High Court. 3 The letter of 24 January 2008 was made during the course of correspondence between the solicitors concerning settlement of the proceedings. On 16 January 2008, CGU's solicitors wrote to AMPFP's solicitors indicating that its legal costs were of the order of $1,425,000 (this figure and others we refer are rounded out in these reasons) together with copying costs of $220,000. CGU's solicitors offered to settle the matter if firstly, CGU was paid a little less than $1,400,000 and secondly an order was made, by consent, dismissing the cross-appeal with no order as to costs and that AMPFP would agree to forego any costs order in its favour. 4 The letter of 24 January 2008 involved a proposal by AMPFP to settle all outstanding issues between the parties and resolve the question of what costs were payable by AMPFP to CGU. It was noted in the letter that the CGU's legal costs were estimated to be $1,400,000 and that a successful litigant might be expected to recover half to two-thirds of their actual legal costs on a party/party basis, or 50% or 65% of their actual costs. The offer was then made to pay CGU $1.1 million (the actual amount identified) "in full and final settlement of all CGU's legal costs". AMPFP's offer was also conditional on the making of consent orders dismissing CGU's cross-appeal with no order as to costs, and on the basis that CGU would agree not to enforce any costs orders made in the proceedings. This offer was rejected by CGU. 5 AMPFP contends that the letter of 24 January 2008 was a Calderbank letter and CGU should have accepted the offer, and its refusal exposes it to an indemnity costs order. Written submissions have been provided by the parties traversing a number of issues. However, it appears to us that there is an obvious basis for rejecting AMPFP's contention that CGU's refusal of the offer exposed it to an indemnity costs order. While it is asserted in the offer letter that CGU would recover half to two-thirds of their actual legal costs on a party/party basis, or 50% or 65% of their actual costs, there is no evidentiary foundation for this assertion before us. Indeed, in the absence of taxation, there is no basis for such a finding. It has not been demonstrated that CGU has achieved an outcome in the cross-appeal less favourable than that offered in the letter of 24 January 2008. In any event, the offer was inherently uncertain and it was not unreasonably refused. 6 While AMPFP should have its costs of the cross-appeal, they should not be on an indemnity basis. I certify that the preceding six (6) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justices Moore, Emmett and Gyles.