David Dusko Tanevski v Trenwick International Limited & Ors

JUDGMENT OF : Tobias JA at 1; Young CJ in Eq at 17 DECISION : (a) DECLARE that by issuing the Certificate of Currency dated 22 April 1998 to the appellants, the Second Respondent contravened s 52 of the Trade Practices Act 1974 (Cth); (b) ORDER that (i) Appeal allowed; (ii) Order 3 made by Sorby DCJ on 12 September 2002 set aside; (iii) Judgment for the appellants against the first respondent in the amount of $516,435.05 (together with interest from 12 September 2002); (iv) The first respondent to indemnify the appellants against the costs the appellants are liable to pay to the plaintiff pursuant to Order 2 made by Sorby DCJ on 12 September 2002; (v) The issue of what damages, if any, the second respondent is liable to pay the appellants by reason of the second respondent's breach of the Trade Practices Act 1974 (Cth) is reserved, to be determined by the District Court of NSW should the circumstances arise which show the appellants have incurred some loss they seek to recover from the second respondent; (vi) The first respondent to indemnify the appellants against all of the appellants' costs and disbursements not unreasonably incurred in defending the plaintiff's claim; (vii) The first respondent to pay the appellants' costs of the appeal and their costs of the proceedings at first instance insofar as they relate to the second and fourth cross-claims on an indemnity basis; (viii) The second respondent to pay the appellants' costs of the appeal and their costs of the proceedings at first instance relating to the second and fourth cross-claims; (c) Liberty to apply on seven day's notice.

CATCHWORDS : COSTS - how costs should be divided as between the parties - whether costs order should be made on a party/party basis or an indemnity basis - ND CASES CITED : State Government Insurance Commission v Lane (1997) 68 SASR 257 First Appellant: David Dusko Tanevski & Anor PARTIES : Second Appellant: Samac Pty Limited First Respondent: Trenwick International Limited Second Respondent: I&S Insurance Broking Group Pty Limited FILE NUMBER(S) : CA 40895/02 Appellant: Mr A Meagher SC, Mr J Bartos COUNSEL : First Respondent: Mr M Pembroke SC, Mr A Losurdo Second Respondent: Mr P Greenwood SC, Mr S A Goodman Appellant: Deacons SOLICITORS : First Respondent: Anderson Rice Second Respondent: Minter Ellison

LOWER COURT District Court JURISDICTION : LOWER COURT DC 2913/00 FILE NUMBER(S) : LOWER COURT Sorby DCJ JUDICIAL OFFICER :

IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40895/02 DC 2913/00

TOBIAS JA YOUNG CJ in EQ

Thursday 18 December 2003 DAVID DUSKO TANEVSKI & ANOR v TRENWICK INTERNATIONAL LIMITED & ANOR Supplementary Judgment 1 TOBIAS JA: On 17 October 2003, judgment on the substantive issues in this matter was delivered. The primary judgment was that of Davies AJA, with whom myself and Young CJ in Eq agreed. 2 As the issues of damages and costs were not fully debated during the hearing of the appeal, liberty was reserved to the parties to raise any matter with respect to those issues within a certain period. Otherwise, the parties were directed to bring in short minutes of order consistent with the judgment of Davies AJA (the judgment). Written submissions have now been filed and the parties have agreed that the Court may determine the outstanding issues on the basis of those submissions and without further oral argument. Further, the parties have agreed that Young CJ in Eq and myself should determine those issues given that the appointment of Davies AJA as an acting Judge of the Court and an acting Judge of Appeal has expired. 3 The parties have agreed that the following orders should be made: a) The appeal be allowed;

b) Order 3 made by the trial judge on 12 September 2002 be set aside; c) Judgment for the Appellants against the First Respondent in the amount of $516,435.05 (plus interest from 12 September 2002);

d) The First Respondent is to indemnify the Appellants against the costs that the Appellants are liable to pay to the Plaintiff pursuant to Order 2 made by the trial judge on 12 September 2002;

e) The issue of what damages, if any, the Second Respondent is liable to pay the Appellants by reason of the Second Respondent's breach of the Trade Practices Act 1974 (Cth) be reserved, to be determined by the District Court of NSW should the circumstances arise which show the Appellants have incurred some loss they seek to recover from the Second Respondent.

f) Liberty to apply on 7 days notice. 4 In addition, the Second Respondent agrees that, consistent with [67] of the judgment, the following declaration should be made: "By issuing the Certificate of Currency dated 22 April 1998 to the appellants, the Second Respondent contravened s 52 of the Trade Practices Act 1974 (Cth)." 5 The matters remaining in dispute between the parties concern what orders for costs should be made both with respect to the hearing of the appeal as well as to the proceedings at first instance, particularly with respect to the costs of the second and fourth cross-claim (see [5] of the judgment). 6 Before dealing with the respective claims regarding the costs of the appeal and the costs below in relation to the cross-claims, I note that the appellants also seek an order in the following terms (Order 7): "The First Respondent is to indemnify the Appellants against all of the Appellants' costs and disbursements not unreasonably incurred in defending the Plaintiff's claim." 7 The appellants submit that such an order should be made upon the basis that the costs referred to would not have been incurred had the first respondent indemnified the appellants with respect to the plaintiff's claim (as it has been found that it should have), as any such indemnity would have included those costs. The first respondent has submitted that no such order should be made as it does not fall within the terms of [68] of the judgment, which provided that: "the costs of the hearing below and the costs of the appeal should follow the usual course." 8 In my opinion, there is no inconsistency between Order 7 as sought by the appellant and [68] of the judgment. Order 7 does no more than reflect what the appellants are entitled to as recognised by Order 4, which the first respondent agrees should be made. Accordingly, I would make Order 7 as sought by the appellants. 9 The essential dispute with respect to the appellants' costs of the appeal and costs at first instance revolves around a dispute between the first and second respondent, whereby the second respondent asserts that the first respondent should pay those costs in their entirety (as do the appellants), whereas the first respondent submits that the costs of the appeal and at first instance should be split between the second and fourth cross-claims. In other words, the first respondent submits that although it should pay the appellants' costs with respect to the appeal and at first instance arising out the fourth cross-claim, the second respondent should pay those costs insofar as they relate to the second cross-claim. 10 Both the appellants and the second respondent submit that had the first respondent allowed the appellants' claim for indemnity when it was made, then neither the appellants nor the second respondent would have incurred the costs of the hearing at first instance or the appeal, as the plaintiff's claim would have been resisted only by the first respondent acting as the appellants' insurer. It was also submitted that to divide the costs of the hearing between the issues raised on each of the cross-claims would be artificial and create significant difficulties for any costs assessor, especially where the liability of the first respondent was the primary issue as between the appellants and the respondents both before the primary judge and this Court. 11 Although the primary liability of the respondents to the appellants was that of the first respondent, nonetheless the misleading and deceptive conduct of the second respondent contributed to the appellants' difficulties. After all, the Certificate of Currency issued by the second respondent to the appellants represented that the relevant cover was with Lloyds of London. If this had been the case, then the first respondent would not have been involved. Accordingly, I do not regard the second respondent as being blameless with respect to the necessity for the appellants' to cross-claim against them in the proceedings. 12 On the other hand, I do not consider that it is appropriate for this Court to divide the costs of the appellants (which, in my opinion, should be paid by both respondents) by reference to the issues that were litigated both at first instance and on appeal by the appellants against each of them. To the extent to which there is overlap, it will be a matter for the respondents to resolve between themselves. If they cannot resolve the issue, it will be for the costs assessor to determine the proportion of the appellants' costs both at first instance and on appeal to be paid by each respondent. On the other hand, the appellants should be able to look to either respondent for the whole of their costs. Accordingly, in my opinion it is appropriate to make an order against each of the first and second respondents to pay the appellants' costs of the appeal and of the proceedings at first instance relating to the second and fourth cross-claims. 13 The next issue is whether those costs should be paid on an indemnity basis. The appellants seek such an order against the first respondent and an equivalent order against the second respondent, but in the form of damages upon the basis that but for the second respondent's misleading and deceptive conduct, the appellants would have obtained insurance with a reputable and identified insurer and would not have had to commence and prosecute the cross-claims. 14 So far as awarding costs against the first respondent on an indemnity basis is concerned, the appellant relies upon the decision of the Full Court of the Supreme Court of South Australia in State Government Insurance Commission v Lane (1997) 68 SASR 257, where it was held (at 265) that the insureds in that case were entitled to costs on a solicitor/client basis because they could have accepted the insurers repudiation of the policy and recovered their costs as damages on that basis. It is submitted that similar considerations apply to the present case. 15 In my opinion, there is substance in the appellant's submissions so far as they relate to the first respondent but not as they relate to the second respondent. Therefore, the order for costs against the first respondent should be on an indemnity basis, but that against the second respondent should be on a party/party or reasonable costs basis. Accordingly, if the appellants recover the totality of their costs against the first respondent, then the second respondent will only need to contribute to those costs to the extent to which they are assessed on a party/party basis, as distinct from an indemnity basis. However, that is a matter for the respondents to determine as between themselves. 16 For the foregoing reasons therefore, I propose the following declaration and orders:

(a) DECLARE that by issuing the Certificate of Currency dated 22 April 1998 to the appellants, the Second Respondent contravened s 52 of the Trade Practices Act 1974 (Cth).

(b) ORDER that: (i) Appeal allowed. (ii) Order 3 made by Sorby DCJ on 12 September 2002 set aside. (iii) Judgment for the appellants against the first respondent in the amount of $516,435.05 (together with interest from 12 September 2002). (iv) The first respondent to indemnify the appellants against the costs the appellants are liable to pay to the plaintiff pursuant to Order 2 made by Sorby DCJ on 12 September 2002. (v) The issue of what damages, if any, the second respondent is liable to pay the appellants by reason of the second respondent's breach of the Trade Practices Act 1974 (Cth) is reserved, to be determined by the District Court of NSW should the circumstances arise which show the appellants have incurred some loss they seek to recover from the second respondent. (vi) The first respondent to indemnify the appellants against all of the appellants' costs and disbursements not unreasonably incurred in defending the plaintiff's claim. (vii) The first respondent to pay the appellants' costs of the appeal and their costs of the proceedings at first instance insofar as they relate to the second and fourth cross-claims on an indemnity basis. (viii) The second respondent to pay the appellants' costs of the appeal and their costs of the proceedings at first instance relating to the second and fourth cross-claims. (c) Liberty to apply on seven day's notice. 17 YOUNG CJ in EQ: I agree with Tobias JA. **********

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