Garage Fashions Pty Ltd v Insurance Australia Ltd trading as NRMA Insurance

Accounting costs 6It is apparent that in coming to the view that the order to be made in favour of the plaintiff should include the amount claimed for accounting costs, I overlooked the position reached at the hearing in relation to that matter. A claim for accountant's fees was made, but during the course of the hearing Senior Counsel for the plaintiff indicated that subject to instructions, the plaintiff would not press that claim. In the result the matter was not pressed further. 7In those circumstances, it must be accepted that in concluding that the accounting costs claim should be included in the order made, I was in error in overlooking the position finally reached. 8As the defendant submitted, r 36.17 permits the error to be dealt with by the further order sought. While the plaintiff did not consent to that course, no submissions were advanced, either to suggest that the power was not available, or that it ought not to be exercised in the way sought for the defendant. In the circumstances, I am satisfied that the order must be made.

Costs 9The defendant opposed an order that costs should follow the event. Its case was that the majority of the hearing was concerned with the question of the value of the stock lost in the fire. Its case on that matter succeeded. 10It also succeeded on the business interruption claim. In money terms the plaintiff succeeded on approximately 20% of the claim, an outcome which largely accorded with the defendant's case. The amount recovered, $186,998 was well less than the minimum $500,000 required by r 42.34 of the Uniform Civil procedure Rules 2005, which provides: "42.34 Costs order not to be made in proceedings in Supreme Court unless Court satisfied proceedings in appropriate court (1) This rule applies if: (a) in proceedings in the Supreme Court, other than defamation proceedings, a plaintiff has obtained a judgment against the defendant or, if more than one defendant, against all the defendants, in an amount of less than $500,000, and (b) the plaintiff would, apart from this rule, be entitled to an order for costs against the defendant or defendants. (2) An order for costs may be made, but will not ordinarily be made, unless the Supreme Court is satisfied the commencement and continuation of the proceedings in the Supreme Court, rather than the District Court, was warranted." 11There is no question that the Court has power to make the order sought as a matter of discretion. Whether the power should be exercised, requires an assessment of the facts (see for example the discussion in Elite Protective Personnel v Salmon (No 2 ) [2007] NSWCA 373). A successful party may be ordered to pay the other parties' costs, in an appropriate case. 12The parties identified what was in issue between them, in a joint memorandum as: "13. The parties disagree on the quantum of loss or damage suffered by the plaintiff in respect of: a. lost or damaged contents; b. lost or damaged stock in trade; c. business interruption; and d. accountant's fees." 13On the orders made, it is evident that the proceedings could have been properly brought in the District Court, as the defendant argued. 14As to stock, $121,148 was awarded, some $597,672 having been claimed. The defendant's pursuit of documents relevant to that claim, was only resolved in interlocutory proceedings before McCallum J in March 2011. That permitted the defendant to obtain expert evidence, which was served on 8 June. It was only shortly prior to the hearing on 8 August that a response was served, outside the time ordered. Leave to rely on one report was refused, given late service and admissibility problems (see the earlier judgment at [20] - [28]). The other report was received, but the conclusions reached were substantially abandoned, when the experts conferred, or were otherwise largely rejected in the judgment (see the earlier judgment at [63] - [77] and [111] - [122]). 15The defendant's case on the stock claim, which took up the bulk of the hearing, succeeded, as did its case in relation to interest under s 57 of the Insurance Contracts Act 1984 (Cth). 16As to business interruption, the defendant's claim also succeeded. The plaintiff's claim for the maximum amount insured under the policy for fittings and fixtures also failed. An order of $60,000, the position the defendant conceded, was made. This aspect of the case turned on documents and took little time. The plaintiff succeeded on an order under s 57 of the Insurance Contracts Act in respect of this claim. The defendant also conceded liability in relation to cleaning costs. Accounting costs were not finally pressed by the plaintiff. 17The plaintiff's conduct of the litigation was plainly deficient, given the time taken in interlocutory matters and the late service of expert reports. Had timely attention to these matters been paid, a sensible settlement of the matter could have been pursued, given the common views which emerged from the accounting experts, albeit they were views which the plaintiff sought to distance itself from at the hearing. 18Weighing all of these matters, it seems to me that a just exercise of the Court's discretion as to costs in the circumstances which have arisen is that the plaintiff should pay part of the defendant's cost of the proceedings, given its success. The defendant's submission that a proper adjustment in the circumstances is that the plaintiff pay 80% of its costs, as agreed or assessed, an adjustment which the plaintiff did not argue against, must be accepted.

Set off 19The plaintiff has not traded since the fire at its business premises, which generated these proceedings. It has no assets available to meet the costs order. In the circumstances, the Court has a discretion to set off the costs payable by the plaintiff against the money judgment ordered in its favour (see Australian Beverage Distributors Pty limited v Evans & Tait Premium Wines Pty Limited [2006] NSWSC 560). The plaintiff did not argue against the making of such an order. 20In the circumstances, I am satisfied that it is just to order such a set off and to stay the money judgment, until costs have been assessed.

Orders 21For the reasons given, I make the orders which the defendant sought in the following terms:

1. Judgment for the plaintiff in sum of $186,998, which comprises: (a) stock - $121,148; (b) contents - $60,000; and (c) cleaning costs - $5,850.
2. The defendant to pay the plaintiff interest pursuant to s 57 of the Insurance Contracts Act 1984 (Cth) on the sum of $121,148, calculated form 8 June 2011.
3. The defendant to pay the plaintiff interest pursuant to s 57 of the Insurance Contracts Act 1984 (Cth) on the sum of $65,850, calculated from 3 November 2009.
4. The plaintiff to pay 80% of the defendant's costs of the proceedings, assessed on a party and party basis or as otherwise agreed.
5. The amounts payable to the plaintiff by the defendant arising from orders 1, 2 and 3 be set-off against those costs payable by the plaintiff.
6. The enforcement of orders 1, 2, and 3 be stayed until further order.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 19 December 2011