Metlife Insurance Ltd v Visy Board Pty Ltd & 25 ors

CATCHWORDS : COSTS - Rectification suit - Intervention - where costs increased by intervention - where plaintiff ultimately but not completely successful and intervention partially successful.

LEGISLATION CITED : (NSW) Civil Procedure Act 2005, s 98 (NSW) Uniform Civil Procedure Rules 2005, r 42.1

Cape Country Club Pty Ltd v Cape Shanck Resort Co Ltd [1999] VSC 217 City of Burnside v Attorney General of South Australia (1994) 63 SASR 65 CASES CITED : MetLife Insurance Limited v Visy Board Pty Limited [2007] NSWSC 1481 MetLife Insurance Limited v Visy Board Pty Limited [2007] NSWSC 1168 O'Toole v Charles David Pty Ltd (No 2) (1991) 171 CLR 232

Metlife Insurance Limited (plaintiff) Visy Board Pty Limited (1st defendant) Visy Paper Pty Limited (2nd defendant) Visy Board Superannuation Pty Limited (3rd defendant) Arpad Kozma (4th defendant) Colin Frewen (5th defendant) Reginald De Livera (6th defendant) Stephen Smith (7th defendant) Florian Karwacki (8th defendant) Sylvia Kleinman (9th defendant) Oscar Marconi (10th defendant) Petru Suciu (11th defendant) Thomas Hall (12th defendant) PARTIES : Mark Williams (13th defendant) Concetta Tedesco (14th defendant) Don Rakoci (15th defendant) Slako Gorguc (16th defendant) Shane Rogers (17th defendant) Maurice Rafidi (18th defendant) Edward Denko (19th defendant) Maria Drago (20th defendant) Milenco Baloi (21st defendant) Cane Mickovski (22nd defendant) Eyup Turkoglu (23rd defendant) Ugur Arslan (24th defendant) Gregory Sabitino (25th defendant) Ramadan Salievski (26th defendant)

COUNSEL : I M Jackman SC (plaintiff) R E Montgomery (4th - 26th defendants)

SOLICITORS : Deacons (plaintiff) Maurice Blackburn Cashman (4th - 26th defendants)

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION EXPEDITION LIST

6399/06 Metlife Insurance Limited (formerly known as Citicorp Life Insurance Limited) v Visy Board Pty Ltd & 25 ors JUDGMENT (ex tempore) 1 HIS HONOUR: On 13 November 2007, following a hearing the previous day, I gave judgment and made orders for the rectification of the insurance policy the subject of the proceedings, and that the fourth to twenty-sixth defendants pay the plaintiff's costs, reserving leave to the parties to apply to set aside the costs order and for some different costs order in its place [MetLife Insurance Limited v Visy Board Pty Limited [2007] NSWSC 1481]. I indicated that I would not regard the defendants as bearing any particular onus to set aside the order, but would embark upon the costs issue, if so required, afresh. 2 The fourth to twenty-sixth defendants, availing themselves of that leave, have applied for orders that the plaintiff pay the costs of their solicitors (as amicus curiae) up to the joinder of the fourth to twenty-sixth defendants on 14 August 2007, and pay the costs of those defendants of the motion for their joinder on 14 August and for expedition on 24 August and of the hearing. Alternatively, they propose that each party pay its own costs of the hearing. 3 (NSW) Civil Procedure Act 2005, s 98, provides that subject to the rules of court, costs are in the discretion of the Court. (NSW) Uniform Civil Procedure Rules r 42.1 provides that subject to that part of the Rules, if the Court makes any order as to costs, the Court is to order that the costs follow the event, unless it appears to the Court that some other order should be made as to the whole or any part of the costs. The effect of that rule is that there has to be some reason if an order, other than an order to the effect that costs follow the event, is to be made.

4 The mere fact that the proceedings were for rectification arising out of the mutual mistake of the plaintiff and the first to third defendants is not reason to order otherwise, if the costs have been incurred substantially because of the defendants' unsuccessful opposition to the application [Cape Country Club Pty Ltd v Cape Shanck Resort Co Ltd [1999] VSC 217, [56]]. On the other hand, although originating in circumstances rather different from the present, there is force in the submission that where a party intervenes in proceedings, it is only in special circumstances that the Court will order the intervenor to pay more than the amount by which the costs have been increased by the intervention [O'Toole v Charles David Pty Ltd (No 2) (1991) 171 CLR 232, 311]]. As Debelle J pointed out in City of Burnside v Attorney General of South Australia (1994) 63 SASR 65, an unsuccessful intervenor may be liable for costs if the intervention substantially extends the hearing or puts the successful party to unnecessary cost, and in assessing this the Court will adopt what his Honour called a "broad axe approach", taking into account factors such as whether the intervention was necessary to protect an interest not otherwise adequately protected, and whether the intervenor has assisted the parties and the Court in defining the issues in the proceedings. 5 In the present case, the costs in issue fall into four main categories.

6 The first involve costs incurred up to 14 August 2007, on which day the Chief Judge made an order that the fourth to twenty-sixth defendants be joined as additional defendants. In respect of those costs, the defendants contend that the plaintiff ought to be ordered to pay the costs of their solicitors Maurice Blackburn Cashman as amicus curiae. 7 The steps taken during that period - which were largely successful - on the part of Maurice Blackburn Cashman, for the benefit of the fourth to twenty-sixth defendants, were calculated to procure appropriate notification to the present and former employees, some of whom ultimately became the fourth to twenty-sixth defendants in the proceedings. Those steps were calculated to bring about steps which were necessary - and which the plaintiff ought originally to have taken in any event - to notify potentially affected parties. I do not think, and Mr Jackman SC for the plaintiff did not submit, that it was appropriate that the relevant defendants be ordered to pay costs prior to the date of their joinder on 14 August. On the other hand, I am unpersuaded that the well- intentioned efforts of Maurice Blackburn Cashman for the benefit of their ultimately unsuccessful clients ought be remunerated by a costs order against the ultimately successful plaintiff. They were not required to take the steps that they did, and had the plaintiff taken them of its own motion, they would have faced part of the plaintiff's costs in the proceedings. Although it may be that the Court can make an order in favour of a non party, that is an exceptional course, and there are insufficient grounds to adopt it here. 8 Accordingly, in respect of the costs up to 14 August, there will be no order as to costs, to the intent that each party bear its own costs. 9 On 14 August, the order was made joining the fourth to twenty-sixth defendants. They brought, and succeeded on, the application to be joined as defendants. On that event they succeeded, and in respect of that application, the ordinary rule would dictate that the plaintiff should pay their costs of the application for joinder. 10 The third category arises from the next step in the proceedings, which involved the plaintiff's motion for expedition. Although that motion was opposed and did not initially succeed [MetLife Insurance Limited v Visy Board Pty Limited [2007] NSWSC 1168], nonetheless the plaintiff obtained a much earlier hearing than would otherwise have been the case and did so only because of the application for expedition. The steps taken on the motion for expedition ought be regarded as steps reasonably taken in the bringing and management of the proceedings towards a hearing, and should be treated as costs in the proceedings generally. 11 The fourth category of costs are those involved with preparation for and the conduct of the hearing including discovery. As Mr Montgomery for the defendants submits, there would have had to be a hearing in this proceeding in any event - the consent of the first, second and third defendants notwithstanding - to persuade the Court as a matter of discretion that rectification was appropriate; but the hearing would probably have been a very much shorter one than that which ultimately took place. Against that has to be borne in mind that the relief ultimately obtained by the plaintiff was different in a significant respect from that which it sought, in that although the plaintiff proposed a term which would have enabled the insurer to determine in its own discretion when the test of total and permanent disablement was satisfied, the Court's decision was to the effect that that was to be decided objectively, and not by the insurer as a matter of discretion. Yet again, against that, it is to be observed that that particular issue did not occupy a significant part of the evidence in argument at the hearing. 12 Further, as Mr Jackman SC points out, the costs of discovery would probably not have been incurred but for the intervention. Adopting Debelle J's "broad axe approach", and weighing these various considerations - namely, the increase in costs occasioned by the intervention, against the impact that the intervention had on the extent of relief that the plaintiff gained, and the assistance which the intervention afforded the Court - it seems appropriate to regard the net increase in overall costs after offsetting the benefits of those matters as being worth about 35 per cent of the total costs of and associated with the final hearing.

(2) In lieu thereof: (2.1) Order that the plaintiff pay the costs of the fourth to twenty-sixth defendants of the motion for joinder. (2.2) Order that the fourth to twenty-sixth defendants pay 35 per cent of the costs of the plaintiff incurred after 14 August 2007. **********

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