Submissions
14 In relation to its indemnity action, Ace submitted that it was entitled to a judgment for $273,755 (being interest of $235,177 plus the differential of $38,598). This was clear from Howard Rotavator Pty Limited v Wilson (1987) 8 NSWLR 498 and Kwanchi Pty Limited v Kocsis (1996) 40 NSWLR 270. Ace submitted that because it had been successful in its recovery action against Zurich, it was entitled to its costs of that action.
15 Ace submitted that not only was it entitled to its costs of that action, but that those costs should be assessed on a solicitor/client basis. It relied upon its unanswered Offer of Compromise of 19 May 2008 where it offered to settle the action for $575,000 plus costs. Ace submitted that this was a more favourable result than that ultimately achieved by Zurich. It submitted that the effect of the liability proceedings was that on the indemnity action Zurich had to pay $759,014 to Ace (i.e. the amount which the plaintiff undertook to pay from his judgment, plus $38,598 plus $235,177 less the amount recoverable on the cross action of $237,088).
16 Ace submitted that judgment should not be entered in favour of Zurich on its cross-claim because the cross-claim was unnecessary. The argument proceeded as follows. The cross-claim could not and has not led to Zurich improving its position. In the plaintiff's action Zurich's interests with respect to Ace were adequately protected by raising the defence under s 151Z(2) of the Act. In the indemnity action Zurich's interests were adequately protected by the fact that Ace would only be entitled to a partial indemnity if it were found to have some responsibility for the accident. Ace submitted that it was entitled to its costs of the cross-claim, or at the very least, should not be required to pay any costs associated with it.
17 Zurich submitted that in the plaintiff's action there should be judgment in its favour on the cross-claim against Ace for the sum of $237,087.55. In the indemnity action it accepted that there should be judgment for Ace in the sum of $273,775, i.e. the total of the interest and the additional amount to be paid to Ace over and above the refund of compensation by the plaintiff.
18 On the question of costs, Zurich submitted that it should have its costs of the cross-claim in the plaintiff's action. Because it was entitled to judgment on the cross-claim, costs should follow the event. Zurich further submitted that since Ace had played an active part in the liability hearing, had allied itself with the plaintiff against Zurich and had ultimately been held to be responsible for part of the plaintiff's injuries, it should also make a contribution to the plaintiff's costs. Zurich suggested the extent of that contribution would be the same as its assessment of liability, i.e. 35%.
19 Zurich accepted that in Ace's indemnity action it should pay Ace's costs up to 5 June 2008 being the date when Ace was joined as a cross-defendant in the plaintiff's action. Thereafter, Zurich submitted, Ace should not be entitled to any further costs.
20 The basis for this submission by Zurich was that once it had filed its cross-claim against Ace and raised the s 151Z(2) defence, it was no longer necessary for Ace to proceed with its indemnity action. All that Ace needed to do was to seek an undertaking from Zurich to pay interest in accordance with the result of the cross-claim. This was because the result of the cross-claim would determine the extent of the indemnity which Ace would obtain and therefore the amount of interest to which it was entitled. Continuing with the s 151Z(1)(d) was unnecessary from 5 June 2008 onwards.
21 In relation to the Offer of Compromise in the indemnity proceedings, Zurich submitted that this did not assist Ace because the judgment did not exceed the Offer of Compromise. Additionally, Zurich submitted, it was not reasonable for it to have accepted the Offer of Compromise at that time because Ace had not served any evidence on interest and because acceptance of the Offer of Compromise would not have brought the proceedings to an end. The plaintiff would not have been bound by any apportionment of liability agreed between Ace and Zurich and the liability issue would have been fully argued in any event. In those circumstances it would still have been necessary for Zurich to pursue its cross-claim against Ace.