The background to this matter is set out in my judgment of 29 September 2017. [1] These reasons assume familiarity with that judgment. I will use the same abbreviations.
In that judgment, I held that Mobis was entitled to indemnity from XL under the Local Policy.
It followed that Mobis did not need to seek indemnity under the Master Policy and thus did not need to seek relief from UNIQA.
On 29 January 2018, I heard argument about what costs orders should be made, including in favour of UNIQA.
I was persuaded to make a Sanderson order that XL, rather than Mobis, pay UNIQA's costs.
I also ordered that XL pay UNIQA's costs on the ordinary basis to 1 May 2017 and, based on a Calderbank offer and an Offer of Compromise, on an indemnity basis thereafter. [2]
I made those costs orders on 13 February 2018.
There was an appeal and cross-appeal from my decisions. The appeal was allowed in part. The cross-appeal was dismissed. The costs orders I made concerning UNIQA were not affected. [3]
By Notice of Motion filed 20 October 2021, UNIQA sought an order pursuant to s 101(4) of the Civil Procedure Act 2005 (NSW) for interest on the costs that I ordered in 2018. By that motion, UNIQA also sought interest on costs ordered in its favour by Ball J in October 2016, being the costs of a dispute concerning whether UNIQA had been properly served [4] .
The 20 October 2021 motion was brought on the basis that those advising UNIQA understood that the relevant form of s 101(4) of the CPA was that in force on the date that Mobis commenced these proceedings.
At that time, s 101(4) of the CPA provided that:
"The Court may order that interest is to be paid on any amount payable under an order for the payment of costs."
UNIQA's written submissions, in support of its motion, proceeded on that basis, and thus on the basis that UNIQA had to persuade the Court that an order should be made that it have interest on the costs ordered in its favour by Ball J in October 2016 and by me in February 2018.
It is now common ground that because UNIQA was joined as a party on 22 July 2016, the current form of s 101(4) of the CPA is applicable, namely:
"Unless the court orders otherwise, interest is payable on an amount payable under an order for the payment of costs."
Accordingly, Mr Kettle, who was very recently briefed to appear for UNIQA on the motion, and who evidently saw the point to which I have just referred, accepted that UNIQA did not need an order for the payment of interest of its costs and that, accordingly, UNIQA's motion should be dismissed.
Faced with that change of position, Mr Weinberger for XL responded by making an oral application for an order under s 101(4) CPA that UNIQA not have interests on its costs.
As finally developed in argument, Mr Weinberger's submission was that UNIQA should only have interest on its costs from 9 August 2021, being the date on which UNIQA served an itemised bill of its costs in relation to the costs order I made in February 2018. UNIQA had already provided XL with an itemised bill of its costs concerning the order made by Ball J in October 2016. That bill of costs had been provided on 19 April 2017.
Very sensibly, Mr Kettle and Mr Weinberger agreed that I should proceed to determine Mr Weinberger's oral application, it being agreed that the evidence that the parties had already adduced on UNIQA's motion was sufficient to support both parties' contentions concerning Mr Weinberger's oral application.
Mr Weinberger's submissions focused on the question of what interest UNIQA should have on the costs I ordered in February 2018.
His submission was that because UNIQA had delayed until August of this year to serve an itemised bill of costs it should not have interest on costs until that date.
UNIQA adduced evidence from its solicitor to explain UNIQA's delay in serving its itemised bill of costs. That explanation was that between February 2019, following the Court of Appeal's decisions, and 2021 there had been negotiations between the solicitors for the parties as to the quantum of UNIQA's costs. Those negotiations proceeded in a somewhat desultory fashion. At the outset of those negotiations, on 7 February 2019, XL through its solicitor requested UNIQA to "submit an itemised estimate" of UNIQA's costs. UNIQA did not submit such an "itemised estimate" until August 2021 - two and a half years later. In the meantime, although UNIQA had earlier submitted an itemised estimate in relation to the costs order by Ball J in October 2016, UNIQA refused to provide an itemised account of the costs I ordered in February 2018. Indeed, in a letter dated 8 February 2021, its solicitor wrote:
"Given our client's claim is for its reasonable costs not our professional fees, we do not consider you are entitled to copies of our invoices for professional fees."
Rather, UNIQA, through its solicitor, sought to negotiate an agreement on the quantum of UNIQA's costs by making assertions about the actual costs UNIQA had incurred and proposing various discounts from those "actual" figures as a basis for compromise.
It was at all times, of course, open to UNIQA to proceed to have its costs assessed in the usual way.
In those circumstances, I am persuaded that it would not be just to allow UNIQA interest on its costs for the whole period since the cost orders in question were made.
A party wishing to enjoy the benefit of the "automatic" interest provision in s 101(4) of the CPA must move with reasonable dispatch either to negotiation of the quantum of its costs or to assessment of those costs if negotiations are unsuccessful.
The Court should not make orders which discourage reasonable negotiation of such matters, but a point will be reached where a delay in proceeding to assessment has the consequences that some limit may be placed on the period during which interest is permitted to run in favour of the party having the benefit of the costs order.
This is especially when the prescribed rate at which interest is payable under s 101(4) of the CPA is 6% above the cash rate last published by the Reserved Bank of Australia [5] .
In relation to the costs ordered by Ball J in October 2016, XL has had UNIQA's itemised costs since April 2017. I see no reason why UNIQA should not have interest on those costs from that date and for an anterior time to allow for negotiation and preparation of the itemised bill of costs. Accordingly, I am not persuaded to make any "otherwise" order under s 101(4) of the CPA in relation to those costs.
In relation to the costs I ordered in February 2018, allowance must be made for a reasonable timeframe for negotiation of a settlement of the costs question, and for the preparation of the itemised bill of costs. I do not, however, think it reasonable that UNIQA have the benefit of interest on its costs for the entire period of the very lengthy negotiations that it has been prepared to tolerate.
It is necessary to take a somewhat broad-brush approach to this matter. My conclusion is that I ought not allow UNIQA to have interest on the costs I ordered beyond the third anniversary of the date of my order. That allows more than adequate time for UNIQA to have sought to exhaust settlement discussions and to prepare a bill of costs.
I see no reason to adjust the interest rate. It is higher than the Reserve Bank of Australia cash rate but is the rate prescribed for the purposes of s 101(4) of the CPA. Very particular circumstances would have to be demonstrated to persuade me to adjust that rate.
UNIQA did not suggest that XL's application for an "otherwise" order under s101(4) of the CPA was an application to vary my February 2018 costs order and thus potentially the subject to the 14 day limit referred to in Uniform Civil Procedure Rules r 36.16(3A). In my opinion, XL's application was not an application to vary my costs order but was one deriving from a "different statutory source than the costs order" and one that "does not impugn the operative and substantive costs order, and [one which] results in a separate judgment from the judgment under the costs order". [6]
As I have said, Mr Kettle accepts that UNIQA's Notice of Motion of 20 October 2021 must be dismissed.
As both parties proceeded under a misapprehension as to which version of s 101(4) of the CPA was relevant, my conclusion is that UNIQA and XL should pay their own costs of that motion and of the argument before me on 10 December 2021.
I make the following orders:
1. Pursuant to s 101(4) of the Civil Procedure Act 2005 (NSW) interest is not payable by the Second Defendant to the Third Defendant in respect of the costs order made on 13 February 2018 beyond 13 February 2021.
2. The Third Defendant's Notice of Motion of 20 October 2021 is dismissed.
3. I make no order as to the costs of the Third Defendant's Notice of Motion of 20 October 2021 and of the argument before me on 10 December 2021, to the intent that the Second and Third Defendant's pay their own costs of that motion and argument.
[3]
Endnotes
Mobis Parts Australia Pty Ltd v XL Insurance Company SE (No 7) [2017] NSWSC 1321.
Mobis Parts Australia Pty Ltd v XL Insurance Company SE (No 10) [2018] NSWSC 37.
Mobis Parts Australia Pty Ltd v XL Insurance Company SE [2018] NSWCA 342; and Mobis Parts Australia Pty Ltd v XL Insurance Company SE (No 2) [2019] NSWCA 19.
Mobis Parts Australia Pty Ltd v XL Insurance Company SE [2016] NSWSC 1170.
See UCPR r 36.7
See, Grace v Grace (No 9) [2014] NSWSC 1239 at [53] (Brereton J) and the more recent observations on this subject in Eliezer v The Council of St Andrew's Cathedral School (No 2) [2021] NSWCA 227 at [17] (my joint judgment with Payne JA) and [45] (White JA).
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Decision last updated: 13 December 2021