QBE Insurance (Australia) Limited v Tropical Reef Shipyard Pty Limited

The Court: 1 On 9 November 2009 we dismissed a notice of motion filed by QBE Insurance (Australia) Limited (QBE) seeking leave to appeal against an answer given to one of four separate questions determined by the primary judge in advance of all other issues in the proceeding. We published our reasons for so doing on 12 November 2009 (QBE Insurance (Australia) Limited v Tropical Reef Shipyard Pty Limited [2009] FCAFC 161). In those reasons for judgment, at [31], we observed as follows: These are the reasons we refused to grant leave to appeal. We reserved the question of costs. Given the common position of the parties before the primary judge that the separate question procedure was appropriate, our preliminary view is that each party should pay its own costs of the appeal. If either party disputes this proposal, it has seven days in which to file a written submission supporting a different order as to costs. 2 Tropical Reef Shipyard Pty Ltd (TRS) filed written submissions to the effect that it had should have the benefit of the usual order as to costs. QBE filed written submissions in response in support of the preliminary indication we gave that each party should bear its own costs of the leave application. 3 We are not persuaded by TRS's submissions that an order that QBE pay TRS's costs of the application for leave to appeal would be just in all of the circumstances. TRS's fundamental proposition was that it had succeeded in having the application for leave dismissed. It incurred the costs of the application for leave because QBE exercised its right to seek leave to appeal. But for that decision by QBE, TRS would not have incurred any costs. Moreover, the Full Court refused the application for leave on a basis that reflected TRS's arguments. TRS had submitted that QBE would suffer no real injustice if leave were refused including by reference to TRS's foreshadowed application to amend its statement of claim, first notified to QBE on 4 November 2009 (before the hearing of the application for leave to appeal). 4 TRS's submissions, however, do not confront all of the relevant facts. It may be acknowledged that, but for QBE's decision to apply for leave to appeal, neither party would have incurred costs in connection with the leave application. This, however, does not alter the fact that TRS agreed to the procedure for the answering of separate questions by the primary judge. It did so on the basis of what must have been a commonly assumed position that all of the relevant facts were adequately particularlised in TRS's statement of claim in the form it then existed. Putting it another way, if TRS had foreshadowed any material amendment to the statement of claim before the hearing of the separate questions, it is difficult to imagine that the hearing could have proceeded. Moreover, it also must have been a commonly held assumption before the primary judge that the answering of the separate questions was either potentially determinative of real issues in the proceeding or capable of yielding some clear saving of time or cost. TRS's submissions on the leave application about its disagreement with QBE's calculations and the significance of the alternative basis for its claim should have been (but were not) drawn to the attention of both QBE and the primary judge when the proposal for separate questions was discussed. 5 In these circumstances TRS's conduct has substantially contributed to a situation where neither party could obtain a meaningful resolution of the separate questions and thus leave to appeal if dissatisfied with the primary judge's answer. In these circumstances the question is not, as TRS posited, why would the more reasonable result be that QBE does not pay TRS's costs? It is why it would be reasonable for QBE to have to compensate TRS for costs incurred as a reasonably foreseeable consequence of TRS having agreed to the utility of the separate question process whilst also retaining to itself the right to seek an amendment of the factual basis on which the separate questions were answered and to agitate (valid) concerns about the incompleteness of that factual basis on the leave application? 6 Finally, and as QBE submitted, the dismissal of the leave application does not fully reflect the substantive outcomes achieved. Because of our view that the refusal of leave could not result in substantial injustice we did not address the question of doubt about the primary judge's answers. Given our conclusions we could not address that issue. We did, however, identify the connection between the questions of construction and causation which is apparent from the primary judge's answer to question 4 and the factors which the primary judge would be entitled to take into account in the final resolution of the proceeding (at [28]). As QBE submitted, without overstating the significance of these matters, QBE has achieved an outcome in terms of our reasons which it might properly perceive as positive at least to some extent. 7 For these reasons we are satisfied that each party should pay its own costs of the application for leave to appeal and so order. I certify that the preceding seven (7) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justices Kenny, Gordon and Jagot.