Reinsurance Australia Corporation Limited v HIH Casualty and General Insurance Ltd

JUDGMENT ON COSTS 1 In my judgment in this matter dated 7 February 2003 at [378], I expressed the preliminary view that AIG, Heath and Chase should pay the applicants' costs of the motions but that there should be no order as to HIH's costs. 2 I have now received extensive written submissions from the parties as to the appropriate costs orders. 3 The applicants submit that I should confirm my preliminary views. Heath and Chase submit that the costs should be costs in the cause or, alternatively, that they should only be ordered to pay 50% of the applicants' costs. 4 AIG submits that costs should be costs in the cause. However, AIG also submits that, in any event, there should be an apportionment of costs to reflect its limited participation in a number of the issues. 5 HIH submits that the applicants should pay its costs. Alternatively, it submits that costs should be costs in the cause or that the costs of the motion should be its costs in the cause. 6 I do not see why the applicants should be denied the benefit of a costs order in their favour. AIG, Heath and Chase were the main protaginists on the notices of motion. The principal question which they sought to have determined was whether there ought to be a permanent or a temporary stay. They were unsuccessful in obtaining that relief. 7 It is no answer to this to say, as AIG has submitted, that but for the claims under the Trade Practices Act 1974 (Cth) the result may have been different. Those claims were at the heart of the dispute between the parties on the stay application. 8 Nor, in my view, would it be appropriate to apportion the costs to reflect the extent to which some of the respondents refrained from participation in the debate on a number of issues. Examples of these issues were the extraterritoriality question on which Heath was the moving party and the agency question which was propounded by Chase. 9 It is true that the Court has a discretion to apportion costs where a successful party has failed on some issues; see Hughes v Western Australian Cricket Association Inc (1986) ATPR 40-748 at 48,136 (per Toohey J) ("Hughes"). It seems to me that the same principle applies where parties have participated to a varying extent in some of the issues. 10 However, as Toohey J observed in Hughes at 48,136, Jacobs J in Cretazzo v Lombardi (1975) 13 SASR 4 at 12 gave "a note of cautious disapproval" of applications to apportion costs according to the success or failure of various issues. 11 Also, as Wilcox J said in Cummings v Lewis (unreported, Federal Court, Wlicox J, 29 May 1993), in the exercise of the Court's discretion on costs "it may be a mistake to dissect too much". This was referred to with approval by Spender J in Joye v Beach Petroleum NL (1996) 67 FCR 275 at 291. 12 Here, as the applicants have submitted, the five days of hearing were "overwhelmingly" concerned with the question of whether there ought to be a stay. It is only fitting that the principal moving parties on that question should pay the costs. 13 Nevertheless, it seems to me that there should be a discount of the costs which AIG, Heath and Chase should be ordered to pay because it has now become apparent that a substantial part of the costs incurred on the motion were wasted on a part of the claim which the applicants no longer press. 14 This has come about because of the abandonment of the claim that the specific representations pleaded in paragraphs 92 to 111 of the Statement of Claim were made by PML/ICE as agents for Heath. It was not suggested at the hearing that these paragraphs were not pressed against HIH, AIG or Chase. 15 As I said in my judgment of 26 March, 2003 at [8], the effect of the abandonment of the specific representations claim is that one of the two reasons which I gave for rejecting Heath's application to strike out that part of the claim no longer holds good. 16 It is unnecessary for me to decide whether the result would have been different if paragraphs 92 to 111 had been withdrawn prior to the hearing. However, it should be plain that what I said at [231] of my judgment of 7 February 2003, was a substantial reason for the conclusion which I reached. 17 It is sufficient for me to say that it is clear, as counsel for Chase submitted, that the effect of the amendment to the pleadings has now revealed that much of the interlocutory hearing proceeded on a false basis. 18 The fact that this did not become apparent until after the hearing does not prevent me from exercising my discretion to reduce the costs order which the applicants would otherwise obtain. Just as a contention abandoned prior to a hearing may result in a departure from the usual costs order, so the abandonment of a claim after the hearing may also have adverse costs consequences. 19 It seems to me that the appropriate course is to state the costs order as a percentage figure to reflect the appropriate discount for the time which was taken up on the question of the specific representations. I am entitled to make a general assessment of the extent to which this question occupied time at the hearing and in preparation; see Gibbett v Forwood Products Pty Ltd (No 2) [2001] FCA 434 at [17] per Mansfield J. 20 In this exercise, mathematical precision is illusory and the view which I have reached depends upon matters of impression and evaluation; see Dodds Family Investments Pty Ltd v Lane Industries Pty Ltd (1993) 26 IPR 261 at 272 per Gummow, French & Hill JJ. 21 Taking these matters into account, in my opinion the appropriate order is that AIG, Heath and Chase should (subject to what I say in para [22]) pay 75% of the applicants' costs of the preparation and hearing of the motions. 22 The costs which are the subject of this order should exclude any costs incurred in the preparation of the statements of Mr KL Walwin and Ms CJ Hamilton which were exhibited to the affidavit of Mr TR Price sworn 6 November 2002. 23 I do not consider that those statements were necessary to meet the submission that Mr Walwin and Ms Hamilton were "unlikely to turn up" at the final hearing. Nor were they necessary to supplement the pleadings and the existing evidence as to the underlying merits. 24 In any event, it is plain that the supplementary affidavits will be relied upon by the applicants for the purposes of the final hearing. Accordingly, those costs should be treated as part of the costs of the substantive proceedings. The costs of preparation of the statements should be costs in the cause. 25 The position of HIH was different from that of the other respondents. It is not correct to say, as the applicants appear to contend, that HIH's position was principally in support of an application for a stay. That contention is inconsistent with the applicants' written submissions in which it was said tht the substance of HIH's position was that it was in truth supporting the applicants' position. 26 HIH only sought a stay if the other respondents were successful in obtaining a permanent or temporary stay. Its principal concern was to ensure that the result was "one in all in, one out all out" and to protect its entitlement to file cross claims. 27 In my view, the appropriate order so far as HIH is concerned is that the costs of its notice of motion should be HIH's costs in the cause. Thus, if it is successful at the trial, it will be entitled to recover its costs of the motion. If it is unsuccessful at the trial, it will not have to pay the applicants' costs of the motion.