Rickhuss v MDA National Insurance Pty Ltd

Supreme Court of NSW|2020-06-12|Before: Garling J

The Summons

On 8 May 2020, the plaintiffs commenced proceedings by Summons against MDA National Insurance Pty Ltd ("MDANI") seeking an order pursuant to r 5.3 of the Uniform Civil Procedure Rules 2005 ("the UCPR") for preliminary discovery.
The affidavit in support of the Summons set out a basis upon which the plaintiffs believed that a cause of action may be available against MDANI pursuant to the Civil Liability (Third Party Claims against Insurers) Act 2017 ("the Act").

Representative Proceedings

The plaintiffs had previously commenced proceedings, pursuant to Pt 10 of the Civil Procedure Act 2005, against a number of parties, including Dr Eddy Dona.
The plaintiffs claimed damages from Dr Dona and a number of corporate entities on behalf of themselves and a large number of individuals who had undergone cosmetic surgery at various clinics which were under the aegis of The Cosmetic Institute. There were a number of different causes of action pleaded.
After the representative proceedings had been on foot for some time, Dr Dona informed the Court that insurance coverage by MDANI had been declined.
At that time, Dr Dona was not in a position to inform the Court whether he would be taking proceedings for indemnity, either in the representative proceedings or separately.

Directions Hearings

On 15 May 2020, these proceedings were before the Court for the first time, as were the representative proceedings (though not for the first time). It became apparent in the course of this directions hearing that MDANI had not fully set out its position with respect to its declining to indemnify Dr Dona in the representative proceedings.
Before those proceedings could continue to be effectively managed towards a hearing date, it was necessary for MDANI to set out fully its position, so the plaintiffs could consider whether they wish to proceed with their application for preliminary discovery. That was because if indemnity was granted to Dr Dona, there would be no basis for the plaintiffs to commence proceedings against MDANI. Similarly, if Dr Dona decided to take proceedings, the plaintiffs did not have a statutory cause of action.
In the course of that directions hearing, at my request, the plaintiffs identified the documents that they needed to formulate their decision whether to commence proceedings against MDANI. Those documents were in two groups. First was any document relating to the declining of indemnity to Dr Dona by MDANI. This was a document which was also necessary to be provided to Dr Dona in the representative proceedings. The second group of documents were the relevant policies in the period that applied to the claims being made, namely between 2012 and 2017.
After further discussions, I made a number of orders in the representative proceedings which were relevant to these proceedings. The first was: "Order that on or before 4pm 15.5.2020, MDA National Insurance Pty Ltd is to provide a copy to the solicitors for the plaintiffs and to the solicitors for Dr Dona, of the policy of insurance including wording and coverage certificate relevant to the claim made by Dr Dona for indemnity in respect of the proceedings 2017/00279308."
I also ordered that on or before 4pm Thursday 21 May 2020, the solicitors for MDANI were to notify the solicitors for Dr Dona of the position with respect to the declining of indemnity for the representative proceedings, including the reasons for declining that indemnity and setting out issues which it anticipated would arise with respect to the declining of indemnity.
I also directed that MDANI provide a copy of that correspondence to the solicitors for the plaintiffs at the same time.
The matter came back before me for further directions on 22 May 2020. By that time, MDANI had complied with the order with respect to setting out its decision to decline to indemnify Dr Dona. The reasons were set out extensively in a lengthy letter and attached document.
By that time, as well, the copies of the relevant insurance policy had been provided by MDANI to the plaintiffs (and Dr Dona). On this occasion, counsel for MDANI invited the Court to dismiss the Summons seeking preliminary discovery because it had no further work to do.
I deferred consideration of the dismissal of the proceedings until the matter was next before the Court, which was 12 June 2020.
On that day, senior counsel for the plaintiffs indicated that they proposed to make application to join MDANI and a number of other insurers to the representative proceedings. The plaintiffs indicated that they were in possession of such documents as were necessary for that purpose.
The parties to these proceedings agreed on 12 June 2020, that the summons for preliminary discovery should be dismissed.
The plaintiffs sought their costs of the proceedings. MDANI opposed that order, and sought an order that each party pay their and its own costs of the proceedings.
In accordance with the parties' agreed position, I dismissed the Summons. I then took submissions on the question of the appropriate order for costs. I reserved the Court's judgment on those submissions.
This is the judgment on the question of costs.

Applicable Legal Principles

Section 98 of the Civil Procedure Act provides that: "1. Subject to rules of court and to this or any other act; (a) costs are in the discretion of the Court; and (b) the Court has full power to determine by whom, to whom and to what extent costs are to be paid; and (c) the Court may order the costs are to be awarded on the ordinary or an indemnity basis."
Part 42 of the UCPR also deals with the question of costs. Rule 42.1 of the UCPR provides that: "… 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 provisions of s 98 of the Civil Procedure Act, which I have set out above, demonstrate that the Court has an ample discretion to award costs which is not confined and which may be exercised whenever the circumstances warrant it: Harrison & Anor v Schipp [2002] NSWCA 213; (2002) 54 NSWLR 738 at [21]-[22].

Discernment

It is correct for MDANI to submit that, as the proceedings having been dismissed, ordinarily the plaintiffs would be expected to pay its costs. That is because they had not succeeded in their claims for preliminary discovery. However, MDANI did not press for its costs.
The plaintiffs on the other hand submitted that they had been successful as a matter of practical reality because they had obtained, via the Court's interlocutory orders, the documents sought in these proceedings. As well, the plaintiffs relied upon the fact that requests has been made to MDANI for those documents prior to commencing proceedings which had not been complied with.
In that respect, MDANI submitted that the requests were neither explicit nor sufficiently narrow for it to be able to comply with those requests. It also submitted that there were issues relating to who else may have had the documents and whether or not the plaintiffs had made reasonable attempts to obtain the documents. MDANI ultimately submitted that these factors ought be considered as being relevant to the question of costs.
The Court dealt with this Summons at the same time as it was giving directions in the representative proceedings. That was the most convenient course for the Court to follow. An issue in those proceedings was whether Dr Dona was or was not entitled to indemnity from MDANI.
It is clear that the directions in those proceedings substantially contributed to the resolution of the issues in the Summons, both: 1. directly, by the provision of a letter from MDANI setting out its position with respect to indemnity; and 2. indirectly, by requiring for the purposes of understanding the refusal to provide indemnity, the production of a copy of the relevant insurance policy terms and conditions, together with any certificate of insurance.
Directions were given on an interlocutory basis in the representative proceedings pursuant to s 56 of the Civil Procedure Act by the Court so as to ensure the just, quick and cheap resolution of the real issues in the proceedings. It is as a consequence of those directions that the Summons now ought be dismissed.
I do not think it is entirely clear that the plaintiffs have had complete success in these proceedings because, on the merits of this proceeding, they would have certainly been entitled to the documents which they claimed, and MDANI's refusal to provide the documents was unreasonable (as is the plaintiffs' submission).
Rather, it seems to me that this Summons no longer needs to remain on foot because of directions made in the course of the representative proceedings, which were aligned to it.
In those circumstances, it was appropriate that this Summons be dismissed, and it is appropriate that each party pay their own costs of these proceedings.

Order

I make the following order: 1. Each party to pay their own costs of these proceedings.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 23 October 2020

At a glance

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