Rockment Pty Ltd trading as Vanilla Lounge v AAI Limited trading as Vero Insurance

ALLSOP CJ: 1 In this matter a separate question was drafted by the parties, with my supervision, for a hearing before the Full Court in the Court's original jurisdiction, pursuant to a direction under s 20(1A) of the Federal Court of Australia Act 1976 (Cth). The Full Court heard the matter on 17 November 2020 and delivered a joint judgment on 18 December 2020 answering the question posed to it and making an order for costs: Rockment Pty Ltd t/a Vanilla Lounge v AAI Limited t/a Vero Insurance [2020] FCAFC 228. 2 There is some dissatisfaction on the part of the applicant as to the order for costs being made, it says, without being heard. I have spoken with the presiding judge of the Full Court and the Full Court will hear brief submissions on costs. 3 The costs order was that the costs of and incidental to the determination of the separate question be costs in the cause. If I may respectfully say so, having familiarised myself with the reasons of the Full Court, I do not understand why that is not within the range of appropriate orders. But the applicant wishes to make submissions. With the permission of the presiding judge, I have organised for submissions to be provided. 4 I will make orders today that the applicant serve submissions of no more than two pages as to the variation of the costs order upon the respondent by 4 March 2021. The respondent is to serve submissions in response of no more than two pages by 8 March 2021. Thereafter, if there is any disagreement about what should go to the Full Court the matter should be listed before me forthwith for resolution of that dispute. If there is no dispute as to what should go to the Full Court, the parties should send a joint communication to the associate to the presiding judge of the Court, Besanko J, enclosing the two sets of submissions. 5 More importantly, as to case management of the matter, there was disagreement as to how the matter should proceed. I do not think it necessary to canvass that disagreement now. In my view, the following should occur. 6 The applicant should file and serve a single document which can stand or be the foundation of an addendum to the concise statement in due course or, perhaps, in due course, it might be preferable to redraft the concise statement. Those such decisions do not need to be made now. For now, there should be a document filed and served by the applicant which explains in the light of the reasons of the Full Court how it is that it recovers under the terms of the policy. 7 The purpose of this document is to explain why the applicant is entitled to indemnity. Having gone to the trouble of an argument as to the exclusion clause, I would expect this document to grapple with the issues raised by the reasons of the Full Court which concern the operation of the exclusion. It goes without saying that the respondent as the insurer bears the onus, if it be a question of onus, of demonstrating the engagement and operation of the exclusion clause to the claim as made. However, the parties now have the benefit of, if I may with the utmost respect say, careful and precise reasons of the Full Court to aspects of the operation of the exclusion clause. 8 As the reasons of the Full Court show, questions of causation arise. Those questions of causation are relevant to the operation of the policy in its indemnification provisions and its exclusion provisions. For this document to be helpful the applicant needs to engage openly, carefully and intellectually with the operation of the policy to explain how it says it is entitled to indemnity. I will leave the drafting of the document, of course, to the applicant and its legal representatives. But what I am suggesting is a sensible narrative which engages with the terms of the policy, the evidence that is proposed to be led, the reasons of the Full Court and any other matters that are said to be relevant. 9 What will then be useful is that the respondent file and serve a document as to what it says in contest, that is, in rejection of or in acceptance of what the applicant says. Once those two documents are in place, and if the applicant's document does what I hope it will do, there is probably no need for any reply. 10 Those documents can then be the foundation for an open and without prejudice engagement in a mediation. I do not think that the document should be in the form of a without-prejudice mediation document, as proposed by the applicant, because if the mediation fails the two documents will probably found the structure of the proceeding and, without any further costs, enable the parties to properly attend to the hearing of this matter. 11 Thus, the orders that I would make in addition to the orders for submissions as to costs in the Full Court are as follows: (1) On or before 23 March 2021, the applicant file and serve a narrative document entitled "Explanation as to Indemnity" of no more than approximately 10 pages explaining why it is entitled to indemnity under the policy, engaging with the terms of the policy, the evidence proposed to be led, the reasons of the Full Court and any other matters thought to be relevant. (2) On or before 20 April 2021, the respondent file and serve an answer to that document of no more than approximately 10 pages. 12 The Court notes that the parties wish the matter to go to mediation. I will make an order, if the parties wish me to make an order, as to that. It may be wise so that the mediator obtains the protection of s 53C of the Federal Court of Australia Act 1976 (Cth). I certify that the preceding twelve (12) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Chief Justice Allsop.