Rosenberg v HIA Insurance Service Pty Ltd

1. in full and final settlement of the Applicant's proceeding the Respondent offers to pay to the Applicant the sum of $99,350.00 (including interest) plus reasonable legal costs and disbursements associated with the enforcement of the claim.

2. this offer is open for acceptance until 14 days after the date of service.

3. if the offer is not accepted, the Respondent will produce it to the Tribunal at the appropriate time and seek an order that the Applicant pays all of the Respondent's costs incurred after the offer was made."

3. This proceeding was brought by the Applicant against the insurer. In the proceeding the Applicant claimed inter alia against the insurer damages in the sum of $229,001.93. That sum consisted of the following amounts - $84,649.90 (damages for rectification and completion of works); $35,069.00 (liquidated damages); $1,780.03 (travel expenses); and $93,063.00 (costs).

4. That last figure of $93,063.00 for costs arises out of another proceeding (D778/2000) in which the Applicant was sued by the builder (John Jackson Homes Pty Ltd) but in which the Applicant counterclaimed. On 29 August 2001 the builder was given leave to discontinue. The builder was ordered to pay costs. Also on 29 August 2001, the counterclaim having proceeded, I ordered on the counterclaim in favour of the Applicant (who was the Respondent in the proceedings) the sum of $135,938.93. I also ordered costs in her favour. Subsequently both sets of costs were assessed by Registrar Jacobs on 16 November 2001. On the claim the costs to be paid by the builder were assessed at $65,710.05 while on the counterclaim costs in favour of the Applicant were assessed at $27,352.95. The total of those two amounts is $93,063.00.

5. It is that figure of $93,063.00 which is in issue on this occasion. Having reserved her position to argue this, the Applicant contends I should order that she have her reasonable costs commencing on 19 January 2000. This is the date the dispute between her and the builder arose, when she served Notice of Termination. On this basis, I should order that her reasonable costs include the sum of $93,063.00. The insurer, however resists this claim and argues that the reasonable costs of the Applicant do not include that sum.

6. The question, therefore, which I must decide is whether the terms of settlement, that the Applicant be paid her "reasonable legal costs and disbursements associated with the enforcement of the claim", runs from 19 January 2000 and includes the $93,063.00 figure I have mentioned.

7. It is argued by the Applicant that this sum is included on the basis of a reading of previous decisions of the Tribunal and considering also the attitudes of the Applicant and the insurer. Thus, it is said that "the claim" must be a reference to the claim made by the Applicant on 7 May 2001. Reliance is placed on Reid v FAI [1999] VCAT DB1 at para [11]. Next it is said that judgment in action D778/2000 and settlement of the action against the insurer are both aspects of "enforcement" of that claim. Reference is made both to Reid's case and to Trajkovsky v Reward [2001] VCAT 1897 where it is said (at para [34]) that "the very process of making and prosecuting a claim under...a policy is 'enforcement' in the present context". Then it is said in reliance again upon Trajovski's case (at para [35]), that "reasonable legal costs and disbursements" include "costs...incurred in any way in the enforcement of the policy and that includes the making of the claim...". Lastly it is said, based on Reid's case (at para [11]) that the concept of costs "associated" with the enforcement of the claim must include any costs whatever which are not entirely unrelated to it. By this process, the Applicant sought to persuade me that the $93,063.00 figure was included in the settlement term as "reasonable costs".

8. I am unable to accept this analysis, although I do accept that the Applicant made a claim on the Insurer on 7 May 2001 and, of course, I do accept also that there were proceedings in the Tribunal in D778/2000 that resulted in orders in favour of the Applicant (then Respondent) including orders for costs totaling ultimately $93,603.00. Further, I accept that as between the claim and the proceedings, the one set of premises is involved and the defects or incomplete works are the same or are substantially so. But what I am unable to accept is that there is any other relevant connection between the claim and those proceedings. I cannot see that the legal proceedings were undertaken for the "enforcement" of the claim. The Insurer was not a party to those proceedings and no issues of liability of the Insurer under the claim of 7 May 2001 were raised by the pleadings in those proceedings as I recall. Indeed, the proceedings were themselves carried on by the Applicant (as Respondent) without any reference at all to the Insurer. In these circumstances I consider it is quite fanciful to suggest that, by defending the builders claim in the proceedings and succeeding on the counterclaim, the Applicant was doing anything at all to enforce here claim against the Insurer of 7 May. In other words, in my view, the Applicant in these proceedings invalidly connects the proceedings in August 2001 with her claim on the Insurer in May 2001. Nor am I satisfied, I would add, that "costs...associated with the enforcement of the claim", as stipulated in the offer of compromise, could, in any event, extend to costs ordered in a party's favour even if not recovered or recoverable in a separate or unrelated proceeding.

9. I am not satisfied, therefore, that it can be said that the sum of the costs ordered in the Applicant's favour in the earlier proceedings can at all constitute costs associated with the enforcement of her claim of 7 May. Her claim of 7 May against the Insurer was not sought to be pursued or enforced in those proceedings. Only her claim against the builder was sought to be pursued or enforced and that only by way of counterclaim. The costs of $93,063.00 were "associated" only with that claim and the defence of the builder's claim. There were not "associated" with the claim against the Insurer. That claim was not the subject of those proceedings (as is made apparent by the Applicant having commenced these separate proceedings) and the costs therefore could not be "associated" with that claim because it was not that claim that was intended to be pursued or sought to be enforced.

10. In any event, and despite the foregoing, I have this fundamental difficulty with the Applicant's analysis. The terms of settlement are in full and final settlement of "the Applicant's proceeding". A sum of $99,350.00 (including interest) is agreed to be paid. Then there is an additional benefit agreed upon, namely, all reasonable legal costs and disbursements associated with the enforcement of the claim. It is as an aspect of that additional benefit, that the Applicant claims an entitlement to the sum of costs of $93,603.00. Yet how can this be justified considering that the sum is one of the items of damages sought to be recovered in the proceedings? The fact is, as I see it, that that claimed entitlement cannot be justified. The sum of $93,063.00 is part of the Applicant's claim in the proceedings which are settled by the offer of compromise which was accepted. Any right to claim that sum against the Insurer is settled or compromised by there being a "full and final settlement of the Applicant's proceeding" in which that sum is a component figure. It cannot be, therefore, that the same sum can be claimed over again as an additional benefit. It is already dealt with in the first part of paragraph 1 of the offer of compromise. That being so, it does not form any aspect of the second part.

11. I am of the view, therefore, that the Applicant's contention fails. Clearly though I would be of this view even if the sum of $93,063.00 had not been claimed as a component figure of her loss and damage.

12. In consequence the respondent Insurer is entitled to a declaration in the terms sought which excludes the sum of $93,603.00 as part of the Applicant's entitlement otherwise to all "reasonable legal costs and disbursements associated with the enforcement of the claim". I make no decision otherwise in relation to any such entitlement or any individual item.

13. I reserve liberty to make any application for costs.