Sciacca v Langshaw Valuations Pty Ltd

Supreme Court of NSW|2013-10-04|Before: Adamson J, Slattery J

Introduction 1On 10 September 2013 I published my reasons for refusing the third defendant's (Vero) application for summary dismissal: Sciacca v Langshaw Valuations Pty Ltd [2013] NSWSC 1285. 2On 4 October 2013 I heard argument on the costs of the motion filed on 20 August 2012 (the motion) and the amended motion filed on 12 July 2013 (the amended motion). The plaintiffs sought an order that Vero pay their costs of the motion and amended motion forthwith. Vero contended that the appropriate costs orders were that there be no order as to costs of the motion or amended motion until 12 July 2013 and that Vero pay the plaintiffs' costs of the amended motion on and from 12 July 2013.

Relevant background to the motion and amended motion 3The procedural chronology in this matter is lengthy. However, I do not consider it necessary to chronicle the various directions hearings and orders made, beyond that which is set out below, to dispose of the costs applications. 4By notice to admit facts dated 17 July 2012 and served on that day, Vero sought from the plaintiffs admissions that by letter dated 21 April 2011 the plaintiffs first made a claim against the seventh defendant, Michelle Fleming, the principal of the insured, Integrity Mortgage Professionals Pty Limited (IMP) and a claim against IMP itself. Vero annexed to the notice to admit facts the copy of the letter in which the claim was alleged to have been made. The plaintiffs' solicitors wrote the letter of claim dated 21 April 2011. By letter dated 31 July 2012 the plaintiffs' solicitors wrote to Vero's solicitors saying that they could not make the admission since the plaintiffs had other solicitors acting for them at an earlier time and they had not obtained a response from them. Nor had they been able to obtain instructions from the third plaintiff who was then overseas. There does not appear to have been any further correspondence arising from this until the plaintiffs made the allegation in the amended pleading referred to below that the claim had been made on that date. 5On 20 August 2012 Vero filed the motion seeking an order for the determination of the following separate question: "Whether, at any material time, there was an insurance contract in force between the third defendant and Integrity Mortgage Professionals Pty Limited which contract covered the liability of Integrity Mortgage Professionals Pty Limited immediately before the de-registration of Integrity Mortgage Professionals Pty Limited." 6On 15 April 2013 the motion was fixed for hearing on 25 June 2013. The matter to be determined at the hearing was whether there ought be a separate question, as distinct from how any question ought be answered. On 22 April 2013 Vero served an affidavit of Veronica Chapman to which was exhibited a large number of documents said to be necessary for the determination of a separate question, if ordered. The matter came before the Court on 21 June 2013 before Slattery J on the plaintiffs' application to vacate the hearing date of 25 June 2013. 7On that occasion, Vero foreshadowed an amendment to the motion by a draft document (which became the amended motion when filed on 12 July 2013) that added a prayer for relief in the alternative to the determination of the separate question: namely, an order that the proceedings against Vero be summarily dismissed. The hearing date was maintained but on 25 June 2013, Slattery J stood the matter over part-heard, in part because his Honour was concerned that the seventh defendant had not been notified of the motion. On 25 June 2013 Slattery J ordered the plaintiffs to replead their case against Vero by 8 July 2013. The terms of the direction were: Direct the plaintiff to replead its case against the third defendant and grant the necessary leave to replead for this purpose to make clear the facts, matters and circumstances that run-off professional indemnity cover was available from the third defendant to the seventh defendant or IMP as at January 2009 and as at April 2011, and serve such repleaded case on the defendants by 8 July 2012. 8On 8 July 2013 the plaintiffs served an amended pleading against Vero which contained allegations about the making of a claim against IMP and the seventh defendant and its notification. 9Significantly for present purposes, the plaintiffs alleged in [40H]: On or about 21 April 2011, during the Run Off Cover Period, the Plaintiffs, in writing, notified the Seventh Defendant of the Plaintiffs' claim. Particulars (a) Letter of the Plaintiffs' solicitors to the Seventh Defendant dated 21 April 2011. 10Vero informed the plaintiffs by letter dated 11 July 2013 that in light of the amended pleading it proposed to press for summary dismissal but not to press for a determination of the separate question. When the matter came before Slattery J on 12 July 2013, Vero sought, and was granted, leave to file the amended notice of motion. I heard its application for summary dismissal on 5 September 2013.

Summary of the parties' submissions on the costs application 11The plaintiffs contended that they had been successful on the amended motion and that there was no reason to except what had occurred prior to 12 July 2013 from the costs order that ought be made in its favour. They submitted that the amended motion raised a discrete issue on which they had been successful and, accordingly, they ought not have to wait for the end of the proceedings, which could be some time hence, to be paid. Further they submitted that Vero had been unreasonable in a number of respects which ought sound in an order that costs be payable forthwith: Fiduciary Ltd v Morningstar Research Pty Ltd [2002] NSWSC 432; 55 NSWLR 1. They principally relied on tardiness by Vero in bringing on the motion for hearing and the filing of the amended motion; the length of the affidavit of Ms Chapman which had been served in support of the motion as compared with the small number of documents relied upon at the hearing; and certain alleged defaults in complying with directions. 12Vero submitted that the matter that inclined it to seek summary dismissal rather than a separate question, as distinct from as an alternative to a separate question, was the filing of the amended pleading. The pleading contained allegations of fact relating to the claim and its notification that had hitherto been in dispute and indeed had been the subject of a notice to admit facts served by Vero on 17 July 2012, which had been disputed by the plaintiffs. 13Vero submitted that, although it was not taken by surprise by the amended pleading, the allegations made regarding the claim and its notification had the effect that it was no longer necessary to seek the determination of the separate question since there were no issues of fact outstanding that would prevent summary dismissal, if its contentions of law on the meaning of s 601 AG of the Corporations Act 2001 (Cth) and its application to the present case were accepted. 14Accordingly, Vero submitted that although the plaintiffs ought have their costs after 12 July 2013 since Vero was unsuccessful on the amended motion, the appropriate order was that there be no order as to costs up to that date. 15The plaintiffs submitted that Vero sought to amend its motion long before the plaintiffs sought to amend their pleading and therefore the latter could not have caused the former.

Reasons 16Vero's decision to press its application for summary dismissal rather than its application that there be a separate question, whilst an apparently reasonable forensic one, had the effect that costs had been expended by the plaintiffs on an application which did not go ahead and which turned out to be unnecessary. The decision to pursue summary dismissal rather than the determination of a separate question was based on there being no relevant dispute of fact. Relevant disputes of fact were removed by the filing of the amended pleading on 12 July 2013. 17The question arises from this sequence whether the plaintiffs ought to have made admissions as to the relevant facts regarding the policy or the date on which a claim was made or notified at an earlier time. The plaintiffs were not insured; they are claimants against the insured. It was necessary for them to make their own investigations before accepting the facts as to these matters that were asserted by Vero, as the insurer. Nonetheless, Vero had sought admissions by notice to admit facts served 17 July 2012 that the plaintiffs first notified a claim to the seventh defendant as the principal of IMP on 21 April 2011. The date of first notification of a claim was a date that the plaintiffs themselves must have known, or had the means of establishing by asking their former solicitors. 18Principal issues of fact, such as the identity of the policy, the making of a claim and the notification of a claim are matters that, in my view, the plaintiffs ought to have addressed in their pleading prior to the direction made by Slattery J on 25 June 2013. Had they done so, Vero would have been in a position to have its application for summary dismissal heard earlier and would not have sought the determination of a separate question. 19I am satisfied that the steps Vero took to have the issue which I determined adversely to it decided at a relatively early stage of the proceedings were not unreasonable. That it sought determination of a separate question as its principal relief on the motion, rather than summary dismissal, was a product of the plaintiffs' non-admission of certain salient facts germane to the resolution of the issue of cover under the policy. 20Although Vero's conduct in seeking to have the claim against it dismissed was not unreasonable, it has been unsuccessful and therefore should pay the costs of the motion and the amended motion. The plaintiffs' reluctance to make an admission which it could have made earlier may well have contributed to the costs incurred and the initial order sought. I am not, however, persuaded that the plaintiffs' conduct is sufficient to disentitle them to the costs of the period from the filing of the motion to the filing of the amended pleading. 21In my view, the appropriate order is that Vero pay the plaintiffs' costs of the motion and the amended motion. 22Although the issue raised by the motion and the amended motion was discrete, I am not persuaded that it is appropriate to order that these costs be paid forthwith. Further, as is apparent from the reasons given above, I do not regard Vero's conduct as warranting such an order. 23I note that the evidence adduced in support of the costs argument included a letter dated 25 September 2013 from Vero's solicitors to the plaintiffs' solicitors that was expressed to be without prejudice save as to costs in which Vero proposed an order that Vero pay the plaintiffs' costs of the amended notice of motion on the ordinary basis. It is not clear to me whether this offer included the costs of the motion, as well as the costs of the amended motion, or whether the costs of the motion were excluded from the offer. This letter does not cause me to except from the costs order the costs of the hearing before me on 4 October 2013, which are included in the costs order made in favour of the plaintiff.

Orders 24I make the following orders: (1) Order the third defendant to pay the plaintiffs' costs of the motion I make the following orders: filed on 20 August 2012 and the amended motion filed on 12 July 2013, including the costs of the hearing on 4 October 2013.

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: 10 October 2013

At a glance

Court

Decision date

Before

Source

Judgment (6 paragraphs)

Parties

Legislation Cited (1)

Cases Cited (2)