FEDERAL COURT OF AUSTRALIA QBE Insurance Australia Limited v Allianz Australia Insurance Limited (No 2) [2020] FCA 707 File number: NSD 715 of 2019 Judge: ALLSOP CJ Date of judgment: 22 May 2020 Cases cited: Floruit Holdings Pty Ltd v Sebastian [2009] NSWCA 411 Petar v Macedonian Orthodox Community Church St Petka Inc (No 2) [2007] NSWCA 142 QBE Insurance Australia Limited v Allianz Australia Insurance Limited [2020] FCA 589 Date of hearing: Determined on the papers Date of last submissions: 20 May 2020 Registry: New South Wales Division: General Division National Practice Area: Commercial and Corporations Sub-area: Commercial Contracts, Banking, Finance and Insurance – Insurance List Category: No Catchwords Number of paragraphs: 7 Counsel for the Applicant: Mr E C Muston SC with M F Newton Solicitor for the Applicant: Sparke Helmore Counsel for the Respondent: Mr A Moses SC with Mr S Blackman Solicitor for the Respondent: Thompson Cooper Lawyers ORDERS NSD 715 of 2019 BETWEEN: QBE INSURANCE AUSTRALIA LIMITED Applicant AND: ALLIANZ AUSTRALIA INSURANCE LIMITED Respondent JUDGE: ALLSOP CJ DATE OF ORDER: 22 MAY 2020 THE COURT ORDERS THAT: 1. Pursuant to r 30.01 of the Federal Court Rules 2011 (Cth), the following two questions arising in the proceedings be heard separately from any other questions: (a) whether Pile & Bucket Pty Limited (P&B) was an 'Insured' within the meaning of the respondent's policy, so as to entitle the applicant to claim equitable contribution as a matter of principle; and (b) whether any entitlement to contribution would extend to the costs incurred by the applicant in the defence of the proceedings against P&B in all the circumstances. 2. The two separate questions be answered as follows: (a) Yes (b) Yes 3. The parties' costs of and incidental to the hearing of the two separate questions be reserved and the balance of the costs remain costs in the cause. 4. The remaining issues in the proceedings be referred to mediation to be concluded by 17 July 2020, unless in the meantime the parties resolve those issues without mediation. 5. The proceedings stand over for further case management hearing to a date in July 2020 to be fixed in consultation with the chambers of the Chief Justice. 6. The parties have liberty to apply on 3 days' notice. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. REASONS FOR JUDGMENT ALLSOP CJ: 1 On 6 May 2020 I delivered reasons in this matter in respect of two questions that had been posed for determination: QBE Insurance Australia Limited v Allianz Australia Insurance Limited [2020] FCA 589. 2 The parties are in substantial agreement as to what should occur by way of orders, with the exception of orders as to costs. The orders that I make in terms of Orders 1, 2, 4, 5 and 6 were agreed. As to the question of costs the parties were at issue. The applicant, which was successful in the answers it sought to the two questions, sought its costs. The respondent sought to have the costs made costs in the cause. 3 The submissions of each party will be held on the file. It is unnecessary to repeat them in detail. Broadly, the applicant, having won, wanted its costs. The issues as discrete issues were propounded and decided one way and, on the authority of cases such as Floruit Holdings Pty Ltd v Sebastian [2009] NSWCA 411, the applicant sought its costs. It did not seek the costs of the proceedings to date, only the costs of the separate questions. 4 The respondent submitted that because the case may have a result not entirely reflective of the applicant's ultimate submissions, the costs should be costs in the cause. It referred to cases such as Petar v Macedonian Orthodox Community Church St Petka Inc (No 2) [2007] NSWCA 142 to the effect that interlocutory applications should generally lead to costs being costs in the cause or a party's costs in the cause. 5 The two issues here were fundamental. If the applicant lost them, that was the end of its claim for contribution. Having won the issues the foundation of a right of contribution exists, the issue becomes how much contribution there should be. That being the case there may be something to be said for not ordering all the costs payable at this stage. However, I do not think that there is any real basis for the notion that the costs should be costs in the cause since the availability of contribution really is now established. The question is one of quantum, broadly speaking. 6 The parties propose to have a mediation. I consider that the fairest course and the preferable course is to reserve the question of costs until after the mediation. I will deal with the costs then if they remain unresolved. However, in fairness to the applicant, I can see no real reason why it should not have the costs of the argument as it requested unless there appear facts to make its propounding of them and the propounding of the proceeding so lacking in real value as to entitle the respondent to a significant discount in those costs. 7 Therefore the Order 3 that I make will be that the parties' costs of and incidental to the hearing of the two separate questions be reserved and the balance of the costs remain costs in the cause. I certify that the preceding seven (7) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Chief Justice Allsop. Associate: Dated: 22 May 2020