Supreme Court New South Wales Medium Neutral Citation: Moussa v Camden Council (No.4) [2022] NSWSC 1422 Hearing dates: 25 August 2022 Date of orders: 25 August 2022 Decision date: 25 August 2022 Jurisdiction: Common Law Before: Garling J Decision: See [24] Catchwords: COSTS — Party/Party — Exceptions to general rule that costs follow the event — Reasonableness of the conduct of the parties — Complete capitulation by respondent one day before hearing — Motion not proceeded on — Costs ordered against respondent Legislation Cited: Civil Liability (Third Party Claims Against Insurers) Act 2017 Cases Cited: Franpina Developments Pty Ltd v John Anthony Arena Pty Ltd [2022] NSWSC 57 Texts Cited: Not applicable Category: Procedural rulings Parties: Danny Moussa (P/A) Camden Council (D1) Cornish Group Spring Farm Pty Ltd (D2) SMEC Testing Services Pty Ltd (In Liq) (D3) Liberty Mutual Insurance Company (R) Representation: Counsel: D Priestley SC / J Burnett (P/A) R Oldfield (D1) M Hall (D2) P Gaffney (R) Solicitors: Mayweathers (P/A) McCulloch & Buggy (D1) Marsdens Law Group (D2) Wotton + Kearney (D3/R) File Number(s): 2020/359004 Publication restriction: Not applicable EX TEMPORE Judgment 1. This is an application for costs by the plaintiff with respect to the finalisation of his Motion which was filed on 24 June 2022 in the class action proceedings 2020/00359004. 2. The proceedings were commenced against three defendants. One of those, SMEC Testing Services Pty Ltd (In Liq) ("SMEC") is now - and has been for some years - in liquidation. Leave to proceed against that party was granted by the Court. No appearance has been filed for SMEC, and an issue arose as to whether that company held insurance coverage with respect to the class action proceedings. 3. I note, by way of background, that there are other proceedings on foot between Cornish Group Spring Farm Pty Ltd ("Cornish Group") as plaintiff and SMEC. In those proceedings, SMEC appears. It has appointed the same solicitors to act in that matter as act for the insurer involved in this Notice of Motion. To an extent, I am prepared to infer that some indemnity has been extended to SMEC with respect to the claim made by Cornish Group. Notice of Motion 1. On 24 June 2022, the plaintiff filed a Notice of Motion in which he sought the following orders: 1. The plaintiff be granted leave, pursuant to s 5 of the Civil Liability (Third Party Claims Against Insurers) Act 2017, to bring proceedings pursuant to s 4 of that act against Liberty Mutual Insurance Company trading in Australia as Liberty Specialty Markets Australia with respect to the liability of the third defendant asserted in these proceedings. 2. The plaintiff be granted leave to file its proposed further amended statement of claim in the form annexed. 3. Liberty Mutual Insurance Company pay the costs of and incidental to the motion if it opposes the making of order 1. 1. The Motion was listed for hearing today before me. This morning I was informed by the plaintiff that it was no longer necessary to seek Orders 1 and 2 in the form proposed, because indemnity had been extended by Liberty Mutual Insurance Company ("Liberty") to SMEC for the claims made in the class action proceedings, being the plaintiff's claims in these proceedings. It was apparent that Liberty was content to accept that position because it also sought that the plaintiff's Notice of Motion be dismissed. Orders for Costs Claimed 1. The parties cannot agree on the position as to costs. The plaintiff seeks an order that Liberty pay his costs of the motion. Liberty seeks an order that the plaintiff's costs of the notice of motion be costs in the cause of the claims against the third defendant. It will be immediately apparent that it has been unnecessary for the Court to hear and determine the merits of the orders sought by the plaintiff in the Notice of Motion. Legal Principle 1. As a matter of legal principle, generally in such circumstances, the Court would not make any order for costs because the Court would be being asked, in effect, to conduct a hearing into the merits of a question which was hypothetical. However, as a matter of principle, there are exceptions such as where the conduct of the defendant or respondent, as the case may be, can be regarded as a capitulation or surrender in circumstances where there is no readily identifiable supervening event which would explain such change of position: see Franpina Developments Pty Ltd v John Anthony Arena Pty Ltd [2022] NSWSC 57. Of course, the Court, without determining the merits of any matter, can look at the reasonableness of the conduct of the parties to the litigation as a relevant factor in the exercise of discretion. 2. Although I have heard significant debate about what happened in 2019 between SMEC and Liberty with respect to notification of claims and facts and circumstances which may give rise to a claim, I have been asked to consider this debate about costs from the perspective of Liberty solely on the basis of what counsel's submissions identify as being inferences which should be drawn from various documents, including affidavits and the like. I think the position is - with respect - rather more simple than that. Evidence 1. On the material before me, correspondence between the solicitors for the plaintiff and the solicitors for Liberty dated 20 July 2021 asked for the provision of an answer to some questions about the relationship between Liberty, as the insurers of SMEC, and their acting in the class action proceedings. The solicitors for Liberty were asked to confirm that they acted for Liberty in respect of the class action claim and that they had received instructions to act for SMEC in respect of the claim or the proceedings. They were also asked to confirm that Liberty and any other SMEC insurers had granted indemnity, or whether they had declined indemnity or communicated no decision. 2. The solicitors were told at the end of that letter that the purpose of seeking that information was to enable the plaintiff to decide whether it was necessary to make the application seeking leave to join Liberty or any other insurer under the Civil Liability (Third Party Claims Against Insurers) Act 2017. 3. That letter was responded to over two months later by letter of 24 September 2021, which, after some pages of information, announced to the solicitors for the plaintiff that "the claim articulated in the draft amended statement of claim is not covered by any policy issued by [Liberty]". 4. Thereafter, there was a further exchange of correspondence. On 25 October 2021, the solicitors for the plaintiff wrote to the solicitors for Liberty, setting out their arguments as to why, so far as they could tell, Liberty was the appropriate insurer. They invited Liberty to reconsider their decision about whether to extend indemnity to SMEC in respect of the plaintiff's claim. 5. The solicitors for Liberty responded to that letter on 15 December 2021. They said: "[Liberty] has given careful consideration to the correspondence, and suggests the appropriate course is for the claimant to consider the information set out herein." 1. It seems to me to be of importance that the end point of this letter can properly be regarded as this, in paragraph 18, namely: "In light of the foregoing, [Liberty] does not see any reason to amend the position set out in the correspondence to you of 24 September 2021." 1. The letter does finish with a request for the provision of further information from the plaintiff, but the letter does not change the indemnity position. 2. Thereafter, the plaintiff elected to bring the Notice of Motion. It elected not to engage in any further correspondence with the solicitors for Liberty. The Notice of Motion was brought and considerable evidence was filed. 3. On 2 August 2022, in written submissions filed for Liberty, it maintained its position that any insurance policy it had issued did not respond to the class action claim and indicated that it would seek that the Notice of Motion be dismissed. 4. On 15 August 2022, submissions were made by the plaintiff on the Motion, and a further affidavit, including an Exhibit AJA-6, was filed. 5. Yesterday, 24 August 2022, Liberty informed the solicitors for the plaintiff that it proposed to extend indemnity, as I have earlier indicated, with respect to the class action. Submissions 1. Counsel for Liberty submitted that the reversal of its position to which it had adhered since September 2021, only came about once the plaintiff had filed the documents comprising Exhibit AJA-6. However, counsel accepted that he could not identify in Exhibit AJA-6 any one or other document which provided information of a kind that had previously not been known to or understood by Liberty so as to justify its change of position. 2. In response to this Motion, Liberty at no time has filed any material from an officer of Liberty, or even from Liberty's solicitors on information and belief from an officer of Liberty, which would explain firstly, why Liberty refused to provide indemnity in the first place or, secondly, why that position changed the day before the hearing of this motion. Discernment 1. I am not prepared to infer, on the basis of the material I have been given, that the position adopted by Liberty initially, followed by its change of position yesterday, is anything other than a capitulation or surrender in the face of the material filed in the proceedings. 2. In my view, it is appropriate in the exercise of my discretion to order Liberty to pay the costs of the Motion because, without engaging in a debate as to the merits or otherwise of its position, the simple fact of the matter is, having for some time (around about a year or more) declined to provide indemnity to SMEC with respect to the class action, it did so yesterday and provided no explanation at all as to why that occurred. I cannot view it as anything other than a complete capitulation. Order 1. As a consequence, I am satisfied that I should order Liberty Mutual Insurance Company trading as Liberty Specialty Markets Australia to pay the costs of the plaintiff's Notice of Motion filed 24 June 2022, and I so order. ********** 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: 19 October 2022