New South Wales Court of Appeal CITATION: Chapman v. Taylor & Ors; Vero Insurance Ltd. v. Taylor & Ors [2005] NSWCA 11 HEARING DATE(S): Matter dealt with on written submissions in Chambers JUDGMENT DATE: 9 February 2005 JUDGMENT OF: Beazley JA at 1; Hodgson JA at 2; Tobias JA at 10 DECISION: In addition to the orders made in par.[45] of the judgment dated 13 December 2004, the following order made: 4. Mr. and Mrs. Taylor to pay Vero's costs of the appeal not extending to briefing senior counsel, and to have a certificate under the Suitors' Fund Act if otherwise eligible. CATCHWORDS: COSTS - Appeal - Two parties with substantially similar interests - Separate appeals brought - One appellant, an insurer with an interest in establishing a general point, briefed senior counsel - Respondent ordered to pay the appellant's costs, not extending to briefing senior counsel. David Neil Chapman - appellant Ernest & Fredericka Taylor - 1st respondents PARTIES: Vero Insurance Ltd - 2nd respondent Consumer, Trader & Tenancy Tribunal - 3rd respondent FILE NUMBER(S): CA 40120/04; 41106/03 COUNSEL: The relevant parties filed written submissions G.P. Bartels, Eastwood for 1st respondent SOLICITORS: McLachlan Chilton, Sydney for 2nd respondent LOWER COURT JURISDICTION: Supreme Court - Common Law Division LOWER COURT FILE NUMBER(S): SC12971/02 LOWER COURT JUDICIAL OFFICER: Master Harrison IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40120/04 CA 41106/03 SC 12971/02 CTTT No.HB 00/83497 BEAZLEY JA HODGSON JA TOBIAS JA Wednesday 9 February 2004 CHAPMAN V. TAYLOR & ORS. VERO INSURANCE LTD (formerly ROYAL & SUN ALLIANCE INSURANCE AUSTRALIA LIMITED) V. TAYLOR & ORS. Judgment No. 2 (On Costs) 1 BEAZLEY JA: I agree with Hodgson JA. 2 HODGSON JA: On 13 December 2004, this Court delivered a judgment in which it left open questions concerning Vero's costs. Vero has provided submissions and affidavits in relation to those questions. Mr. and Mrs. Taylor provided answering submissions, and Vero provided submissions in reply. No objection was taken to the affidavits, and they have been read. The affidavits established inter alia: 1. Prior to the hearing before the Master, Vero made an offer of compromise on terms that the summons be dismissed with no order as to costs. 2. The Taylors' claim before the CTTT was for $137,756.00 plus interest and costs, and after taking into account settlement of the part of the claim that related to defects, the amount in issue on the part of the claim that related to non-completion was about $100,000.00 plus interest and costs. 3. Vero's costs before the Tribunal were a little over $70,000.00, some being applicable to the defects portion of the claim and some to the non-completion portion. 4. Vero's costs in relation to the Supreme Court proceedings were about $40,000.00. However, it is not clear if this relates to the proceedings before the Master or proceedings before the Court of Appeal or both. 5. Vero regarded the frustration point as important in determining the risk it undertook in issuing insurance under the Home Building Act. 3 The question of costs before the Tribunal is still to be determined by the Tribunal, and is not being dealt with by this Court. 4 Vero has sought indemnity costs. However, as a defendant it would not be entitled to indemnity costs by force of the Supreme Court Rules. Such entitlement would require a determination by this Court that the Taylors' rejection of the offer was unreasonable. In my opinion, particularly having regard to the difficulty of the case, the rejection was not unreasonable. Vero is not entitled to indemnity costs. 5 Vero was the insurer of the Taylors and not of Mr. Chapman, and as submitted by Vero, it had interests which were different from and could potentially conflict with Mr. Chapman's interests. However, the interests of Vero and Mr. Chapman in the proceedings before the Master and in this Court, relating entirely to the frustration point, substantially coincided. However, I cannot say that it was unreasonable for Vero to be separately represented before the Master and to bring its own appeal against the Master' decision; and in circumstances where the Taylors briefed Senior Counsel, I cannot say it was unreasonable for Vero to brief Senior Counsel. Furthermore, there is force in Vero's submission that, if there is any penalty to be imposed by reason of the bringing of separate appeals, there is no reason that it should be visited upon Vero and not at all on Mr. Chapman. 6 However, there is still the consideration that Vero has vigorously contested the frustration point partly because of the wider importance of the case to Vero, beyond the result in the particular case. It cannot be said that this was a test case, as was A. Goninan & Co. Limited v. Gill [2001] NSWCA 77, 51 NSWLR 441, at [60]. However, the wider importance of the point to Vero is a matter that, in my opinion, can be taken into account. 7 I am concerned that, by reason of Vero's contesting the difference between a claim for $137,000.00 plus interest and a conceded entitlement to $37,000.00 plus interest, the Taylors face the possibility of liability for costs of Vero perhaps in the order of about $100,000.00, incurred by one of two defendants with substantially the same interests, where the extent of these costs may be partly because it was in Vero's commercial interests to establish a general point. 8 If an order for costs is made in Vero's favour in the appeal, it would seem that a Suitors' Fund certificate could be granted; and since Vero's appeal is a distinct appeal from Mr. Chapman's appeal, there would be a further amount of $10,000.00 available towards payment of Vero's costs. In my opinion, the provisions of the Suitors' Fund Act and the limits provided by that Act are matters that can be taken into account in determining costs orders. One possibility, then, is to order that the Taylors pay Vero's costs of its appeal and have a certificate under the Suitors' Fund Act, and to limit the quantum of Vero's costs to $10,000.00. As against this, as I have said, there is the consideration that there may not be sufficient reason to discriminate between the positions of Mr. Chapman and Vero in relation to costs; and also the consideration that it could not be said to be unreasonable for Vero to have brought its separate appeal and to brief Senior Counsel. 9 However, I think the separate appeal and briefing of Senior Counsel may fairly be regarded, at least in part, as additional precaution taken by Vero by reason of its wider interests, and the exclusion of Senior Counsel's costs would not involve discrimination in favour of Mr. Chapman. Accordingly, in addition to the orders made in par.[45] of the previous judgment, I would propose the following further order: 4. Mr. and Mrs. Taylor to pay Vero's costs of the appeal not extending to briefing Senior Counsel, and to have a certificate under the Suitors' Fund Act if otherwise eligible. 10 TOBIAS JA: I agree with Hodgson JA. ********** 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.