Ivan Mabbett v Watson Wyatt Superannuation Pty Limited & Anor [2008] NSWSC 460

New South Wales Supreme Court

CITATION : Ivan Mabbett v Watson Wyatt Superannuation Pty Limited & Anor [2008] NSWSC 460

HEARING DATE(S) : 7/5/08 JURISDICTION : Equity Division Commercial List

JUDGMENT OF : Einstein J

EX TEMPORE JUDGMENT DATE : 7 May 2008

DECISION : Plaintiff to pay part of insurers costs on indemnity basis.

CATCHWORDS : Indemnity Costs - Delinquency demonstrated by litigation having proceeded on false factual assumptions, plaintiff having failed to brief his experts with true and complete relevant histories of his injuries, physical capacities and work history

LEGISLATION CITED : Civil Procedure Act 2005

CATEGORY : Procedural and other rulings

Darrell Cullen v ZLB Behring LLC (2006) NSWSC 359 CASES CITED : Degman Pty Limited (In Liquidation) v Wright (No 2) (1983) 2 NSWLR 354, Harrison v Schipp [2001] NSWCA 13 Oshlack v Richmond River Council (1998) 193 CLR 72

Ivan Mabbett (Plaintiff) PARTIES : Watson Superannuation Pty Limited (First Defendant) AMP Life Limited (Second Defendant)

FILE NUMBER(S) : SC 50196/07

Mr G Beauchamp (Plaintiff) COUNSEL : Mr R Potter (First Defendant) Ms V Heath (Second Defendant)

Firths (Plaintiff) SOLICITORS : DLA Philips Fox (First Defendant) Minter Ellison (Second Defendant)

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION COMMERCIAL LIST

Einstein J

Wednesday 7 May 2008 ex tempore Revised 13 May 2008

50196/07 Ivan Mabbett v Watson Wyatt Superannuation Pty Limited & AMP Life Limited JUDGMENT 1 The reserved judgment in these proceedings was delivered on 1 May 2008. The parties were required to bring in short minutes of order, the Court having indicated in the last paragraph of the reserved judgment that at that time costs may be argued. Hence the only issues presently before the Court concern the making appropriate orders and a decision as to the principled exercise of the Court's discretion with respect to the question of costs. Essentially the only matters that has been the subject of debate before the Court has been the question of costs. 2 It is common ground that the Court's power under section 98 of the Civil Procedure Act 2005 to determine by whom and to what extent costs are paid is a broad discretion [Oshlack v Richmond River Council (1998) 193 CLR 72] that is one that is exercised in accordance with established principles and the rules. Pursuant to UCPR rule 42.1, if the Court makes any order as to costs the order is to be that costs follow the event unless it appears that another order should be made. The question which arises in this case is, as I say, what is the principled exercise of the discretion in the somewhat unusual circumstances which prevail. 3 Mr Beauchamp, on behalf of the plaintiff, has submitted that the appropriate costs order is that each party pay its own costs. 4 It is inappropriate to revisit the findings in the principal judgment, but clearly enough the insurer's contentions on the construction issue were rejected: [see paragraph 39]. Again clearly enough, the reasons found that at least one of the grounds relied upon in the insurer's initial decision, and indeed the only ground expressly cited in the second decision, was based on a misconstruction of the contractual terms. Paragraph 58 of the reasons constitutes the rejection of the insurer's contention that the mere fact that the plaintiff had resigned prior to his injury made it impossible for him to sustain an injury on his final day of work which would cause his absence from employment with the employer within the subsequent six month period. At this stage it is of course common ground that in terms of the second limb of the TPD definition, the second defendant succeeded and the plaintiff failed. 5 A careful reading of the reserved judgment will disclose that there were a number of very close matters for detailed consideration. 6 Ms Heath, appearing for the second defendant, has contended that there are reasons why the second defendant is entitled to an order that the whole [or such part as the Court may deem appropriate] of its costs be paid by the plaintiff on an indemnity basis. This submission requires one to return to the principles which inform the exercise of the discretion to order indemnity costs. 7 In Harrison v Schipp [2001] NSWCA 13, the Court of Appeal had occasion to revisit the proper approach to the award of indemnity costs. Giles JA at 132-137, with whose judgment Handley and Fitzgerald JJA agreed, emphasised the type of delinquency in the conduct of the proceedings necessary to be established in order to make good a departure from the ordinary basis on which costs should be assessed. The making of deliberately false allegations in a defence [which may occur together with prolixity, prevarication and/or the gross prolonging of the litigation] may give rise to an occasion for the exercise of the Court's discretion by the making of an indemnity costs order. 8 Ms Heath has submitted that the indemnity costs order ought be made on a number of bases. She has particularly sought to rely on what is suggested to have been relevant delinquency said to have caused the litigation to be brought and continued, as well as on an unaccepted Calderbank offer, which the second defendant has submitted was unreasonably rejected by the plaintiff in the circumstances. 9 The submission concerning the suggested delinquency related to and in the proceedings has been as follows: