The costs implications of commencing proceedings before compulsory conference

Motor Vehicle Directions

Insurance Australia Limited & Anor v Albrecht [2015] ACTSC 68

On 25 March 2015, His Honour Master Mossop handed down judgment on an originating application issued on behalf of NRMA.

The issue to be determined was whether the restrictive costs regime in section 155(3)(c) of the Road Transport (Third Party Insurance) Act 2008 applied to Mr Albrecht’s acceptance of NRMA’s mandatory final offer, which occurred after court proceedings were commenced.

Background

Mr Albrecht was involved in a motor vehicle accident on 21 October 2010.

ACT Magistrates Court proceedings were commenced on 8 July 2014, just prior to the expiry of the limitation period and before the parties participated in a compulsory conference.

The compulsory conference occurred on 5 September 2014 however the matter did not resolve. Mandatory final offers were then made by both parties.

On 19 September 2014, Mr Albrecht accepted NRMA’s mandatory final offer.

Consent judgment was entered on 10 November 2014 and provided for ‘Judgment for the plaintiff in the sum of $85,000, inclusive of payments made, plus costs as agreed or assessed.’

Consideration

In submissions to the Master, it was submitted on behalf of NRMA that reference to ‘awards’ in section 155(3) included awards made by consent of the parties. That interpretation of section 155(3) would ensure a consistent approach to the legislation which applied the restrictive costs regime throughout the life of a litigated matter. It did not limit the restriction to the pre-court and post-hearing stages.

Counsel for Mr Albrecht submitted that the reference to ‘awards’ was reference to a judgment of the court after a hearing. That approach would be consistent with the reasoning of the Queensland Court of Appeal in Amos v Brisbane City Council [2005] QCA 433.

Decision

His Honour held that the purpose of the legislation was to give effect to the legislature’s desire to apply restrictive costs provisions to a greater number of motor accident claims. Accordingly, NRMA’s interpretation of section 155(3)(c) best achieved that purpose.

His Honour also found there was no difference in law between a judgment entered by the consent of the parties and a judgment entered after a hearing.

Although the Court made the declaration sought that section 155(3)(c) applied to this matter, Master Mossop declined to make the specific costs orders sought on behalf of NRMA in accordance with section 155(3)(c)(i) and (ii). In the circumstances of this case, the Court felt the orders sought could result in Mr Albrecht having to pay a net amount to NRMA in respect of its costs. That would be inconsistent with the consent judgment, which referred to ‘judgment for the plaintiff plus costs’.

Implications for the future management of claims

As a result of this decision, we anticipate there may be a number of changes in the manner these types of claims are progressed.

It is anticipated that it will minimise the number of claims in which court proceedings are commenced prior to the parties engaging in a compulsory conference. For those matters conferenced after proceedings are commenced, the plaintiff will be required to take into account the application of the restrictive costs provision. Indeed, more claims may now be resolved on an ‘inclusive of costs’ basis.

Where a claim does resolve on a plus costs basis, it would be prudent for insurers to make it known that any resolution by consent of the parties must be given effect by the entering of consent judgment and terms of settlement with the court. Any costs orders sought in those documents should be carefully worded to ensure they refer to costs calculated in accordance with the legislation.

Authored by Lauren Armstrong, Senior Associate, Canberra.

 


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