FEDERAL COURT OF AUSTRALIA

Macquarie Underwriting Pty Ltd v Permanent Custodians Limited (No 2) [2007] FCAFC 108

MACQUARIE UNDERWRITING PTY LTD AND SVB SYNDICATES LIMITED v PERMANENT CUSTODIANS LIMITED, ARMA PTY LIMITED AND NEIL TEVES

NSD 1335 OF 2006

ALLSOP, GRAHAM AND BUCHANAN JJ

20 JULY 2007

SYDNEY

THE COURT ORDERS THAT:

1.                  The costs of the motion that was the subject of the judgments of the primary judge on 29 May 2006 and 4 July 2006 and the costs of the appeal be costs in proceeding NSD 1758 of 2004 to abide the outcome of the claims made by the first respondent against the appellants in that proceeding.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

REASONS FOR JUDGMENT

THE COURT

1                     On 3 May 2007 the Court made orders allowing the appeal in part and limiting the leave to Permanent Custodians Limited (“Permanent”, the first respondent to the appeal and the applicant in the proceeding at first instance) to join Macquarie Underwriting Pty Limited and SVB Syndicates Ltd (which collectively we will refer to as the “Insurers”) to the proceeding in respect of only one of the policies of insurance put forward, the second policy.  (See [2007] FCAFC 60.)  It is unnecessary to repeat the facts recounted in the earlier reasons for judgment.

2                     The orders made on 3 May 2007 permitted the parties to put submissions on costs.

3                     Permanent filed submissions on costs.  It sought the costs of the appeal, the costs of the application for leave to appeal and the costs of the original application before the primary judge.

4                     The Insurers filed submissions on costs.  They sought orders that the costs before the primary judge be costs in the cause and that Permanent be ordered to pay 50% of their costs on appeal.

5                     As to the costs of the application for leave to appeal, these were dealt with by the Judge who heard that application and who granted leave to appeal.  Her Honour ordered that Permanent pay the Insurers’ costs of the application for leave.  That order was made in the appellate jurisdiction of the Court.  It was not (as it could not have been) before us on appeal.  Whether or not the order should have been made is not a matter for us to consider, since we are not in a position to vary it.

6                     As to the costs before the primary judge and on appeal, it is true that the Insurers resisted any joinder and that they have been unsuccessful in that regard.  However, as Allsop J and Buchanan J said at [41] of their earlier reasons (agreed by Graham J at [105]), s 6 of the Law Reform (Miscellaneous Provisions) Act 1946 (NSW) is concerned with leave to commence an action to vindicate a charge over “insurance moneys”, that is by reference to claims on policies of insurance.

7                     Neither side was vindicated in the entirety of the position that it adopted.  Although Permanent primarily put its application on the basis of the second policy, it nevertheless propounded the first policy causing the second judgment of the primary judge and additional costs.  On appeal, the first policy was propounded as a proper basis for joinder.

8                     The appropriate course to adopt as to costs is one that is open to debate.  Ultimately, the issue was whether Permanent should be entitled to commence litigation against the Insurers in order to enforce a charge on a relevant policy.  There is something to be said for the proposition that given that the objective aim of the Insurers was to avoid being joined at all, and given that they failed in that aim, some costs consequences should flow necessarily to the advantage of Permanent.

9                     In our view however, looking at this as an interlocutory controversy adjectival to the underlying proceeding, considering the merit and lack of merit of the issues argued before the primary judge and on appeal, and recognising the nature of the application for leave to commence as related to each policy, the most just result would be, in our view, for the costs of both sides of the motion before the primary judge and on appeal to be costs in the cause as between Permanent and the Insurers.

10                  Thus, the costs order that we would make is that the costs of the motion that was the subject of the judgments of the primary judge on 29 May 2006 and 4 July 2006 and the costs of the appeal be costs in proceeding NSD 1758 of 2004 to abide the outcome of the claims made by Permanent (the first respondent) against the Insurers (appellants in that proceeding).

Associate:

Dated:         20 July 2007