Federal Court of Australia

Civil & Allied Technical Construction Pty Limited v Underwriters to Policy No. 01811320-14074, W1174593001, 1680000186CMC and 99-0006673-CGR [2023] FCA 857

ORDERS

THE COURT ORDERS THAT:

1.    The application filed on 30 June 2023 be dismissed.

2.    The respondent pay the applicant’s costs of the application on an indemnity basis.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

DERRINGTON J:

1    These reasons concern the appropriate costs order to be made following the applicant’s abortive application for judgment in default, which was abandoned as a consequence of the respondent underwriters belatedly filing their defence.

2    The proceeding has been delayed by what appears to be the contumelious, if not contumacious, failure by the respondent underwriters to file their defence. Since about October 2018, correspondence has passed between the parties in relation to the insurance claims the subject of this dispute. On 13 December 2022, the applicant filed and served its Originating Application, Statement of Claim and Genuine Steps Statement. On 5 January 2023, the respondent underwriters filed and served a Notice of Address for Service. Orders were made on 6 March 2023 for them to file a defence by 17 April 2023. That did not occur and no attempt was made to seek an extension to that deadline. Further orders were made on 3 May 2023 by consent, whereby the time for the filing of the defence was extended to 29 May 2023. The respondent underwriters again did not file a defence by that date and did not attempt to seek any extension. Further orders were made at a case management hearing on 13 June 2023 that the defence be filed by 21 June 2023, along with an affidavit explaining the reasons for the failure to file the defence in accordance with the earlier orders of the Court. Those orders were also not complied with and, again, no attempt was made to seek any additional time for compliance.

3    It was not only this delinquency by the respondent underwriters that prompted the filing of the application for default judgment, though that would have been justification enough. Instead, the respondent underwriters compounded their disobedience of the Court’s orders by making representations in correspondence to the applicant’s solicitors to the effect that the defence would be filed imminently. Those representations proved to be false, and no sufficient explanation for their making has been given to the Court.

4    In these circumstances, the making of the application for default judgment was not only justified, it could be said to have been forensically imperative.

5    The respondent underwriters eventually filed their defence on 29 June 2023. Although the applicant could theoretically have pressed its application for default judgment in these circumstances, as a matter of practical reality it would have failed, and the decision not to proceed with it was entirely appropriate. That application should now be dismissed. It follows that the cost involved in its preparation have been rendered nugatory. However, the present circumstances not only justify the making of an order for indemnity costs in connection with this application against the defaulting party, they positively demand it.

6    Affidavits were filed by the solicitors for the respondent underwriters, which attempted to provide some explanation for the delay. Unfortunately, the explanation offered was both thin as to substance and materially incomplete. In the latter respect, the evidence simply failed to offer any explanation for significant gaps of time during which the defence was not filed. This fact was very appropriately acknowledged by Mr Shukla for the respondent underwriters.

7    It should be mentioned, again, that this matter, concerning certain claims under policies of insurance, is long-standing. Discussions between the insured and insurers have been ongoing for some time. It is beyond comprehension that, following the commencement of this proceeding, the insurers still did not know, or were not fully appraised of, their reasons for refusing to indemnify the insured. There can be no rational explanation as to why their position could not have been articulated in a defence in a relatively short period of time.

8    In circumstances where the respondent underwriters have not attempted to explain in full their continued failure to file a defence, in defiance of multiple court orders over a considerable period of time, it is open to conclude that they are taking a high-handed approach to the litigation. Though no determination can be made as to why they are doing that, the objective facts demonstrate an unexplained and obviously contumelious delay in filing a defence. This entirely justifies the making of an order for indemnity costs in respect of the abandoned application for default judgment.

9    It should be ordered that the respondent, the Underwriters to Policy No. 01811320-14074, W1174593001, 1680000186CMC and 99-0006673-CGR, pay the applicant’s costs of the application for default judgment on an indemnity basis.

Associate:

Dated:    27 July 2023