Don’t forget about costs: lessons for appealing costs orders

The ACT Court of Appeal has declined to make a costs order in favour of a motor vehicle accident insurer after the insurer successfully appealed the Supreme Court’s assessment of damages but neglected to fully challenge the original costs order against it.1

Background

The plaintiff had been crossing a road on foot in Cowra, NSW on an evening in June 2004 when he was struck by a motor vehicle being driven by the defendant. The plaintiff suffered significant brain injuries and his claim was pursued by the Public Advocate of the Australian Capital Territory. The defendant’s insurer admitted negligence. A protracted Court battle ensued to determine damages and in June 2014 the ACT Supreme Court awarded the plaintiff just over $1.3 million. That amount was also to be reduced by 30% on account of contributory negligence. The insurer was also ordered to pay the plaintiff’s costs. The insurer appealed, focusing mostly on contributory negligence and the costs order.

In November 2015 the Court of Appeal adjusted contributory negligence to 50%, to the benefit of the insurer and ordered a recalculation of damages. However, despite formally challenging the costs order in the appeal papers, the insurer did not mention the issue during the appeal hearing. For this reason, the Court of Appeal’s decision also did not mention the issue.

Seeking costs after the appeal hearing

The parties agreed on the amount of recalculated damages. When this amount was submitted to the Court by email, the insurer pressed its challenge to the original costs order. The Court of Appeal made orders for submissions to be made about costs and relisted the matter. In the meantime, the parties agreed on final orders reflecting the Court of Appeal’s formal decision. Those orders did not contain anything about the pending costs issue, but they were nonetheless agreed and submitted to the Court for making. Unfortunately, the insurer then failed to appear at the listing designed to determine the costs issue. The agreed final orders sought by the parties were then made in chambers. Furthermore, before a new costs hearing could be scheduled one of the parties had the orders entered in the Registry. That action is the accepted final step in any proceeding, bringing the matter to a complete end. It followed that the insurer was therefore prevented from further challenging the costs order which it was trying to appeal from. Understandably, this was disputed by the insurer and the Court of Appeal heard argument on the subject.

Did the entry of orders conclude the appeal, such that the costs issue could not be determined?

The insurer argued that all issues on the appeal had not been disposed of and therefore the appeal of costs could continue. It also said that it must have been the Court of Appeal’s intention to address this issue as it had directed the parties to file submissions and relisted the matter for this purpose. The plaintiff contended that the proceedings came to an end with the entry of the orders, which the plaintiff also alleged were filed by the insurer.

The Court of Appeal determined that there was no scope for ‘re-opening’ of the appeal as orders had already been entered and were not eligible to be set aside under the Court Procedure Rules 2006 (ACT). Accordingly, the insurer was not able to press its challenge to the costs order.

The Court’s reasoning largely relied on its previous decision in O’Rafferty v The Queen [No. 2] (2014) 291 FLR 93. In that matter the Court of Appeal had refused to reopen a criminal appeal where one of the appeal grounds had not been addressed but orders had been entered following the Court’s decision. The accused appealed to the High Court, who effectively granted the appeal and remitted the matter back to the Court of Appeal so that the unaddressed ground could be determined. Applying that reasoning to the present case, the Court of Appeal said that it was unable to reopen the current case to determine the costs issue, presumably without having the matter remitted to it by the High Court.

However, in the alternative, the Court of Appeal commented on what the result might have been if the appeal had been reopened. The insurer had made a settlement offer that it said warranted a change to the original costs order. That offer disclosed that the insurer would have been willing to agree to contributory negligence at the rate of 33%, significantly lower than the 50% arrived at by the Court of Appeal.

The Court identified that its assessment of 50% contributory negligence rested largely on a change in approach by the New South Wales Court of Appeal since the original costs order was made. In those circumstances, although the insurer’s offer was a reasonable one, it was not unreasonable for the plaintiff to have failed to accept it at the time it was made. Accordingly, even if the insurer had succeeded in challenging the original costs order, the Court of Appeal would not have varied it.

Lessons

Although it is apparent from the Court of Appeal’s decision that the insurer would not have succeeded in adjusting the original costs order in any event, the decision demonstrates the importance of:

  1. ensuring that all grounds of appeal are raised not only in the appeal papers but in submissions during hearing
  2. appearing at all listings set by the Court, and
  3. not agreeing to final orders until those orders include all of the orders being sought by your client (including, if necessary, by drawing this to the attention of the Court).

1Steen v Senton [2017] ACTCA 5


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