Loiero v MMI General Insurance Australia Ltd [2003] FCAFC 110 (15 May 2003)

Last Updated: 6 June 2003

FEDERAL COURT OF AUSTRALIA

Loiero v MMI General Insurance Australia Ltd [2003] FCAFC 110

TONY MARIO LOIERO & JULIE LOIERO v MMI GENERAL INSURANCE AUSTRALIA LTD

Q6 of 2003

HILL, KIEFEL & HELY JJ

15 MAY 2003

BRISBANE

IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY	Q6 of 2003

ON APPEAL FROM A SINGLE JUDGE OF THE FEDERAL COURT OF AUSTRALIA

BETWEEN:	TONY MARIO LOIERO and JULIE LOIERO APPELLANTS
AND:	MMI GENERAL INSURANCE AUSTRALIA LTD RESPONDENT
JUDGES:	HILL, KIEFEL & HELY JJ
DATE OF ORDER:	15 MAY 2003
WHERE MADE:	BRISBANE

THE COURT ORDERS THAT:

1. The time within which the appellants may apply for leave to appeal in respect of a stay be extended to 2.20 pm on 15 May 2003.

2. Leave to appeal from that part of the judgment of Dowsett J given on 20 December 2002, whereby his Honour refused the appellant's application for a stay of orders 1 and 2 made by him that day be refused and accordingly, that the motion of the appellants dated 15 May 2003 be dismissed with costs.

3. The appeal be dismissed.

4. The appellants pay the respondent's costs of the appeal.

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

IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY	Q 6 of 2003

ON APPEAL FROM A SINGLE JUDGE OF THE FEDERAL COURT OF AUSTRALIA

BETWEEN:	TONY MARIO LOIERO and JULIE LOIERO APPELLANTS
AND:	MMI GENERAL INSURANCE AUSTRALIA LTD RESPONDENT

JUDGES:	HILL, KIEFEL and HELY JJ
DATE:	15 MAY 2003
PLACE:	BRISBANE

REASONS FOR JUDGMENT

THE COURT

1 On 23 October 1998 the appellants gave an undertaking in proceedings in which the company D'Angler's Paradise Pty Ltd was an applicant. It was given in circumstances where the respondent had sought security for costs from the company. The undertaking was in these terms:

`That in the event an order for costs is made against the Applicant in these proceedings which the Applicant is unable to meet within a reasonable time, we will pay the costs so ordered.'

2 The company was unsuccessful and an order for costs made against it. On 15 May 2002 the Deputy District Registrar ordered that the company pay the costs which had been certified on taxation on 25 March 2002.

3 On 20 December 2002 Dowsett J found that the undertaking did not extend to the costs of the appeal. That is not an issue in this appeal. His Honour ordered that, under Order 35 rule 11, the appellant pay to the respondent the sum of costs certified on taxation together with interest from the date of certification. The order was, in effect, an order that the appellants comply with their undertaking and not in terms an order that they pay a sum of money.

4 As such, no question arises of interest being payable on this order. The appellants are not, contrary to their own submissions, put in a position where they are obliged to pay more than the company would have, which is to say, interest upon interest. The respondents do not contend that his Honour's order has that effect and undertake not to assert to the contrary with respect to the quantum of costs. His Honour declined an application to stay the orders. The appellants appeal from that order and the refusal of their application. Order 62 sub-rule 45(6) provides:

`Every award of costs under a judgment of the Court shall carry interest calculated in accordance with Order 35 rule 8 from the date of the certificate of taxation quantifying the same.'

His Honour considered that it was reasonable to infer that the undertaking was given with knowledge of that proviso. Pursuant to the undertaking the appellants were responsible for all the costs for which the company was liable. The company was liable for costs, including interest accruing in accordance with the Rule, his Honour held. No error can be discerned in his Honour's reasoning, in our view. The question is one of the construction of the undertaking. There is nothing in the terms of it, which suggests, that the appellants were to do otherwise than to meet the obligations of the company with respect to costs if it did not.

5 The undertaking was, after all, given in response to an application for security for costs against the company and in the context where the Rules would operate upon it. No limitation on the undertaking is to be gleaned from the reference to payment of costs `so ordered'. Their undertaking was to pay whatever the company was obliged to pay by way of costs and which it was unable to meet after an order for costs had been made. The making of the order for costs made the appellants' liability potential. The reference to it did not, however, serve to define or limit it.

6 The Rules operate automatically upon costs and interest becomes a component of the award of costs. The fact that an award of costs is not meant to indemnify a party against all costs incurred does not alter this. There is nothing in the words of the undertaking which suggests that the reference to cost in it, is not to be as the Rules allow. There was no attempt in the undertaking to limit or exclude the operation of the Rules of court with respect to what followed as a matter of course when an order for costs was made and remained unpaid.

7 The appellants had solicitors acting for them and it was clearly in their respective contemplation, as the terms of the undertaking show, that they were to pay if the company had not done so within a reasonable time. There is no assistance to be gained by the appellants from the difference between judgment sums and an order for costs made under, or as part of, the judgment. Under Order 35 rule 8 and Order 62 sub-rule 46(6), both carry interest, albeit from different times.

8 The appellants also sought to advance an argument that this liability did not arise until after a reasonable time had passed. We do not understand this point to have been taken before his Honour but, in any event it does not further advance the appeal. Whilst they may not have been called upon to pay until later, the company's liability for costs, which they undertook to then meet, included interest. Subsequent to the dismissal of the appeal by the company, and on 30 April 2001, the appellants brought further proceedings in their own names against the respondent, as insurer, with respect to the same loss, suffered in a fire in 1995.

9 The appellants sought a stay of orders with respect to their payment of costs because of those proceedings, although they did not explain why it took them until April 2001 to discover their right to sue and bring them. Because there was no explanation of the lengthy history of the proceedings and the circumstances leading to the commencement of their own proceedings in the Supreme Court, his Honour declined the stay. His Honour clearly considered it to be possible that the appellants were seeking to postpone payment to the respondent, but his decision was not based upon an inference to that effect.

10 The appellants require leave to bring this part of the appeal, and that requires considerations of the prospects of success in the appeal. It is submitted that the male appellant did offer an explanation as to the commencement of the proceedings in the Supreme Court. He said, in his affidavit supporting the application, that he had engaged new counsel after the appeal was determined in this court. The insurance policy was issued to him and his wife `trading as D'Anglers' Paradise' which he said was their business name at that time. His asset position has been substantially reduced, and the proceedings in the Supreme Court might be stifled if the appellants are forced to pay the costs.

11 As far as they go, these matters do not provide grounds for a stay. There is no evidence to suggest that the appellants might now succeed. Indeed, it is to be observed that the proceedings in the Supreme Court were brought in both their name and the company's, although the name of the company has apparently now been struck from those proceedings. The submissions for the appellants seek to expand impermissibly upon what was said in the affidavit. In any event, nowhere in the appellants' affidavit material can the explanations which his Honour reasonably, in our view, thought to be essential be found. It cannot be suggested that his Honour's discretion miscarried. If the appellants mistakenly brought the earlier proceedings, this would not provide reasons for denying the respondent its costs and the benefit of the undertaking given.

12 The application for leave is refused and the appeal should be dismissed with costs.

I certify that the preceding twelve (12) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justices Hill, Kiefel & Hely JJ

Associate:

Dated: 5 June 2003

Counsel for the Appellant:	K Barlow
Solicitor for the Appellant:	Allens Arthur Robinson
Counsel for the Respondent:	R Bain QC and U Prasser
Solicitor for the Respondent:	Deacons
Date of Hearing:	15 May 2003
Date of Judgment:	15 May 2003