Horgan v HIH Casualty & General Insurance Ltd [1999] FCA 75 (1 February 1999)

Last Updated: 17 February 1999

FEDERAL COURT OF AUSTRALIA

Horgan v HIH Casualty & General Insurance Ltd [1999] FCA 75

Colgate-Palmolive Company and Anor v Cussons Pty Ltd [1993] FCA 536; (1993) 46 FCR 225

JOHN TIMOTHY HORGAN v HIH CASUALTY & GENERAL INSURANCE LIMITED (ACN 008 482 291) & ORS

VG 595 of 1998

WEINBERG J

MELBOURNE

1 FEBRUARY 1999

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY	VG 595 OF 1998

BETWEEN:	JOHN TIMOTHY HORGAN Applicant
AND:	HIH CASUALTY & GENERAL INSURANCE LIMITED (ACN 008 482 291) First Respondent UTILITIES INSURANCE UNDERWRITING AGENCIES PTY LTD (ACN 007 430 999) Second Respondent EQUIPSUPER PTY LTD (ACN 006 964 049) Third Respondent

JUDGE:	WEINBERG J
DATE:	1 FEBRUARY 1999
PLACE:	MELBOURNE

EX TEMPORE REASONS FOR JUDGMENT

1 On 18 December 1998 an application brought by John Timothy Horgan against the third respondent, Equipsuper Pty Ltd formerly known as VEI Super Pty Ltd, came before me on a notice of motion seeking to strike out the pleading against that third respondent. On that occasion I granted leave to the applicant to replead his case, but made a number of observations which indicated that in my view the applicant should give careful consideration to whether his action against the third respondent, which had been instituted on 4 November 1998, had any proper basis or was necessary in order to protect his interests.

2 On 15 January 1999 the applicant discontinued against the third respondent, as he was entitled to do, without the leave of the court. The question which arises now is whether the applicant should be required to pay the third respondent's costs upon the usual party and party basis, or whether there is some special or unusual feature in this case which justifies the payment of costs on an indemnity basis.

3 The principles governing the award of indemnity costs are clearly set out in the judgment of Sheppard J in Colgate-Palmolive Company and Anor v Cussons Pty Ltd [1993] FCA 536; (1993) 46 FCR 225, and in particular his Honour's statement of the relevant principles or guidelines at pages 232 to 234 of that judgment.

4 One of the bases upon which indemnity costs may properly be awarded is where proceedings are commenced which are misconceived, and involve allegations which ought never to have been made. I do not accept the proposition that one should necessarily infer from such an application that it was brought for an ulterior or extraneous purpose. That is a separate basis upon which an order for indemnity costs may be made but not a precondition to the making of such an order.

5 When one adds to the fact that the application was misconceived the fact that it pleaded or purported to plead a breach of trust against a professional trustee, an allegation capable of being understood to involve some element of moral turpitude, which allegation should never have been made, the case for making an order that costs be paid on an indemnity basis becomes stronger.

6 In the present case the applicant was throughout 1998 in dispute with his employer. It appears that for some months, in the latter part of 1998, he became concerned about his superannuation entitlements. He had a number of conversations with a representative of the third respondent in the months preceding December 1998 during the course of which he raised a number of issues of a general nature concerning those entitlements. He wanted to know when the third respondent would pay him the moneys which he regarded it as holding on his behalf.

7 The difficulty is that at no stage prior to 17 December 1998 did the applicant articulate with any clarity the real nature of his concerns. Only then, six weeks after he had instituted proceedings, did he ask the third respondent for a specific assurance that the moneys in question would not be paid to any other party pending the outcome of his dispute with his employer.

8 On 24 December 1998, a week or so later, a letter written by Messrs Freehill Hollingdale & Page, the legal representatives of the third respondent, made it perfectly clear that the applicant's entitlements were safe, and explained (for perhaps the third or fourth time) why it was that the applicant had not to that point been paid. With hindsight, it is plain that the applicant could have clarified this relatively straightforward matter simply by ensuring that he asked the appropriate question. Had he done so, he would, no doubt, have been reassured. The proceedings brought against the third respondent would almost certainly not have been instituted.

9 I cannot accept the submission of Mr Rinaldi, for the applicant, that the third respondent's representative was in some way at fault in failing to give the applicant appropriate reassurances during the course of the conversations which they had in the months preceding December 1998. The representative was not in a position to know, with any certainty, the nature of the applicant's concerns. He was under no obligation to elicit from the applicant precisely what was troubling him. He was, therefore, not in a position to allay the applicant's concerns.

10 In my opinion, the proceedings against the third respondent should never have been instituted. It was sensible of the applicant to recognise this, however belatedly, and to discontinue those proceedings. The applicant certainly deserves some credit for this. Nonetheless, given that the proceedings which he instituted involved the making of serious and unwarranted allegations against the third respondent, there should, in my opinion, be an order that the costs paid by the applicant be assessed on an indemnity basis. I propose therefore to order that the applicant pay the third respondent's costs of the proceeding up to and including 15 January 1999 on an indemnity basis. I will hear the parties further in relation to the costs of today's proceeding.

I certify that the preceding ten (10) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Weinberg.

Associate:

Dated:

Counsel for the Applicant:	Mr MG Rinaldi
Solicitor for the Applicant:	Mills Oakley
Counsel for the Third Respondent	Ms J Richards
Solicitor for the Third Respondent	Freehill Hollingdale & Page
Date of Hearing:	1 February 1999
Date of Judgment:	1 February 1999