Pacific Indemnity Underwriting Agency Pty Ltd v Maclaw No 651 Pty Ltd & Anor

(2005) 13 VR 483; [2005] VSCA 165

Victorian Court of Appeal

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For Australian Law.

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Interrogate

Catchwords

1. Insurance
2. › Domestic building insurance
3. › Compulsory insurance under Building Act 1993 (Vic)
4. › Policy interpretation
5. › Costs and expenses clause
6. › Whether 'reasonable legal costs and expenses' means indemnity costs or party/party costs
7. › Building owner's right to recover directly from insurer under Condition 9
8. › Ministerial Order under s 135 Building Act 1993 (Vic)
1. Contract
2. › Construction of compromise agreements
3. › Interpretation of costs terms in settlement agreements
4. › Whether 'reasonable legal costs and expenses' in settlement terms adopted meaning from insurance policy
5. › Whether extrinsic evidence of parties' intention admissible
6. › Codelfa Construction Pty Ltd v State Rail Authority of NSW [1982] HCA 24
1. Costs
2. › Basis of assessment
3. › Party/party costs distinguished from indemnity costs and solicitor/client costs
4. › Meaning of 'reasonable legal costs and expenses'
5. › Whether consumer protection context requires indemnity basis
6. › Victorian Civil and Administrative Tribunal Act 1998 (Vic), s 109
1. Practice and Procedure
2. › Victorian Civil and Administrative Tribunal
3. › Costs in VCAT proceedings
4. › Whether bill of costs in taxable form required
5. › Assessment of costs
6. › Victorian Civil and Administrative Tribunal Act 1998 (Vic), s 109

Quick Take

The expression 'reasonable legal costs and expenses' in domestic building insurance policies issued under the Building Act 1993 (Vic) and in settlement agreements compromising VCAT proceedings means costs on a party/party basis, not on an indemnity basis. The VCAT decision in Reid v FAI General Insurance, which had been widely relied upon for the proposition that costs in domestic building insurance claims should be on an indemnity basis, was disapproved. A building owner exercising rights under Condition 9 of the policy stands in the shoes of the insured builder and can only recover from the insurer an amount equal to the insurer's liability to the insured.