Kernaghan v Corrections Corporation of Australia Staff Superannuation Pty Limited (No.3 ) [2007] FCA 2018

Kernaghan v Corrections Corporation of Australia Staff Superannuation Pty Limited (No.3 ) [2007] FCA 2018

Interest on $300,000 is payable by CGU from 2 August 2004 on $200,000, with interest on the full $300,000 from 11 July 2007, as CGU was unreasonable not to make any payment earlier, though an exact assessment was not possible. Indemnity costs were refused as rejection of Calderbank offer and withdrawal of non-disclosure defence were not unreasonable. Costs payable by CGU to cross-claimants for the relevant period are reduced by 30% to reflect inefficiencies. AIMS to pay 30% of common costs incurred by CGU.

Parties
Applicant: Donald Kernaghan & Ors; First Respondent and First Cross Claimant: Corrections Corporation of Australia Staff Superannuation Pty Ltd (ACN 065 347 186); Second Respondent and Second Cross Claimant: Terence Arthur Lawson; Third Respondent and Third Cross Claimant: John Kenneth Twomey; Fourth Respondent and Fourth Cross Claimant: Australian Integration Management Services Pty Ltd (formerly Correction Corporation of Australia Pty Ltd) (ACN 010 921 641); First Cross Respondent: CGU Insurance Limited (ACN 004 478 317); Second Cross Respondent: Chubb Insurance Company of Australia Pty Ltd (ACN 003 710 647)
Jurisdiction
Australia
Judgment Date
04 October 2007
Procedural Posture
Civil / Post Judgment Costs and Interest Decision
Outcome
Orders made as to interest and costs apportionment; parties to agree formal orders.
Legal Topics
Costs, Interest, Indemnity Costs, Insurance Contracts Act 1984 (cth), Calderbank Offers
Insurance Law Civil Procedure Costs Interest Indemnity Costs Insurance Contracts Act 1984 (cth) Calderbank Offers

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Parties

Donald Kernaghan & Ors

Applicant

Corrections Corporation of Australia Staff Superannuation Pty Ltd (ACN 065 347 186)

First Respondent and First Cross Claimant

Terence Arthur Lawson

Second Respondent and Second Cross Claimant

John Kenneth Twomey

Third Respondent and Third Cross Claimant

Australian Integration Management Services Pty Ltd (formerly Correction Corporation of Australia Pty Ltd) (ACN 010 921 641)

Fourth Respondent and Fourth Cross Claimant

CGU Insurance Limited (ACN 004 478 317)

First Cross Respondent

Chubb Insurance Company of Australia Pty Ltd (ACN 003 710 647)

Second Cross Respondent

Procedural Posture

Civil / Post Judgment Costs and Interest Decision

Legal Issues

  1. 1 From what date should interest run on the $300,000 costs indemnity?
  2. 2 Is CGU liable for indemnity costs based on a Calderbank offer?
  3. 3 Should indemnity costs be awarded due to withdrawal of non-disclosure defence?

Ratio Decidendi

Interest on $300,000 is payable by CGU from 2 August 2004 on $200,000, with interest on the full $300,000 from 11 July 2007, as CGU was unreasonable not to make any payment earlier, though an exact assessment was not possible. Indemnity costs were refused as rejection of Calderbank offer and withdrawal of non-disclosure defence were not unreasonable. Costs payable by CGU to cross-claimants for the relevant period are reduced by 30% to reflect inefficiencies. AIMS to pay 30% of common costs incurred by CGU.

Court Disposition

Orders made as to interest and costs apportionment; parties to agree formal orders.

Orders

  • By 12 October 2007, cross-claimants to file and serve minutes of proposed orders reflecting court's conclusions.
  • Interest on $200,000 from 2 August 2004 to 11 July 2007, then on $300,000 thereafter until payment by CGU.