King & Wood Mallesons

Asia-Pacific 100 position: 2

Can a statutory charge affect advancement of legal costs for an appeal?

King & Wood Mallesons’ previous alert discussed the NSW Court of Appeal’s decision on the operation of section 6 of the Law Reform (Miscellaneous Provisions) Act 1946 (NSW) (s 6) in the Great Southern proceedings. The court unanimously held that s 6 did not apply to the claims in those proceedings because they were not instituted in a NSW court. This article considers what the decision may mean for advancement of legal costs on appeal.

The court held that s 6 creates a charge only in relation to insurance moneys that are, or may become, payable in respect of a liability to pay damages or compensation and not otherwise. The court found that until a liability to pay damages or compensation has been determined by judgment, award or settlement, there is nothing to which the charge can attach or on to which it can descend.

If s 6 was construed to include in its scope all the moneys that might be payable under a contract of insurance, then this would alter the contractual rights of the insured to be advanced defence costs. The court held that there was nothing in s 6 to suggest that it was intended to alter such rights, and if this was the intention then parliament would have provided so in express terms…

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