The Magistrates’ Court General Civil Procedure Rules 2010 (“the Rules”) have recently been amended to alter a number of key forms and rules.

The most significant change for insurers relates to the procedure by which it, as the insurer of a Defendant, may settle a claim once legal proceedings have been issued.

The Present Position

At present, a Defendant, or an insurer on the Defendant’s behalf, is usually able to resolve a Magistrates’ Court proceeding by paying the total amount of the claim and the costs as stated on the Complaint. The Rules specify that if “the Defendant” pays the amount stated within the time limit for giving a Defence then ‘the proceeding must come to an end’.

Under the existing Rules it is clear that if settlement is reached within 21 days of service, no interest is required to be paid on the claim to bring an end to the proceeding. There is, however, some debate as to whether the Plaintiff may be entitled to additional costs incurred, such as costs associated with service difficulties.

The New Amendment

The amended Rules add an additional step and additional problems to this previously straight forward settlement procedure.

The amended Rules now provide that:

  • if the Defendant pays the amount stated on the Complaint within the time limit for giving a Defence; and
  • the Plaintiff accepts the amounts paid as full satisfaction of the claim (including any interest and costs), the proceeding ends on that acceptance by the Plaintiff

Accordingly, the proceeding does not end by the Defendant’s payment of the amount stated on the Complaint (within the time required), but by the Plaintiff’s acceptance of the amount in full satisfaction of the claim.

Implications

The amendment of the Rules allows a Plaintiff the discretion to refuse to accept the amount stated on the Complaint in full satisfaction of the claim and demand a further amount for additional costs and interest before the proceeding is brought to a conclusion.

If no agreement is reached, the “dispute” would have to be determined by the Court.

There may be some merit in amending the Rules to allow Plaintiffs the right to claim additional costs which have been properly incurred.

However, the entitlement to claim interest is somewhat unexpected.  The new amendments appear to give the Plaintiff an entitlement to claim interest on the claim from the date the Complaint was issued until the date of settlement – assuming that the claim does entitle the Plaintiff to validly seek interest.  The calculation of interest could be a tedious task and it will probably be necessary for the Courts to provide some guidance with respect to interest.

Accordingly, before making payment to settle a claim, a Defendant’s insurer will now need to liaise with the Plaintiff or Plaintiff’s lawyers to clarify whether the amount specified on the Complaint will be subject to any additional costs or interest.

Further claims by the Plaintiff or Plaintiff’s lawyers will therefore need to be scrutinised to determine whether such further costs are reasonable and whether the Plaintiff is entitled to payment of interest.

Address for Service in Victoria

The amended Rules also now require a Plaintiff and a Plaintiff’s solicitors to give an address for service of documents in Victoria. 

Presumably this amendment has been made as a result of the increasing trend for legal practitioners in other states to act for Plaintiffs and not disclose an address for service in Victoria.

Application

The amendment to the Rules comes into operation on 1 February 2015 and applies to all proceedings issued on and after this date.