Defence costs are not litigation costs

dreamstime-s-25435678You cannot live in Melbourne and not have a story involving the Australian Football League as a lead story each day.

Earlier this week it spilt over to the insurance industry when high profile personality, James Hird allegedly is taking action against an insurer for not meeting the costs of his litigating against the AFL and ASADA (Australian Sports Anti-doping Authority).

As I read what has been published, it appears that the Insurers position is that their policy protects against defence costs in actions taken against an Insured but not for actions commenced by an Insured. This is an important point that everyone either selling or buying cover under a liability or financial lines program needs to understand and appreciate.

I think it is now accepted that unless you are a millionaire or a pauper (the later being able to claim legal aid) Australian’s cannot the legal system. If middle Australia loses then they could lose their house. I recall reading a well researched report on the high cost of litigation a few years back. For those interested, here is a link.

This demonstrates the importance of liability insurance which comes with motor vehicle, home and contents policies, contract works, liability policies along with management liability, cyber insurance, directors and officers insurance and professional indemnity to name but a few.

It also explains the rise of litigation funders who may assist where there is a good chance of financial reward from an action started.

With “no win, no fee” matters, while the lawyer acting for you may not charge if they fail, you may well be up for the legal costs of the other side if you fail.

I fear that, if my understanding is correct, Mr Hird may be throwing good money after bad in chasing the insurer unless he can demonstrate that the legal costs were indeed defence costs as defined in the policy. To see whether they are or not we will have to wait and see and if things go as they have in the past we will read all about it in the press.

One response to “Defence costs are not litigation costs”

  1. Alex Damon says:

    The list of civil matters for which legal aid is available is very limited, so I don’t think being poor is a very good option. Even in criminal matters legal aid works on a meagre budget generally guaranteed not to give poor people proper representation. And if middle Australia does get defamed and can’t do anything about it, middle Australia should be thankful that it has a house not to risk.

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