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[2026] NSWDC 48
General information, not legal advice.
District Court of NSW
2026-03-18
Abadee DCJ
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Source: NSW Caselaw (www.caselaw.nsw.gov.au). Converted to plain text by ZoeLaw. Not the official version.
Medium Neutral Citation: Amirbeaggi v AAI Limited [2026] NSWDC 48
Hearing dates: 13, 14 March 2026
Date of orders: 18 March 2026
Decision date: 18 March 2026
Jurisdiction: Civil
Before: Abadee DCJ
Decision: See [157]-[159]
Catchwords: CIVIL PROCEDURE – application for permanent stay or dismissal of proceeding – abuse of process - indemnity dispute following storm event – rectification works occur following institution of proceeding – suggested ‘destruction’ of evidence after commencement of a proceeding – insurer contends that the works unfairly prejudices its defence – whether test for abuse of process distinct for categories of case involving deliberate destruction of evidence in a pending proceeding – whether an abuse of process committed – whether the appropriate remedy is an order for dismissal or stay
Legislation Cited: Civil Procedure Act 2005 (NSW), ss 57, 58, 67
Evidence Act 1995 (NSW), s 140
Uniform Civil Procedure Rules 2005 (NSW), r 13.4
Cases Cited: Amirbeaggi v AAI Limited [2025] NSWDC 477
Batistatos v Roads and Traffic Authority of New South Wales (2006) 226 CLR 256
Cessnock City Council v 123 259 932 Pty Ltd (2024) 281 CLR 39
Challis & Anor v Ford Motor Company of Australia Pty Ltd [2023] QDC 193
Clark v New South Wales (2006) 66 NSWLR 640
Fuji Xerox Australia Pty Ltd v Lee & Anor [2003] QSC 303
GLJ v The Trustees of the Roman Church for the Diocese of Lismore (2023) 280 CLR 442
Hunter v Chief Constable of the West Midlands Police [1982] AC 529
Palavi v Radio 2UE Sydney Pty Ltd [2011] NSWCA 264
Pathmanathan v Healthscope [2020] FCA 65
UBS AG v Tyne (2018) 265 CLR 77
Walton v Gardiner (1993) 177 CLR 378
Willmot v Queensland (2024) 419 ALR 623; [2024] HCA 42
Texts Cited: J D Heydon Cross on Evidence (14th ed, e-looseleaf) LexisNexis
Category: Procedural rulings
Parties: AAI Limited t/as Suncorp Insurance (Applicant)
Farshad Amirbeaggi (Respondent)
Representation: Counsel:
Mr S Ahmed (Applicant)
Mr O Jones SC (Respondent)
Solicitors:
Mills Oakley (Applicant)
YPOL Lawyers (Respondent)
File Number(s): 2023/00235327
Publication restriction: Nil.
This proceeding, which commenced on 24 July 2023, concerns an indemnity dispute between the insurer, AAI, and the insured, Mr Farshad Amirbeaggi. Mr Amirbeaggi is an experienced solicitor in practice since 2001. Part of that experience has concerned construction cases. Another part has concerned insurance cases. On 9 June 2021 Mr Amirbeaggi entered into a home and contents policy underwritten by AAI whose period expired on 9 June 2022. The dispute followed a significant storm event that occurred in Sydney in February 2022. Mr Amirbeaggi brought a claim that the insurer was required to indemnify him for water damage to the home (with recent improvements to it) located on the residential property he owned in Woollahra (the ‘Property’). AAI denied liability for damage caused by the Storm Event on or about 1 June 2023, citing the engagement of multiple exclusions in the policy.
It is uncontroversial that following the institution of the proceeding, renovation works had occurred to the home on the Property at Mr Amirbeaggi’s behest. The insurer complains that these works amounted to a ‘destruction’ of evidence and that such occurrence, in a pending proceeding, has irremediably prejudiced its defence in the insurance dispute such that it cannot now receive a fair trial. It says that Mr Amirbeaggi was not just a typical insured home owner who might innocently, but mistakenly, have destroyed relevant evidence. He was, instead, a solicitor with over 20 years’ experience, including experience in construction and insurance cases, who must have known of the significance of the alterations to the home to the insurer’s capacity to defend the proceeding, but proceeded with those alterations regardless, without the insurer’s prior knowledge and approval.
By a notice of motion it filed on 20 December 2024, AAI sought summary dismissal, under r 13.4 of the Uniform Civil Procedure Rules 2005 (NSW) or, alternatively, a permanent stay of the proceeding, under s 67 of the Civil Procedure Act 2005 (NSW).
It may be wondered why, 15 months on, it has taken so long for the application to be heard. Some of the background is referred to in a judgment I delivered last November, when I acceded to an adjournment application to enable Mr Amirbeaggi to rely upon evidence relevant to the interlocutory application [1] ; with AAI having the opportunity to rely on evidence in reply.
At this stay application, the parties relied on the following evidence.
On the eve of the motion, the Court received a 12-volume Court Book (numbering 5,341 pages). At the hearing of the application, the Court indicated that the parties could not assume that consideration would be given to material not specifically relied upon by the parties’ Counsel in argument.
For AAI (henceforth the applicant), it principally relied upon:
affidavits (and exhibits) of Mr Papaianni, a partner of Mills Oakley, being solicitors for AAI, sworn 20 December 2024 (Exhibits A & B) and 12 November 2025 (Exhibits C & D);
affidavits (and exhibits) of Mr Darryl Pickering, a building consultant, sworn 19 March 2025, 4 November 2025 & 13 February 2026 (Exhibits E, F, G, H and J);
affidavits (and exhibits) of Mr John Grunberger, a structural engineer, sworn 18 March 2025, 5 November 2025 & 26 February 2026 (Exhibits K, L, M, N and O).
For Mr Amirbeaggi (henceforth the respondent), he principally relied upon his affidavits (with exhibits) sworn 15 July 2024 (Exhibits 1 & 2), 12 November 2024 (Exhibits 3 & 4) and 10 November 2025 (Exhibit 5). He also relied upon an affidavit of Mr Perigo (which was admitted over the applicant’s objection) dated 11 March 2026 (Exhibit 6).
Included within the Court Book were two sets of written submissions from the parties. I have taken those written submissions into account, supplemented as they were by oral addresses after the conclusion of the evidence.
At the hearing of the motion, Counsel for the applicant supplied the Court with a chronology (MFI 5), which I have also had regard to. It was not suggested on the respondent’s behalf that the chronology was inaccurate or a partisan document. Nor did the respondent seek to supplement it.
The respondent had been the owner of the Property since 2017. He has leased it since September 2020. The home on the Property, a three-storey terrace, was understood to have been built in the 1940s.
On or about 19 January 2017, about 5 years before the pivotal storm in February 2022 (the Storm Event), the respondent entered a construction contract with the Matrix Group Co Pty Ltd (Matrix). The scope of the works under that contract was the ‘full renovation of the terrace both internally and externally’. This contract terminated in February 2018. The respondent obtained a report from a construction expert, Adam Perigo, distilling incomplete and defective works, including water damaged floorboards, the upstairs bathroom and ensuite and the waterproofing leak to the kitchen and dining room (the ‘Matrix defects’). In his affidavit, Mr Perigo deposed to having advised the respondent about the property from July 2017 to early or the middle of 2021. Mr Perigo conducted his first inspection of the Property on 30 August 2017.
The respondent brought a lawsuit for damages in this Court against Matrix in March 2018 in respect to the Matrix defects, after having terminated the contract on 22 February 2018. That proceeding was later transferred to the Supreme Court. The respondent obtained a monetary judgment against Matrix for a sum of approximately $850,000. However, Matrix entered into liquidation. Thereafter the respondent claimed against HBCF (aka iCare). His claim against that entity was confined to those losses the applicant was unable to recoup against Matrix itself. That proceeding remains on foot.
Mr Perigo completed his last inspection on 9 March 2018.
On 1 August 2018, Joseph Tobiano was engaged to undertake rectification works of the Matrix defects. He ceased performing those works on 1 February 2019.
Around July 2019, the ground floor of the Property was flooded with water and sewerage. This may be described as the ‘2019 Water Event’. There was damage to the timber flooring, skirting boards and timber treads, amongst other things. In the course of an investigation of that event, a water leak was identified as coming from the kitchen.
Between February 2020 and June 2020, the respondent engaged Scott Wightley to undertake all the rectification work from the flooding and kitchen leak events of 2019. Those works were completed in June 2020. The Property was tenanted from September 2020.
In March 2021, the respondent was informed by the tenant that water leakages were apparent in the ground floor of the kitchen, including in a cupboard under the kitchen sink and mould on the wall at the base of the kitchen island causing floorboard damage; and an issue with the front bedroom balcony and Velux Skylight in the main bathroom. This may be described as the ‘2021 Water Event’.
On 24 March 2021, the respondent sent an email to his real estate agent in connection with the 2021 Water Event, in which he expressed his concern about a “water penetration issue” and indicated that it “may be necessary to lodge an insurance claim.”
On 26 April 2021, an invoice was issued by Max Plumbing and Roofing which indicated that the gutter located at the front part of the property required replacing.
By 9 June 2021, the subject policy commenced.
On 13 August 2021, the respondent affirmed an affidavit in his proceeding against Matrix.
On 22 December 2021, Mr Adnun, of CRD Building Consultants (engaged by iCare), contacted the respondent.
The respondent’s case was that the ‘Storm Event’ in 2022 was actually an event spanning the period 21 February 2022 to 9 March 2022.
On 15 March 2022, the insurer instructed Kingston Building Australia to attend the site to complete temporary works.
A number of persons attended the Property up to the date that the proceeding commenced. In April 2022, Mr Adnan (of CRD) attended (for iCare). A builder from the Johns Lyng Group (JLG) attended (for the insurer) in May 2022 and in June 2022. Mr Greg Matthews (of GM Building Consultants) attended (for the respondent) in May 2022. Reports were prepared. A plumbing report from Evolution Plumbing was prepared in July 2022. A report from CRD was prepared in July 2022. JLG reported in August 2022.
In March 2023, the respondent provided certain reports to the applicant. These included the report of an electrical engineer (Toby Murdoch), a report of Mr Matthews (building consultant) and a report of a quantity surveyor (Wilde Woolard). In his evidence at the hearing, the respondent also says he provided a report of a hygienist.
The applicant arranged for JLG to assess the reports that the respondent had provided to it. On 8 May 2023, it also instructed Mr Grunberger, a structural engineer, to attend the site and prepare a ‘causation report’. The problem and his task was defined as follows:
“Tenants have reported water leaking through a light fitting and water damage to ceiling in bathroom. Exact time of incident unknown. Engineer to provide report for water entry to kitchen sink cabinetry/dining room wall lining, cause of damages to entry level floating floor.”
On 15 May 2023, Evolution Plumbing issued a leak detection report.
Mr Grunberger attended the site on 16 May 2023 and spoke with the respondent (over the phone) and the tenant.
On 26 May 2023, Mr Grunberger reported to the applicant. In the Executive Summary to that report, Mr Grunberger wrote as follows:
“2.1 The water ingress into the upstairs bathroom has been caused by the failure of the silicon seal around the skylight. The silicon has deteriorated to such an extent as to cause the water staining to the bathroom ceiling.
2.2 The water ingress into the upstairs en-suite has been caused by the backflow of rainwater due to the undersized gutter outlet pipe located above the location of the water-stained ceiling.
2.3 The water staining and mould to the lower level kitchen cabinetry has been caused by the failure of the waterproof membrane along the external wall of the kitchen combined with an inadequately sealed penetration through the wall.
2.4 The water staining and mould along the base of the western wall of the kitchen/dining area has been caused by the overflow of the gutter into the cavity space combined with the absence of weep holes along the base of the wall.
2.5 The minor tenting of the floating timber floor in the entry hall and living room has been caused by the dampness and elevated moisture level in the sub-floor area.
2.6 It is our opinion that the above damages have been exacerbated by the storms in February and March 2022 but have not been the proximate cause of the damage…”
On or about 1 June 2023, the applicant denied the respondent’s claim for indemnity. It provided the respondent with a copy of Mr Grunberger’s report.
On 24 July 2023, the respondent commenced this proceeding by filing his statement of claim. At the hearing of this application, the parties drew the Court’s attention to distinct aspects of that pleading.
For the applicant, reference was made to paragraph 32.6, in which the respondent particularised his loss and damages partly as the costs, losses and liabilities incurred, and to be incurred, “relating to the presence and rectification of the Storm Damage (including the Water Damage)” (emphasis supplied). Storm Damage and Water Damage were defined terms in the pleading. ‘Storm Damage’ was defined not only by reference to the home and its fixtures, but also by ‘The Improvements’ which had earlier been defined (in the particulars to paragraph 4) as including renovation works conducted between 2017 and 2020 “by using premium finishes, fittings, and fixtures”. Such ‘renovation’ works appeared to include a reference to the works that had been conducted by Matrix between 2017 and 2018, although Matrix was not referred to by name. Nor was reference made to the remedial works undertaken in relation to the Matrix defects (or the 2019 water event).
The applicant also referred to that part of the respondent’s claim against the applicant relating to an action for contravention of the Australian Consumer Law. The respondent had pleaded certain express and implied representations, which he asserted were misleading or deceptive and, as far as the element of causation was concerned, he pleaded that but for those representations, he would “have carried out remedial works to make the Property habitable” (paragraph 40.1).
The pleaded facts (or particulars) in paragraphs 32.6 and 40.1 of the statement of claim elicited, relevantly, two requests for particulars from the applicant’s solicitors (made on 24 August 2023):
(a) request numbered 17(c): this sought clarification of the basis upon the claim for rectification costs was made; and (b) request number 24(a): this sought an indication from the respondent’s solicitors whether the respondent had taken steps to carry out remedial works.
On 3 November 2023, the respondent’s solicitor (Mr Lusk, of YPOL Lawyers) answered the requests for particulars.
The answer to the request 17(c) was:
“Repairs are on-going and will be quantified upon completion of repair works. For present purposes, the plaintiff relies upon the report of Ian Tucker dated 31 March 2023, which has been provided to your client.”
“The plaintiff is currently meeting with builders to obtain quotes and ascertain availability to undertake works. Upon completion of those works, he intends to take steps to sell the property.”
There is now a lively dispute as to what was conveyed or implied by this latter response. The applicant argues that this indication implied that the applicant would be notified by the respondent once quotes were obtained. The respondent argues that the applicant was, by this indication, on notice of the respondent’s intention to undertake repair works, but did not take the opportunity when such opportunity arose to demand that those works cease immediately, or be suspended, so as to permit further inspections by those engaged by the applicant.
At the hearing of the application, the respondent was cross-examined about this ‘notice’. He accepted that Avail, an entity I will shortly describe, had, by then, been engaged to undertake renovation works, but denied that what his solicitor wrote on 3 November 2023 about the circumstance that he was only obtaining quotes was false.
In his closing address, Senior Counsel for the respondent argued that the whole of his client’s claim needed to be considered in its entirety. It was not just a ‘vanilla’ claim for the applicant’s denial of indemnity. It featured, as an important part, an additional claim that the applicant had breached its duty of utmost good faith. This was emphasised since, as Senior Counsel for the respondent submitted, even if everything that the applicant said about the importance of the Matrix works was right, there was no basis for staying or summarily dismissing the respondent’s claim based upon the applicant’s alleged breach of its duty of good faith.
Further, the respondent argued that in order for the applicant’s complaints about an inability to probe the Matrix defects to be relevant, or to gain traction, the applicant needed to amend. It was submitted that what it was really complaining about was its inability to now explore an as yet, non-pleaded additional ground for denying indemnity.
It is now common ground that following the Storm event, renovations occurred between September and October 2023. This involved excavation of the existing basement/subfloor for the construction of cellar space. Those proceedings continued into 2024. Timesheets (for labourers and a supervisor) appeared to indicate services were performed on 14 September 2023. On 2 November 2023, Avail Buildco Pty Ltd issued an invoice to the respondent (INV-0118) for works completed at the Property “til 30 October 2023”.
The applicant says that it only learnt about the Matrix defects and litigation against that company on 6 November 2023 when documents were supplied to accompany answers to particulars.
Out of the documents that the applicant says it only obtained from November 2023, the applicant argues that the respondent’s substantive affidavit (with a voluminous exhibit in his proceeding against Matrix) raised, relevantly, certain matters which the applicant contends are relevant to the current indemnity dispute; including water ingress events affecting the Property prior to the inception of the policy, occurring in 2019 and 2021. The applicant also argues that an email of 24 March 2021 referred to earlier in these reasons evinced the respondent’s awareness that he might bring an insurance claim for water ingress. It also raised an issue about the adequacy of a silicon seal around the Velux skylight. The respondent’s affidavit in his proceeding against Matrix, so the applicant said, raised other overlapping issues between Matrix’ work and the current claim relating to the upstairs main bedroom and en-suite bathroom, waterproofing leaks into the kitchen and ground floor, the upstairs en-suite and timber flooring.
Returning to the narrative, however, on 20 March 2024, the applicant’s solicitors, Mills Oakley, sent an email to the respondent’s solicitors explaining the relevance of documents it had previously sought (on 9 February 2024) concerning the scope of works performed by Matrix.
After documents had been produced on subpoena by Matrix’s liquidators, in a letter sent to YPOL, dated 4 June 2024, Mills Oakley conveyed the applicant’s concerns that there was some apparent overlap between the respondent’s complaint of defective works against Matrix, leading to water damage, and the respondent’s claim against the applicant of water damage allegedly arising from the Storm Event, and Mr Amirbeaggi’s references to other instances of water ingress (in 2019 and 2021) prior to the inception of the policy. The applicant relies on this correspondence in rebuttal to the respondent’s point that the applicant was on notice that he was conducting renovation works from 3 November 2023: even if that was so, then from at least 4 June 2024, the respondent was still aware of the applicant’s concerns about the state of the property but still had not disclosed the recent works.
On 12 July 2024 (following a court direction from the Judicial Registrar on 2 July 2024), the respondent served 5 expert reports, and another affidavit from himself (amounting to 1,800 pages including the exhibit), on 16 July 2024 in this proceeding. The expert reports were those of Mr Matthews, Mr Tucker, Mr Murdoch, Mr Etch and Mr Ellis.
The applicant’s solicitor, Mr Papaianni, was dissatisfied with the content of that evidence in terms of it adequately answering the applicant’s concerns identified in the letter of 4 June 2024.
From late July 2024, Mr Papaianni deposed to steps by which the applicant set about engaging its experts to give evidence in the proceeding. The Court had directed the applicant to serve its evidence by 1 November 2024.
On 11 September 2024, Mr Pickering, a building consultant, was instructed to review the material and conduct a physical inspection of the Property and prepare what he termed a ‘litigation-compliant’ report. However, in September 2024, the applicant learnt that Mr Pickering had constraints on his capacity to prepare a report. On 27 September 2024, in a submission to the Online Court, Mr Papaianni explained that Mr Pickering would not be able to inspect the Property until the end of October 2024. That submission came to the notice of the respondent’s lawyers, who consented to the requested extension of time. The applicant duly obtained the extension, with a direction to serve its evidence by 13 December 2024.
Mr Papaianni deposed that he sought an indication from his counterpart as to the difficulties in being able to arrange access to the property for inspections. He deposed that in a conversation with Mr Simon Lusk, of YPOL, on 25 October 2024, he learnt for the first time that there had been ‘recent’ renovation works undertaken to the property, but Mr Lusk had indicated to him that YPOL did not know that the works had been carried out or their extent. Mr Papaianni also deposed to learning, for the first time, that from the respondent’s perspective, notice of those works had been given in YPOL’s answer to the request for the particular numbered 24 in its letter of 6 November 2023.
At the hearing of this application, the respondent denied that up to this point, he had concealed from his lawyers the circumstance that renovation works had commenced. He said that he had told them towards the end of 2023.
On 29 October 2024, Mills Oakley sent a letter to YPOL in which various assertions were made culminating in a complaint that the applicant had not been notified of the renovation works and making urgent efforts to have its experts.
On 5 November 20224, the respondent’s lawyers sent a letter to the applicant’s lawyers. In that letter, the respondent expressly contended that: (1) AAI had already inspected the property in the period from 2022 to May 2023, before the current proceeding had commenced; (2) the applicant had not expressed objections or concerns when, on 3 November 2023, the respondent had flagged that he was, at that point, meeting builders to obtain quotes; (3) the current state of the property was “substantially different” to the state that it was in after the Storm Event and to the state of the property before the works had commenced.
The applicant complains that the respondent denied access to the property completely until after 28 November 2024 and only thereafter on a conditional basis.
The applicant records that with a due date for its evidence to be served in the substantive proceeding looming, it was forced by these events to file a motion compelling the respondent, amongst other things, to grant access to the property. That motion was filed on 11 November 2024. Access was ultimately obtained as a result of a Court order (by Andronos SC DCJ) 20 November 2024.
Other documents were subsequently produced. These indicated that the building company, Avail BuildCo Pty Ltd (‘Avail’) had actually started rectification works by at least 11 September 2023 and had issued multiple invoices for work even before the indication (as the applicant would put it) provided to the applicant (on 3 November 2023) about the respondent ‘currently meeting’ builders to obtain quotes. In his affidavit, Mr Papaianni had pieced together invoices from 2 November 2023 to 4 September 2024. Correspondence sent on behalf of the respondent indicated that the actual construction contract with Avail had not been located.
Mr Pickering inspected the property on 15 November 2024, alongside the respondent and others. He took contemporaneous notes of his observations.
Mr Grunberger had a site inspection with others on 20 November 2024. He took photographs during this inspection. He discerned that the state of the Property had substantially altered since his first inspection, in terms of the areas of claimed damage from the February 2022 Storm event as well as the property overall. He itemised those differences in paragraph 34 of his affidavit of 18 March 2025.
On 5 December 2024, Mr Grunberger received instructions from Mills Oakley to prepare a ‘litigation compliant’ report.
On 20 December 2024, the applicant filed the current motion. I noted earlier that in my reasons for the decision granting an adjournment of that motion to March 2026, some reference was made to the delay in the hearing of the motion. Mr Papaianni’s affidavit of 12 November 2025 sets out further detail.
Generally, the applicant complains that the extensive renovations commencing from 1 September 2023, after the proceeding had commenced in July 2023, has irremediably resulted in prejudice to it. The applicant only learnt about the renovation works on 25 October 2024. This was after expressing its concerns to the respondent in June 2024 about an apparent overlapping of concerns about the effects of works carried out by Matrix and other instances of water ingress which, although the events had occurred, had not been disclosed to the applicant prior to the inception of the policy.
The applicant submits that the respondent had resisted the insurer’s attempts to acquire information and more particularly, to have its experts access the property.
The respondent (an experienced litigator) had led the applicant to think that a full disclosure of events would be made in the evidence served. That evidence was served in mid-July 2024, but it did not address the subject of the recent works that had commenced in September 2023. Meanwhile a builder (Avail) was continuing recent renovation works which substantially altered the condition of the property. Invoices indicated that substantial work was carried out from June to November 2024. The property has now been completely rectified.
The applicant’s experts, it was submitted, have been deprived of the opportunity to thoroughly investigate the causes of recurring water entry into the property since 2016, the overlap claimed as damage in the respondent’s litigation and to properly respond to the respondent’s evidence in chief.
The applicant relies upon evidence from Mr Grunberger, the structural engineer. Mr Grunberger had prepared a pre-litigation report in May 2023. The applicant relies upon that expert’s evidence to contend that had it known of extensive prior defective works, the history of the respondent’s Matrix litigation and prior water entry events in 2019 and 2021, Mr Grunberger would have been asked to assess the recurring water entry locations and perform a general ‘condition assessment report’. A condition assessment report would have allowed him to opine on whether damage caused to the Property was as a result of a Storm event or prior defective work (i.e. the Matrix defects or the works undertaken to rectify the Matrix defects). As it was, Mr Grunberger had not been provided with instructions about pre-existing defects plainly because the applicant was unaware of them.
Around late October 2024, once information had come to light, Mr Grunberger opined that there was an overlap of the damaged area, issues associated with the Matrix works and the current indemnity dispute. On 20 November 2024, he attended the property and observed that it had been substantially altered, with some of the areas of claimed damage from his earlier report repaired.
The applicant retained Mr Grunberger to provide a supplementary report directed to the issue of what damage was attributable to the Storm event and what part not attributable to it; and also, what damaged areas attributable to the Storm event had been repaired following the recent works. Mr Grunberger indicated that he was unable to provide that opinion. He said that at his first inspection, he did not adopt the frame of reference he usually would have had he been aware of a history of defects. He says he would have taken alternative examinations. These cannot now be undertaken.
Mr Grunberger was cross-examined on the application. Mr Grunberger had some difficulty accepting that when he inspected the property for the first time in May 2023, part of his purpose was to verify an assumption he had made (based on another person’s report) that the Property was both in excellent condition and watertight even though a plain reading of his affidavit conveyed that he actually did have that purpose. He indicated that as a result of a report attributable to Mr Perigo, he doubted whether the building professionals who had purported to rectify the Matrix defects had effectively done so. He was referred by the respondent’s Senior Counsel to alternative sources of information, short of his own further inspection, which may be relevant to the conclusions he drew. These included photographs, a CRD report and a report of the JLG and an inspection by the Kingston Building Centre. Whilst he accepted that these were relevant sources of information (which he had not considered), he maintained that it was still necessary for him to conduct an inspection himself.
In re-examination, Mr Grunberger elaborated that his doubts about the adequacy of the works, to the extent that they were sourced from the CRD report, concerned residual issues about the quality of the work in the wet areas, in the kitchen, bathroom, dining and living areas, the finishes and the floorboards and planter box. He said he could not now say whether the defects, whether or not they were the Matrix defects, had been fixed. To do so, he needed to inspect the Property with reference to the itemised list in the CRD report; and the Property had now been rendered habitable. He said that the last time he had been out to the property in late 2024, he was limited as to the nature of the inspection he could carry out.
The applicant also relies upon evidence of Daryl Pickering, a building consultant. He only saw the property for the first time in September 2024. The applicant contends that for several reasons, that expert required a site attendance. Mr Pickering also attended the property in November 2024. He indicated that there were a number of areas of damage identified in one of the reports that the respondent relied upon, but he deposed that he was no longer able to examine them as they had been substantially altered through the recent renovation work. He indicated that he needed to inspect the property in the condition it was in before the recent renovation works. He was no longer able to opine on whether the Matrix defects, or water ingress from the 2019 and 2021 water events caused the damage (instead of the Storm Event). He was prevented from conducting floor and water tests.
Mr Pickering was also cross-examined at the hearing of the application. He accepted that he had made no enquiries of the professionals who had performed the Matrix defects, or of others who had inspected the Property, such as the JLG, Kingston Building Australia, Evolution Plumbing and Mr Adnan (author of the CRD report).
Mr Pickering accepted that issues associated with the 2019 water events had been dealt with. He was referred to areas of the property where water ingress had been taken and Mr Grunberger’s opinions (which he generally agreed with). He emphasised that a problem with Mr Matthews’ opinion was that data was missing with moisture readings. He thought that this was significant since some materials might give off false moisture readings. He indicated what he would do if given the opportunity, but now could not do so. When he examined the site, he was instructed not to engage in any intrusive testing.
The respondent anticipates that at the hearing, he expects to establish that the Matrix defects would not have permitted water ingress from outside the property and that, in any event, those defects and subsequent issues had been rectified by the time of the Storm event and that the property was in good condition at the time. He explained that rectification work was undertaken by Mr Poletto, Mr Tobiano and Mr Whitely. Although the respondent stated in March 2021 that a further defect had been identified which appeared to result from water ingress, the respondent says he subsequently learned that this was because of a perished silicone sealant.
According to his Senior Counsel, the respondent will also contend that the renovations from September 2023 did not materially interfere with the ability of the applicant’s experts to prepare their evidence. They only converted the subfloor into a cellar and did not impact upon the damaged areas. The 2024 renovations did substitute a new remediation for some parts of the Property, but the respondent will contend that this would not necessarily affect the applicant’s experts’ analysis.
“the inherent power which any court of justice must possess to prevent misuse of its procedure in a way which, although not inconsistent with the literal application of its procedural rules, would nevertheless be manifestly unfair to a party to litigation before it, or would otherwise bring the administration of justice into disrepute among right-thinking people”. [2]
“The varied circumstances in which the use of the court’s processes will amount to an abuse, notwithstanding that the use is consistent with the literal application of its rules, do not lend themselves to exhaustive statement. Either of two conditions enlivens the power: where the use of the court’s procedures occasions unjustifiable oppression to a party, or where the use serves to bring the administration of justice into disrepute.”
Their Honours in that case emphasised (at [45]) the significance of case management principles, noting that courts are less ready than previously to “indulge parties who engage in tactical manoeuvring” which impedes the ‘just, quick and efficient’ resolution of litigation (see also Gordon J at [139]).
In GLJ v The Trustees of the Roman Church for the Diocese of Lismore (2023) 280 CLR 442 (‘GLJ’), Kiefel CJ, Gageler and Jagot JJ observed (at [3]) that:
“…the grant of a permanent stay to prevent an abuse of process involves an ultimate decision that permitting a matter to go to trial and the rendering of a verdict following trial would be irreconcilable with the administration of justice through the operation of the adversarial system. That ultimate decision must be one of last resort on the basis that no other option is available. If a court refuses to exercise its jurisdiction to hear and decide cases in other than exceptional circumstances and as a last resort to protect the administration of justice through the operation of the adversarial system, that refusal itself will both work injustice and bring the administration of justice into disrepute.”
“21. Neither necessary unfairness nor such unfairness or oppression as to constitute an abuse of process justifying a permanent stay of proceedings depends on a mere risk that a trial might be unfair. The party seeking the permanent stay bears the onus of proving that the trial will be unfair or will involve such unfairness or oppression as to constitute an abuse of process. While the onus is the civil standard of the balance of probabilities, the onus has rightly been described as a heavy one, and the power rightly said to be exercisable only in an exceptional case. This is because it is always an extreme step to deny a person the opportunity of recourse to a court to have their case heard and decided. Lest the concept of “exceptional circumstances” be reduced to the formulaic, the power to grant a permanent stay, as Gaudron J explained in Jago v District Court (NSW), is “a power to refuse to exercise jurisdiction” which operates “in the light of the principle that the conferral of jurisdiction imports a prima facie right in the person invoking that jurisdiction to have it exercised”, it being “a basic element of the rule of law, namely, that every person and organisation, regardless of rank, condition or official standing, is ‘amenable to the jurisdiction’ of the courts”. This context underlies the requirement of exceptionality to enliven the power to grant a permanent stay.
22. Moreover, although it has been said that the question whether a permanent stay should be granted on abuse of process grounds “falls to be determined by a weighing process involving a subjective balancing of a variety of factors and considerations”, the ultimate question is not “whether the unfairness to a moving party by reason of a stay outweighs the unfairness to a defending party by reason of the continuation of the proceedings”. It is difficult to conceive of a case in which a mere balancing of competing interests between the parties could justify a permanent stay of proceedings. The metaphor of a “balancing exercise” is best avoided. It cannot be applied to the concept of either the incapacity for a fair trial to be held, or a trial involving such unfairness or oppression as to constitute an abuse of process. It also tends to distract attention from the real issue – the congruence or otherwise of the holding of a trial and rendering of a verdict with the fundamental norms underlying our legal system – and impermissibly refocuses attention on considerations personal to the parties. Considerations personal to the parties are relevant only to the extent that they expose circumstances of the congruence or incongruence in the particular case of the holding of a trial and rendering of a verdict.
23. If a trial will be necessarily unfair or so unfairly and unjustifiably oppressive as to constitute an abuse of process, a court must not permit the trial to be held. If a fair trial can be held and will not be so unfairly and unjustifiably oppressive as to constitute an abuse of process, a court ordinarily has a duty to hear and decide the case.” (emphasis supplied)
“…the purpose of the power (to protect the integrity of the adversarial system) [with]…the extreme consequences of an exercise of the power (a court declining to exercise its jurisdiction).”
“1. The onus of proving that a permanent stay of proceedings should be granted lies squarely on a defendant...
2. A permanent stay should only be ordered in exceptional circumstances...
3. A permanent stay should be granted when the interests of the administration of justice so demand...
4. The categories of cases in which a permanent stay may be ordered are not closed…
5. One category of case where a permanent stay may be ordered is where the proceedings or their continuance would be vexatious or oppressive…
6.The continuation of proceedings may be oppressive if that is their objective effect...
7. Proceedings may be oppressive where their effect is “seriously and unfairly burdensome, prejudicial or damaging”
8. Proceedings may be stayed on a permanent basis where their continuation would be manifestly unfair to a party…
9. Proceedings may be stayed on a permanent basis where their continuation would bring the administration of justice into disrepute amongst right-thinking people…”
The applicant drew attention to principles 3, 5 and 9 as being engaged in this case.
In Willmot, the plurality explained (at [16] and [27]) that the test for a permanent stay was as follows:
“The relevant inquiry is whether any prospective trial will be unfair or so unfairly and unjustifiably oppressive as to constitute an abuse of process. If a fair trial can be held and will not be so unfairly and unjustifiably oppressive as to constitute an abuse of process, a court ordinarily has a duty to hear and decide the case. If the trial will be necessarily unfair, a stay must be ordered.” (emphasis supplied)
“Fairness is to be evaluated in the context of principles and techniques available to trial judges to deal with evidentiary imbalances …First, courts recognise that the degree of satisfaction required under the civil standard of proof may vary according to the gravity of the fact to be proved. Second, all evidence is to be weighed according to the proof which it was in the power of one side to have produced, and in the power of the other to have contradicted. Third, a court is not bound to accept uncontradicted evidence and the ‘facts proved must form a reasonable basis for a definite conclusion affirmatively drawn of the truth of which the tribunal of fact may reasonably be satisfied’.”
Two other principles and techniques were identified at [30], but they appear more germane to the context of cases involving historical sexual abuse. The three principles and techniques identified also appear to have general application to civil cases where there has been a loss of evidence. [3]
The applicant drew the Court’s attention to principles peculiarly applicable to cases where evidence has been deliberately destroyed by a party in a subsisting legal proceeding where the party is aware of the forensic significance of the evidence.
In Fuji Xerox Australia Pty Ltd v Lee & Anor [2003] QSC 303, Chesterman J observed:
“[15] The remedy sought by the defendant’s application (i.e. strike out or dismissal for abuse of process) is drastic. It is to preclude the plaintiff from pursuing what is an arguable right to recover a substantial sum of money. I apprehend that a court would only accede to such an application where it is clear that there cannot be a fair trial and that that consequence is a result of the deliberate action of a party to the litigation.
[16] In this regard the intention of the person who destroys evidence or puts it beyond the reach of his opponent is critical. Actions which are themselves lawful may amount to a contempt of court if done with the intention to interfere with the course of justice.”
Despite the reference to the party’s intention, above, there is authority that posits that it is unnecessary for there to be proof of any contumelious disregard, oppressive conduct or moral delinquency on the plaintiff’s part. It is the objective effect of the continuation of the action that needs to be considered: Batistatos Roads and Traffic Authority of New South Wales (2006) 226 CLR 256 (“Batistatos”) at [70].
In Clark v New South Wales (2006) 66 NSWLR 640 (“Clark”) Johnson J surveyed cases where the appropriate curial response to a party’s destruction of property during a proceeding was the drawing of adverse inferences against the party destroying material before trial, and other cases where the power to dismiss or stay a proceeding had been exercised. At [103]-[104], his Honour continued:
“...the remedies available in such circumstances are not confined to the drawing of appropriate inferences. if the conduct of the destroying party may be characterised as an abuse of process, then the power of the court to stay or dismiss proceedings may be used in an appropriate case. This power is to be exercised sparingly.
- Ordinarily, a party is entitled to initiate and continue proceedings with the court determining those proceedings on their merits. Where, however, a party to proceedings intentionally destroys material which is significant to the determination of the proceedings, and such destruction occurs after the proceedings have been commenced, then a clear foundation would appear to exist for the court to call in aid its power to stay or dismiss the proceedings. The court will have in mind the interests of the individual parties to the civil proceedings, but also the protection of the administration of justice and the integrity of the courts and the system of justice generally. Resolution of an application for a stay or dismissal of the proceedings will consider the question whether a fair trial may take place in the absence of the destroyed material even where an appropriate inference may be drawn adverse to the destroying party.”
On the facts in Clark, the trial judge found that the conduct of the plaintiff in destroying a tape was such an instance of contumelious and blameworthy conduct: after the commencement of the proceeding, he engaged in the intentional destruction of items of potential evidence when their evidentiary significance was known to him (a hearing had been adjourned, on the plaintiff’s application, to enable the forensic testing of the tape). Having determined that an abuse of process was made out, Johnson J considered whether it was sufficient remedy that the other party had the benefit of inferences in its favour, but determined ultimately that this was not so. This was because there was a ‘real and substantial risk’ of the defendant not having a fair trial (at [150]).
Justice Johnson’s statement of principles in Clark was generally endorsed by the New South Wales Court of Appeal in Palavi v Radio 2UE Sydney Pty L**td [2011] NSWCA 264 (“Palavi”) (per Allsop P, Macfarlan JA agreeing) at [93], albeit that Allsop P indicated that the statement needed to be qualified by the circumstance that the authorities Johnson J had drawn upon did not reflect the provisions of the Civil Procedure Act 2005 (NSW), including a party’s statutory duty to assist the court to further the overriding purpose (in s 56(1)). Statements in earlier authorities that had spoken of the fundamental right of citizens to access the courts, and the view that such right should not be denied other than in exceptional circumstances, also had to be read in in the light of the burden (or ‘degree of injustice’: s 58(2)(vi) that a party’s conduct had cast upon its opponent: Palavi (per McColl JA at [183]), dissenting in the result, but not in principle).
The significance of case-management concerns and objectives to stay applications apparent in these observations were echoed in passages in the High Court’s decision in UBS AG, adverted to earlier in these reasons.
Allsop P in Palavi emphasised (at [94]) that the power to order a permanent stay was not exercised to punish a defaulter and should be used sparingly. Moreover, it needed to be used proportionately (see also McColl JA at [166] and [184]). Whether the fairness of a trial has been put in jeopardy requires an evaluation of the potential consequences of the abusive circumstances and all the other circumstances. A trial had to be fair to both parties: it was not ‘just’ to require a defendant to do its best with the evidence it could muster in circumstances where the plaintiff, by conduct that was deliberate and an abuse of the Court’s process destroyed relevant evidence of real significance knowing of its obligations and of the relevance of the material.
On the facts in Palavi, a defamation case, Allsop P (at [95], Macfarlan JA agreeing; McColl JA dissenting) determined that a party had deliberately disposed of two phones which contained relevant material of real significance to the defence propounded by the defendant. The conduct was deliberate and its purpose was to enable her to evade her discovery obligations. Her conduct created a “not insignificant risk” to the defendant’s ability to propound its defence (of substantial truth). Although the defendant may have been able to conduct its defence (without the material), a “real and substantial risk” was deliberately created by the applicant that could be seen to have impaired that defence. The remedy, in that case, was to strike out the imputations affected by the documents (two phones) destroyed by the plaintiff, as the primary judge had. It was not to strike out the entirety of the pleading. The Court of Appeal (by majority) endorsed that ‘proportionate’ response to the circumstance that an abuse of process was established.
In its written submissions, the applicant cited a decision of the District Court in Queensland, being Challis & Anor v Ford Motor Company of Australia Pty Ltd [2023] QDC 193, when in the context of subrogated proceedings commenced by an insurer, a party disposed of a motor vehicle that had caught fire, before a party had the chance to inspect it. The primary judge permanently stayed the proceeding. Porter KC DCJ adopted the statement of principles of Johnson J in Clark at [156].
Counsel for the applicant submitted that the High Court’s exposition of these principles in GLJ and Wilmott needed to be considered in the ‘new world’ [4] context of a sui generis category of case affected by a particular statutory amendment concerning extending the limitation period for a particular type of claim. They dealt with the paradigm of an ‘impoverishment of evidence’, not its deliberate destruction.
These cases of historical sexual assault claims concerned the impoverishment of evidence, before the institution of a legal proceeding. The applicant acknowledged that there was another type of ‘innocent’ loss or diminution of evidence recognised by the applicant were cases where evidence was lost or destroyed in the course of business, before the institution of a proceeding.
Counsel for the applicant submitted that the test of real and significant risk from Clark and Palavi endures beyond the recent statement of principles in GLJ and Wilmott; at least to the type of case being presently considered – the destruction of evidence (after commencement of a proceeding) case. Clark remained good law, with the qualifications identified in Palavi regarding the salience of provisions in the Civil Procedure Act.
The applicant contends that the respondent undertook remediating works in 2023 and 2024 to the Property without prior notice to AAI, with the consequence that AAI’s experts could not undertake inspections. This occurred in a context where (a) he had not previously disclosed the circumstance that works undertaken by Matrix were defective or incomplete and (b) he misled AAI in November 2023 by fostering the erroneous impression that he was in the process of engaging builders when by September 2023 he had already engaged Avail. AAI’s experts argue (and the respondent’s Counsel does not suggest that their arguments are unreasonable) that there is a ‘correlation’ between the ‘Matrix defects’ and the problems about the state of the property after the Storm Event. The respondent sought to conceal those defects in a way that also deprived the applicant of a potentially additional ground for denial of the indemnity claim.
The applicant’s Counsel submitted that his client’s denial of indemnity was based only upon the information it had conducted through the investigative assessments from its experts undertaken in 2022 and 2023. The respondent could have had no actual or reasonable expectation that the applicant would limit itself to such experts once litigation had commenced.
The applicant takes issue with the admissibility of much of what the respondent deposed to in his affidavit in opposition to the application. However, by its written submissions, it accepted that for the purposes of this application, the Court need not resolve factual conflicts on several topics, including disputes about whether or not: (i) the areas constituting the Matrix defects and subsequent water events are actually different to those which are the subject of the indemnity dispute; (ii) the Matrix defects and the 2019 event were rectified; and (iii) recent renovation works were ‘minor’ in nature.
Its primary position was that the Court should find that there is a ‘real and substantial risk’ that it has been denied the right to a fair trial because the opinions of Messrs Pickering and Grunberger about those topics were ‘reasonably held’. The gist of their views was that:
(a) there was overlap between the Matrix defects and subsequent water events and the current claim; (b) they needed to do a site attendance informed by the Matrix defects and subsequent water events (2019 and 2021); and (c) the recent renovation work meant that they could no longer give expert evidence.
These points were elaborated. The key Matrix defects concerned cupped and cracked timber flooring and the state of the upstairs main bathroom and ensuite. The water ingress events occurred in July and August 2019. When reference is made to the marked-up floor plan in a report prepared for the respondent’s use in this proceeding (dated 11 July 2024), there was evident overlap in several locations.
The unstated implication appears to be that because the experts’ views were reasonably held, then the consequence of their being now deprived of the opportunity to inspect the Property before the 2023-2024 renovation works, it must follow that there is a real and significant risk that the applicant has been unfairly prejudiced.
Both Mr Grunberger and Mr Pickering explained their need for site attendances.
Counsel for the applicant submitted, in answer to the respondent’s point about Mr Grunberger already having had the opportunity to inspect the premises before the commencement of the proceeding, that there was a substantial difference between a ‘causation’ report and a ‘condition assessment’ report; the latter of which was inherently or likely to be more ‘holistic’. When he did inspect, in May 2023, he was not apprised of the nature of the works undertaken by Matrix and the nature of the subsequent remedial works prior to the Storm event.
The applicant pointed to what it contended was a contradiction between the respondent’s effective assertion in his 2024 affidavit that Mr Tobiano had adequately performed remedial works following the Matrix defects with the references in his 2021 affidavit indicating residual concerns about work.
He also argued that if the respondent honestly believed that the Matrix defects had been effectively remedied, rather than just subjectively asserting such belief, he could have called Mr Matthews to give evidence to that effect.
Both Mr Grunberger and Mr Pickering described the recent renovation works as extensive; which accorded with the applicant’s lawyer’s description.
It was not a sufficient curial response to the respondent’s abuse for the Court to draw the types of inferences identified by Johnson J in Clark. Since the works from 2023 and 2024 were more or less completed, the applicant was unfairly placed in the position (similar to the opposing party in the Palavi case) of being asked to do the best that it could. They were not now in a position to confirm the applicant’s existing bases for denying indemnity and were now unable to further explore whether or not there may have been additional grounds to deny indemnity. That was unfair.
The respondent submits that the test from Palavi was now displaced by the more recent High Court authorities I have referred to. Senior Counsel accepted, however, the relevance of s 56(3).
The respondent submitted that in the light of recent authority from the High Court, there were only two pathways by which the Court could find an abuse of process warranting a permanent stay. The first was that the respondent was responsible for the destruction of evidence of such significance as to preclude the applicant from providing a meaningful response to the claim brought against it. Secondly, the respondent dishonestly destroyed or substantially impaired evidence which effectively put the evidence beyond useful reach of the applicant. In the latter sense, dishonesty could be inferred in certain cases (such as in Palavi). In this case, however, the respondent’s Senior Counsel argued that in order to reach the standard of proof on such serious allegation, the Court would carefully need to drill down the evidence as to areas of damage to the Property before comparing it to the nature of the renovation works undertaken in 2023.
The respondent cites the exceptional or ‘draconian’ nature of the power and argues, in effect, that its exercise would be disproportionate – the applicant should be left with the opportunity of inviting the hearing judge to draw inferences adverse to the respondent. He points to the ‘myriad’ of complex factual and expert disputes. They need to be fully ventilated at trial. It is premature to resolve them now.
Senior Counsel for the respondent, as noted, emphasised the dual claims in the respondent’s pleading; and specifically his claim that the applicant had breached its duty of utmost good faith. The 2023 renovations did not affect that claim. He did this partly to illuminate other points, regarding the information and evidence that the applicant already had to hand to make its decision to deny indemnity. This included the report from the JLG (which, it was pointed out, had recommended acceptance of the respondent’s claim).
I interpolate at this point that in his submissions in reply, Counsel for the applicant argued that it was not so simple to separate the two claims. He argued that it could not have been a breach of the duty of good faith if the applicant was ultimately right to deny indemnity.
The respondent argues that it would be wrong for the Court to accede to the applicant’s suggestion that the power is enlivened on the basis that the applicant’s experts’ opinions were ‘reasonably held’. It would, in effect, be asking the Court to determine that the proceeding is abusive on the basis of hypothetical factual findings. The respondent suggests, more than once, that he would be entitled to respond to the recent evidence in reply of Mr Pickering and Mr Grunberger.
The respondent contends that it is impractical for the Court to resolve the many assertions, and counter-assertions about such matters as the scope of the rectification works prior to the Storm Event, whether or not there was a water ingress event in 2021, and the scope of the rectification works in September 2023. Especially in connection with the application for dismissal, the Court was referred to observations of Steward J in Pathmanathan v Healthscope [2020] FCA 65 at [8], when his Honour said:
“...the determination of a summary dismissal application does not require a mini‑trial based upon incomplete evidence to decide whether a proceeding is likely to succeed or fail at trial. Instead, it requires a critical examination of the available materials to determine whether there is a real question of law or fact that should be decided at trial…”
However, if (contrary to his contention) it was necessary to consider the merits, Senior Counsel for the respondent submitted that, contrary to the impression that might have been conveyed, the evidence indicated areas of agreement between Mr Matthews (of GMBC) and Mr Grunberger. They agreed, essentially, as to the causal path of the water ingress in the Storm Event. The respondent submitted that where they disagreed was in Mr Grunberger’s views, reflected in several instances in his report, as to whether the defects were the proximate cause of water ingress.
This fed into a separate point regarding the reasonableness of the respondent’s argument. It was submitted that the respondent might have been forgiven for thinking that the scope of the dispute was limited only to what was the proximate cause(s) of the damage. His Senior Counsel acknowledged however that this was not quite what the respondent had actually said was going through his mind.
The respondent joins issue with the proposition that he destroyed evidence through the course of renovations occurring from September 2023 and extending into 2024. By the answer to the request for particulars, he had intimated that he was attending to such works and the applicant could itself have taken steps to preserve evidence. The context, properly considered, indicated that the remedial works that the respondent spoke about were those undertaken to fix the damage from the February 2022 Storm event. The 2023 works involved works to the cellar and were not, in any event, performed to remediate damage from the February 2022 Storm Event.
It was wrong for the applicant to submit that the respondent had lied when it was represented on his behalf in November 2023 that he was currently meeting builders when it was only Avail that had been engaged. Subsequent invoices suggested that there were others, like Mr Wightley, who were still performing work; a matter which, it was said, the applicant knew about.
The respondent also suggests that his decision to commence and continue the 2023 and 2024 renovations fairly had to be viewed in the context of the applicant’s refusal to indemnify. Even though blameworthy conduct is not a touchstone for the exercise of power, this factor is relevant and the respondent did not engage in blameworthy (or contumelious) conduct.
As to the state of the property prior to the commencement of the proceeding, the respondent cites the circumstance that after lodging a claim against the applicant in March 2022, between March 2022 and March 2023, the respondent had supplied the applicant with numerous reports regarding damage to the property, purporting to demonstrate that damage was occasioned by the Storm event. The applicant had also conducted numerous inspections of its own, including one by its building consultant, JLG and a plumber; as well as from Mr Grunberger. The respondent contends that in addition to the views of these experts, the applicant had other information about the condition of the Property after the storm event and prior to the renovations that started in September 2023 and continued into 2024.
The respondent contends that the applicant’s declinature was not attributable to pre-existing defects but because of an asserted lack of maintenance from silicone around the skylight, inadequate guttering and a failed waterproof membrane in a planter box.
Also, for indemnity disputes of this kind, where insurers contend that damage was sustained because of pre-existing defects, it is not uncommon that the insurer will not have had the opportunity to inspect property prior to the insured event. That is not unfair. It simply reflects the reality of events. As it happens, the applicant’s experts did investigate the Property several times after the Storm Event, but before the 2023-2024 renovations. Part of what Mr Grunberger says he was doing was to evaluate the assumption made by a different entity that the Property was ‘watertight’. Either expressly or inferentially, the applicant had declined to provide indemnity on the basis of the information it gleaned from those inspections. It did not rely upon pre-existing defects as a ground for declinature. Put another way, the applicant could not rely upon the consequences of the Matrix defects or water ingress events in 2021 as providing a basis or bases for refusing the claim.
The respondent says that he has positively asserted that the Matrix defects had been rectified. This interlocutory motion is not a proper vehicle for resolving the controversy. He also argues that the renovations of September and October 2023 could not have impacted areas damaged by the Storm event.
In his closing address, in the alternative to his primary proposition that the Court could not properly make any definitive findings, Senior Counsel for the respondent submitted that when their evidence at this hearing was considered, there was not a great deal that Mr Grunberger or Mr Pickering would change in their views even if they were given further opportunity to physically inspect the property. For example:
(a) the roof area and skylight had not been renovated in 2023 and Mr Grunberger had relied (only) on images from Evolution Plumbing. (b) as to the ensuite, Mr Grunberger maintained his view that water had got in as a result of the overflow on the guttering, but the 2023 renovations did not change the guttering. (c) as to damage above the kitchen and dining area, the applicant’s experts both considered that the causes of damage here were the same as the causes of damage to the ensuite. The applicant’s own plumber’s report indicated there were no leaks. (d) as to the damaged area along the southern wall of the kitchen, both the applicant’s experts continued to adhere to their view that water had passed through gaps in the area of the walls proximate to the planter box. They did not say that they could not say whether they continued to adhere to those views pending further inquiry. (e) as to the damaged area of the floorboards in the front hallway, Mr Grunberger attributed the cause to elevated moisture. But he did not conduct his own moisture testing when he had the opportunity and it was not suggested that the building of a cellar could affect his opinion.
In my view, the recent authorities of GLJ and Wilmott have, respectfully, in one sense indicated continuity and, in another sense, signposted a nuanced level of change. As to the former aspect, what has been stressed (and explained) is the level of ‘exceptionality’ that attends a Court’s decision to permanently stay a proceeding. This aspect had been emphasised in earlier authorities. As to the latter aspect, I consider, with respect, that the standard in Wilmott – that the hearing will necessarily be unfair – is an elevation from the less demanding test of ‘real and substantial’ or ‘not insignificant’ risk of unfairness posited by Allsop P in Palavi (and by Johnson J in Clark). The latter test was disapproved in GLJ. The bar has been raised.
It is true that GLJ and Willmot concerned permanent stay applications in the context of the unique litigious features of civil cases for historical sexual assaults. Those features evidently include the loss of evidence (such as the deaths or cognitive impairments of certain witnesses) or diminution or ‘impoverishment’ of the quality of evidence (occasioned by the significant effluxion of time). It is also true that those features do not necessarily extend to the deliberate destruction of evidence by a party with a consciousness of the relevance of the evidence to the issues in an extant civil proceeding.
I would not, with respect, seek to place the category of case of a party’s destruction of evidence with a consciousness of the significance of that evidence to a subsisting civil proceeding as falling outside of the framework of principle identified by the High Court in GLJ and Willmot. The statement of principles is not by their terms or by implication confined to cases where there is an ‘impoverishment’ of evidence but is plainly capable of subsuming the category of case of destruction of evidence. If a party intends to destroy evidence that is significant, by definition, it is impairing the capacity of its opponent to dispute the claim or defence which it is raising. This might be another way of restating what had been said in cases like Batistatos*,* that it is unnecessary, and probably a distraction, to focus on whether the party has acted contumeliously or in a culpable way. It is the objective effect of its destruction that counts. But the party’s motive or purpose also remains potentially significant. Where the destruction occurs because the party considers that the evidence would be positively unhelpful to its case, then a Court might also treat the conduct as amounting to an admission by the party.
Viewed in that light, the first real issue is whether or not the applicant has established that the works undertaken in 2023-2024 (which have since been completed) means that without the applicant’s experts having the opportunity to further investigate the effects of the ‘Matrix’ defects and remedial works, the continuation of the proceeding to hearing will necessarily be so unfair that it warrants a permanent stay or dismissal.
This question concerns the extent of prejudice to the applicant. I am not persuaded that the applicant has surmounted the high bar of establishing that the deprivation of opportunity of its experts to investigate the defects prior to the 2022 Storm as a result of the 2023-24 renovations necessarily means that the applicant will not obtain a fair trial.
The applicant took a decision to decline indemnity on the stipulated grounds. It remains capable of justifying those grounds with reference to the information that it had up to the point when it reached that decision. It is possible that further investigation of the Matrix defects and subsequent works up to the 2022 Storm event might improve its case, by reinforcing the correctness of that decision, or even by furnishing an additional basis or bases for it, but on its currently pleaded case, the applicant is not bereft of the opportunity to defend the claim by reference to evidence. To the contrary, in my view, it currently has the material available that underscored the expressed reasons for declinature.
Nor am I persuaded that the evidence of the applicant’s experts, regarding their need, as distinct from their preference, to inspect the property now, in order for the applicant to obtain a fair trial. Senior Counsel for the respondent raises clearly arguable, or ‘triable’ issues, as to whether or not the views they have already formed, would likely to change even if they had the opportunity for further inspection. There is force in the contention that whatever lens he was wearing in May 2023, at least part of what Mr Grunberger was trying to do was to assess whether the Property was in a “watertight” condition and that his conclusions in that report were substantially influenced by photographic images.
For completeness, I also would have found that even if the ‘real and significant risk’ test was the relevant standard, I would not have been satisfied that the test had been established by the Applicant.
Quite apart from the drawing of inferences, the applicant’s submission that the respondent destroyed property since he knew that, left unaltered, they may expose the Matrix defects, and thereby positively damage his case could, if accepted, constitutes an admission by conduct. [5] In terms of proof, these are significant matters that engages s 140(2)(c) of the Evidence Act 1995 (NSW) noting the gravity of the allegation of the respondent’s state of mind, but also arguably the respondent’s status.
As is the case with the analogous Edwards direction in criminal law, care needs to be exercised before the admission can be found. In my view, the evidentiary base is not sufficiently clear or cogent to presently enable the serious findings that the respondent knew that by altering the Property in 2023 and 2024, he could conceal the circumstance that the Matrix works were not only defective but had not been fully rectified before the Storm Event which he knew would be damaging to his case. This is not a case where, like the facts Clark, the drawing of an adverse inference was virtually irresistible. There were, rather, as his Senior Counsel argued, countervailing matters that might point against that conclusion. The state of the evidence was not such as to inarguably falsify his belief that the remedial works performed after the Matrix Defects had come to light were effective. Nor did it inarguably falsify the respondent’s evidence of his belief that the 2023 and 2024 renovations were not undertaken to the parts of the Property affected by renovations undertaken prior to February or March 2022.
At the risk of undue repetition, what I have said represents only preliminary indications. Such factual conclusions can only be finally made in the light of the totality of the evidence in the hearing.
If in the course of trying to establish that the 2023 and 2024 renovation works means that the continuation of the proceeding will necessarily be unfair, the applicant is able to demonstrate that the respondent ‘destroyed’ evidence, even in the absence of admissions, such conduct can be a weighty factor in establishing an abuse as an affront to the adversarial system of justice.
Mr Amirbeaggi comes to this Court seeking relief. As I indicated with reference to the High Court’s decision in UBS AG, a party’s tactical manoeuvring can influence a Court’s decision to stay a proceeding.
The applicant advances reasonable arguments that for someone with his legal experience, he would likely have appreciated the potential disadvantage that the applicant may sustain if he, in effect, went behind its back and altered the condition of the property at a time when he knew that the applicant’s experts had not yet had the opportunity to test his own expert evidence in the proceeding. It is reasonably arguable that it would be surprising if someone in his position would not have appreciated that the applicant would probably like to have its own experts look at the property after it had been served with his expert evidence in this proceeding, which occurred in the middle of July 2024; and that this was so notwithstanding earlier inspections carried out prior to the decision to refuse to indemnify him. Further, it may be reasonably arguable that there was no reasonable basis for him to assume that those experts would be the same as the persons who had conducted assessments for the applicant prior to its decision to refuse to indemnify him. There is yet a further question whether or not he was entirely forthcoming about the existence of works between 2017 and 2022.
In my view, this application is not the forum to finally resolve such arguments. The applicant accepts that the Court should not resolve whether the areas of the Property the subject of the claim are different from the areas affected by the Matrix defects and water events of 2019 and 2021; and whether the Matrix defects (and 2019 water event) were actually fixed. Plainly, the inferences that the applicant would have the Court draw now are contentious and would involve the Court descending into the arena to resolve a myriad of factual matters. To raise but only one point, if the respondent’s design was to try to conceal the Matrix defects and their remediation (or works undertaken in 2019 or 2021) through the expedient of not fully and frankly disclosing rectification works in 2023, it was curious that he would draw attention to works performed by Matrix (albeit indirectly) in his pleading, by the definition of Improvements (which picked up works performed up to February 2022, including by Matrix, which needed to be rectified). It was also curious, if his motive was concealment, that he would also flag in November 2023 that not only were repairs “on-going” but that he would even signal his intention to undertake works.
Mr Papaianni’s evidence of his expectation that by mid-July 2024 he expected more information about the works that had been flagged in November 2023 but, upon his review of the evidence that was served, was disappointed with what he read, is unconvincing. The suggested omissions from the respondent’s evidence may again furnish inferences against him in terms of the strength of his case, but his conduct in substantially relying upon ‘pre-litigation’ reports after the litigation commenced is not an obvious marker of a party trying to manipulate the trail of evidence to disadvantage its opponent.
However, whatever the respondent’s true motives were, it remains the case that an important question for the Court to consider concerns the consequences of abusive conduct and whether there is some remedy is available short of curtailing the proceeding. This is the aspect of proportionality. As I read the passage from Johnson J’s decision in Clark, what is said there, and what was said by the Court of Appeal in Palavi (save as to the asserted test of only ‘reasonable and substantial risk’, which, for reasons indicated, I respectfully suggest has been superseded) is not antithetical to what the High Court has recently observed in GLJ and Willmot.
The applicant has the opportunity to persuade the Judge who hears the case of the evidentiary principles and techniques to address evidentiary balances caused by a party’s conduct, which were summarised in Willmot and also that the respondent’s conduct constitutes admissions*.* I am not satisfied on the evidence that this is a case where the remedy of a permanent stay or dismissal would be a proportionate response.
In GLJ the plurality deprecated the notion of a balancing exercise between competing notions of unfairness to an applicant and unfairness to a respondent, when considering whether the power to stay should be exercised. This was because it gave rise to an undue focus upon the personal considerations of the parties. However, on its face, s 58(2)(b)(vi) of the C**ivil Procedure Act contemplates a comparison between the degree of injustice suffered by each party as a consequence of a procedural decision. That must involve an objective inquiry. Moreover, how a procedural decision conduces to the case management objective of attaining a just determination in the proceeding is a mandatory consideration when evaluating the dictates of justice on a procedural application: ss 57(1)(a) and 58(2)(a).
I did not understand the applicant’s Counsel to submit that his client could not succeed in its defence without the benefit of the additional inspections of its expert in the form the Property was in prior to the 2023-4 renovations. But the possible or even probable deprivation of the opportunity to elicit evidence which might perfect a pre-existing defence is not the touchstone for a determination of an abuse of process resulting in a permanent stay. I have accepted actual prejudice to the applicant as a result of the respondent’s conduct but have acknowledged that there are evidentiary techniques and principles to help redress evidentiary balances.
Moreover, I have to weigh that prejudice to the applicant in the context against the injustice to the respondent of curtailing a reasonably arguable claim for denial of indemnity as well as an arguable claim against the insurer of breach of its duty of utmost good faith which in my view may not necessarily hinge upon the fate of the claim arising from denial of indemnity. When weighing these competing aspects of potential injustice, in my opinion the dictates of justice do not favour a permanent stay or summary dismissal of the action (per ss 57(1) and 58(2)(vi) of the Civil Procedure Act).
In my view, it is neither necessary or appropriate to make findings as to whether the Matrix defects and the subsequent rectifications of them up to February 2022 are capable of having bearing upon the causation issues.
There needs to be a degree of virtual certainty before a Court would exercise a power to summarily dismiss a proceeding. So too, in my view, there needs to be a high degree of certainty that a Court would conclude that by the applicant’s conduct in conducting the renovations throughout 2023 and 2024, he has necessarily deprived the applicant of a fair trial.
The applicant’s notice of motion dated 20 December 2024 is dismissed.
On the question of costs, the applicant obtained an order that the respondent pay its costs thrown away as a result of the adjournment when the matter came before the Court on 18 November 2025. That order will not be disturbed. To the extent that other costs orders have been made in connection with the motion they will also be undisturbed.
Otherwise, subject to extant costs orders already made, the applicant should pay the respondent’s costs of and occasioned by the motion.
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Amirbeaggi v AAI Limited [2025] NSWDC 477.
Hunter v Chief Constable of the West Midlands Police [1982] AC 529 at 536.
The second of those principles was referred to in Cessnock City Council v 123 259 932 Pty Ltd (2024) 281 CLR 39 at [129] as reinforcing the ‘facilitation principle’ in contract cases where a contract-breaker’s breach results in uncertainty in quantification of the innocent party’s loss.
This was the description given to such claims in GLJ in the sub-heading preceding [29].
J D Heydon Cross on Evidence (14th ed, LexisNexis [33435], footnotes 15 (‘concealing evidence’) and 40 ‘the destruction of a document’).
Minor wording amendments.
Amirbeaggi
AAI Limited [2026] NSWDC 48
(2006) 226 CLR 256
(2024) 281 CLR 39
(2006) 66 NSWLR 640
(2023) 280 CLR 442
(2018) 265 CLR 77
(1993) 177 CLR 378
(2024) 419 ALR 623
(2018) 265 CLR 7
(2019) 100 NSWLR 218