Azmin Firoz Daya v CNA Reinsurance Co Ltd & Ors - [2004] NSWSC 795 - NSWSC 2004 case summary — Zoe

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Azmin Firoz Daya v CNA Reinsurance Co Ltd & Ors

[2004] NSWSC 795

Supreme Court of NSW|2004-08-27|Before: Einstein J

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At a glance

Source facts

Court

Supreme Court of NSW

Decision date

2004-08-27

Before

Einstein J

Source

Original judgment source is linked above.

Judgment (57 paragraphs)

[1]

CITATION : Azmin Firoz Daya v CNA Reinsurance Co Ltd & Ors [2004] NSWSC 795 HEARING DATE(S) : 23/8/04 JUDGMENT DATE : 27 August 2004

[2]

JURISDICTION: Equity Division Commercial List JUDGMENT OF : Einstein J DECISION : Order made for compulsory mediation.

[3]

CATCHWORDS : Mediation of civil proceedings - party not consenting to order - compulsory order for mediation - Principles - meaning of obligation to mediate in good faith - Overriding purpose of Supreme Court Rules - Just, quick and cheap resolution of issues in civil proceedings - Consideration of advantages of mediation in terms of forcing parties to hear one anothers viewpoint LEGISLATION CITED : Supreme Court Act (1970) (NSW) Supreme Court Rules (NSW) Aiton v Transfield (1999) 153 FLR 236 Amalgamated Television Services Pty Ltd v Marsden (No 2) [2003] NSWCA 186 Arab Bank Plc v Zurich Insurance Co [1999] 1 Lloyd's Rep 262 Idoport Pty Ltd v National Australia Bank Ltd [2001] NSWSC 427 CASES CITED : Idoport v National Australia Bank Ltd [2000] NSWSC 1141 John Fairfax and Sons Pty Ltd v Police Tribunal (NSW)(1986) 5 NSWLR 465 Morrow v chinadotcom Corp [2001] NSWSC 209 Remuneration Planning Corp Pty Limited v Fitton [2001] NSWSC 1208 Singh v Singh [2002] NSWSC 852 Azmin Firoz Daya (Plaintiff) CNA Reinsurance Company Ltd (First Defendant) Eagle Star Reinsurance Company Limited (Second Defendant) PARTIES : General Accident Fire & Life Assurance Corporation PLC (Third Defendant) Encon Underwriting Ltd as underwriting agent for underwriters at Lloyd's evidenced by Contract No.ENCDORPR98 (Fourth Defendant) Royal & Sun Alliance PLC (Fifth Defendant) FILE NUMBER(S) : SC 50081/04 COUNSEL : Mr M Lee (Plaintiff) Mr M Jones (Defendants) SOLICITORS : Sparke Helmore (Plaintiff) Hunt & Hunt (Defendants)

[23]

(f) all documents produced by Dresdner Kleinwort Wasserstein under subpoena in the Ingot Proceedings as BLG had entered into a confidentiality regime in order to be able to access those documents (which Insurers were provided with between 5 and 9 February 2004). " 3 Reasonably recently, in Idoport Pty Limited v National Australia Bank Limited [2001] NSWSC 427, the Court dealt with many of the parameters appropriate to be taken into account in determining the proper exercise of the Court's relevant discretion on an application for a compulsory mediation. It is unnecessary for present purposes to repeat what was there said save perhaps to make the following observations: · in paragraph 9 the Court made clear that a basal consideration was that the proceedings then before the Court were commercial proceedings and that commercial proceedings differ in many ways from other categories of proceedings. It was said that there can be no issue but that commercial proceedings before the Commercial List are regularly settled for all sorts of reasons and by utilising a myriad of approaches taken by businessmen and corporations to contested commercial litigation; · the genesis of the 1994 amendments was referred to in paragraphs 15 to 20 of the Idoport judgment; · the 2000 mandatory amendments were the subject of paragraphs 21 to 24 of the Idoport judgment; · the proper approach to be taken [in terms of the consideration of the overriding purpose rule, the provisions of Part 7B of the Supreme Court Act and Practice Note 118] was set out in paragraph 33; · the paragraphs which followed paragraph 33 then dealt in more detail with each of those parameters. · in terms of judicial consideration of Part 7B, paragraph 44 set out anterior case law. 4 To my mind the application presently before the Court should be acceded to, this being a relatively clear case for that as the proper exercise of the Court's discretion. Here again the plaintiff in its written submissions appears to me to have squarely and with substance identified particular reasons why the Court should presently order compulsory mediation. They are adopted in what follows:

[50]

(k) having regard to the serious view already taken by insurers, the involvement of a "representative" will not change things as a matter of practice. It is clear that if any change were to take place in any insurer's position, it could only happen following further consultation. That is a practical matter that could only happen whilst the London market is open for business. 9. If Mr Daya has an offer he wishes the insurers to consider, there is no reason why the regime proposed by the defendant, designed to avoid significant expense and dislocation to the defendants, is not an appropriate." 7 That the proper exercise of the Court's discretion is to make the order includes a consideration as it seems to me of, inter alia, the following matters: · first and foremost, the Ingot claim is said to presently be valued at around $AU65 million inclusive of interest; · I accept that it appears that the defendants are all in the business of writing international insurance policies and that to suggest that there is manifest and unnecessary inconvenience in location in requiring insurers to attend a mediation is simply incorrect. To my mind the background suggests that such arrangements as require to be made will be made; · insofar as the situation of the pleadings in the present proceedings is concerned, the pleadings are apparently to close today and the evidence satisfies me that the parties have a sufficiently full knowledge of the ambit and substance of the dispute to be in a position to meaningfully participate in a mediation. 8 Returning to Part 1 of the Supreme Court Rules and the overall objective in terms of the just, quick and cheap resolution of the real issues in civil proceedings, the judgment of McHugh J in John Fairfax and Sons Pty Ltd v Police Tribunal (NSW) (1986) 5 NSWLR 465 at 476 furnishes support for the now proposition that what was then the inherent jurisdiction to make such orders so as to enable the Court to uphold, protect and fulfil the judicial function by ensuring that justice is administered according to law and in an effective manner, can now be seen to be complemented by the overriding purpose rule.

[52]

"3 The culture of the Court in relation to the perceived usefulness of compulsory arbitrations has shifted radically in the comparatively short period since s 110K was introduced. In Morrow v chinadotcom Corp [2001] NSWSC 209, Barrett J refused to order a reluctant party to engage in mediation on the basis that, if mediation were not engaged upon willingly, the process would be pointless and likely to be a waste of money. However, in Idoport Pty Ltd v National Australia Bank Ltd [2001] NSWSC 427, a very large commercial case, Einstein J made orders for mediation over opposition, as did I in Remuneration Planning Corp Pty Ltd v Fitton [2001] NSWSC 1208. In that case I made the following comment on the change in the perceived wisdom relating to this subject matter at [3]: "This is an area in which the received wisdom has in my experience changed radically in a period of a few months. A short time ago there was general acceptance of the view adopted by Barrett J in the decision to which I have referred, that there was no point in a mediation engaged in by a reluctant party. Of course, there may be situations where the Court will, in the exercise of its discretion, take the view that mediation is pointless in a particular case because of the attitudes of the parties or other circumstances and decline to order a mediation. However, since the power was conferred upon the Court, there have been a number of instances in which mediations have succeeded, which have been ordered over opposition, or consented to by the parties only where it is plain that the Court will order the mediation in the absence of consent. It has become plain that there are circumstances in which parties insist on taking the stance that they will not go to mediation, perhaps from a fear that to show willingness to do so may appear a sign of weakness, yet engage in successful mediation when mediation is ordered." 10 More recently, and again as the plaintiff has observed, the Court of Appeal in Amalgamated Television Services Pty Ltd v Marsden (No 2) [2003] NSWCA 186 in a context in which the Court [Beazley, Giles and Santow JJA] was dealing with the Court of Appeal electing to entertain a section 110K application said as follows:

[53]

"[62] In proceedings which have already been of unprecedented length and enormous cost, the overriding purpose of the Rules, to facilitate the "just, quick and cheap resolution of the real issues" must be borne constantly in mind. That overriding purpose is a matter which the Court is not merely entitled to take into account, it is required to do so; Idoport v National Australia Bank Ltd [2000] NSWSC 1141 at [45]. Nor is it a stricture which the parties themselves are free to disregard. That is why, in considering the threshold question whether this Court should consider whether or not to order mediation, as sought by the respondent and opposed by the appellant (who submits this should be determined by a single judge), we give weight to the fact that, were an order for mediation not to be made by consent, it would not be just, quick and cheap to remit such a matter to a judge in the Common Law Division." 11 As the plaintiff has submitted, those very same observations are of equal importance and significance when one set of proceedings in the Court raises cognate or similar issues to those canvassed in proceedings of great potential length and cost, a fortiori, where those cognate proceedings are already subject to an extant order for compulsory mediation. 12 Where one has a very clear stand taken by a respondent to an application for compulsory mediation plainly enough the Court must pay particular care to the reasons for that position being taken. On the other hand, the clear imperative is for the Court to stand back from the position taken by both parties on such applications and, in exercising the discretion to order or to refuse to order the section 110K compulsory mediation, to look at the situation in perspective. Experience in the area of mediation throws up the fact that the process of mediation may even in major commercial litigation lead to quite unexpected results. From time to time the parties can find some form of unexpected way in which to achieve a compromise. From time to time the very circumstance that the compulsory mediation will cause the major players to have to listen to one another may have a cathartic effect. Particularly is this so when, as so very often will occur, hearing in person, the other side's point of view may change even an entrenched point of view. [cf Aiton v Transfield (1999) 153 FLR 236 where the requirements of mediation in good faith were examined] 13 In any event, the Ingot Capital proceedings 50169 of 2001, are so massive in terms of the numbers of parties, estimated time of hearing and almost every parameter in terms of litigation, that if and to the extent that a mediation of the proceedings presently before the Court can take place at the same time as the mediation already ordered, this must be a positive consideration of dimensional significance in terms of the current application. 14 It is further to be noted that on the affidavit evidence before the Court, a series of communications have passed between the plaintiff's solicitors and the solicitors for parties to the main Ingot Capital proceedings with a view to eliciting what the attitude of those other parties would be to a proposal for a concurrent mediation of these proceedings. Those communications are generally certainly not unfavourable to and, to my mind, particularly important in their terms in confirming, to the extent one needs to confirm, that the proper exercise of the Court's discretion is to make the orders now sought.