In these proceedings, the plaintiff, Mr Damien Beslic, sues the first defendant, MLC Ltd, for breach of a policy of insurance dated 15 October 2004, under which the first defendant agreed to provide the plaintiff insurance cover, if he became totally disabled within the meaning of the policy. The plaintiff claims to be entitled to a benefit of $10,493.09 per month by reason of his becoming totally disabled.
The first defendant paid the benefit to the plaintiff between 11 January 2009 and 9 October 2010. It then ceased to pay the benefit.
By its defence in these proceedings, the first defendant has purported to avoid the policy pursuant to s 29(2) of the Insurance Contracts Act 1984 (Cth). That provision entitles an insurer to avoid a contract of life insurance, which the policy in the present case was, where the insured has fraudulently failed to comply with the insured's duty of disclosure, or the insured has made a fraudulent misrepresentation to the insurer before the contract was entered into. The insurer may not avoid the contract if the insurer would have entered into the contract even if the insured had not failed to comply with the duty of disclosure, or had not made the misrepresentation before the contract was entered into.
The grounds upon which the first defendant claims that it was entitled to avoid the policy are set out in par 12 of its further amended defence to further amended statement of claim. In outline, the first defendant claims that the plaintiff breached the duty of disclosure that he owed to the first defendant under s 21 of the Insurance Contracts Act by providing false answers to a document headed "Personal Questionnaire", that he was required to complete before the first defendant agreed to issue to him the insurance policy upon which he now sues.
The first defendant claims that the alleged failures by the plaintiff to disclose, and the misrepresentations, were fraudulent because the plaintiff deliberately failed to disclose and, or alternatively, misrepresented the relevant matters with reckless disregard for the truth of the responses to the questionnaire.
The first defendant says that, if it had been made aware of the true situation, it would not have entered into the policy with the plaintiff on the same terms.
The second defendant, AXA Financial Planning Ltd, carried on business as a financial and insurance advisory company. The plaintiff alleges that, before the first defendant issued the insurance policy to the plaintiff, the plaintiff retained the second defendant to review his insurance requirements to ensure that he would not be financially disadvantaged in the event of not being able to work due to sickness or accident. The second defendant advised the plaintiff in relation to his application to the first defendant, including concerning the completion of the questionnaire which forms the basis of the first defendant's decision to avoid the policy. The plaintiff alleges that, by various means, he provided relevant information to Mr Woodward, who was an employee of the second defendant. The plaintiff provided oral information to Mr Woodward in relation to the answers to the questions contained in the questionnaire, and also provided to Mr Woodward two emails, sent on 5 October 2004, containing further details of his medical history. The plaintiff claims that Mr Woodward added information to the plaintiff's application to the first defendant contained in one of the two emails, but he did not add the information contained in the other email, which included the plaintiff's psychiatric consultation with a particular psychiatrist.
It is sufficient to note that part of the plaintiff's claim against the second defendant is that, if it is found that the first defendant has validly avoided the policy by reason of the failure by the plaintiff to disclose to it the information in the second of the two emails, the second defendant will be liable to compensate the plaintiff by reason of its breach of duty to him in failing to include the information contained in the second email in the information provided to the first defendant.
I have set out the issues between the parties to these proceedings in broad outline, only to the extent necessary to identify the issues that are relevant for the purposes of the dispute now before the Court. There are two issues. The first is whether the first defendant would in fact have declined to issue the policy to the plaintiff on the same terms, if he had disclosed all of the additional matters upon which the first defendant relies in its defence. The second is whether, in fact, the plaintiff sent to Mr Woodward the two emails dated 5 October 2004 upon which the plaintiff relies. It is not necessary to consider the allegations contained in the pleadings in more detail. It is also not necessary to consider the cross claims that have been filed by the defendants.
[2]
Plaintiff's application under s 192A of the Evidence Act
By a notice of motion filed on 27 April 2015, the plaintiff seeks the following relief:
1. Pursuant to section 192A of the Evidence Act 1995 (NSW), an advance ruling on the admissibility and or use of the affidavits of [6 named persons].
2. Pursuant to section 192A of the Evidence Act 1995 (NSW), an advance ruling on the admissibility and/or use of Mr Klein's opinion in his reports dated 29 April 2014 and 5 September 2014.
3. Costs of this motion be costs in the cause.
In broad outline, the six persons named in par 1 of the notice of motion have sworn affidavits on behalf of the first defendant, which contain evidence concerning the circumstances in which the first defendant issued the policy to the plaintiff; the relevant underwriting procedures of the first defendant; how it would have responded if the plaintiff had provided complete and correct information in the questionnaire; and that the first defendant would not have issued the policy, if it had known the truth. For the purposes of argument the plaintiff chose one of the witnesses, Ms Janet Kennerley, who was an underwriter employed by the first defendant, who assessed the plaintiff's application for insurance, as representative of the evidence given by the six witnesses.
Mr Klein is an expert in computer forensics. Mr Klein was retained by the second defendant to provide expert evidence, based upon an inspection of the plaintiff's and the second defendant's computers, concerning whether the two 5 October 2004 emails could be found on those computers, and whether there were any anomalies in the emails that might cast doubt on their authenticity.
Section 192A of the Evidence Act relevantly provides:
Where a question arises in any proceedings, being a question about:
(a) the admissibility or use of evidence proposed to be adduced…
The court may, it if it considers it to be appropriate to do so, give a ruling or make a finding in relation to the question before the evidence is adduced in the proceedings.
The defendants opposed the rulings on the admissibility of the evidence referred to in the notice of motion being made before the hearing. Their position is that it is inappropriate for the Court to make the advance rulings.
The plaintiff's notice of motion was listed for directions before a registrar of the Court on 25 May 2015. The parties came to an agreement concerning the orders that they would ask the Registrar to make. Those orders would have required the plaintiff to file and serve a schedule of his objections to the evidence identified in the notice of motion by a stipulated date, and the parties to file and serve outlines of written submissions by given dates. The parties agreed to ask the Court to list the notice of motion for hearing on 3 September 2015.
The Registrar declined to make the orders sought by the parties, and instead listed the notice of motion to come before a judge sitting in the Applications List on 19 June 2015, for the purpose of determining, as a preliminary issue, whether the Court should determine the notice of motion. The parties were directed to exchange written submissions.
I dealt with the matter in the Applications List on 19 June 2015.
[3]
May appropriateness of making ruling be considered first?
The first submission made by the plaintiff was that, what the plaintiff described as "this threshold interlocutory hearing", should not be required, and the requirement that it occur was unlawful, in the sense that there was no proper statutory basis for it to have been required. The plaintiff submitted that I should revoke the Registrar's order. The plaintiff submitted that s 192A of the Evidence Act does not require that, before an application under the section is determined by the Court on its merits, the party seeking to make the application needs to demonstrate, in a separate interlocutory hearing, that permission to make an application under s 192A should be granted by the Court.
In particular, although the plaintiff recognised that s 192A includes a discretionary component, in the expression "the court may, if it considers it to be appropriate to do so", that is but a discretionary matter to be considered when the Court is ruling on the application under s 192A; it is not a statutory authority for a threshold process of seeking permission.
The plaintiff submitted that a substantial problem that would arise if there was a 'permission to bring' threshold, would be the identification of the satisfaction required for the threshold to be satisfied.
The plaintiff further submitted that the procedure that the Registrar had imposed was contrary to the purpose of the Parliament in introducing s 192A.
With respect, I think that the plaintiff has misconceived the nature of the hearing contemplated by the Registrar's order, and the plaintiff is wrong in so far as he submits that s 192A does not permit the Court to determine whether it is appropriate for the Court to make a ruling on the admissibility of evidence in advance of hearing the parties' submissions as to whether or not the evidence is admissible.
I accept that there is no requirement, whether in the Evidence Act or the Civil Procedure Act 2005 (NSW) for the Uniform Civil Procedure Rules 2005 (UCPR) that requires a party, who wants the Court to make a ruling or finding under s 192A, to seek the Court's leave to do so, or to make a formal application for that leave.
The order made by the Registrar did not require or imply that the plaintiff should seek the leave of the Court to make his application under s 192A. Rather, the effect of the order was to give a judge of the Court an opportunity to consider the appropriateness issue that arises under the section, before the Court embarked fully on a determination of the evidentiary issues raised by the plaintiff's notice of motion.
In my view, the Evidence Act, the Civil Procedure Act and the UCPR have the collective effect that the Court may consider the appropriateness issue first, and if that issue is determined against the giving of a ruling before the evidence is adduced in the proceedings, it is competent for the Court to decline to hear argument on the evidentiary issues on the merits. I therefore do not accept the plaintiff's submission that s 192A gives parties a right to apply to the Court for the giving of the ruling , and that the Court must hear that application on its merits, and only after the hearing decide whether or not it considers it to be appropriate to give the ruling.
There is nothing in the wording of s 192A that requires the Court to allow the parties to argue the points of evidence before it decides the appropriateness issue. The fact that the words "the court may, if it considers it to be appropriate to do so" precede the words "give a ruling" suggests that the Court may decide whether it is appropriate to give the ruling, before it embarks upon any hearing of the application to make the ruling. Furthermore, there is nothing in the wording of s 192A that introduces any particular temporal connection between the determination of the appropriateness issue and the determination of the dispute as to the appropriate ruling.
Section 11 of the Evidence Act provides that the power of the Court to control the conduct of a proceeding is not affected by the Evidence Act, except so far as that Act provides otherwise expressly or by necessary intendment. There is no express manifestation of a contrary intention in s 192A, and in my view no such contrary intention is implied.
The course that the Registrar took in this case is consistent with the overriding purpose of the Civil Procedure Act, as expressed in s 56(1), in so far as it was intended to facilitate the just, quick and cheap resolution of the real issues in the proceedings. Section 58(1)(b) and (c) are of particular significance, in so far as they require the proceedings to be managed to facilitate the efficient disposal of the business of the Court, and the efficient use of available judicial and administrative sources.
It is not the role of a single judge, particularly one who is required to deal with a limited interlocutory application of the nature of the one that is now before the Court, to lay down any general rules governing the practice of the Court. However, the following observations may be of some relevance to applications for rulings under s 192A, at least where they are made in proceedings in the General List of the Equity Division of the Court. I infer that considerations of this nature motivated the Registrar to make the order that she did in this case.
Proceedings in the General List are not case managed by a judge of the Court. A registrar provides the level of case management that is available. If a notice of motion is filed for the making of a ruling under s 192A after proceedings in the General List have been set down for trial, the Registrar has the option in an appropriate case to refer the notice of motion to the trial judge. The trial judge will be able, subject to the convenience of the Court, to address the determination of the motion in a manner that should facilitate the efficient use of the judge's time, particularly to avoid the waste of duplicated judicial effort. In a specialised list that is managed by a judge of the Court, the list judge is likely to develop an understanding of the issues raised by the proceedings, and an application of the type that is now before me would usually arise during an ordinary directions hearing, and would be dealt with in the ordinary course of business in the list.
In matters in the General List it will be appropriate for the Registrar to consider whether the efficient disposal of the business of the Court, and the efficient use of judicial resources, in relation to the disposal of an application under s 192A, justifies a judge of the Court considering the appropriateness issue before the Court deals with the application on its merits. That approach will not always be justified, and care should be taken to avoid unnecessary duplication of effort that may flow from a judge being required to deal with the appropriateness issue and the merits of the application in separate hearings.
I do not accept that any problem arises concerning the identification of the nature of the satisfaction required before the Court should consider it to be appropriate to give the ruling sought. The level of satisfaction does not, as the plaintiff submitted, fall within a range with 'an arguable case for relief' at one end, and 'reasonable cause to suspect that if the application were heard on its merits that application has prospects of success so as to justify hearing the s 192A [application] on its merits' at the other. The test is simply one of appropriateness. It falls within the discretion of the judge. The criteria that should be taken into account will depend entirely on the circumstances. They are not limited to any particular degree of satisfaction concerning the prospects of the applicant succeeding in establishing its case for the ruling. The applicant's prospects of success may well be relevant in a particular case, but it is only one factor.
I respectfully adopt the following statements made by Stevenson J in Lambert Leasing Inc v QBE Insurance Australia Ltd [2012] NSWSC 953 at [11] to [13].
[11] The section has been considered in a number of cases (for example Southern Cross Airports Corp Pty Ltd v Chief Commissioner of State Revenue [2011] NSWSC 349 per Gzell J; Australian Competition and Consumer Commission (ACCC) v Allphones Retail Pty Ltd (No 3) [2009] FCA 1075 ; (2009) 259 ALR 541 per Foster J; Kernahan v ACN 003 134 475 Pty Ltd [2010] NSWSC 51 ; (2010) NSWLR 452 per Hammerschlag J; Gondarra v Minister for Families, Housing, Community Services and Indigenous Affairs [2012] FCA 185 ; (2012) 127 ALD 288 per Kenny J).
[12] The section specifies only one test for the court to exercise its power, namely that it "considers it appropriate to do so". I agree with the observations of Biscoe J in NA & J Investments Pty Ltd v Minister Administering the Water Management Act 2000 [2012] NSWLEC 120 at [40]: -
Whether the court should make advance rulings under s 192A is a discretionary case management decision to be made in accordance with the overriding purpose of facilitating the just, quick and cheap resolution of the real issues in dispute.
[13] It appears to me that some good reason should be advanced in order that the court exercise jurisdiction under s 192A. However, it is not necessary, in my opinion, to show "special circumstances" or to show that the circumstances are "out of the ordinary".
In submissions, counsel for the plaintiff advanced a particular argument in support of the appropriateness of rulings being made under s 192A, which calls for response by me. Counsel submitted that, if the evidence was ruled to be inadmissible as the plaintiff contends, that would end the capacity of the defendants to prove the precise matters sought to be established by the evidence, as the defendants would be denied an opportunity to respond to the rulings by seeking to rely upon additional new evidence, assuming that it is available to them, to try to establish the matters that were intended to be proved by the evidence that is ruled to be inadmissible. As I understand it, that submission was put on the basis that, even though the ruling under s 192A is made before the evidence would ordinarily have been adduced at the trial; the ruling is to speak as at the date of the trial. Counsel suggested that the party who has served the evidence would not ordinarily be given an opportunity to replace or improve it. That is a question that is not now before the Court for decision. However, I would refer to the following statement by Stevenson J in Sydney Attractions Group Pty Ltd v Schulman [2012] NSWSC 951 at [28]:
[28] In my opinion, the remarks by Gzell J in Southern Cross Airports v Chief Cmr of State Revenue at [15] are apposite. Those remarks (in which I have substituted details relevant to this case) were as follows: -
In my view it is appropriate to give an advance ruling in this matter. Inevitably there will be a need to rule because [Sydney Attractions] does not accept the reports. If an advance ruling is made in favour of [Mr Schulman], it will provide certainty to both parties with respect to this portion of the expert evidence. If the advance ruling goes against [Mr Schulman], [he] will have the opportunity before the trial, which is due to commence on [19 November 2012], to address the question of whether [he] can adduce further evidence to cure the inadmissibility.
There may well be cases where, in conformity with the requirements of s 56 of the Civil Procedure Act, there may be a number of alternative ways that are available to a party to prove a particular matter. The simplest and least expensive way may raise a question of admissibility. Section 192A, in an appropriate case, might permit the party to serve evidence prepared in the simpler and less expensive way, and then to seek a ruling under s 192A, in advance of the hearing, on the admissibility of the evidence. The very purpose might be to give the party an opportunity to serve further evidence prepared in the more complicated and expensive way, if necessary to do so.
[4]
It is premature to decide appropriateness issue
I do not propose to rule at this stage on the question whether or not it will be appropriate for the Court to hear the plaintiff's notice of motion on its merits. There are two reasons for my taking this course.
The first reason is a simple one. The second defendant has been given leave to serve a further report by Mr Klein. It is possible that the further report will remedy the shortcomings in the earlier reports, upon which the plaintiff relies to support his argument that the reports should be rejected. Even if the new report does not do so, it may well change the basis upon which the Court should approach the question of whether or not it is appropriate for the Court to reject Mr Klein's earlier reports in advance of the hearing.
The second reason arises initially out of the terms of order 1 sought in the plaintiff's notice of motion. By that order the plaintiff simply sought "an advance ruling on the admissibility and/or use of the affidavits of" the identified witnesses. That application did not inform the Court, or the defendants, in any precise way of the rulings that the plaintiff seeks.
When the hearing commenced, I proceeded upon an assumption, since proved to be false, that the plaintiff would argue that the affidavits of the witnesses should be rejected in their entirety. As I have noted above, during the plaintiff's submissions, the plaintiff used the affidavit of Ms Kennerley as a representative sample of the affidavits of the six witnesses.
It became apparent that the plaintiff sought, in particular, a ruling that the following sentence, in par 31 of the affidavit, is inadmissible:
I conclude, following review of the documents at hand, that I would certainly have declined the application or recommended it be declined and cover would not have been offered.
Counsel for the plaintiff indicated that the plaintiff would submit that this evidence is a statement of opinion, and is not admissible as a lay opinion under s 78 of the Evidence act, and it is not an expert opinion because it does not satisfy the requirements of s 79.
There may be scope for debate as to the proper way to classify evidence of a counterfactual nature given by a witness, as to what the witness believes he or she would have done on the assumption that the events that led to his or her actions had been different in some specified way to the actual events. The evidence in par 31 of the affidavit seems to state, in part, the witnesses' subjective belief (as to what she would have done), and, in part, an opinion (as to what the fate of the application could have been).
It became apparent during submissions, however, that the plaintiff wished, additionally, to argue that Ms Kennerley's evidence as to what she would have done should be rejected, because the manner in which the first defendant's witnesses' affidavits had been prepared inappropriately allowed Ms Kennerley access to a document prepared by a superior officer of the first defendant, at a later time to Ms Kennerley's involvement in the issue of the policy by the first defendant to the plaintiff, in which the other witness stated that the first defendant would have rejected the plaintiff's application.
It became apparent to me during the course of the plaintiff's submissions that it would not be possible to decide the appropriateness of making the evidentiary rulings sought by the plaintiff, until the plaintiff had prepared and delivered to the Court and the defendants a precise list of all of the objections upon which the plaintiff seeks rulings by the Court, and a concise, though informative, statement of the reasons why the evidence is inadmissible.
As I understand it, the plaintiff's challenge to the first defendant's witnesses' evidence goes further than to challenge sentences of the type that I have set out above, in Ms Kennerley's affidavit, and the plaintiff in addition wishes to make various other objections.
It is not clear to me how a ruling in advance, that evidence of the type contained in the sentence in par one of 31 of Ms Kennerley's affidavit is inadmissible will provide any particular advantage to the parties in relation to the hearing of the claim.
It also appears to me that, if the plaintiff persists with his claim that Ms Kennerley's evidence should be rejected, because the process by which it was prepared was tainted in some way, it would be difficult to make a proper ruling on that submission in advance of the hearing, and without the significance of all relevant aspects of the preparation of the evidence being considered. It is likely that evidence of the circumstances in which the witness' evidence was prepared would be relevant to the ruling. It is unlikely to be a summary question.
It will not be appropriate for me to set out, as a generalisation, the form that applications for rulings under s 192A should take, in proceedings in the General List of the Equity Division. However, in my view, it will always be desirable for the applicant to set out specifically, either in the notice of motion, or in some document annexed to the affidavit in support of the notice of motion, the precise evidentiary rulings that are sought from the Court. Clear reasons for the rulings sought should also be advanced in an appropriate document. The form of the list of objections customarily served by parties immediately before the hearing of matters, in compliance with the usual order for hearing, would be a starting point. Parties should consider whether it is appropriate to provide reasons in slightly greater depth than is customary immediately before the hearing, to allow for the fact that the judge who hears the application may not be the trial judge, and will usually be unfamiliar with the issues and evidence when he or she hears the application.
The applicant should also, at an appropriate time, and at the latest in the applicant's submissions in support of the application, articulate concisely but informatively the reasons why, in the particular case, it will be appropriate for the Court to give an advance ruling on the evidentiary issues. As I have indicated above, appropriateness will not usually be determined solely on the prospects of the applicant's succeeding in obtaining the rulings sought.
Among all other relevant considerations, the applicant should realistically address the issue of the feasibility of a judge giving proper rulings on the evidentiary issues, in relation to the extent that it will be necessary for the judge to make him or herself familiar with a significant amount of the issues, and evidence, that are involved in the proceedings.
Section 192A of the Evidence Act provides a facility for parties to seek advance rulings on evidence in proceedings in the General List of the Equity Division of this Court no less than in other Lists, Divisions and Courts. However, parties should consider the way the General List operates when they contemplate applications under s 192A. The efficient operation of the General List might be impaired unless care is taken before applications are made under the section, particularly if made before the matter has been set down for hearing and a trial judge allotted. Applications for advance rulings are more likely to be accepted as being appropriate if, at the outset, the applicant clearly identifies all of the evidentiary rulings sought, the reasons in support of those evidentiary reasons, why the making of advance rulings will be appropriate, and the nature of the hearing that will be necessary to enable a judge to efficiently make the rulings sought. That should assist the Registrar to accept that the notice of motion seeking evidentiary rulings in advance under s 192A should be set down for hearing before a judge on the merits.
I will ask the parties to consider these reasons and bring in short minutes of order. The orders should include a requirement that the plaintiff provide the information considered in the preceding paragraph, after any additional report by Mr Klein is served by the second defendant. Costs should be reserved at this stage.
[5]
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Decision last updated: 10 July 2015