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[2001] NSWSC 609
Supreme Court of NSW
2001-07-09
Original judgment source is linked above.
CITATION : Bowlers Club of NSW v Jones Lang LaSalle & Ors, Griffiths v Berkeley Challenge & Ors [2001] NSWSC 609 CURRENT JURISDICTION: Common Law Division FILE NUMBER(S) : SC 20921 of 1997; 20071 of 2000 HEARING DATE(S) : 9 July 2001 JUDGMENT DATE : 19 July 2001
Bowlers Club of New South Wales Limited (Plaintiff) v Jones Lang LaSalle (NSW) Pty Limited (formerly JLW (NSW) Pty Limited) (First Defendant) Newsound Electronics Pty Limited (Second Defendant) FFE Building Services Pty Limited (Third Defendant) Honeywell Limited (Fourth Defendant) Yelrah Investments Pty Limited (Fifth Defendant)
The Parties to the Cross-Claims referred to in Schedule 1 to the Notice of Motion filed 18 June 2001
20071 of 2000 PARTIES : Trevor Charles Griffiths (Plaintiff) v Berkeley Challenge Pty Limited (First Defendant) Delta Electricity (Second Defendant)
Delta Electricity (Cross-Claimant to First Cross-Claim) Berkeley Challenge Pty Limited (Cross-Defendant to First Cross-Claim)
Delta Electricity (Cross-Claimant to Second Cross-Claim) HIH Casualty & General Insurance Limited (First Cross-Defendant to Second Cross-Claim) CGU Insurance Limited (Second Cross-Defendant to Second Cross-Claim) JUDGMENT OF : Master Malpass
Mr N Rein SC (First Defendant/Cross-Claimant on First Cross-Claim) Mr D Pritchard (Provisional Liquidators of HIH Casualty & General Insurance Limited and HIH (Liability) Pty Limited being respectively the Fifth and Sixth Cross-Defendants to the First Cross-Claim) COUNSEL : 20071 of 2000
Mr N Rein SC (Second Defendant/Cross-Claimant to Second Cross-Claim) Mr D Pritchard (Provisional Liquidators of HIH Casualty & General Insurance Limited/First Cross-Defendant to Second Cross-Claim)
Middletons Moore & Bevins (First Defendant/Cross-Claimant on First Cross-Claim) Blake Dawson Waldron (Provisional Liquidators of HIH Casualty & General Insurance Limited and HIH (Liability) Pty Limited being respectively the Fifth and Sixth Cross-Defendants to the First Cross-Claim)
20071 of 2000 SOLICITORS : Middletons Moore & Bevins ((Second Defendant/Cross-Claimant to Second Cross- Claim) Blake Dawson Waldron (Provisional Liquidators of HIH Casualty & General Insurance Limited/First Cross-Defendant to Second Cross-Claim) CATCHWORDS : Provisional liquidation - application for leave - discretionary power of court - relevant considerations. LEGISLATION CITED : The Corporations Law, s 471B, s 553D. Ibbco Trading Pty Ltd v HIH Casualty & General CASES CITED : Insurance Ltd (in prov liq) BC200102190. National Rail Corp Ltd v HIH Casualty & General Insurance Ltd BC200102916. DECISION : See Paragraphs 22 - 25.
THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION
20921 of 1997 BOWLERS CLUB OF NEW SOUTH WALES LIMITED v JONES LANG LASALLE (NSW) PTY LIMITED (FORMERLY JLW (NSW) PTY LIMITED) & ORS 20071 of 2000 TREVOR CHARLES GRIFFITHS v BERKELEY CHALLENGE PTY LIMITED & ORS JUDGMENT 1 In each of these matters, leave of the court is sought pursuant to s 471B of The Corporations Law . In each matter, HIH Casualty and General Insurance Limited (HIH) is a cross-defendant. Joint provisional liquidators were appointed on 15 March 2001. The applications were heard together. 2 In one of the matters the applicant is Delta Electricity (the Notice of Motion was filed on 1 June 2001). It is the second defendant in proceeding 20071 of 2000. It has brought a Cross-Claim against HIH and CGU Insurance Limited (CGU) seeking indemnity. A Defence has been filed by each of the cross-defendants. Under the relevant policy, each of the cross-defendants bears a proportion of any determined liability. Largely, the matter in dispute concerns questions of construction (including construction of the policy). 3 The original proceedings have been resolved by compromise. The amount payable to the plaintiff is in the order of $400,000. The Cross-Claim remains the only matter to be determined. As at 21 February 2000, it was said to be ready for hearing. It has been set down for a one day hearing to take place on the 26 July 2001. The hearing date was allocated by the List Judge after the appointment of the provisional liquidators. On that occasion no mention was made by those appearing of the existing stay. 4 Delta relies on two affidavits. Both of them have been sworn by Erin Elizabeth Devery. Anthony Gregory McGrath has sworn an affidavit on behalf of the provisional liquidators. There has been tender of documentation. I have not sought to exhaustively record what appears in this material. 5 In the other matter, the applicant is Jones Lang LaSalle (NSW) Pty Limited (JLL). It is a defendant in proceedings 20921 of 1997. The Notice of Motion was filed on 18 June 2001. There are a number of sets of proceedings. The litigation arises out of a fire at the premises of the Bowlers Club. A large amount of money is involved. HIH (together with HIH (Liability) Pty Limited) is involved as a cross-defendant in each of them to a claim for indemnity. The Cross-claims are identical in essential respects. A Defence has been filed. The issue raised by the pleadings is also a matter of policy construction (reliance is placed on an exclusion clause). Liability to indemnity was denied in December 1997. 6 The proceedings were commenced back in 1997. They are now at a well advanced stage. Generally speaking, the pleadings are closed and discovery is complete. Orders have been made in relation to witness' statements and expert reports. The court has been told that largely the evidence in chief is complete. 7 Prior to the appointment of the provisional liquidators, solicitors had been acting for the cross-defendants and a fixture for mediation to take place on 5 November 2001 was allocated. The matter will come before the List Judge on 27 August 2001 when the question of a hearing date will be considered (there is an estimate of 4 - 5 weeks as the hearing time for all sets of proceedings). 8 On 9 February 2001, HIH filed a Notice of Motion seeking the striking out of each of the proceedings. The basis of the application is thought to be founded on the ground that JLL has already been indemnified by another insurer in respect of the claim that it is seeking to make against HIH. 9 In relation to the Notice of Motion, subpoenas have been issued. Subpoenas have generated inter alia privilege issues. At some stage in the future, action may be taken to bring this application to a hearing. 10 The applicant relies on an affidavit sworn by Kathryn Elizabeth Roach. The respondent relies on an affidavit sworn by Anthony Gregory McGrath. This affidavit is in terms similar to the affidavit filed in the other matter. There has been tender of documentation. I have not sought to exhaustively record what appears in this material. 11 The parties have referred to various decided cases. In particular, there has been reference to four judgments recently delivered by Hunter J (including Ibbco Trading Pty Ltd v HIH Casualty & General Insurance Ltd (in prov liq) BC200102190 and National Rail Corp Ltd v HIH Casualty & General Insurance Ltd BC200102916). In Ibbco , Hunter J looked at earlier authority. It is not necessary to once again canvass that material. I should add that in those cases Hunter J had before him material similar to that found in the affidavits sworn by Mr McGrath. 12 Section 471B confers a discretionary power which is to be exercised judicially. The court is to have regard to the relevant circumstances of the particular case before it. The applicant bears the onus of demonstrating an entitlement to relief. 13 The affidavits sworn by Mr McGrath demonstrate the enormous task confronting the provisional liquidators. It is unnecessary to expressly refer to the many matters which are detailed therein. They have been the subject of comment in other cases. It suffices to merely mention certain of them. What is mentioned is not intended to be exhaustive. 14 The HIH Group is a very complex group of companies which are located both in Australia and elsewhere. There is clear insolvency. A reliable estimate of gross assets and liabilities is yet to be made. An unsecured creditor's prospects of payment of a dividend may be well into the future. Schemes of Arrangement (in addition to or instead of a winding up) remain a possibility. 15 It is said that it will create a serious dislocation to the orderly planning and execution of the tasks being undertaken by the provisional liquidators if the provisional liquidators have to deal on an ad hoc basis with applications for leave. It is estimated that there are 50,000 claims. There have been over forty applications made pursuant to s 471B (four of them have already been dealt with). 16 It is said that the provisional liquidators have not yet given consideration to either matter or taken legal advice in relation to them. It is further said that the provisional liquidators have not made a decision in respect of defending the proceedings if leave to proceed is granted. 17 There has been some heated argument about reinsurance arrangements. However, on the material before me, it seems unlikely that there are any such arrangements in relation to either of the matters. 18 In each of the matters, prior to the filing of the Notice of Motion, the provisional liquidators were given notice of the intended applications. In each of the matters, the provisional liquidators advised that they intended to oppose the application. 19 In each of the matters, it has been argued that the application should be refused and that each applicant should follow the procedure of lodging a proof of debt (s 553D). I do not accept that submission. 20 The HIH Group is in provisional liquidation. One of the matters has a hearing date. In the other, preparation for hearing is well advanced. Considerable time and money has been expended in preparation. In my view, a refusal of leave would not serve the interests of justice. Indeed it would have the potential of putting the parties to further and unnecessary trouble and expense. If the applicants were left to follow the procedure in due course, at the very least there would have to be real prospects that the proof of debt would be rejected and the applicants would still have to approach the court by way of appeal. 21 In each matter, the material further reveals inter alia that:- (a) the defended Cross-Claims throw up real issues; (b) these are issues which are appropriately dealt with in a hearing before a court; (c) the future of the HIH Group is yet to be determined; (d) what is to happen to the Group may not be known for some time; (e) a defence of the Cross-Claims should not unduly distract the provisional liquidators from their task; (f) each applicant seeks leave on the condition that any judgment obtained may not be enforced without leave of the court.
22 In the circumstances of the matter of Delta Electricity, it seems to me that the applicant has discharged the requisite onus of proof. Accordingly, I grant leave pursuant to s 471B. 23 In the circumstances of the matter of the Bowlers Club, it seems to me that the applicant has discharged the requisite onus of proof. Accordingly, I grant leave pursuant to s 471B. 24 In each matter, that leave is granted on the condition that any judgment obtained may not be enforced without the leave of the court. 25 In each of the matters, the costs of the application are to be costs in the Cross-Claim. The Exhibits may be returned. **********
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