Darshn v Avant Insurance Limited

ALLSOP CJ: 1 This matter is listed for hearing before a judge of the Court on 19 and 20 April 2021. The matter has been expedited. It concerns a claim by the applicant who is a plastic surgeon who has been sued in a class action in the Supreme Court of New South Wales (referred to as the TCI Proceeding). He is in the position of having had two professional indemnity insurers both on claims-made policies. The first is Avant Insurance Limited, the first respondent. The second is Medical Insurance Australia Pty Limited, the second respondent. The problem he faces is, if I may use the expression, the nightmare of any insured of being told by the first insurer that he did not notify it of the claim in circumstances to enliven what might be called the aggregation or crystallisation clause in the policy, notwithstanding that it is a claims-made policy, and being told by the second insurer that there is a clause which states that the policy does not cover previously existing circumstances. 2 The urgency is that the TCI Proceeding is gathering some pace. Legal fees are required. The first policy is, of course, one that covers legal fees and defence costs as well as other aspects of indemnity. I will not go through the detail of the terms of the amended originating application and concise statement; save to say that there is a dispute about the operation of the policy with the first respondent, the effect of s 40(3) of the Insurance Contracts Act 1984 (Cth), and how s 54 of the Insurance Contracts Act interrelates with one or both of those. 3 On 26 February 2021, I ordered that the applicant serve upon the respondents a call for documents to be produced to him as if under notice to produce. The documents were to be produced by the respondents on or before 15 March 2021. On 12 March 2021, the solicitors for the applicant contacted my chambers to request that the matter be listed before me to resolve a dispute between the applicant and the first respondent concerning the categories of documents to be produced. Attached to that email was a series of correspondence between the solicitors for the applicant and first respondent, being letters from Williams Roberts Lawyers to Carter Newell Lawyers dated 5 March 2021, 11 March 2021 and 12 March 2021, and letters from Carter Newell Lawyers to William Roberts Lawyers dated 9 March 2021 and 11 March 2021. 4 The gist of the problem that is giving rise to the dispute about documents is that at a point in time when the first respondent was on risk, the applicant, who was not a defendant in the TCI Proceeding at that point, received a subpoena from the solicitors acting for the applicant in the TCI Proceeding. A number of other doctors received similar extensive subpoenas. I make no criticism of anyone who gave leave to issue the subpoenas. But such use of subpoenas reveals a difficulty for recipients when the subpoenas are actually being used as a form of third-party discovery in aid of a potential joinder of those parties to proceedings. I think that is what happened here. 5 There was a telephone conversation between a legally trained employee of Avant and the applicant in which he indicated that he had been served with a subpoena. The detail of what passed between them in terms of conversation is not important for present purposes. What is important to state for present purposes is that the applicant did not appreciate, it would appear, that the receipt of the subpoena may indicate that there were circumstances which might give rise to a claim. He made no written notification to Avant in that respect. He dealt with the answer to the subpoena. After taking up a new policy with the second respondent, the applicant received the news that he was to be joined in the TCI Proceeding. 6 I should add that there had been notifications and complaints from individuals who were former patients of the applicant during the period of the applicant's cover with the first respondent. He had told the first respondent of these complaints. They were dealt with without any dispute between the first respondent and the applicant. At least one if not two, perhaps more, of these individuals are or may well be members of the class in the TCI Proceeding. Issues arose and, indeed, it appears that there was some discussion between the applicant and the employee of the first respondent with whom he spoke about this possible intersection and the need for such persons to decide whether to opt out of the TCI Proceeding. 7 One aspect that now arises is that the applicant has requested, as if on notice to produce, ten classes of documents from the first respondent. Three classes were initially in contest, being classes (b), (e) and (f) taken from the letter of 5 March 2021 of William Roberts Lawyers as follows: (b) The list of persons who received a subpoena referred to in Avant's MLA Activity Report dated 22 March 2019 (Subpoenaed Surgeons). … (e) All written communications between Avant and the Subpoenaed Surgeons concerning their claims for indemnity in relation to the TCI Proceeding. (f) All file notes and/or memoranda created in the period from 14 September 2017 to 30 June 2019 concerning the TCI Proceeding. 8 The debate now centres upon classes (e) and (f). The documents in (e) are said by the first respondent to be not relevant and the documents in (f) are said to be not relevant either but also the subject of a vague call which is oppressive. As explained above, the solicitors for the applicant and first respondent have engaged in correspondence about these matters and the letter of the applicant's solicitors, William Roberts Lawyers, of 12 March 2021 clarifies the documents in class (f) as follows: … For the avoidance of doubt, documents falling within this category are limited to those that address the allegations or developments in that proceeding in a substantive way. … 9 The applicant says that the documents should be provided because they will reveal matters relevant to how the applicant has been dealt with by the first respondent in contradistinction to how it has dealt with other surgeons who have also been joined to the TCI Proceeding and to whom it is said cover has been granted. If it be the case that the first respondent had a very close watching brief on the TCI Proceeding and if it be the case that it appreciated from its knowledge of the TCI Proceeding that one or more of the surgeons might well be joined to the proceeding including, perhaps, the applicant, such matters might be particularly relevant to the questions: (a) whether there is any particular prejudice in the applicant not identifying in writing what the first respondent might well have appreciated for itself from its own understanding of the proceeding and its own experience as an underwriter; and (b) in respect of the same kinds of considerations, whether the first respondent has acted conformably with s 14 of the Insurance Contracts Act in relying on certain provisions of the policy. I draw no conclusions whatsoever about those matters, but it seems to me that the documents are relevant and should be provided as a matter of urgency. I had considered making an amendment to the orders that I made on 26 February 2021 to simply require discovery in this area but that may slow down the proceeding. 10 Turning to the two paragraphs of the letter of 5 March 2021, class (e) is not oppressive and, in my view, may well be relevant depending upon the arguments deployed and their legitimacy. They may well contain aspects of the affairs of third parties that raise questions of confidence and I would expect that not to be a basis for a claim of refusal to provide the information, albeit it may be the basis for a proper understanding between the solicitors that a third party's confidence be maintained by information only being available to legal representatives until there is some reason for distribution to the client. Any dispute about that matter can be brought to me or to the judge hearing the matter if that be a different person. 11 As to class (f), there is a degree of breadth in that call. However, properly understood as limited by the letter of 12 March 2021, what is being called for are file notes and memoranda created between two particular dates concerning one legal proceeding which deal with the allegations or developments in that proceeding in a substantive way. I do not consider that to be in any way oppressive in its vagueness and that was one matter that gave me pause for thought about whether this perhaps should be by way of discovery. Again, I will not order discovery. I will order, in terms that I already have, the production of these documents as if on notice to produce. 12 If there are claims for legal professional privilege, such claims can be made. They will have to be substantiated in due course at the appropriate time but, in my view, both classes (e) and (f) with those qualifications should be the subject of production pursuant to a varied order. 13 I will make the following orders: (1) On or before 23 March 2021 and subject to Order 2, the first respondent produce to the applicant the documents falling within categories (e) and (f) described in the letter from the applicant's solicitor to the first respondent's solicitor dated 5 March 2021 as explained in relation to paragraph (f) on page 2 of the letter of the same solicitor dated 12 March 2021. (2) The first respondent need not produce on 23 March 2021 to the applicant documents for which a claim for legal professional privilege is made, the privilege in relation to such documents to be justified by affidavit or affidavits to be filed and served on or before 26 March 2021. The documents the subject of the claim are to be kept in a sealed envelope by the solicitor for the first respondent and be available for production should that be ordered in due course. (3) The following orders of 26 February 2021 be vacated: (a) in so far as it relates to the second respondent, order 4; and (b) order 5. (4) On or before noon on 17 March 2021, the second respondent: (a) file and serve: (i) A concise statement in response setting out the factual and legal basis for its declinature; and (ii) Any evidence upon which it wishes to rely either by affidavit or by statement; and (b) serve upon the applicant a call for documents to be produced to it as if under notice to produce to be provided on or before 22 March 2021. (5) On or before 26 March 2021, the applicant file and serve: (a) Any concise statement in reply; and (b) Any further evidence in reply. (6) Liberty to apply on 24 hours' notice. (7) The matter be listed for case management on 26 March 2021 at a time to be fixed in consultation with the chambers of the Chief Justice. I certify that the preceding thirteen (13) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Chief Justice Allsop.