Gorczynski v W&FT Osmo Pty Ltd

(a) Leave to appeal from the decision of Simpson J of 24 July 2009 granted. DECISION: (b) Appeal dismissed. (c) The applicant to pay the second respondent's costs of the summons for leave to appeal and of the appeal.

CATCHWORDS: INSURANCE - Claims generally - Statutory charge on insurance money and leave to proceed against insurer - Plaintiff sought leave to commence proceedings against insurer to enforce charge - Primary judge dismissed application for leave - Appeal against decision of primary judge - Whether prohibition under s 6 of Law Reform (Miscellaneous Provisions) Act 1946 applies - Whether as a matter of discretion the application should be rejected - Whether claim for damages is for legal costs not causally related to alleged negligence of insured - Whether plaintiff has arguable case for establishing duty of care - Whether s 54 of Insurance Contracts Act 1984 (Cth) has no application because insured never made claim upon insurer for payment under policies - Whether plaintiff's cause of action was commenced outside limitation period - Plaintiff's claim against insured is statute barred - Plaintiff's application for leave to commence action against insurer refused - PROCEDURE - Supreme Court procedure - New South Wales - Procedure under Rules of court - Parties - Joinder of parties - Plaintiff filed notice of motion seeking to join insurer as party to proceedings instituted by him against insured - Primary judge dismissed notice of motion - Appeal dismissed

Environmental Planning and Assessment Act 1979 LEGISLATION CITED: Insurance Contracts Act 1984 (Cth) Law Reform (Miscellaneous Provisions) Act 1946 Uniform Civil Procedure Rules 2005

Bailey v New South Wales Medical Defence Union Ltd [1995] HCA 28; (1995) 184 CLR 399 C E Heath Casualty & General Insurance Ltd v Grey (1993) 32 NSWLR 25 Commonwealth Bank of Australia v Baltica General Insurance Co Ltd (1992) 28 NSWLR 579 FAI General Insurance Co Ltd v Australian Hospital Care Pty Ltd [2001] HCA 38; (2001) 204 CLR 641 Kinzett v McCourt [1999] NSWCA 7; (1999) 46 NSWLR 32 Precision Products (NSW) Pty Ltd v Hawkesbury City Council [2008] NSWCA 278; (2008) 74 NSWLR 102 CASES CITED: Ratcliffe v VS&B Border Homes Ltd (1987) 9 NSWLR 390 Triden Properties Ltd v Capita Financial Group Ltd (1996) 12 BCL 402 Trident General Insurance Co Ltd v McNiece Bros Pty Ltd [1988] HCA 44; (1988) 165 CLR 107 Tzaidas by his tutor Tzaidas v Child [2004] NSWCA 252; (2004) 61 NSWLR 18 Walton v National Employers' Mutual General Insurance Association Ltd [1973] 2 NSWLR 73 Wardley Australia Ltd v Western Australia [1992] HCA 55; (1992) 175 CLR 514 Winnote Pty Ltd v Page [2006] NSWCA 287

PARTIES: Peter Gorczynski W&FT Osmo Pty Limited

COUNSEL: A: Mr Martin Luitingh R: Mr James Duncan

SOLICITORS: A: Niall Connolly, Lawyers, Sydney R: Deacons, Sydney

IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 2009/298500 SC 2008/20520

GILES JA TOBIAS JA McCOLL JA

Wednesday 14 July 2010 PETER GORCZYNSKI v W & F T OSMO PTY LIMITED Judgment 1 GILES JA: I agree with Tobias JA. 2 TOBIAS JA: By summons filed on 26 October 2009 the applicant, Peter Gorczynski, seeks this Court's leave to appeal from the dismissal by Simpson J on 24 July 2009 of his Notice of Motion filed 16 December 2008 pursuant to which he sought an order that QBE Insurance Group Ltd (QBE) be joined as a party (relevantly, as an additional defendant) to proceedings instituted by him in the District Court against W & F T Osmo Pty Limited (Osmo). The summons for leave and the appeal were heard concurrently. The primary judge referred to the applicant as "the plaintiff" and so shall I.

THE BACKGROUND FACTS 3 By Statement of Claim filed in the District Court on 5 May 2006 the plaintiff sued Osmo, a firm of consulting structural and civil engineers, alleging the following:

● That in or about 1999 Osmo was retained by neighbours of the plaintiff (the neighbours) to provide various certificates (the certificates) to the Leichhardt Municipal Council (the Council) with respect to certain construction works relating to a building (the building) located at the rear of the neighbours' property which was attached and/or adjacent to a building on the plaintiff's property.

● Between 4 May 1999 and 9 October 1999 and pursuant to s 149D of the Environmental Planning and Assessment Act 1979 (the EP&A Act) Osmo issued the certificates to the Council. In reliance upon the certificates, on 25 October 1999 the Council granted Building Certificates retrospectively authorising the construction of the building.

● Osmo owed a duty of care to the plaintiff with respect to the issuing of the certificates which it breached as a consequence whereof the plaintiff suffered damage.

● That damage was constituted by the costs incurred by the plaintiff in commencing (on 24 January 2000) and prosecuting proceedings (the proceedings) in the Land and Environment Court against the neighbours and the Council for the purpose of obtaining an order that the building work, the subject of the certificates, be demolished.

● As a consequence of the institution of the proceedings, the Council issued an order on 8 March 2001 pursuant to s 121B of the EP&A Act for the demolition of part of the building.

● On 27 June 2002 the Land and Environment Court ordered the demolition of those parts of the building which had not been demolished pursuant to the Council's order of 8 March 2001. 4 Although not alleged in the Statement of Claim it is convenient to note at this point, as it is relevant to the damages claimed by the plaintiff in the Statement of Claim, that on 6 February 2003 the Land and Environment Court (Cowdroy J) ordered the neighbours to pay the plaintiff's costs of the proceedings but made no order for costs as between the plaintiff and the Council. 5 Osmo elected not to defend the proceedings in the District Court as a consequence whereof on 7 July 2006 default judgment was entered against it in favour of the plaintiff, the question of damages being stood over for later assessment; the amount of damages claimed by the plaintiff was $316,816.77. 6 On 17 November 2008 the matter was transferred to the Supreme Court upon the basis that the damages then claimed by the plaintiff exceeded the amount of $750,000 being the jurisdictional limit of the District Court (the principal proceedings). 7 Osmo is impecunious and unable to meet any award of damages which might be made against it. 8 At the time the certificates were issued by Osmo to the Council, it held successive insurance policies (the policies) with QBE covering it against claims, inter alia, of professional negligence. Those policies were renewed annually from 7 May 1997 to 7 May 2004. They were policies of the kind commonly known as "Claims Made and Notified" policies. 9 As noted above, the proceedings the costs of which the plaintiff asserts constitute the damage that he sustained due to Osmo's negligence, were first filed on 24 January 2000. In fact, the plaintiff filed four sets of proceedings in the Land and Environment Court, some of which could not be said to relate to the alleged negligence of Osmo in issuing the certificates. Nevertheless, the costs incurred by the plaintiff and which he now claims to be the damage caused by Osmo's negligence, were incurred after 7 May 1997 and before 7 May 2004, i.e. during the Period of Cover as defined in the policies. 10 Osmo itself did not, at any time, notify QBE that it had been served with the Statement of Claim filed on 5 May 2006 or of any claim made against it by the plaintiff or that it proposed to make a claim against QBE under the policies. The first of these matters may not necessarily be correct (see [49] below) but for present purposes it does not matter.

11 On 16 December 2008 the plaintiff filed a Notice of Motion purportedly pursuant to UCPR 6.24(1) seeking an order that QBE be joined as a party to the principal proceedings. However, that application was, in truth, an application under s 6(4) of the Law Reform (Miscellaneous Provisions) Act 1946 (the Law Reform Act) seeking the leave of the court to commence proceedings against QBE to enforce the charge created by s 6(1) of that Act.

THE RELEVANT TERMS OF THE POLICIES 12 At [33] of her reasons, the primary judge recited the following relevant provisions of the policies: "1.1 QBE agrees to indemnify the Insured [Osmo] against legal liability for any Claim for compensation first made against the Insured during the Period of Cover and which is notified to QBE during the Period of Cover, in respect of any civil liability whatsoever and howsoever incurred in the conduct of the Professional Business Practice. 5.2 If during the Period of Cover, the Insured becomes aware of any fact or circumstance that might give rise to a Claim under this Policy and elects to give notice in writing to QBE of such fact or circumstance, then any Claim which may subsequently arise out of such fact or circumstance shall be deemed to be a Claim made during the Period of Cover. PROVIDED ALWAYS THAT such written notice is given to QBE during the same Period of Cover or within twenty-eight (28) days after its expiry. 7.1 'Claim' shall mean: (a) the receipt by the Insured of any written or verbal notice of demand for compensation made by a third party against the Insured, (b) any writ, statement of claim, summons, application or other originating legal or arbitral process, cross-claim, counterclaim or third or similar party notice served upon the Insured. 7.8 'Period of Cover' shall mean the period specified in the Schedule." 13 Although the actual policies are not in evidence but only a copy of the policy wording, it was common ground and her Honour assumed, that the Period[s] of Cover were for each of the years from 7 May 1997 to 7 May 2004.

THE RELEVANT STATUTORY PROVISIONS 14 Section 6 of the Law Reform Act relevantly provides as follows: " 6 Amount of liability to be charge on insurance moneys payable against that liability

(1) If any person (hereinafter in this Part referred to as the insured) has … entered into a contract of insurance by which the person is indemnified against liability to pay any damages or compensation, the amount of the person's liability shall on the happening of the event giving rise to the claim for damages or compensation, and notwithstanding that the amount of such liability may not then have been determined, be a charge on all insurance moneys that are or may become payable in respect of that liability.

(4) Every such charge as aforesaid shall be enforceable by way of an action against the insurer in the same way and in the same court as if the action were an action to recover damages or compensation from the insured; and in respect of any such action and of the judgment given therein the parties shall, to the extent of the charge, have the same rights and liabilities, and the court shall have the same powers, as if the action were against the insured: Provided that, except where the provisions of subsection (2) apply, no such action shall be commenced in any court except with the leave of that court. Leave shall not be granted in any case where the court is satisfied that the insurer is entitled under the terms of the contract of insurance to disclaim liability, and that any proceedings, including arbitration proceedings, necessary to establish that the insurer is so entitled to disclaim, have been taken . (Emphasis added)

(5) Such an action may be brought although judgment has been already recovered against the insured for damages or compensation in respect of the same matter. … " 15 Both before the primary judge and this Court QBE submitted that it was entitled under the terms of the policies to disclaim liability with the consequence that, as provided by so much of s 6(4) as I have emphasised in the preceding paragraph, the Court was either prohibited from granting leave or would not do so in the exercise of its discretion. The plaintiff responded to this submission by referring to s 54 of the Insurance Contracts Act 1984 (Cth) (the 1984 Act) which relevantly provides as follows: " 54 Insurer may not refuse to pay claims in certain circumstances (1) Subject to this section, where the effect of a contract of insurance would, but for this section, be that the insurer may refuse to pay a claim, either in whole or in part, by reason of some act of the insured or of some other person, being an act that occurred after the contract was entered into but not being an act in respect of which subsection (2) applies, the insurer may not refuse to pay the claim by reason only of that act but the insurer's liability in respect of the claim is reduced by the amount that fairly represents the extent to which the insurer's interests were prejudiced as a result of that act. (2) Subject to the succeeding provisions of this section, where the act could reasonably be regarded as being capable of causing or contributing to a loss in respect of which insurance cover is provided by the contract, the insurer may refuse to pay the claim. (3) Where the insured proves that no part of the loss that gave rise to the claim was caused by the act, the insurer may not refuse to pay the claim by reason only of the act. (4) Where the insured proves that some part of the loss that gave rise to the claim was not caused by the act, the insurer may not refuse to pay the claim, so far as it concerns that part of the loss, by reason only of the act. (5) … (6) A reference in this section to an act includes a reference to: (a) an omission; and (b) an act or omission that has the effect of altering the state or condition of the subject-matter of the contract or of allowing the state or condition of that subject-matter to alter."

THE PRIMARY JUDGE'S FINDINGS 16 As her Honour noted at [11] of her reasons, after discussion agreement was reached between the parties that the material evidence on the application was:

● the Statement of Claim filed in the District Court and transferred to this Court (the Statement of Claim); ● an affidavit sworn by the plaintiff on 7 August 2008; ● an affidavit sworn by Paul Baram (solicitor for QBE) on 8 April 2009; ● an affidavit sworn by Ava June Bentley (National Claims Manager of QBE) on 15 April 2009. 17 At [13] her Honour expressed doubts as to whether the material referred to adequately exposed the relevant facts and circumstances necessary for her decision. Nevertheless, she considered (at least initially) that she should confine herself to that material. However, that left in a state of some uncertainty other aspects of the matter. As will appear, both she and the parties referred to evidence not included in that listed at [16] above. 18 At [14] her Honour recorded that the dispute between the plaintiff and the neighbours had spawned a massive amount of litigation principally in the Land and Environment Court but also in the Supreme Court, the Court of Appeal and on one occasion at least, an application for special leave to appeal to the High Court. Although her Honour was provided with copies of some of the judgments and reference was made to others which were not provided to her, she considered it inappropriate to go beyond what was identified on behalf of the parties as material on the basis of which the present application was made and defended before her. As will become apparent, other material tendered before the primary judge and which was the subject of submissions before her, became relevant to some of the issues argued on the appeal. 19 At [41] her Honour noted the history of s 6 of the Law Reform Act as recounted in the joint judgment of McHugh and Gummow JJ in Bailey v New South Wales Medical Defence Union Ltd [1995] HCA 28; (1995) 184 CLR 399 at 440-445. She also referred to their Honours' construction of that provision at 445-450. It is convenient at this point to state the following propositions which may relevantly be distilled from the joint judgment (at 446-450):

(a) Section 6 creates a new right with an associated remedy to enforce it; it does so by sweeping up distinctions in the general law between legal and equitable assignments of whole or part of presently existing or future choses in action.

(b) Thus the obligations, the performance of which s 6 seeks to secure, are not only payment by the insurer to the insured of all insurance moneys that are or may become payable, but also the performance by the insured of the obligation to pay damages or compensation to the claimant in discharge of the liability of the insured to the claimant.

(c) By its own force, in circumstances where it applies, the section creates on the happening of the event giving rise to a claim for damages or compensation, a charge on all insurance moneys which are then payable in respect of a liability against which the insured is indemnified and all such insurance moneys that may become payable in respect of that liability.

(d) Where no sum is as yet identified as presently payable by the insurer to the insured [as in the present case], nevertheless the statutory charge operates, by loose analogy to an agreement for a charge on after-acquired property, upon such moneys as and when they do become payable.

(e) Although the claimant is a stranger to the contract of insurance between the insurer and the insured, the charge created by this section is enforceable, by reason of s 6(4), by way of an action by the claimant against the insurer.

(f) This action is to be maintained in the same way and in the same court as if it were an action by the claimant to recover damages or compensation from the insured. In respect of that action and of the judgment given therein, the parties to it, the claimant and the insurer, have, to the extent of the charge, the same rights and liabilities and the court has the same powers as if the action were brought by the claimant against the insured.

(g) Thus the position of the insurer is protected in several ways against the consequences of exposure to the direct action by the claimant created by the section in that, first, there is the leave requirement; second, the insurer has the same rights against the claimant as if the action were brought by the claimant against the insured; third, if the contract of insurance between the insurer and the insured fixes the greatest sum for which the insurer may be liable to the insured, then in the action brought by the claimant against the insurer, the insurer shall not be liable for any greater sum: thus protecting the insurer in cases where the amount of the liability of the insured to the claimant exceeds the insurance moneys.

(h) As to the last sentence of s 6(4), it is not directing the court that leave be denied only in a case where it is satisfied both of the entitlement to disclaim liability and that necessary steps have been taken to establish entitlement to do so; leave may as a matter of discretion be refused in other cases but must be refused in these cases.

(i) Further, there will be nothing in respect of which the charge may be enforced if the moneys never become payable by reason of the exercise by the insurer of rights to avoid the contract or of vitiating factors in its formation. A typical example of an entitlement of an insurer to disclaim liability would be a disclaimer under the general law right to rescind for non-disclosure.

(j) The position is similar where there is a breach which, pursuant to the terms of the contract or the general law, entitles the insurer to disclaim liability and this state of affairs exists when action is brought by the claimant under s 6(4) or, as necessary, leave is sought to commence that action. Nevertheless, once the charge has descended on the happening of the event giving rise to the claim for damages or compensation, no mutual or unilateral action of the insurer or insured which is taken otherwise than under or pursuant to the contract of insurance or the general law as it operates upon the contract may vary, discharge or otherwise qualify or abrogate that contract so as to deny to the claimant what otherwise would be the fruits of enforcement of the charge by action taken under s 6(4) against the insurer. 20 At [49] of her reasons the primary judge recognised that: "[a]n indolent, or malevolent, insured (especially if impecunious and with nothing to lose) could, by merely refraining from or failing to give the proper notice, entitle the insurer to disclaim the policy, thereby thwarting an attempt by a third party claimant to exercise the right conferred by s 6. In such circumstances, if the insurer were held entitled, by reason of the failure of the insured to notify, to disclaim to the insured, it would equally be entitled to disclaim a claim made by a third party, and it would be futile to grant leave under s 6(4). It might therefore be assumed that leave under s 6(4) would not be granted." 21 Such circumstances, her Honour noted at [50], would defeat the stated object of the enactment of s 6 unless the insurer was precluded from disclaiming. It was in that context that her Honour considered that s 54 of the 1984 Act would, in an appropriate case, afford relief to an insured against what might, but for the subsection, be the loss of insurance due to an immaterial, irrelevant or trivial breach of the policy. 22 In this context her Honour referred to the judgments of Giles JA and Santow JA (in separate judgments), Campbell AJA agreeing with both, in Tzaidas by his tutor Tzaidas v Child [2004] NSWCA 252; (2004) 61 NSWLR 18 where it was held that the provisions of s 54 of the 1984 Act may be relevant to an application for leave to commence proceedings pursuant to s 6(4) of the Law Reform Act. I interpolate the following observations with respect to that decision. 23 At [46] Giles JA observed: "Once regard can be had to a statutory provision operating to permit the insurer to avoid the contract of insurance, why not [have] regard to a statutory provision operating to prevent an insurer from declining to pay under the contract of insurance? In both cases, whether the insurer is entitled to disclaim liability is found in the terms of the contract of insurance as affected, in their existence or effect, by the statutory provision." 24 In Tzaidas, the policy with CGU Insurance Ltd (CGU) was, like the present policies, a claims made and notified policy containing provisions very similar to those which I have extracted at [12] above. As in the present case, in that case the insured had not given notice of a potential claim against it to CGU as insurer which the policy required. CGU sought to disclaim liability accordingly. The plaintiff in response relied upon the provisions of s 54(1) of the 1984 Act. However, as CGU had not commenced any proceedings necessary to establish that it was entitled to disclaim, the prohibition in the proviso to s 6(4) did not apply and the question resolved itself as one relating to the exercise of the court's discretion whether or not to grant leave in the circumstances. 25 At [53] Giles JA noted that the insured's failure to give notice of the circumstances to CGU during the period of insurance was an act (omission) within s 54, open to consideration for its causative or prejudicial effect. As it had none, s 54(2), (3) and (4) were not engaged. Only s 54(1) could operate. 26 An issue arose in Tzaidas as to whether any claim had been made by the plaintiff against the insured during the period of insurance cover, it being contended that it had not. For reasons to which I shall refer, that issue does not arise in the present case. 27 At [55] the primary judge accepted that s 54(1) of the 1984 Act may be taken into account in the exercise of the court's discretion whether or not to grant leave pursuant to the proviso to s 6(4) of the Law Reform Act. In particular, at [56] she held that if the circumstances were such that s 54(1) would or might arguably afford relief to an insured making a claim, then on the authority of Tzaidas, it was also available to a person in the position of the plaintiff who seeks to claim directly on the policy. 28 This proposition was not contested by QBE although on the appeal, but not clearly before the primary judge, it submitted that s 54(1) was not engaged because any claim which the insurer might but for the section refuse to pay can only be made by the insured and no such claim was made by Osmo in the present case. 29 The primary judge directed herself with respect to this question although not in the context of a submission put to her by QBE. At [53] she relevantly said: "Section 54 is, of course, directed to, and proceeds upon, the assumption that the claim is made by the insured against the insurer. It was not drafted with s 6(4) of the LR(MP) Act in mind. It is, however, adaptable to a claim by a third party on the charge created by s 6(1) of the LR(MP) Act . If, as was held in Tzaidas , it is relevant to the exercise of the s 6(4) discretion, that can only be because a third party claimant may also take advantage of the relief provided by the section. ..." 30 The effect of these observations is that from her Honour's perspective, s 54(1) applied where a third party such as the plaintiff made a "claim" for payment of the insurance moneys by QBE based on the charge created by s 6(1) of the Law Reform Act. It will be necessary to refer in more detail to this issue when dealing with QBE's submissions with respect thereto. 31 At [57] of her reasons her Honour posed the following question: "would Osmo, if it claimed on the policy, and if QBE refused to pay the claim by reason of Osmo's failure to notify [it] of the circumstances giving rise to the plaintiff's claim against it, be entitled to the benefit of s 54(1)?" 32 In effect her Honour answered this question in the affirmative upon the basis that the extent, if any, that Osmo's failure to notify QBE increased the damage to the plaintiff and therefore the magnitude of the claim on the policies, thus reducing the liability of QBE to pay, were matters to be quantified on another occasion and were inappropriate for determination upon an application for leave. There was no challenge by QBE to this finding. 33 The primary judge then noted that the prohibition against the grant of leave required two specified conditions to be met, of which the second was that any proceedings necessary to establish the insurer's entitlement to disclaim had been taken. At [59] she held that the prohibition was conjunctive and that it was insufficient for an insurer to invoke the prohibition if it is able to establish only one of the conditions. However, even where the prohibition does not operate, the grant of leave under s 6(4) nevertheless remains discretionary and may be refused for other proper reasons. At [60] she exemplified the refusal of leave where "it could clearly be seen that a claim was, by reason of limitation of actions legislation, statute-barred." 34 At [65] to [67] of her reasons, the primary judge rejected QBE's submission that, first, the plaintiff's application was defective because there was no relevant existing or proposed pleading of a justiciable claim against QBE: and, second, that an order for joinder ought not to be made because such an order would not be made after judgment (in this case, against Osmo) where the purpose of the joinder was merely to aid in the execution of the (default) judgment. QBE did not on the appeal seek to challenge her Honour's rejection of these submissions. 35 At [68] her Honour noted that QBE had advanced a number of independent propositions which she summarised in the following terms: "a. [s 6(4)] is not enlivened. There is not a contract of insurance by which Osmo is indemnified against liability, and the pre-condition in s. 6(1) is not met. This is so due to the matters set out in the preceding section of these submissions. b. In the alternative, for the same reasons, the prohibition against leave specified in s. 6(4) applies. c. Further, in the alternative, for discretionary reasons leave ought not be granted as the claim (as pleaded in the statement of claim) by the [plaintiff] against Osmo is hopeless because: i. the claim is statute barred; ii. the claim is bound to fail; and/or iii. there is no non-barred causally related loss. d. Section 54 of the Insurance Contracts Act , 1984 has no application in the circumstances of this matter." 36 The primary judge rejected each of these submissions. In a draft Notice of Contention QBE challenged her Honour's rejection of propositions b., c., and d. "1. The court below ought to have found that s.54 of the 1984 Act can have no application in the circumstances of the matter on the basis that the first respondent has never made a claim against the second respondent. 2. The court below ought to have held that the prohibition under s.6 of the Law Reform Act applied. 3. The court below ought to have exercised its discretion to reject the application under s.6 of the Law Reform Act on the further grounds that: a. the applicant's claim for damages against the first respondent is in respect of legal costs that are not causally related to any alleged negligence on the part of the first respondent; b. the applicant's cause of action against the first respondent (one for pure economic loss) would not be established; c. the applicant's cause of action against the first respondent, in all events, was commenced outside the limitation period." 37 At [81] her Honour concluded that notwithstanding the rejection of QBE's propositions to which I have referred at [35] above, nonetheless the application for leave must fail upon the following grounds:

● the successive periods of cover began on 7 May 1997 and ended on 7 May 2004;

● by the policies, Osmo was covered against a claim of the kind made by the plaintiff in two eventualities: (i) that the claim made by the plaintiff was first made against Osmo during the (a) period of cover , and was notified (by Osmo) to QBE during the (a) period of cover (cl 1.1); or

(ii) that Osmo became aware during the (a) period of cover of facts or circumstances that might give rise to a claim under the policy and elected to notify QBE of such fact or circumstance within the (a) period of cover or 28 days thereafter (cl 5.2);

● the evidence does not disclose the date on which Osmo issued (allegedly in breach of duty) its certificates. It therefore does not disclose whether the alleged breach of duty occurred during any period of cover;

● the demand made by the plaintiff on Osmo was made in 1999 - outside the periods of cover;

● Osmo did not, during any period of cover, notify QBE of any fact or circumstance that might give rise to a claim against it;

● Osmo was therefore not covered against the plaintiff's claim. 38 Furthermore, at [82] and in reliance upon the decision of the High Court in FAI General Insurance Co Ltd v Australian Hospital Care Pty Ltd [2001] HCA 38; (2001) 204 CLR 641 at [40]-[44], the primary judge held that there was a distinction between an insurer's refusal to pay a claim by reason of an omission (in which case s 54(1) operates to override the provisions of the policy entitling it to do so) and an insurer's refusal to pay a claim because it was not a claim for which the policy provided cover (in which case s 54 has no application). In her Honour's view the plaintiff's present claim fell within the latter and not the former category. It would appear that this conclusion was based on the findings identified in the third and fourth dot points at [81] of her reasons as recorded in the preceding paragraph. 39 QBE did not seek to support her Honour's reasoning at [81] of her judgment. In this respect, her factual findings in the third and fourth dot points of her analysis were incorrect. The evidence tendered at trial clearly established that the certificates in respect of the issue of which it was alleged that Osmo was in breach of its duty of care to the plaintiff, were issued in 1999. The first certificate was dated 4 May 1999 being Certificate of Inspection No. 5334, which was Annexure B to the affidavit of Niall Connelly sworn 4 March 2009, the plaintiff's solicitor. The final certificate was issued on 9 October 1999 as appears from Annexure E to the same affidavit. 40 The affidavit of Mr Connolly, referred to in the preceding paragraph did not form part of the agreed evidence that her Honour identified at [11] of her reasons (at [15] above). Nevertheless it was before the court and no objection was taken by QBE on the hearing of the appeal to its contents being relied upon. It was also referred to by her Honour in the first sentence of [37] of her reasons which I have recorded at [45] below. 41 In paragraph 9 of the Statement of Claim, it was pleaded that Osmo issued a written Certificate of Inspection No. 5334 dated 4 May 1999; a written Certificate of Structural Adequacy dated 23 August 1999; a further written Certificate of Structural Adequacy which was undated but bore a facsimile transmission date of 27 August 1999; and Certificate of Inspection No. 5531 referring to date of inspection of 9 October 1999. 42 In the foregoing circumstances there was uncontested evidence that established that the certificates were issued, and an alleged breach of duty occurred, during the Period of Cover of the annual policy issued in respect of those periods commencing 7 May 1998 and 7 May 1999. 43 As to the fourth dot point, being the finding that the demand made by the plaintiff on Osmo was made in 1999 - outside the Period of Cover - her Honour apparently overlooked the fact, which she recorded at [34] of her reasons, that the Period[s] of Cover were for each of the years from 7 May 1997 to 7 May 2004. It follows that this finding, which was essential to her Honour's conclusion, was in error. 44 As to the fifth dot point, namely, that Osmo did not during any period of cover, notify QBE of any fact or circumstance that might give rise to a claim against it, this may be so. It would be an omission entitling QBE to disclaim liability under the policies but for s 54(1). However, her Honour acknowledged at [36] a telephone conversation in March 2009 between Mr Osmo, the director of Osmo, and Mr Baram, the solicitor for QBE, in which Mr Baram said that he recalled a discussion with the plaintiff in or about May 1999 in which the plaintiff told him that he risked being sued, but said that he did not take it seriously. 45 Her Honour expanded on this statement at [37] in the following terms: "A more expansive account of the 'discussion' was set out in the written submissions made on behalf of the plaintiff, incorporating file notes of the plaintiff (records of the conversation) annexed to an affidavit that does not form part of the agreed evidence identified in para [11] above. It was said that, on 26 May 1999, the plaintiff explicitly warned Mr Osmo that if the Council determined the building application on the basis of Osmo's certificate he (the plaintiff) would have no choice but to sue 'him' [either Mr Osmo or Osmo] for negligence or 'deceptive conduct/representations'. " 46 Her Honour also referred at [38] of her reasons to a letter written by the plaintiff to Osmo on 26 October 1999 and which was Annexure "E" to Mr Connolly's affidavit, advising that QBE had been warned that Osmo had issued "false certifications" that would probably result in claims against Osmo's policy. The last two paragraph of that letter were in the following terms: "I also advise that your insurer, QBE, has been warned that you have issued false certifications and that this will probably result in court action and claims against your Policy. This letter now serves as formal notice that I hold you liable for any loss and damage that I suffer as a consequence of your conduct and my having to commence court action if the council issues Building Certificates in reliance on your certificates." 47 Annexure G to Mr Connolly's affidavit of 4 March 2009 was a diary note dated 25 October 1999 in the plaintiff's handwriting in which he recorded that he rang QBE's office on that day at 10.30am and spoke to a female. The note records the following: "Told her there's an ongoing dispute over false certifications in his certificates and reports which [a]ffect my property and that it's likely to end up in court action and claim against Osmo. She confirmed his policy is current. 'It's up to the policy holder to lodge a claim as the policy is between him and QBE'. She'll let the 'relevant department' know about my call. Asked for my name, contact details."

After stating that he gave the woman concerned his phone number and Booth Street address, the diary note continues: "Told her I've already warned Osmo that he'll be held liable for any losses and that I'll be sending him letter to formally put him on notice." 48 There is a further diary note dated 11 December 2000 in which the plaintiff stated that he rang QBE regarding Osmo and that he gave "her" Osmo's policy number. The note continues in these terms: "Told her I'm calling to check if policy is still current as there's a court case on foot re Osmo's evidence about illegal building works and that it's likely that there'll be a claim made against him re negligence."

The QBE employee spoken to stated that she could not give the plaintiff any information about the client's police due to privacy laws, informing him only that it was current. 49 I mention these factual matters as there may well be a live issue as to whether or not, if leave to proceed against QBE be granted, QBE was, in light of the wide definition of "Claim" in clause 7.1(a) of the policy wording (see [12] above), in fact entitled to disclaim the policies upon the ground of a failure to be notified of the plaintiff's threatened claim against Osmo.

QBE'S SUBMISSIONS ON ITS DRAFT NOTICE OF CONTENTION 50 As I have noted, QBE accepted that it could not support the primary judge's findings at [81] of her reasons upon which she based her decision to dismiss the plaintiff's application. Rather, it relied upon its draft Notice of Contention, arguing that the primary judge's decision should be upheld on other grounds. Of those grounds, the following can be disposed of relatively shortly.

(a) Ground of Contention 2 51 The second ground of contention was that her Honour ought to have held that the prohibition upon the grant of leave referred to in the proviso to s 6(4) applied upon the basis that QBE was clearly entitled to disclaim liability under the policies as no "Claim" (as defined in cl 7.1 of the policy wording) had been made by the plaintiff against Osmo during the relevant Period of Cover. Accordingly, it was not "necessary" for QBE to have taken proceedings to establish that it was so entitled to disclaim liability. The underlying assumption of this submission may be doubtful: see [49] above. 52 However, the contention would only require consideration if s 54(1) of the 1984 Act was not engaged. Its acceptance or otherwise is dependant upon consideration of that issue. In this respect there can be no doubt that the effect of this Court's decision in Tzaidas is that if s 54(1) is engaged so that, prima facie, the insurer is disentitled from denying liability to pay a claim under a policy, then it becomes "necessary" for the insurer to establish that it is entitled to disclaim notwithstanding that provision. 53 It follows that leaving aside the issue as to whether a "claim" was in fact notified to QBE within the meaning of the policies, the correctness or otherwise of ground (2) of the draft Notice of Contention is dependent upon the correctness of ground (1), namely, that s 54(1) of the 1984 Act has no application to the present case on the basis that Osmo never made a "claim" against QBE under the policies within the meaning of that provision. (b) Ground of Contention 3(a) 54 QBE further submitted that as a matter of discretion this Court would not grant the plaintiff's application upon three grounds. The first was that the claim for damages allegedly in the sum of approximately $900,000 was for legal costs in respect of a multiplicity of proceedings that were not causally related to the alleged negligence of Osmo in issuing the certificates. There is no doubt that some of the proceedings between the plaintiff and the neighbours were unrelated to Osmo's alleged breach of duty. But it is also clear, or at least reasonably arguable, that some of the costs incurred by the plaintiff were as a result of the Council relying upon the certificates. 55 As I have noted at [3] above, the Statement of Claim alleged that as a consequence of the proceedings, the Council on 8 March 2001 issued an order under s 121B of the EP&A Act requiring demolition of part of the building in respect of which the certificates had been issued. Further, the plaintiff was successful in obtaining an order from the Land and Environment Court on 27 June 2002 requiring the demolition of those parts of the building not demolished pursuant to the Council's order of 8 March 2001. Although some orders for costs were made, nevertheless the plaintiff in his particulars of damage to paragraph 14 of the Statement of Claim asserted that he had incurred costs of $316,816.77 in relation to the proceedings which, impliedly, were not recoverable from the neighbours against whom he was successful in obtaining an order for costs but only on an ordinary basis. 56 In my view her Honour was correct to reject proposition (c)(iii) (extracted at [35] above) to which she referred at [78] and [79] of her reasons and in which she accepted that in many instances the damages claimed by the plaintiff appeared to be remote from what, so far as the evidence went, were said to be Osmo's breaches of duty. However, she noted that it was "only necessary, for present purposes, that the plaintiff showed that he has an arguable case that some loss, consequential upon any breach of duty he shows, has been occasioned. If he succeeds in doing that, then quantification is a matter for trial." 57 Possibly the amount of loss occasioned could be relevant to the exercise of the discretion under s 6(4), but I understand her Honour to have meant that the arguable case for "some loss" was for a loss in a sufficiently large sum, even if not something like $900,000. In my view her Honour's reasons with respect to those issues are unexceptional and do not disclose error. It follows that QBE's proposition (c)(iii) of its draft Notice of Contention should be rejected and any quantification be left for trial.

(c) Ground of Contention 3(b) 58 In ground 3(b) of its draft Notice of Contention, QBE submitted that as the plaintiff's cause of action against Osmo was for pure economic loss, before he could succeed in establishing a duty of care to avoid such loss, he was required to establish that he was "vulnerable". Reliance was placed upon what was said in the joint judgment of Gleeson CJ, Gummow, Hayne and Heydon JJ in Woolcock Street Investments Pty Ltd v CDG Pty Ltd [2004] HCA 16; (2004) 216 CLR 515 at [23]. Reliance was also placed upon the judgment of Allsop P in Precision Products (NSW) Pty Ltd v Hawkesbury City Council [2008] NSWCA 278; (2008) 74 NSWLR 102 at [105], [106], [110] and [111] in which his Honour noted that on the basis of Woolcock Street Investments, the most important aspect of a relationship sufficiently close to give rise to a duty of care to avoid economic loss was that of "vulnerability" understood as a reference to the plaintiff's inability to protect himself from the consequence of the defendant's want of reasonable care. 59 At [77] of her reasons her Honour concluded that she would not readily find that the plaintiff had no prospect of establishing that Osmo owed him such a duty of care and that in an application such as the present it was neither necessary nor appropriate to conclude that Osmo did or did not owe the plaintiff such a duty. Rather, it was sufficient to conclude that he had an arguable case to that effect, a conclusion that she reached. 60 In my opinion her Honour was correct to find that the plaintiff had an arguable case for establishing a duty of care. It was arguable that he was vulnerable to exposure to the Council in effect granting approval to the building based on the certificates and rejecting the plaintiff's submissions that those certificates were flawed. The plaintiff had debated the question with both Osmo and the Council and in fact obtained his own expert report, but each of these matters was allegedly ignored by the Council who, in reliance upon the certificates, on 25 October 1999 issued Building Certificates pursuant to s 149D of the EP&A Act in respect of the building. 61 Although ultimately it was open to the plaintiff to litigate the issue, and he did, nevertheless in the meantime on one view of it, he had incurred costs (such as obtaining his own expert report) and thus sustained a loss as a consequence of Osmo's alleged negligent issue of the certificates against which he could not protect himself in the sense of dissuading the Council from issuing Building Certificates authorising the building which later turned out to warrant demolition. Nor could the plaintiff protect himself against the costs of the proceedings, because he did not have the ability to force the Council to knuckle under. It was therefore arguable that he was vulnerable to the Council's conduct, ultimately held to have been in error, in opposing his claims in the proceedings. 62 In my opinion, the plaintiff's case on the issue of vulnerability may not be overwhelming, but it cannot be said that it is not at least arguable. Accordingly, I would reject this ground of contention.

(d) Ground of Contention 1 63 That leaves two more debatable issues for determination under the draft Notice of Contention. The first is that s 54(1) of the 1984 Act has no application in a case such as the present where Osmo, as the insured, never made a claim upon QBE for payment under the applicable policies. In support of this contention, QBE made, in essence, two submissions. The first was that no "claim" was made upon it within the meaning of s 54(1). The second was that even if such a claim had been made, it was not made by the insured but by the plaintiff, a third party. In respect of the latter proposition, reliance was placed upon those parts of the joint judgment of McHugh, Gummow and Hayne JJ in FAI Insurance at [40]-[41] which I have emphasised and where their Honours said: "40. Section 54 directs attention to the effect of the contract of insurance on the claim on the insurer which the insured has in fact made . It is not concerned with some other claim which the insured might have made at some other time or in respect of some other event or circumstance. It requires the precise identification of the event or circumstance in respect of which the insured claims payment or indemnity from the insurer. For example, in Greentree the insured claimed indemnity against liability for a claim which the third party had first made on it outside the period of cover. (To distinguish between the claim which a third party makes on the insured, and the claim which the insured makes on the insurer, it is convenient to refer to the former as the 'demand' by the third party.) The insured's claim necessarily incorporated a temporal dimension. The contract of insurance applied only if the third party's demand on the insured was made within the period of cover. The insured's claim on the insurer therefore had to identify when the demand was made. That being so, the claim could not properly be described without that temporal element. 41. Even if the fact that the third party made no demand on the insured within the period of cover were said to be an "omission" it is, nevertheless, of the first importance to recognise that the claim to which s 54 refers is the claim by the insured on the insurer that was actually made. It is not a claim for indemnity against some other demand (such, for example, as a demand assumed to have been made during the period of cover). Section 54 does not permit, let alone require, the reformulation of the claim which the insured has made . It operates to prevent an insurer relying on certain acts or omissions to refuse to pay that particular claim. In other words, the actual claim made by the insured is one of the premises from which consideration of the application of s 54 must proceed. The section does not operate to relieve the insured of restrictions or limitations that are inherent in that claim." (Emphasis added) 64 The present issue did not arise in Tzaidas as it was common ground that it was the insured that made the claim upon CGU under the relevant policy. Nor did it arise in FAI Insurance where the claim was made by the insured so that the issue as now raised by QBE did not arise in either case. Thus the issue in FAI Insurance that attracted the observations of their Honours in the paragraphs of their reasons to which I have referred above, related to whether the claim upon the insurer which the insured in that case had "in fact" made, must be one which was related to what their Honours referred to as the "demand" by a third party upon the insured. The language adopted by their Honours and upon which QBE relies merely reflected the undisputed fact that it was the insured that made the claim in that case. 65 Thus, at [42] their Honours referred to the restrictions inherent within a claim varying in accordance with the type of insurance in issue. Under a "claims made and notified" policy, if no demand is made by a third party upon the insured during the period of insurance, any claim that may subsequently be made by the insured on the insurer (i.e. the claim to which s 54 refers) would necessarily acknowledge that indemnity is sought in relation to a demand not of a type covered by the policy (because not within the temporal limits that identify those demands in relation to which indemnity must be given). In other words, the "claim" to which s 54(1) refers can only be one in respect of a demand by a third party upon the insured which is of a type to which the indemnity, the subject of the policy, is engaged. It follows in my view that FAI Insurance is not authority for the proposition that a "claim" for the purposes of s 54(1) can only be made by the insured. 66 It is of course essential to differentiate, as did the High Court in FAI Insurance, between a "Claim" (as defined in the policy) by a third party upon the insured and a "claim" on the insurer for the purposes of s 54(1). Although the former must, in a claims made and notified policy, be made within certain time limits set out in the policy (in the present case within the Period of Cover or 28 days of the expiration thereof), there is no temporal requirement for the making of a "claim" against the insurer for payment under the contract of insurance. 67 There is no authority, and certainly none was referred to, which identifies what is a "claim" for the purposes of s 54(1). In Kelly and Ball, Principles of Insurance Law, 2nd ed (2001) LexisNexis Butterworths, the learned authors at [14.0080], when referring to a claims-made cover, state that the first question that arises in relation to such a cover is what constitutes a "claim". The essence of a claim, the learned authors state, is an assertion by a third party of a right against the insured. Reference was made to Walton v National Employers' Mutual General Insurance Association Ltd [1973] 2 NSWLR 73 at 82 where Bowen JA referred to the primary sense of the word "claim" as being "a demand for something as due, an assertion of a right to something". 68 Relevantly in the present case, there was a "claim" because a demand was made upon QBE that it indemnify Osmo under the policies in respect of the plaintiff's claim against QBE's insured. As Kelly and Ball point out, a claim is obviously made when a writ or statement of claim is served although service is not necessary provided its issue is brought home to the insured or, relevantly for present purposes, the insurer (QBE). 69 In my opinion, a "claim" for the purposes of s 54(1) was made against QBE when the present application was filed and served seeking the leave of the court under the proviso to s 6(4) of the Law Reform Act to commence proceedings against QBE. The claim was for payment of the insurance moneys payable under the policies and over which the plaintiff was entitled to a charge pursuant to s 6(1) of that Act. 70 Even if the filing and service of that application was not sufficient, then in my view if leave were granted, a statement of claim would be filed and served upon QBE which would, on this aspect of the matter, be sufficient to engage s 54(1). But as Kelly and Ball state, all that is necessary is that the insurer, QBE, have had brought to its attention that a "claim" is asserted against it and that that "claim" seeks payment under the relevant contract of insurance. 71 Thus, in the words of Sheller JA in Triden Properties Ltd v Capita Financial Group Ltd (1996) 12 BCL 402, the essence of the making of a claim is that "the substance of the claim is in fact 'brought home to'" the person against whom the claim is asserted. There can be no doubt in the present case that that requirement was satisfied. 72 The second, and more substantive, submission of QBE was that s 54(1) required any such claim upon it to be made by its insured, Osmo. Irrespective of who makes a "claim" for the purposes of s 54(1), one thing is clear and that is that QBE as the insurer is entitled to disclaim liability under the relevant policies in the same way as it would be so entitled if the claim upon it for payment was made by Osmo, its insured. 73 As was said in Bailey (at 447), the parties to the action, being the claimant and the insurer, have, to the extent of the claimant's charge, the same rights and liabilities and the court has the same powers as if the action were brought by the claimant against the insured: see also Ratcliffe v VS&B Border Homes Ltd (1987) 9 NSWLR 390 at 397B. When this matter was raised during the course of argument on the appeal, reference was made by the plaintiff to the provisions of ss 48 and 51 of the 1984 Act that entitled persons who were not the insured to make a claim under a contract of insurance. Those sections are, relevantly, in the following terms: " 48 Entitlement of names persons to claim (1) Where a person who is not a party to a contract of general insurance is specified or referred to in the contract, whether by name or otherwise, as a person to whom the insurance cover provided by the contract extends, that person has a right to recover the amount of the person's loss from the insurer in accordance with the contract notwithstanding that the person is not a party to the contract. (2) Subject to the contract, a person who has such a right: (a) has, in relation to the person's claim, the same obligations to the insurer as the person would have if he were the insured; and (b) may discharge the insured's obligations in relation to the loss. (3) The insurer has the same defences to an action under this section as the insurer would have in an action by the insured. … 51 Right of third party to recover against insurer (1) Where: (a) the insured under a contract of liability insurance is liable in damages to a person (in this section called the third party ); (b) the insured has died or cannot, after reasonable enquiry, be found; and (c) the contract provides insurance cover in respect of the liability; the third party may recover from the insurer an amount equal to the insurer's liability under the contract in respect of the insured's liability in damages. (2) A payment under subsection (1) is a discharge, to the extent of the payment, in respect of: (a) the insurer's liability under the contract; and (b) the liability of the insured or of the insured's legal personal representative to the third party. (3) This section does not affect any right that the third party has in respect of the insured's liability, being a right under some other law of the Commonwealth or under a law of a State or Territory." 74 It was suggested that as these provisions provide for "claims" by third parties who are not the insured, and given the apparent application of s 54(1) to those "claims", it followed that the reference in s 54(1) to a claim which the insurer may not refuse to pay, was not confined to a claim made by its insured. It was further suggested that there was no reason why an applicant seeking leave under s 6(4) of the Law Reform Act could not, therefore, make a "claim" for the purposes of s 54(1). 75 In its supplementary written submissions on this issue, QBE essentially advanced five reasons why the suggestions referred to in the preceding paragraph should be rejected. The first was that the 1984 Act drew a distinction between claims under a contract of insurance on the one hand and claims made under that Act against an insurer by a person who is not the insured under a contract of insurance on the other. In support of this distinction, reliance was placed upon the provisions of s 56(1) which provides as follows: "Where a claim under a contract of insurance, or a claim made under this Act against an insurer by a person who is not the insured under a contract of insurance, is made fraudulently, the insurer may not avoid the contract but may refuse payment of the claim." 76 It was therefore submitted that where s 48 was enlivened, the person to whom that section applied was given a statutory right to recover the amount of that person's loss from the insurer in accordance with the contract of insurance notwithstanding that that person was not a party to the contract. Any claim made by such a person was therefore a claim made under the 1984 Act and was not a claim under the contract of insurance. 77 It was further submitted that the 1984 Act makes reference to no other types of claim other than a claim under the contract of insurance on the one hand and a claim under the Act on the other. It was accepted that the reference to "a claim" in s 54(1), by itself and without more, could be a reference to either or both of these types of claims. 78 Reliance was placed upon various paragraphs of Report No. 20 of the Australian Law Reform Commission on Insurance Contracts (ALCR 20) the recommendations of which resulted in the 1984 Act. QBE submitted the following:

(a) Section 54 was enacted in effectively the same form as appeared in the draft Bill that was appended to ALCR 20.

(b) ALCR 20 dealt with the proposed s 54 at paragraphs 228-230 and 241-242. Those paragraphs made it plain that there was a narrow, specific focus in respect of that which was being sought to be redressed by the proposed section, namely, the remedying of particular circumstances arising between the insured and his or her insurer. There was nothing in these paragraphs to suggest that there was any contemplation of the proposed section having any application in respect of any persons other than insureds under contracts of insurance. In particular there was nothing in those paragraphs to suggest that there was any contemplation of the proposed s 54 having application to third parties or claims made by such parties to obtain rights under s 48 or otherwise.

(c) There was also nothing in ALCR 20 when dealing with the proposed s 48 that would suggest that it was contemplated that s 54 would apply to claims made by third parties under s 48.

(d) Accordingly, ALCR 20 reveals that the apparent intent of s 54 was for it to deal only with circumstances arising between an insured and his or her insurer. It was not intended to deal with any claim other than the claim made by an insured under a contract of insurance. 79 In my opinion the foregoing submissions of QBE are without merit. It is true that the paragraphs in ALCR 20 upon which QBE relies speak in terms of claims by an insured upon his or her insurer, which are unquestionably the principal type of claim with which s 54(1) is concerned. On the other hand, there is nothing in those paragraphs which suggests that s 54 was intended to be limited in the manner contended for. Other parts of ALCR 20 discuss claims by third parties and make recommendations to enable them to be made, such as ss 48 and 51. 80 The policy behind s 54 is to limit the insurer's remedies so that they reflect the actual loss the insurer has suffered as a consequence of the relevant act or omission. It is difficult to see why that policy does not apply to a claim made by a third party as much as to a claim made by the insured where otherwise the contract of insurance is engaged. 81 One of the difficulties with QBE's submission as I understand it, is that it seeks to deny the application of s 54 to a claim made by a third party pursuant to s 48. Section 48(3) provides that the insurer has the same defences to an action under s 48 as the insurer would have in an action by the insured. Accordingly, it could refuse to pay a claim by a s 48 claimant by reason of some act not only of the claimant but of the insured, or any other person. It would be odd indeed if in such circumstances s 54 could not be availed of by s 48 claimants. 82 The same comment applies to s 51. It entitles, in the circumstances there referred to, a third party to whom an insured under a contract of liability insurance is liable in damages, to recover from the insurer an amount equal to the insurance liability under that contract in respect of the insured's liability in damages. Although s 51 does not contain a provision such as s 48(3), it would be odd if, when a third party claim against the insurer was made pursuant to s 51, the insurer was disentitled from disclaiming liability as a consequence of some act or omission of the insured or some other person provided that that act or omission occurred after the contract was entered into. Thus, under the general law, the insurer might be entitled to disclaim liability under the policy where an insured, contrary to the terms of the policy, has admitted liability to the third party. There seems no reason why s 54 should not apply in such a case. 83 Some support for the application of s 54 to a s 51 claimant is to be found in Derrington and Ashton, The Law of Liability Insurance, 2nd ed (2005) LexisNexis Butterworths at [2-107] (p. 55) where the learned authors, having in the preceding paragraphs stated that s 54 is expressed in very wide terms and that it applies where the insured omits to comply with a term for the payment of the premium, observe: "If s 54 operates to relieve an insured from the consequences of non-payment of the premium, it would also seem to have application to a claim made directly against the insurer by a claimant under s 51, because the latter can recover the amount of the insurer's liability under the contract. The same reasoning applies to the case of a claim by a person, not a party to the insurance contract, to whom the cover is extended, for that party has the same obligations as the insured and the insurer has the same defences as to an action by the latter." 84 QBE seeks to meet these responses by submitting that s 54 may apply to a claim by a third party under ss 48 or 51 because such a claim would be one "under the Act". However, its reliance on s 56 does not support its contention. True it is that s 56, which deals with fraudulent claims, refers to a claim under a contract of insurance on the one hand and a claim made under the Act against an insurer by a person who is not the insured under a contract of insurance on the other. But the first claim is not in terms confined to a claim by the insured under a contract of insurance. Provided the claim is one which is made under a contract of insurance, it matters not, if the claim is fraudulent, whether it is made by the insured or by some third party who is otherwise entitled to make a claim under that contract. 85 Nevertheless, QBE submits that even if s 54 is construed as extending beyond a claim by the insured or a claim under the 1984 Act, it cannot apply to what is referred to as a claim made by "automation" by an applicant, who is neither an insured nor a person entitled to make a claim under the Act, for leave under the proviso to s 6(4) of the Law Reform Act which is State legislation to which no reference, express or otherwise, can be found in the 1984 Act or any extrinsic material such as ALCR 20. 86 In my opinion, QBE's submission overlooks the essential nature of the s 6(1) charge on the insurance moneys payable in respect of the liability of an insured where he or she is indemnified against that liability under a contract of insurance. The opening words of s 6(4) provide that every such charge shall be enforceable by way of an action against the insurer in the same way and in the same court as if the action were an action to recover damages or compensation from the insured. Further, in respect of any such action the parties have the same rights and liabilities as if the action were against the insured. In light of these provisions it is difficult to conclude otherwise than that a claim to enforce any such charge against the insurer is no different in substance to a claim upon the insurer for payment in respect of the insured's liability in respect of which he or she is indemnified under the contract of insurance. 87 As was pointed out by Spigelman CJ, with the agreement of Mason P, Priestley JA and Handley JA, in Kinzett v McCourt [1999] NSWCA 7; (1999) 46 NSWLR 32 at [102], the use of the words of the proviso to s 6(4) that "no action shall be commenced " is suggestive of a procedural requirement rather than an essential precondition to entitlement to sue. The Chief Justice adopted that suggestion at [106] where he opined that leave under s 6(4) was only a preliminary requirement to, or condition of, enforcement of the cause of action created by the first sentence of s 6(4). A reference to "claim" in s 54(1) is prima facie unrestricted with the consequence that, subject to the submissions from QBE to which I am about to refer, it should not be confined in the manner for which it contends. 88 The second reason advanced for rejecting the suggestions referred to at [74] above, is that ss 54(3) and (4) only apply "where the insured proves" the relevant facts and are thus a clear indication that s 54 as a whole is only intended to apply to a claim upon the insurer by the insured. It is submitted that neither of those subss permit a third party to prove either of the matters to which they refer. Thus ss 54(3) and (4) create a difficulty in the section as a whole applying to a claim made pursuant to s 48 or, for that matter, s 51. 89 That difficulty was recognised by Giles J (as his Honour then was) in Commonwealth Bank of Australia v Baltica General Insurance Co Ltd (1992) 28 NSWLR 579 at 589G-590A where his Honour noted that s 54(3) indicates that a third party is in a worse position than the insured since the insurer may refuse to pay the claim by reason of an act of the third party unless "the insured" proves that no part of the loss was caused by the relevant act. The insured may be dead or otherwise cannot be found. Or just malevolent and uncooperative. 90 Again, in C E Heath Casualty & General Insurance Ltd v Grey (1993) 32 NSWLR 25 at 48B, Clarke JA (with whom Meagher JA agreed) noted that subs (3) and (4) speak only of the insured, thus creating difficulties when seeking to apply s 54 to a s 48 claim and, a fortiori, a s 51 claim: see s 51(1)(b). 91 In Kelly and Ball, op.cit at [6.0030.5] (p. 6246), the learned authors contend that the difficulty created by the fact that ss 54(3) and (4) refer only to disproof of causation "by the insured" can be resolved by interpreting the word "insured" as including a third party in respect of his or her claim against the insurer. 92 QBE submits that this is not an available interpretation as it pays no regard to the distinction between an insured and a third party making a claim under the Act, a distinction to which the learned authors refer earlier in the same paragraph at page 6222. It was submitted that it was sufficient for the purpose of the present proceedings merely to demonstrate that the expression "claim" in s 54(1) only contemplates a claim by an insured without being concerned to rationalise the application of that provision to a ss 48 or 51 claimant. 93 However, if QBE's submissions are accepted then it must follow that s 54(1) could not be availed of by a s 48 third party claimant. In my opinion, the draftsperson of s 54 must have contemplated that, on occasions, a third party would be entitled to make a claim under an insurance contract whether under s 48 or under the general law: see Trident General Insurance Co Ltd v McNiece Bros Pty Ltd [1988] HCA 44; (1988) 165 CLR 107. It is true that Trident had not been decided at the time the legislation was passed. But ALCR 20 at paragraphs 121 and 122 discusses other ways in which third party claims have succeeded on occasions and the fact that, on many occasions, insurers pay such claims. 94 The structure of s 54 is as follows. Sub-section (1) sets out the general principles. Sub-section (2) sets out how that general principle is to apply in a particular case: i.e. where the act or omission "could reasonably be regarded as being capable of causing or contributing to a loss". Sub-section (1) cannot apply if subs (2) does given the words "but not being an act in respect of which subs (2) applies" in subs (1). Sub-sections (3) and (4) set out qualifications to the particular case dealt with by subs (2). 95 It is difficult to see what policy reason there could be for not applying s 54(1) and, for that matter, s 54(2) to third party claims. Those provisions appear to have been deliberately drafted in a manner that does not in terms confine either to claims made by the insured. Section 54(1) refers to "the effect of a contract of insurance" and not to the rights of the insured. If the insurer is entitled to refuse to pay the claim, that is clearly an effect of the contract of insurance. Further, the right of the insurer under s 54(2) to refuse to pay a claim is not dependent upon any particular claimant, whether it be the insured or some third party otherwise entitled to make the claim. 96 Although it was suggested by QBE that subss (3) and (4) are qualifications on subs (1), the question is whether those sub-sections should be limited to claims by the insured or whether "the insured" in those subsections should be interpreted as including third parties who are entitled to the benefit of subsection (1). It would appear that the expression "the insured" is sometimes used loosely in the 1984 Act to mean any insured person under the contract of insurance being a person who is expressly entitled to a benefit under such a contract. 97 Thus the first sentence of paragraph 233 of ALCR 20 speaks in terms of "an insured person" rather than "the insured". The latter is by definition a party to the contract of insurance whereas the former may be a third party who is entitled to make a claim under the contract but is not a party thereto. It would be consistent with the object of s 54(1) to interpret the expression "the insured" in subss (3) and (4) as referring to an insured person, thus including a third party claimant. 98 There is no rational reason why the rights conferred by subss (3) and (4) should only be available to insureds (in the strict sense) but not to third party claimants. Moreover, if subss (3) and (4) are read literally so that they are limited in the manner for which QBE contends, they produce very odd results. 99 Thus, for example, suppose that a contractor takes out a contractors all risk insurance policy for the contractor's own benefit and the benefit of all subcontractors (who are therefore entitled to claim under s 48). Suppose proceedings are brought against both the contractor and a subcontractor who then seek to join the insurer. Suppose the insurer relies on an act to which s 54(2) applies (for example, there may be some term in the policy requiring the contractor to carry out regular safety inspection of machinery and it is faulty machinery that has caused the loss in respect of which contractor and subcontractor are sued). If the insured contractor proves that no part of the loss was caused by the failure to carry out regular inspections (because, for example, the inspections would not have revealed the fault), who would be entitled to succeed against the insurer? On the strict wording of subs (3), it would seem to be both. The insured would have proved what is required by subs (3) and it would be odd in those circumstances if the insured contractor succeeded but the (third party) subcontractor did not. If the foregoing is accepted, then it would also be odd if s 54(3) could not be relied upon if only the subcontractor sued the insurer but was otherwise able to prove that no part of its loss was caused by the relevant act. 100 Accordingly, in my opinion subsections (2) and (3) should not be construed as requiring a "claim" to which reference is made in subsection (1) to be one made only by the insured. 101 The third reason advanced by QBE is that where the legislature intended the 1984 Act to apply to a claim other than by the insured, it expressly said so, such as in s 56. The fact that s 54(1) does not follow this course is a further indication that the intent was that the section was to deal with only one type of claim, being that of the insured. 102 In my opinion this submission should be rejected. The 1984 Act uses various grammatical structures to achieve its goals. The structure of s 54, broadly speaking, is similar to the structure of s 28 (which is concerned with the remedies for misrepresentation and non-disclosure). There is no reason why s 28 would not apply to a claim by a third party. Section 28(3) speaks of the liability of the insurer "in respect of a claim" and, like s 54(1), does not confine such a claim to one made by the insured. It would be odd if it did. There is no reason why the liability of the insurer should not be reduced in the manner contemplated by subs (3) where the claim is made by a third party as distinct from the insured. This is particularly so as s 33 provides that the remedies set out in Division 3 of Part IV which commences with s 28 are exclusive of any right that the insurer would otherwise have in respect of a misrepresentation or non-disclosure. If s 28 were limited to claims by an insured, the insurer would have no remedy where the claim was made by a third party under s 48 as on QBE's construction s 28 would not apply when a claim is by a third party. But if s 28 applies to such claims, why should not s 54 as well? In my view it should. Section 55, which is the equivalent in Division 3 of Part V to s 33, supports such a conclusion. 103 The fourth reason advanced by QBE in support of its contention that s 54 applies only to a claim by an insured is founded upon the statement of the plurality in FAI Insurance to which I have referred at [63] above and which I would reject for the reasons articulated at [64] and [65] above. FAI Insurance was not concerned with third party claims and the remarks of the High Court are directed to the usual case of which that was one, namely, a claim by the insured. 104 The fifth reason advanced by QBE is little different from the first, namely, s 54, even if it is not confined to a claim by the insured, is confined to a claim under the 1984 Act. However, the submission is based upon a false premise. 105 The 1984 Act is not concerned only with claims by insureds under contracts of insurance and claims by third parties under the provisions of the Act. As ALCR 20 makes clear, it was drafted in the context where other types of claims by third parties were possible and, indeed, where insurers often pay such claims. Many of its provisions in one way or another seek to deal with such claims. Thus, a claim under s 6(4) of the Law Reform Act is a claim against the insurer. Further, it is a claim in respect of "insurance moneys": i.e. a claim to moneys that are payable under a contract of insurance. QBE is seeking to resist that claim because of what it says is the effect of a term of the policy as a result of the omission of Osmo to notify it of the plaintiff's claim. There is no reason as a matter of policy why s 54(1) should not apply in those circumstances. 106 For the foregoing reasons, in my opinion QBE's first ground of contention should be rejected and it should be held that s 54(1) applies to a claim by a third party including, in the present case, the plaintiff. The primary judge so held at [53] of her reasons and in my opinion she was correct to so find.

(e) Ground of Contention 3(c) (i) The plaintiff's submissions to the primary judge 107 In his written submissions in reply, the plaintiff responded to a submission of QBE that leave should not be granted pursuant to s 6(4) as the plaintiff's claim against Osmo as articulated in the Statement of Claim filed on 5 May 2006 was outside the limitation period which expired on 5 May 2000. In this regard, as will appear, QBE submitted to her Honour that the plaintiff had suffered loss as a consequence of Osmo's breach of duty at the time he incurred certain legal and other costs. 108 It was submitted by the plaintiff that characterisation of a liability to pay a solicitor's legal costs in a litigious matter as "a loss" was contingent upon the making of costs orders for the recovery of costs and was not concerned with the client's liability to pay his or her solicitor's costs where their payment was potentially contingent upon the making of costs orders in the client's favour. Accordingly, it was not self-evident that costs incurred by the plaintiff before May 2000 could be properly characterised as a "loss" at that time given that he may not have been called upon to pay them (or would have been entitled to be reimbursed for them) if a costs order was made in his favour as it ultimately was, at least in part. 109 This last submission seems to me to constitute, at least implicitly, a concession that the plaintiff in fact incurred legal costs prior to May 2000. This would seem to be so as Annexure E to Mr Connolly's affidavit sworn 9 October 2008 is a copy of a table summarising the plaintiff's claim for damages referred to in the affidavit of the plaintiff sworn 7 August 2008 and exhibited to Mr Connolly's affidavit. At paragraph 64 of that affidavit, the plaintiff asserted that his damages included the legal costs and other expenses that he had incurred in seeking to protect his valuable property rights. Copies of his solicitor/client bills were apparently annexed to that affidavit but were not in evidence before her Honour. 110 Nevertheless, Annexure E to Mr Connolly's affidavit contained a table setting out the plaintiff's costs in the Land and Environment Court. Relevantly for present purposes, that table included the following: Gorczynski's costs in Land & Environment Court SOURCE DATE INVOICE AMOUNT SUB TOTAL Hones Lawyers 12/10/99 782 4,124.20 18/2/00 896 4,000.00 22/03/00 935 6,851.00 31/3/00 953 1,369.00 05/04/00 824 1,300.00 17,644.20

It will be apparent that the amounts of each of the solicitor's invoices related to work performed and legal costs charged in respect of the period prior to 5 April 2000. (ii) The primary judge's findings on the issue of whether the plaintiff's claim against Osmo was statute barred 111 Her Honour asserted at [75] of her reasons that the limitation question was touched upon only briefly in both written and oral submissions. While it remained available to be argued in full on a final hearing, she considered that the issue was not so clear as to permit the making of an order that would lock the plaintiff out from his claim against QBE. 112 The basis of this conclusion was articulated by the primary judge at [74] where, after referring to the plaintiff's argument that assumed that the cause of action against Osmo arose on the filing of the Statement of Claim on 5 May 2006, she observed: "…It is not immediately apparent that the cause of action did arise on that occurrence. What the plaintiff now seeks to claim is damages representing the costs outlaid and incurred in repeated proceedings from that date and continuing. Moreover, it is at least arguable that, even in respect of that proceeding, damage did not arise until Cowdroy J delivered judgment, granting the plaintiff costs against Ms Perera and Ms Dee, but declining to order costs against the Council." 113 The judgment of Cowdroy J to which her Honour refers related to the costs orders made by his Honour and to which I have referred at the end of [3] above. It would appear that the primary judge considered it arguable that it was not until Cowdroy J declined to order the Council to pay the plaintiff's costs of the proceedings that the plaintiff sustained a loss being the amount of those costs which he himself would have to bear in the absence of an order in his favour against the Council. (iii) The relevant principles as to when time commences to run 114 It is trite law that a plaintiff cannot sue for damages in negligence until the cause of action accrues for it is only when it accrues that time commences to run. As damage is the gist of the cause of action in negligence, it is necessary that the damage which is sustained is beyond what can be regarded as negligible and, therefore, is "measurable": Winnote Pty Ltd v Page [2006] NSWCA 287 at [40] per Mason P, with whom I agreed. 115 As the plaintiff's present claim is one for economic loss, there must be some actual damage of a measurable kind: Winnote at [41]. However, it is necessary to bear in mind the warning by Mason CJ, Dawson, Gaudron and McHugh JJ in Wardley Australia Ltd v Western Australia [1992] HCA 55; (1992) 175 CLR 514 at 533 where their Honours observed: "We should, however, state in the plainest of terms that we regard it as undesirable that limitation questions of the kind under consideration should be decided in interlocutory proceedings in advance of the hearing of the action, except in the clearest of cases. Generally speaking, in such proceedings, insufficient is known of the damage sustained by the plaintiff and of the circumstances in which it was sustained to justify a confident answer to the question." 116 In the same case, Toohey J (at 558-559) issued a similar cautionary statement observing that the instant case provided a good illustration of the difficulty and undesirability of trying to determine a limitation point in interlocutory proceedings "unless the position is clear beyond peradventure". (iv) The submissions of the parties 117 The plaintiff, in supplementary written submissions filed with the leave of the Court, submitted that the cause of action of the plaintiff against Osmo will only be complete when the plaintiff knows what he has to pay, i.e. when all the costs orders and recovery processes have been completed. Before then, the plaintiff can only speculate as to what damages he has suffered. 118 Accordingly, the test is not whether the plaintiff's cause of action was complete as at 12 October 1999 "when he first paid, or became liable to pay, invoice 782 of Hones Lawyers". The alleged negligent issue of the certificates by Osmo created prospective and contingent costs liabilities that were not certain at the time they were issued or at the time of the commencement of the Land and Environment Court proceedings and did not become certain until judgments relating to costs were made: the latter being a reference to the orders of Cowdroy J referred to by her Honour. 119 It was further contended by the plaintiff that the test should not be what he was ordered to pay but rather what he cannot recover: and that amount is yet to be established. In other words, at the very least the plaintiff's loss was neither ascertained nor ascertainable until after the costs judgment was made in February 2003. In any event, his loss is ongoing. 120 QBE, in its written supplementary submissions in reply, submitted that the evidence established that by 5 May 2000, the plaintiff had incurred the following costs, expenses, and liabilities arising from or associated with the impugned certificates and reports:

o The cost to the plaintiff of retaining his own engineer and surveyor which, it can be inferred, he did some time in 1999;

o The filing cost on the commencement of the Land and Environment Court proceedings in January 2000;

o Legal costs of $17,644.20 as referred to in [110] above;

o Some portion of miscellaneous expenses referred to in Table 1 in Annexure E to Mr Connolly's affidavit sworn 9 October 2008 as being incurred between 1999 and 2003 in the amount of $92,076.44. 121 It was therefore submitted that the plaintiff had sustained actual and measurable damage well and truly prior to 5 May 2000. Accordingly, the plaintiff's claim against Osmo was statute barred prior to the filing of the Statement of Claim in the District Court on 5 May 2006. 122 The plaintiff sought to counter QBE's submissions by contending that not only was Osmo negligent in issuing the certificates, but also in its continuing failure to qualify them both before and after 25 October 1999 when the Council issued Building Certificates pursuant to s 149D of the EP&A Act in reliance upon those certificates. 123 As already noted at [3] above, it was not until 8 March 2001 that the Council issued an order pursuant to s 121B of the EP&A Act in respect of the demolition of part of the building and the Land and Environment Court ordered demolition of the balance of the building on 27 June 2002. 124 It would appear that this submission of the plaintiff is based upon particular of negligence (m) to paragraph 13 of the Statement of Claim which asserted that on each occasion that Osmo provided a certificate after Certificate of Inspection No. 5334 dated 4 May 1999, it failed to review and/or reconsider and/or amend and/or qualify the terms of certification provided by Osmo in previous certificates. 125 QBE submitted that that particular of negligence did not establish some continuing breach of duty beyond the alleged failure of Osmo to make corrections to its last certification given on or about 9 October 1999 as alleged in particular (f) to paragraph 9 of the Statement of Claim. 126 I would have considerable doubt as to whether Osmo was under a duty of care to correct certificates which it had issued negligently. Even if it did, I am satisfied that on the case as pleaded, particular (m) to paragraph 13's allegation of negligence in failure to review, reconsider, amend or qualify an earlier certificate is confined to, at the latest, the issuing of the last certificate given on or about 9 October 1999, and thus more than six years prior to the commencement of the proceedings. While particular (g) to paragraph 9 of the Statement of Claim alleges an undated certificate referring to a date of inspection on 5 July 2000 certifying that there had been no changes to the building or any matter concerning the building since the previous inspections, that certificate is not alleged to have been relied on by the Council and, accordingly, any negligence in relation thereto is of no causal significance. This appears to be accepted by the plaintiff who sought to counter QBE's submissions by relying on Osmo's failure to qualify "earlier" certificates, not by relying on issuing the particular (g) to paragraph 9 certificate as negligence in itself within the six years limitation period. 127 Finally, the plaintiff submitted that it was not open to QBE to assert that his claim against Osmo was statute barred given that Osmo had filed no defence in the proceedings issued against it and default judgment had been entered. However, this submission must be rejected as it is contrary to the provisions of s 6(4) of the Law Reform Act insofar as they provide that the parties shall have the same rights and liabilities as if the action against the insurer was against the insured (Osmo). Further, on an application for leave the court is entitled to, indeed must, act prospectively, and if it is satisfied that the insurer will rely on a limitation defence (as I am satisfied QBE will), that is highly material to the exercise of the discretion. (v) The conduct of the limitation issue at trial 128 I have already referred at [17] to the fact that her Honour with the agreement of the parties, considered only part of the evidence tendered before her. That evidence did not include the material referred to at [109] and [110] above being Mr Connolly's affidavit of 9 October 2008 together with its annexures and exhibits. Yet that material was relied on by QBE, without apparent objection by the plaintiff, in its submissions to her Honour on the limitation issue during final addresses. 129 Certainly at Trial Tpt.19(10) counsel for the plaintiff submitted, and repeated on the appeal, that his client would only have first suffered damage when a costs order was made by Cowdroy J and it was then apparent that he would need to bear some solicitor/client costs which were not recoverable from the neighbours against whom a costs order had been made in February 2003 in the plaintiff's favour. 130 But counsel for QBE at Trial Tpt.29(43-50) expressly relied on Annexure E to Mr Connolly's affidavit extracted at [110] above and on the basis of that material submitted that the plaintiff's action was statute barred. Furthermore, at Trial Tpt.34(30-35) QBE relied on the affidavit evidence of the plaintiff (being an annexure to Mr Connolly's affidavit) that the plaintiff had incurred costs in retaining his own expert engineer and surveyor. 131 Regrettably, the primary judge did not deal with these submissions of QBE or with the evidence upon which they were founded. If she had, she may have come to a different conclusion with respect to the limitation issue. (vi) The plaintiff's claim against Osmo is statute barred 132 In my opinion the plaintiff's submissions on the limitation issue should be rejected and those of QBE accepted. On his own evidence, the plaintiff accepted that he had incurred legal costs to his solicitors of a not insubstantial amount prior to 5 May 2000. Neither in evidence nor submissions does he suggest that he did not pay those costs or that he was not obligated to pay them irrespective of what costs orders were made in the proceedings. Thus there was no suggestion that there was any agreement between he and his solicitors that he would not be liable for those legal costs unless and until he obtained an order that those costs be paid by the neighbours or the Council. 133 Furthermore, the foundation of the plaintiff's submission that, as at 5 May 2000, he had not suffered any loss as a consequence of Osmo's negligence, is that that loss could not be ascertained until it was determined (as it was in February 2003) whether or not he would obtain an order for costs in his favour from the Land and Environment Court. However, this submission goes only to the ultimate quantification of the plaintiff's loss and not to the fact that he sustained a measurable loss by incurring, amongst other things, the legal costs referred to at [110] above. Whether or not he ultimately was able to recover those costs from third parties only went to their quantification and not to the fact that he incurred the obligation to his solicitors to pay them and, it can be inferred, did in fact pay them. As I have indicated, neither in evidence at trial nor in submissions below nor in this Court did the plaintiff suggest otherwise. 134 In my opinion, therefore, her Honour was in error in failing to find that the fact that the plaintiff's claim against Osmo was statute barred was unarguable. Even if it be thought that this is too definite a conclusion, whether a limitation defence exists is very material to the exercise of the discretion. In my opinion, the prospect that the limitation defence will fail at trial is so remote that it mandated the exercise of the court's discretion pursuant to the proviso to s 6(4) of the Law Reform Act to refuse the plaintiff leave to commence proceedings against QBE to enforce the statutory charge. 135 Accordingly, the present is a case where the Court can confidently find that the plaintiff's claim against Osmo was statute barred prior to the filing of the Statement of Claim on 5 May 2006. That finding dictates that, as a matter of discretion, the plaintiff's application under the provision to s 6(4) of the Law Reform Act for leave to commence an action against QBE to enforce the charge over the insurance moneys payable under the policies pursuant to s 6(1) should be refused.

CONCLUSION 136 It follows from the foregoing that the primary judge was ultimately correct to dismiss the plaintiff's notice of motion that QBE be joined as a party to the proceedings between the plaintiff and Osmo. I would therefore propose the following orders:

(a) Leave to appeal from the decision of Simpson J of 24 July 2009 granted.

(c) The applicant to pay the second respondent's costs of the summons for leave to appeal and of the appeal. 137 McCOLL JA: I agree with Tobias JA and the orders his Honour proposes. **********

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