C THE RESOLUTION
14 Owing to the interconnectedness of the issues and the alternative forms of relief sought, the parties' written submissions focussed upon issues of power rather than finding the shortest way home.
15 I raised concerns to this effect with the parties at the interlocutory hearing on 31 May 2023, resulting in orders for the filing of the amended interlocutory application and draft originating application. But some confusion persisted in the revised submissions filed in advance of today's listing.
16 The cause of some confusion is captured in MPG's written submissions (at [108]-[109]), which provide as follows:
108. Schedule 5 extends the indemnity to "judgments, suits or actions" and applies those expanded exposures (ie, beyond costs and expenses) to those incurred "directly or indirectly as consequence of commencing legal proceedings in relation to the Insured Claim" (emphasis added).
109. It is this extended reach of the indemnity which, according to VAH, extends to including cross-claims and claims for contribution, that is an impediment to the litigation funder in this proceeding, Balance, providing the creditor indemnity in the Schedule 5 form. Ordering that the indemnity conform with the disclosed creditor indemnity condition pulls back the reach of the Schedule 5 indemnity from capturing any exposure indirectly incurred by VAH as a consequence of the Applicant commencing this proceeding.
17 It seemed to me MPG's concerns as to the scope of the Creditor Indemnity were predicated upon a belief that VAH would assert that the Creditor Indemnity would indemnify VAH against any claims for contribution by third parties, in circumstances where senior counsel for VAH had recently confirmed it would not "affirmatively assert" this position: T5.21-22 (31.05.23).
18 Accordingly, I could see no reason to expend further time and costs pursuing the Statutory Issue, and provided the parties with the following draft order for their review in advance of the hearing:
THE COURT NOTES THAT:
1. In order to maintain this proceeding, the applicant is obliged to provide an indemnity to VAH in the terms set out in Matheson Property Group Pty Ltd (Trustee) v Virgin Australia Holdings Limited [2022] FCA 1243, that is, for all costs, expenses, judgments (including but not limited to any judgment or order obtained by the applicant against VAH, or any amounts required to be paid by VAH in connection with any judgment or order), suits or action incurred directly or indirectly as a consequence of the applicant commencing proceedings against the respondents to the extent that VAH is not indemnified for such amounts pursuant to a contract of insurance entered into before 20 April 2020 or such amounts as are not otherwise paid by VAH's insurer (Indemnity).
2. VAH has, though its senior counsel, advised the Court that notwithstanding the terms of the Indemnity and any submissions made on behalf of VAH on 2 September 2022 that:
(a) although VAH contends the Indemnity covers the costs and expenses arising in the circumstances referred to in paragraph 10(b)(iii) of the Outline of Evidence of Mark Russel Clifton located at page 3371 of the Court Book provided to the Court on 17 June 2023 (CB) and reproduced as annexure A to these orders, VAH does not maintain and will not maintain in relation to this proceeding (or any proceeding commenced or proposed to be commenced by a group member) that the Indemnity operates so as to extend to costs, expenses or judgments incurred in relation to any cross-claims or any claims for contribution made in relation to the claim of the applicant or a claim of a group member made in this or in any other proceeding;
(b) an indemnity from Balance UK to the applicant with an initial limit of $10 million will be sufficient, for the purposes of cl 8.1(d)(2) of the DOCA, to satisfy VAH that the applicant will be able to meet the Indemnity; and
(c) VAH does not propose to defend any claim of the applicant or a claim of a group member made in this proceeding on the basis that an Indemnity was not provided prior to its commencement.
3. As a consequence of (2) above, the applicant does not press for relief in terms of prayers 1 or 2 of its draft originating application located at CB 51 to 54 and reproduced as annexure B to these orders, or prayer 7A of its amended interlocutory application dated 9 June 2023.
AND THE COURT ORDERS BY CONSENT THAT:
4. The claim for relief in terms of prayer 7A of the applicant's amended interlocutory application dated 9 June 2023 be dismissed.
19 This proved a useful exercise.
20 Shortly before the hearing, MPG provided the Court with a revised form of order, reflecting its consent to what I had proposed but identifying an issue as to whether it is open to VAH to call for periodic payments on account of the Creditor Indemnity. VAH consented to the Court's proposed orders and indicated there were some aspects of MPG's proposed orders it could "live with", and others it could not: T3.12-8.44. In the end, three issues were raised: first, the adequacy of the "initial limit" of $10 million on the Creditor Indemnity; secondly, the ability of VAH to make periodic calls on the Creditor Indemnity; and thirdly, the extent to which any periodic calls should be subject to the approval of the Court.
21 Following a short adjournment, the parties resolved the first issue, and agreed to reserve their positions as to the second and third issues, reflected in a carve out in the final iteration of the orders, in the following terms:
The parties agree to reserve for further argument, if necessary, the following questions:
(a) whether the Indemnity authorises VAH to demand, or requires MPG to make, periodic payments on account of the Indemnity of amounts that are said to be costs and expenses falling within the Indemnity; and
(b) if period payments can be demanded up to a limit of $5 million, whether any such periodic payments are subject to supervision and assessment by the Court.
22 It was then necessary to turn to the question of joinder.
23 Counsel for the VAH Insurers indicated they did not object to being joined subject to my making an order along the lines of that made in R&B Investments Pty Ltd (Trustee) v Blue Sky Alternative Investments Limited (Administrators Appointed) (in liq) [2023] FCA 703, relieving the VAH Insurers of any obligation to take any step in the proceeding. I am minded to make such an order for the reasons set out by Nettle J in CGU Insurance Limited v Blakeley [2016] HCA 2; (2016) 259 CLR 339 (at 337-338 [115]), namely, to ensure "all issues are dealt with at once in the one proceeding in a manner that binds all parties to the proceeding", in accordance with "contemporary imperatives of cost-effective and efficient judicial management" and, of course, the overarching purpose in Pt VB of the FCA Act.