Mrdajl v Southern Cross Constructions

Relevant Legislation

1. The relevant sections of the Act are extracted below: 3 Definitions (1) In this Act: claimant - see section 4. court means a court or tribunal of New South Wales. insured liability means a liability in respect of which an insured person is entitled to be indemnified by the insurer. insured person means a person who is, in respect of a liability to a third party, entitled to indemnity pursuant to the terms of a contract of insurance, and includes a person who is not a party to the contract of insurance but is specified or referred to in the contract, whether by name or otherwise, as a person to whom the benefit of the insurance cover provided by the contract extends. liability means a liability to pay damages, compensation or costs. Note: The Interpretation Act 1987 contains definitions and other provisions that affect the interpretation and application of this Act. (2) Notes included in this Act do not form part of this Act. 4 Claimant may recover from insurer in certain circumstances (1) If an insured person has an insured liability to a person (the claimant), the claimant may, subject to this Act, recover the amount of the insured liability from the insurer in proceedings before a court. … 5 Leave to proceed (1) Proceedings may not be brought, or continued, against an insurer under section 4 except by leave of the court in which the proceedings are to be, or have been, commenced. (2) An application for leave may be made before or after proceedings under section 4 have been commenced. (3) Subject to subsection (4), the court may grant or refuse the claimant's application for leave. (4) Leave must be refused if the insurer can establish that it is entitled to disclaim liability under the contract of insurance or under any Act or law.

Procedural History

1. Before turning to the issue at hand, it is useful to outline the procedural history of the proceedings. A summary follows: 1. A statement of claim was filed on 16 May 2014. The applicant initially brought proceedings against an entity called Southern Cross Constructions (NSW) Pty Ltd (In Liq) ("the first defendant"). 2. A further amended statement of claim was filed on 18 August 2015. It merely corrected the pleadings with respect to the allegations of negligence. 3. A second further amended statement of claim was filed on 20 June 2016. It introduced "Calcono Pty Limited" into the proceedings. 4. A third further amended statement of claim was filed on 5 September 2017. It introduced Caringbah Formwork Pty Ltd as a third defendant into the proceedings. It also changed the spelling of the second defendant's name to "Calcano Pty Ltd". 5. A fourth further amended statement of claim was filed on 5 October 2017. It removed Caringbah Formwork Pty Ltd as third defendant, which had recently liquidated, and introduced Workers Compensation Nominal Insurer ("the third defendant") to the proceedings. 6. A proposed fifth ASOC was annexed to the first affidavit filed in Court on 7 December 2017. This was replaced by the proposed fifth ASOC annexed to the second affidavit filed on 19 January 2018. It seeks to introduce the respondent as the second defendant in the proceedings, in lieu of "Calcono Pty Ltd". 7. Calcono Pty Ltd has since gone into liquidation. By a letter dated 3 October 2017, the appointed liquidator, Cor Cordis Chartered Accountants, confirmed that it neither consented nor opposed the proceedings brought against Calcono Pty Ltd and sought acknowledgement from the parties that, inter alia, the liquidator would not be liable for any personal costs orders (see Annexure B to the first affidavit). 8. The first defendant was also recently de-registered. Ms Lee, whom formerly acted as special counsel for the first defendant, appeared as amicus curiae before the Court as presently constituted. 9. The proceedings brought by the applicant against the first and third defendants do not impact upon the Court's present determination, having been dealt with and finalised outside of court. 10. The only opposition to the application is that of the respondent.
2. I now turn to the issue on the application.

The Issue

1. The Act is of recent origin, having commenced on 1 June 2017. The evident purpose of the Act is to permit proceedings be brought by a claimant against an insurer whereby the insurer stands in the place of the insured person as defined by the Act (see s 3 of the Act). Relevantly to these proceedings, the Act provides for the substitution of insurers in certain circumstances in lieu of defendants or for the joinder of such insurers in a separate and distinct capacity.
2. Such proceedings may not be brought except by leave of this Court (see s 5 of the Act). Pursuant to s 5(2), such an application for leave may be made before or after proceedings under s 4 have been commenced.

Construction of Sections 4 and 5

1. I will now turn to the proper construction of ss 4(1) and 5 of the Act.
2. Whilst s 5(1) and (2) set out the requirement for leave, the starting point for such a determination must be consideration of the application by the claimant brought pursuant to s 4 of the Act. The two sections must to be read together.
3. Section 4(1) of the Act sets out the foundation upon which the application for leave may be brought. Whilst s 5(1) provides that leave must be obtained to bring an application under s 4, such an application is reliant upon or dependent upon, for its efficacy, a valid application being made under s 4(1). Section 5(2) does not alter that condition, but rather simply deals with the time in which an application for leave may be brought by an applicant.
4. Section 5(3) defines the Court's discretion. The Court's discretion, with respect to the present application to grant leave, is shaped by two considerations. First, the application must be brought pursuant to s 4. Secondly, consideration, if relevant, must be given to s 5(4), that is, "leave must be refused if the insurer can establish that it is entitled to disclaim liability under the contract of insurance or under any Act or law".
5. Section 4(1) of the Act may be divided into four elements: 1. An entity must exist, namely, the relevant insurer ("the insurer"); 2. The insurer has issued an insurance policy with the relevant defendant, namely, Colocono Pty Ltd ("the policy"); 3. The policy covers the risk; and 4. The policy was in place at the time of the risk.
6. The first element, with respect to the insurer, is implicit within the relationships defined in s 4. A claimant is a person to whom an insured person has an insured liability. It follows that a relationship of insured person and insurer must exist in order to create the foundation to pursue any such "insured liability".
7. In a similar light, with respect to the second element, the policy is "the contract of insurance" and the means by which the relationship implicit in the first element is established (see s 3 of the Act).
8. The third element, as to risk, is couched in the opening words of s 4(1): "If an insured person has an insured liability to a person". Again, turning to the definitions in s 3 of the Act, it is clear that existence of a current policy and any "insured liability" concerns establishment of an entitlement to be indemnified by reference to the policy. To the end, the fourth element is derived from the same component of s 4(1).
9. That construction is not diminished by the effect of s 5(4). The reference to an insurer disclaiming liability under a contract of insurance is to be distinguished because of s 4(1). The foundation for refusal pursuant to s 5(4) is based upon, inter alia, identification of the insurer and the terms of "the contract of insurance". This step cannot be taken without settling upon the fact of whether there is a proper basis to bring forward an application pursuant to s 4(1).
10. Accordingly, the question in this matter is whether the evidence in the proceedings is such that it may satisfy s 4(1).
11. That question is not to be resolved as a question of onus (cf Zaki v Better Buildings Constructions Pty Limited [2017] NSWSC 1522, where Campbell J, with respect to the construction of s 6 of the Act, confirmed "the onus lies upon the insurer" in that context (at [33])). As previously mentioned, the Court needs to determine if it has jurisdiction to grant leave. However, if it were a question of onus, it would fall to the applicant to demonstrate the requisite facts for the purposes of s 4(1). This is because the applicant must establish the jurisdictional foundation for the order it seeks. This may be distinguished from s 5(4), which plainly casts the onus upon the insurer.
12. The evidence before the Court, as previously mentioned, comprises of an email chain between Ms Adele Stilo, Personal Assistant to Mr Trevor Carter of Carters Law Firm, and Mr Tim Doubleday, Manager, Legal, Court Process Desk, Planning & Operations, Disputes, Financial Crimes & Operations, Legal & Secretariat of Suncorp ("the Court Process Desk"). The following may be derived from that evidence: 1. On 26 October 2017 at 2.47pm, an email, containing an attachment identified as a letter, was sent from Ms Stilo to the general email inbox of the Court Process Desk at Suncorp ("the first email"). Mr Doubleday, was also copied into the email. The subject of the email identified the substantive proceedings to which the present matter pertains. The aforementioned letter was not introduced into evidence. 2. That same day, at 3.35pm, Ms Stilo received a reply via the Court Process desk email, with Mr Doubleday as signature ("the second email"). Owing to the brevity of the second email, it is extracted in full: Thanks Adele, With the policy number we have been able to locate the policy and will forward the Statement of Claim to the relevant Suncorp business area for action. I should add that there is a discrepancy between the name of the insured - Calcono Pty Ltd - and the name on the Statement of Claim - Calcano Pty Ltd - which is why we couldn't locate the policy initially. Thanks and regards, Tim 1. Taken at its highest, the following observations may be made about the second email: 1. An insurance policy number was sent from Carters Law Firm through to a division of Suncorp. (It may be inferred this was included in the letter attached to the first email). 2. Mr Doubleday confirmed the existence of a policy of relevance to a business division of Suncorp. However, the number and nature of the policy is not disclosed by the correspondence. 3. A discrepancy was identified, with respect to identification of "the insured". Mr Doubleday identified the insured as "Calcono Pty Ltd" and noted that a different company name was included on the statement of claim, "Calcano Pty Ltd".
13. Applying that evidence to the elements set out above, I have reached the following conclusions. 1. First, it is conceivable that an inference may be drawn that Colocono Pty Ltd is insured by an entity falling within a business division at Suncorp. However, there is no need, in my view, to resolve the first element. 2. As to the remaining elements, the evidence does not establish the existence of a policy per se. It was contended by counsel for the applicant that the inference was available on the material before the Court. Whilst I accept an inference may be drawn that an insurance policy exists with the aforementioned entity, no inference or conclusion is available with respect to the final two elements on the evidence before the Court. A determination as to whether or not the policy covered the risk and was in place at the time of this risk can only be established by reference to the insurance contract or some documentary evidence bearing more closely upon it. 3. There is an insufficiency of evidence to establish the jurisdictional basis for bringing an application pursuant to s 4(1) and accordingly the judicial discretion, with respect to s 5. In any event, it would be inappropriate to exercise such discretion in favour of the plaintiff in that light.
14. In the result, I find no proper basis to grant leave pursuant to s 5(3) of the Act.

Conclusion

1. The application should be refused with costs.

Orders

1. The following orders are made: 1. The notice of motion is dismissed; and 2. The applicant shall pay the costs of the respondent on the notice of motion as agreed or as assessed.

Amendments 23 February 2018 - Corrections: • Coversheet: "Warren Agnew" to "Moray & Agnew". • [5(5)]: "forth" to "fourth". • [14]: following "A claimant is" the words "a person to whom" were added; and, the word "claimant" was amended to "insured person". DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 23 February 2018