Perera v Genworth Financial Mortgage Insurance Pty Limited

Court of Appeal (NSW)|2016-03-16|Before: McColl JA, Leeming JA, Slattery J

[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]

Judgment

THE COURT: The applicant, Madura Perera, seeks leave to appeal from a judgment of Slattery J striking out the applicant's statement of claim in proceedings he had commenced against the respondent, Genworth Financial Mortgage Insurance Pty Ltd t/a Genworth. [1]
The applicant is a valuer. Genworth is a mortgage insurer. The applicant sought to sue Genworth on three bases, for negligently inflicted economic harm (economic loss claim), for defamation and for negligence causing nervous shock (nervous shock claim).
The applicant sought leave to file an amended pleading (ASC) before the primary judge. The strike out application proceeded on the basis that the "practical contest" turned on the merits of the proposed ASC. [2]
The respondent sought to strike out the ASC on the basis either that the proceedings were frivolous or vexatious, or disclosed no reasonable cause of action, or had a tendency to cause prejudice, embarrassment or delay in the proceedings. [3]

Economic loss claim

The economic loss claim arose from previous litigation between the parties.
The respondent sued a company, Hodder Rook & Associates Pty Ltd (Hodder Rook), a provider of professional valuation services, for negligent valuations. The applicant was the author of one of the valuations the subject of the Hodder Rook proceedings. In the course of the proceedings the respondent abandoned its claim in respect of one of the valuations. Before the litigation was completed, Hodder Rook went into liquidation. The liquidator declined to pursue the case. It has never proceeded to final judgment.
In the ASC, the applicant sought to plead that the respondent had a "duty [to him] not to claim [that] valuation [was] negligent" and that, in breach of that duty of care, the respondent had failed to ascertain whether or not that valuation was "negligent" before it made a "negligent claim". He asserted that he had suffered loss as a result of the respondent's breach of duty because he had to notify the respondent's claim to his insurer and, accordingly, could not obtain professional indemnity insurance and was unable to continue to work as a valuer.
The primary judge struck out the economic loss claim on the basis that it did not disclose a reasonable cause of action. [10] His Honour held that Australian courts have not recognised a cause of action of negligently causing purely economic loss to a person associated with a company which was a defendant in proceedings. [11] In his Honour's view, too, there was a tension between the posited duty of care and a "citizen's right of free access to the courts." [12] Another matter to which the primary judge referred in essence, [13] was the need to preserve the coherence of other legal principles. [14] His Honour also found that the duty of care for which the applicant contended would be contrary to the public interest in the finality of litigation. [15]
There is no doubt that the duty of care for which the applicant contends in his economic loss claim is novel. The High Court has reserved its decision on whether advocates' immunity is attracted in relation to advice given to settle a case, in circumstances where there has been no judicial determination on the merits and, too, as to whether to reconsider its decisions concerning such immunity in Giannarelli v Wraith [1988] HCA 52 (1988); 165 CLR 543 and D'Orta-Ekenaike v Victoria Legal Aid [2005] HCA 12; (2005) 223 CLR 1. [16] The decision in Attwells may be important to the resolution of the issues in this appeal.
Further, in cases where it is not clear whether there is a duty of care, or whether the breach of duty alleged falls within or outside the immunity it is arguable, in our view, that the economic loss claim should not have been struck out as disclosing no reasonable cause of action. [17]

The nervous shock claim

The nervous shock claim turned on an allegation that the respondent's Property Services Leader "threatened to sue [the applicant] personally", as a result of which the applicant suffered nervous shock which led to psychiatric injury. The applicant contended that in circumstances where the respondent was aware "of the previous case where [the applicant's] valuations were disputed and the final outcome that led to [the applicant's] predicament", the respondent "owed [him] a duty of care not to injure [him] by threatening to sue personally." The ASC further alleged that the respondent ought to have foreseen that he might suffer a "recognised psychiatric illness" "where a threat is made to sue personally … if reasonable care were not taken" and, too, that there was a "pre-existing relationship between [the applicant] and [the respondent]." [18]
The primary judge struck out the nervous shock claim pursuant to UCPR 13.4(1) on the basis that the applicant had failed to plead in any adequate form the basis upon which the respondent was responsible for the conversation between its Property Services Leader and the applicant. [19] His Honour also said that the duty of care for which the applicant contended would have similar problems to the duty of care said to lie behind the economic loss claim. He concluded that the "factual basis why [the respondent] should have any duty to take reasonable care in respect of [the applicant] is quite unclear." [20]
As the foregoing discussion makes apparent, in circumstances where the factual basis upon which a duty of care may depend has yet to be ascertained, it is arguable that the nervous shock claim ought not have been struck out.

Defamation claim

The defamation claim concerned a letter the respondent wrote to a bank for which the applicant contended he regularly conducted valuations (ASC 24). The letter criticised a valuation which the applicant "conducted" (ASC 24), although it did not refer to him by name.
The primary judge struck out the defamation claim pursuant to UCPR 14.28(1)(a) and (b) on the basis that the pleading disclosed no reasonable cause of action and was embarrassing. [21] This was because, in his Honour's view, the ASC did not allege that the imputations pleaded were "defamatory of the plaintiff" as required by UCPR 14.30. The primary judge was also of the view that the ASC did not comply with UCPR 15.19(1)(d). This was because, as the letter did not identify the applicant, particulars of identification and the identity of those who would identify the applicant as the person defamed were required, but not provided. [22]
ASC 26 pleaded that the respondent "published this letter in order to harm the reputation of the plaintiff." The essence of a defamation claim is that the sting of the matter complained of "tends to harm the reputation" of the plaintiff. [23] Thus, it is arguable that this paragraph was sufficient compliance with UCPR 14.30.
It also appears to be arguable that ASC 24 sufficiently identified the applicant as the author of the impugned valuation and too, the bank to which it was addressed, as at least one "person" who would have identified him as the subject of the impugned letter.

Pro bono assistance

As will be apparent, the questions which warrant a grant of leave to appeal, particularly those in relation to the duty of care in the context of the economic loss and nervous shock claims, raise complex questions of law. In the circumstances, it is, in our view, in the interests of the administration of justice to refer the applicant to the Registrar for referral to a barrister on the Pro Bono Panel for legal assistance in the conduct of the appeal. [24]
The papers include a notice of appeal which was apparently filed on 15 October 2015. As might be expected from a notice of appeal prepared by a self-represented litigant, that document does not fully comprehend the issues which will have to be debated in the course of the appeal. The pro bono assistance to which we have referred should extend to drafting a notice of appeal which raises the grounds of the appeal at the heart of the applicant's complaint.
We make the following orders: 1. Grant leave to appeal. 2. Stand the matter into the Registrar's list for directions on 27 April 2016 as to the filing of the notice of appeal consequential upon the pro bono referral and generally. 3. Costs of the leave application to be costs in the appeal.

Endnotes

Perera v Genworth Financial Mortgage Insurance Pty Ltd t/a Genworth [2015] NSWSC 1357.
Primary judgment (at [2]).
Uniform Civil Procedure Rules 2005 (NSW) (UCPR) 13.4(1)(a) or (b) and 14.28(1)(a) and (b).
General Steel Industries Inc v Commissioner for Railways (NSW) [1964] HCA 69; (1964) 112 CLR 125 (at 129) per Barwick CJ.
Dey v Victorian Railways Commissioners [1949] HCA 1; (1949) 78 CLR 62 (at 91) per Dixon J.
Cox v Journeaux (No 2) [1935] HCA 48; (1935) 52 CLR 713 (at 720) per Dixon J.
Ibid.
Shaw v State of New South Wales [2012] NSWCA 102 (at [30]ff) per Barrett JA (Beazley, McColl, Macfarlan JJA and McClellan CJ at CL agreeing); Brimson v Rocla Concrete Pipes Ltd [1982] 2 NSWLR 937 (at 944 - 945) per Cross J.
Agar v Hyde [2000] HCA 41; (2000) 201 CLR 552 (at [57]) per Gaudron, McHugh, Gummow and Hayne JJ.
Primary judgment (at [9]).
Primary judgment (at [12]).
Primary judgment (at [10]).
Primary judgment (at [10]).
Sullivan v Moody [2001] HCA 59; (2001) 207 CLR 562 (at [50], [55]) per Gleeson CJ, Gaudron, McHugh, Hayne and Callinan JJ; see also Caltex Refineries (Qld) Pty Ltd v Stavar [2009] NSWCA 258; (2009) 75 NSWLR 649.
Primary judgment (at [10]) referring to D'Orta-Ekenaike v Victoria Legal Aid [2005] HCA 12; (2005) 223 CLR 1.
Attwells v Jackson Lalic Lawyers Pty Limited [2016] HCATrans 48.
See Jackson Lalic Lawyers Pty Limited v Attwells [2014] NSWCA 335 (at [31]) per Bathurst CJ (Meagher and Ward JJA agreeing).
cf Civil Liability Act 2002 (NSW), s 32(1) and (2)(d).
Primary judgment (at [29]).
Primary judgment (at [30]).
Primary judgment (at [25]).
Primary judgment (at [24]).
Gatley on Libel and Slander, 11th ed (2008) Sweet & Maxwell (at [2.1]).
UCPR 7.36. 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: 22 March 2016

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