Prasad v AMP Life Limited; Printer Ribbon Products Pty Ltd v AMP Life Limited

Supreme Court of NSW|2012-08-31|Before: Stevenson J, Santow J, Clarke J

Judgment 1The defendant in these proceedings, AMP Life Limited ("AMP"), seeks orders of the type made by Clarke J (as his Honour then was) in Markus v Provincial Insurance Co Ltd (1983) 25 NSWCCR 1; since endorsed by the Court of Appeal in Halpin v Lumley General Insurance Ltd [2009] NSWCA 372; (2009) 78 NSWLR 265 ("Markus orders"). 2The particular orders sought by AMP are as follows: - (1)the requirement that the defendant serve evidence on which it intends to rely be waived in respect of the evidence referred to in paragraph 1 of tab 1 of exhibit SAL1 ("Paragraph 1") to the affidavit of Ms Sarah Ann Lark ("Ms Lark"); (2)the requirement that the defendant serve expert reports on which it intends to rely be waived in respect of the medical reports referred to in paragraph 2 of tab 1 of the exhibit SAL1 ("Paragraph 2") to the affidavit of Ms Lark; (3)the defendant have leave to issue the subpoenas for production of documents referred to in paragraph 3 of tab 1 of exhibit SAL1 ("the Subpoenas") to the affidavit of Ms Lark; (4)the requirement in the Uniform Civil Procedure Rules 2005 ("UCPR") r 33.5(s) that the Subpoenas be served on the plaintiffs be dispensed with, alternatively postponed, until the conclusion of the plaintiffs' case at trial; (5)a direction in accordance with UCPR r 33.8 that the defendant have first access to any documents produced in response to the Subpoenas; (6)a direction in accordance with UCPR r 33.8 that no party other than the defendant be permitted to inspect, copy or remove any documents produced in response to the Subpoenas without leave of the Court; (7)such other order or orders as the Court considers appropriate. 3Those orders are sought in relation to each of the two proceedings before me. Those proceedings are travelling together in the list and will, in due course, be heard together. 4In the first proceedings (2010/158206), Ms Vanita Prasad ("Ms Prasad"), seeks indemnity from AMP pursuant to policies of insurance issued by AMP to Ms Prasad providing cover for income protection and total and permanent disablement. Ms Prasad maintains that she is entitled to payment of income protection benefits and a lump sum of $1 million by reason of her total and permanent disablement. Ms Prasad alleges that she became incapacitated on 2 December 2003 by reason of her psychological condition and that she has been entitled to benefits since 12 January 2004. 5In the other proceedings (2011/4654), Printer Ribbon Products Pty Ltd ("PRP"), makes a corresponding claim under a policy AMP issued to it in respect of the total and permanent disablement of Ms Prasad. 6AMP has denied liability to indemnify Ms Prasad or PRP and has purported to avoid both policies on the grounds of Ms Prasad's fraudulent non-disclosure of certain information. 7AMP also denies that Ms Prasad is totally and permanently disabled. 8The orders sought refer to an affidavit of Ms Lark, who is a solicitor handling this matter on behalf of AMP. 9Ms Lark has sworn two affidavits in the proceedings. One was served and read in open court. 10The other, being that referred to in the prayers for relief, was, together with its exhibit, provided to the Court on a confidential basis so that I could determine whether there was basis for the orders sought. I have ordered that Ms Lark's second affidavit not be served until further order. 11After the matter was first called, and opened, I adjourned to read the confidential material. It was common ground that this is the appropriate procedure to adopt in a case such as this. 12Discovery has taken place. The parties have served all their evidence in chief. 13Ms Prasad made a statement on 24 February 2008 in which she stated that she had developed a psychiatric condition which, since December 2003, left her unfit to work, and that she was still certified "totally unfit to work". 14AMP obtained material on subpoena that suggested that, contrary to those statements, Ms Prasad had, since December 2003, been working for a process server, Express Mercantile. 15On 22 June 2011, Ms Prasad served a further statement in which she gave evidence concerning casual process serving work that she had been doing for Express Mercantile. 16AMP has served some evidence, including evidence going to what Mr Cavanagh SC, who appears for AMP, described as "underwriting evidence". 17The Court has made a number of orders in respect of the provision of AMP's evidence, to which I will return below.

The Markus discretion 18In the usual course, a defendant must serve on a plaintiff all the evidence on which it relies prior to the commencement of the hearing. 19In my opinion, some good reason must be shown that the usual procedure should not be followed in this case. 20In Markus, Clarke J accepted the submission that a loss assessor's report, obtained by the defendant insurer, should not be served on the plaintiff, notwithstanding that the defendant proposed to use it at the hearing because: - "...the interests of justice would not be served by producing the document because it contains material which does not advance the plaintiffs' case but which on the other hand, if the plaintiffs are not genuine, put the plaintiffs on notice of some allegedly suspicious circumstances and enable them to tailor or endeavour to tailor their evidence to meet the circumstances." 21In Broadwater Taxation and Investments Services Pty Ltd v Hendriks (Supreme Court of New South Wales, Santow J, 9 September 1993, unreported) Santow J (as his Honour then was) considered Markus and said: - "A helpful way of testing the matter is to ask whether giving access to the materials would deprive a litigant of a legitimate forensic advantage - legitimacy being always determined by asking how the interests of justice would best be served. The kind of material which typically would fall into this category is typically [sic] where one party has taken pains to prepare material to attack the credit of the other party." 22Drawing from the comments made by the members of the Court of Appeal in Halpin, I consider that I should bear in mind the following factors when considering AMP's application: - (a)I must consider whether the making of the orders would promote the speedy determination of the real issues in the proceedings and whether the making of the orders would promote the just, quick and cheap disposition of the proceedings (per Sackville AJA, with whom Tobias JA agreed, at [89] referring to the Civil Procedure Act 2005 s 61(1) and s 61(2)(c) and UCPR r 2.1 and r 2.3); (b)I must consider whether the dictates of justice will be served by the making of the orders (per Sackville AJA at [101]); (c)I should consider whether the material is of a kind that would be of assistance only to the withholding party in meeting the case of the deprived party and not of a kind which would assist the deprived party in the formulation and presentation of his or her own case (per Sackville AJA at [84] citing Barrett J (as his Honour then was) in Kon v AMP Life Ltd [2006] NSWSC 957); (d)it would normally be unjust to withhold material which might assist the deprived party (per Sackville AJA at [114]). (e)I should consider whether there is a risk that the material, if made available, would tend to tempt the deprived party to tailor his or her evidence, or at least consider doing so (per Sackville AJA at [84] citing Barrett J in Kon); (f)it is inappropriate for the Court to make any assessment as to the honesty of the party against whom fraud is alleged (per Sackville AJA at [119]); (g)but there is a need to be satisfied that there is some real basis for suspicion of fraud (per Basten JA at [37]); (h)it is relevant to take into account the likely risk of adjournment that the withholding of the material may cause and the impact on the prospects of settlement in the event that the material is withheld (per Sackville AJA at [97] and [98]);

The material proposed to be withheld 23When considering these factors, I bear in mind that neither Ms Prasad nor PRP, or their legal advisers, have seen the material that AMP seeks to withhold. 24The plaintiffs do not know the nature of the evidence referred to in Paragraph 1, except that Mr Cavanagh has referred to the documents as "experts' reports" in his written submissions. 25The plaintiffs do know the nature of the material referred to in Paragraph 2, because of an email exchange that took place between the solicitors for the parties shortly before the hearing of this motion before me, and because of comments made by Mr Cavanagh in open court. 26The plaintiffs do not know to whom the Subpoenas proposed to be issued by AMP are to be directed.

Paragraph 1 27So far as concerns the evidence referred to in Paragraph 1, I am satisfied that that evidence could be of assistance only to AMP in meeting the case made by Ms Prasad. Depending on the outcome of cross-examination, the material might not even be used for that purpose (cf Barrett J in Kon at [10]; referred to by Sackville AJA in Halpin at [84]). The material would not advance Ms Prasad's nor PRP's case. 28I also consider that this material, if made available would "tend to tempt [Ms Prasad] to tailor [her] evidence or at least to consider doing so" (per Barrett J in Kon at [11], cited by Sackville AJA in Halpin at [84]). 29Therefore, on the face of it, and subject to the matters I consider below, AMP has made out the case for a Markus order in respect of the material in Paragraph 1.

Paragraph 2 30As to the material referred to in Paragraph 2, the plaintiffs know that this material comprises medical reports because that is how the material is described in AMP's Notice of Motion. As a result of the correspondence to which I have referred, and Mr Cavanagh's remarks in open court, the plaintiffs know that these reports are those of Dr Yvonne Skinner ("Dr Skinner"), a consultant physiatrist, who examined Ms Prasad on 14 June 2011. 31In my opinion, the first of those reports, dated 4 July 2011, contains material that, to some extent, supports Ms Prasad's case. In particular Dr Skinner concludes that a provisional diagnosis of Ms Prasad is of "major depression" and concludes: - "Without treatment I do not think that she would be able to return to work in the foreseeable future." 32I do not think it would be appropriate, or just, to withhold this report from the plaintiffs. 33Different considerations apply in relation to the second of Dr Skinner's reports. That report has a relationship with the material referred to in Paragraph 1 and, like that material, will not advance Ms Prasad's case and may tempt her to at least consider tailoring her evidence to meet it.

The Subpoenas 34So far as I am aware, there is no precedent for the making of Markus orders in relation to subpoenas of the kind now proposed by AMP. 35If those orders were made, the plaintiffs would not know the identity of the parties to be subpoenaed (although the plaintiffs' legal representatives could doubtless keep an eye on the Court list and be present in Court when they were called on) and would not, without leave, know what documents have been produced. 36It would, in my opinion, require extraordinary circumstances to warrant the making of orders like this; in advance of the production by any of the proposed subpoenaed parties of any document. 37I have carefully considered the material touching on the Subpoenas that AMP wishes to issue. 38Having done so, I am not satisfied that it would be appropriate for me to make any order about those Subpoenas at the moment, apart from giving AMP leave to issue the Subpoenas, and ordering that it have first access to the documents produced. 39Therefore, I am not prepared to make orders (4) or (6) (referred to in [2] above) as sought by AMP. 40I am prepared to grant AMP leave to issue the Subpoenas, and to direct that it have first access to the documents produced. 41Thereafter, AMP can make such further application as it may be advised, in the light of the documents produced.

The expert reports and the second report of Dr Skinner 42There remains for consideration whether I should make Markus orders in respect of the evidence referred to in Paragraph 1 and the second of Dr Skinner's reports. 43In regard to those matters, Mr Rayment, who appears for Ms Prasad, has submitted that Markus orders should not be made for a number of reasons, which I will consider in turn.

Prejudice 44Mr Rayment pointed to the number of orders that have been made, by consent, in these proceedings directing AMP to serve its evidence as follows: - (a)on 10 December 2010 that AMP serve its evidence in relation to damages and fraud by 8 April 2011; (b)on 2 February 2011 that the time for AMP to serve all lay and expert evidence be extended to 25 July 2011; (c)on 25 July 2011 that the time for AMP to file all lay and expert evidence be extended to 16 September 2011; (d)on 15 September 2011 that the time for AMP to serve its lay and expert evidence be extended to 30 September 2011; (e)on 4 October 2011 that the time for AMP to serve its lay and expert evidence be extended to 21 October 2011; (f)on 28 November 2011 that the time for AMP to complete service of its "primary lay and expert evidence" be extended to 23 December 2011; 45On 28 November 2011 Ms Prasad was also directed to serve all her lay and expert evidence in reply by 29 February 2012. 46On 27 February 2012, Ms Prasad's solicitor, Mr Carl Mickels ("Mr Mickels") wrote to Ms Lark: - "Can you confirm that you have served all of your evidence so I can finalise mine in reply". 47Ms Lark replied: - "At this stage, AMPL has served its primary evidence." 48Mr Mickels replied: - "That is not what I asked. You were ordered to serve all your evidence by 23-12-11. I need confirmation that you have served all of your evidence. Otherwise, I will have to seek an order that your evidence be limited to what has been served. I do not want to be in a position, again, where your client seeks to serve late evidence just before the mediation or before the hearing itself. I expect to serve my evidence in reply subject to your confirmation by tomorrow provided snr counsel being able to settle it." 49Ms Lark replied: - "Carl - AMP has served its primary evidence." 50Mr Rayment submitted that the last email amounted to a representation by AMP that it had served all of its evidence in chief and that the use by Ms Lark of the expression "primary evidence" was reasonably understood by Mr Mickels to be a reference to the defendant's evidence in chief. 51Mr Rayment submitted: - "In these circumstances it is clear that, but for the statement by the defendant that its evidence was complete, the plaintiff would not have filed evidence in reply." 52That somewhat bold submission was not supported by any evidence from Ms Prasad. 53Ms Prasad served an affidavit in reply made 15 March 2012. 54That affidavit gives a detailed answer to what Mr Cavanagh has described as the "underwriting" evidence of AMP (that is as to the circumstances in which Ms Prasad entered the relevant contracts of insurance). It does not contain any material relevant to the evidence referred to in Paragraph 1 or to that in Dr Skinner's second report. 55I accept that the number of orders extending the time for AMP to serve its evidence is a factor that weighs in the balance. However, I have no evidence as to the circumstances in which AMP sought, and Ms Prasad agreed, to the various orders extending time. I find it difficult to see what difference earlier revelation of AMP's intention to make this application would have made on the manner in which Ms Prasad formulated her evidence in reply.

Adjournment 56Mr Rayment pointed to the observations made by the Court of Appeal in Halpin as to the relevance of a likely adjournment to the exercise of the Markus discretion. 57Mr Rayment submitted that since some of the material proposed to be withheld is expert evidence: - "It seems inevitable that the hearing will have to be adjourned so that the plaintiff can have the substance of the two expert opinions considered by an independent expert." 58Mr Rayment also submitted that it should be a term of the making of any Markus order that AMP pay the costs thrown away by any adjournment of the proceedings resulting from service of material previously withheld. 59Again, I think there is force in this submission, but I do not think it would be appropriate for me, now, to make any order about any costs that might be thrown away at the trial. That should be a matter for the trial judge. However, if it turns out that the trial is adjourned by reason of any late service of any withheld evidence of AMP, AMP would have a case to answer concerning the costs thereby incurred.

Mental health of Ms Prasad 60Mr Rayment also pointed to material that suggests that one factor which led to the psychiatric condition that Ms Prasad claims she now suffers was a lengthy cross-examination in proceedings in which she was involved in 2003. 61Mr Rayment submitted that a Markus order may serve to worsen the adverse effect of cross-examination of Ms Prasad in these proceedings. 62I accept that this is a factor to be taken into account. However, it is difficult to predict what difference the withholding of evidence now might have on the experience Ms Prasad undergoes during any cross-examination at the hearing. She is on notice of AMP's position in relation to her claim and of the likelihood that her evidence will be vigorously tested.

Partial Disclosure 63Mr Rayment also drew attention to the observation of Master Harper in Forrest v NRMA Insurance [2012] ACTSC 47 at [19] that partial disclosure of the party seeking to withhold documents of the "gist" of such documents may be a reason to decline to make a Markus order. 64Mr Rayment handed up a schedule of evidence served by AMP. 65It is a sufficient answer to this aspect of the matter to state that the documents referred to in Paragraph 1 do not appear to be from any of the witnesses on that schedule.

Consideration 66I have considered carefully each of the matters that Mr Rayment has advanced. Although, as I have indicated, I consider there to be some substance in each of the matters, overall I do not think their combined weight outweighs the considerations referred to in paragraphs [27] and [28] above. 67I have formed no view as to whether AMP will make out its claim of fraud and non-disclosure against Ms Prasad. However, the further evidence she adduced in the face of the documents obtained by AMP showing she was working as a process server with Express Mercantile (see [14 - 15] above) suggests to me there is some basis to suspect that Ms Prasad might be tempted to tailor her evidence to meet that now sought to be withheld. 68Taking into account all the matters referred to above, in particular at [22], I consider the interests of justice, and the just, quick and speedy determination of these proceedings require that I make the orders sought by AMP in respect of the expert reports referred to in Paragraph 1, and the second of Dr Skinner's reports. I am only prepared to make the orders concerning Subpoenas indicated at [40] above.

The position of PRP 69Mr Gollan, who appeared for PRP, submitted that whatever Markus orders the Court made in respect of Ms Prasad, no such orders should be made in respect of PRP. 70In his opening written submissions, Mr Cavanagh, for AMP, submitted that PRP "is a company associated" with Ms Prasad. Based on the material before me, that does appear to be overstating matters somewhat. 71There does seem to have been a commercial association between Ms Prasad and PRP, which led PRP to take out the policy with AMP with which its proceedings are concerned. However, there is no material before me to suggest any ongoing association between PRP and Ms Prasad. 72For the purpose of these proceedings, PRP joins with Ms Prasad in arguing that Ms Prasad did not make misrepresentations to AMP and that Ms Prasad is totally and permanently disabled for the purposes of the relevant policy (see contentions C3 and C5 in PRP's Commercial List Statement). 73However, as Mr Gollan submitted, there is no suggestion in the evidence before me that PRP itself has committed any fraud or engaged in any misleading conduct, so far as concerns AMP. 74On behalf of PRP, Mr Gollan submitted: - "When [PRP] chose to participate in these proceedings, it relied upon the truth of the representations made by Ms Prasad as to her total and permanent disablement. [PRP] continues to rely upon the truth of any representations made by Ms Prasad when persisting with these proceedings. If [AMP] is bone fide in its suspicions and application, then it follows that [PRP] is the victim of a fraud and/or misrepresentation. In those circumstances, [PRP] should be given every opportunity to consider the merits of its case, whether it is the victim of a fraud and whether it is in its interests to continue to participate in the litigation." 75I see force in these submissions. 76PRP, by its director, Mr Dennis Flynn ("Mr Flynn"), offers an undertaking to the Court to keep confidential to PRP's lawyers and to Mr Flynn himself, all the material that AMP seeks to withhold from Ms Prasad. 77In my opinion, that is the appropriate course to adopt.

Conclusion 78 I make the following orders: - (a)That the defendant not be required to serve on the plaintiff in proceedings 2010/158206 (Ms Prasad) the evidence referred to in paragraph 1 of tab 1 of Exhibit SAL1 ("the Exhibit") to the affidavit of Sarah Ann Lark sworn on 28 August 2012 ("Ms Lark's Affidavit"), and the later report of Dr Yvonne Skinner referred to in paragraph 2 of tab 1 of the Exhibit until the close of the plaintiffs' case at the trial of these two proceedings; (b)That the documents referred to in order (a) be produced to the plaintiff in proceedings 2011/4654 (Printer Ribbon Products) subject to Printer Ribbon Products, by its director Mr Dennis Flynn, giving to the Court an undertaking, in writing, that he and Printer Ribbon Products will ensure that such material is kept confidential and not, without leave of the Court, disclose to any party other than Mr Flynn and the legal advisers of Printer Ribbon Products; (c)That the defendant have leave to issue the Subpoenas for production addressed to the persons listed in paragraph 3 of tab 1 of the Exhibit; (d)That pursuant to UCPR r 33.8 the defendant have first access to any documents produced in response to the Subpoenas; (e)That Ms Lark's Affidavit, and the Exhibit, be placed in a sealed envelope in the Court file and marked "Documents inspected by the Court for the purpose of the Defendant's Amended Notice of Motion of 28 August 2012 heard on 31 August 2012; this envelope not to be opened without the leave of a Judge of the Court"; (f)The costs of the defendant's Amended Notice of Motion of 28 August 2012 be costs in the cause; and (g)There be liberty to apply on 48 hours notice in respect of the form of these orders.

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: 11 September 2012

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