QBE INSURANCE (AUSTRALIA) LTD -v- LOIS NOMINEES PTY LTD and the persons detailed in the Schedule attached to the Appeal Notice (Civil) [2012] WASCA 186 (26 September 2012)

QBE INSURANCE (AUSTRALIA) LTD -v- LOIS NOMINEES PTY LTD and the persons detailed in the Schedule attached to the Appeal Notice (Civil) [2012] WASCA 186 (26 September 2012) - WASCA 2012 case summary — Zoe

[212]

The primary judge erred in law in holding that the respondents' claim for a declaration was arguable; his Honour should have held that a declaration would not be granted as it had no utility as a matter of law or in practical effect because the doctrine of res judicata would have no application and a denial of liability by the appellants in any subsequent claim against them by Mr Hill or his trustees would not be an abuse of process.
The primary judge erred in law in holding that the procedural, evidentiary and forensic disadvantages the appellants would suffer in the present action were to be assessed taking into account that the appellants could bring a claim against Mr Hill. The possibility that the appellants could bring a claim against Mr Hill was irrelevant in assessing those procedural, evidentiary and forensic disadvantages.
The primary judge should have held there was no utility in the declaration sought and the court therefore lacked jurisdiction to grant the declaration.
The primary judge should have held that the respondents had no standing to seek a declaration in respect of a contract to which they were not a party and which conferred no benefits on them.
The primary judge erred in finding that the respondents' claim was arguable. He should have held that even if it was arguable that a declaration of the nature sought was available, such a declaration would not be granted in the circumstances of this case because neither Mr Hill nor his trustee had disputed the appellants' denial of indemnity and they had not sought to participate in the action or to contest the respondents' claims against Mr Hill; the respondents were not parties to the contract of insurance; the denial of liability was based on proof of detailed facts and the appellants' forensic difficulties would preclude relevant evidence being adduced; and it was highly unlikely a declaration would bind the appellants and Mr Hill so it would not finally conclude the dispute between them but would cause prejudice or embarrassment in any subsequent proceedings between them.
The primary judge should have held that the respondents' action was an abuse of process because it was manifestly unfair to the appellants by reason of the procedural, evidentiary and forensic disadvantages the appellants would suffer, and allowing a dispute under the insurance contract to be litigated by a person who was not a party to the contract was likely to bring the law into disrepute.
The primary judge erred in finding that the appellants' procedural, evidentiary and forensic disadvantages were to be assessed taking into account that the appellants could bring their own claim against Mr Hill, as that was irrelevant in assessing the disadvantages.

[350]

200 North West v Binnie was a case in which the Water Authority had engaged engineers to design a tunnelling and pumping system. Complaints were made by local residents. In order to allay the local residents' concerns, the Water Authority arranged a meeting with them and invited them to the site. At the meeting there was an explosion of the system, killing and injuring various residents. The victims sued the Water Authority, the engineers, and the contractors who had constructed the works. No contribution notices had been filed and at trial none of the defendants expressly sought an apportionment of liability. Nevertheless, the trial judge found for the plaintiffs and then apportioned liability as between the defendants - 55% against the engineers, 30% against the Water Authority and 15% against the contractors. All three defendants appealed. The Court of Appeal set aside the apportionment orders and found the engineers to be wholly liable. In later proceedings, the Water Authority sued the engineers to recover its own losses arising from the incident. In those later proceedings, the Water Authority contended that the engineers were precluded from defending the claim for negligence. The trial judge (Drake J) decided the application on two bases, one being an abuse of process and the other issue estoppel. In relation to issue estoppel, I have noted above that Goldberg J considered that the trial judge's approach to issue estoppel was inconsistent with the law of Australia. In relation to abuse of process, his Lordship considered authorities including Reichel v Magrath [1889] 14 App Cas 665 and held that notwithstanding 'procedural technicalities or defects', including the absence of any formal contribution claim in the first set of proceedings, 'the reality is that the respective liability of each party was litigated, and very fully litigated' in the earlier proceedings (see 554 - 555). It is to be noted that Drake J held (554 - 555) that in the earlier litigation, it was properly open to the judge to apportion liability amongst the defendants despite the procedural absence of contribution notices. Presumably the parties must be taken to have known that when they came to fight the case in the way that they did.

[360]

210 In this appeal it was common ground that, on the basis of the suit as presently constituted, there would be no res judicata estoppels binding the insurer in subsequent proceedings by the trustees. In my view that is correct. I should state my reason for that assent. The trustees could not take advantage of a declaration in any subsequent proceedings against the insurer because the trustees would not be privies of the solicitor (and they are clearly not privies of the insurer). The trustees, in subsequent proceedings in which they claimed an indemnity under the policy, would not be asserting the same interest which the solicitor had in the declaratory proceedings, because the solicitor had no legal (or even commercial) interest in the declaratory proceedings. It could not be said that as a defendant in the declaratory proceedings, the solicitor was, either in form or substance, a representative of the trustees. Moreover, there would be no privity because the trustee's rights with respect to the policy would precede any judgment in favour of the plaintiffs against the solicitor in the declaratory proceedings; the trustees' rights would not be acquired after the date of that judgment. In this appeal both parties also proceeded on the basis that there would be no applicable Anshun estoppel arising from the declaration proceedings which would bind the insurer. I also agree with that, on the basis that it would not be unreasonable for the insurer not to claim against the trustees for a negative declaration within the plaintiffs' suit. For the reasons given above, the trustees could not contend that they were the privies of the solicitor for the purposes of Anshun estoppel. Also, even though Anshun estoppel has been held, in certain circumstances, to preclude a plaintiff who has failed in its action against one party in the first litigation, from subsequently suing another person who is not a privy to the party sued in the first action, those circumstances are far removed from this case whilst ever the trustees are not parties to the suit, and provide no proper comparison with it. See in this regard Asher v Secretary of State for the Environment [1974] 1 Ch 208; Rippon v Chilcotin Pty Ltd. In the suit as presently constituted, the absence of any resulting res judicata or Anshun estoppels would itself make it unlikely that the plaintiffs would obtain a broad positive declaration as to the rights under the policy, and accordingly there would be no likelihood of conflicting judgments.

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QBE INSURANCE (AUSTRALIA) LTD -v- LOIS NOMINEES PTY LTD and the persons detailed in the Schedule attached to the Appeal Notice (Civil) [2012] WASCA 186 (24 October 2012)

Legislation Cited (4)

Cases Cited (50)