Simpson v Thorn Australia Pty Ltd trading as Radio Rentals

GLEESON J: 1 On 8 May 2019, I made orders joining James Marshall and AIG Australia Limited (AIG) to the proceeding as the second and third respondents respectively, granting leave to the applicant (Ms Simpson) to file a further amended originating application and a further amended statement of claim (FASOC), and granting leave to the applicant to bring or continue to bring the proceedings against AIG pursuant to s 5 of the Civil Liability (Third Party Claims Against Insurers) Act 2017 (NSW) (Civil Liability (Insurers) Act). 2 These are my reasons for making those orders.

Background 3 This proceeding was commenced in March 2017 by Ms Simpson seeking relief against the first respondent (Thorn) on her own behalf and in a representative capacity pursuant to the Australian Securities and Investments Commission Act 2001 (Cth) (ASIC Act). 4 Ms Simpson alleges that: (1) she is and has been, since at least 15 June 2012, a pensioner in receipt of certain payments from Centrelink, during the period from 28 March 2011 to 29 March 2017 (relevant period); (2) she obtained financial products from Thorn for personal, domestic or household purposes within the meaning of s 12BAA(7)(k) of the ASIC Act; and (3) she is a "consumer" within the meaning of s 12BC of the ASIC Act. 5 Ms Simpson's claims allege the following three principal matters against Thorn: (1) misleading or deceptive conduct and or false or misleading representations in contravention of s 12DA and/or s 12DB of the ASIC Act; (2) the inclusion, in four contracts between Ms Simpson and Thorn, of contract terms that are unfair within the meaning of s 12BG of the ASIC Act; and (3) unconscionable conduct in contravention of s 12CB(1) of the ASIC Act. 6 In outline, Ms Simpson's case against Thorn is based on the following facts: (1) Thorn advertised and promoted its services as "Rent Try $1 Buy Representation, Try, $1* Buy". (2) By this advertising and promotion, Thorn represented to Ms Simpson and group members that they could rent specific goods, try those goods, and then buy those same goods for $1 at the end of the rental contract (Rent Try $1 Buy Representation). (3) Contrary to the Rent Try $1 Buy Representation, Ms Simpson did not have any right to buy and own the goods she was "renting" and "trying" for $1 pursuant to the four contracts. (4) The contracts between Ms Simpson and Thorn (and between Thorn and group members) contained eight terms that are alleged to be "Unfair Contract Terms". (5) By entering into each of the four contracts with Ms Simpson, Thorn engaged in conduct that was, in all the circumstances, unconscionable in contravention of s 12CB(1) of the ASIC Act. 7 The estimated total claim made in the proceeding against Thorn exceeds $100 million. 8 Since its commencement, there have been several case management hearings to advance the preparation of the matter for hearing, including a contested application for further discovery and leave to administer interrogatories. There has also been extensive discovery of documents by Thorn between September 2017 and April 2018, including over 9,200 documents provided in April 2018. An additional 3,000 documents were discovered in late September 2018. 9 On 1 November 2018, the proceeding was listed for a three week hearing commencing 15 October 2019. In July 2018, the matter had been tentatively fixed for a two week hearing commencing 17 June 2019. Prior to that, the matter had been case managed towards a hearing in March 2019. 10 Ms Simpson sought the orders for joinder of Mr Marshall and AIG, and related orders, by an interlocutory application dated 21 December 2018. 11 Broadly, Ms Simpson wished to amend her claim to include claims for relief against Mr Marshall arising out of his involvement with the conduct that gives rise to the claims against Thorn. The proposed claims against Mr Marshall arise from the same subject matter as the claims made against Thorn. Ms Simpson alleges that Mr Marshall held various senior roles in Thorn and its parent company, Thorn Group Limited (Thorn Group), before and during the relevant period including (at various times), the roles of General Manager of Radio Rentals, Chief Operating Officer of Thorn Group and Chief Executive Officer and Managing Director of Thorn Group. 12 The proposed claim against AIG arises from the allegation that the liabilities of Thorn and Mr Marshall to Ms Simpson and the group members, as set out in the proposed FASOC, are liabilities in respect of which Thorn and Mr Marshall are entitled to be indemnified by AIG up to the limit of cover within the terms of a civil liability policy and a directors and officers' policy. 13 AIG has declined to indemnify Thorn and Mr Marshall in respect of the claims. 14 Mr Marshall foreshadowed his intention, if joined, to file a cross-claim against AIG for indemnity under the terms of the relevant policy. 15 The interlocutory application was supported by an affidavit of Richard Ryan, Ms Simpson's solicitor, affirmed 21 December 2018. Mr Ryan's evidence was that the proposed claims against Mr Marshall and AIG arose in circumstances where Ms Simpson's legal team had concerns about the ability of Thorn and its parent company, Thorn Group Limited, to pay, in whole or in part, the claims made in the proceeding. Mr Ryan referred, in particular, to recent evidence concerning the financial position of Thorn Group Limited, saying: "In particular, I have become aware, most especially since 21 November 2018, that Thorn's financial position may be deteriorating …". 16 Later in his affidavit, Mr Ryan referred to Thorn's Half Year Financial Statements and Half Year Results Presentation released on 21 November 2018. 17 The application was listed for hearing on 5 April 2019 but was adjourned to 8 May 2019 to permit Ms Simpson to amend the proposed FASOC to plead the facts relied upon to allege that Mr Marshall was relevantly "involved" in Thorn's alleged contraventions of the ASIC Act. 18 By this time, there was additional evidence (in affidavits of Mr Ryan made on 26 March 2019 and 3 April 2019) that the financial position of Thorn Group Limited was continuing to deteriorate, including profit warnings issued to the Australian Stock Exchange on 31 January and 1 April 2019. 19 Ms Simpson's application was opposed by Thorn on the following grounds: (1) the proposed pleading was defective; (2) the application was made late; (3) the explanation for the lateness of the application was inadequate; (4) the reasons why the proposed amendments were said to be necessary were unpersuasive; and (5) the amendments raised a serious risk of the October 2019 trial dates being lost with consequent prejudice to Thorn. 20 In addition, submissions were made on behalf of Mr Marshall and AIG in opposition to the application.

Joinder of additional parties 21 Rule 9.05(1)(b)(iii) of the Federal Court Rules 2011 provides: (1) A party may apply to the Court for an order that a person be joined as a party to the proceeding if the person: … (b) is a person: … (iii) who should be joined as a party in order to enable determination of a related dispute and, as a result, avoid multiplicity of proceedings. 22 There was no suggestion by Thorn, Mr Marshall or AIG that the pre-conditions for an application under this rule were not satisfied. In particular, Mr Marshall submitted that the controversy (that is, the disputes between Ms Simpson, the group members, Thorn and Mr Marshall) ought to be decided by a single judge and that he should not be a "second round defendant" where Thorn's ability to indemnify Mr Marshall was subject to doubt. 23 Efficiency considerations strongly favour a joinder of Mr Marshall to the proceeding. However, in deciding whether to order that joinder, it was necessary to consider the impact on Thorn. Senior counsel for Ms Simpson, Mr Finch SC, acknowledged that the joinder gave rise to a serious risk that it would be necessary to vacate the October 2019 trial dates, which Thorn argued, was unacceptable prejudice to it. The parties argued this issue by reference to the principles that govern an application for leave to amend a pleading, which is appropriate since Ms Simpson proposed to effect the joinder of Mr Marshall by the filing of the FASOC. 24 On balance, speed and efficiency considerations also favour a joinder of AIG. If AIG is joined to the proceeding, the relevant insurance disputes can probably be resolved more quickly than if the insurance dispute were litigated separately and it is probably more efficient to have the insurance dispute determined by the same judge as the main proceeding.

Amendment to pleadings 25 The relevant principles are well known. The Court's powers to grant leave to amend are broad, and require that parties are given a proper opportunity to plead their case. Even so, a just resolution of proceedings does not require that a party be permitted to raise any arguable case at any point in the proceeding, on payment of costs: Aon Risk Services Australia Ltd v Australian National University [2009] HCA 27; (2009) 239 CLR 175 (Aon) at [98]. Relevant considerations are: (1) the nature and importance of the amendment to the party applying for it: Aon at [102]; (2) the extent of the delay and the costs associated with the amendment: Aon at [102]; (3) the prejudice that might be assumed to follow from the amendment, and that which is shown: Aon at [5], [99] and [102]; (4) the explanation for any delay in applying for that leave: Aon at [30], [102] and [103]; (5) the parties' choices to date in the litigation and the consequences of those choices: Aon at [112] and Luck v Chief Executive Officer of Centrelink [2015] FCAFC 75 (Luck) at [44]; (6) the detriment to other litigants in the Court: Aon at [93], [95] and [114] and Luck at [44]; and (7) potential loss of public confidence in the legal system that can arise where a court is seen to accede to applications made without adequate explanation or justification: Aon at [5], [24] and [30]. 26 No pleading issue was raised in connection with the proposed claim against AIG.

Nature and importance of amendment 27 The importance of the proposed amendments, to add a claim against Mr Marshall, was not contested. Several arguments were raised, primarily by Mr Muddle SC on behalf of Mr Marshall, that the proposed amendments were deficient. 28 Mr Brereton SC also argued that the proposed amendments were deficient for failing to plead a case that Mr Marshall was involved in the alleged contraventions concerning Mr Simpson individually. I did not accept that this is a pleading defect. Rather, Mr Brereton SC identified an issue as to whether the matters pleaded, especially at para 67A(a) of the FASOC (which pleads knowledge of the essential matters concerning the making of the Rent Try $1 Buy Representation to Ms Simpson and group members) are sufficient to support a finding of involvement in the alleged contraventions against Ms Simpson. 29 I rejected each of Mr Muddle SC's criticisms of the FASOC for the following reasons. 30 Mr Muddle SC first argued that the FASOC lacked an allegation that Mr Marshall knew that the Rent Try $1 Buy Representation was false, and that a corresponding allegation in relation to knowing involvement in unconscionable conduct was also absent. 31 At para 67A, the FASOC pleads that, at the relevant times, Mr Marshall knew: (1) the essential facts concerning Thorn's advertising, pleaded at para 5 of the FASOC; (2) that Thorn made the Rent Try $1 Buy Representation; (3) that the Rent Try $1 Buy Representation was repeated on the cover of contract documents; and (4) that contrary to the Rent Try $1 Buy Representation, there was no right to buy and own the goods that were "rented" and "tried" for $1. 32 The allegation that Mr Marshall knew facts that were "contrary to the Rent Try $1 Buy Representation" necessarily entails an allegation that Mr Marshall knew that the representation was false. 33 At para 67E of the FASOC, Ms Simpson alleges that Mr Marshall knew various facts in relation to "the essential matters" pleaded at each sub-para of para 66 of the FASOC, including that Mr Marshall knew at all relevant times "that the Rent Try $1 Buy Representation was misleading or deceptive as to the true nature of the transaction associated with Radio Rentals Contracts". The particulars of that allegation state that Mr Marshall's knowledge is to be inferred from facts and circumstances including those at para 67B and those particularised at 67A(d). In my view, the words "true nature of the transaction", when read with the reference to 67A(d), refer to the allegation that there was no right to buy and own the goods that were "rented" and "tried" for $1 and make it clear that Ms Simpson alleges that Mr Marshall knew that the Rent Try $1 Buy Representation was misleading or deceptive by virtue of the absence of the identified right. 34 Having regard to these matters, I am satisfied that the FASOC sufficiently alleges that Mr Marshall knew that the Rent Try $1 Buy Representation was false, misleading or deceptive. 35 Next, Mr Muddle SC contended that the FASOC does not provide particulars of the objective facts, matters and circumstances from which such knowledge of falsity is to be inferred. I disagree. The particulars to para 67A(d) are the relevant particulars. For example, particular (iii) refers to a statement by Mr Marshall to the effect that "because contracts are regulated as consumer leases they cannot give a customer a contractual right to buy the goods". That statement is a fact from which it might be inferred that the Rent Try $1 Buy Representation was false, if it is found that the representation has the meaning alleged at para 6 of the FASOC, namely, that representees "could rent specific goods, try those goods and then buy those same goods for $1 at the end of the rental contract". 36 Next, Mr Muddle SC argued that the pleading of involvement in the alleged contraventions is fatally flawed, because para 67C and para 67H allege omissions, which are not alleged to have been advertent. Mr Muddle SC contended that s 12BA(2)(c) of the ASIC Act has the effect that refraining from doing an act is only "conduct" if it is otherwise than inadvertent and that it is "trite law" that the allegation of advertence, and proper particulars of the objective circumstances from which it is alleged that inference of advertence ought to be drawn, are essential. 37 I accepted Mr Finch's submission that "advertence" is not an integer of involvement in a contravention, at least on the face of s 79 of the Corporations Act 2001 (Cth). 38 Section 12BA(2)(c) of the ASIC Act provides: (2) In this Division: … (c) a reference to refusing to do an act includes a reference to: (i) refraining (otherwise than inadvertently) from doing that act; or (ii) making it known that that act will not be done … 39 This provision is not relevant to the elements of the pleading of accessorial liability against Mr Marshall. Rather, it is concerned with the interpretation of the references in Pt 2 Div 2 to "refusing to do an act". 40 Next, Mr Muddle SC argued that, in so far as para 67B and para 67G purport to allege "acts", the allegations are that Mr Marshall "maintained" and "continued to maintain" certain matters. According to Mr Muddle SC, there are no particulars of "maintained" or "continued to maintain" that identify any positive and advertent conduct. They are in substance allegations of omissions, which are not alleged to have been advertent. 41 Mr Finch SC confirmed that Ms Simpson's case is that Mr Marshall's "maintenance" of Thorn's allegedly offending conduct does not include a positive decision or decisions to continue the conduct but rather that the continuation of the conduct, in the face of Mr Marshall's identified knowledge and discovery of identified facts, gives rise to an inference that Mr Marshall was involved in the alleged contraventions by positive acts rather than mere omissions (which are pleaded in the alternative). I accepted that this was arguable and did not require pleading or particularisation of additional facts. 42 Finally, Mr Muddle SC noted that no attempt had been made to omit against Mr Marshall allegations of conduct (especially in relation to the "First Simpson Contract"), which were said to be "unarguably time barred". This is a matter that can be conveniently addressed by any limitations defence that Mr Marshall may seek to raise. I do not accept that it is a defect in the proposed pleading.

Delay 43 In Aon at [102] and [103], the plurality observed: [102] It is the extent of the delay and the costs associated with it, together with the prejudice which might reasonably be assumed to follow and that which is shown, which are to be weighed against the grant of permission to a party to alter its case. Much may depend upon the point the litigation has reached relative to a trial when the application to amend is made. There may be cases whether it may properly be concluded that a party has had sufficient opportunity to plead their case and that it is too late for a further amendment, having regard to the other party and other litigants awaiting trial dates … [T]he extent and the effect of delay and costs are to be regarded as important considerations in the exercise of the court's discretion. Invariably the exercise of that discretion will require an explanation to be given where there is delay in applying for an amendment. [103] The fact that an explanation had been offered for the delay in raising the defence was regarded as a relevant consideration in [Queensland v J L Holdings Pty Ltd [2007] HCA 1; (1997) 189 CLR 149]. Generally speaking, where a discretion is sought to be exercised in favour of one party, and to the disadvantage of another, an explanation will be called for. The importance attached by r 21 to the factor of delay will require that, in most cases where it is present, a party should explain it. Not only will they need to show that their application is brought in good faith, but they will also need to bring the circumstances giving rise to the amendment to the court's attention, so that they may be weighed against the effects of any delay and the objectives of the Rules. There can be no doubt that an explanation was required in this case. 44 Thorn argued that the vast bulk of the documents that had led to the proposed joinder of Mr Marshall were discovered in April 2018, although it acknowledged that a small number of relevant documents were also discovered in September 2018. On that basis, Thorn contended that the joinder application could and should have been made by the end of May 2018 so that there was a delay of about seven months between then and the filing of the joinder application. Thorn further contended that there was an additional delay of four months as a result of Ms Simpson's failure to plead adequately the case against Mr Marshall in the proposed statement of claim that accompanied the interlocutory application. 45 Thorn next contended that this delay should have been explained by evidence, referring to Aon at [106]. Senior counsel for Thorn, Mr Brereton SC, identified two relevant explanations which he submitted were unsatisfactory: (1) An explanation given from the bar table to the effect that Mr Marshall's knowledge and involvement only became apparent after a careful analysis of the discovered documents. (2) An explanation in Mr Ryan's 21 December 2018 affidavit, which was a concern about Thorn's ability to meet the claim. Mr Ryan was not cross-examined, but Mr Brereton SC argued that this application did not "stack up". Mr Brereton SC noted that Mr Ryan did not state when the concerns about Thorn's financial capacity arose and that Mr Ryan referred to matters concerning Thorn's financial position that were in the marketplace well before the 21 November 2018 release of the Half Year Financial Statements and Half Year Results Presentation. Mr Brereton SC submitted that the matters identified by Mr Ryan from the Half Year Financial Statements and Half Year Results Presentation did not amount to a marked change or new event. 46 I accepted that there was a delay in the joinder application, which may have been as great as the seven months identified by Mr Brereton SC. Mr Ryan's affidavit provides an explanation for why the application was made in December 2018, but not for why it was not made earlier having regard to the information available from time to time about Thorn Group's financial position. I accepted that, if analysis of discovered documents led to the joinder application, then that explanation should have been given by affidavit. In my view, a sufficient explanation would also have addressed why the application was only made after the 1 November 2018 case management hearing when the matter was listed for trial. 47 I accepted that the insufficiency of the explanation for the delay was a matter to be weighed against granting the application, although I also recognised that the implications of the delay were less acute than they might have been if the application were made closer to the trial, or after the commencement of the trial (as occurred in Aon). As Mr Finch SC observed, the application was made approximately 10 months prior to the trial.

Prejudice 48 Thorn's principal concern was to avoid the loss of the October 2019 trial dates. Mr Brereton SC noted, as a factor that may lead to a vacation of the trial, that Mr Marshall had raised the spectre of concurrent wrongdoers or other parties being joined to the proceeding in the event of his joinder. 49 Thorn noted that prejudice by reason of the prolongation of already long-running litigation is suffered even where the party concerned is a commercial enterprise: Aon at [101]. 50 Thorn submitted that the theory behind this proceeding challenged the standard contractual terms that lie at the heart of Thorn's consumer leasing business, which has historically contributed the lion's share of its revenue. 51 Mr Muddle SC contended that Mr Marshall would have insufficient time to prepare for his defence, given that the final hearing is currently scheduled to commence on 15 October 2019 (that is, in five months' time). Mr Marshall submitted that, if joined to these proceeding, he could not now be ready to participate in a joint trial on the scheduled dates, for the following reasons: (1) His inability to obtain legal assistance as a consequence of what Mr Marshall maintained was an unlawful failure by Radio Rentals to pay his legal fees pursuant to a Deed of Access, Indemnity and Insurance. (2) He did not know the case he is called to meet, by reason of the matters in the deficiencies in the FASOC identified above. (3) To the extent that difficulty might have been ameliorated in a practical sense by Ms Simpson identifying all of the documentary evidence against Mr Marshall, she has expressly refused to do that, or to nominate a near date by which she will do that. The correspondence concerning this issue is annexed to the affidavit of Kellie Van Munster, solicitor, sworn 7 May 2019. (4) Even if Mr Marshall was able to obtain legal assistance, Ms Van Munster estimated that it would take a solicitor 230 days to review the whole of the discovery with which Mr Marshall has been served, to seek to identify documentary evidence that it may be in his interests to deal with in his evidence. (5) A hearing of the proposed amended claim could not with confidence be predicted to conclude within the dates set aside. 52 I did acknowledge the risk that the October 2019 trial dates may, in due course, be vacated. However, it is not a certainty and I concluded that, with effective case management and the required and expected cooperation of the parties, there were good prospects that the risk would not materialise given that there were still five months before the scheduled trial. 53 Mr Marshall's evidence included Ms Van Munster's estimate, referred to above, that it would take approximately 230 days for a solicitor to review each of 48,146 documents produced to her firm by Ms Simpson's lawyers in connection with the proceeding. I did not give any weight to that estimate, in the absence of any reason to believe that such an exercise would be necessary or appropriate for the preparation of Mr Marshall's defence. 54 Mr Brereton SC informed the Court that Thorn had agreed to indemnify Mr Marshall for his reasonable costs of defending the proceeding. Although Mr Muddle SC complained that this agreement had not yet resulted in the payment of any amount for Mr Marshall's costs, I concluded that I could realistically expect Mr Marshall to prepare his defence for an October 2019 trial having regard to the issues raised by the FASOC and the indemnity for his defence costs. This conclusion was based on my view that the main issues for determination are likely to be what was conveyed by Thorn's advertising and whether the terms of the relevant contracts were consistent with the advertising. 55 I also considered, based on my experience of the trial in Lynch v Cash Converters NSD900/2015 and the similarities between the issues in that trial and the likely issues in this proceeding, that the three weeks currently allowed for the trial is generous and it is unlikely that there will be a need to vacate the trial on the basis that a substantially longer period will be required, even if there are multiple parties. In particular, I did not accept Thorn's submission that the scope of the case was set to fundamentally change by reason of the need to consider what occurred at board meetings and what individual directors and management did in response to consumer and regulatory complaints or action. Rather, I accepted Mr Finch SC's submission that those matters were likely to be under consideration in any event, in connection with the alleged liability of Thorn.

Other matters 56 There was no evidence that Ms Simpson has made any relevant forensic choice that affected the exercise of the discretion. The position of other litigants in the Court favoured the joinder in order to avoid a multiplicity of proceedings, but may be detrimentally affected if there is any waste of Court resources as a result of the joinder. The latter prospect should be remote because, if the trial is vacated, it should not occur at the last minute. Accordingly, there should be an opportunity for Court resources to be usefully redeployed.

Consideration 57 As noted at the outset, efficiency considerations strongly favour a joinder of Mr Marshall to the proceeding. When balanced against the risk of prejudice to Thorn and the insufficiency of the explanation of the delay in making the application, I concluded that the preferable course was to allow the joinder, granting leave to make the amendments by which the joinder was to be affected. I recognised that this outcome placed Thorn at a disadvantage in that there is a prospect that the October 2019 trial may have to be vacated but considered that this disadvantage was outweighed by the inconvenience of a separate second trial against Mr Marshall.

Joinder of AIG 58 Section 4 of the Civil Liability (Insurers) Act provides: (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. (2) The amount of the insured liability is the amount of indemnity (if any) payable pursuant to the terms of the contract of insurance in respect of the insured person's liability to the claimant. (3) In proceedings brought by a claimant against an insurer under this section, the insurer stands in the place of the insured person as if the proceedings were proceedings to recover damages, compensation or costs from the insured person. Accordingly (but subject to this Act), the parties have the same rights and liabilities, and the court has the same powers, as if the proceedings were proceedings brought against the insured person. (4) This section does not entitle a claimant to recover any amount from a re-insurer under a contract or arrangement for re-insurance. 59 Section 5 of that Act provides: (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. 60 Section 5 is the successor to s 6(4) of the Law Reform (Miscellaneous Provisions) Act 1946 (NSW). AIG accepted that the three pre-conditions to the exercise of the relevant discretion, identified in Bede Polding College v Limit (No 3) Limited [2008] NSWSC 887 at [6] in relation to s 6(4), were satisfied because: (1) there is an arguable case against the insured, here Thorn and Mr Marshall; (2) there is an arguable case that the policy responds; and (3) there is a real possibility that, if judgment is obtained, the insureds would not be able to meet it. 61 AIG explicitly did not dispute the Court's power to grant leave pursuant to s 5. 62 In DHSE Holdings Ltd (receivers and managers appointed) (in liq) v Abboud; National Australia Bank Ltd v Abboud [2017] NSWSC 579, Stevenson J declined to grant leave under s 6(4) where, although the three pre-conditions above were satisfied, the insurers had confirmed coverage for the insureds albeit subject to reservations. At [41], his Honour concluded that it was not appropriate to grant leave where there was currently no insurance controversy for the Court to quell. 63 At [21], Stevenson J stated that the discretion "must be exercised for the purpose for which it was conferred; namely, to ensure that insurers are not exposed to unnecessary, unwarranted or inappropriate claims", citing Oswald v Bailey (1987) 11 NSWLR 715 at 717F-G, 725E; Tzaidas v Child [2004] NSWCA 252; (2004) 61 NSWLR 18 at [17], [107]; Opes Prime Stockbroking Ltd (in liq) (Scheme Administrators Appointed) v Stevens [2014] NSWSC 659 at [17] and Wayland v Bird [2017] NSWCA 26 (Wayland) at [20]-[26]. 64 In Wayland at [20], Ward JA noted with apparent approval the statement of Campbell JA in Energize Fitness Pty Ltd v Vero Insurance Ltd [2012] NSWCA 213 at [59] that the purpose of s 6(4) was "to provide a filter against insurers being unjustifiably made parties in litigation that, apart from the grant of leave, they would be free to stay out of". Her Honour noted, also with apparent approval, Campbell JA's statement that the standard for when it is justifiable to bring an insurer in was "fairly low". 65 In Opes at [18] and [19], after identifying the purpose of the discretion conferred by s 6(4), Ball J stated: [18] Generally, where leave is sought, that is because there are difficulties in pursuing the claim against the insured or the insurer has denied liability. In those cases, the question whether the insurer should be exposed to proceedings against it will usually be answered by considering whether the 3 matters identified by Grove J are satisfied. For example, in Bede Polding College itself, the defendant had entered into administration, the business no longer traded and the former principals of the business were deceased. In those circumstances, it was not unreasonable to expose the insurer to proceedings against it if the plaintiff had an arguable claim and it was arguable that the insurer was liable to indemnify the defendants in respect of it. [19] The question, however, in each case must be whether it is reasonable for the insurer to be joined, and that question will not always be answered by the 3 conditions identified by Grove J. As Simpson J said in Gorczynski v W & FT Osmo Pty Ltd [2009] NSWSC 693; (2009) 258 ALR 189 at [60]: [T]he grant of leave under s 6(4) nevertheless remains discretionary, and may be refused for other proper reasons. Ordinarily, for example, leave would not be granted where it could clearly be seen that a claim was, by reason of limitation of actions legislation, statute-barred. It may not be granted where the insurer was able to demonstrate irreparable prejudice. 66 AIG identified the following matters against the exercise of the discretion: (1) The representative nature of the proceeding, by which the Court is first asked to determine liability in relation to a single application, so that there is no prospect of a large money judgment immediately following the October 2019 trial. (2) Relatedly, the possibility of Thorn being unable to satisfy a judgment from its own resources is one that will not crystallise at or immediately following the October hearing. (3) Joinder is not necessary to enable Thorn to conduct a proper defence of the proceeding. (4) Although AIG has denied liability to indemnify Thorn, AIG does not suggest that it will not be bound by the outcome of the proceeding; that is, by this Court's determination as to whether, for what amount, and on what bases Thorn is liable to Ms Simpson and or group members. Accordingly, there is no prospect of the existing issues in the case being litigated twice. The only question is whether those issues should be expanded now to include an insurance dispute that may not otherwise need to be litigated. (5) Whether and to what extent the insurance issues are hypothetical will be known only once the Court delivers its judgment on the common issues, following the October hearing. (6) If joined, AIG's costs of defending the proceeding are likely to be in the order of $750,000. Joinder may also be expected to increase the costs of the existing parties to some extent. If joined, it may be anticipated that AIG will seek security for its costs. All of this would be unnecessary if Ms Simpson failed in her case against Thorn. 67 I accepted that joinder of AIG is not necessary to enable the rights of Ms Simpson and the group members against Thorn (and Mr Marshall) to be fully enforced. However, senior counsel for AIG, Mr Rich SC, did not contend that this was a matter that precluded the grant of leave in the proper exercise of the Court's discretion. 68 In this case, AIG has denied the claims made by Thorn and Mr Marshall under the relevant insurance policies, and Mr Marshall signalled his intention to file a cross-claim against AIG in the event of his joinder to the proceeding. In those circumstances, there is presently an insurance dispute that is relevant to the proceeding. Furthermore, given the real possibility that if judgment is obtained, the insureds would not be able to meet it, it is preferable that the insurance dispute be determined with minimal delay. I accepted that, in the circumstances of this case, this is most likely to be achieved by the grant of the leave sought so that the insurance dispute can be determined by the judge who also determines the principal proceeding. Given the presence of Thorn and Mr Marshall as respondents to the proceeding, AIG will be in a position to make forensic choices about the extent of its participation having regard to the matters that it has identified, set out above.

Conclusion 69 Accordingly, I made orders in the terms sought. I also ordered the applicant to pay Thorn's costs thrown away by reason of the further amended originating application. 70 Although Ms Simpson succeeded on her joinder application, she sought an indulgence by the application and the costs of the application were unnecessarily increased by her initial failure to present an adequate further amended statement of claim. In those circumstances, I considered that the respondents should not be required to pay Ms Simpson's costs of the joinder application. I concluded that the appropriate order was that the costs of the joinder application be the respondents' costs in the cause. I certify that the preceding seventy (70) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gleeson.