insurance information held by administrators of the first respondent and by
Source
Original judgment source is linked above.
Catchwords
CORPORATIONS – ADMINISTRATION – PRELIMINARY DISCLOSURE –PROCEDURE – ESTOPPEL – STAY OF PROCEEDINGS– application forinsurance information held by administrators of the first respondent and bydirector respondents –power to order production of documents undersection 70-90 of Schedule 2 to the Corporations Act 2001 (Cth)(IPS) – where orders for preliminary disclosure have been made inVictoria – where insurers intervene – where thereis overlap ofdocuments sought – where production of documents would be in the interestsof administrators and creditors asa whole – where any prejudice tocreditors could be mitigated or eliminated by limitations on disclosure –
held that
administrators should be ordered to produce documents, subject to
limitations to be decided, under s 70-90(3) of the IPS – whether
categories of documents sought are reasonably necessary – whether the
application is prevented
by Anshun estoppel – whether application
should be stayed for abuse of process – whether temporary stay should be
ordered pending
Victorian proceedings
Corporations Act 2001 (Cth) sch
2 ss 70-45, 70-90
Uniform Civil Procedure Rules 1999 (Qld) r 222
Supreme Court (General Civil Procedure) Rules 2015 (Vic) r
32.05
Age Co Ltd v Liu (2013) 82 NSWLR 268
[2023] NSWCA
26
Antico v Heath Fielding Pty Ltd (1997) 188 CLR 652
[1997] HCA
35
Carr v Finance Corporation of Australia (No 1) (1981) 147 CLR 246
[1981] HCA 20
CBRE (V) Pty Ltd v Trilogy Funds Management Ltd (2021)
107 NSWLR 202
[2021] NSWCA 316
Century Drilling Limited v Gerling
Australia Insurance Company Pty Limited [2004] 2 Qd R 481
[2004] QSC
120
Ingram v Ardent Leisure Ltd [2020] FCA 1302
Lantrak Holdings
Pty Ltd v Yammine [2023] FCAFC 156
Pfizer Ireland Pharmaceuticals v
Samsung Bioepis AU Pty Ltd (2017) 351 ALR 103
[2017] FCAFC 193
Re
1st Fleet Pty Ltd (in liq) [2019] NSWSC 6
Roadshow Films
Pty Ltd v iiNet Ltd (2011) 248 CLR 37
[2011] HCA 54
Sterling
Pharmaceuticals Pty Ltd v Boots Co (Aust) Pty Ltd (1992) 34 FCR 287
[1992]
FCA 72
Tomlinson v Ramsey Food Processing Pty Ltd 256 CLR 507
[2015]
HCA 28
UBS AG v Tyne (2018) 265 CLR 77
[2018] HCA 45
Watson & Co Superannuation
Pty Ltd v Dixon Advisory and Superannuation Services Ltd
[2022] FCA 1273
Judgment (100 paragraphs)
[1]
CORPORATIONS - ADMINISTRATION - PRELIMINARY DISCLOSURE - PROCEDURE - ESTOPPEL - STAY OF PROCEEDINGS - application for insurance information held by administrators of the first respondent and by director respondents - power to order production of documents under section 70-90 of Schedule 2 to the Corporations Act 2001 (Cth) (IPS) - where orders for preliminary disclosure have been made in Victoria - where insurers intervene - where there is overlap of documents sought - where production of documents would be in the interests of administrators and creditors as a whole - where any prejudice to creditors could be mitigated or eliminated by limitations on disclosure - held that administrators should be ordered to produce documents, subject to limitations to be decided, under s 70-90(3) of the IPS - whether categories of documents sought are reasonably necessary - whether the application is prevented by Anshun estoppel - whether application should be stayed for abuse of process - whether temporary stay should be ordered pending Victorian proceedings
Watson & Co Superannuation Pty Ltd v Dixon Advisory and Superannuation Services Ltd[2022] FCA 1273
[19]
G Crafti SC & T Pincus for the proposed intervenors
[20]
[1] Probuild Constructions (Aust) Pty Ltd (Probuild (Aust)), the second respondent, is a member of the Probuild Group, over which administrators, the first respondent, were appointed on 23 February 2022. A deed of company arrangement (Probuild DOCA) was executed by the administrators and by all the companies in the Probuild Group in July 2022. The first applicant, Wadren Pty Ltd in its capacity as trustee for the Hoppers Crossing Unit trust (Wadren), had entered into a contract with Probuild (Aust) for the construction of a shopping centre in Victoria in 2014. Practical completion occurred in 2017. The second applicant, QIC Werribee Pty Ltd in its capacity as trustee of the QIC Werribee Trust (QIC Werribee), acquired a 50 percent interest in the shopping centre in February 2019. The applicants notified Probuild (Aust) of various defects in the shopping centre in 2019. Since that time, Probuild (Aust) have been notified on various dates between August 2020 and February 2022, of non-structural design defects identified by the applicants. The estimated claim of the applicants against Probuild (Aust) is sizeable being in a range of $310 million to $335 million.
[2] On 14 March 2023, the applicants commenced proceedings in the Victorian Supreme Court against Probuild (Aust) and others in respect of structural defects in the shopping centre. They have not however, commenced proceedings with respect to non-structural defects. They are considering whether to do so and, to that end, are seeking information as to Probuild (Aust)'s insurance status, both in terms of policies and claims.
[3] Prior to the present application, the applicants had applied for preliminary disclosure in the Victorian Supreme Court from Probuild (Aust) and AIG Australia Limited (AIG), Probuild (Aust)'s primary insurer. Following a substantive hearing, Acting Justice Barrett ordered limited preliminary disclosure be made with some orders made by consent for disclosure by AIG and further orders made for disclosure by AIG and Probuild (Aust). His Honour but otherwise dismissed the application. Part of the orders included an order that Probuild (Aust) make discovery of the excess PI policies for the years 2019/2020, 2020/2021 and 2021/2022. That decision was the subject of an appeal, which was undecided when this application was heard. It is uncontroversial that there is a significant overlap in the documents sought by the applicants in Victoria and which are not sought pursuant to the present application.
[21]
[4] The applicants seek orders from this Court for the disclosure of documents and provision of information by the administrators of Probuild (Aust) pursuant to s 70-90 of the Insolvency Practice Schedule (IPS). The respondents did not appear at the application and informed the applicants that they did not oppose the application.
[5] AIG Limited, Starr Underwriting Agents Limited for and on behalf of Lloyd's Underwriter Syndicate No 1919 CVS, and HCC International Insurance Company Plc, the primary layer professional indemnity insurers for Probuild (Aust) (AIG) and the excess PI insurers (of which there is a number[1]), each sought to intervene in the application. AIG also sought to be joined as a respondent. However, following the applicants indicating to the court that they did not oppose AIG and the excess PI insurers intervening, AIG did not continue its application to be joined as a party. I am satisfied consistent with the principles set out in Roadshow Films Pty Ltd v iiNet Ltd,[2] that AIG and the excess PI insurers' interests would be directly affected by a decision in this proceeding and that given the administrators were not acting as contradictors it was appropriate for them to intervene in that application.
[6] Both AIG and the excess PI insurers sought to oppose the orders sought by the applicants. AIG contends that the application is an abuse of process or that the applicants are estopped from making the present application by reason of Anshun estoppel, given the applicants had made the application for preliminary discovery in Victoria.
[7] In this application, the matters for determination by this court are:
[22]
(a) whether the doctrine of Anshun estoppel applies, and prevents the applicants from making an application pursuant to s 70-90 of the IPS;
(b) in the alternative to (a) whether the application by the applicants should be dismissed on the basis it is an abuse of process;
(c) in the event that neither (a) or (b) are found to be established, whether the court should exercise its discretion to order the provision of the information and documents pursuant to s 70-90; and.
(d) whether documents subject to confidentiality orders of the Victorian Supreme Court should be produced to the second applicant pursuant to r 222 of the UCPR.
[23]
[8] The applicants originally requested that the administrators of Probuild (Aust) provide them with information and documents pursuant to s 70-45 of the IPS. Section 70-45 provides that:
[24]
"70-45 Right of individual creditor to request information etc. from external administrator:
[25]
(1) A creditor may request the external administrator of a company to:
[26]
(2) The external administrator must comply with the request unless:
[27]
(a) the information, report or document is not relevant to the external administration of the company; or
(b) the external administrator would breach his or her duties in relation to the external administration of the company if the external administrator complied with the request; or
(c) it is otherwise not reasonable for the external administrator to comply with the request.
[28]
(3) The Insolvency Practice Rules may prescribe circumstances in which it is, or is not, reasonable for an external administrator of a company to comply with a request of a kind mentioned in subsection (1)."
[29]
[9] The administrators refused the request on the basis that they considered that complying with the request would be a breach of their duties and/or complying would not be reasonable because:
[30]
(a) complying with the request might substantially prejudice the interests of one or more creditors or a third party and that prejudice outweighs the benefits of complying with the request; and/or
(b) disclosure of the requested documents may give rise to an action for breach of confidence.
[31]
[10] As a result of that refusal, s 70-65 of the IPS allows the applicants to apply to the court for production of the requested documents under s 70-90 IPS. Section 70-90 relevantly provides that:
[32]
"70-90 Court may order relevant material to be given
[33]
(1) The person or persons who made the request for the relevant material may apply to the Court for an order that the external administrator give the person or persons all or part of the relevant material.
[34]
(3) On application under subsection (1) or (2), the Court may:
[35]
(a) order the external administrator to give the person, or any or all of the persons, who made the request for the relevant material all or part of that material; and
(b) make such other orders, including orders as to costs, as it thinks fit."
(a) there is reasonable cause to believe that the applicant has or may have the right to obtain relief in the Court from a person whose description the applicant has ascertained;
(b) after making all reasonable inquiries, the applicant has not sufficient information to enable the applicant to decide whether to commence a proceeding in the Court to obtain that relief; and
(c) there is reasonable cause to believe that that person has or is likely to have or has had or is likely to have had in that person's possession any document relating to the question whether the applicant has the right to obtain the relief and that inspection of the document by the applicant would assist the applicant to make the decision -
[39]
the Court may order that that person shall make discovery to the applicant of any document of the kind described in paragraph (c).
[40]
[12] It is uncontroversial that there is a significant overlap between the material now requested and the information sought in the preliminary discovery application.
[13] In Victoria, the applicant originally sought documents including:
[41]
(a) that Probuild (Aust) gives discovery of all documents that are or have been in the possession, custody or power of Probuild (Aust) relating to the policy documents (as that term was defined in a supporting affidavit of Ms Morecombe);
(b) that AIG gives discovery of all documents that are or have been in the possession, custody or power of AIG relating to:
(i) AIG policy documents which was defined to mean the confirmation that the claim was notified to insurers, a copy of the notification, a copy of any confirmation or denial of indemnity, a copy of the policy itself and details of all insurers under the policy; and
(ii) past claim documents defined to mean "confirmation of whether any other claims have been made upon the applicable PI insurance policy or policies including details of any settlements of such claims.
[42]
[14] By the Amended Originating Application, the documents sought related to the 2019/2020 insurance year, and the 2020/2021 and 2021/2022 policy years.
[15] Barratt AsJ made the following orders:
[43]
(a) by consent that AIG produce to the applicants:
(i) the primary PI policies held by Probuild (Aust) for the 2019/2020, 2020/2021 and 2021/2022 policy years; and
(ii) the written notifications made by Probuild (Aust) to the primary insurers for the policy year 2019/2020 in respect of the claim (being the notification of claim to Probuild (Aust) issued by the applicants on 10 October 2019), the structural defects and the non-structural defects;
(b) that:
(i) Probuild ( Aust) make discovery of the excess PI policies which insure Probuild (Aust) and which identify the excess insurers for the 2019/2020, 2020/2021 and 2021/2022 policy years; and
(ii) AIG make discovery to Wadren of all documents comprising of confirmation of indemnity or denial of indemnity from the primary insurers in respect of the 2019/2020 primary policy;
(c) that the excess insurers, Probuild (Aust) make discovery of the excess PI policies which insured Probuild (Aust) for the 2019/2020, 2020/2021 and 2021/2022 policy years.
[44]
[16] In the preliminary discovery proceedings, AIG confirmed the primary PI policy limits of indemnity and for those policy years sought the limit of indemnity had not been exhausted by claims.
[17] In the present application, the documents sought by the applicant are:
[45]
(a) documents relating to any notification made by Probuild (Aust) to its primary insurers for the policies in the years ended June 2021 and June 2022 regarding notification of the claims of the applicants against Probuild ( Aust) in respect of all defects;
(b) documents relating to notification of claims by Probuild (Aust) to the excess professional indemnity insurers in the policy years ended June 2020, June 2021 and June 2022 regarding the claims of the applicants;
(c) documents or information regarding the remaining limit of indemnity (or the extent to which the limit of indemnity has been exhausted or eroded) in respect of each of those primary and excess policies;
(d) documents or information regarding any other claims that have been made upon the primary or excess policies, including any resolution of any such claim;
(e) correspondence between Probuild ( Aust) or the administrators and any of the insurers regarding the remaining limit of indemnity under each of the primary and excess insurance policies;
(f) provision to the first applicant, Wadren, of documents held by Probuild (Aust) regarding communications between Probuild (Aust) or the administrators and the relevant insurer regarding the grant or denial of indemnity, and the conditions imposed on any grant of indemnity, in respect of claims of the applicants regarding:
(i) the primary insurance policies in the years ended June 2021 and June 2022; and
(ii) the excess insurance policies in the years ended June 2020, June 2021 and June 2022;
(g) provision to the second applicant, QIC Werribee, of documents held by Probuild (Aust) regarding communications between Probuild (Aust) or the administrators and the relevant insurer regarding the grant or denial of indemnity, and the conditions imposed on any grant of indemnity, in respect of claims of the applicants regarding:
(i) the primary insurance policies in the years ended June 2020, June 2021 and June 2022; and
(ii) the excess insurance policies in the years ended June 2020, June 2021 and June 2022.
[46]
[18] Primary submissions were made by AIG but those submissions were relied upon by the excess PI insurers insofar as they applied to the documents sought relating to the excess PI policy.
[47]
[19] AIG claims that the principles of Anshun estoppel would apply in the present case so as to preclude the assertion of a claim by the applicants to the documents and information sought because it is so connected with the subject matter of the preliminary discovery that it makes it unreasonable in the context of the first proceeding for the claim not to have been made or the issue not to have been raised in that proceeding.
[20] Three forms of estoppel were said by the majority of the High Court in Tomlinson v Ramsey Food Processing Pty Ltd[3] to "have now been recognised by the common law of Australia as having the potential to result from the rendering of a final judgment in an adversarial proceeding.". One of those forms of estoppel is Anshun estoppel, which according to the majority:
[48]
"... operates to preclude the assertion of a claim, or the raising of an issue of fact or law, if that claim or issue was so connected with the subject matter of the first proceeding as to have made it unreasonable in the context of that first proceeding for the claim not to have been made or the issue not to have been raised in that proceeding. The extended form has been treated in Australia as a "true estoppel" and not as a form of res judicata in the strict sense. Considerations similar to those which underpin this form of estoppel may support a preclusive abuse of process argument."
[49]
[21] According to AIG, it was unreasonable for the applicants to not have sought production in the Victorian proceedings pursuant to s 70-90 of the IPS of:
[50]
(a) the disclosure of documents regarding the remaining limits of indemnity under the primary PI policies for the 2019/2020, 2020/2021 and 2021/2022 policy years;
(b) confirmation of remaining limits of indemnity or the extent to which the limit of indemnity has been eroded; and
(c) correspondence between Probuild (Aust) and any insurer regarding the remaining limit of indemnity on each policy.
[51]
[22] According to AIG, the present application is an unnecessary separate proceeding in relation to the same subject matter, requiring evidence on and consideration of the same or similar issues. While the applicants accept that there is an overlap in terms of the documents sought, they contend that this application raises different issues, involves different parties and the application is not unreasonable. The applicants however contend that in any event the arguments fail at the threshold because the decision of Barrett AsJ in the preliminary disclosure proceedings was not a final judgment which is a precondition to Anshun estoppel having any application. I accept that to be the correct characterisation.
[23] In order for Anshun estoppel to apply, the decision must be final and conclusive on the merits and the cause of action must be extinguished by the decision which is said to create the estoppel.[4] That position was accepted by both parties.
[24] While AIG could not direct the Court to a specific case in support of its argument, AIG contend that an application for preliminary discovery which was instigated by an originating application and was a stand-alone proceeding such that Barratt AsJ's decision was a final judgment rather than an interlocutory one. AIG contends that the Victorian judgment was final and conclusive on the merits of the application and not an application made within proceedings and finally decided the question of documents to be produced on preliminary discovery.
[25] The applicants however contend that judgment was an interlocutory one and that the approach of AIG does not accord with the correct test for determining whether a judgment is final and an interlocutory judgment. It contends that there is nothing to constrain it from bringing a preliminary discovery application again.
[26] In support of its contentions that the decision of Barratt AsJ was an interlocutory one, the applicant relied upon the frequently quoted passage from Gibbs CJ in Carr v Finance Corporation of Australia (No. 1)[5] namely that:
[52]
"The test now applied in this Court for determining whether a judgment is final or not is whether the judgment or order appealed from, as made, finally determines the rights of the parties...
[53]
In my opinion the test in Licul v Corney requires the court to have regard to the legal rather than the practical effect of the judgment."
[54]
[27] The applicants contend that their submission accords with authorities[6] which have identified the preliminary discovery application to be an interlocutory one.[7] Two cases upon which the applicants rely: Age Co Ltd v Liu,[8] and Pfizer Ireland Pharmaceuticals v Samsung Bioepis AU Pty Ltd,[9] characterised an application for preliminary discovery as an interlocutory application. In Age Co Ltd, Bathurst CJ[10] stated that applications for preliminary discovery are interlocutory applications.[11] In that case, prior to filing a statement of claim alleging articles contained defamatory imputations, interlocutory orders were sought for, inter alia, the publisher to provide documents as to the identity of the sources of information upon which the articles were based. In Pfizer Ireland Pharmaceuticals, Allsop CJ held that an application for preliminary discovery was an interlocutory application.[12] Perram J also stated that the procedure was an interlocutory and summary one.[13]
[28] Counsel for the intervenors however contended that this case was distinguishable because it had been commenced by a separate application. While the preliminary discovery application did proceed as a stand-alone application, that does not in my view lead to a characterisation of the legal effect of the decision as being one which finally determines the rights of parties. Its legal effect was not a final order, and in my view, it was not a final judgment. In Age Co Ltd, the application was made prior to the filing of a statement of claim for the purpose of ascertaining the identity or whereabouts of a person for the purpose of commencing proceedings against them. In the present case, the application under r 32.05 of the Victorian Rules was to obtain documents to assist a party, the applicants, to inter alia, decide whether to commence a proceeding. It was clearly a step towards future proceedings and not determinative of rights. Further applications for preliminary discovery could be made. The applications are broadly similar to those considered in Pfizer Ireland Pharmaceuticals and , and the stand-alone nature of the application does not justify a different characterisation of the application from the New South Wales Court of Appeal in .
[55]
[30] In the alternative, the AIG contends that the bringing of the application is an abuse of process and the court should permanently stay the application.
[31] The overlap between the Anshun estoppel and abuse of process was discussed by the majority in Tomlinson:[14]
[56]
"[24] To explain contemporary adherence to the comparatively narrow principle in Ramsay, it is appropriate also to explain the relationship between the doctrine of estoppel and the doctrine of abuse of process as it has since come to be recognised and applied in Australia. The doctrine of abuse of process is informed in part by similar considerations of finality and fairness. Applied to the assertion of rights or obligations, or to the raising of issues in successive proceedings, it overlaps with the doctrine of estoppel. Thus, the assertion of a right or obligation, or the raising of an issue of fact or law, in a subsequent proceeding can be simultaneously: (1) the subject of an estoppel which has resulted from a final judgment in an earlier proceeding; and (2) conduct which constitutes an abuse of process in the subsequent proceeding.
[57]
[25] Abuse of process, which may be invoked in areas in which estoppels also apply, is inherently broader and more flexible than estoppel. Although insusceptible of a formulation which comprises closed categories, abuse of process is capable of application in any circumstances in which the use of a court's procedures would be unjustifiably oppressive to a party or would bring the administration of justice into disrepute. It can for that reason be available to relieve against injustice to a party or impairment to the system of administration of justice which might otherwise be occasioned in circumstances where a party to a subsequent proceeding is not bound by an estoppel."
[58]
[32] AIG seeks a permanent stay of the application.
[33] AIG contends that as a consequence of the applicants' failure to seek the relief now sought in this application in the Victorian proceedings, the present application is an unnecessary separate proceeding in relation to the same subject matter requiring evidence on and consideration of the same or similar issues. AIG further contends thar there is a real risk of inconsistency of rulings affecting the rights of the administrators and therefore the creditors of Probuild (Aust) and the primary insurers.
[34] As was said by Bell P in CBRE (V) Pty Ltd v Trilogy Funds Management Limited,[15] "a permanent stay of proceedings on the ground of abuse of process should only be ordered in exceptional circumstances (and will ordinarily require the applicant for a stay to establish that the continuation of the proceedings would be vexatious or oppressive in the sense that it would be "seriously and unfairly burdensome, prejudicial or damaging)". That a heavy onus is borne by those who seek the permanent stay of proceedings on abuse of process grounds is well established.
[35] In an analysis of the authorities in Lantrak Holdings Pty Ltd v Yammine,[16] it is recognised that attempts to litigate claims that should have been litigated in earlier proceedings may constitute an abuse of process.[17] However, as noted in Lantrak Holdings, in some cases separate agitation of claims that should have been litigated in earlier proceedings will be abusive; but, it is not in every instance in which claims should have been litigated earlier that they will be found to be abusive.[18]
[36] In Lantrak Holdings, Jackman J conveniently summarised the relevant principles derived from the High Court decision of UBS AG v Tyne, namely:[19]
[59]
"[306] The primary judge then referred to the leading case on the principles applicable to a claim of abuse of process such as the present being UBS AG v Tyne[2018] HCA 45; (2018) 265 CLR 77 (UBS). At [58]-[64], the primary judge identified the following principles in the judgment of Kiefel CJ, Bell and Keane JJ, and in the concurring judgment of Gageler J (which also adopted at [61] the reasons of the plurality):
[60]
(a) either of two conditions enlivens the power of the court to permanently stay proceedings as an abuse of process of the court: one being where the use of the court's procedures occasions unjustifiable oppression of a party, and the other being where the use serves to bring the administration of justice into disrepute: UBS at [1];
(b) whether or not particular conduct rises to the level of an abuse of process is a determination that requires consideration of all the circumstances, the determination being "a broad, merits-based judgment which takes account of &...; all the facts of the case, focusing attention on the crucial question whether, in all the circumstances, a party is misusing or abusing the process of the court by seeking to raise before it the issue which could have been raised before": UBS at [7], quoting Lord Bingham in Johnson v Gore Wood & Co[2002] 2 AC 1 at 31;
(c) the determination of whether the bringing or continuance of a proceeding is an abuse of the process of the court must take into account the procedural law administered by the court whose processes are engaged, relevantly s 37M of the FCA Act which provides that the overarching purpose of the civil practice and procedure provisions of the court is to facilitate the just resolution of disputes according to law "as quickly, inexpensively and efficiently as possible", that overarching purpose having various objectives including "the efficient use of the judicial and administrative resources available for the purposes of the Court", "the efficient disposal of the Court's overall caseload" and "the disposal of all proceedings in a timely manner": UBS at [34];
(d) the timely, cost-effective and efficient conduct of modern civil litigation takes into account wider public interests than those of the parties to the dispute: UBS at [38], citing, amongst other authorities, Aon Risk Services Australia Ltd v Australian National University[2009] HCA 27; (2009) 239 CLR 175 at ;
[61]
[37] There will therefore be an abuse of process where the use of the court's procedures either occasions "unjustifiable oppression" to a party, or serves to bring the "administration of justice into disrepute".[20]
[38] In this case, the intervenors rely on the fact that:
[62]
(a) the present application seeks many of the same documents that have been the subject of the decision in Victoria;
(b) there was nothing to preclude the applicants from making the application they now make in Victoria as an alternative to the application for preliminary discovery;
(c) prior to commencing the application for preliminary discovery in Victoria, the applicants had made a request of the administrators on 31 May 2022 pursuant to s 70-45 of the IPS for the documents now requested from the primary insurers. That request was refused, which would have entitled the applicants to apply to the court for production under s 70-90; and
(d) a second request was made by the applicants pursuant to the IPS on 8 March 2023 prior to the applicants amending their application in the Victorian proceedings to request additional documents in respect of the 2020/2021 and 2021/2022 policy years.
[63]
[39] In the present case, the applicant points to a number of factors which negate any inference that the present application is an abuse of process:
[64]
(a) First, that the administrators had originally not accepted that the applicants were a "creditor" of Probuild (Aust). It was not until the applicants had commenced the Victorian Supreme Court claim for damages in relation to structural defects and made a fresh request of the administrators in September 2023 that the Administrators accepted the applicants had standing as creditors to make the request under s 70-45;
(b) secondly, that the application seeking preliminary discovery in Victoria had been made prior to the decision of Watson & Co Superannuation Pty Ltd v Dixon Advisory and Superannuation Services Ltd[21] which is said to have overcome what was thought to have been difficulties in obtaining an order pursuant to s 70-90 in a number of respects; and
(c) thirdly, the present application was made against the administrators consistent with the terms of s 70-90. AIG and the excess PI insurers have chosen to intervene. Neither the administrators nor Probuild (Aust) have objected to the making of the application. No orders were sought in the Victorian proceedings or the present proceedings against AIG.
[65]
[40] It is well established that principles of modern litigation require a party to pursue litigation in the most expeditious and efficient manner available.[22] There is undoubtedly an overlap in the documents sought in the present application and the application in the Victorian proceedings. Confidentiality issues raised by the intervenors are relevant in both applications. The most efficient course would have been to make the present application brought as an alternative to the preliminary discovery. However, the issues in each application are quite different notwithstanding the applications have the same purpose. Different considerations arise in the determining of an application under s 70-90 of the IPS from the application for preliminary disclosure. Similarly, the parties differ insofar as the application in respect of s 70-90 is limited to external administrators. While AIG are affected by the relief sought insofar as it seeks insurance documents which they have an interest in maintaining confidentiality over; no inconsistency would arise in terms of the findings of this application to those in Victoria. The basis of the applications differ. Confidentiality is not generally contentious in the present application although the mechanism by which it is to be protected is in issue.
[41] While Barrett AsJ found that documents relating to particular policy years were not relevant to the claim proposed to be made by the applicant for substantive damages. the basis of the application in the present case is different insofar as the present information is sought by the applicants as creditors to ascertain the financial worth of the application, albeit that is because it has a bearing on whether the applicants will make a further claim for non-structural defects. While the fact that the decision in Watson & Co Superannuation Pty Ltd v Dixon Advisory and Superannuation Services Ltd[23] had a bearing on the decision to pursue the present application, that is a matter of little weight since it was open for the applicants to bring their own application to test the parameters of s 70-90 of the IPS and it is a single Judge decision.
[42] It is more persuasive, however, that part of the explanation for the failure to bring the application as part of the Victorian proceedings, that the administrators had not accepted that the applicants had standing to make the application as a creditor until after the applicants had issued proceedings. That is a precondition to being able to make the application while the second request was made prior to the application being amended in Victoria. The applicants had to await a response before being in a position to make the application. The applicants are clearly trying an alternative avenue now open to them to obtain the documents, but they do not seek to relitigate the findings of Barrett AsJ insofar as different considerations apply. The fact that the applicants have stated the outcome of these proceedings may affect its decision-making to pursue an appeal in Victoria, is on the basis that they may obtain the documents sought by a different mechanism not through litigating the same issue against the same parties.
[66]
[44] AIG also contends that the Court should grant a temporary stay of proceedings on the basis that it is in the interests of justice and for case management purposes to do so. The relevant principles were considered by Lockhart J in Sterling Pharmaceuticals Pty Ltd v Boots Co (Aust) Pty Ltd.[24] AIG contends that it is undesirable to have two proceedings running concurrently in circumstances where there is an overlap of relief sought, common issues as to confidentiality and an overlap in the evidence before the Court in both proceedings. The fact that the Victorian decision is the subject of an appeal is of particular relevance. In Sterling Pharmaceuticals v Boots Co (Aust) Pty Ltd, Lockhart J observed that a relevant consideration in deciding whether to order a temporary stay was that "the law should strive against permitting multiplicity of proceedings in relation to similar issues".[25]
[45] While as I have found above while the issues between the two applications differ, there is an inter-relationship between the outcome of this application and the ongoing appeal.
[46] In terms of the overlap of the issue of confidentiality, the applicants contend that was only relevant to the exercise of the court's discretion, rather than to the issues that have to be determined in deciding the application for preliminary discovery, as opposed to the application for the production of documents under s 70-90 of the IPS. However, it may be that there is some prospect of conflicting orders being made in the exercise of the Court's discretion in relation to confidentiality. That possibility is not, in my view, sufficient to justify the grant of a temporary stay particularly since if the matter proceeds to appeal the court will have the benefit of the terms of any orders made and this Court will hear from the parties to address the Court in terms of confidentiality.
[47] To a certain extent there is little utility in considering a temporary stay in circumstances where the parties made full submissions in relation to the issues. However, given the interlocutory nature of both applications and the fact that there are distinct issues that have to be decided in both with different parties, albeit that they are directed to obtaining similar documents and information, I am not satisfied that it is appropriate to grant a temporary stay.
[67]
Should the court make orders under s 70-90 IPS?
[68]
[48] The present application is made by the applicants pursuant to s 70-90 of the IPS.
[49] Justice Thawley in Watson & Co Superannuation Pty Ltd v Dixon Advisory and Superannuation Services[26] considered the framework under the IPS for the request of documents to be made of administrators and the power of the court to grant access to the information pursuant to s 70-90 of the IPS. Relevant to the present case, his Honour considered the court's function under s 70-90 in circumstances where the administrators had refused a request to provide information in relation to insurance on the basis it would expose them to a claim for breach of confidence in circumstances where the insurers had contended the policies were confidential and risked the insurers avoiding policies which would cause substantial pressures to the creditors of the company under administration.
[50] His Honour accepted a contention that s 70-90(3) was not confined, as contended by the insurers to an inquiry into whether the administrator's decision was reasonable or was held in good faith. According to his Honour, as s 70-90(3) is expressed in broad terms. He found that it was unlikely that it was intended that a Court on an application under that section could not order production of documents in circumstances where a court was satisfied that the administrators had, in good faith, formed an erroneous opinion that a document was legally privileged. He considered that the section conferred a broad discretion confined only by the purpose of the provisions. According to his Honour, adopting observations of Black J in Re 1st Fleet Pty Ltd (in liq):[27]
[69]
"... The court plainly has, on the expressed terms of s 70-90 of the IPSC, a discretion as to the extent to which information or documents should be produced. Such a discretion should, however, be exercised having regard to the purpose of the relevant provisions, namely to require the production of documents or information to creditors where an appropriate request is made and it is not established that the request is unreasonable for the purposes of s 70-45 of the IPSC or r 70-15 of the Insolvency Practice Rules (Corporation) or whether requirement to produce such documents or information was mandatory under s 70-55 of the IPSC. It seems to me unlikely that the legislature would have intended that the court had a further discretion, at large, under s 70-90(3) of the IPSC to withhold an order for the provision of information or documents where s 70-45 or s 70-55 of the IPSC required that such information or documents be provided. ..."
[70]
[51] I accept his Honour's construction that the scope of the power in s 70-90 is not confined by its terms to a court determining whether the administrators had formed the opinion in good faith and whether the applicant had grounds to impugn the bono fides of the opinion held. Thawley J in his reasoning pointed to the fact that it is when a person who had made a request under s 70-45 which was then refused, the power of the court to consider the matter under s 70-90(3) is enlivened and that the word "may" plainly provides a discretion. His Honour did not consider the statutory language and context of the IPS demonstrated an intention that s 70-90 that the court could only exercise the discretion to compel production where the administrator was shown to have acted erroneously or on the basis of an opinion not held in good faith. I agree that his Honour's approach is consistent with the wording of s 70-90.
[52] Notwithstanding that his Honour determined that administrators could properly refuse the request for the documents on the basis that they had acted in good faith, and form an opinion that the disclosure of insurance policies would found an action by the insurers for breach of confidence and that the disclosure of the policies would carry the risk of insurers voiding policies which would cause substantial prejudice to the creditors of the company concerned. Although Thawley J observed that in the vast majority of cases, the court would refuse to grant relief unless an administrator was shown to have acted erroneously or on the basis of an opinion not held in good faith, his Honour determined that it was appropriate to exercise the discretionary power in s 70-90 of the IPS in the circumstances of the case before him.
[53] In Watson, his Honour determined that while the administrators refusal was a powerful factor against refusal, he considered it was in the interests of the administrators of the company and the creditors as a whole, including the applicant, that at least part of the insurance policies be disclosed to certain people.[28] His Honour found that the information would inform the applicant as to whether it should seek leave of the court to proceed against the company under administration, whether it was commercially viable to prosecute the proceedings against the company concerned to judgment or seek to settle the matter and whether there were insurance policies which informed the conduct of the proceeding or the conduct of the administrators of the company concerned and whether the administrators are acting reasonably and appropriately. His Honour considered it was in the interests of not only the applicant but also in the interests of the creditors as a whole for the applicant to know how forcefully to press the claims against the company and potentially other respondents. Disclosing the above information so the applicant knew of the matters identified would ensure the administrators' time was not wasted or that no unnecessary expenses were incurred and avoid insurance proceeds being consumed in litigation rather than applied for the claims of creditors. He considered that by the court ordering the disclosure by the administrators, the administrators would be protected from any liability for breach of confidence and his Honour found there was no realistic possibility of any policy being avoided by reason of any disclosure by the administrators made pursuant to an order of the court.
[71]
[60] There is no suggestion that the administrators' refusal to provide the documents requested was not done in good faith. While it is not apparent why the administrators consider that the provisions of documents might prejudice the interests of one or more creditors or be a breach of confidence, at least the latter can be addressed by a court order. The administrators have not appeared to resist the application on the basis of their refusal and do not oppose the orders' sought.
[61] The circumstances of the present case are somewhat unusual. The DOCA incorporates as a term, the terms of s 562 of the Corporations Act and provides the applicants with a contractual right to be paid insurance received by the administrators, the company or liquidators, in respect of liability incurred by the company to that third party in respect of whom liability was incurred (after the deduction of expenses).[34] The administrators have told creditors that a final distribution of the Pool C funds will require any outstanding litigation against the Probuild Group which includes Probuild ( Aust) to be determined so that final distributions can be calculated. Thus, if the applicants determine to pursue litigation to seek relief in relation to the non-structural defects, the distributions to creditors will be delayed and affected by that litigation.
[62] The decision of the applicants as to whether to proceed with the litigation is therefore a decision which not only affects the parties to the litigation, but creditors as a whole. The proposed claim is potentially large and the litigation potentially complex and lengthy. If they were successful in the litigation that would presumably at least they would not prove against other unsecured creditors in Pool C.
[63] The applicants have information already through voluntary disclosure by Probuild as to the primary level of cover. They obtained on preliminary disclosure some further information subject to confidentiality restrictions. The applicants are also aware that for the 2019/2020 policy year the primary insurance has not been exhausted. They also have the excess insurance policies for the years from 2019/2020 through to 2022.
[71] As to the request for the document referred to in paragraph 11 of Ms Wearne's affidavit[35] I do not consider that that document should be produced pursuant to r 222 in circumstances where that document was only provided to the first applicant and not the second applicant and specific orders were made by his Honour Justice Barratt AsJ to that effect. While the second applicant contends that the evidence was not sufficient as to what representations might have been made to give rise to a cause of action for misleading or deceptive conduct which was the second applicant's only identified potential cause of action in the Victorian preliminary discovery application given the evidence of indemnification is now sought under s 70-90 and the terms of r 222, the second applicant should be provided with that document pursuant to s 70-90 and r 222. The document that was referred to by Ms Wearne was the subject to the order of Bennet AsJ and clearly not exhibited to her affidavit as a result of the order. Consistent with the decision of Holmes J in Century Drilling Limited v Gerling Australia Insurance Company Pty Limited, it is not appropriate for this court to order that a party produce a document which was not annexed as a result of a court order in another State pursuant to r 222.[36]
[72] The relief sought in paragraphs 9 and 10 of the amended Originating Application is denied.
[74]
The parties are to provide draft orders within seven days reflecting the above reasons. The matter will then be listed at a time convenient for the parties to make further submissions to the Court on the appropriate form of orders including as to confidentiality, at which time I will hear the parties as to costs.
[75]
[1] Which are identified in the court heading but for the present purposes will be referred to in the judgment as "the excess PI insurers".
(e) although a party has a "right" to bring proceedings, in doing so choices are made respecting what claims are made and how they are framed, and the just resolution of a dispute involves parties having a sufficient "opportunity" to identify the issues that they seek to agitate, and abuse of process principles may be invoked to prevent attempts to litigate a claim that should have been litigated in earlier proceedings: UBS at [38]-[39], citing Aon at [33], [98] and [112];
(f) in some circumstances the bringing of a claim which should have been litigated in an earlier proceeding will be an abuse, and that may be so notwithstanding that the later proceeding is not precluded by an estoppel, and that can be seen so even where the parties seeking to make the claim or to raise the issue in the later proceeding was neither a party to the earlier proceeding, nor the privy of such a party: UBS at [43] and [62]-[63], citing Tomlinson v Ramsey Food Processing Pty Ltd[2015] HCA 28; (2015) 256 CLR 507 at [26] ; and
(g) the courts must be astute to protect litigants and the system of justice itself against abuse of process, and it is to hark back to the time before the High Court's decisions in Aon and Tomlinson, and the enactment of s 37M of the FCA Act, to expect that the courts will indulge parties who engage in tactical manoeuvring that impedes the "just, quick and efficient" resolution of litigation: UBS at [45]."
[43] While undesirable, I do not find the present application rises to the level of being an abuse of process and I am not satisfied that the AIG or the excess PI insurers have discharged the heavy onus to justify a grant of a permanent stay in relation to the present application.
[54] The court stated its intention was to fashion orders pursuant to s 70-90 which have the effect of providing only that information which is truly needed for the applicant to make an appropriate assessment whether to proceed against the company in liquidation and "to do so in a way which does not confer tactical or other inappropriate advantages".
[55] His Honour in Watson & Co Superannuation Pty Ltd v Dixon Advisory and Superannuation Services Ltd (No. 2)[30] clarified that the disclosure of information may provide an advantage to the applicant, in providing information sufficient to allow it to make an informed decision as to whether it would seek leave to proceed. His Honour rejected the insurers' contention that the information should be limited to the policy name, the policy holder and policy period. His Honour ordered that the information as to policy definitions, liability wording with respect to claims made by or on behalf of the company in administrations, exclusions that apply, policy conditions, the applicable sub-limits and overall limits. Thawley J considered disclosure of limits and sub-limits was reasonably necessary to provide information of whether to proceed in the claim and how vigorously. His Honour also considered the existence and content of exclusions was reasonably necessary for the same reason and that neither conferred an unfair tactical advantage.
[56] AIG and the excess insurers contend that the documents sought are sought by the applicants to provide the applicants with a tactical advantage. They further contend that their interests are a relevant consideration in determining whether or not to order the documents be produced. In particular, insurance arrangements are generally regarded as confidential because they contain commercially sensitive terms.[31] In that regard, they referred to the observations of Derrington J in Ingram v Ardent Leisure Ltd[32] where his Honour recognised that there is a unique relationship between an insurer and an insured and the duties which are owed and that if insurance documents would be made available to third parties who may wish to pursue a claim in respect of which the insurance policy might respond, the insurer/insured relationship will be severely and detrimentally affected as it would not necessarily prevent the parties to the policy corresponding in a manner consistent with their duties.
[57] AIG and the excess insurers rejected proposed confidentiality undertakings of the applicants on the basis that they did not sufficiently address the confidentiality issues. The applicants contend this is a matter which can be resolved. There is no apparent reason why the matter is not capable of resolution and any court order being conditioned on terms as to confidentiality being satisfied. The insurers also contend that disclosing the information sought by the applicants to them would be to the detriment of other creditors who had made claims given that it would allow the applicants to tailor how they expressed their claims and conduct them obtaining as much insurance available as they can in competition with other creditors. It would of course be open for other creditors to seek the same information.
[58] Both AIG and the excess PI insurers contend that there is no reason for the primary insurance to have to be disclosed. AIG contend further that there is no justifiable reason for the applicants to obtain the notifications from Probuild (Aust) to the insurers after those affecting the 2019/2020 year, because such notifications are immaterial because of s 54 of the Insurance Contract Act and the principle in Antico v Heath Fielding Pty Ltd[33] applied given the reservation of rights that was contained in the letter from QIC Werribee to Probuild (Aust) of 18 February 2020. The letter after notifying various defects stated, "the co-owners continue to reserve their rights against Probuild (Aust) regarding the deficiencies and defects in the stage 7 works.". According to AIG, that demonstrates that the insurer had knowledge of other potential claims. According to AIG, it was immaterial that Probuild (Aust) may have notified other defects to the insurers in later years as s 54 of the Insurance Contract Act would effectively render those notifications from the insured to the insurer to fall under the first year.
[59] The applicants' counsel however contends that the position was not without uncertainty as to whether s 54 of the Insurance Contract Act would limit the claims to the policy for the 2019/2020 year and that the position may be to the contrary. At the very least it contends that the later policies may have a bearing upon which of the three years insurance was engaged in respect of the claim. The applicants also contend that the information about other claims is material to the applicants because it bears upon whether it continue in the Victorian proceedings or starting fresh proceedings for the non-structural defects would or would not be commercially worthwhile. If the applicants are satisfied that there is insurance they may not then prove in Pool C so that a greater amount is available to be distributed amongst the unsecured creditors, which would be a benefit to the creditors. As to any advantage over other creditors the applicants' counsel contended it was open for them to seek the same information that they were seeking.
[64] The administrators have not sought to contest the order, however that said, they have little to gain by doing so whereas the insurers have an interest in the orders that may be made insofar as it is contended that the insurance policies are subject to confidentiality. I consider that those confidentiality considerations should be able to be adequately protected by the provision of an appropriately worded undertaking.
[65] It is in my view in the interests of the applicants and the creditors as a whole that the applicants be provided with information to allow them to make an informed assessment as to whether to pursue the proceedings presently on foot and issue further proceedings in respect of non-structural defects. There are a number of companies within the Probuild Group subject to administration where the primary insurance cover for their professional services covered all companies in the group with a combined limit of indemnity. The cover extended to indemnifying the 16 insured companies against any Claim for civil liability first made against the insured the insured during the period of insurance and notified to the insurer during the period of insurance arising from the performance of Professional Services. Section 70-45 and s 70-90 were introduced with the object of enabling a creditor to obtain more information about the administration of the company. The applicants are aware from the administrators that are a number of claims that have been made against companies in the Probuild Group in respect of which the insurance cover may provide indemnity and have some information but it remains "sketchy" which I accept is presently the case. They are also unaware of when the claims which they notified Probuild (Aust) over the period 2020- 2022 were notified to the insurer, which if Antico does not apply would be relevant in assessing what policy may respond to the claim. While they are aware the primary policies indemnities are not exhausted they do not the extent of insurance remaining. I accept this information to a certain extent will allow the applicants to make an informed assessment as to whether it is commercially worthwhile to continue the Supreme Court proceedings in Victoria and commence further proceedings in relation to non-structural defects. Until these matters are resolved unsecured creditors further delay of the resolution of their claims given the administrators indication that there will be no final distribution to Pool C and D funds until outstanding litigation against the Probuild Group have been determined. Of course, if the applicants do pursue the present litigation in respect of structural defects and potentially non structural defects that will delay resolution of their position in any event. However the applicants contend that they may choose to not lodge or reduce their proof of debt if there is adequate insurance which will be of benefit to other unsecured creditors in the pool.
[66] If the applicants consider there is available insurance to respond to the claim, they may reduce the applicants' claim to share in the assets available for creditors. If the applicants consider the insurance policies will not respond or be sufficient to meet the claims, they may decide not to pursue the claims and not delay the distribution of the Pool C funds to unsecured creditors and will avoid the utilisation of Probuild (Aust)'s limited resources in litigation with little or no utility. I do not consider the fact the present application may resolve in the applicants abandoning the appeal against the preliminary discovery orders is of great weight. While allowing the application to a certain extent may give the applicants information not available to other creditors, those creditors are able to make a similar application to the present such that I do not consider there is particular prejudice to other creditors in that regard.
[67] I do consider however that the category of documents requested are too broad and go beyond what is necessary for the applicants to make an informed assessment of whether or the extent to which they proceed with litigation. In that regard I note the decision of Thawley J in Watson was far more limited in the disclosure of documents allowed. I consider that the nature of the relationship that exists between an insurer and insured is of some relevance at least to the extent it could affect claims of other creditors and also the interests of the insurer if the applicants were permitted to obtain such broad categories of the documents. I consider the insurers' interests will otherwise be sufficiently protected by confidentiality orders and orders protecting legally privileged communications.
[68] I do not accept the application of Antico is so clear that the policy documents for the 2020/21 and 2021/2022 years should not be disclosed given notifications were made by the applicants to Probuild (Aust) in those years, such that no information should be ordered to be disclosed in relation to those latter policy years.
[69] However, the documents should be confined to only documents which are reasonably necessary to permit the applicants' to assess the commerciality of any claim made or to be made and minimise the effect of such disclosure on the interests of other creditors and the confidential nature of the relationship between an insured and insurer. In my view, the information that should be provided in relation to paragraph 1(a) of the amended Originating Application should be confined to those documents constituting any notification of the claims in 1(a)(i)-(iv) and 1(b) should be confined to documents constituting any notification of claims. I consider that 1(d) should be ordered to be given by AIG but not the excess insurers, given that the applicants are aware the limits of the indemnity of the Primary PI policies have not been eroded. I consider the documents in 1(f) should be limited to the "amount of any such claim and whether indemnity has been given or denied". It is not necessary for the applicants to be given the details of the claims to assess their position and I consider it would confer a tactical advantage beyond what is necessary for the applicants to assess that claim. As to paragraphs 2 and 3 of the amended Originating Application, I consider that the correspondence concerning the grant or denial of indemnity under 2019/2020, 2020/2021 and 2021/2022 policies given the evidence of notifications made in respect of those years.
[70] I note the applicants have agreed to meet the reasonable costs of the administrators complying with the order and for provisions as to confidentiality and legal professional privilege. Given the concerns of the insurers, I will hear the parties prior to making any orders as to confidentiality if it cannot be agreed. I will order the parties provide an agreed draft order within seven days reflecting the above reasons or in the event of disagreement, provide alternative orders for my consideration. An exception should be made for documents already provided. The parties should provide submissions as to costs of no more than three pages if they cannot otherwise be agreed.