Wiltrading (WA) Pty Ltd v Lumley General Insurance Ltd & Ors [2005] WASCA 106

Wiltrading (WA) Pty Ltd v Lumley General Insurance Ltd & Ors [2005] WASCA 106 - WASCA 2005 case summary — Zoe

[124]

"It is I think important to note that the evidence concerning what I have described as the primary facts will be before the court in any event. The third defendant made no objection to and indeed consented to the amendment to the plaintiff's statement of claim and that consent was forthcoming only a couple of weeks ago. Against that background I think that it would be wrong now to allow matters to be raised in the principal action but not in the third party proceedings.

The question which then arises is whether the matter should proceed to trial on Monday as scheduled or whether the trial should be adjourned in part or in full. In my view it should certainly be that the third party proceedings, the insurance proceedings should be adjourned so as to allow the parties and the third defendant in particular an adequate opportunity to raise by way of reply the matters touched upon by Mr Pynt [counsel for Wiltrading] which the third party would seek to raise so as to meet the amended defences.

Matters dealing with alleged breaches of duty of utmost good faith and waiver and estoppel [sic] . As to whether the main action should be adjourned the starting point I think is to observe that it is no fault of the plaintiff that these matters have been raised so late in the day and he is entitled to his day in court if it can fairly be done. The third defendant argues that it would be unfair to expose it to the possibility of a large judgment against it without a contemporaneous determination of its right to be indemnified but I have seen no evidence of any particular hardship that it would suffer and of course ... if it does have a right of indemnity then that right will cover any costs incurred by it for being out of its money, as the saying goes, for a period of time.

In addition, I think it appropriate to note that whereas the balance of convenience might well have favoured joint trials of the principal claim and the third party claims in times gone past the amendments in the third party action will now raise potentially many and complex issues which have nothing to do with the plaintiff. It would be unfair to burden the plaintiff with the cost of being involved in proceedings designed to resolve those issues. I do note Mr Pynt's submission that there are possible claims which the third defendant might want to bring in the contribution proceedings against Austal.

I also note that Mr Pynt has said in his submissions that the third defendant wishes to reserve its rights in respect of any claims which it might have against the other defendants as well but it should be possible, I think, for the third defendant to proceed now in the main action. If there are particular matters in relation to the contribution proceedings which emerge as matters which can't conveniently and properly be tried in the main action, they are matters which I think can be attended to in the course of the running of the main action and appropriate orders or directions could perhaps be made.

In the end then, the conclusion to which I have come is that there should be leave to amend the defences of the third parties; the trial of the third party action should be adjourned; the principal action should proceed. There will inevitably, as I have said, be other and consequential orders and directions to be made."

[187]

"75 When a writ is issued the rights of the parties are crystallised. The function of the litigation is to ascertain what those rights are and grant the appropriate remedy. The submission of the defendants in this case is that, notwithstanding this, one party's conduct of the litigation can not only change that party's substantive rights but do so retrospectively avoiding the contract ab initio. It cannot be disputed that there are important changes in the parties' relationship that come about when the litigation starts. There is no longer a community of interest. The parties are in dispute and their interests are opposed. Their relationship and rights are now governed by the rules of procedure and the orders which the court makes on the application of one or other party. The battle lines have been drawn and new remedies are available to the parties. The disclosure of documents and facts are provided for with appropriate sanctions; the orders are discretionary within the parameters laid down by the procedural rules. Certain immunities from disclosure are conferred under the rules of privilege. If a party is not happy with his opponent's response to his requests he can seek an order from the court. If a judgment has been obtained by perjured evidence remedies are available to the aggrieved party. The situation therefore changes significantly. There is no longer the need for the remedy of avoidance under section 17; other more appropriate remedies are available. The same points have been persuasively made by Callahan AJ sitting in the Supreme Court of Connecticut in Rego v Connecticut Insurance Placement Facility (1991) 593 A 2d 491, 497.

76 I recognise that it is possible for something to be done in the litigation which may amount to a contractual act; the delivery of pleadings and similar documents are a form of communication. Such communication can have a contractual significance which can and will still be given effect to. Thus it is possible by a pleading to repudiate a contract or accept a repudiation as terminating the contract. Similarly, a claim or defence may affect the substantive rights of a landlord and tenant inter se. But the acts and omissions of the assured relied upon by the defendants in the present case are not of that character. They are solely relevant as alleged failures to observe good faith under section 17. The section 17 principle is a principle of law and if its rationale no longer applies and if its operation, the conferment of a right of avoidance, ceases to make commercia1 or legal sense then it should be treated as having been exhausted or at the least superseded by the rules of litigation. It will also very often be the case that by the time the litigation has started the cover has expired or its subject matter has ceased to exist so as to make the continuing relationship of insurer and insured no longer current and the observation of good faith only significant to the litigation.

77 I am therefore strongly of the view that once the parties are in litigation it is the procedural rules which govern the extent of the disclosure which should be given in the litigation, not section 17 as such, though section 17 may influence the court in the exercise of its discretion."

At a glance

Court

Decision date

Before

Catchwords

Source

Catchwords

Judgment (226 paragraphs)

Wiltrading (WA) Pty Ltd v Lumley General Insurance Ltd & Ors [2005] WASCA 106 (10 June 2005)

WILTRADING (WA) PTY LTD -v- LUMLEY GENERAL INSURANCE LTD & ORS [2005] WASCA 106 (10 June 2005)

Events Leading to the Third Party Proceedings Concerning Lumley

The Third Party Proceedings Against Palmcove and SRS

Parties

Legislation Cited (6)

Cases Cited (33)