For the reasons set out above I am satisfied that the allegations set out in paragraphs 43 - 47 are manifestly without merit and doomed to fail. I am not persuaded there is any reason at all as to why they should not be struck out at this time, as submitted by Mr Forrest, and I will so order.
In relation to the allegations set out in paragraphs 38 - 42 I am not satisfied that they are doomed to fail. However, the insurer may, of course, seek further particulars of any or all of the allegations.
I will reserve the costs of this application with liberty to apply.
Parties
Applicant/Plaintiff:
# Wood
Respondent/Defendant:
Calliden Insurance Limited & Ors
Legislation Cited (2)
Building Regulations 1999
Building Contracts Act 1995
Cases Cited (8)
Wood v Calliden Insurance Limited & Ors (Domestic Building) [2008] VCAT 1339 (4 July 2008)
The hurdle to be overcome by a party making an application under s75 is very high. As Judge Bowman said in Arrow International Australia Pty Ltd v Indevelco Pty Ltd[2005] VCAT 306 at [32 and 34]:
There have been a number of decisions of the courts generally and of this Tribunal in relation to the principles which operate when applying a provision such as S.75 of the Act. In relation to this Tribunal, these were summarised by Deputy President McKenzie in Norman v Australian Red Cross Society(1998) 14 VAR 243. One such principle is that, for a dismissal or strike out application to succeed, the proceeding must be obviously hopeless, obviously unsustainable in fact or in law, on no reasonable view justify relief, or be bound to fail. This is consistent with the approach adopted by the courts over the years. As was stated by Dixon J in Dey v Victorian Railways Commissioners(1949) 78 CLR 62:-
Whether or not a burden of proof in the strict sense exists in proceedings before this Tribunal, I am also of the view that the party making an application such as this is required to induce in my mind a state of satisfaction that the claim is obviously hopeless, unsustainable, and bound to fail, and that it is "very clear indeed" that this is so. (emphasis added)
Although at the commencement of the hearing Mr Kelmpfner indicated this was not a pleading summons it is clear that is exactly what it is. The submissions on behalf of the insurer concentrate on the specific wording used by the applicants in their Further Amended Points of Claim, and whether they disclose a tenable cause of action against the insurer. However, I reject the suggestion by Mr Forrest that the insurer should have sought particulars before making its s75 application. Particulars will not remedy an allegation which is 'frivolous, vexatious, misconceived or lacking in substance',.
It must be remembered that in considering an application under s75 I am not required to consider or be satisfied as to the likely success of the Woods' claim. I am required to consider whether the allegations are 'frivolous, vexatious, misconceived or lacking in substance', in other words, whether they are doomed to fail. This does not contemplate a detailed consideration of the evidence. As Senior Member Cremean observed in Johnston v Victorian Managed Insurance Authority[2008] VCAT 402 at [15-17]:
.... I do not think Parliament intended that the Tribunal should be functioning as a court of pleadings. From time to time, of course, and contained within the Sixth Respondent's submissions, it is expressly disclaimed that the Tribunal is a court of pleadings. And that remains the reality: the Tribunal is not a court in the normal sense of that word and is not, most definitely, a court of pleadings.
There is also this point. The primary function of the tribunal, apart from alternative dispute resolution, is to conduct hearings. A hearing is a trial of the action. There should not be a trial before a trial.
It is convenient to deal with the Sixth Respondent's application under s75. The hurdle to be overcome under s75 is very high. The case for strike out or dismissal must be plain and obvious; clear untenability must be quite apparent: see General Steel Industries Inc v Commissioner for Railways (NSW) [1964] HCA 69; (1964) 112 CLR 125 at 129-30. As Barwick C J said in that case a "plaintiff ought not to be denied access to the customary tribunal which deals with actions of the kind he [she] brings unless his [her] lack of a cause of action ... is clearly demonstrated": at p129. For, as Kirby J said in Lindon v Commonwealth of Australia (No 2)[1996] HCA 14; (1996) 136 ALR 251 at 256 it is "a serious matter to deprive a person of access to the courts of law for it is there that the rule of law is upheld ..." (emphasis added)
In Lindon v Commonwealth (No 2)[1996] HCA 14; (1996) 136 ALR 251, Kirby J in considering the relevant principles to be applied in an application for summary dismissal said at [14]:
Counsel for the insurer submitted that the execution by the insurer of the Terms of Settlement could not be a breach of its duty of utmost good faith owed to the Woods because, at the time the Terms of Settlement were executed, the insurer did not owe them a duty of the utmost good faith. I note in passing that the insurer's solicitors appear to have been actively involved in the settlement negotiations in the earlier proceeding, and drafted the Terms of Settlement. Further, the insurer contends that the evidence does not substantiate the Woods' allegations, but as noted above, a strike out application is not a trial before a trial. An assessment of the evidence can only occur after it has been heard and tested and is a matter for the final hearing.
These propositions are sufficient to satisfy me that this allegation is not untenable or doomed to fail. Whether, under the statutory regime of builders warranty insurance, the insurer owes subsequent owners a duty of utmost good faith does not appear to have been determined. I was referred to a number of authorities by the insurer but these are concerned with the duty of utmost good faith owed by an insurer to the party with which it is engaged in litigation. They are not concerned with how this might affect the insurer's duties and obligations to subsequent owners under a policy of builders' warranty insurance. In Manifest Shipping Co v Uni-Polaris Insurance Co Ltd[2003] 1 AC 469 the court was concerned with the extent of disclosure by the insured during the course of litigation and Allianz Australia Insurance Ltd v Douralis & Ors[2008] VSCA 72 was concerned with the conduct of the insured during the course of litigation. Imaging Applications Pty Ltd & Anor v Vero Insurance Limited & Ors[2008] VSC 178, a very recent decision of the Supreme Court forwarded to the Tribunal by the insurer's solicitors, was concerned with the conduct of the insurer during the course of litigation. After considering whether the duty of utmost good faith continued to apply during the course of litigation, Vickery J concluded that '...the conduct did not constitute a breach of the duty of utmost good faith even if the duty did continue to apply during the course of the litigation'.
Whether the insurer breached its duty of utmost good faith to the Woods, if such a duty was owed to them at the time the Terms of Settlement were entered into, and whether it elected to make good as alleged by the Woods, are not questions to be determined in the absence of hearing all of the evidence and legal submissions. I cannot be satisfied on the material before me that these allegations are 'frivolous, vexatious, misconceived or lacking in substance'.
As a result the Applicants have suffered loss and damage.
In seems to me quite extraordinary to suggest that an insurer, in entering into terms of settlement under which work is to be carried out for the benefit of the insured, whether by the original builder or a nominated builder, manages and arranges the carrying out of building work. I do not consider that this is a matter of evidence, as suggested by Mr Forrest. As indicated to counsel during the hearing, following the decision of the Court of Appeal in Shaw v Yarranova[2006] VSCA 291 it is, in my view, clear that to fall within that definition a person must in colloquial terms be 'getting his hands dirty'. I do not accept the submission by counsel for the Woods that Yarranova is to be read in the context of the dispute before the Court of Appeal: insofar as the definition related to developers under contracts of sale of real estate. As Neave JA observed, after considering the policy goals, and legislative context of the Domestic Building Contracts Act1995 ('the DBC Act') and, most importantly, the interrelationship between it and the registration and insurance requirements for builders under the Building Act1993: