| JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA LOCATION : PERTH CITATION : ACE INSURANCE ASIA PACIFIC LIMITED -v- ZURICH AUSTRALIAN INSURANCE LIMITED [2003] WADC 191 CORAM : GROVES DCJ HEARD : 11 AUGUST 2003 DELIVERED : 4 SEPTEMBER 2003 FILE NO/S : CIVO 96 of 2003 BETWEEN : ACE INSURANCE ASIA PACIFIC LIMITED Applicant
AND
ZURICH AUSTRALIAN INSURANCE LIMITED
Respondent
Catchwords: Practice and procedure - Order 26A, r 4 - Pre-action discovery from a potential party - Turns on own facts
Legislation: Nil
Result: Order for pre-action discovery
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Representation:
Counsel:
Applicant : Ms P E Griffin
Respondent : Mr M M Gismondi
Solicitors:
Applicant : Minter Ellison
Respondent : Mullins Handcock
Case(s) referred to in judgment(s):
Clarkson v Director of Public Prosecutions [1990] VR 745
Davis v Sagar Pty Ltd & Anor, unreported; SCt of WA; Library No 980443; 10 August 1998
Case(s) also cited:
Lonrho Ltd v Shell Petroleum Co Ltd (No 2) [1980] WLR 627
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1 GROVES DCJ: By an originating summons dated 23 May 2003 Ace Insurance Asia Pacific Limited (Ace Insurance) makes application for an order that Zurich Australian Insurance Limited (Zurich) give pre-action discovery of documents "…which are of have been in (Zurich's) possession, custody or power relating to the activities of George Hool at Alcoa of Australia Limited's premises on 28 August 1995".
Background to the application 2 The circumstances giving rise to the application are deposed to in the affidavit of the applicant's solicitor sworn 1 April 2003 as follows: "6. at 28 August 1995 George Hool ('Hool') the plaintiff in District Court Action No 3021 of 1995 was engaged by Amec Services Pty Ltd ('Amec') as a pipe fitter. 7. At all material times Alcoa occupied and controlled premises, Wagerup Refinery ('the Premises') in the State of Western Australia. 8. On 28 August 1995 Hool was walking down a flight of stairs in building 26 ('Building 26') of the Premises when he fell down the flight of stairs and injured himself ('the Accident'). 9. Amec paid entitlements under the Workers Compensation and Rehabilitation Act 1981 (WA) to Hool totalling $128,433.50. 10. Amec has alleged that Alcoa is obliged to indemnify Amec for its workers' compensation payments to the plaintiff, pursuant to section 93 of the Workers Compensation and Rehabilitation Act 1981 ('The Reimbursement Claim'). Pleadings 11. Hool's statement of claim filed on 16 October 1995, alleged that: (a) the accident was caused by Alcoa's breach of statutory duty in that it failed to ensure that Hool did not suffer injury or damage by reason of any danger due to the state of the Premises or anything
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(e) descended the stairs with a general lack of care. 14. Alcoa alleged that Amec was liable to the plaintiff in respect of the Accident, and therefore liable to contribute to the Hool's compensation. Settlement of substantive proceedings 15. Hool, Alcoa and Amec entered into a deed of settlement ("The Deed") on 9 April 1999. 16. The Deed contained the following provisions: (a) The plaintiff agreed to compromise his claim against the defendant for the sum of $230,000 (excluding worker's compensation payments) with costs taxed; and (b) The plaintiff accepted the settlement sum in full satisfaction and discharge of all claims which the plaintiff may have, or otherwise might have had against Alcoa or Amec or against another person in respect of the proceedings, or any cause of action or other matter connected with the proceedings."
Basis of the claim for contribution 3 Amec was insured by Zurich under a public liability policy. This raises a question of dual insurance for the same risk. The principles of rateable contribution between insurers confirm that where two insurers are liable for the same risk, they must contribute rateably towards the payment for that risk. The purpose of seeking pre-action discovery of documents is to enable Ace Insurance to make a decision whether or not to pursue proceedings against Zurich for a rateable contribution towards payment of the settlement sum. 4 Zurich has denied that it is liable for any contribution claim. Zurich has provided copies of its combined general liability policy wording and renewal schedule and renewal quotation for the relevant period. Zurich has also provided a copy of General Conditions of Contract. Ace Insurance has requested any contractual documentation in relation to the
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employment relationship between Hool and Amec, information in relation specifically to two separate contracts between Hool and Amec and also any documents indicating Hool's activities on the date of the accident and the number of the contract in relation to which such activities were undertaken. 5 Zurich has failed or refused to provide any further documentation. The chain of correspondence concludes with Zurich's solicitors stating in their letter of 22 October 2002: "Further, in the circumstances, our client does not wish to incur the costs of investigating this matter when, as previously stated, we consider that your claim for contribution under the principles of dual insurance has no basis."
Power to order pre-action discovery 6 The Rules of the Supreme Court make provision for discovery of documents from a potential party. Order 26A, r 4 provides: "4(1) This rule applies if a person who may have a cause of action against a person whose description has been ascertained ('the potential party') wants – but the person, after reasonable enquiries, has not been able to obtain sufficient information to enable a decision to be made as to whether to commence or take the proceedings. (2) If there are reasonable grounds for believing that the potential party had, has, or is likely to have had or to have, possession of the documents that may assist in making the decision, the person may apply for an order under this rule. (3) The application shall be supported by an affidavit and a copy of both shall be served on the potential party.
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(4) On the application the Court may order the potential party to give discovery of all documents that are or have been in the potential party's possession and that may assist the applicant in making the decision" 7 It is in the interests of justice generally and of the parties in particular that an applicant has available to it as much information as possible before a final decision is made whether to proceed against the potential party or not. The applicant does not have to show that it has a prima facie case entitling it to relief but rather it must put before the Court evidence to show objectively that there is reasonable cause to believe that the applicant either has, or may have, a right to relief against the potential party. (See generally the Commentary on O 26A in Seaman "Civil Procedure Western Australia"). The applicant has a low threshold of proof in establishing that reasonable enquiries have been made: Davis v Sagar Pty Ltd & Anor, unreported; SCt of WA; Library No 980443; 10 August 1998. 8 Order 26A is designed to enable "fishing" to be engaged in and if an application is bona fide and the circumstances required by the rules are shown to exist, the Court has discretionary power to order the discovery: Clarkson v Director of Public Prosecutions [1990] VR 745 at 758. The aim of the order is to ensure that parties commencing litigation do so after careful consideration, rather than proceeding in the hope that something might turn up during the discovery process.
Zurich's contentions in response to the application 9 Zurich's primary submission is that Ace Insurance has not made reasonable enquiries of the party who may reasonably be expected to hold the documents sought, namely Amec. Allied to that is the submission that as a party to the District Court proceedings the documents may well have been available to Ace Insurance as the insurer of Alcoa. Furthermore it is contended that Ace Insurance has failed to verify why the documents, assuming such documents exist, were not sought by it from Amec or Alcoa. 10 It is not incumbent upon a party making application for pre-action discovery to make enquiry of all and sundry who may potentially have a document or documents sought. Ace Insurance has no right of action against either Amec or Alcoa on its potential claim for dual insurance contribution. The issue is not relevant to and does not involve them. Neither of them are a potential party. On the other hand Zurich is the
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potential party and it is apparent from the lengthy exchange of correspondence between solicitors that all reasonable enquiries have been made of Zurich and exhausted. Nor is it any answer to say that the documents may have been available to Ace Insurance as the insurer of Alcoa. Even if they had been available but the opportunity was not then taken to obtain the documents does not mean that the applicant is barred or estopped from now pursuing its enquiries with Zurich. Likewise no explanation is necessary why the documents were not sought from other sources. 11 Zurich also contend that Ace Insurance has failed to show that it has reasonable grounds to believe that Zurich has the documents. In support Zurich points to its solicitor's letter dated 22 October 2003 where it is stated: "We or our client do not have any of the documentation which you have requested…relating to what activities (Hool) may have been undertaking on the day of the accident including reference to the nature of the work done, the time of day it was done and the number of the contract." 12 In what may be regarded as a contradiction of that statement the letter goes on to state: "Our client does not wish to incur the costs of investigating this matter when…we consider that your claim for contribution under the principles of dual insurance has no basis." 13 With respect, the assertion that the claim for contribution has no basis could only have been made, one would reasonably expect if a proper investigation of the matter had been made. Conversely if Zurich has not investigated this matter it is not in a position to assert that the application for pre-action discovery must fail. The correspondence does not displace a reasonably held belief on the part of Ace Insurance that the documents sought are within Zurich's possession, power or control. Indeed, if anything, it confirms it. 14 Finally, Zurich contends that the application is an abuse of process, Ace Insurance having already determined to commence proceedings against Zurich. Despite the "sabre rattling" made in correspondence by solicitors to the effect that they were seeking instructions to commence proceedings that does not assert in fact that a firm decision has been made to in fact commence proceedings. To the contrary the correspondence demonstrates some frustration on the part of the applicant's solicitors in
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endeavouring to get responses to the matters raised from Zurich's solicitors. What is apparent also is that they have pursued the matter as far as they can with Zurich's solicitors to no avail. It is apparent that a final decision has not been taken to commence proceedings and that in fact Ace Insurance is reluctant to do so without the benefit of the information sought. It has been thwarted in that process by Zurich's intransigence and hence the necessity to make the application before the Court.
Conclusions 15 I am satisfied on the information before the Court that there is reasonable cause to believe that Ace Insurance may have a right to relief against Zurich. It is not necessary to show that it has a prima facie case entitling it to relief. It may be that on discovery of the documents sought that in fact no question of dual insurance arises. If that is so then that will be the end of the matter. On the other hand if the documentation does suggest dual insurance then Ace Insurance as will be its right may then issue proceedings. 16 In the circumstances I am satisfied that the proper administration of justice warrants pre-action discovery being ordered. 17 I will hear the parties as to the terms of the orders.
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