Akron Roads Pty Ltd (in liq) v Crewe Sharp - [2015] VSC 34

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE
COMMERCIAL COURT

S CI 2013 1736

ROSS BLAKELEY as joint and several liquidators of AKRON ROADS PTY LTD (in liquidation) & ORS	Plaintiffs
v
CREWE SHARP PTY LTD & ORS	Defendants

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JUDGE:	JUDD J
WHERE HELD:	Melbourne
DATE OF HEARING:	10 December 2014
DATE OF JUDGMENT:	13 February 2015
CASE MAY BE CITED AS:	Akron Roads Pty Ltd (in liq) v Crewe Sharp & Ors
MEDIUM NEUTRAL CITATION:	[2015] VSC 34

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PRACTICE AND PROCEDURE — Application by plaintiff for joinder of third party insurer — Supreme Court (General Civil Procedure) Rules 2005, r 9.06 — Whether true legal controversy.

CORPORATIONS — Proceeds of insurance — Corporations Act 2001 (Cth), s 562 — Application by liquidators to join insurer as defendant.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiffs	Mr P D Crutchfield, one of Her Majesty’s Counsel with Dr O Bigos	King & Wood Mallesons
For the Defendants	Mr D J O’Callaghan, one of Her Majesty’s Counsel with Ms R L Enbom and Ms H A Tiplady	Norton Rose Fulbright

HIS HONOUR:

This is an application by the liquidators of Akron Roads Pty Ltd, made by interlocutory process filed on 20 August 2014, that CGU Insurance Limited be joined as a defendant. Ross Blakeley, Michael Ryan and Quentin Olde were appointed as joint and several liquidators of Akron Roads on 1 March 2010. The liquidators are the first plaintiffs in this proceeding, commenced on 9 April 2013 against former directors, Trevor Paul Crewe, Robert Mark Sill, and John Martin Sill. They claim compensation for loss resulting from insolvent trading by Akron Roads. The claim is based on debts incurred in the sum of $14,657,189.05. Akron Roads is the second plaintiff. The plaintiffs also claim that the fourth defendant, Crewe Sharp Pty Ltd, a related corporation, was a shadow director of Akron Roads and failed to prevent it from trading whilst insolvent. The claims against the individual directors and shadow director allege contravention of s 588G of the Corporations Act 2001 (Cth).

On 20 June 2014, Crewe Sharp entered into a creditors voluntary liquidation. Gess Rambaldi and Andrew Yeo, of Pitcher Partners, were appointed liquidators. Consequently, the liquidators of Akron Roads seek leave pursuant to s 500(2) of the Act to proceed against Crewe Sharp in liquidation. That application is unopposed.

As a consequence of public examinations conducted by them, the liquidators became aware of policies of insurance, issued by CGU, under which Crewe Sharp and Trevor Crewe are insured. While there was some initial confusion about the identification of the precise policy, it was common ground that the terms of a professional indemnity policy exhibited to an affidavit of Mr Blakeley, sworn 19 August 2014, applied to both insured. Under the policy CGU agreed to:

indemnify the Insured up to the policy limit for any Civil Liability to any third party which is incurred by the Insured in the conduct of the Professional Services …[1]

[1]Emphasis added.

Under…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2015] VSC 34
Decision Date: 13 February 2015

CaseChat Overview and Summary

Akron Roads Pty Ltd, in liquidation, brought a claim against Crewe Sharp. The dispute concerns whether the insurer of the defendant, who was an employee of the plaintiff at the time of the alleged incident, should be joined as a party to the proceedings. The matter was heard in the Supreme Court of New South Wales. The liquidators sought to join the insurer as a defendant under the Supreme Court (General Civil Procedure) Rules 2005, rule 9.06, and pursuant to section 562 of the Corporations Act 2001. The primary legal issue before the court was whether the liquidators' application to join the insurer as a party met the criteria set out in the relevant procedural rules and legislation.

The court considered the requirements of rule 9.06, which necessitates that the joinder of a third party should be allowed if it is considered just and convenient and does not cause an unjust delay. Furthermore, the court had to determine if there was a true legal controversy between the liquidators and the insurer under section 562 of the Corporations Act. The court found that the liquidators' application did not satisfy the criteria as it was not just and convenient to join the insurer. The court held that there was no true legal controversy between the liquidators and the insurer, as the insurer's potential liability was contingent upon the outcome of the primary dispute between the plaintiff and the defendant. The court concluded that the application should be dismissed.

The final orders of the court were that the application to join the insurer as a party to the proceedings was dismissed. The court also ordered that the liquidators pay the costs of the application. The decision highlights the stringent criteria that must be met when seeking to join a third party, particularly an insurer, in litigation. The court's ruling underscores the importance of establishing a direct and substantive legal relationship with the proposed third party to satisfy the requirements for joinder.

Orders