AMP Life Ltd v Lehmann

[1999] WASC 274

AMP LIFE LTD -v- LEHMANN & ANOR [1999] WASC 274

Jurisdiction:	SUPREME COURT OF WESTERN AUSTRALIA	Citation No:	[1999] WASC 274
Case No:	CIV:2469/1999	Heard:	30 DECEMBER 1999
Coram:	McKECHNIE J	Delivered:	31/12/99
No of pages:	11	Judgment Part:	1 of 1
Result:	Application refused
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Parties:	AMP LIFE LTD (ACN 079 300 379) DALVENE KAYE LEHMANN ELEVION PTY LTD (ACN 009 375 544)
Catchwords:	Mareva order Lack of complete disclosure by plaintiff No evidence that defendant intends to defeat the processes of the Court No new principles
Legislation:	Nil
Case References:	Cardile v LED Builders Pty Ltd [1999] HCA 18, (1999) 73 ALJR 657 City of Burnside v Attorney-General of South Australia (1994) 63 SASR 65

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

IN CHAMBERS

CITATION : AMP LIFE LTD -v- LEHMANN & ANOR [1999] WASC 274 CORAM : McKECHNIE J HEARD : 30 DECEMBER 1999 DELIVERED : 31 DECEMBER 1999 FILE NO/S : CIV 2469 of 1999 BETWEEN : AMP LIFE LTD (ACN 079 300 379)

Plaintiff

AND

DALVENE KAYE LEHMANN
First Defendant

ELEVION PTY LTD (ACN 009 375 544)
Second Defendant

Catchwords:

Mareva order - Lack of complete disclosure by plaintiff - No evidence that defendant intends to defeat the processes of the Court - No new principles

Legislation:

Nil

Result:

Application refused

(Page 2)

Representation:

Counsel:

Plaintiff : Mr M F Dwyer
First Defendant : Mr H O Moser
Second Defendant : Mr H O Moser

Solicitors:

Plaintiff : Corrs Chambers Westgarth
First Defendant : Bradford & Co
Second Defendant : Bradford & Co

Case(s) referred to in judgment(s):

Cardile v LED Builders Pty Ltd [1999] HCA 18, (1999) 73 ALJR 657

Case(s) also cited:

City of Burnside v Attorney-General of South Australia (1994) 63 SASR 65

(Page 3)

McKECHNIE J:

Introduction

1 This is an application for an interlocutory injunction. The matter arises in this way: Ms Lehmann, or her company Elevion Pty Ltd, was for some years an AMP agent and, as such, she was eligible to and did join the AMP Agents' Income Protection Plan. Just what were the conditions of that plan may be a matter of debate but at all events she was entitled to payments if she became disabled by accident or illness. Unfortunately, on 13 April 1992, she underwent surgery which went wrong. As a result, she became eligible for benefits which, until discontinued on 30 July 1997, amounted in total to $169,829.51.

2 In 1995 she commenced an action in the District Court for negligence against the doctor who conducted the operation. In a consent judgment, dated 10 December 1999, she received $350,000.

The plaintiff's basis of claim

3 The plaintiff asserts that it is entitled to claim the amount it has paid to Ms Lehmann as moneys had and received for the benefit of the plaintiff or as of right pursuant to the law of subrogation. It has instituted these proceedings as a matter of urgency because on 24 December 1999 Ms Lehmann's solicitors advised the plaintiff's solicitors of their receipt of the District Court damages and their instructions to pay the moneys to her.

4 The plaintiff asserts that it is entitled to recover against Ms Lehmann essentially on two bases. The first is that the contract of insurance is an indemnity contract. Under general principles of subrogation, Ms Lehmann must therefore repay the moneys received. The second basis is that the contract itself requires an offset in respect of the damages.

5 The plaintiff asserts that Ms Lehmann applied to join the plan on or about 12 December 1988. A brochure outlining the plan was produced in evidence. The brochure refers to a trust deed. The trust deed put in evidence is dated 9 November 1989.

6 While one may speculate as to the true position, there is before the Court no clear evidence that Ms Lehmann was bound under the terms of the trust deed produced. The plaintiff asserts that she was so bound. It is necessary to examine the trust deed.

(Page 4)

7 Under a heading entitled "Applications of Contributions", cl 3 provides, in particular items (2) and (3):

"(2) The Trustees shall arrange with the Society for the benefits to be provided by means of a Policy of such form as is from time to time agreed upon by the Trustees and the Society and the Trustees shall from the moneys in their hands available for this purpose pay to the Society the premiums under the Policy.

(3) When for any reason a benefit becomes payable to or in respect of a Member in accordance with this Deed and the Rules the Trustees shall subject to the terms and conditions of the Policy receive from the Society the amount so payable."

8 The rules under the heading "Payment of Benefits on Disablement" require the trustees to pay or apply the benefit payable under the plan to or for the benefit of the member. Rule 7 allows for the trustees to redetermine the benefits, whereupon any difference shall be paid by the member to the trustees or the trustee to the member, as the case may be.

9 Before examining the merits of any other issue, it seems to me that the plaintiff has failed to prove it has a sufficient contractual relationship with Ms Lehmann to maintain its claim against her. The plan which is relied on is a trust placing obligations on trustee and member. No argument has been addressed as to whether the rights and obligations extend to or from the plaintiff.

10 On the present state of evidence, the application should fail at this point. However, such a course may be wasteful as the proper plaintiffs could no doubt recommence an action and seek an injunction, so I propose to deal with the other matters put in issue by the parties on the basis that the plaintiff is the proper plaintiff. If any of the arguments for the plaintiff are sufficiently strong to otherwise justify an injunction, I will adjourn the application to enable the plaintiff to take steps to clarify or rectify its position.

(Page 5)

Serious question to be tried

(a) Is the policy a contract of indemnity?

11 The plaintiff's first basis of claim is that the plan is a policy of indemnity insurance. The evidence is that the plan is contained in the trust deed and rules to which reference has already been made.

12 Counsel for Ms Lehmann puts in issue whether the insurance plan is an indemnity contract and asserts it is a contingency contract of insurance. It does not in any event appear to be a full indemnity contract. Counsel for Ms Lehmann concedes that there is an arguable case and that the plaintiff has established a serious issue to be tried, although he submits the likelihood of success is not great.

13 In my view the plaintiff has established a serious question to be tried. In the absence of detailed argument on the point, I am not prepared to comment on the likelihood of ultimate success.

(b) Does the trust deed require a refund from the defendant?

14 The second basis of claim raised by the plaintiff is whether the trust deed and rules require an offset or refund. Ms Lehmann has recovered a sum by way of damages. The plaintiff asserts that r 6(2)A requires Ms Lehmann to reimburse the plaintiff the amounts so received.

15 Consideration of the submission must commence with the deed cl 8 which states, under the heading "Damages and Compensation":

"Nothing in this Deed or in the Rules shall in any way affect the right of a Member or his or her personal representatives or other person to claim damages or compensation by common law or under a Workers' Compensation Act or any other statute in force governing compensation to a Member injured or dying from an accident arising out of or in the course of his or her agency with the Society or of his or her employment by a company which is an Agent of the Society and except as provided in the Rules the amount payable in terms of this Deed and the Rules shall not be reduced by reason of any payment of damages or compensation as aforesaid".

16 Unless the payment of damages to Ms Lehmann falls within a rule, then she is not obliged to repay the money. The plaintiff claims that the

(Page 6)

relevant rule is r 6. Under that rule, the disability payment is offset by payment under another policy of disability insurance, income earned on commission, a war pension or under r 6(2)A(b), which is said to be the relevant subrule, and which states:

"as compensation for bodily injury or sickness and any amount in respect of which the Member has made or is entitled to make a claim (except any amount received or receivable as a reimbursement for hospital and medical expenses incurred) as compensation as aforesaid for bodily injury or sickness including all amounts under any Workers' Compensation law or provision or as a pension social services pension or payment or other amount payable or which would be payable by the Commonwealth of Australia or by a State or Territory of that Commonwealth; and"

17 I do not consider that this provision is wide enough to cover an award of damages. Clause 8 differentiates between damages and compensation. Rule 6(2)A(b) speaks only of compensation. In the context of a disability plan providing income by way of monthly payments fixed as a percentage of overall income, it makes sense to offset similar types of income payments, especially during the course of those payments.

18 Counsel for Ms Lehmann concedes that there are arguments both ways on the point but asserts there is not a strong likelihood of success by the plaintiff.

19 There is an arguable case for the plaintiff. However, before proceeding further, it would be well advised to examine the basis of its claim under this head and whether it has sufficient prospect of success to justify further pursuit.

Duty of disclosure

20 The plaintiff's application was originally to be ex parte because of difficulties in service of process over the Christmas break. In the event, service was able to be effected. In the affidavit affirmed in support, the solicitor for the plaintiff dealt with the issue of communications between the parties at par 21 and par 22, where he stated:

"21. The plaintiff has attempted to negotiate a resolution of the plaintiff's claim against the defendants. In essence the

(Page 7)

plaintiff says the plan is an indemnity policy by nature (and accordingly the law of subrogation applies) whereas the defendants say the plan is not an indemnity policy.

22. Negotiations which had been continuing for a substantial period of time culminated in a facsimile dated 24 November 1999 from me to the defendants' solicitors in which notice was given of an action to be commenced by the plaintiff against the defendants claiming the return of the moneys. I also suggested the moneys be placed in a joint account in the name of the solicitors pending the resolution of the action. Annexed hereto and marked with the letter 'MFD5' is a copy of the facsimile dated 24 November 1999.

21 Subsequent paragraphs in this affidavit dealt in detail with the interchanges between the parties' solicitors from 25 November to 29 December 1999. Ms Lehmann has filed an affidavit in opposition to the claim for an injunction, annexing inter alia correspondence commencing as long ago as 6 March 1996 where her solicitor said:

"I have referred your letter to my client and she is keen to finalise the smooth processing of her claim, including any aspects that relate to the AMP Society.

In that regard, I would be obliged if you could forward to me further details of what it is proposed your client will be claiming under it's [sic] subrogated claim.

Please treat this as a matter of urgency."

On 15 April 1996, the solicitors wrote:

"… my client intends to compromise her claim against Dr Lim without your client's instructions or directions and your client should take whatever steps it considers necessary."

22 Further correspondence between the parties followed, in which their respective positions as to the matters of law were made clear. On 4 September 1997, her new solicitors wrote:

"… if there is anything further to be done in this regard it should be done by way of court action enforcing your client's rights. We are instructed to accept service …"

(Page 8)

23 On 27 July 1999, after the matter had further developed, Ms Lehmann's solicitors wrote:

"If you do intend to exercise any rights against my client in a separate action, you should proceed with such action forthwith."

24 The plaintiff seeks an interlocutory injunction to restrain Ms Lehmann from her removing from this Court's jurisdiction, or transferring, disposing or otherwise dealing with damages to the value of $169,829.51. The basis for the injunction is outlined in the written submissions as follows:

"8. The defendants deny the plaintiff's entitlement to be reimbursed the monthly benefit paid pursuant to the plan.

9. In the absence of an injunction, there is nothing to prevent the defendants from dissipating the whole of the District Court damages received.

10. In the absence of a fund being preserved there is a real risk the plaintiff will be deprived of the opportunity to successfully recover the moneys."

25 The sole evidence in support of these submissions seems to be the letter of Ms Lehmann's solicitors dated 23 December 1999 received the next day by the plaintiff's solicitors, where it is said:

"Our client has specifically instructed us that we are to pay the settlement monies to her forthwith. … We suggest you immediately issue whatever proceedings against our client that you consider necessary."

26 There is a heavy obligation on a plaintiff and those advising it to ensure that all relevant material is put before a court when there is a prospect of an ex parte hearing. The letter of 23 December 1999 must be seen in the context of the previous communications.

27 The past correspondence from Ms Lehmann's solicitors was very relevant to the issue as to the likelihood of her acting to defeat the processes of the Court. It shows constant invitations to the plaintiff well prior to settlement of her District Court action to have the issue resolved in court. It shows that she was acting with advice and renders less likely any inference that she would act improperly in respect of the plaintiff's

(Page 9)

claims. The correspondence should have been disclosed by the plaintiff but was not.

28 Although the matter did not in the event proceed ex parte, the plaintiff's conduct is nevertheless relevant to the issue whether the Court's equitable jurisdiction should be excited on its behalf. As a matter of discretion, I would refuse the injunction because of the conduct of the plaintiff in failing to make full disclosure.

Delay

29 The plaintiff argues that it could not have taken action until the defendant's action had been settled because the claim had not crystallised. With respect, I disagree. The issues involving the interpretation of the trust deed are not complex, require no evidence and are well placed for an originating summons for a declaration. This could have been made at any time.

30 No doubt the plaintiff is entitled to take a commercial view that it may be prudent to do as it has done and wait to see whether there are actually any funds to recover. However, in doing so, it has allowed Ms Lehmann to underwrite entirely the litigation and take all the risk. She having been successful, the plaintiff now seeks to force her to place nearly half of her settlement in escrow for an undetermined time.

31 I do not regard the plaintiff's conduct as delay in the sense often used to defeat an application for an injunction but I do regard the history of the matter as relevant to the question of discretion. On this ground, an exercise of discretion does not favour the plaintiff.

Risk of dissipation of assets

32 In Cardile v LED Builders Pty Ltd [1999] HCA 18, (1999) 73 ALJR 657, the High Court examined the nature of Mareva orders. At par 51 of the joint judgment they quoted with approval from the New South Wales Court of Appeal as follows:

"We agree with the tenor of what was said with particular respect to Mareva relief before judgment by the Court of Appeal of New South Wales (Mason P, Sheller JA, Sheppard AJA) in Frigo v Culhaci, unreported, 17 July 1998 at 10-11. See also the observations as to the need to care by

(Page 10)

Dixon J, with respect to the writ of ne exeat colonia in Glover v Walters (1950) 80 CLR 172 at 175-176:

'[A Mareva order] is a drastic remedy which should not be granted lightly…

A [Mareva order] is an interlocutory order which, if granted, imposes a severe restriction upon a defendant's right to deal with his or her assets. It is granted at the suit of a plaintiff whose status as a creditor is in dispute and who need not be a secured creditor. Its purpose is to preserve the status quo, not to change it in favour of the plaintiff. The function of the order is not to [Abella v Anderson [1987] 2 Qd R 1 at 2-3, per McPherson J]


"provide a plaintiff with security in advance for a judgment that he hopes to obtain and that he fears might not be satisfied; nor is it to improve the position of the plaintiff in the event of the defendant's insolvency" …

Many authorities attest to the care with which courts are required to scrutinise applications for [Mareva orders]. The leading decision in this State is Patterson v BTR Engineering (Australia) Pty Ltd (1989) 18 NSWLR 319."

33 The plaintiff has failed to provide any evidence of the need for an injunction in the terms sought by it. While every plaintiff would no doubt like the ability to have a defendant set aside sufficient moneys to satisfy a possible judgment in due course, that is not and never has been the proper purpose of an interlocutory order requiring the defendant to preserve assets. Cogent evidence would need to be required as to the defendant's determination to defeat the processes of the Court before any order could be considered.

34 In the present case, there is not a shred of evidence to suggest that Ms Lehmann intends to act improperly. The history shows that at all times she has been aware of the plaintiff's claim and has conducted herself appropriately in respect of it, corresponding through her solicitors, rejecting the basis of the claim but inviting its determination in court.

35 In addition, she has sworn that she is ordinarily resident in the jurisdiction and has been so all her life. She has assets within the jurisdiction which are sufficient to cover any judgment which the plaintiff

(Page 11)

might obtain, and that she has no intention of frustrating the claim. She has sworn that she intends to defend the claim and bring a counterclaim in respect of what she asserts is the wrongful cessation of payments.

36 The plaintiff complains that these proceedings were made necessary because Ms Lehmann and her solicitors refused to pay the money into a joint account pending the outcome of the trial. I ask rhetorically: Why should she? She has taken action against a doctor for an injury done to her and received a settlement for it. She has emphatically rejected the plaintiff's claims for the money. The resolution of the claim may be some way off. She has no legal obligation to set the sum aside in these circumstances.

37 Leaving aside all the other reasons I have outlined why I would refuse this injunction, the plaintiff's application in seeking an injunction in the nature of a Mareva order in the circumstances of this case, where it has put forward no cogent evidence, is close to being contumelious. I dismiss the application.