Andy Haridemos and Maria Haridemos v Insurance Australia Limited (Trading as NRMA Insurance)
[2012] ACTSC 12
•31 January 2012
ANDY HARIDEMOS AND MARIA HARIDEMOS v INSURANCE AUSTRALIA LIMITED (TRADING AS NRMA INSURANCE)
[2012] ACTSC 12 (31 January 2012)
PRACTICE AND PROCEDURE – pleadings – particulars – whether paragraph of defence asserting that the plaintiffs will be able to prove their case should be struck out as embarrassing – whether Markus discretion extends to relieving insurer from requirement to plead and give particulars of asserted breaches by insured of terms of policy.
Court Procedures Rules 2006, rr 407, 430, 434
Markus v Provincial Insurance Co Ltd (1983) 25 NSWCCR 1
Marsden v Amalgamated Television Services Pty Ltd [1999] NSWSC 428
Broadwater Taxation and Investments Services Pty Ltd v Hendricks (unreported, Santow J, Supreme Court of NSW, Equity Division, 9 September 1993)
Kon v AMP Life Limited [2006] NSWSC 957
Halpin v Lumley General Insurance Limited (2009) 78 NSWLR 265
Re An Application Under s 73 of the Civil Law Wrongs Act [2] [2011] ACTSC 26
No. SC 807 of 2009
Master Harper
Supreme Court of the ACT
Date: 31 January 2012
IN THE SUPREME COURT OF THE )
) No. SC 807 of 2009
AUSTRALIAN CAPITAL TERRITORY )
BETWEEN: ANDY HARIDEMOS
First Plaintiff
MARIA HARIDEMOS
Second Plaintiff
AND:INSURANCE AUSTRALIA LIMITED (TRADING AS NRMA INSUARANCE)
Defendant
ORDER
Judge: Master Harper
Date: 31 January 2012
Place: Canberra
THE COURT ORDERS THAT:
the action be stood over to 24 February 2012 for further directions.
This is an application by the plaintiffs for further and better particulars of the defendant’s defence, and for an order striking out a paragraph of the defence as embarrassing.
The case for the plaintiffs is that their Porsche Cayenne S four-wheel motor vehicle was comprehensively insured under a policy issued by the defendant; that the vehicle was stolen; and that the defendant refuses to meet their claim.
Factual background
The plaintiffs are a married couple with four school-aged children. They own and live in a large two - to three-storeyed house on a very large block of land in a inner southern suburb of Canberra. The first plaintiff owns and runs a supermarket at a suburban shopping centre in the north of Canberra. He works very long hours, often leaving for work before the rest of the family are awake, and not returning home until late in the evening, sometimes as late as 1:00 am. He has a motor vehicle which is effectively for his own use exclusively.
The second plaintiff is not employed, and looks after the household and the family. She drives the children to school in the mornings and collects them in the afternoons, and takes them to sporting and other activities after school.
In March 2006 the plaintiffs bought the insured motor vehicle through a Canberra dealer with the assistance of funding provided by Wespac Banking Corporation. The purchase price was $148,471.82, less $48,000.00 by way of trade-in of another vehicle. It seems that the Porsche was not immediately insured with the defendant. There is a suggestion that it was initially insured with another company. It is unclear when the change to the defendant took place, but it is common ground that there was at the time of the alleged theft a comprehensive motor vehicle insurance policy in force for the period 7 April 2009 to 7 April 2010, providing for an agreed value for the vehicle during that policy year of $103,670.00 with claims being subject of an excess of $600.00.
The second plaintiff says that on the afternoon or evening of Thursday 14 May 2009, she parked her car on the driveway level with the front door of her house, and locked it. It was presumably still there when her husband got home from work at about 1:00 am on the morning of Friday 15 May 2009, as it was his practice to park behind his wife’s car in the driveway. The plaintiffs say that when the first plaintiff got up in the morning and went out to drive to work, he observed that his wife’s car was not there. Their case is that it must have been stolen during the night, presumably at some time between about 1:00 am when the husband got home and about 7:30 am when he went out and noticed that it was missing.
The driveway at the home of the plaintiffs is a semi-circular one with two crossings of the footpath and verge to the street frontage. Each driveway entrance has a high and substantial barred metal gate which is generally operated electronically. The second plaintiff says that she kept a remote control device for the gates in her car. It was the practice of both husband and wife to keep the gates locked, opening and closing them only to drive in and out. There was also a manual control near each gate, which the second plaintiff says was used by a gardener and occasionally by the children.
The plaintiffs reported the theft to the police, and made a claim under the insurance policy. The insurer refused to meet the claim.
On or about 26 August 2009 the second plaintiff was notified that the Porsche had been found in the suburbs of Canberra. They notified the defendant insurer, which took possession of the vehicle and seems to have had possession of it since. There is a suggestion that the vehicle had been damaged when found but I have no information about the extent of the damage. The plaintiffs say that the defendant has not returned the vehicle to them or told them where it is. The defendant says that it has offered to deliver the vehicle to a location nominated by the plaintiffs at no cost and they have not responded to this offer.
The pleadings and the request for particulars
The proceedings were commenced in September 2009 by originating claim with a statement of claim attached. Initially the plaintiffs sued the wrong company (a related company in the same group). This was put right with an amended originating claim in December 2009. A defence to that statement of claim was filed in January 2010. The solicitors for the plaintiffs sought further and better particulars of the defence. Some were supplied but a dispute arose as to others. The plaintiffs’ solicitors filed an application in March 2010 seeking the disputed particulars, and also seeking an order that a paragraph of the defence be struck out as embarrassing and not capable of being pleaded to.
Unfortunately the pressure of the business of the court was responsible for extended delays in the application being heard. In April 2010 Refshauge J was informed that the hearing would probably take more than two hours, and gave the parties leave to approach the List Clerk to fix a date. The hearing of the application was fixed for 10 June 2010 before me but was not reached on that date. It came back into my list on 11 February 2011, but was again unable to be reached. The application was heard on 18 February 2011. Regrettably because of the continuing pressure of the civil load of the court this decision is being handed down almost a year after the hearing.
The time prior to hearing was utilised to some benefit by the parties in narrowing the issues. The solicitors for the defendant provided to the solicitors for the plaintiffs a draft amended defence. Although leave to file this document has not been granted, the hearing proceeded on the basis that this would become the defence on which the defendant would go to trial. By the time of the hearing, there were two paragraphs of the defence about which there remained a dispute between the parties.
The first of the paragraphs in dispute was;
No breach of Policy
1. Further or in the alternative, and in answer to the whole of the amended statement of claim, the defendant says that in all the circumstances of the case, the plaintiffs are and will be unable to discharge their evidentiary and persuasive burden of establishing on the balance of probabilities:
(a) that the vehicle was the subject of theft or attempted theft in a way that results in the relevant activation of the Policy; and
(b) that the defendant breached the Policy by failing to pay the claim made by the plaintiffs pleaded in paragraph 10 in the Amended Statement of Claim
The particulars sought of this paragraph were:
As to paragraph 21
4. Paragraph 21 has the appearance of a submission rather than a pleading, and the Plaintiffs reserve their right to have it struck out on that ground. Prior to determining whether to do so please advise all the acts, facts, matters and/or circumstances by reason of which it is alleged that the Plaintiffs are/or will be unable to discharge their evidentiary and persuasive burden of establishing on the balance of probabilities:
(a) that the vehicle was the subject of theft or attempted theft in a way that results in the relevant activation of the policy, and/or
(b) that the defendant breached the policy by failing to pay the claim made by the Plaintiffs.
In addition to seeking these particulars, the solicitors for the plaintiffs have also or as an alternative, asked for an order that the paragraph be struck out as embarrassing.
The other paragraph of the defence to be considered is;
Not Truthful and Frank and failure to co-operate
22. Further and in the alternative, and in answer to the whole of the Amended Statement of Claim, the defendant says:
(a) it was an express written term of the Policy that the defendant could refuse a claim, cancel the Policy or do both, if the plaintiffs, or anyone seeking cover under the Policy, were not truthful and frank in any statement made in relation to or in connection with a claim (the “Not Truthful and Frank Term”);
(b1) it was an express term of the Policy that the plaintiffs were required to co-operate fully with the defendant by providing all information, documents and help needed by the defendant to deal with the plaintiffs’ claim (the “Co-operation Term”);
(b2) it was an express term of the Policy that, if the plaintiffs did not co-operate, the defendant was entitled to not pay the relevant claim, in full or at all;
(c) in making and/or maintaining the claim pleaded in paragraph 10 of the amended statement of claim, the plaintiffs have breached the Not Truthful and Frank Term and the Co-operation Term:
Particulars of 20 (c)
Breach of the Not Truthful and Frank Term
(i) during an interview with a representative of the defendant (Joseph Khalifieh) on 30 July 2009, the second plaintiff informed the defendant that the key to the vehicle which the plaintiffs had provided to the defendant during the claims process was the key which she had regularly used for almost the entire period of the plaintiffs’ ownership of the car.
(ii) further particulars of the plaintiffs’ breach of the Not Truthful and Frank Term will be provided after the close of the plaintiffs’ case;
Breach of the Co-operation Term
(iii) despite the defendants’ repeated requests, the plaintiffs have refused to provide the defendant with financial records which the defendant requires for the purposes of its investigations into the claim.
(iv) the defendant repeats particulars (i) and (ii) above.
(d) As a consequence of the matters pleaded in sub-paragraphs 20(a), 20(b1), 20(b2) and 20(c) of this defence and paragraphs 7 and 21 of this defence, the defendant:
(i) has and is entitled to refuse the claim pleaded in paragraph 10 of the amended statement of claim, and
(ii) is not obliged to pay the plaintiffs the insured sum claimed in the amended statement of claim or any other sum pursuant to the Policy or at all.
The particulars requested of paragraph 22 were sought prior to the most recent foreshadowed amendments. They were sought as follows:
As to paragraph 22 (c)
5.Please advise precise particulars of the statement or statements to use the language of paragraph 22(a) made by the plaintiffs or either of them which is alleged to be not truthful and frank, stating whether either or both of those alternatives is relied upon.
6.Please advise all the acts, facts, matters and/or circumstances by reason of which it is alleged that any statement referred to in answer to 5 above is not:
(a)truthful and/or
(b)frank.
As I have mentioned previously, when these particulars were sought the defence was in somewhat different terms. In particular, the Co-operation Term had not been pleaded, and no breach of that term had been alleged. The most recent amendments to the defence were foreshadowed only during the course of the application, and I recognise that the plaintiffs may later seek, and may be entitled to, further and better particulars of the allegations about the Co-operation Term.
The submissions of the defendant about the Not Truthful and Frank Term
Counsel for the defendant submits that the defendant should not have to provide further particulars of the Not Truthful and Frank Term until the plaintiffs have given their evidence in chief.
The defendant has not pleaded fraud on the part of the plaintiffs, but rather has denied their assertions about the alleged theft of the vehicle, and put them to proof. There is no question that this is a course open to the defendant.
The argument of the defendant about particulars is that if it is required to provide them, this will disclose the defendant’s case in such a way as to provide the plaintiffs with an opportunity to tailor their evidence to their advantage.
Counsel for the defendant concedes that there is thus far no authority in the decided cases for the proposition that a party may be relieved of the usual obligation to provide further and better particulars of a pleading on this ground. There are a number of decisions supporting the proposition that a party will not be required to serve witness statements or affidavits which would be likely to have that effect, and other authorities to the effect that in certain circumstances a party may be denied access to documents produced on subpoena which might have a similar effect. Counsel for the defendant submits that the ratio of these cases should be extended to exempt, in present circumstances, an insurer from having to provide particulars to its insured which would put the insured on notice of aspects of the insurer’s case which might enable a fraudulent insured to tailor its evidence to its advantage, depriving the insurer of the benefit of confronting the insured with these matters during cross-examination.
The confidential material
Counsel for the defendant handed up and sought to rely on an affidavit of his instructing solicitor, Mr D Fernando, sworn on 10 February 2011, without being required to serve a copy on the plaintiffs, and on the footing that the affidavit, and a set of supplementary written submissions referring to evidence emerging from the affidavit, would be quarantined from inspection by the plaintiffs’ solicitors. Counsel for the plaintiffs objected to the affidavit evidence and the supplementary submissions being received, but accepted that I would need to read them to rule on the objection. I have done so in the course of preparing these reasons. I can say without causing any disadvantage to the defendant that the affidavit annexes a copy of the invoice for the purchase of the Porsche by the plaintiffs on 31 March 2006, and a transcript of a record of interview between Mr Khalifeh, an investigator instructed on behalf of the defendant, and the second plaintiff, conducted at the office of the plaintiffs’ solicitors on 31 July 2009. Mr Walker, the solicitor with the conduct of the matter at that firm, who appeared as counsel for the plaintiffs on the hearing of the present application, was present at the interview and, according to the transcript, recorded it separately. The affidavit has two other annexures which I shall not identify in these reasons. I see no reason not to disclose a description of these annexures, having regard to the fact that the plaintiffs must have been involved in the purchase of the Porsche, and the second plaintiff and Mr Walker as her solicitor participated in the interview with Mr Khalifeh. That interview took place over a period of about two hours on a Friday afternoon, and the transcript runs to seventy-eight pages.
I can see no reason why copies of the invoice and the transcript should not be made available to the plaintiffs’ solicitors during the discovery process.
The solicitors for the plaintiffs have since informed the court that they do not press request 6 as to paragraph 22 (c) of the defence. Counsel for the defendant concedes that in the normal course the plaintiffs would be entitled to further particulars of the breach of the Not Truthful and Frank Term. He submits, however, that in the unusual circumstances of this case, the defendant should not be required to provide those particulars until the plaintiffs have closed their case at trial. Counsel submits that the circumstances are analogous to the discretion said to have developed from the decision of Clarke J in Markus v Provincial Insurance Co Ltd (1983) 25 NSWCCR 1. Most of the cases, including Markus, have arisen from refused claims under insurance policies. In Markus, the plaintiffs sought production for inspection of three reports by a loss assessor retained by the defendant insurer in the course of discovery. The insurer claimed privilege. Clarke J accepted that the two later reports were privileged, but found that the first was not. The report contained results of discussions with police officers and other persons, together with hypotheses based on those discussions. Clarke J held that the report was of such a nature that its material would not enable the plaintiffs to be in a better position from the point of view of presentation of their case at trial. Allowing them to see the document would put them on notice of the allegedly suspicious circumstances, enabling them to tailor or endeavour to tailor their evidence to meet the circumstances. Clarke J acknowledged that production of the report to the plaintiffs might increase the likelihood of settlement, but concluded that this was outweighed by the greater interest of ensuring that the court gave justice between the parties. His Honour declined to order production of the report.
The Markus discretion has been exercised to refuse a party leave to inspect documents produced on subpoena (Marsden v Amalgamated Television Services Pty Ltd [1999] NSWSC 428 per Levine J) and to exempt a party from a requirement pursuant to a direction that certain affidavits be served before trial (Broadwater Taxation and Investments Services Pty Ltd v Hendricks (unreported, Santow J, Supreme Court of NSW, Equity Division, 9 September 1993); Kon v AMP Life Limited [2006] NSWSC 957 per Barrett J). The principles to be applied were explained in some detail by Sackville AJA, with whom Tobias and Basten JJA concurred, in Halpin v Lumley General Insurance Limited (2009) 78 NSWLR 265. The discretion, it was held, could be exercised so as to permit a defendant insurer to withhold service of affidavits relating to investigations supporting a defence that the insured had provided false information to induce payment of the claim, notwithstanding the regime under the Civil Procedure Act 2005 (NSW) and the Uniform Civil Procedure Rules 2005 (NSW). A number of these authorities were cited with approval by Refshauge J in Re An Application Under s 73 of the Civil Law Wrongs Act [2] [2011] ACTSC 26, where his Honour dealt with the interaction between the Markus discretion and specific provisions contained in the Civil Law Wrongs Act as to non-disclosure of documents where fraud is suspected.
I am in no doubt that the court has the power to make the order for particulars sought by the plaintiff and also the power to refuse the application. Rule 434 of the Court Procedures Rules 2006 provides that a party may apply to the court for an order for better particulars of a pleading, and that the court may make any order it considers appropriate on such an application.
Consideration of the issues
There is no question that the Markus discretion is available in the Australian Capital Territory to exempt a party from a requirement under a direction to serve an affidavit or a witness statement on the other side. The discretion also permits the court to grant leave to one party to inspect documents produced on subpoena or notice for non-party production but to refuse that leave to the other party. The discretion may be exercised where two major criteria are satisfied, as identified by Barrett J in Kon v AMP Life Limited:
[10] In each of these cases the material in question was withheld. There were two main reasons. The first was that the material was not of a kind that could assist the deprived party in the formulation and presentation of its own case. It was of such a nature that it could be of assistance only to the applicant in meeting the case made by the deprived party and, depending upon what came out in the deprived party’s case, it might not even be relied on for that purpose. In other words, the evidence in question might, after the close of the deprived party’s case, be seen to be of no use in any event.
[11] The second point was that the material was of such a nature that it would, if made available, tend to tempt the deprived party to tailor its evidence or at least consider doing so.
However, so far as my researches extend, and as far as I have been taken to authorities by counsel, the discretion has been exercised only in relation to affidavits, witness statements and documents produced on discovery or subpoena. There is, as far as I can ascertain, no instance of the discretion having being exercised to exempt a defendant from the obligation to provide proper particulars of its defence, still less to omit particulars which would in the normal course be included in the pleading itself. I am not in a position to say that there might not be circumstances where the discretion would be held capable of extending in such a fashion, but I am not persuaded that this is such a case.
I should firstly say that I accept that the defendant has not in its defence asserted fraud on the part of the plaintiffs. All that the defendant has done is to put in issue the assertion by the plaintiffs that they are entitled to payment of their claim under the policy.
However, the defendant has in paragraph 22 of the proposed amended defence made a positive assertion that the plaintiffs have committed a breach of the Not Truthful and Frank Term (and also a breach of the Co-operation Term) in the policy. Where a defendant in a defence makes a positive assertion, it must include in the pleading particulars necessary to define the issues for, and prevent surprise at, the trial, and to enable the opposite party to identify the case the pleading will require them to meet: Rule 430. Additionally Rule 407 requires a breach of contract to be specifically pleaded, and also any fact from which a breach of contract is claimed to be an inference. Further particulars beyond those required by the rules to be included in the pleading may be given by correspondence.
I am satisfied that the plaintiffs are entitled to precise particulars of the statement or statements said to have been made by them or either of them which is or are alleged to be not truthful or frank, stating whether either or both of those alternatives is relied upon.
I am conscious, also, of the fact that an insured under a policy might be found not to have been frank in connection with a claim by omission, as opposed to an untruthful or less than frank statement. If the defendant’s case in relation to the Not Truthful and Frank Term is that the defendants or either of them was not frank by virtue of omitting to tell the defendant something they were required under the policy to tell the insurer, then it seems to me that the defendant must give particulars of the asserted omission.
If these particulars are not provided, the issues for trial will not have been defined. The plaintiffs will not know the case that the defence, in that regard, requires them to meet.
I am not persuaded that the plaintiffs are entitled to the particulars requested in request 6 in their solicitors’ letter of 3 February 2010. It will be enough if the defendant identifies statements made by the plaintiffs or either of them which it says are not truthful or not frank. It need not go further and explain why.
The proposed amended defence has not yet been filed. It may be that after consideration of these reasons the defendant will decide not to persist with paragraph 22 of its proposed defence. If it does so, it will of course be at risk of a further application for particulars of the asserted breach of the Co-operation Term, if particulars are requested and not provided. Those advising the defendant may on consideration come to the view that the balance of the defence will be adequate for the defendant’s purposes, and that it need not take on an obligation to make out the positive assertions set out in the paragraph.
As for paragraph 21 of the defence, I am satisfied that the paragraph is embarrassing. On analysis it really does no more than emphasise the defendant’s denial of liability. The paragraph reads as though the defendant is making a factual assertion, that is taking on an obligation to prove something at trial, when on a more careful reading it is clear that that is not the case. I accept the submission on behalf of the plaintiffs that they cannot plead to the paragraph. It adds nothing to the defence and should be struck out.
In circumstances where the defendant has made it clear that it will not be relying on the defence of 18 January 2010 presently on the court record, it is I think inappropriate to make orders about that defence or particulars. The argument on both sides on the hearing of the application was about the proposed amended defence, which had not then, and still has not, been filed.
In the circumstances I propose to publish these reasons.
The only order I will make is that the action be stood over to 24 February 2012 for further directions.
I certify that the preceding forty (40) numbered paragraphs are a true copy of the Reasons for Judgment herein of Master Harper.
Associate:
Date: 31 January 2012
Counsel for the plaintiffs: Mr GP Walker
Solicitor for the plaintiffs: Chamberlains Law Firm
Counsel for the defendant: Mr G Donnellan
Solicitor for the defendant: William Roberts Lawyers
Date of hearing: 18 February 2011
Date of judgment: 31 January 2012
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