CIMIC Group Limited v AIG Australia Limited
[2021] NSWSC 1338
•19 October 2021
Supreme Court
New South Wales
- Amendment notes
Medium Neutral Citation: CIMIC Group Limited v AIG Australia Limited [2021] NSWSC 1338 Hearing dates: On the papers Decision date: 19 October 2021 Jurisdiction: Equity - Commercial List Before: Ball J Decision: Plaintiff’s notice of motion filed 6 October 2021 be dismissed with costs
Catchwords: CIVIL PROCEDURE — Discovery — Order for general discovery — Discovery sought against sixth and eighth defendants where those defendants may possess documents that may be relevant to plaintiff’s case against other defendants in the same proceedings
Legislation Cited: Insurance Contracts Act 1984 (Cth)
Category: Procedural rulings Parties: CIMIC Group Limited (Plaintiff)
AIG Australia Limted (First Defendant)
Chubb Insurance Australia Ltd (Second Defendant)
Catlin Syndicate Ltd (Third Defendant)
Catlin Australia Pty Ltd (Fourth Defendant)
Liberty Mutual Insurance Company (Fifth Defendant)
Berkley Insurance Company (Sixth Defendant)
Swiss Re International SE (Seventh Defendant)
Zurich Australian Insurance Ltd (Eighth Defendant)
Arch Underwriting at Lloyd’s Limited on behalf of Syndicate 2012 (Ninth Defendant)
Dual Australia Pty Ltd (Tenth Defendant)Representation: Counsel:
Solicitors:
M Friedgut (Sixth Defendant)
S Fitzpatrick (Eighth Defendant)
Allens (Plaintiff)
Mills Oakley (Sixth Defendant)
YPOL Lawyers (Eighth Defendant)
File Number(s): 2020/172061
Judgment
-
By a notice of motion dated 6 October 2021, the plaintiff, CIMIC Group Limited (CIMIC), seeks an order that “[t]he Sixth and Eighth Defendants … give general discovery by 5 November 2021 limited to documents relevant to a fact in issue within the meaning of the Uniform Civil Procedure Rules 2005 (NSW) r 21.1(2)”.
-
In these proceedings, CIMIC claims indemnity from the first to fifth defendants (the 2011 Insurers) who provided CIMIC with primary and excess D&O insurance cover for the 2011–12 policy year (the 2011 Policies) in respect of costs and settlement amounts it paid in connection with claims against and investigations involving a number of its directors arising from allegations that CIMIC and related companies had engaged in corrupt practices including the payment of bribes to government officials in Iraq.
-
The 2011 Insurers defend that claim on various grounds. One ground is that CIMIC knew of circumstances that could have been notified under the prior year policies (the 2010 Policies). The 2011 Insurers rely on a prior claims and circumstances exclusion. They also plead a case based on misrepresentation and non-disclosure. In response to those defences, CIMIC joined the sixth to tenth defendants (the 2010 Insurers) who provided cover under the 2010 Policies and seeks declarations that, if the 2011 Insurers are entitled to deny liability on the basis of the prior claims and circumstances exclusion or misrepresentation and non-disclosure, then it remains entitled, in reliance on s 54 of the Insurance Contracts Act 1984 (Cth) and the notification and deeming clauses in each of the 2010 Policies, “to notify circumstances, being the existence and contents of a handwritten document (the Iraq File Note) created by a former co-chief operating officer and former CEO of CIMIC, Mr David Stewart (Stewart) appearing (on its face) to be dated 23 November 2010 …” (plaintiff’s Amended Summons para [6]). The Iraq File Note is one of the documents relied on by the 2011 Insurers in their defence based on the exclusion and misrepresentation and non-disclosure.
-
In response to those claims the sixth defendant has pleaded a number of defences including a defence that CIMIC is not entitled now to give late notification under the 2010 Policies and a defence that any claim based on late notification would now be statute barred. The eighth defendant raises similar defences.
-
There were lengthy debates between CIMIC and the 2011 Insurers on the scope of discovery. Those debates were ultimately resolved by an order made with the consent of the 2011 Insurers and the seventh, ninth and tenth defendants requiring the plaintiff to give general discovery. The sixth and eighth defendants did not consent to those orders.
-
In my opinion, an order for general discovery should not be made against the sixth and eighth defendants. The fact that the other 2010 Insurers, who are in a similar position to the sixth and eighth defendants, have consented to such an order is irrelevant to the question whether the order should be made.
-
CIMIC submits that the reasons for making an order for general discovery are the same as those that led the Court to make an order for general discovery against the 2011 Insurers. In particular, it points to the difficulty of formulating agreed categories that would capture all documents that might properly be discoverable. It gives a number of examples of relevant documents that may be in the possession of the sixth and eighth defendants. Those examples fall into two categories.
-
First, it is said that the sixth and eighth defendants may have documents that are relevant to the claim between the plaintiff and the 2011 Insurers. Two examples are given. One is that the eighth defendant may have documents relevant to the non-disclosure case because the senior underwriter employed by the first defendant for the 2012 Policy is now employed by the eighth defendant and she may have communicated information about the first defendant’s position to other employees of the eighth defendant. The other is that it is said that the sixth and eighth defendants may have documents relevant to the non-disclosure case because they may have communicated with the 2011 Insurers in relation to the 2011 Policy (and, for that matter, the 2012 Policy).
-
Second, it is said that the sixth and eighth defendants may have documents relevant to the issues between the plaintiff and them. Two examples are given.
-
One example arises from a defence raised by the sixth and eighth defendants that the costs for which CIMIC seeks indemnity did not arise from circumstances that could or should have been notified under the 2010 Policies. It is said that the sixth and eighth defendants could have documents relevant to that issue.
-
The other example arises from the way in which CIMIC puts its claim. CIMIC pleads (in para [188] of its Amended Commercial List Statement) that it sought confirmation from the 2010 Insurers “that they accepted that in the event that a Court finds … that [the amounts claimed against the 2011 Insurers] arose from ‘circumstances that could and should have been notified’ under the 2010 Policies, then it must follow that CIMIC remains entitled to give notice of the existence and contents of the Iraq File Note to each of them … in reliance upon the 2010 Notification Clause and the 2010 Deeming Clause … and s 54(1) of the Insurance Contracts Act”. In response to that allegation, the eighth defendant pleads that not giving the requested confirmation did not represent any failure by them. CIMIC contends that that puts in issue the reasons the eighth defendant did not give the requested confirmation.
-
A number of points may be made about these submissions.
-
First, I do not accept that the sixth to eighth defendants are likely to have documents that are likely to be of assistance to CIMIC in its claim against the 2011 Insurers. The examples given relate to the defence of non-disclosure. That defence raises factual questions about what CIMIC knew, what it disclosed and what the 2011 Insurers knew. It is difficult to see that the 2010 Insurers would have any information that would assist CIMIC on those issues. Disclosure of information by CIMIC to the sixth or eighth defendants of information may shed light on what CIMIC knew before entering into the 2011 Policies. But that information is not going to be of assistance to CIMIC. It could only be of assistance to the 2011 Insurers. The sixth and eighth defendants are unlikely to have any documents that shed light on what CIMIC disclosed to the 2011 Insurers. And despite what CIMIC says, it seems unlikely that the sixth and eighth defendants would have documents that shed light on what the 2011 Insurers knew. CIMIC’s suggestion that a previous employee of the first defendant, who apparently was not involved in underwriting the 2011 Policies, possibly communicated information on that topic to her new employer seems speculative, as does the suggestion that the 2010 Insurers themselves disclosed information to the 2011 Insurers.
-
Second, it is difficult to see what documents would be relevant to the defence that the costs in respect of which CIMIC seeks indemnity did not arise from circumstances that could or should have been notified under the 2010 Policies. That appears to turn on the wording of the 2010 Policies and the nature of the costs. The policies are in evidence and the 2010 Insurers are unlikely to have documents that shed light on the character of the costs claimed by CIMIC.
-
Third, in relation to the other example referred to by CIMIC, it is difficult to see why that issue raises the question of the reasons why the eighth defendant refused to give the confirmation sought. The reasons presumably are the reasons for defending the claim — that is, the eighth defendant did not give the confirmation because it did not think that it was obliged to do so for the reasons stated in its Commercial List Response. The point raised in the paragraph of the eighth defendant’s response to which CIMIC refers simply seems to be that the fact that it did not give the confirmation was not a failure because it had no obligation to give the confirmation. That does not appear to raise a factual issue in respect of which discovery might be given.
-
Fourth, the effect of the orders sought by CIMC is to require the sixth and eighth defendants to give general discovery in relation to the issues between CIMIC and the 2011 Insurers. Those issues are quite different from the issues between the plaintiff and the sixth and eighth defendants. There may be a question whether the plaintiff is entitled to bring the issues between it and the 2010 Insurers to a head in the way it has sought to do. But assuming it is, the issue between the plaintiff and those insurers is very different. In the case of those insurers, the issue appears to be whether, if the plaintiff gave notice now of the Iraq File Note it would be entitled to rely on late notice of those circumstances as triggering liability of the 2010 Insurers under the 2010 Policies in respect of the claims for which they now seek indemnity. It is not clear why the sixth and eighth defendants should be put to the cost of undertaking a detailed analysis of the case pleaded against the 2011 Insurers and undertaking a search for documents that are relevant to that case, particularly in circumstances where it is not apparent that the sixth and eighth defendants would have any relevant documents.
-
Fifth, and related to the fourth point, there is nothing to prevent CIMIC from seeking documents falling within specific categories by way of discovery or a notice to produce if it can demonstrate that those documents may shed some light on the issues in the case. That, it seems to me, is the appropriate procedure to follow where the documents are sought in relation to a case that does not concern the sixth and eighth defendants or where they are sought in relation to a case that is narrow in compass, as the case against the 2010 Insurers appears to be.
-
Accordingly, CIMIC’s notice of motion filed 6 October 2021 must be dismissed with costs.
**********
Amendments
20 October 2021 - Updating Counsel on coversheet
Decision last updated: 20 October 2021
0
0
1