Clark v ING Life Limited

Case [2007] FCA 1960

FEDERAL COURT OF AUSTRALIA

Clark v ING Life Limited [2007] FCA 1960

PRACTICE AND PROCEDURE – application for leave to discontinue proceedings – with leave of the Court pursuant to O 22 r 2(1)(d) of the Federal Court Rules 2001 (Cth) and s 43(2) of the Federal Court of Australia Act 1976 (Cth) – where leave sought is to discontinue with no order as to costs – where there has been no hearing on the merits – where respondent asserts discontinuing applicant failed to join a relevant party to the proceedings – whether discontinuing applicant acted ‘unreasonably’ in all the circumstances

PRACTICE AND PROCEDURE – costs – factors governing the exercise of the Court’s discretion to award costs – where application has been brought under O 22 r 2(1)(d) of the Federal Court Rules – where Court finds there is no delinquency or misconduct on the part of the discontinuing applicant – where there has been no determination of the proceedings on the merits

Federal Court of Australia Act 1976 (Cth) s 43(2)
Federal Court Rules 2001 (Cth) O 22 r 2(1)(d)

JH Lever & Co Pty Ltd v Maniotis (2005) 215 ALR 773 cited
Maniotis v JH Lever & Co Pty Ltd [2006] FCAFC 7 distinguished
O’Neill v Mann [2000] FCA 1680 applied
Oshlack v Richmond River Council (1998) 193 CLR 72 cited
Re Minister for Immigration and Ethnic Affairs;  Ex parte Lai Qin (1997) 186 CLR 662 referred to
Smith v Airservices Australia (2005) 146 FCR 37 applied
The Owners of The Ship ‘Shin Kobi Maru’ v Empire Shipping Co Inc (1994) 181 CLR 404 cited

JULIANNE MICHELLE CLARK v ING LIFE LIMITED (ABN 33 009 657 176) AND ADEPT SUPER AND LIFE PTY LTD (ABN 96 105 840 882)
NSD 1454 OF 2007

RARES J
22 NOVEMBER 2007
SYDNEY


IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

NSD 1454 OF 2007

BETWEEN:

JULIANNE MICHELLE CLARK
Applicant

AND:

ING LIFE LIMITED (ABN 33 009 657 176)
First Respondent

ADEPT SUPER AND LIFE PTY LTD (ABN 96 105 840 882)
Second Respondent

JUDGE:

RARES J

DATE OF ORDER:

22 NOVEMBER 2007

WHERE MADE:

SYDNEY

THE COURT ORDERS THAT:

1.The applicant have leave to file a notice of discontinuance against the second respondent with no order as to costs.

2.The second respondent pay the costs of the applicant’s amended notice of motion dated 19 November 2007.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.


IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

NSD 1454 OF 2007

BETWEEN:

JULIANNE MICHELLE CLARK
Applicant

AND:

ING LIFE LIMITED (ABN 33 009 657 176)
First Respondent

ADEPT SUPER AND LIFE PTY LTD (ABN 96 105 840 882)
Second Respondent

JUDGE:

RARES J

DATE:

22 NOVEMBER 2007

PLACE:

SYDNEY

REASONS FOR JUDGMENT

(REVISED FROM THE TRANSCRIPT)

  1. Mrs Clark, the applicant, has applied to discontinue these proceedings which are currently now only brought against Adept Super & Life Pty Limited,…

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AGLC
Clark v ING Life Limited [2007] FCA 1960
Case
[2007] FCA 1960
Decision Date

CaseChat Overview and Summary

In the case of Clark v ING Life Limited, the plaintiff, Mrs Clark, sought to discontinue her claim against the defendant, Adept, without prejudice, under the rules of court. Mrs Clark had previously been involved in a dispute with ING Life Limited over the denial of a life insurance claim due to the diagnosis of breast cancer. Adept, who assisted Mrs Clark in applying for the insurance policy with ING, was subsequently joined as a defendant in the proceedings. Adept opposed the application to discontinue, arguing that the costs incurred by Mrs Clark in the proceedings should be paid by her as the discontinuing party. The court was tasked with determining whether leave to discontinue should be granted and, if so, whether the plaintiff should be required to pay the defendant's costs.

The primary legal issue before the court was whether Mrs Clark's application to discontinue her claim against Adept should be granted without prejudice and whether she should be ordered to pay Adept's costs. The court considered the discretionary nature of the application and whether there were any special circumstances that would warrant a departure from the usual rule that a discontinuing party pays the other party's costs. The court also considered whether the proceedings would have been unnecessary if Suncorp, another insurer, had been sued or if section 54 of the Insurance Contracts Act had been properly applied.

The court found that the application for leave to discontinue was not an admission of likely defeat and that there were no objective grounds on which it could be said that Mrs Clark would have failed against Adept. The court noted that the award of costs is subject to the myriad circumstances of the case, including the conduct of the proceedings. Given that the resolution in this case was made by the court rather than through the withdrawal of the proceedings, the court concluded that it was appropriate to grant leave to discontinue without prejudice. However, the court ordered that the second respondent, Adept, pay the costs of the plaintiff's amended notice of motion.

Orders

Orders of the court

1. The applicant have leave to file a notice of discontinuance against the second respondent with no order as to costs.

2. The second respondent pay the costs of the applicant’s amended notice of motion dated 19 November 2007.

Background

Background to the litigation

The position of Adept is that leave should only be granted on condition that Mrs Clark pay its costs of the proceedings. Adept estimates the amount of its costs recoverable on a taxation to be about $25,000.BACKGROUND The proceedings arose because Mrs Clark and her husband came to review their insurance arrangements in late 2004. Mrs Clark is the mother of three young children. At that time, the youngest was about three years of age. She described her occupation in the proposal for insurance, completed with Adept’s assistance, as ‘home duties’. Her husband was a coal miner. In January 2003 Mrs Clark had taken out life and trauma insurance cover with Suncorp Metway Life & Superannuation Limited providing for a maximum benefit of about $260,000 should she be diagnosed with a ‘critical condition’, one of which was breast cancer. She renewed that policy in late December 2003 for a further year. During the course of 2004 Mrs Clark became aware of a lump in her right breast. She claimed to have consulted medical practitioners who advised her that the lump was a cyst and not malignant. In early November 2004, Mr Budin, an employee of Adept, attended at the home of Mr and Mrs Clark. He assisted her in completing an application form for life and trauma insurance cover with ING Life Limited, the first respondent. ING issued a policy to Mrs Clark on about 30 November 2004 which provided for a cover of $250,000 in respect of a diagnosis of breast cancer. However, during the course of November 2004, Mrs Clark’s breast condition needed further medical attention. She prepared an affidavit for the purpose of this costs application. There is a substantial issue discussed in it as to precisely what diagnosis she should have been aware of and what, if anything, may have been required to be disclosed by her to ING under her duty of disclosure pursuant to the Insurance Contracts Act 1984 (Cth). Mrs Clark’s statement of claim was filed on 26 July 2007. It joined only ING and Adept. It alleged that on or about 6 December 2004 Mrs Clark contracted, and was diagnosed with, breast cancer. In January 2005 she made a claim on the ING policy. That claim was declined by ING in April 2005. Also, at some stage during 2005, she lodged a claim on the Suncorp policy. It too was declined on two bases. First, Suncorp asserted that, at the time of the claim, Mrs Clark was not the subject of a policy issued by it which was then in force. Secondly, Suncorp declined on the basis that the diagnosis of a breast cancer tumour failed to meet what it asserted was the policy’s requirement that it be of such severity as to require a full mastectomy. In her original statement of claim, Mrs Clark alleged breaches of the Insurance Contracts Act against ING and breaches s 52 of the Trade Practices Act 1974 (Cth), against, relevantly, Adept. She claimed that Adept had represented to her that:·she need only complete the ING proposal to the best of her knowledge;·Mr Budin had checked the information she had inserted into the proposal form and considered it to have been her best effort in completing it;·he had inserted information into the proposal which would be sufficient disclosure to ING;·if there were information not disclosed in the proposal form, then ING would conduct inquiries to ascertain any additional information required; and·Mrs Clark had no ongoing duty of disclosure pursuant to s 21 of the Insurance Contracts Act.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

RARES J

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

Established by: RARES J

Adept’s solicitors also asserted that there was an underlying policy in the rules that a discontinuing party should be liable for the other party’s costs, unless the Court otherwise ordered. They recognised that costs ultimately were a matter in the discretion of the Court, but said there were no special circumstances in these proceedings which would justify a departure from the ‘usual’ order. They then pointed out that the proceedings would never have been necessary, had Suncorp been sued or proper attention given to the operation of s 54 of the Insurance Contracts Act. They referred to an affidavit by the solicitor for Mrs Clark in support of the application to amend, which referred to the suggestion made by ING (which I have been informed was also orally communicated by the solicitors for Adept), that a claim could be made on Suncorp and s 54 of the Insurance Contracts Act relied on to support it. They said that Mrs Clark had, and always had, a valid claim on the Suncorp policy and that her sole allegation of loss in her current pleadings against Adept was her loss of opportunity to make good that claim because of the advice she received to cancel that policy once the ING policy had incepted. (The statement of claim pleads that one of the losses Mrs Clark suffered was her failure to recover the $250,000 in accordance with the ING policy or, alternatively, that sum under the Suncorp policy.)CONSIDERATION In my opinion, the proper approach under O 22 r 2(1)(d) is to take the view that it is not the function of the Court to make a prediction as to the outcome of a hypothetical case. I am of opinion that Mrs Clark’s application for leave to discontinue is not an acknowledgement by her of likely defeat. Nor is there a basis on which it can be said that on any objective view of the case, she would have failed against Adept: see the discussion by Finn J in O’Neill v Mann [2000] FCA 1680 [11]-[13] and JH Lever & Co Pty Ltd v Maniotis (2005) 215 ALR 773 at 774-775 [3]-[4] per Mansfield J. In the appeal in the latter case, Maniotis v JH Lever & Co Pty Ltd [2006] FCAFC 7, Finn, Emmett and Bennett JJ, said at [74]:‘There is no absolute rule with respect to the exercise of the power to award costs that, in the absence of disentitling conduct, a successful party is to be compensated by the unsuccessful party: Oshlack v Richmond River Council (1998) 193 CLR 72 at [40]. A successful party may be ordered to bear the costs of the unsuccessful party. There may be prima facie rules that a successful party is entitled to costs or that a successful party should receive its costs unless good reason is shown to the contrary (at [35]) but that is subject to the “myriad circumstances” in the institution and conduct of litigation.’They also said:‘Usually the circumstances in which a successful party is denied all or part of its costs have to do with the conduct of proceedings.’However, in that case the resolution was made by the Court rather than by a withdrawal of the proceedings from the field of litigation.