Crane v Insurance Australia Limited trading as NRMA Insurance

[2014] NSWDC 218

District Court

New South Wales

Medium Neutral Citation:

Crane v Insurance Australia Limited trading as NRMA Insurance [2014] NSWDC 218

Hearing dates:

10 November 2014

Decision date:

12 November 2014

Jurisdiction:

Civil

Before:

Gibson DCJ

Decision:

(1) Subpoena issued 8 September 2014 to the defendant in these proceedings set aside.

(2) The parties to provide short minutes of order providing an extension of time for the plaintiff to serve witness statements on a date mutually convenient to the parties prior to 12 December 2014, followed by the service of statements by the defendant and such other steps as the parties may deem necessary.

(3) Defendant's Amended Notice of Motion dismissed.

(4) Proceedings listed before the Registrar on 19 January 2015 for directions.

(5) Costs reserved.

(6) Confidential affidavit of the defendant and all annexures are returned.

Catchwords:

PRACTICE AND PROCEDURE - plaintiff currently in breach of orders to file statements, in proceedings where an insurer had pleaded fraud, issues subpoena for investigative reports - application to set aside subpoena on the basis of oppression, lack of legitimate forensic purpose and a fishing expedition - whether claim for "Markus privilege" (Markus v Provincial Insurance Co Ltd (1983) NSWCCR 1) made out - whether documents sought for the purpose of "tailoring" the plaintiff's case - subpoena set aside

Legislation Cited:

Insurance Contracts Act 1984 (Cth), s 13
Uniform Civil Procedure Rules 2005 (NSW), r 33.4

Cases Cited:

Askarou v Nominal Defendant (NSW) (1989) 8 MVR 491
Azar Building and Construction Services Pty Ltd v Transport Infrastructure Development Corporation [2010] NSWLEC 110
Broadwater Taxation and Investment Services Pty Ltd v Hendriks (Supreme Court of New South Wales, 9 September 1993)
Dimovski v GIO (1995) 21 MVR 288
Halpin v Lumley General Insurance Ltd (2009) 78 NSWLR 265
Hammoud Brothers Pty Ltd v Insurance Australia Limited [2004] NSWCA 366
Ho v Fordyce (ex parte) [2012] NSWSC 1404
ICAP Australia Pty Ltd v BGC Partners (Australia) Pty Ltd [2009] NSWCA 307
Markus v Provincial Insurance Co Ltd (1983) NSWCCR 1
Marsden v Amalgamated Television Services Pty Ltd [1999] NSWSC 428
McLennan v Insurance Australia Ltd [2011] NSWDC 132
Morton v Colonial Mutual Life Insurance Society Ltd [2013] FCA 681
Prasad v AMP Life Ltd [2012] NSWSC 1076
TZ Ltd v ZMS Investments Pty Ltd & Ors; Sigalla v TZ Ltd [2010] NSWSC 138
Vidal v NRMA Insurance Ltd [2005] NSWCA 390

Texts Cited:

-

Category:

Interlocutory applications

Parties:

Plaintiff: James Crane
Defendant: Insurance Australia Limited trading as NRMA Insurance

Representation:

Plaintiff: Mr R E Quickenden
Defendant: Mr A Ahmad
Plaintiff: Bourne Lawyers
Defendant: Holman Webb Lawyers

File Number(s):

2013/348706

Publication restriction:

None

Judgment

1. The defendant by Notice of Motion filed on 10 November 2014 seeks the following orders:

(1)   Pursuant to Uniform Civil Procedure Rules 2005 (NSW) ("UCPR") Pt 33 r 33.4, the subpoena issued to the defendant on 8 September 2014 be set aside;

(2)   Alternatively to (1), the plaintiff be refused access to documents produced to the Court in answer to the subpoena until further order.

1. The plaintiff's statement of claim, filed on 1 November 2013, seeks payment under his comprehensive insurance policy for damage to his 2006 Ford Falcon F6 Typhoon, which was insured with the defendant for an agreed value of $40,000. The defendant, in its defence filed on 18 June 2014, relies upon s 13 Insurance Contracts Act 1984 (Cth) and provides particulars of asserted breaches of the plaintiff's obligation to be truthful and frank in all statements made to the defendant in connection with the claim.

1. The plaintiff filed a subpoena on 8 September 2014 seeking production of the following documents:

"All documents and copy documents including any witness statements, investigative reports, correspondence, incident reports or other documents (including electronic documents) relating to a claim made by the plaintiff in respect of comprehensive motor vehicle insurance covering NSW registered motor vehicle BG09WY on or about November 2012."

1. The return date for that subpoena was 15 September 2014. The defendant immediately objected to inspection of those documents, and requested that its application to set aside the subpoena (or alternatively to deny access) should be listed in the next Gosford sittings commencing 3 November 2014.

1. The context in which this subpoena was issued is of relevance. These proceedings were being case-managed by the Registrar. On 15 September 2014, the week after the subpoena was issued, the Registrar gave the parties a timetable for the filing of affidavits; the plaintiff was directed to file and serve statements by 29 October 2014 and the defendants to file statements by 28 November 2014, with the proceedings to be listed for further directions in the March 2015 sittings. The plaintiff served material in relation to quantum by the due date, but has not served any material concerning liability and, in particular, has failed to file any statement by the plaintiff.

1. The defendant first seeks the setting aside of the plaintiff's subpoena on the following grounds:

(a)   It is oppressive, in that it is devoid of particularity and seeks an impermissibly wide range of documents (including documents which would be the subject of a claim for legal professional privilege);

(b)   It is not issued for a legitimate forensic purpose, but for the purpose of "tailoring" (Prasad v AMP Life Ltd [2012] NSWSC 1076 at [20], [22], [28], [33] and [67]) the plaintiff's evidence to meet the evidence of the defendant; for example, by enabling the plaintiff to avoid compliance with the Registrar's timetable for service of the plaintiff's statements first in time; and

(c)   It does not seek documents to assist the plaintiff's case, and is a "fishing expedition".

1. Secondly, and alternatively, in reliance upon Markus v Provincial Insurance Co Ltd (1983) NSWCCR 1 ("Markus"), the defendant seeks an order refusing access to the plaintiff's documents, which have been provided to me under cover of a confidential affidavit sworn on 8 November 2014 by Margot Toniato.

1. The Markus privilege from production of documents or evidence is an exemption based on the court's recognition that there may be proceedings where compliance with court orders for production of evidence or documents carries the risk that the opposing party may tailor the evidence based on that discovery: Halpin v Lumley General Insurance Ltd (2009) 78 NSWLR 265. It is generally invoked in insurance-related litigation because the insured has the burden "to prove not only what it claimed were the events themselves, but also all facts and circumstances which tended to make its evidence credible": Hammoud Brothers Pty Ltd v Insurance Australia Limited [2004] NSWCA 366 at [10]. The "Markus privilege" argument may apply to a wide range of evidence and documents, ranging from Anton Piller orders (Ho v Fordyce (ex parte) [2012] NSWSC 1404) to inspection of documents produced on discovery (Morton v Colonial Mutual Life Insurance Society Ltd [2013] FCA 681), and may include production and/or inspection of documents sought under subpoena: Marsden v Amalgamated Television Services Pty Ltd [1999] NSWSC 428, cited on this point in Halpin v Lumley General Insurance Ltd (2009) 78 NSWLR 265.

1. Although there is considerable overlap between the bases of the objections to inspection, I shall deal with the defendant's two main arguments separately.

Lack of particularity and of legitimate forensic purpose

1. Counsel for the defendant first submits that the terms of the subpoena are impermissibly broad and that, while the plaintiff has indicated in a general sense that production of documents the subject of any claim for legal professional privilege will not be pressed, the defendant is still asked to search for every document relevant to the claim (and all copies thereof) and to make this evaluation in relation to each document.

1. Counsel for the plaintiff submits that the reference to the plaintiff's insurance claim gives the request sufficient particularity and that claims for legal professional privilege can be made in relation to any privileged document without requiring any refinement of the terms of the subpoena.

1. I consider the terms of the subpoena to be impermissibly wide. The plaintiff is asking for "all" documents (as well as all "copies of documents" and electronic records), "including" (which means "not limited to") a series of general categories of documents, including witness statements. This lack of particularity cannot be remedied by a reference to the date of the plaintiff's claim on the policy.

1. The principles and relevant authorities in relation to the setting aside of a subpoena where there is no legitimate forensic purpose have been helpfully summarised in ICAP Australia Pty Ltd v BGC Partners (Australia) Pty Ltd [2009] NSWCA 307 at [8] ff. In particular, at [14], Tobias JA noted that "there must be some concrete grounds for belief which takes the case beyond a mere fishing expedition". Tobias JA went on to note, at [28], the broad nature of a request for "all documents", concluding that "the unlimited manner in which it is framed" warranted its setting aside on the basis of being a "fishing expedition".

1. Tobias JA's explanation of these principles has been relied upon in a number of decisions in other courts: see, for example, Azar Building and Construction Services Pty Ltd v Transport Infrastructure Development Corporation [2010] NSWLEC 110 at [20] - [21]. The drafting of a subpoena seeking every document in the opposing party's possession, whether privileged, irrelevant, a photocopy or existing in multiple copies, should not still be a procedure used by practitioners. Seeking "all documents" in this generalised fashion is not simply an attempt to obtain discovery by subpoena, but an attempt to obtain documents which, given the restrictions of discovery by reason of relevance and privilege, would not be available pursuant to a discovery order at all. Neither the opponent, nor the court, should be obliged to get out a red pencil to cross through, or read down, the terms of the subpoena to endeavour to identify what is really being sought. The only course is for such subpoenae is for them to be set aside.

1. However, this is not the only basis upon which this subpoena should be set aside. The defendant submits that the real vice in the subpoena is that it is not issued for a legitimate forensic purpose, but for the purpose of enabling the plaintiff to obtain the defendant's witness statements and evidence before putting on the plaintiff's statements in accordance with the timetable. If so, the defendant submits, and I agree, that this would not be a "legitimate" forensic purpose.

1. Does the subpoena serve any other legitimate forensic purpose? The test for legitimate forensic purpose for subpoenae, explained in ICAP Australia Pty Ltd v BGC Partners (Australia) Pty Ltd (see also TZ Ltd v ZMS Investments Pty Ltd & Ors; Sigalla v TZ Ltd [2010] NSWSC 138 at [13]), is that it must be "on the cards" that the documents will materially assist the issuing party's case.

1. Mr Quickenden submitted that it would greatly benefit his client to know what evidence the defendant had, because he could then rely upon any evidence which did not go against him in order to corroborate his claim. However, the plaintiff's case is that he left his stalled truck overnight in the street and that some unknown person damaged it. It is not necessary for him to establish an alternative hypothesis of the case (Dimovski v GIO (1995) 21 MVR 288 at 291, citing Askarou v Nominal Defendant (NSW) (1989) 8 MVR 491; Vidal v NRMA Insurance Ltd [2005] NSWCA 390 at [15]).

1. Difficult issues may arise if the issuing party has a legitimate forensic purpose in addition to a forensic purpose that is not legitimate. However, that is not the case here. As Tobias JA noted in ICAP Australia Pty Ltd v BGC Partners (Australia) Pty Ltd, the very generality of the documents sought by the plaintiff demonstrates that the plaintiff is on a "fishing expedition", looking to find out what the defendant's case is, in order to tailor his own evidence to meet it. I am accordingly satisfied that the lack of any legitimate forensic purpose would warrant the setting aside of the subpoena.

1. The second basis for the setting aside of the subpoena (or alternatively a denial of access to the produced material) is on the basis of what the parties have variously referred to as "the Markus privilege" or "the Markus discretion". As is set out below, I am similarly of the view that the documents sought should not, even if the subject of a subpoena which is sufficiently particularised, and seeking documents for which there is a legitimate forensic purpose, be produced for inspection.

The Markus discretion

1. A preliminary objection taken by Mr Quickenden is that the relief sought in the amended notice of motion fails to identify the Markus discretion as the basis, and that this is a fatal error warranting dismissal of the application. Applications of this kind commonly do not refer to Markus in the orders sought (see, for example, the wording of the order considered in McLennan v Insurance Australia Ltd [2011] NSWDC 132 at [2]). The basis of the defendant's objection has been clearly set out in the correspondence attached to the affidavit of Mr Bourne (Exhibit A) and the defendant's written submissions, and I accordingly reject this submission.

1. The wide range of the Markus discretion, in terms of the court's power to refuse access to documents produced on discovery, affidavits or documents under subpoena, either entirely or until a certain stage of the litigation, has been explained in Halpin v Lumley General Insurance Ltd at [119] - [120]. At [119] the court noted that, while it was generally inappropriate for a court to consider that a party had acted so dishonestly that access to documents which would normally be provided should be refused, it was equally inappropriate for the court to ignore the nature of the allegations or the issues in dispute and the manner in which it was proposed to test the evidence of the party whose credit was challenged.

1. The defendant submits that the material which it is sought to withhold is not of benefit to the plaintiff's case. The evidence in question goes to the basis of the defence, namely that the plaintiff was not truthful and frank and/or not acting in good faith, this being evidence of the nature that gives rise to the Markus problem: Halpin v Lumley General Insurance Ltd at [6]. The defendant submits that there is a real chance that the plaintiff, who has already failed to comply with an order to provide his statement or other liability evidence, would tailor that evidence (and his overall position) to overcome the shortfalls that would be revealed if he saw this evidence.

1. Two examples of such evidence are given. The first is that a preliminary accident report challenges that the damage occurred while the vehicle was stationary. The second is that there are inconsistencies in the plaintiff's evidence revealed from interviews of witnesses. I am satisfied that this is evidence of the kind that attracts the Markus principle: Halpin v Lumley General Insurance Ltd at [119].

1. The fact that the plaintiff has failed to comply with the order to file witness statements is of significance. Had he done so, the result of this application would have been less certain. This is because some of the information the defendant does not wish to produce will be revealed in the defendant's statements in accordance with the timetable and some will become apparent if both sides retain expert evidence and serve reports. Additionally, there has never been anything to stop the plaintiff making his own inquiries at the scene of the accident.

1. However, the defendant should not be obliged to hand its case on a platter to a plaintiff who, without retaining his own expert, making his own inquiries and filing his own evidence, seeks production of documents from the defendant which will give him this information out of turn so that he can tailor his own case to meet that material.

1. I am comfortably satisfied that the defendant can establish a real likelihood that, by seeking this material "in advance" (Halpin v Lumley General Insurance Ltd at [36], citing Santow J in Broadwater Taxation and Investment Services Pty Ltd v Hendriks (Supreme Court of New South Wales, 9 September 1993)), the plaintiff would be enabled to tailor or endeavour to tailor his evidence, and that of his witnesses. Accordingly, I would set aside the plaintiff's subpoena on this basis as well.

Costs and further case management issues

1. The defendant has been successful on all issues raised in this motion, and ordinarily costs will follow the event. However, I have reserved the issue of costs, in part because the trial judge will be in a better position to determine issues relevant to fraud, and in part because, if the plaintiff does not comply with the next orders of this court for the filing of statements (for which I have proposed a generous timetable), the defendant may wish to consider further applications, which may include the seeking of specific costs orders in relation to this application.

1. The parties must enter into a timetable for the further conduct of these proceedings, including the service of statements, and should provide such a timetable to the court prior to the end of these sittings. I have included an order to this general effect.

Orders

(1)   Subpoena issued 8 September 2014 to the defendant in these proceedings set aside.

(2)   The parties to provide short minutes of order providing an extension of time for the plaintiff to serve witness statements on a date mutually convenient to the parties prior to 12 December 2014, followed by the service of statements by the defendant and such other steps as the parties may deem necessary.

(3)   Defendant's Amended Notice of Motion dismissed.

(4)   Proceedings listed before the Registrar on 19 January 2015 for directions.

(5)   Costs reserved.

(6)   Confidential affidavit of the defendant and all annexures are returned.

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Decision last updated: 11 December 2014