Crawley v Vero Insurance Ltd (No 4)

[2012] NSWSC 1582

Supreme Court

New South Wales

Medium Neutral Citation:	Crawley v Vero Insurance Ltd (No 4) [2012] NSWSC 1582
Hearing dates:	5 December 2012
Decision date:	19 December 2012
Jurisdiction:	Common Law
Before:	Beech-Jones J
Decision:	Application to administer interrogatories dismissed.
Catchwords:	PRACTICE AND PROCEDURE – application to administer interrogatories in relation to resolution under s 409 of Legal Profession Act 2004 – exclusively within knowledge of decision maker(s) – whether necessary – whether reasonably required – whether validity of resolution in issue on pleadings – interrogatories not necessary for the resolution of the issues raised in the pleadings.
Legislation Cited:	- Administrative Decisions (Judicial Review) Act 1977 (Cth) - s 13 - Interpretation Act 1987 - s 41 - Legal Profession Act 1987 - s 44 - Legal Profession Act 2004 - s 409 - Uniform Civil Procedure Rules 2005 - r 14.27
Cases Cited:	- Attorney-General v Walker (1849) 3 Exch 242; 154 ER 833 - Austral Monsoon Industries Pty Ltd v Pittwater Council [2009] NSWCA 154; 75 NSWLR 169 - Chong v Nguyen [2005] NSWSC 588 - Crawley v Vero Insurance Ltd [2012] NSWSC 593 - Crawley v Vero Insurance Limited (No 2) [2012] NSWSC 1053 - Crawley v Vero Insurance Ltd & Ors (No 3), NSWSC unrep, 25.10.12 - Lee v Carlton Crest Hotel (Sydney) Pty Ltd [2012] NSWSC 1392 - Pelechowski v Registrar, Court of Appeal (NSW) [1999] HCA 19; 198 CLR 435 - State Drug Crime Commission of NSW v Chapman (1987) 12 NSWLR 477
Category:	Interlocutory applications
Parties:	Christopher William Crawley (Plaintiff) Vero Insurance Ltd (First Defendant) HDI-Gerling Australia Insurance Company Pty Ltd (Second Defendant) Gordian Runoff Ltd (Third Defendant) Westport Insurance Corporation (Fourth Defendant) Zurich Specialities London Ltd (Fifth Defendant) LawCover Pty Ltd (Sixth Defendant)
Representation:	Counsel: Mr M.L.D. Einfeld QC, Mr A.C. Harding (Plaintiff) Mr D.L. Williams SC, Ms L. Chan (Defendants) Solicitors: Bruce & Stewart (Plaintiff) Colin Biggers & Paisley (Defendants)
File Number(s):	2010/397627

Judgment

1. The background to these proceedings is set out in Crawley v Vero Insurance Ltd [2012] NSWSC 593 ("Crawley (No 1)") and Crawley v Vero Insurance Ltd (No 2) [2012] NSWSC 1053 ("Crawley (No 2)").

1. On 5 December 2012 I heard argument on the plaintiff's application to administer interrogatories to the defendant. This application was the last remaining prayer for relief set out in the plaintiff's notice of motion filed 16 August 2012 (see Crawley v Vero Insurance Ltd & Ors (No 3), unreported, 25 October 2012 ("Crawley (No 3)").

The proposed interrogatories

1. The proposed interrogatories are directed to a resolution said to have been made by LawCover under s 409 of the Legal Profession Act 2004 on 16 May 2012 (see Crawley (No 2) at [11] and [14]). LawCover purported to resolve that, in the event that Mr Crawley failed in these proceedings to establish an entitlement to indemnity under a policy of insurance, "no sum shall be payable out of SMIF" in respect of Mr Crawley's liability in the Equity Division Proceedings (see Crawley (No 1) at [4] to [5]) or his legal costs and disbursements incurred in those proceedings. The reference to "SMIF" is to the "Solicitors Mutual Insurance Fund" which I discussed in Crawley (No 2) at [9] to [21].

1. The resolution is contained in a document that appears to be an extract from the minutes of a meeting of the Board of LawCover. The extract contains various matters that are "noted" as well at the text of the resolution. These notes refer to the Board having considered "all facts and circumstances available including legal advice". In broad terms, the proposed interrogatories require the proper officer of LawCover to identify those facts and circumstances as well as the contents of the legal advice referred to. The proposed interrogatories also require the proper officer to identify what was said by each member of the Board of LawCover on various topics referred to in the notes accompanying the resolution, and to identify any documents that record that discussion or which were provided before, during or after the meeting concerning the resolution.

The pleadings

1. Before addressing the submissions concerning the interrogatories it is necessary that I briefly note the relevant parts of the pleadings. These interrogatories are all concerned with that part of Mr Crawley's claim which seeks indemnity and recovery, not pursuant to any insurance policy taken out on his behalf, but by virtue of a favourable determination under s 409 for payment out of SMIF.

1. In paragraphs 26 to 30 of his statement of claim Mr Crawley pleaded that LawCover was obliged to make but had not made a determination under s 409 as to whether he had such an entitlement and sought mandamus requiring him to. In Crawley (No 2) I granted Mr Crawley leave to amend his statement of claim by adding an additional paragraph 31 that pleaded, in the alternative, that LawCover had in and after February 2003 determined under s 409 or its statutory predecessor to pay certain amounts to his benefit. This additional paragraph arose out of a contention made on behalf of Mr Crawley that certain payments on account of his legal costs that were made in 2003 and 2004 could only have been made following such a determination in his favour (see Crawley (No 2) at [7] to [20]). LawCover has since served an affidavit addressing those payments. It contends that the affidavit demonstrates that the payments were made without any such determination having been made. Mr Crawley disputes that. It is a debate for resolution at a final hearing.

1. A further amended statement of claim ("FASC") was filed by Mr Crawley on 10 September 2012 in accordance with the orders made in Crawley (No 2). On 23 October 2012 LawCover filed a defence. In answer to paragraph 29 of the FASC which asserted LawCover's obligation to make a determination, it pleaded, inter alia, in paragraph 29 of its defence:

"In relation to paragraph 29 of the [FASC], the defendants:

...

(g)   have decided that the plaintiff is not entitled to any amount in respect of the claims in the [Equity Division] proceedings;

Particulars

1.   Letter from Colin Biggers and Paisley (CBP) to Christopher Crawley dated 20 December 2007

2.   Letter from CBP to Bruce Stewart Demarco dated 17 May 2010.

(h) made a determination under s 409 of the 2004 Act to the effect that no payments will be made from SMIF to the plaintiff over and above those required pursuant to the indemnity provided in the Policy; and

Particulars

Resolution LC 6/2012 made by LawCover, as manager of SMIFF, on 16 May 2012.

(i)   Otherwise deny the allegations therein."

1. In answer to the plaintiff's new paragraph 31, which I have referred to above, LawCover referred to paragraph 29 of its defence and otherwise denied the allegation.

1. Thus in paragraph 29 of the FASC Mr Crawley pleads that LawCover was obliged to but did not make a determination under s 409 and, in the alternative, pleads in paragraph 31 that it previously made a limited determination in Mr Crawley's favour. LawCover replies to paragraph 29 by pleading, inter alia, that in 2012 it made a determination and replies to paragraph 31 by denying that it made a determination in 2003, and pleads that, even if it did, it was superseded by the determination made in 2012.

Is it "necessary" to order the administration of the interrogatories?

1. The power to order interrogatories is conferred by r 22.1 of the Uniform Civil Procedure Rules 2005 ("UCPR"). As these proceedings do not involve a claim for damages or contribution arising out of a death or bodily injury "special reasons" are not required to be shown before they can be ordered. However, before I make an order for their administration, I must be satisfied that such an order is "necessary" (UCPR r 22.1(4)). In this regard senior counsel for Mr Crawley, Mr Einfeld QC, referred me to the approval by Davies J in Lee v Carlton Crest Hotel (Sydney) Pty Ltd [2012] NSWSC 1392 at [21] of the following passages from the judgment of Rothman J in Chong v Nguyen [2005] NSWSC 588 at [16]:

"The word 'necessary' when used in relation to a requirement on the exercise of a power granted to a court should generally and does here mean 'reasonably required or legally ancillary' to the achievement of the goal, in this case, of a fair trial. I refer to the joint judgment of Gaudron, Gummow and Callinan JJ in Pelechowski v Registrar, Court of Appeal (NSW) [1999] HCA 19; 198 CLR 435 which, while determining whether there was a valid basis for contempt proceedings, examined the power of the District Court to issue injunctive relief. They said:

'The term 'necessary' in such a setting as this is to be understood in the sense given it by Pollock CB in Attorney-General v Walker (1849) 3 Exch 242; 154 ER 833, namely as identifying a power to make orders which are reasonably required or legally ancillary to the accomplishment of the specific remedies for enforcement provided in Division 4 of Part 3 of the District Court Act. In this setting, the term 'necessary' does not have the meaning of 'essential'; rather it is to be 'subjected to the touchstone of reasonableness' (State Drug Crime Commission of NSW v Chapman (1987) 12 NSWLR 477 at 452).' "

1. It is not necessary to consider whether and, if so, how the administration of interrogatories could ever be considered "legally ancillary" to any relief or claim made in a proceedings. It is difficult to see how an order for interrogatories could be said to be necessary to ensure the efficacy of any form of final relief in the same way that an asset freezing order may facilitate execution of a final judgment. It suffices to state that I will approach the matter on the basis of whether or not it has been established that the administration of interrogatories is "reasonably required" but not necessarily "essential".

1. There is no doubt that the subject matter of the interrogatories is purely within the knowledge of LawCover. That is of assistance to Mr Crawley in his efforts to persuade me that their administration is reasonably required although it is not by itself sufficient. The remaining matter to consider is the connection between the interrogatories and the issues raised by the pleadings. Two matters were put forward on behalf of Mr Crawley.

1. First, in oral argument Mr Einfeld QC sought to draw a connection between the subject matter of the interrogatories and the contention in paragraph 31 of the FASC that there was a determination in 2003 under s 409 or its statutory predecessor, s 44 of the Legal Profession Act 1987. He also submitted that the interrogatories were required to test that part of LawCover's defence which pleaded in paragraph 29(g) that it had previously "decided" to refuse Mr Crawley any amount under s 409. Thus in reply he submitted that:

"... but those facts and circumstances [as referred to in the minutes recording the resolution in May 2012] may well have discussed, probably did discuss, the fact that approvals had earlier been given for the payments for the costs and expenses in 2003.

So here is a meeting of the board of LawCover relevant to this case. We know the facts and circumstances were recorded. We know discussion must have taken place and, bearing in mind the issues that have arisen by reason of the earlier pleadings of the defendant, plus our additional new pleading in paragraph 31, your Honour can infer it is very likely that the discussion that took place adverted to those matters."

1. This aspect of the application was restated in a number of ways. However in the end it rose no higher than asserting that it is "very likely" that, at the LawCover Board meeting on 16 May 2012, there was discussion about some aspect of the payments made in 2003 and 2004 and that those discussions bear upon the current dispute between Mr Crawley and his insurers. In particular, it was submitted that those discussions would disclose whether something that happened in that earlier period amounted to a determination under s 409 or s 44 of the Legal Profession Act 1987. I do not accept that this is the case, especially given the resolute denial by LawCover that any such determination was made. At best, all that can be said is that something that was said or discussed during the LawCover board meeting on 16 May 2012 may have referred to or touched upon the earlier payments that were made on account of his legal expenses. That mere possibility is not enough for me to conclude that the interrogatories are necessary in the sense that I have discussed. A much greater degree of likely relevance would have to be established before I would conclude that they are "reasonably required" for the resolution of the issues raised by this aspect of the pleadings.

1. Mr Einfeld QC's reference to the "earlier pleadings of the defendant" (above at [13]) was to a previous version of the defence that pleaded the decision in 2009 to refuse the plaintiff under s 409. This is re-pleaded in sub-paragraph 29(g) of the defence to the FASC extracted above (at [7]). As best as I can tell this appears to allege some form of decision that fell short of a resolution by the board of LawCover. Any consideration of the connection between the interrogatories and that decision only begs the question of what issues are raised by the pleadings concerning that decision, a matter which I will turn to next.

1. Second, it was submitted that the interrogatories were necessary in order to test the validity of the resolution made by LawCover on 16 May 2012. In his written submissions Mr Crawley contended that the interrogatories were necessary because the "efficacy of the [LawCover] resolution may turn upon the circumstances in which it was reached and the matters considered when it was passed". Those submissions contended that the proposed interrogatories "self evidently relate to a matter in issue, namely whether an effective determination has or has not been made by LawCover either to pay Mr Crawley's claims from the SMIF, or to deny payment from the SMIF". LawCover's submissions denied that the efficacy of the resolution was an issue that was raised by the pleadings.

1. In oral argument this basis was re-stated by Mr Einfeld QC with varying degrees of enthusiasm. As the argument was developed it was submitted that by pleading the resolution in its defence to paragraph 29 of FASC, LawCover was positively asserting the legal validity of the resolution as an answer to so much of Mr Crawley's case as pleaded that LawCover had a duty to consider his position under s 409, but had failed to do so. No reply has been filed to the defence but it was suggested that the automatic joinder of issue created by UCPR r 14.27 meant that the legal validity of the resolution was in contest.

1. In this State there is no general entitlement to obtain a statement of reasons for an adverse decision made pursuant to the exercise of a statutory power (cf s 13 of the Administrative Decisions (Judicial Review) Act 1977 (Cth)). This means that persons can still face the position of not knowing if they have a basis to challenge decisions adverse to them made under New South Wales statutes because they do not know why the decision was made. This difficulty was acknowledged and the means by which it has been partially addressed were explained by Spigelman CJ in Austral Monsoon Industries Pty Ltd v Pittwater Council [2009] NSWCA 154; 75 NSWLR 169 at [98] to [100] (McColl JA and Handley AJA agreeing):

98 Establishing the purpose of a decision-maker has always generated difficulty in applications for judicial review of administrative decisions where the decision-maker does not identify his or her reasoning process. That is why it was necessary to enact s 13 of the Administrative Decisions (Judicial Review) Act 1977 (Cth) and s 25D of the Acts Interpretation Act 1901 (Cth). There are no equivalent provisions in this State.

99   However, there are judicial mechanisms for establishing the purpose of the actual decision-maker. In the present case, interrogatories could have been directed to the Minister with a view to eliciting the relevant evidence. Other powers of the court could be called in aid in order to establish the relevant facts.

100   I refer, for example, to Practice Note SC CL 3 which applies to proceedings in the Administrative Law List in the Supreme Court and which states:

'23. Where proceedings have been taken to challenge the decision of a public body or public official, because of the difficulties which at times arise in ascertaining the decision making process and the reasons for the decision, the Court may, at a directions hearing, direct the body or person whose decision has been challenged to furnish to the plaintiff within a specified time, a statement in writing setting out the reasons for the decision including findings on material questions of fact referring to the evidence or other material on which those findings were based, the body's or person's understanding of the applicable law and the reasoning processes leading to the decision (compare Administrative Decisions Tribunal Act 1997 (NSW), s 49). Otherwise in appropriate cases, orders may be made for such matters to be ascertained by way of particulars, discovery or interrogatories. Subject to this, orders for discovery or interrogatories will only be made in exceptional cases, and such orders will then generally be confined to particular issues. Evidence in matters in the List is normally by affidavit.'"

1. The discussion in Austral Monsoon of the possibility of administering interrogatories arose in the context of an express allegation in that case that the relevant decision was made for an "improper, collateral purpose" (at [90]). Further, the facility offered by Practice Note 3 of obtaining reasons and failing that ordering interrogatories presupposes that a proper challenge to the validity of an administrative decision has been made in an initiating process. At a minimum there would be need to be some properly pleaded basis for impugning the decision which would justify the administration of interrogatories, even if the moving party could only provide limited particulars of the relevant allegation.

1. In this case from time to time it has been suggested that once LawCover made a resolution of the kind that Mr Crawley asserts was made in 2003 then it had no power to make another. Assuming that argument to have force (cf s 48(1) of the Interpretation Act 1987) it could be resolved without recourse to interrogatories. It is a question of power, not fact. Instead the form of interrogatories proposed here are of the kind that might be administered if Mr Crawley alleged that LawCover had taken into account irrelevant matters, failed to take into account relevant matters, acted for a purpose that was improper vis à vis the statute or acted in bad faith. However there is no express allegation to any such effect.

1. Assuming for present purposes that the effect of UCPR r 14.27 is such that the legal validity of LawCover's resolution is in issue in the proceedings in some broad sense, that does not mean that it is open to Mr Crawley to contend that it is invalid on the basis of the grounds of judicial review just noted. A general joinder of issue on the validity of a resolution does not mean that every ground of judicial review known to the law thereby becomes in issue. To the contrary the grounds of review to which these interrogatories could legitimately be directed to are all matters that would take LawCover by surprise and would have to be specifically pleaded in a reply (UCPR r 14.14(1)) even if full particulars could not be provided.

1. The same observations apply to paragraph 29(g) of the defence to the FASC which pleads that LawCover "decided" that Mr Crawley is not entitled to any amount in respect of the claims made in the Equity Division proceedings.

1. The end result is that the only issues in the proceedings to which the interrogatories could directly relate are ones that were required to be, but have not been, the subject of a specific pleading. It follows that I consider that the interrogatories are not "necessary" for the resolution of the issues raised by the current pleadings and I refuse the application to administer them.

Disposition

1. It follows that I will order that the plaintiff's notice of motion of 16 August 2012 be otherwise dismissed. I am minded to make an order that the plaintiff pay the costs of prayer 3 of the notice of motion which sought the administration of interrogatories. If either party seeks to argue against this they can do so briefly within the written submissions the subject of orders 3 to 5 of the orders I made on 5 December 2012.

1. The Court orders that:

(1)   The balance of the Plaintiff's notice of motion filed 16 August 2012 be dismissed.

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Decision last updated: 19 December 2012