Dixon, Meachelle v Royal Insurance Australia Ltd

[1997] FCA 87

IN THE FEDERAL COURT OF AUSTRALIA )
  )
AUSTRALIAN CAPITAL TERRITORY     )
  )    No AG72 of 1996
DISTRICT REGISTRY                )
  )
GENERAL DIVISION                 )

MEACHELLE DIXON

Applicant

ROYAL INSURANCE AUSTRALIA LIMITED

First Respondent

CIGNA INSURANCE (AUSTRALIA) LIMITED

Second Respondent

LEADENHALL INSURANCE LIMITED

Third Respondent

COURT:FINN J

PLACE:CANBERRA

DATE:     18 FEBRUARY 1997

MINUTES OF ORDERS

THE COURT ORDERS THAT:

(1)the applicant be granted leave to file and serve a notice of appeal from the judgment of Mr Justice Gallop of 28 October 1996;  and

(2)the appeal be stayed until the applicant lodge with the ACT District Registrar security for the payment of costs in the sum of $9,000 in a form acceptable to the Registrar.

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

IN THE FEDERAL COURT OF AUSTRALIA )
  )
AUSTRALIAN CAPITAL TERRITORY     )
  )    No AG72 of 1996
DISTRICT REGISTRY                )
  )
GENERAL DIVISION                 )

MEACHELLE DIXON

Applicant

ROYAL INSURANCE AUSTRALIA LIMITED

First Respondent

CIGNA INSURANCE (AUSTRALIA) LIMITED

Second Respondent

LEADENHALL INSURANCE LIMITED

Third Respondent

COURT:FINN J

PLACE:CANBERRA

DATE:     18 FEBRUARY 1997

EX TEMPORE REASONS FOR JUDGMENT

I have before me both an application for leave to file and serve a notice of appeal from a judgment of a judge of the Supreme Court of the Australian Capital Territory and a motion that, in the event of leave being given, the appeal be made conditional upon or else be stayed until the applicant provides security for the costs of the appeal.

The need for the application results from the error in timing made by the solicitor for Ms Dixon (the applicant) as to the filing of a notice of appeal in this matter.
     The judgment the subject of the application was given on 28 October 1996.  The applicant’s solicitors filed a notice of appeal on 20 November 1996, one day out of time.  On 25 November 1996 that notice was rejected and on 28 November 1996 the present application was instituted.

Though the hearing before me traversed a variety of issues, the application reduced itself in the end to one issue of substance.  This was whether there was prospect at all of the appeal being upheld.  If such a prospect was there, then, as I intimated to counsel at the hearing, I was of the view, that consistent with such decisions of the Full Court of this Court as Jess v Scott (1986) 12 FCR 187 and Jones v The Queen, (unreported, 17 August 1984, FC FCA) and with the decision of the New South Wales Court of Appeal in Kidron & Spaile Architects Pty Ltd v Garrett (1994) 35 NSWLR 572 (esp at 578), my discretion would be exercised favourably to the applicant: the delay is small and explained; no relevant prejudice would be caused; and it would be just to
allow the applicant to proceed in such circumstances.  But is there such a prospect?

At issue is a bare question of statutory interpretation.

In saying this I should acknowledge that this is not the only matter or ground raised in the proposed notice of appeal.  It is, though, the one which Mr Crowe for the applicant advances as the principal ground of appeal.

I should state at the outset that, while I see considerable difficulty confronting the ground advanced, I am unprepared to hold for the purposes of an application of this type that its prospects of success are so “hopeless” (cf Kidron & Spaile Architects Pty Ltd v Garrett, above, at 578) as to warrant my dismissing it.

To appreciate the nature of the question to be raised it is necessary to refer briefly to the circumstances of this matter.

The applicant was injured in December 1984 in an accident involving a light aircraft flown by a Mr Priest.  The respondents were his insurer.

On 15 November 1988 Ms Dixon recovered an ex parte judgment against Mr Priest in the sum of $148,696.32. By order of 14 August 1991 Higgins J granted leave to her pursuant to s26(3) of the Law Reform (Miscellaneous Provisions) Act 1955 (ACT) (“the Act”) to commence proceedings against the respondents. Those proceedings were duly instituted by writ of summons on 1 October 1991 and sought, in substance, the enforcement of the charge upon all insurance moneys that were payable by the insurer in respect of Priest’s liability to her.

By notice of motion of 19 July 1994 the respondents sought an order that, by reason of various matters of fact, they were discharged from any liability to indemnify Priest with the consequence that there was no resultant charge enforceable against them.

On the hearing of that motion the trial Judge found (inter alia) that as a result of material nondisclosure/false
disclosure in the applicant’s insurance proposal with the insurers they were validly entitled to disclaim liability to indemnify him.

While a variety of challenges are made to his Honour’s conclusion in this, the principal matter advanced by way of ground of appeal is that it was not open to the insurers to argue on the motion, or for his Honour to find, that the insurers were entitled to disclaim liability.

Put shortly the applicant’s argument is that, by virtue of the provisions of s26(3) of the Act, not merely the appropriate time but the only time to raise the issue of disclaimer was in the application for leave to commence proceedings before Higgins J in 1991.

Insofar as presently relevant sections 25 and 26 of the Act provide:

“25. (1)   If a person (in this Part referred to as ‘the insured’) has, whether before or after the commencement of this Act, entered into a contract of insurance by which he or she is indemnified against liability to pay any damages or compensation, the amount of his or her liability is, on the happening of the event giving rise to the claim for damages or compensation, and notwithstanding that the amount of the liability may not then have been determined, a charge on
all insurance moneys that are or may become payable in respect of that liability.

26. (1)   Subject to subsection (2), a charge created by this Part is enforceable by way of an action against the insurer in the same way and in the same court as if the action were an action to recover damages or compensation from the insured.

. . .

(3)  Except where subsection 25(2) applies apply, no such action shall be commenced in any court except with the leave of that court, and leave shall not be granted where the court is satisfied that the insurer is entitled under the terms of the contract of insurance to disclaim liability, and that any proceedings, including arbitration proceedings, necessary to establish that the insurer is so entitled to disclaim have been taken.”  (Emphasis added.)

The issue the applicant wishes to have determined by the Full Court is the proper construction to be placed upon s26(3) and in particular upon the words I have emphasised. I will refer to those words as “the proscription”: cf Lissenden v Yorkville Nominees Pty Ltd [1984] 3 NSWLR 138 at 142.

It is conceded that a line of decisions at first instance has held, and appeal courts have assumed, that all that is required of a court in exercising its discretion to grant leave under s26(3) is that the applicant’s claim be
arguable with the consequence that the final determination of the parties’ rights and liabilities should await the hearing of the proceedings so allowed to be commenced.  These decisions are collected in the trial Judge’s reasons for judgment.

Nonetheless, it is submitted that the meaning of the subsection is by no means certain;  that in Lissenden’s case, above, for example, Mahoney JA discerned three possible constructions of the proscription and indeed suggested his own inclination in favour of a construction different from that adopted in the line of decision noted above;  that one of the constructions so referred to (though not there discussed) is that which the applicant propounds;  and that in this state of the law she should be allowed to have the construction issue determined directly by an appellate court.

As I earlier noted, the applicant’s contention is that the issue of disclaimer must be raised on the s26(3) application. If at that stage the matter is not raised for whatever reason (including lack of knowledge of the facts that would otherwise justify disclaimer), the respondent is
thereafter precluded from raising it.  The contrary occurred in this instance.

The argument has obvious unattractive and indeed unpalatable consequences.  But despite the respondents’ clear invitation to me to reject it as “hopeless”, it is one which, in this or in modified form, the applicant should be given the opportunity to have ventilated before an appeal court. In saying this I should indicate that I do not necessarily rate highly the applicant’s prospects of success.

This comment on prospects does, though, bring sharply into focus the respondent’s motion for security for costs. The sum sought as the estimate of party/party costs in the event of the motion being successful is in the order of $12,850.  The applicant did not dissent from this estimate.

It is unnecessary here to restate at any length the various considerations which Judges of this Court have indicated are, or may be, relevant to the exercise of the discretion given by s56 of the Federal Court of Australia Act 1976: see eg Equity Access Ltd v Westpac Banking Corporation (1989) ATPR 40-972; Feltafield Pty Ltd v Heidelberg Graphic Equipment Ltd, (unreported, 12 August 1994, FCA, Beazley J).

Here the circumstance is one of a natural person appellant who on her own admission is impecunious and will be unable to satisfy an order for costs should she be unsuccessful on the appeal.  I have already indicated that I do not rate her prospects of success highly.  I would also indicate that I do not consider the respondents to be responsible in any relevant way for her impecuniosity.  Neither do I regard their asking for security at this stage to be oppressive of her:  cf Pasdale Pty Ltd v Concrete Constructions (1995) 19 ACSR 693 at 698.

While it is the case that a court will not order an impecunious natural person to provide security as a condition of having his or her claimed determined:  cf Fletcher v Commissioner of Taxation (1992) 37 FCR 288 and the cases referred to therein; the same situation does not obtain as of course in relation to an appeal by such a person from such a determination: see eg the observations of Bowen LJ in Cowell v Taylor (1885) 31 Ch D 34 at 38 and of Neaves J of this Court in Ciappina v Ciappina (1983) 70 FLR 287 at 291.
There, it may well be appropriate for security to be provided.

In light of the considerations I have referred to and in particular to the prospects of the appeal, I am of the view that this is a matter in which it is appropriate to order that security be given for the payment of costs that may be awarded against the applicant.

I consider the respondents estimate of party/party costs noted earlier to err somewhat on the generous side particularly in relation to the projected length of time for hearing of the appeal.  In any event I propose to adopt a reasonably conservative approach in fixing an appropriate amount for security.  I would order that it be in the sum of $9,000.

My orders then will be that:

(1)the applicant be granted leave to file and serve a notice of appeal from the judgment of Mr Justice Gallop of 28 October 1996;  and

(2)the appeal be stayed until the applicant lodge with the ACT District Registrar security for the payment of costs in the sum of $9,000 in a form acceptable to the Registrar.

I would note that the applicant’s solicitors have accepted that the respondents’ costs of this application will be borne by them personally.

I certify that this and the preceding 10 pages are a true copy of the Reasons for Judgment herein of the Honourable Justice Finn.

Associate

Dated:  17 February 1997

Counsel for the applicant    :  R Crowe
Solicitors for the applicant :  Gary Robb & Associates

Counsel for the respondent   :  Dr K Crispin QC
Solicitors for the respondent     :  Blake Dawson Waldron

Date of hearing             :  13 February 1997

Date of judgment            :  18 February 1997