Dorrough, Christopher James and Anor v Bank of Melbourne Ltd Bank of Melbourne Ltd v Dorrough, Christopher James and Ors The National Mutual Life Association of Australasia Ltd v FAI General Insurance Co Ltd

The Federal Court of Australia was asked to decide whether the National Mutual Life Association of Australasia Limited could discontinue its cross-claim against FAI General Insurance Company Limited, and whether FAI could be granted leave to cross-claim against certain parties. The Dorroughs had sued the Bank of Melbourne for relief in respect of loan obligations, while the Bank sought indemnity and contribution against the Dorroughs, National Mutual, and Mr. Byrne. National Mutual sought leave to claim against FAI as a cross-respondent, and FAI resisted. The proceedings and cross-claims have been settled between all parties except FAI. FAI now sought leave to cross-claim against the Dorroughs, the bank, Mr. Byrne, and Alan Taylor, trustee in bankruptcy of Mr. Byrne's estate, while National Mutual sought leave to discontinue its cross-claim against FAI. The court had to determine whether the issues raised in the proposed cross-claim were hypothetical and whether the work done in preparation for litigation could be considered an "advantage gained in the litigation."

In its decision, the court held that the proposed cross-claim by FAI was not an appropriate vehicle for determining the issues, as it was hypothetical and would not lead to any relief for the parties involved. The court also found that the preparation done in the current proceedings could be utilized in other proceedings if the issues arose again. The court granted leave for National Mutual to discontinue its cross-claim against FAI, stating that it would not serve any good purpose to refuse the application. The court refused leave for FAI to cross-claim against the other parties, as FAI had failed to demonstrate that the issues raised in the proposed cross-claim were not hypothetical. The court ordered that FAI pay the costs of the respondents to both motions.