Evans v Davantage Group Pty Ltd (No 2)

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FEDERAL COURT OF AUSTRALIA

Evans v Davantage Group Pty Ltd (No 2) [2020] FCA 473

File number: VID 982 of 2018
Judge: BEACH J
Date of judgment: 9 April 2020
Catchwords: GROUP PROCEEDINGS – application seeking respondent’s insurance documents – practice and procedure – doubts as to respondent’s ability to meet judgment – primary cover – excess layer cover – confidentiality – capacity to engage in a meaningful mediation – potential settlement – power to order production of insurance documents under s 33ZF of Federal Court of Australia Act 1976 (Cth) – modern case management theory – ss 37M and 37P – relevance of insurance documents to s 33V settlement approval process – application refused
Legislation:

Civil Liability (Third Party Claims Against Insurers) Act 2017 (NSW) ss 4, 5

Federal Court of Australia Act 1976 (Cth) ss 33V, 33ZF, 33ZG, 37M, 37P
Cases cited:

Beneficial Finance Corporation Limited v Price Waterhouse (1996) 68 SASR 19

BMW Australia Ltd v Brewster; Westpac Banking Corporation v Lenthall (2019) 94 ALJR 51

C.E. Heath Casualty and General Insurance Ltd v Pyramid Building Society (in liquidation) [1997] 2 VR 256

CGU Insurance Ltd v Blakeley (2016) 259 CLR 339

Commonwealth Bank of Australia v ACN 076 848 112 Pty Limited [2015] NSWSC 666

Evans v Davantage Group Pty Ltd [2019] FCA 884

J.N. Taylor Holdings Ltd (in liq) v Bond (1993) 59 SASR 432

Kirby v Centro Properties Limited [2009] FCA 695

Mallonland Pty Ltd v Advanta Seeds Pty Ltd [2019] QSC 250

Rodolfo Lopez v Star World Enterprises Pty Ltd [1997] FCA 454

Simpson v Thorn Australia Pty Ltd trading as Radio Rentals (No 4) [2019] FCA 1229
Date of hearing: 14 February 2020
Registry: Victoria
Division: General Division
National Practice Area: Commercial and Corporations
Sub-area: Corporations and Corporate Insolvency
Category: Catchwords
Number of paragraphs: 112
Counsel for the Applicant: Mr BF Quinn QC and Ms J Collins
Solicitor for the Applicant: Baker McKenzie
Counsel for the Respondent: Mr MI Borsky QC and Dr CO Parkinson
Solicitor for the Respondent: Herbert Smith Freehills
Counsel for the First Intervener: Mr MW Thompson QC and Ms V Blidman
Solicitor for the First Intervener: Moray & Agnew Lawyers
Counsel for the Second Intervener: Mr JP Slattery SC and Mr J Corbett
Solicitor for the Second Intervener: Norton Rose Fulbright Australia

ORDERS

VID 982 of 2018
BETWEEN:

BRETT WILLIAM EVANS

Applicant
AND:

DAVANTAGE GROUP PTY LTD (ACN 161 967 166)

Respondent

AAI LIMITED

First Intervener

INSURANCE AUSTRALIA LIMITED, DUAL AUSTRALIA PTY LTD AND BERKLEY INSURANCE CO. (TRADING AS BERKLEY INSURANCE AUSTRALIA)

Second Intervener

JUDGE:

BEACH J

DATE OF ORDER:

9 APRIL 2020

THE COURT ORDERS THAT:

1.Insurance Australia Limited, Dual Australia Pty Ltd and Berkley Insurance Co. (trading as Berkley Insurance Australia) be given leave to intervene in the applicant’s interlocutory application seeking production of the respondent’s insurance documents (the insurance application).

2.AAI Limited be given leave to intervene in the insurance application.

3.The insurance application be dismissed.

4.The applicant’s and the respondent’s costs of and incidental…

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Details
Case
[2020] FCA 473
Decision Date

CaseChat Overview and Summary

Evans v Davantage Group Pty Ltd (No 2) involved an application by Evans, the applicant, for the production of insurance documents of Davantage Group Pty Ltd, the respondent, in the context of a group proceeding. Evans sought the documents to assess the respondent’s ability to meet any potential judgment and to inform his decision on whether to proceed with the litigation or to settle. The application raised issues about the power of the Court to order the production of insurance documents in group proceedings, the relevance of such documents to the settlement approval process under section 33V, and the confidentiality and capacity considerations in mediation.

The court considered the statutory powers under section 33ZF of the Federal Court of Australia Act 1976 (Cth) and the principles of modern case management under sections 37M and 37P. The court also examined the relevance of the insurance documents to the potential settlement and the broader implications for the collective action process. The court concluded that while it had the power to make the orders sought, the statutory provisions did not provide a source of power for ordering the production of insurance documents in this context. The court further held that the applicant's desire to obtain the documents was not compelling enough to justify breaching the confidentiality and capacity principles relevant to mediation and settlement processes.

The court dismissed the application, noting that the primary insurer had denied cover, and the excess insurers had generally denied cover, limiting the potential utility of the documents. The court also granted leave to several insurance companies to intervene in the proceedings, highlighting their interest in the outcome of the application. The court ordered that the costs of the application be borne by the applicant and the respondent, with the interveners' costs to be taxed if not agreed upon.

In summary, the court refused the application for the production of insurance documents, emphasizing the balance between the procedural rights in group proceedings and the need to protect confidentiality and capacity in the settlement process.

Orders

Orders of the court

1. Insurance Australia Limited, Dual Australia Pty Ltd and Berkley Insurance Co. (trading as Berkley Insurance Australia) be given leave to intervene in the applicant’s interlocutory application seeking production of the respondent’s insurance documents (the insurance application).

2. AAI Limited be given leave to intervene in the insurance application.

3. The insurance application be dismissed.

4. The applicant’s and the respondent’s costs of and incidental to the insurance application be their costs in the cause.

5. The applicant pay the interveners’ costs of and incidental to the insurance application to be taxed in default of agreement.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

Further, the applicant can settle “in principle” on a foundational assumption or a representation made by the respondent. If that is made transparent before me I will seek to verify it in any s 33V process if the applicant cannot. Indeed, the respondent would also have an interest in verifying it. And if it was not verified, then other steps can be taken.(d) Conclusion Let me make the following final observations. First, I have carefully considered the Court’s protective role under Pt IVA. But the boundaries thereof are not unlimited and do not go so far as to justify giving the applicant, under the collective action of a group proceeding, the right to obtain a respondent’s insurance documents in a context such as the present that the applicant and group members would not normally have in individual proceedings. Second, I do accept that there has been a changed circumstance in Davantage’s balance sheet strength since the time of issue that no doubt impacts upon the judgment call to be made by the applicant and his advisers as to whether to pursue the proceeding further and in what form, or whether to settle the proceeding and if so on what terms. And I well appreciate the applicant’s desire to inform himself further on such matters by seeking to obtain the insurance documents. Nevertheless this is not a compelling enough reason to grant his application. Third and finally, one can reasonably speculate about what would follow if I was to accede to the application. Now it is to be recalled that the primary insurer has denied cover save as to a limited aspect, and the excess insurers have denied cover generally. Therefore, it may be queried how much utility there will be in reviewing the insurance documents in that context, as distinct from a scenario where an insurer has accepted that its policy covers a respondent’s liability to the applicant in relation to the nature of the claims but the respondent and insurers want to keep confidential the dollar figure of the available cover. But I do not have to speculate further. I do not propose to accede to the applicant’s claims. In summary, I accept that I have the power to make the orders sought under s 23. But I do not accept that ss 33ZF(1), 37M and 37P provide an available source of power. In any event, for the various reasons given I would not exercise any power in favour of the applicant to order production of the insurance documents.

Ratio Decidendi

Legal Principle Established

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