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FAI Insurances Ltd v Mainprize

FAI Insurances Ltd v Mainprize

Case [2006] NSWSC 554 8 June 2006

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CITATION: FAI Insurances Ltd (in Liquidation) & Ors v Mainprize & Ors; HIH Insurance Ltd (in Liquidation) v Alfredson & Ors; FAI Insurances Ltd (in Liquidation) & Ors v Cassidy & Anor; HIH Insurance Ltd (in Liquidation) & Ors v Fodera & Ors; FAI Insurances Ltd & Ors v PricewaterhouseCoopers Actuarial; HIH Insurance Ltd (in Liquidation) & Ors v Abbott & Ors [2006] NSWSC 554

HEARING DATE(S): Tuesday 6 June 2006

JUDGMENT DATE :
8 June 2006

JUDGMENT OF: Simpson J

DECISION: time for service of statements of claim extended

LEGISLATION CITED: Uniform Civil Procedure Rules 2005, r1.12, r6.2(4)

CASES CITED: Kleinwort Benson v Barbrak Ltd [1987] 1 AC 597

PARTIES: FAI Insurances Ltd (in Liquidation) & Ors - Plaintiffs
HIH Insurance Ltd (in Liquidation) & Ors - Plaintiffs
General Reinsurance Australia Ltd - 4th Defendant in proceedings numbered 20033 of 2004
Kolnische Ruckversicherungs-Gesellschaft Aktiengelsellschaft - 5th Defendant in proceedings numbered 20033 of 2004
Guy Carpenter & Co Pty Ltd - 6th Defendant in proceedings numbered 20033 of 2004

FILE NUMBER(S): SC 20033/04; 20513/02; 20308/05; 20236/04; 20237/04; 20168/05

COUNSEL: ST White SC / EA Collins - Plaintiffs
JR Sackar QC / J Hogan-Doran - 4th & 5th Defendants
T Faulkner - 6th Defendant

SOLICITORS: Calyton Utz - Plaintiffs
Allens Arthur Robinson - 4th & 5th Defendants
Ebsworth & Ebsworth - 6th Defendant

IN THE SUPREME COURT
OF NEW SOUTH WALES
COMMON LAW DIVISION

SIMPSON J

Thursday 8 June 2006

20033/04 FAI Insurances Ltd (in liquidation) & Ors v Timothy Maxwell Mainprize & Ors
20513/02 HIH Insurance Ltd (in liquidation) & Ors v Francis Keith Alfredson & Ors
20308/05 FAI Insurances Ltd (in liquidation) & Ors v Terence Kevin Cassidy & Anor
20236/04 HIH Insurance Ltd (in liquidation) & Ors v Dominic Fodera & Ors
20237/04 FAI Insurances Ltd (in liquidation) & Ors v PricewaterhouseCoopers Actuarial
20168/05 HIH Insurance Ltd (in liquidation) & Ors v Charles Percy Abbott & Ors
JUDGMENT

1 HER HONOUR: At issue in these proceedings is a claim by the plaintiffs for orders extending the time for service of a number of statements of claim, the operative versions of which were all filed on dates which, absent the orders now sought, will be valid for service only until 30 September 2006.

2 The application was heard in the course of my tenure as Duty Judge, with the limitations on available time that that entails. All participating parties agreed that they would not require “comprehensive reasons”. Accordingly, these reasons will be somewhat more attenuated than would ordinarily be the case.

3 It is a matter of notoriety that, in 2001, HIH Insurance Ltd (“HIH Insurance”) collapsed. Provisional liquidators and then liquidators were appointed. The liquidation process has commenced and proceeded some distance. A very large number of interlocking companies constitute the group of which HIH Insurance is a part.

4 The liquidators have determined to commence proceedings against a vast number of defendants. So too have the liquidators of FAI Insurances Ltd (“FAI Insurances”), also in liquidation. Eight…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading FAI Insurances Ltd v Mainprize

Details

AGLC: FAI Insurances Ltd (in Liquidation) v Mainprize; HIH Insurance Ltd (in Liquidation) v Alfredson; FAI Insurances Ltd (in Liquidation) v Cassidy; HIH Insurance Ltd (in Liquidation) v Fodera [2006] NSWSC 554
Case: [2006] NSWSC 554
Decision Date: 8 June 2006

CaseChat Overview and Summary

The plaintiffs, FAI Insurances Ltd and HIH Insurance Ltd, both in liquidation, sought an extension of time to serve statements of claim against various defendants, including former directors, auditors, and financial institutions, arising from the collapse of HIH Insurance in 2001. The statements of claim, filed between 2002 and 2006, remained unserved due to ongoing negotiations between the liquidators and the defendants. The defendants, represented by various legal firms, had varying positions on the application for extension, with some opposing the extension and others not objecting or agreeing to specific terms. The legal issues centred on whether the plaintiffs had demonstrated "good reason" for the extension, as required under the Uniform Civil Procedure Rules, and whether the extension would result in unnecessary costs and proceedings without prejudice to the defendants.

Simpson J, the presiding judge, considered the extensive negotiations and the belief by the liquidators that a settlement could be reached by the expiry of the current time limit for service. The judge also noted the potential negative impact on creditors if the statements of claim were served before a settlement was achieved. While acknowledging the defendants' desire for finality, the judge found that the interests of the majority of parties and the creditors favoured granting the extension. The judge relied on the English case of Kleinwort Benson v Barbrak Ltd, which established that "good reason" for an extension included saving unnecessary proceedings and costs without prejudice to the defendants. Consequently, the judge concluded that the extension should be granted to allow continued negotiations and to avoid premature service of the statements of claim, which could disrupt the settlement process and increase costs.

In light of the above reasoning, Simpson J decided to grant the plaintiffs' application for an extension of time to serve the statements of claim. The judge required the plaintiffs to ensure that the orders were made in respect of all necessary parties, whether they participated in the current proceedings or not. The judge's decision balanced the need for finality sought by some defendants with the broader interests of the majority of parties and the creditors, ultimately favouring the continuation of negotiations and the avoidance of unnecessary costs and proceedings.

Orders