GIO General Limited v AMBROSINO
[2001] WADC 267
•26 NOVEMBER 2001
JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CIVIL
LOCATION: PERTH
CITATION: GIO GENERAL LIMITED -v- AMBROSINO & ORS [2001] WADC 267
CORAM: WILLIAMS DCJ
HEARD: 5 NOVEMBER 2001
DELIVERED : 26 NOVEMBER 2001
FILE NO/S: CIV 672 of 2001
BETWEEN: GIO GENERAL LIMITED
Plaintiff
AND
ROGER AMBROSINO
First DefendantALESSANDRO AMBROSINO
Second DefendantGIOVANNA AMBROSINO
Third Defendant
Catchwords:
Procedure - Supreme Court procedure - Order 14 application - Whether defendants cross claim amounts to equitable set off - Whether stay of execution appropriate
Legislation:
Nil
Result:
Plaintiff entitled to judgment
No stay of execution
Representation:
Counsel:
Plaintiff: Mr E V Gregoriadis
First Defendant : Mr G A Pestell
Second Defendant : Mr G A Pestell
Third Defendant : Mr G A Pestell
Solicitors:
Plaintiff: Corsers
First Defendant : Murcia & Associates
Second Defendant : Murcia & Associates
Third Defendant : Murcia & Associates
Case(s) referred to in judgment(s):
Australian Can Co Pty Ltd v Levin & Co Pty Ltd [1947] VLR 332
Casella v Costin Pty Ltd, unreported; SCt of WA; Library No 5416; 22 June 1984
Eng Mee Yong v Letchumanan [1980] AC 331
Gathercole v Smith (1881) 7 QBD 626
Geraldton Building Co Pty Ltd v Christmas Island Resort Pty Ltd (1992) 11 WAR 40
Hazart Pty Ltd v Rademaker (1993) 11 WAR 26
Hazcor Pty Ltd v Kirwanon Pty Ltd (1995) 12 WAR 62
James v Commonwealth Bank of Australia (1992) 37 FCR 445
Morgan & Son Ltd v S Martin Johnson & Co Ltd [1949] 1 KB 107
Rawson v Samuel (1841) 41 ER 451
State Bank of Victoria v Parry [1989] WAR 240
Case(s) also cited:
Nil
WILLIAMS DCJ:
Introduction
This is an appeal from the decision of the learned Deputy Registrar given on 24 July 2001 whereby he dismissed the plaintiff's application for summary judgment.
Principles applicable in relation to appeals
The jurisdiction exercised by the Registrar of the District Court in relation to interlocutory matters is a delegated jurisdiction. A condition of the delegation of this jurisdiction is the provision for a complete review de novo before a Judge of the District Court. In conducting such an appeal, each party may rely on evidence given in affidavit or orally before the Registrar. Furthermore, a rehearing of the matter would also permit the admission of further evidence, without leave, subject to the discretion of the Judge to exclude such evidence where it is irrelevant or where it would be unjust to admit it. It would be wrong to adopt a more restrictive approach: Hazart Pty Ltd v Rademaker (1993) 11 WAR 26 per Malcolm CJ at 28-29.
Facts
The plaintiff sues the defendants for premiums for worker's compensation insurance. The plaintiff insured the defendants and accepted claims on their behalf. The plaintiff managed and paid out on those claims.
Calculation of the premiums was based on an estimate of wages to be paid by the defendants for the period of the cover. Following the expiry of an insurance period the defendants were obliged within one month to provide a wages declaration as to the wages paid during the period of the cover. The premium would then be adjusted. The plaintiff's claim is for premiums as adjusted for the years ending 30 June 1998 and 30 June 1999.
The defendants raise a counterclaim for mismanagement by the plaintiff of the claims which the plaintiff handled on behalf of the defendants. The defendants say that because of mismanagement of those claims they have been required to pay excessive premiums for worker's compensation insurance to their new worker's compensation insurer for the years following 30 June 1999 and that it will be effecting their premiums into the future. The defendants sue for damages to be assessed.
The defendants say they are entitled to set off against the plaintiff's claim their claim for unliquidated damages and adduce evidence that their counterclaim may exceed the amount of the plaintiff's claim and that their set off amounts to a complete defence to the plaintiff's claim. Accordingly the defendants should be given unconditional leave to defend the plaintiff's claim.
General principles applicable
It is the submission of counsel for the plaintiff and accepted by counsel for the defendant that the following general principles are applicable:
(i)In considering an application for summary judgment, the criterion to be applied by the Court is that after the matter has been explained to the Court, there must be real uncertainty, without full argument or further investigation of the facts, as to the plaintiff's right to judgment (Australian Can Co Pty Ltd v Levin & Co Pty Ltd [1947] VLR 332 at 333).
(ii)Summary judgment is not confined to cases in which it is immediately plain and obvious that there is no defence or a real question to be tried, and the fact that a transaction is intricate does not disentitle an applicant to relief in a clear case, and extensive argument may be necessary to demonstrate that there is no question which ought to be tried (Australian Can Co Pty Ltd case, above, at 334).
(iii)The Court is not bound to accept uncritically as raising a dispute of fact calling for further investigation every statement in an affidavit, however equivocal, lacking in precision or inconsistent with undisputed contemporary documents or other statements by the same deponent (Eng Mee Yong v Letchumanan [1980] AC 331 at 341).
(iv)If the defendant can show a triable issue as to a set-off against the claim which is the subject of the application, the defendant will be given leave to defend. (Seaman's Commentary, Vol 1, par 14.3.5).
(v)A set-off exists when the defendant has some claim which can be raised against the plaintiff to 'set-off' in whole or in part, the plaintiff's claim (see Outline of Equity and Trusts, 3rd Ed., M Evans, Butterworths, 1996 at p 394).
(vi)A set-off is unlike a counterclaim in that a set-off can only be used as a defence to reduce or completely negative any verdict in the plaintiff's favour. It is not a matter for separate proceedings against the plaintiff; if it were, it would be raised by way of counterclaim, and not as a set-off (see Outline of Equity and Trusts above, p 394).
(vii)If the defendant can only show a triable counterclaim, the Court will give summary judgment, but can order a stay of execution until after the trial of the counterclaim (Seaman's Commentary, Vol 1, par 14.3.5).
(viii)In general, a counterclaim which is in effect an unconnected cross action will not provide a basis for a stay of execution (State Bank of Victoria v Parry[1989] WAR 240 at 246).
(ix)If the subject matter of the counterclaim is an equitable set-off, unconditional leave to defend is given (Morgan & Son Ltd v S Martin Johnson & Co Ltd[1949] 1 KB 107 at 114).
(x)As far as equitable set-off is concerned:
(a) the Courts have held that the set-off must be essentially bound up with, or must impeach, the title of the other party (Hazcor Pty Ltd v Kirwanon Pty Ltd (1995) 12 WAR 62 at 67 per Kennedy J (with whom Malcolm CJ and Murray J agreed));
(b) the impeachment test was expressly formulated by Lord Cottenham LC in Rawson v Samuel (1841) 41 ER 451 at 458:
"We speak familiarly of equitable set-off, as distinguished from the set-off at law; but it will be found that this equitable set-off exists in cases where the party seeking the benefit of it can shew some equitable ground for being protected against his adversary's demand. The mere existence of cross demands is not sufficient: …Several cases were cited in support of the injunction; but in every one of them, except Williams v Davies, it will be found that the equity of the bill impeached the title to the legal demand."
(c) the strict formulation of the impeachment test was approved of by Gummow J in James v Commonwealth Bank of Australia (1992) 37 FCR 445, and by the Full Court of Western Australia in the Hazcor Pty Ltd case;
(d) to establish an equitable set-off, it is necessary to establish that the claim of the defendant has been brought about by, or has been contributed to by, or is otherwise so bound up with the rights relied on by the applicant, that it would be unconscionable that the applicant should proceed with the claim without allowing a set-off (Casella v Costin Pty Ltd, unreported; SCt of WA; Library No 5416; 22 June 1984); and
(e) the defendant must show an equitable right to be protected from the applicant's claim (Geraldton Building Co Pty Ltd v Christmas Island Resort PtyLtd (1992) 11 WAR 40 at 43, 52);
(xi)An equitable set-off is no more than a defence, and no relief can be recovered on it if the applicant's action is discontinued or dismissed (Gathercole v Smith (1881) 7 QBD 626 at 629).
Defendant's stated position:
Mr Ambrosino, in his affidavit:
(i)Does not deny the Plaintiff's claim;
(ii)Bases the defendants' counterclaim for damages on the allegation that the workers' compensation claims of the defendants were not properly managed and quantified by the plaintiff [see par 6 of the affidavit];
(iii)States, in par 15, that the defendant's claim:
"… is therefore for quantifiable damages against GIO at minimum to the extent of $140,610.92 [see par 13 of the affidavit where this amount is stated as being the amount the defendants allege was overpaid to their new insurer in respect of insurance premiums for the 1999/2000 year due to an alleged over-inflated claims history presented by GIO] + $130,200 [see par 14 of the affidavit where this amount is stated as being the amount the defendants allege was overpaid to their new insurer in respect of insurance premiums for the 2000/2001 year due to an alleged over-inflated claims history presented by GIO] = $270,810.92, and further, damages of $300,000 plus, depending on the rate achieved on premiums by New Concrete in coming years".
Application of facts to the law
The defendants do not raise a direct defence to the plaintiff's claim, and as such, do not dispute the facts of the claim or the amount owed by them to the plaintiff.
The defendants' claim can not be said to constitute a set-off, as it is a matter for separate proceedings against the plaintiff, dealing with an entirely different cause of action, and based on entirely different facts, the defendants' action being in fact an unconnected cross action.
The plaintiff's claim is based on its contractual rights as set out in the insurance policy and the defendants' proposed claim against the plaintiff is based on alleged negligence by the plaintiff.
The defendants can show no equitable right to be protected from the plaintiff's claim.
The defendants claim can not be said to have been brought about by, or to have been contributed to by, or to be otherwise so bound up with the rights relied on by plaintiff, that it would be unconscionable that the plaintiff should proceed with the claim without allowing a set-off, therefore the defendants' claim cannot be classified as an equitable set-off.
Counsel for the defendants puts the question: "Why should the defendants pay the plaintiff when the plaintiff hasn’t done the job for which it seeks to be paid and has caused the defendants loss and damage because of it?" In my view the plaintiff has done the job for which it seeks to be paid and that is admitted by the defendants. The plaintiff charged the defendants a premium to cover the defendants for worker's compensation claims and it is not said that the plaintiff did not cover those claims.
Stay of execution
The defendants say that in any event there should be a stay of execution of any judgment given against the defendants until after the trial of any counterclaim raised by the defendants in the action because the defendants' counterclaim does not arise out of a separate or distinct transaction from the plaintiffs claim. It is said that on the contrary the plaintiff's claim and the defendants' counterclaim are so closely connected that it would be unjust to allow the plaintiff to enforce a judgment against the defendants prior to the determination of the defendants' counterclaim; State Bank of Victoria v Parry [1989] WAR 240 at 246; the Supreme Court Practice 1991, Vol 1, p 152- p 153.
However State Bank of Victoria v Parry supra at 246 is authority for the proposition that in general a counterclaim which is in effect an unconnected cross action will not provide a basis for a stay of execution. In my view it is not appropriate that a stay of execution be granted.
Conclusion
It follows that the appeal is allowed. I will hear counsel as to the appropriate orders to be made.
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