Hamersley Iron Pty Ltd v Terex Mining Australia Pty Ltd
[2008] WADC 25
•31 January 2008
HAMERSLEY IRON PTY LTD -v- TEREX MINING AUSTRALIA PTY LTD [2008] WADC 25
| DISTRICT COURT OF WESTERN AUSTRALIA | Citation No: | [2008] WADC 25 | |
| Case No: | CIVO:158/2007 | 31 JANUARY 2008 | |
| Coram: | SCHOOMBEE DCJ | 30/01/08 | |
| PERTH | |||
| 15 | Judgment Part: | 1 of 1 | |
| Result: | Application allowed | ||
| PDF Version |
| Parties: | HAMERSLEY IRON PTY LTD TEREX MINING AUSTRALIA PTY LTD |
Catchwords: | Practice and procedure Discovery to identify a potential party |
Legislation: | Rules of the Supreme Court 1971, O 24A r 3 |
Case References: | Paxus Services Ltd v People Bank Pty Ltd (1990) 99 ALR 728 Stewart v Miller [1979] 2 NSWLR 128 |
JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
- IN CHAMBERS
- Applicant
AND
TEREX MINING AUSTRALIA PTY LTD
Respondent
Catchwords:
Practice and procedure - Discovery to identify a potential party
Legislation:
Rules of the Supreme Court 1971, O 24A r 3
Result:
Application allowed
(Page 2)
Representation:
Counsel:
Applicant : Mr H L Williams
Respondent : Mr N M Beech
Solicitors:
Applicant : DLA Phillips Fox
Respondent : Pynt & Partners
Case(s) referred to in judgment(s):
Paxus Services Ltd v People Bank Pty Ltd (1990) 99 ALR 728
Stewart v Miller [1979] 2 NSWLR 128
(Page 3)
1 SCHOOMBEE DCJ: I have come to the conclusion that the application should be allowed. I will give ex tempore reasons but allow myself the right to edit those reasons if any of the parties wish to have a copy of the reasons or if the matter is to be appealed.
2 This is an application for discovery pursuant to O 26A r 3 of the Rules of the Supreme Court 1971 between the plaintiff, Hamersley Iron Pty Ltd, which I shall refer to as "Hamersley", and Terex Mining Australia Pty Ltd, which I shall refer to as "Terex".
3 This application came before me on 25 January 2008, on which occasion it was adjourned to today's date to allow the parties to file further affidavits. The reason why the matter was adjourned was because the Court raised certain issues regarding the appropriateness of the application under that particular rule, which issues were also of concern to counsel for Terex Mining.
4 Order 26A r 3 deals with discovery in order to identify a potential party. Rule 3(1) provides as follows:
"This Rule applies if a person who appears to have a cause of action against a person ('the potential party') wants:-
(a) to commence proceedings against the potential party; or
(b) to take proceedings against the potential party in the course of an action to which the person is a party,
but the person, after reasonable inquiries, has not been able to ascertain a description of the potential party sufficient for the purposes of doing so."
5 This rule indicates that there are four matters which an applicant has to prove in order to fall within this rule. These four matters are the following:
1. The applicant needs to have a cause of action against the potential party;
2. It needs to want to commence proceedings against the potential party, or take proceedings against the potential party in the course of an action in which the applicant is already a party;
3. It needs to show that despite reasonable inquiries, it was not able to locate the potential party; and;
(Page 4)
- 4. It needs to indicate that the potential party could not be ascertained for purposes of commencing proceedings.
6 Hamersley filed an affidavit sworn to by Ms Elphick and filed on 3 December 2007 setting out the background to this application. It appears that there are already proceedings on foot in which Hamersley and Terex are involved. A Mr Green has instituted proceedings against Hamersley as first defendant and against Extraman Pty Ltd as second defendant, and Terex has been joined as a third party by Hamersley.
7 In his statement of claim, which is attached to the affidavit by Ms Elphick, Mr Green alleges that he suffered serious injury during an accident at a mine site operated by Hamersley. It appears from the affidavit that Mr Green was an employee of Extraman Pty Ltd and that Terex hired the services of Mr Green from Extraman Pty Ltd, and then supplied the services of Mr Green to Hamersley.
8 The affidavit by Ms Elphick further sets out that Hamersley has instructed its solicitors, DLA Phillips Fox, which I shall refer to as "Phillips Fox", to determine whether Hamersley is entitled to indemnity under a public liability policy taken out by Terex pursuant to the provisions of the contract of service between Terex Mining and Hamersley. The contract of service is attached to the affidavit by Ms Elphick and sets out that the contractor, which in this case was Terex, is obliged to take out a public liability policy which shall also cover Hamersley.
9 The affidavit sworn to by Ms Elphick does not say, in so many words, that Hamersley intends to bring proceedings against the insurer of the public liability policy which Terex has taken out or, at least, was meant to take out pursuant to the contract of service between Hamersley and Terex. However, it is implied from the affidavit that this is the intention of Hamersley and this is why Hamersley wishes to identify the insurer of the public liability policy taken out by Terex.
10 This further appears from a letter sent by Phillips Fox to ACE American Insurance Co, dated 22 November 2004, which is attached to the affidavit filed by Mr Nicholas Beech on behalf of Terex on 30 January 2008. In that letter Phillips Fox, on behalf of Hamersley, say that Hamersley Iron considers ACE American Insurance Co to be liable to indemnify it against Mr Green's claim. The letter further sets out that Hamersley is currently pursuing indemnity for Mr Green's claim from Terex itself pursuant to an indemnity clause in the contract of service and only seeks to claim indemnity against the insurer of the public liability
(Page 5)
- policy to the extent that it cannot enforce its contractual indemnity against Terex.
11 The letter further asks that it be considered as a notification of the circumstances of the accident and the claim and enquires whether ACE American Insurance Co concedes that it will be liable under the policy to indemnify Hamersley against Mr Green's claim. In my view it therefore appears sufficiently from this letter that the intention of Hamersley is to bring proceedings against the insurer of the public liability policy that was taken out by Terex.
12 The problem that Hamersley has put to this Court is that it is not certain whether ACE American Insurance Co or any other insurer is the correct insurer of the public liability policy taken out by Terex in its name and that of Hamersley. Hamersley's solicitors, Phillips Fox, have taken steps to identify the potential party, that is, the insurer of the public liability policy. First of all, Hamersley has a copy of a policy wording which appears on its face to be issued by "ACE American Insurance Co, a California Corporation" but, from the affidavit material before me, it is not clear how this policy came into the possession of Hamersley. Counsel for Hamersley informed me fro the bar table that Hamersley does not know where the policy wording came from – it simply arrived by post.
13 Phillips Fox then wrote to ACE American Insurance Co as per the letter which is attached to the affidavit by Mr Beech, which I have already referred to. The affidavit sworn to by Ms Elphick sets out that no reply was received by Phillips Fox to the letter sent to ACE American Insurance Co. In the affidavit filed by Mr Williams on behalf of Hamersley on 31 January 2008, he states that after the letter sent to ACE on 22 November 2004, numerous further letters were sent to ACE American Insurance Co by Phillips Fox, but no reply was received to any of these letters.
14 At some stage it seems that Phillips Fox obtained information regarding the representation of ACE American Insurance in Perth and directed their inquiries to ACE American Insurance in Perth. The affidavit filed by Mr Williams attaches a letter sent to the underwriting manager of ACE American Insurance in Perth on 20 October 2005 enclosing a copy of the various letters sent to ACE American Insurance Co and asking for the correct address to which these inquiries should be directed.
(Page 6)
15 It seems that the inquiry to the Perth office was directed to the Sydney office of ACE American Insurance and, subsequently, a number of letters and emails were exchanged between Phillips Fox and ACE Insurance in Sydney. Essentially ACE American Insurance in Sydney required further information before they would direct Hamersley to the appropriate address of ACE American Insurance Co in the United States. ACE Insurance in Sydney first asked for a copy of the policy wording held by Hamersley which was supplied and then required detail of the claim by Hamersley against Terex. Lastly, ACE Insurance I Sydney asked why inquiries were to be made from ACE American Insurance Co where a claim had already been instituted by Hamersley against Terex.
16 At that stage it came to the notice of Phillips Fox that Pynt & Partners, who are the solicitors on record for Terex, might also have been acting in some way for ACE Insurance Sydney. Accordingly, Phillips Fox considered it inappropriate to further deal with ACE Insurance in Sydney and indicated that, pursuant to the professional conduct rules, it would be necessary for them to deal with Pynt & Partners directly.
17 I am not sure that this concern by Phillips Fox was justified because it appears that Pynt & Partners were acting for Terex on the instructions of ACE Insurance Sydney. There is no indication that Pynt & Partners were generally representing ACE Insurance Sydney or ACE American Insurance Co for the purpose of dealing with any inquiries by another insured regarding potential indemnity under a policy issued by either of these insurance companies.
18 Nevertheless, it appears that Phillips Fox then started to communicate with Pynt & Partners. According to the affidavit filed by Mr Williams, there was a telephone conversation on 10 October 2006, pursuant to which Pynt & Partners indicated that they had instructions from ACE in Sydney, that ACE had reserved indemnity to Terex under Terex's public liability policy, that they were providing ACE with advice on indemnity, and that they were not aware of any American based ACE policy.
19 Almost a year later, on 1 August 2007, Phillips Fox wrote a letter to Pynt & Partners, which is attached to the affidavit of Ms Elphick, in which they inquired as to whether Pynt & Partners would provide them with a copy of the policy pursuant to which ACE Insurance Sydney had granted indemnity to Terex and pursuant to which they were instructed to conduct the defence on behalf of Terex.
(Page 7)
20 The letter also explained that Phillips Fox was of the view that this policy might be an additional policy to the policy issued by ACE American Insurance Co which was called the "International Advantage Commercial Insurance Policy", and a copy of which they were holding. The letter indicated that it was written to Pynt & Partners as Terex's solicitors on the record but that, insofar as Pynt & Partners were also acting for ACE Insurance, the question was also directed to them in that capacity, and emphasised that Hamersley's request was pursuant to 74 of the Insurance Contracts Act 1984 (Cth). Section 74 of the Insurance Contracts Act 1984 (Cth) provides as follows:
"Policy documents to be supplied on request
(1) Where the insured under a contract of insurance so requests in writing given to the insurer, the insurer shall give to the insured a statement in writing that sets out all the provisions of the contract.
(2) An insurer need not comply with the requirements of subsection (1) if the insurer has already given to the insured such a statement, whether as required by this Act or otherwise."
21 After this letter some emails were exchanged between Pynt & Partners and Phillips Fox pursuant to which Phillips Fox indicated that they would file an application under O 26A r 3 of the Rules of the Supreme Court, and Pynt & Partners queried whether that order was brought against Terex and, if so, whether it was an appropriate order. Phillips Fox filed the originating summons on 3 December 2007.
22 Counsel for Terex submitted, at the hearing of the application, that it was not properly brought under O 26A r 3 of the Rules of the Supreme Court for basically three reasons. The first was that Hamersley knew who the potential party was that it intended to sue, that is, ACE American Insurance Co. Secondly, that the application was geared to obtaining documents so that Hamersley could ascertain whether it was insured under certain policies, what the terms of the policies were and also who the insurer was under those policies. The application was, therefore, not only directed towards finding out who the potential party was to be sued as a defendant, but went wider than this. The third argument put forward by counsel for Terex was that Hamersley had not shown that it had a cause of action against ACE American Insurance Co or ACE Sydney.
(Page 8)
- This was on the basis that Hamersley had not yet asked either insurer for indemnity and neither insurer had refused indemnity.
23 As regards the first point raised, that is, that Hamersley knows who the potential party is that it wishes to sue, the position on the material before me seems to be the following: Hamersley knows that ACE American Insurance Co issued the International Advantage Commercial Insurance Policy of which it has a copy. However, as pointed out by counsel for Hamersley, on the face of the copy of the policy it is not clear whether the policy's period of insurance actually covers the date of the accident.
24 There are two sets of endorsements to the policy. The first seems to cover the period from 1 October 2001 to 1 October 2002. The other endorsement covers the period from 1 October 2002 to 1 October 2003. The accident occurred in August 2001. There is no schedule attached to the copy of the policy issued by ACE American Insurance which Hamersley holds.
25 It further appears from the two sets of endorsements that the insured under the policy issued by ACE American Insurance Co is Terex Corporation. This is a different name to that of Terex. Accordingly, it is not certain that the policy issued by ACE American Insurance Co is the public liability policy which Terex took out pursuant to its obligations under the contract of service between it and Hamersley.
26 Accordingly, I agree with counsel for Hamersley that it is not clear on the face of the document held by Hamersley, that the policy issued by ACE American Insurance Co covers any liability arising to Hamersley from the accident which occurred in August 2001.
27 Further, there does seem to be some uncertainty with regard to the proper address or the location at which ACE American Insurance can be found. The affidavit by Mr Williams indicates that the letters sent to ACE American Insurance Co, care of its broker, Marsh, in the United States, remained unanswered. Order 24A r 3 of the Rules of the Supreme Court applies not only where the applicant does not have a description of the potential party, but also where it only has a description which is insufficient for the purposes of commencing proceedings against that potential party.
28 Whereas Hamersley may have an indication that ACE American Insurance Co is the insurer which issued the public liability policy which Terex appears to have taken out pursuant to the contract of service
(Page 9)
- between it and Hamersley, Hamersley has no way of knowing whether the copy of the policy document that it has, is actually applicable to the date ton which the accident occurred and whether it provides cover to Hamersley. In addition Hamersley does not have a proper description which is sufficient to commence proceedings against ACE American Insurance Co.
29 Pursuant to O 26A r 3, the applicant has to show that it has undertaken reasonable inquiries. It could be said that Phillips Fox should not have been put off by their concerns that Pynt & Partners were acting in some respect for ACE Insurance Sydney because they were conducting the defence of the claim against Terex on the instructions of ACE Sydney, and that Phillips Fox should have pursued its inquiries directed at ACE Sydney. Perhaps if Phillips Fox had explained in some more detail to ACE Insurance Sydney what the background was to their inquiry and why they were directing this inquiry to ACE Insurance Sydney, they may have been provided with an answer by ACE Insurance Sydney. On the other hand, ACE Insurance Sydney might also have taken the approach that, whereas there was a potential claim, this had nothing to do with ACE Insurance Sydney and should have been pursued by Phillips Fox directly with the American insurer.
30 I have, therefore, come to the conclusion that whereas the steps taken by Hamersley in order to locate and identify the potential party may not have been perfect, Phillips Fox certainly went to some length to try and obtain this information. Accordingly, I am of the view that it cannot be said that Phillips Fox did not take reasonable steps.
31 As regards the second argument raised by counsel for Terex, namely, that the purpose of the application is really to obtain documents and not a description of the potential party, I agree that the purpose of the application goes wider than just obtaining the proper address for ACE American Insurance Co or, if that is not the correct insurer, finding out who the insurer is of the public liability policy which Terex took out. The purpose of the application is also to determine whether Hamersley is covered under that policy in respect of Mr Green's claim.
32 In this regard counsel for Terex raised the argument that what Phillips Fox should have done is to have brought an application again ACE American Insurance Co under O 26A r 4 of the Rules of the Supreme Court, which deals with discovery from a potential party which has already been indemnified. Order 26A r 4(1) provides as follows:
(Page 10)
- "This Rule applies if a person who may have a cause of action against a person whose description has been ascertained ('the potential party') wants –
(a) to commence proceedings against the potential party; or
(b) to take proceedings against the potential party in the course of an action to which the person is a party,
but the person, after reasonable inquires, has not been able to obtain sufficient information to enable a decision to be made as to whether to commence or take the proceedings."
33 It is apparent from the provisions of this rule that it would also have been an appropriate proceeding for Hamersley to approach ACE American Insurance Co and to ask for the relevant documents which would have enabled it to find out whether it had sufficient information to make a decision whether to commence proceedings against ACE American Insurance Co. However, the problem that Phillips Fox encountered in this regard is that it was unable to locate or communicate with ACE American Insurance Co.
34 I am also of the view that it would not be an answer to say that Phillips Fox should have brought an application under O 26A r 4 against ACE Insurance in Sydney, because ACE Insurance in Sydney could very likely have taken the approach that it was not the appropriate company against whom the application was to be made, as it was not the company whose description had been ascertained, at least not pursuant to the copy of the policy which has on the face of it been issued by ACE American Insurance Co. This means that such an application would very likely have brought Hamersley back to square one.
35 The difficulty in this particular matter seems to be that Hamersley, to some extent, falls between two stools as far as O 26A r 3 and O 26A r 4 are concerned. It wishes to see more documentation than what r 3, strictly speaking, is geared to but, on the other hand, it is unable to bring an application under r 4 for further information until it knows who the party is to bring the application against and, more particularly, where to locate that party.
36 Counsel for Terex also submitted that Hamersley had another avenue of redress under s 74 of the Insurance Contracts Act. Section 74(1) of the Insurance Contracts Act:
(Page 11)
- "Where the insured under a contract of insurance so requests in writing given to the insurer, the insurer shall give to the insured a statement in writing that sets out all the provisions of the contract."
37 Counsel for Hamersley referred to s 8 of the Insurance Contracts Act which deals with the application of this act. Section 8 provides as follows:
"8 Application of Act
(1) Subject to section 9, the application of this Act extends to contracts of insurance and proposed contracts of insurance the proper law of which is or would be the law of a State or the law of a Territory in which this Act applies or to which this Act extends
(2) For the purposes of subsection (1), where the proper law of a contract of proposed contract would, but for an express provision to the contrary included or to be included in the contract or in some other contract, be the law of a State or of a Territory in which this Act applies or to which this Act extends, then notwithstanding that provision, the proper law of the contract is the law of that State or Territory."
39 It is therefore not clear whether Hamersley could rely on s 74 of the Insurance Contracts Act in approaching ACE American Insurance Co for information on the terms of the policy. Further, s 74 refers to "an insured" being entitled to see the provisions of any insurance contract. Hamersley may again encounter difficulty in persuading ACE Insurance Sydney or ACE American Insurance Co that it is an insured under any policy issued by either of them, if it is not able to obtain the necessary documentation to prove that it is an insured.
(Page 12)
40 As far as the third submission by counsel for Terex is concerned, I agree that Hamersley has not proven that it has a complete cause of action. A cause of action for indemnity against an insurer is based on the insurer's refusal to provide indemnity and that has not yet occurred. However, counsel for Hamersley submitted that this approach would leave Hamersley in an impossible situation, as it would not be able to ask for indemnity because it did not know who the appropriate insurer was and, therefore, could not trigger a refusal so that it would obtain a complete cause of action. However, O 26A r 3 of the Rules of the Supreme Court only requires that it should "appear" that the applicant has a cause of action against the potential party. It is not necessary for an applicant to prove this conclusively.
41 In Stewart v Miller [1979] 2 NSWLR 128 Sheppard J held as follows at 140:
"… Preliminary discovery is a valuable aid to justice. But its objective would be perverted if it were to be permitted to be turned into an instrument of oppression if it became a procedure in aid of speculative claims. It is one thing to require the name of a wrongdoer to be disclosed to the person wronged. It is a very different thing to require his name to be disclosed so that someone supposing himself to have a grievance against him may commence merely speculative proceedings against him. This does not mean that an applicant for preliminary discovery will never be granted that relief unless he establishes that he has a prima facie case against the person whose name he wishes to ascertain. The evidence, although falling short of establishing all the ingredients of a prima facie case, may point sufficiently to the existence of a case for relief as to make it proper, in the interests of justice, that preliminary discovery be ordered so that proceedings for that relief can be brought. Each case must be considered on its own merits."
42 In my view, Hamersley has a potential cause of action against the insurer of the public liability policy issued to Hamersley for indemnity in respect of Mr Green's claim. This is not speculative. It is based on the documents placed before this Court which indicate that, pursuant to a contract of service between Hamersley and Terex, Terex was under an obligation to take out a public liability policy which would also provide cover to Hamersley. Further, the copy policy wording issued by ACE American Insurance Co has been provided to this Court which indicates that there was at least some type of public liability policy issued
(Page 13)
- to Terex Corporation. Although Hamersley cannot prove all the necessary ingredients at this stage, it has, in my view, shown that it appears to have a cause of action. It may not have a complete cause of action to bring proceedings or to issue a writ of summons at present, but it has indicated that it has a right to obtain some relief against the insurer from which a policy was obtained by Terex on behalf of Hamersley.
43 At the end of the day I have to make a discretionary judgment which should be made in the interests of justice. I agree with counsel for Terex that the purpose of this application appears to be slightly wider than what O 26A r 3 strictly speaking contemplates. There may also have been an issue that Hamersley initially misconceived or did not spell out sufficiently its position and the background to its investigations in the letters to ACE American Insurance Co, ACE Insurance Sydney, Pynt & Partners, or in the initial affidavit filed by Ms Elphick.
44 However, on the basis of the further affidavit filed by Mr Williams, it is clear in my view that Hamersley does not have a proper description of an insurer sufficient to enable it to commence proceedings. At the very least Hamersley is entitled to be provided with discovery of documents indicating who the insurer is of the public liability policy that Terex took out in compliance with its obligations under the contract of service with Hamersley. If the documents which provide that information go further and also disclose to Hamersley whether it is covered under that policy for the claim by Mr Green, that is no reason to refuse the application.
45 Although prejudice to the party against whom the application is made is not an issue pursuant to O 26A r 3, I have considered, in the interests of justice, whether there would be any prejudice to Terex if such an order was made. There could be situations where the ambit of the documentation in respect of which discovery is sought pursuant to O 26A could be prejudicial to the respondent to that application, for example, if it contained business records, some of which might be confidential. There does not seem to be any reason why the discovery of any policies, schedules and endorsements as are sought by Hamersley could be prejudicial to Terex.
46 It has repeatedly been held that O 26A is a rule of a beneficial kind which should be given the fullest scope that its language will reasonably allow. In this regard I refer to what was said in Paxus Services Ltd v People Bank Pty Ltd (1990) 99 ALR 728 at 733 with regard to the equivalent provision in the Federal Court Rules.
(Page 14)
47 I am, therefore, of the view that, under the circumstances and in the interests of justice, I should allow the application.
48 As regard the formulation of the orders, counsel for Terex submitted that the orders should be formulated in such a manner that any documents to be discovered should be edited so that they disclose the identity of the potential party only and not any other information. However, O 26A r 3 does not provide for documents to be discovered on an edited basis.
49 Order 26A r 3 (4)(a) provides that on application discovery should be given of all documents that are in the non-party's possession relating to the description of the potential party. It does not say that only those parts of the documents which describe the potential party should be disclosed. Again, I cannot see any prejudice to Terex in disclosing a full copy of the documents sought subject, of course, to the requirement that these documents do relate to a description of the potential party. As indicated earlier, the words "description of a potential party" needs to be read as encompassing a description sufficient for the purposes of the applicant issuing proceedings.
50 In my view it would not be in the interest of justice to restrict the discovery of the relevant documents to only certain lines or paragraphs which disclose the name of the insurer. This would mean that Hamersley would thereafter have to bring a further application under O 26A r 4 against the particular insurer whose name has been disclosed in order to establish whether Hamersley is an insured under the policy issued by the insurer and whether the policy applies to Mr Green's claim.
51 Keeping in mind that interlocutory applications and the resulting costs should be kept to a minimum, I see no reason why these orders should be restricted to only parts of the document, particularly where there is no prejudice to the opposing party. Further, I agree with the submission made by counsel for Hamersley that it should not be left to the decision of Terex how much of any document relates to the description of the potential party. This is particularly so in the context of an insurance policy where it is sometimes necessary to refer to a number of clauses in order to work out how far the cover extends, to which insured it applies, and in respect of what particular occurrence or period of time it applies.
52 Accordingly, I have come to the conclusion that any documents which relate to the description of the potential party, that is, the insurer of the public liability policy that Hamersley took out in compliance with its
(Page 15)
- obligations under the contract of service with Terex, should be discovered in full, such documents to be identified in the orders to be made.
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