Helicopter Aerial Surveys Pty Ltd v NTI Ltd
[2025] FCA 265
•25 March 2025
FEDERAL COURT OF AUSTRALIA
Helicopter Aerial Surveys Pty Ltd v NTI Ltd [2025] FCA 265
File number(s): NSD 133 of 2025 Judgment of: JACKMAN J Date of judgment: 25 March 2025 Catchwords: PRACTICE AND PROCEDURE – Interlocutory application for orders to join Insurance Australia Limited as the respondent and remove NTI Ltd as the respondent – Where incorrect entity was sued – Where applicant seeks to recover amount payable from insurer following judgment debt and costs order in FCCA proceedings – Application granted
COSTS – Where outgoing respondent asserted it was the relevant insurer – Where applicant sought clarification of NTI Ltd’s role and which entity was the insurer – Where applicant foreshadowed a claim under s 601AG of the Corporations Act 2001 (Cth) – Where outgoing respondent later said it was the appointed claims manager, not the relevant insurer – Where outgoing respondent failed to clarify that the insurance business had been transferred to Insurance Australia Limited – The parties pay their own costs of the proceedings to date – The outgoing respondent pay the applicant’s costs of and in relation to the interlocutory hearing
Legislation: Corporations Act 2001 (Cth)
Federal Court of Australia Act 1976 (Cth)
Cases cited: Insurance Australia Limited, in the application of Insurance Australia Limited (No 2) [2017] FCA 980
Northern Territory v Sangare [2019] HCA 25; (2019) 265 CLR 164
Division: General Division Registry: New South Wales National Practice Area: Commercial and Corporations Sub-area: Commercial Contracts, Banking, Finance and Insurance Number of paragraphs: 31 Date of hearing: 25 March 2025 Counsel for Applicant Mr T Bateman Solicitors for Applicant Vector Legal Pty Ltd Counsel for Respondent Mr M Short Solicitors for Respondent Turks Legal ORDERS
NSD 133 of 2025 BETWEEN: HELICOPTER AERIAL SURVEYS PTY LTD
Applicant
AND: NTI LTD
Respondent
ORDER MADE BY:
JACKMAN J
DATE OF ORDER:
25 MARCH 2025
THE COURT ORDERS THAT:
1.Pursuant to r 9.05 of the Federal Court Rules 2011 (Cth), Insurance Australia Limited be joined as respondent;
2.Leave be granted to the applicant to file an Amended Originating Process and an Amended Concise Statement in the form exhibited to the affidavit of Bradley James Hayward dated 20 March 2025 and serve those documents on Insurance Australia Limited by 1 April 2025;
3.Pursuant to r 9.08 of the Federal Court Rules 2011 (Cth), NTI Ltd be removed as a respondent;
4.Subject to order 5, the applicant and NTI Ltd each pay their own costs of the proceedings to date;
5.NTI pay the applicant's costs of and relating to the hearing today in relation to costs.
6.The matter stand over to 9.30 am on 16 April 2025.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
REASONS FOR JUDGMENT
Delivered ex tempore, revised from transcriptJACKMAN J:
In these proceedings, the applicant claims the amount of a judgment debt and costs order which were made in favour of the applicant against Bradford Marine Pty Limited (Bradford Marine) in proceedings heard in the Federal Circuit Court of Australia in November 2020 (FCCA proceedings). The judgment debt and costs order from the FCCA proceedings were never paid. Bradford Marine was wound up on 15 January 2021 and deregistered on 30 October 2024.
By these proceedings, the applicant seeks to recover the amount payable from Bradford Marine's insurer pursuant to s 601AG of the Corporations Act 2001 (Cth) (Corporations Act). At the time of filing its application, the applicant understood that NTI Ltd (NTI) was the relevant insurer of Bradford Marine. It is now accepted that NTI was not the relevant insurer of Bradford Marine, and the parties agree that appropriate orders ought to be made for the removal of NTI from the proceedings. The parties disagree, however, on the appropriate order as to costs. The applicant submits that there should be no order as to costs (with the intent that it and NTI each pay their own costs) but seeks an order for costs of and relating to this hearing. The respondent submits the applicant should pay its costs.
The court has a broad discretionary power to award costs in proceedings: s 43(2) of the Federal Court of Australia Act 1976 (Cth). In the exercise of this discretion, the court will generally order that costs follow the event, and if a party has been wrongly joined, then, ordinarily, it will be entitled to a costs order in its favour upon the proceedings against it being dismissed or discontinued.
The general principle that costs follow the event may be modified or displaced where there is conduct on the part of the successful party in relation to the conduct of the litigation that would justify a different outcome, such as a want of the cooperation required of litigants to ensure the just resolution of the real issues in civil proceedings with minimal delay and expense, or where its conduct induced the claimant to believe that he or she had a good cause of action: Northern Territory v Sangare [2019] HCA 25; (2019) 265 CLR 164 at [25] (Kiefel CJ, Bell, Gageler, Keane and Nettle JJ).
In the FCCA proceedings, by a letter of instructions to an expert witness dated 23 March 2020 and apparently served on the applicant, Turks Legal, being the solicitors acting for Bradford Marine, positively asserted that NTI was the relevant insurer of Bradford Marine, stating:
We confirm we act for NTI Insurance, the product liability insurer of Bradford Marine Pty Limited, in this matter.
On 7 July 2021, the legal representatives of the applicant, Vector Legal, wrote to Turks Legal seeking payment of the judgment debt on the basis of its understanding that Turks Legal acted for the insurer of Bradford Marine.
On 16 July 2021, Turks Legal indicated that it previously acted for Bradford Marine (which was now in liquidation) in the proceedings and said that the only relevant policy of insurance had a sub-limit of $25,000 and that the insurer had settled that obligation with Bradford Marine.
The reply from Vector Legal to Turks Legal of 9 September 2021 referred to the participation of "your client insurer" in the FCCA proceedings and requested a copy of the insurance policy documents.
On 23 September 2021, Turks Legal replied to Vector Legal and stated, among other things:
We note you also refer to NTI as the Insurer. To our knowledge, NTI did not issue a policy of insurance to Bradford in respect to the loss, and your threatened application upon NTI would waste both your client's costs and ours and we will rely upon this correspondence on the question of costs if such an application is made. However, we are aware that another insurer (CGU) issued a Marine Trade Public and Products Liability Policy …
In the same correspondence, Turks Legal provided more details as to their understanding of the relevant insurance policies, and provided copies of those insurance policies to Vector Legal, which revealed that CGU Insurance Limited (CGU) had issued a policy of insurance for the period 16 February 2016 to 22 March 2017.
That letter did not say that NTI was the appointed claims manager of Bradford Marine or that the insurance business of CGU had been transferred to Insurance Australia Limited (IAL) pursuant to orders made in August 2017. I infer that NTI and Turks Legal must have known those matters, given that NTI was their client, and three weeks later, on 13 October 2021, Turks Legal said that CGU was also their client.
On 1 October 2021, Vector Legal sought to clarify NTI’s role, given Turks Legal's previous statement during the FCCA proceedings that they acted for NTI, being the product liability insurer of Bradford Marine. The letter also expressed confusion as to which entity was the insurer, as the works the subject of the claim were conducted between August 2015 and January 2016, being earlier than the period of insurance of the CGU policy which had been provided to them by Turks Legal. The letter asked for confirmation whether Turks Legal acted for Bradford Marine or CGU.
On 13 October 2021, Turks Legal responded by email confirming that it acted for both NTI and CGU and asserting that any contact with its clients would be "improper". Instead of informing Vector Legal that NTI was the claims manager, and that CGU’s insurance business had been transferred to IAL in August 2017, Turks Legal reiterated the position that NTI did not issue a policy of insurance to Bradford Marine (which was true) and referred to a press release dated 14 February 2017, which was provided to Vector Legal. That press release is headed "CGU and Vero Transfer Marine Insurance Portfolios to NTI".
The press release described a joint venture agreement between CGU and Vero to create NTI as a "leading marine insurance specialist", jointly owned and underwritten by CGU and Vero. In my view, it was clearly open in the circumstances for the applicant and its solicitors to assume that there was a commercial relationship between CGU and NTI whereby, despite not issuing a policy of insurance to Bradford Marine, NTI was now liable for such a policy. Indeed, I regard that as the better reading of the email and press release provided on 13 October 2021.
On 22 October 2021, Turks Legal provided the schedule for a CGU policy issued to Bradford Marine for the previous policy period, namely, 16 February 2015 to 16 February 2016.
On 28 October 2021, in relation to the question of the role of NTI, Vector Legal observed in a letter to Turks Legal that:
The relationship between CGU and NTI has never been disclosed to our clients... To justify your comments with the assertion that NTI did not issue any policy of insurance to Bradford for any relevant period is, with respect, dissembling.
Vector Legal did not receive a response to its letter dated 28 October 2021.
On 25 January 2024, Vector Legal wrote to Turks Legal referring to their understanding that Bradford Marine would shortly be deregistered, as it was nearing the end of the liquidation process, and foreshadowing the commencement of proceedings pursuant to s 601AG of the Corporations Act. Vector Legal sought confirmation, given that it appeared that the insurer was CGU, as to:
whether any other entity has assumed its [ie CGU’s] liabilities since deregistration, and which entity now holds those liabilities.
Vector Legal did not receive a response to that letter.
On 8 November 2024, Vector Legal again wrote to Turks Legal foreshadowing a claim under s 601AG of the Corporations Act against NTI. Vector Legal did not receive a response to that letter.
On 4 February 2025, the applicant commenced these proceedings against NTI.
On 17 February 2025, having been served with the relevant initiating process, Turks legal wrote to Vector Legal referring to and reiterating its position expressed in earlier correspondence on 13 October 2021 that NTI did not issue a policy of insurance to Bradford Marine and that NTI’s role was made clear in the 14 February 2017 press release provided on 13 October 2021. However, as indicated above, that press release did in fact convey the impression that CGU had transferred its marine insurance business to NTI.
It was only on 24 February 2025, after these proceedings had been commenced, and the day before the first case management hearing in these proceedings was conducted, that Turks Legal wrote to Vector Legal and indicated for the first time the following key matters:
(a)on 23 August 2017, Gleeson J in Insurance Australia Limited, in the application of Insurance Australia Limited (No 2) [2017] FCA 980 confirmed a scheme whereby the insurance business of CGU was transferred to IAL;
(b)pursuant to the Scheme set out in the Annexure to Gleeson J’s orders, and particularly cl 2 of that Scheme, CGU transferred to IAL all the insurance contracts and insurance liabilities from the business previously operated by CGU; and,
(c)NTI was the appointed claims manager of the claim by Bradford Marine but was not and never had been the relevant insurer.
That is, despite Turks Legal:
(a)acting in the FCCA proceedings on behalf of Bradford Marine and communicating in correspondence deployed in those proceedings that NTI was the product liability insurer of Bradford Marine;
(b)having knowledge of and access to the relevant insurance policy documents of Bradford Marine so as to provide them to Vector Legal; and,
(c)representing that it acted for both NTI and CGU.
Turks Legal did not, until 24 February 2025, convey to Vector Legal the simple and fundamental facts that NTI was only a claims manager, and that CGU’s business had been transferred to IAL in 2017, some four years before the correspondence exchanged in 2021.
Moreover, in 2024, when the express question was put to Turks Legal as to which entity had assumed CGU’s liabilities under the relevant insurance policies and an application against NTI was expressly foreshadowed, Vector Legal received no response from NTI.
These were matters clearly known to NTI, CGU and Turks Legal, and the applicant could have been disavowed very quickly and easily of its reasonable assumptions in relation to NTI’s assumed liabilities of CGU’s insurance business upon its deregistration.
Instead, NTI waited until after the commencement of these proceedings to finally reveal its true relationship with Bradford Marine and indicate which entity had assumed CGU’s insurance liabilities. I infer that if those matters had been revealed to the applicant's legal representatives at any point in or since 2021 (and as late as November 2024), these proceedings would have been commenced against IAL and not against NTI. It is NTI’s failure to bring these basic and important facts to the attention of the applicant that has brought this litigation upon itself.
NTI submits that the applicant appears to have conducted no due diligence to ascertain the entity to which CGU’s insurance business was transferred prior to CGU’s deregistration and proceeded in the face of Turks Legal expressly stating on multiple occasions that NTI was not the issuer of the insurance policy to Bradford Marine. I reject those submissions. The applicant engaged in the most obvious and efficient form of due diligence, namely, to ask NTI’s solicitor what the position was.
Turks Legal responded in its email of 13 October 2021, which began by asserting that any contact with their clients, NTI and CGU, would be improper. The answer given did not reveal the true position, which was explained only after these proceedings were commenced against NTI.
On the contrary, the answer given conveyed that CGU had transferred its marine insurance business to NTI, giving rise to the reasonable but erroneous understanding on the part of the applicant and its solicitors that, while NTI had not actually issued the relevant insurance policy to Bradford Marine, it had become liable for it. It was, of course, possible for the applicant or its solicitors to conduct searches for any decision of the Federal Court confirming a scheme for the transfer of insurance business, but there was nothing in Turks Legal's response which suggested that a search of that kind would produce anything other than the implication arising from the email and press release sent on 13 October 2021, namely, that the CGU policy had been transferred to NTI.
In my view, the conduct of NTI, through its solicitors, has induced the applicant reasonably to believe that NTI was the appropriate party to join as the respondent in these proceedings. Further, NTI, through its solicitors, has displayed a lack of the cooperation which is required of litigants to ensure the just resolution of the real issues in civil proceedings with minimal delay and expense.
This is also a plain case of a party failing to conduct a civil proceeding in a way that is consistent with the overarching purpose of the civil practice and procedure provisions set out in s 37M of the Federal Court of Australia Act 1976 (Cth), namely, to facilitate the just resolution of disputes according to law and as quickly, inexpensively and efficiently as possible, in breach of s 37N(1). In addition, it involves a breach by Turks Legal of the duty imposed by s 37N(2) to assist its client to comply with that duty. Those are matters which I am duty bound to take into account in exercising the discretion to award costs: s 37N(4).
The applicant does not seek an order that all its costs to date be paid by NTI. Nor does it seek an order that NTI’s solicitors should bear the costs personally. The applicant did not submit that the costs of and relating to today's hearing should be paid on the indemnity basis. In the circumstances, it is appropriate to make the costs order which has been sought by the applicant.
I certify that the preceding thirty-one (31) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Jackman. Associate:
Dated: 26 March 2025
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