HIH Casualty & General Insurance Limited (in liquidation) v R J Wallace sued on his own behalf and on behalf of all other members of Syndicate No 683 at Lloyd's of London for the 1993 underwriting account & Ors

[2006] NSWSC 1158

CITATION:	HIH Casualty & General Insurance Limited (in liquidation) v R J Wallace sued on his own behalf and on behalf of all other members of Syndicate No 683 at Lloyd's of London for the 1993 underwriting account & Ors [2006] NSWSC 1158
HEARING DATE(S):	3/11/06
JURISDICTION:	Equity Division Commercial List
JUDGMENT OF:	Einstein J
EX TEMPORE JUDGMENT DATE:	11/03/2006
DECISION:	Defence to be filed.
CATCHWORDS:	Practice and Procedure - Defendant seeks stay in order to invoke arbitral provision - Case management - Order that defendant file defence pending possible appeal from order refusing a stay
PARTIES:	HIH Casualty & General Insurance Limited (in liquidation) (Plaintiff) R J Wallace sued on his own behalf and on behalf of all other members of Syndicate No 683 at Lloyd's of London for the 1993, 1994, 1995, 1996, 1997, 1998, 1999, 2000 underwriting account (First - Eighth Defendants)
FILE NUMBER(S):	SC 50073/06
COUNSEL:	Mr F Gleeson SC, Dr A Bell SC, Mr S Nixon (Plaintiff/Respondent) Mr J Sackar QC, Ms K Barrett, Mr MA Izzo (Defendants/Applicants)
SOLICITORS:	Blake Dawson Waldron (Plaintiff/Respondent) Ebsworth & Ebsworth (Defendants/Applicants)

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
COMMERCIAL LIST

Einstein J

Friday 3 November 2006 ex tempore
Revised 6 November 2006

50073/06 HIH Casualty & General Insurance Limited (in liquidation) v R J Wallace sued on his own behalf and on behalf of all other members of Syndicate No 683 at Lloyd's of London for the 1993 underwriting account & Ors

JUDGMENT

1 In proceedings No. 50073/06 the issues which remain are these:

i. the making of an appropriate costs order;

ii. the making of an order for the dismissal of the notice of motion

iii. the question of whether or not the Court should proceed in case management mode to order that the defendants file a defence.

2 Dealing first with costs, there can be it seems to me, absolutely no doubt but that the usual order for costs is appropriate bearing in mind the reasons for judgment and I propose to so order. As the judgment makes plain HIH has succeeded on most of, if not all of, its submissions.

3 As to the second matter, the Court will in a moment simply dismiss the notice of motion.

4 As to the third matter that of case management, this is an unusual circumstance in that the reasons do recognise that there is a real possibility that an appeal or leave to appeal may be sought from the Court of Appeal. However the reasons also repeat certain of the evidence given by Mr McGrath, one of the joint liquidators, of the significance of the proceedings extending to the distance that the liquidators consider the potential impact of the ‘pay as paid issue’ not only on the liquidation of the licensed insurers within in the HIH and FAI Groups but also possibly on future insurance company insolvencies to be extremely important. The same evidence was that the potential denial of the access of creditors to reinsurance assets that form part of an insurance company’s solvency requirements, once the company has entered formal insolvency may well have serious regulatory implications.

5 To my mind having examined the matter with Ms Barrett of counsel for the defendants and Dr Bell SC of counsel for the plaintiff, it is not apparent that the making of an order now requiring the defendants to file a defence on or before 29 November 2006, could be seen to prejudice the defendants in any discernable way. That is because, if there is an application advanced to the Court of Appeal for leave to appeal, the Court of Appeal will either reverse the reasons found in today’s judgment or uphold those reasons.

6 If the Court of Appeal upholds those reasons it will of course be necessary for a defence to be filed and for the matter to continue regularly.

7 If the Court of Appeal upholds an appeal then, barring an application by the plaintiff’s for special leave to appeal to the High Court of Australia, it will be necessary for the matter to go forward to arbitration, in which event as I would apprehend it, the arbitrators will also require a document in the nature of a defence [such requirement being probably likely to produce the very same form of defence as would have been necessary in Court proceedings].

8 The date 29 November 2006 is selected because that gives the defendants three Monday application days in which to endeavour to approach the Court of Appeal for leave to appeal and concomitantly with such an approach, should the defendants be so advised, they have the right to ask the Court of Appeal to stay the order for the filing of a defence.

9 It is for that reason that in my view 29 November 2006 should be the date by which a defence is ordered to be filed.

In those circumstances the Court makes the following orders:


i. the defendants are to pay the plaintiff’s costs of the notice of motion filed on 13 July 2006.

ii. the notice of motion filed on 13 July 2006 is dismissed.

iii. the defendants are to file and serve a defence on or before 29 November 2006.

iv. the proceedings are listed for directions to Justice Bergin’s Friday list on 1 December 2006.