Imaging Applications Pty Ltd v Vero Insurance Ltd - [2008] VSC 178

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMON LAW DIVISION

No. 2119 of 1990

IMAGING APPLICATIONS PTY LTD (ACN 006 376 441) & ANOR	Plaintiffs
v
VERO INSURANCE LIMITED (ACN 005 297 807) & ORS	Defendants

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JUDGE:	VICKERY J
WHERE HELD:	Melbourne
DATE OF HEARING:	12 - 14 May 2008
DATE OF JUDGMENT:	29 May 2008
CASE MAY BE CITED AS:	Imaging Applications Pty Ltd & Anor v Vero Insurance Limited & Ors
MEDIUM NEUTRAL CITATION:	[2008] VSC 178

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DELAY - Dismissal for want of prosecution - Applicable principles - Delay inordinate and inexcusable - Prejudice demonstrated – Dismissal as an abuse of process – Applicable Principles - Interests of justice require dismissal of proceeding

DUTY OF UTMOST GOOD FAITH – Whether duty applies to insurer in its conduct of litigation

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APPEARANCES:	Counsel	Solicitors
For the Plaintiffs	Mr. M. Petch	Mr M. Petch
For the 1st Defendant	Mr. J. Whelan	Norris Coates
For the 2nd Defendant	Mr. D. Hyde	Middletons
For the 3rd Defendant	Mr. D.A. Klempfner	Moray & Agnew

HIS HONOUR:

Introduction

There are two matters before the Court. The plaintiffs issued a notice of appeal filed 5 October 2007 appealing the whole of the judgment of Master Daly dated 4 October 2007. In her judgment the Master dismissed the plaintiff’s proceeding against the second and third defendants for want of prosecution pursuant to a summons of the second defendant filed 30 May 2007 and a summons of the third defendant filed 9 May 2007. Each summons sought dismissal of the plaintiffs’ proceeding for want of prosecution and in the alternative as an abuse of the process of the Court. The second matter is a summons issued by the first defendant dated 12 October 2007 seeking identical relief against the plaintiffs. By order of Osborn J made 24 October 2007, the summons of the first defendant was ordered to be heard at the same time as the appeal. Accordingly, the appeal and the summons of the first defendant were heard by me at the same time.

At the commencement of the hearing Vero Insurance Limited (“Vero”) made application to be substituted for the first defendant Sun Alliance Insurance Limited (“Sun Alliance”) pursuant to rule 9.06 of the Supreme Court (General Civil Procedure) Rules 2005 (“the Rules”). I granted this leave because Vero has recently assumed the liabilities of Sun Alliance in relation to this proceeding number 2119 of 1990.

Further, the name of the second defendant has now changed. On an oral application made by the second defendant during the course of the trial I granted it leave pursuant to rule 36.01 to change its name to “Aon Market Services Pty Ltd.”

A record of the principal steps in the procedural history of this matter are set out in schedule “A” to this judgement in the form of a chronology.

The proceeding

The facts giving rise to this proceeding are summarized in an earlier judgment of the Court by Hedigan J (Imaging…

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.

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Details

Case: [2008] VSC 178
Decision Date: 29 May 2008

CaseChat Overview and Summary

The case of Imaging Applications Pty Ltd v Vero Insurance Ltd involved a dispute over whether the insurer, Vero Insurance Ltd, had breached its duty of utmost good faith during the course of litigation. The plaintiff, Imaging Applications Pty Ltd, sought damages for the insurer's alleged failure to act in good faith. The matter was heard in the Federal Court of Australia, where the plaintiff also sought to have the defendant's application to dismiss the proceeding for want of prosecution dismissed as an abuse of process.

The primary legal issue before the court was whether the defendant insurer owed a duty of utmost good faith to the plaintiff in the conduct of litigation, and if so, whether this duty had been breached. Additionally, the court needed to determine if the delay in the plaintiff's prosecution of the case was inordinate and inexcusable, and whether the dismissal would be an abuse of process. The court was also required to assess whether the dismissal was in the interests of justice.

The court found that while there is a general duty of utmost good faith in insurance contracts, this duty does not extend to the conduct of litigation by the insurer. The court emphasised that the duty of utmost good faith in insurance is concerned with the initial formation of the contract and not with the ongoing conduct of litigation. The court further held that the delay in the plaintiff's prosecution was indeed inordinate and inexcusable, and that the dismissal of the proceeding was not an abuse of process. The court concluded that the dismissal was in the interests of justice due to the significant prejudice suffered by the defendant as a result of the delay.

Orders