Jenny Lee Boase as trustee for the Boase Family Trust v Brook [No 3]

[2017] WASC 149

JURISDICTION     :   SUPREME COURT OF WESTERN AUSTRALIA

IN CIVIL

CITATION:   JENNY LEE BOASE AS TRUSTEE FOR THE BOASE FAMILY TRUST -v- BROOK [No 3] [2017] WASC 149

CORAM:   CHANEY J

HEARD:   22 MAY 2017

DELIVERED          :   30 MAY 2017

FILE NO/S:   CIV 2061 of 2013

BETWEEN:   JENNY LEE BOASE AS TRUSTEE FOR THE BOASE FAMILY TRUST

Plaintiff

AND

ALAN MICHAEL BROOK
Defendant

QBE INSURANCE (AUSTRALIA) LTD
BRIT SYNDICATE 2987 AT LLOYDS
AMERICAN HOME ASSURANCE COMPANY
DA CONSTABLE SYNDICATE 286 AT LLOYDS
Proposed Second Defendants

Catchwords:

Practice and procedure - Joinder of parties - Application by plaintiff to join defendant's insurers as second defendant - Insurer asserting that aggregation clause prevents recovery by defendant under policy in relation to plaintiff's claim - No dispute between defendant and insurers - Whether joinder necessary to ensure that all matters in dispute in proceedings may be effectively and completely determined

Legislation:

Rules of the Supreme Court 1971 (WA), O 18 r 6
Supreme Court Rules 1987 (SA), r 27

Result:

Application for joinder dismissed

Category:    B

Representation:

Counsel:

Plaintiff:    Mr M J McCusker QC &

Mr J A Robertson

Defendant:    In person

Proposed Second Defendants    :    Mr T Lampropoulos SC

Solicitors:

Plaintiff:    Williams + Hughes

Defendant:    In person

Proposed Second Defendants    :    Colin Biggers & Paisley

Case(s) referred to in judgment(s):

Bridge Shipping Pty Ltd v Grand Shipping SA (1991) 173 CLR 231

Elovalis v Elovalis [2008] WASCA 141(S)

J N Taylor Holdings Ltd (in liq) and J N Taylor Finance Pty Ltd (in liq) v Alan Bond & Ors (1993) 59 SASR 432

Jenny Lee Boase as Trustee for the Boase Family Trust v Brook [No 2] [2016] WASC 1

Lois Nominees Pty Ltd v Hill [2011] WASC 53

Qantas Airways Pty Ltd v A F Little Pty Ltd [1981] 2 NSWLR 34

Renovation and Finance Co Pty Ltd v Kott Gunning (a firm) [2016] WASC 29

Timothy Boase and Jenny Lee Boase as Trustee for the Boase Family Trust v Brook [2015] WASC 23

Woodings v Stevenson (2001) 24 WAR 224

1. CHANEY J: By a chamber summons dated 21 September 2016, the plaintiff applied for leave pursuant to O 18 r 6 of the Rules of the Supreme Court 1971 (WA) (RSC) to join QBE Insurance (Australia) Ltd, Brit Syndicate 2987 at Lloyds, American Home Assurance Company and DA Constable Syndicate 386 at Lloyds (together the Insurers) as second defendants in these proceedings. The insurers oppose the application.

History of the proceedings

1. These proceedings were commenced in July 2013.  In a decision delivered in January 2015, I outlined the history of the proceedings to that point - see Timothy Boase and Jenny Lee Boase as Trustee for the Boase Family Trust v Brook [2015] WASC 23. Following that decision, Mr Timothy Boase was removed as trustee, and the current plaintiff has carried on the proceedings as a representative action, with her current solicitors acting on her behalf. Various interlocutory orders have been made and the parties have now filed their statements of evidence that they intend to adduce at trial.

2. In October 2015, I heard an application by the defendant for security for costs.  That application was unsuccessful - see Jenny Lee Boase as Trustee for the Boase Family Trust v Brook [No 2] [2016] WASC 1. I noted in that decision that the proceedings had, by October 2015, reached an advanced stage [30]. Delays were subsequently encountered largely by reason of the fact that the defendant, Mr Brook, ceased to be represented by independent solicitors, and has had the conduct of his own defence. He has failed on a number of occasions to comply with procedural orders directed to having the matter ready for trial, although those defaults have now substantially been remedied. Part of the delay throughout 2016 and in early 2017 arose by virtue of the plaintiff seeking time to investigate and negotiate with the Insurers.

3. The plaintiff seeks to join the Insurers in order to seek a declaration that the Insurers are liable to indemnify the defendant in respect to the claims of the plaintiff and each member of the represented group in the event that judgment is obtained against the defendant.  She also seeks a declaration as to whether a limitation on the defendant's policy of insurance with the Insurers would apply to prevent any recovery by the defendant from the Insurers in relation to the claims in these proceedings.

4. An affidavit of John Andrew Robertson filed in support of the plaintiff's application deposes to the fact that, after 'due enquiry and title searches' Mr Robertson believes that the value of the defendant's assets fall significantly below the amount which would be necessary to satisfy a judgment debt should the plaintiff's claims in the action succeed.  He also deposes to being informed by the plaintiff's husband (Mr Timothy Boase) that Mr Brook said to Mr Boase words to the effect that he (Mr Brook) would go into bankruptcy if he lost this case.  Mr Robertson annexes to his affidavit a copy of Mr Brook's professional indemnity insurance policy with the Insurers.  Clause 13.1 in Schedule 1 of that policy provides:

   13.1Claims Aggregation

   All Claims made, whether made by one or more Claimants, against an Insured arising from:

   a)one act or omission;

   b)one matter or transaction;

   c)one series of related acts or omissions;

   d)the same or similar act or omission in a series of related matters or transactions;

   e)the same or similar act or omission in one or more matters or transactions for the same client (or a relative or associate of the same client);

   f)the same or similar series of related acts or omissions in one or more matters or transactions for the same client (or a relative or associate of the same client);

   g)the same or similar series of related acts or omissions in one or more matter or in relation to one transaction or one or more related transactions; or

   g)all dealings and advice in respect of one managed investment scheme (including a contributory or nominee mortgage),

   will be regarded as one Claim;

   otherwise each Claim will be regarded as a separate Claim.

5. Mr Robertson deposed that the Insurers, through their solicitors, deny that they are obliged to indemnify the defendant against the plaintiff's claims.  That position is confirmed in an affidavit of Peter John Moran, filed on behalf of the Insurers.  Mr Moran is a partner in the firm of solicitors who act for the Insurers.

6. In a letter dated 3 August 2016, Mr Moran advised that any joinder application made by the plaintiff would be defended on various grounds.  One of those was that the full policy limit had been paid by the Insurers in respect of claims made against Mr Brook and thus the insurers had no further liability under the policy in respect of any liability of Mr Brook to the plaintiff or the other group members.  The letter also asserted that the insured under the policy, Mr Brook, 'has accepted the Insurers' position in respect of aggregation.  There is hence a concluded position between the insurer and insured; an agreement that prohibits the plaintiff from pursuing a different position'.

7. The exchange of correspondence between the solicitors for the respective parties demonstrates that, despite requests by the plaintiff's solicitors for more information as to the nature of the other claims said to have exhausted the cover under the policy, and the nature of any 'agreement' in relation to aggregation between Mr Brook and the Insurers, no further detailed information has been forthcoming. 

8. In essence, therefore, the plaintiff seeks, through joining the Insurers to these proceedings, to litigate the issue as to whether or not the aggregation clause is applicable to exclude any liability of the Insurers to indemnify Mr Brook or whether there is any other impediment to recovery under the insurance policy in respect of the claims in these proceedings. It thus seeks to join the Insurers as second defendant in the proceedings pursuant to O 18 r 6 of the RSC.

9. The proposed second defendants oppose the application on the basis that the requirements of O 18 r 6 are not met, but even if they are, then joinder should not be ordered as a matter of discretion.

Order 18 rule 6

1. Order 18 rule 6(2) provides:

   At any stage of the proceedings in any cause or matter the Court may on such terms as it thinks just and either of its own motion or on application -

   (a)order that any person who has been improperly or unnecessarily made a party or who has for any reason ceased to be a proper or necessary party, to cease to be a party;

   (b)order that any person who ought to have been joined as a party or whose presence before the Court is necessary to ensure that all matters in dispute in the cause or matter may be effectually and completely determined and adjudicated upon, be added as a party,

   but no person shall be added as a plaintiff without his consent signified in writing or in such other manner as may be authorised.

2. The question for determination is therefore whether the Insurers presence before the court is necessary to ensure that all matters in dispute in the cause may be effectually and completely determined and adjudicated upon.  In my view it is not.

3. There is no present issue in the proceedings as to Mr Brook's entitlement to indemnity under his professional indemnity insurance policy.  Mr Brook appeared at the hearing of the application for joinder and advised the court that he neither supported nor opposed the application.  He otherwise made no contribution to the dispute as to joinder.  He did not, however, indicate any disagreement with the proposed second defendants' assertion that he accepted that the aggregation clause operated so as to prevent any further claim by him under his policy in relation to the claims of the plaintiff and the represented group members.  The plaintiff has not established that there exists any issue as between Mr Brook, the insured, and the Insurers that the policy does not provide indemnity for the plaintiff's claim by reason of the operation of the aggregation.

4. In Woodings v Stevenson (2001) 24 WAR 224 [12], Owen J, drawing on observations by McHugh J in Bridge Shipping Pty Ltd v Grand Shipping SA (1991) 173 CLR 231, 260 ‑ 261, suggested that O 18 r 6(2) is a remedial rule which should be given a beneficial interpretation and should be given the widest interpretation which its language will permit. In that case, Owen J permitted the substitution of the plaintiff in a debt claim by substituting the actual debtor as plaintiff in place of the receiver and manager of the debtor who had instituted the proceedings. Given the subject matter of the action, it is easy to see that the substitution of the actual debtor as plaintiff in the action was necessary to ensure that the matters in dispute, namely the liability for the debt, could be effectually and completely determined.

5. The plaintiff placed considerable reliance on the decision in J N Taylor Holdings Ltd (in liq) and J N Taylor Finance Pty Ltd (in liq) v Alan Bond & Ors (1993) 59 SASR 432. In that case, an application was brought to join the insurer of the three defendants under a director's liability insurance policy. One of the defendants was bankrupt, and the other two had left the country. The trustee in bankruptcy of the bankrupt defendant was said to have agreed with the plaintiffs to assign to the plaintiffs the right to be indemnified pursuant to the policy subject to the consent of the insurer, but the insurer had refused to consent. The plaintiffs sought to obtain a declaration that the insurer was obliged to indemnify the defendants, and a declaration that the assignment of the right to indemnity was valid. Much of the case turned on the question of the court's jurisdiction to make the declarations sought. Having concluded that the jurisdiction to make the declarations existed, the court found that joinder should be permitted pursuant to either r 27.01 or alternatively r 27.05(f) of the Supreme Court Rules 1987 (SA) (SASC Rules). Rule 27.01 of the SASC Rules is substantially in the terms of O 18 r 4 of the RSC. The alternative avenue for joinder identified in J N Taylor, namely r 27.05(f) of the SASC Rules, permitted the court on application, or of its own motion, to join a party if 'there exists between that person and a party to the proceedings a question or issue arising out of, or relating to or connected with any relief or remedy sought in the proceedings, which in the opinion of the court it would be just and convenient to determine as between him and that party as well as between the parties to the proceedings'. There is no equivalent provision in O 18 of the RSC.

6. It can be noted that r 27.05(e) of the SASC Rules is substantially in terms of O 18 r 6(2)(b) of the RSC. Despite the obvious attention given by the court to the basis upon which joinder of the insurer in J N Taylor could be ordered, none of the three judges of the Full Court identified r 27.05(e) as a potential source of power.

7. In Lois Nominees Pty Ltd v Hill [2011] WASC 53, Beech J examined the question of whether O 18 r 4 of the RSC empowered the court to add new defendants to an existing action, or was concerned only with joinder before commencement, so that O 18 r 6 governed the question of joinder of parties at a later stage in the proceedings. After a thorough and detailed analysis of the authority, legislative history, and linguistic and textual considerations, Beech J concluded that O 18 r 4 is not directed to amendment of a writ or statement of claim and does not itself permit amendment of a writ or statement of claim to add new parties [82]. In reaching that conclusion, his Honour agreed with Jenkins J in Renovation and Finance Co Pty Ltd v Kott Gunning (a firm) [2016] WASC 29 where her Honour reached the same conclusion. That proposition is not challenged in this application and the plaintiff does not seek to place any reliance on O 18 r 4 as a basis for an order for joinder. It is clear that the basis upon which joinder was permitted in J N Taylor was a basis not available under O 18 of the RSC, and does not support the proposition that joinder should be ordered in this case under O 18 r 6(2).

8. The plaintiff also contended that the phrase 'all matters in dispute in the proceedings' should not be construed as limited to matters arising on the existing pleadings, but may also include those disputed issues of fact which are subjacent to the proceedings - see Qantas Airways Pty Ltd v A F Little Pty Ltd [1981] 2 NSWLR 34, 38; Elovalis v Elovalis [2008] WASCA 141(S) [7]. That proposition can be accepted. In Qantas Airways, the application was to join a builder in a claim for negligence already on foot against engineers and architects arising out of the construction of the plaintiff's building.  After expressing the proposition relied upon by the plaintiff, Glass JA concluded that the phrase 'all matters in dispute in the proceedings' in his opinion included 'questions such as whose default caused the instability of the structure and who is liable to the plaintiff in damages for such instability' (38).

9. The present situation is far removed from the facts in Qantas Airways.  There is no question of any liability of the Insurers to the plaintiff (or represented group numbers) for their alleged losses.  The plaintiff has not established that there is any dispute at all as between the defendant and the Insurers.  The Insurers have no potential direct liability to the plaintiff.  In this case, the plaintiff seeks to identify a potential dispute as between the defendant, or possibly some future dispute between a possible future trustee in bankruptcy and the Insurers on the basis that it has been unable to obtain sufficient information to satisfy itself that what appears to be a settled position as between the defendant and the Insurers is justified.  The ventilation of that speculative question is not necessary to ensure that any of the matters in dispute as between the plaintiff and the defendant are effectually and completely determined and adjudicated upon.

Discretion

1. Even if I had reached a different conclusion as to the application of O 18 r 6(2), I would not, in the circumstances of this case, be inclined as a matter of discretion to join the proposed second defendants. This case is very close to being ready for trial. It has been on foot since 2013. Joinder of the proposed second defendants, with a claim involving different and additional factual enquiries is likely to substantially delay the completion of the proceedings. Pleadings will need to be completed, relevant documents discovered and additional witness statements prepared. Whether or not it will ever be necessary to consider questions of insurance liability is dependent upon the outcome of the plaintiff's claim against the defendant. I accept that there may well be difficult questions of privilege in relation to communications between the defendant and the Insurers as against the plaintiff (and the rest of the world) which will at least give rise to significant interlocutory dispute and could possibly have a significant effect on the capacity of the court to sensibly deal with the claim against the Insurers before the plaintiff's claim against the defendant has been dealt with and adjudicated upon.

2. In oral submissions, it was suggested that the question of indemnity of the defendant under its policy with the Insurers could be dealt with as a preliminary issue.  It was said that clarification of that issue would assist in promoting a compromise of the plaintiff's claims having regard to whether or not the defendant was entitled to indemnity.  Putting aside the question of whether clarifying the plaintiff's bargaining position is a proper consideration in the exercise of discretion, I have grave doubts that, if the proposed second defendants were joined, the question of the application of the aggregation clause could be resolved without resolution of not only the factual issues surrounding the plaintiff's claim against Mr Brook, but also the factual circumstances of other claims said to have exhausted the limit of cover.  Far from facilitating the efficient, timely and cost effective resolution of the proceedings, joinder is more likely to have quite the opposite effect.

Conclusion

1. For those reasons, the application for joinder of the proposed second defendants should be dismissed.