John Montclare v MetLife Insurance Ltd (ACN 004 274 882) and Rivkin Direct Insurance Agencies Pty Ltd (ACN 073 632 292)
[2016] VSCA 18
•18 February 2016
SUPREME COURT OF VICTORIA
COURT OF APPEAL
S APCI 2015 0070
| JOHN MONTCLARE | Applicant |
| v | |
| METLIFE INSURANCE LTD (ACN 004 274 882) and RIVKIN DIRECT INSURANCE AGENCIES PTY LTD (ACN 073 632 292) | Respondents |
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| JUDGES: | TATE and OSBORN JJA |
| WHERE HELD: | MELBOURNE |
| DATE OF HEARING: | 18 February 2016 |
| DATE OF JUDGMENT: | 18 February 2016 |
| MEDIUM NEUTRAL CITATION: | [2016] VSCA 18 |
| JUDGMENT APPEALED FROM: | Montclare v Metlife Insurance Ltd [No 2] [2015] VSC 574 |
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PRACTICE AND PROCEDURE – Applications to amend leave to appeal applications and for extension of time – Applications for stay of costs orders made below – Risk of bankruptcy leading to frustration of any appeal if costs orders executed – Undertakings proffered and accepted not to execute costs orders pending the hearing and determination of the application for leave to appeal and any consequent appeal.
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| APPEARANCES: | Counsel | Solicitors |
| For the Applicant | Mr D Kelsey-Sugg | Maurice Blackburn |
| For the First Respondent | Mr B Jellis | Norton Rose Fulbright Australia |
| For the Second Respondent | Mr A Cox | Pointon Partners |
TATE JA
OSBORN JA:
The Court has before it today four applications by the applicant, John Montclare (‘Montclare’).
The first application received by the Court was an application dated 26 November 2015 for a stay of execution of costs orders made by Ginnane J on 16 October 2015.
The costs orders are relevantly in the following terms:
1.The plaintiff [Montclare] pay 70 per cent of the first defendant’s [Metlife Insurance Ltd (‘Metlife’)] costs of and incidental to this proceeding, to be calculated on a party-party basis up to and including 31 March 2013 and thereafter on a standard basis.
2.The plaintiff [Montclare] pay the second defendant’s [Rivkin Direct Insurance Agencies Pty Ltd (‘Rivkin DI’)],[[1]] costs of and incidental to this proceeding on a party-party basis up to and including 31 March 2013 and thereafter on the standard basis.[[2]]
[1]A company related to Rivkin Direct Management Pty Ltd.
[2]The orders were also referred to in paragraphs 36 and 66 of the judgment of Ginnane J dated 16 October 2015: Montclare v Metlife Insurance Ltd [No 2] [2015] VSC 574 (‘Costs reasons’).
The orders are respectively paragraphs 2 and 4 of the orders of Ginnane J made 16 October 2015.
There is and has been no opposition to Montclare's application for a stay by Metlife.
However, Rivkin DI has opposed the grant of a stay in respect of the costs order made in its favour on several bases, including the ground that the application for a stay was incompetent as there was no application for leave to appeal the costs orders on foot, the application for leave to appeal having been brought against his Honour's judgment of 25 June 2015[3] and not against the final orders made (including the costs orders) on 16 October 2015.
[3]Montclare v Metlife Insurance Ltd [2015] VSC 306 (‘Substantive reasons’).
This response has ultimately led to Montclare seeking to amend its application for leave to appeal (which had already been amended on 25 September 2015) to extend to the final orders made by his Honour, including the costs orders. This application has only recently been made.[4] This is the second application before the Court today.
[4]There is some uncertainty about the date of this application but it appears to be dated 18 February 2016.
To facilitate this amendment, it has been necessary for Montclare to seek an extension of time in which to make its application to amend its application for leave to appeal.[5] This is the third application before the Court today.
[5]The application is dated 16 February 2016.
It was submitted today by Mr Kelsey-Sugg, on behalf of Montclare, that the application to amend the application for leave to appeal has been made only out of an abundance of caution, and for completeness, as the costs orders made followed the event below and, if Montclare was to be successful on the appeal, the costs orders below would most likely be varied, reversed, or set aside, simply as a consequential implication of that success. He submitted that it was not strictly necessary for the costs orders to be directly challenged and the explanation for the delay in doing so, and thus the need for an extension of time, was precisely because the amendment was not considered to be essential. Nevertheless, the application is now made and an extension of time is required.
The fourth application made today is an application by Montclare dated 17 February 2016 to extend the scope of the costs orders stayed so as to include the costs order of Costs Registrar Conidi dated 26 November 2013.[6] The Court was told today that this was done at the initiative of Metlife, which has sought to be cooperative throughout and whose object has been to facilitate the hearing of the application for leave to appeal.
[6]This application was made informally, by email. In the circumstances, it has become unnecessary to make an order in respect of it.
The proceedings before Ginnane J
The orders made by Ginnane J relate to proceedings brought by Montclare in 2005 against Metlife claiming $1.1 million as a life insurance benefit under an insurance contract on the life of Graham Shilton (‘Shilton’).
Metlife actively resisted the proceedings below and was represented by senior and junior counsel. Rivkin DI played no active role in the proceedings below until the question of costs came to be addressed. It gave an enforceable undertaking to the Court ‘to pay to [Montclare] within seven days of receipt any sums received by [Rivkin DI] from [Metlife] in respect of [Montclare] under the insurance policy which is the subject of this proceeding.’ Pursuant to orders made by Master Kings on 26 July 2006 and orders made subsequently by Beach J at the first trial, Rivkin DI was excused from further attendance until submissions were made about costs.
By way of background, following Shilton's death by suicide on 22 January 2001, Metlife sought to avoid the contract of insurance under s 29(2) of the Insurance Contracts Act1984 (Cth) (‘the ICA’) on the basis that Shilton and Montclare had misrepresented or failed to disclose who had signed Shilton's signature in two insurance applications[7] and in two letters concerning those applications, as well as having failed to disclose the purpose of the insurance, Montclare's previous attempts to obtain insurance, and statements and details of Shilton's medical history. Metlife also alleged in the alternative that Shilton and Montclare had engaged in negligent misrepresentation and/or misleading and deceptive conduct.
[7]The initial contract of insurance was for $300,000 and then was increased to $1.1 million.
The case put by Montclare at trial was that he was not an ‘insured’ for the purposes of the ICA and so did not have the statutory obligations relating to disclosure and misrepresentations that are imposed on an insured by the ICA. He also denied that he or Shilton was guilty of non-disclosure or made any misrepresentation.
As mentioned, the trial judge delivered his substantive reasons for judgment on 25 June 2015. He found that Montclare was an ‘insured’ under the ICA in that Shilton had made a fraudulent misrepresentation to the insurer in relation to a question about his medical history. Shilton's misrepresentation had effect as though it had been made by Montclare. He concluded that Metlife was entitled to avoid the contract of insurance.[8] The judge was satisfied that Metlife would not have entered into the contracts of insurance if Shilton had not made the misrepresentation about his medical history. He further held that, because the contracts were subject to the provisions of the ICA, Metlife could not rely on any cause of action for negligent misstatement or misleading and deceptive conduct. In any event, he held that those causes of action would not have succeeded.
[8]Substantive reasons [787].
The judge did not pronounce orders on the day he delivered his reasons. A further hearing on costs was conducted before the judge on 4 August 2015 and the parties were given an opportunity to file submissions on costs. On 16 October 2015 the judge delivered his costs reasons[9] and made final orders.[10]
[9]Montclare v Metlife Insurance Ltd [No 2] [2015] VSC 574 (‘Costs reasons’).
[10]The final orders were in the following terms: ‘1. The proceeding is dismissed. 2. Subject to paragraph 3 of this order, the plaintiff pay 70 per cent of the first defendant’s costs of and incidental to this proceeding, to be calculated on a party-party basis up to and including 31 March 2013 and thereafter on a standard basis. 3. The first defendant pay on a party-party basis the plaintiff’s costs thrown away as a result of the adjournment of 6 June 2011. 4. The plaintiff pay the second defendant’s costs of and incidental to this proceeding on a party-party basis up to and including 31 March 2013 and thereafter on a standard basis. 5. The operation of paragraphs 2 and 4 of this order are stayed for 28 days from this day. 6. This order does not affect any costs orders previously made in this proceeding’.
Montclare's application for leave to appeal is fixed for hearing on 28 April 2016. This means that the hearing is imminent.
The proposed grounds of appeal are:
1. The learned trial Judge erred in law in finding that the certificates of insurance issued to Mr Montclare were contracts of insurance.
2. The learned trial Judge erred in law in finding that the certificates had features that were sufficient to constitute the certificates as contracts of insurance.
2A. The learned trial Judge erred in law by failing to give any or any adequate reasons for finding that the certificates of insurance issued to Mr Montclare were contracts of insurance. His Honour's reasons failed to disclose a process of reasoning which was understandable and logical.
3. The learned trial Judge erred in law in finding that because insurance entitlements had their source in the master policy, that did not prevent Mr Montclare's contractual entitlements being contained in, and arising from, the certificates of insurance.
4. The learned trial Judge erred in finding that the relationship of trust between Rivkin … and Mr Montclare explains why the certificates of insurance were described in the Policy Information Statement as ‘evidence of a contract of insurance between Mr Montclare, Rivkin Direct Management Pty Ltd and Citicorp Life.’
5. The learned trial Judge erred in finding that the scheme of insurance cover upon which Mr Montclare relied was never implemented in his case.
6. The learned trial Judge erred in finding that there was no reference to the group scheme contemplated by the master policy in the certificates of insurance or in the Customer Information Brochure.
7. The learned trial Judge erred in law in finding that ‘The interposition of Rivkin Direct Management between Citicorp and Mr Montclare does not prevent the certificates of insurance being contracts of insurance.’
8. The learned trial Judge erred in finding that Mr Shilton had made a fraudulent representation in answering, or arranging for the answering of, question 9H.
Applications
It cannot be said that on their face any of the grounds of appeal are wholly without merit.
In support of a stay, Montclare relies upon an affidavit affirmed by him on 16 November 2015 in which he says that he believes he will be unable to pay the costs awarded against him as he is in a position of financial difficulty. He deposes that he is unemployed and his sole source of income is a Newstart allowance from Centrelink which only provides him with $624.67 per fortnight. After payment of his weekly living expenses, including food and rent, he says he has ‘virtually no disposable income’, nor does he have any savings. As a result, he is struggling to pay his bills: he owes over $5,000 to Energy Australia and over $1,000 to Dr Alan Segal. He also has a credit card of ‘around $4,000’; does not own a house and his only assets are household and personal effects with a combined worth of a few hundred dollars. As a result of these matters, he stated that if Metlife or Rivkin DI sought to execute the costs orders against him made by Ginnane J on 16 October 2015, or indeed the order made by the costs registrar, he would be placed at real risk of bankruptcy. In written submissions Montclare says that the costs to be paid have yet to be quantified, but ‘are very likely to be substantial’.
Montclare has also more recently filed a second affidavit which reinforces his financially precarious position.
A court would be slow to refuse an application for a stay of costs orders where their execution would almost inevitably lead to the frustration of any appeal that may have real merit. However, this morning the legal practitioners for Metlife and Rivkin DI have adopted the very sensible position of proffering undertakings, and these have been confirmed this afternoon, not to execute the 16 October 2015 costs orders in their favour (or, in the case of Metlife, the costs order of Registrar Conidi made 26 November 2015) until the hearing and determination of the application for leave to appeal and, if leave is granted, the appeal.
In those circumstances we consider that the basis upon which Montclare sought the Court’s protection is no longer live. Mr Kelsey-Sugg of counsel informed the Court this afternoon that his client, Montclare, has accepted the undertakings proffered.
It follows that, subject to those undertakings having been made, we would dismiss the application for a stay. It also follows that there is no need to extend the scope of the stay application to include the orders of the costs registrar as the undertakings given extend to those orders, where relevant.
However, to ensure that the true issues in dispute are ventilated in the application for leave to appeal, and, if leave is granted, the appeal, we would grant the application to amend the application for leave to appeal and grant the extension of time sought.
This leaves a real question as to the role of Rivkin DI in the application for leave to appeal and whether it is a necessary or proper party to the proceedings. No relief is directly sought against Rivkin DI and no ground of appeal identifies any finding of the judge that is directly relevant to it. There is no error directly identified in the costs reasons of his Honour that relates directly to Rivkin DI. The question remains whether, if Montclare were to be successful in the application for leave to appeal, and the appeal, there would be consequential implications for the costs orders made below in Rivkin DI's favour.
Mr Kelsey-Sugg of counsel indicated to the Court this morning that attention would be given by his client as to whether Rivkin DI is a proper party to the application for leave to appeal, and the appeal, and discussions may ensue with Mr Cox on that issue with the aim of arriving at consent orders.
With respect to the costs of today's application, we consider that there should be an order in favour of both Metlife and Rivkin DI for the costs of, and incidental to, today's applications because of the repeated indulgences sought by Montclare today, most particularly the very late filing of the applications other than the application for a stay. However, we consider that the orders should be subject to further undertakings given by the relevant legal practitioners that the costs order of today's applications would not be executed until the hearing and determination of the application for leave to appeal and, if leave is granted, the appeal. Mr Jellis and Mr Cox confirmed this afternoon that their clients gave those undertakings.
The focus of the parties must now be in preparing for the hearing of the application for leave to appeal and in ensuring that it is placed on a proper footing.
The orders of the Court will be:
1.The application made by the applicant Mr Montclare (‘Montclare’) dated 16 February 2016 for an extension of time to file and serve a further amended application for leave to appeal from the orders of Ginnane J made 16 October 2015 be granted.
2.The application by Montclare dated February 2016 for leave further to amend the amended application for leave to appeal be granted.
3.Subject to the undertaking given by Mr Andrew Cox of Pointon Partners, solicitors for the second respondent, Rivkin Direct Insurance Agencies Pty Ltd (ACN 073 632 292) (‘Rivkin DI’), that Rivkin DI would not execute in relation to the costs payable by the applicant under paragraph (4) of the orders of Ginnane J made 16 October 2015, nor serve a bankruptcy notice, until the hearing and determination of the application for leave to appeal in relation to any respondent and any consequent appeal, the Court orders that:
the application made by Montclare for a stay of paragraph (4) of the orders of Ginnane J made 16 October 2015 is dismissed.
4.Subject to the undertaking given by Mr Ben Jellis of counsel on behalf of the first respondent, Metlife Insurance Ltd (‘Metlife’), in these terms, that the first respondent would not enforce or seek to enforce the costs orders made by Ginnane J on 16 October 2015, and/or those made by Registrar Conidi on 26 November 2013, pending the hearing and determination of the applicant's application for leave to appeal and the appeal if leave be granted, or until further order, the Court orders that:
the application made by Montclare for a stay of paragraph (2) of the orders of Ginnane J made 16 October 2015 is dismissed.
5.Subject to the undertaking given by Mr Andrew Cox of Pointon Partners, solicitors for the second respondent, Rivkin Direct Insurance Agencies Pty Ltd (ACN 073 632 292) (‘Rivkin DI’), that Rivkin DI would not execute any costs order made today in its favour for the costs of and incidental to the applications made today by the applicant, John Montclare (‘Montclare’), until the hearing and determination of Montclare's application for leave to appeal and, if leave is granted, the appeal, the Court orders that:
Montclare pay Rivkin DI's costs of, and incidental to, the applications made by Montclare today.
6.Subject to the undertaking given by Mr Ben Jellis of counsel on behalf of the first respondent, Metlife Insurance Ltd (‘Metlife’), that Metlife would not execute any costs order made today in its favour for the costs of and incidental to the applications made today by the applicant, John Montclare (‘Montclare’), until the hearing and determination of Montclare's application for leave to appeal and, if leave is granted, the appeal, or until further order, the Court orders that:
Montclare pay Metlife's costs of, and incidental to, the applications made by Montclare today.
Those undertakings will also be set out under the category of ‘Other Matters’ in the formal orders that are prepared.
(Discussion.)
The seventh order will be:
7. The second respondent, Rivkin Direct Insurance Agencies Pty Ltd (ACN 073 632 292) has leave to file and serve a notice of contention by 4:00 pm on Thursday 3 March 2016.
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