Kanatas v Davies

IN THE COUNTY COURT OF VICTORIA

AT MELBOURNE

COMMERCIAL DIVISION

Revised
(Not) Restricted
Suitable for Publication

GENERAL LIST

Case No. CI-20-02191

Theodoros KANATAS and Anor

Plaintiffs

Melissa DAVIES

and

Creo Libera Pty Ltd and Anor

Defendant

Third Parties

JUDGE:	HIS HONOUR JUDGE ANDERSON
WHERE HELD:	Melbourne
DATE OF HEARING:	19 November 2024
DATE OF JUDGMENT:	3 December 2024
CASE MAY BE CITED AS:	Kanatas v Davies
MEDIUM NEUTRAL CITATION:	[2024] VCC 1914

REASONS FOR DECISION

Subject: Leave to file an appearance out of time and settlement of the balance of the

proceeding - Judgment in third party proceedings

Catchwords: Practice and procedure - Third Party procedure by defendant seeking indemnity
for plaintiffs’ claim – Failure by first third party to file appearance – Settlement
at mediation by all other parties – Defendant seeking judgment against first
third party – First third party seeking to file appearance out of time – Arguable
defence by first third party – Explanation by first third party for failure to file
appearance – Fault with first third party’s insurer – Insurer prepared to
indemnify the first third party and take over the defence of the proceeding –
Prejudice to the defendant if first third party permitted to file an appearance –
Defendant settled the proceeding with other parties on the basis that the first
third party was not participating in the proceeding – Prejudice to the defendant
if the basis for the reordering of her affairs disturbed – Leave to file an
appearance refused – Judgment entered for the defendant against the first
third party for damages to be assessed

Legislation:Rule 11.14 County Court Civil Procedure Rules 2018
Cases:Goldberg v Morrow [2003] VSCA 127, Whelan Kartaway Pty Ltd v Donnelly
[2012]; VSC 45, Timbercorp Finance Pty Ltd v Collins & Tomes [2016] VSCA
128, Winter-Cooke v Winter-Cooke [2022] VSCA 264 and Permanent
Custodians v Petrovska [2015] VSC 42

APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr K. Mihaly	Megan Copas
For the Defendant	Mr A. Rollnik	Carter Newell Lawyers

HIS HONOUR:

The proceeding was initiated between neighbouring property owners. The defendant was carrying out alterations to the existing house on her property. The adjoining property owners, the plaintiffs, believed that the building works comprising “concrete piers and concreted capping beams” encroached on their land. There was disagreement between the surveyors engaged by each property owner as to the precise location of the boundary.
The plaintiffs commenced the proceeding on 15 May 2020. The defendant joined her builder, Creo Libera Pty Ltd (“Creo”) and her surveyor, Hipfel & Richards Pty Ltd trading as Peter Richards Surveying (“Richards”), as third parties by third party notice dated 2 September 2021. Creo failed to file an appearance. At a mediation on 6 June 2022, the plaintiffs settled with the defendant, and the defendant also settled with Richards.
The defendant by summons dated 25 September 2024 sought judgment against Creo in the sum of $107,738.50, or alternatively damages to be assessed. On the return date of the summons, 16 October 2024, counsel sought to appear for Creo to make an oral application seeking leave for Creo to file an appearance in the proceeding.
An affidavit sworn by a director of Creo, Jeremy Paul Dickson on 15 October 2024, raised matters by way of defence to the third party proceeding, and provided details of contact between Mr Dickson and Creo’s insurer Chubb Insurance Australia Limited (“Chubb”) about the proceeding and Chubb’s assurances that it would look after Creo’s interests in the proceeding. The application was adjourned to permit the parties to file further material.
On 23 October 2024, Creo filed an application for leave to file an appearance in the third party proceeding. The application was supported by a further affidavit by Mr Dickson and an affidavit by Creo’s solicitor, Sarah Britz. The application was opposed by the defendant.
The two applications, Creo’s application for leave to file an appearance, and the defendant’s application for judgment against Creo, raise a number of issues:
a.        on Creo’s application:
i.whether Creo had a defence to the defendant’s third party claim that had a real prospect of success. This matter was conceded by defendant’s counsel Mr Mihaly;
ii.whether an appropriate explanation had been offered for Creo’s failure to file an appearance;
iii.       the relative claims of prejudice by the parties;
b.        on the defendant’s application for judgment:
i.         whether the application was properly brought under Rule 11.14;
ii.whether the appropriate order was judgment for a monetary sum or for damages to be assessed;
iii.whether Creo might suffer irreparable harm if, in the circumstances, judgment were permitted to be entered.

Explanation for failure to file an appearance

The uncontested evidence is that, following the service of the third party proceeding on Creo, Mr Dickson made contact with a responsible employee of Chubb who indicated to him that Chubb accepted responsibility for defending the third party proceeding on Creo’s behalf.
Ms Britz in her recent affidavit confirmed that:
a. her firm was instructed by Chubb to act in the matter on behalf of Creo;
b.Chubb accepted that Mr Dickson’s statements in his affidavits about his contact with Chubb and the assurances that had been given to him, were correct;
c.Chubb, would accept responsibility for the conduct of the defence of the defendant’s claim on behalf of Creo and would indemnify Creo under the policy of insurance in respect of any liability Creo may have to the defendant in the proceeding.
The following is a summary of the contact Mr Dickson had with Chubb in respect of the proceeding. The third party notice was served by post on Creo in or about late October 2021. Mr Dickson contacted Creo’s insurance broker, RSM Group, who notified the insurer, Chubb. In conversations with the broker, Mr Dickson was advised, “it was likely that Chubb would take on the defence”.
On 6 December 2021, Creo received an email from the defendant’s solicitor, Ms Copas, noting that Creo had not filed an appearance and stating that an application for judgment would be filed if an appearance were not filed by 14 December 2021. Mr Dickson forwarded the email to the insurance broker with a request that it be sent immediately to Chubb.
There was further communication with the broker on 9 December 2021 and from Ms McNamara, a Chubb claims examiner, on 13 December 2021. On 14 December 2021 Mr Dickson wrote to both the broker and the insurer to ensure that a response was made to Ms Copas before the deadline. Ms McNamara replied that day that she had “attempted to contact Megan Copas a number of times without response”.
Later on 14 December 2021, Mr Dickson confirmed Ms Copas’ contact details with Ms McNamara and sent an email to Ms Copas, advising that “Lucy (Chubb) has been making efforts to contact you for several weeks”. Ms Copas responded to both Mr Dickson and Ms McNamara, referring to a missed call she had received with a recorded message advising that contact would be made with her by email. The caller did not leave any contact details.
On 24 January 2022, Ms Copas wrote to Mr Dickson and Ms McNamara, “advising that she had not heard anything since 14 December 2021 and that no Notice of Appearance had been served despite previous indications”. A further letter on 2 February 2022 from Ms Copas set out the history of communications and advised that, unless an appearance was filed within 14 days, the defendant would seek judgment with damages to be assessed.
Mr Dickson immediately forwarded this letter to the broker and to Chubb, expressing his concern that he was “being left unreasonably exposed”. The broker replied that Ms McNamara had not responded to its communications “requesting an update”. Ms McNamara did respond to the broker and Mr Dickson on 12 December 2021, advising that she was “waiting on a response from a panel firm in terms of appointment on a without prejudice basis, for now, while we finalise our coverage position”. She promised to “be in touch promptly with the insured and Ms Copas, “once she [Ms McNamara] had heard” and stating that “the timeline as provided by Ms Copas will be complied with”.
Mr Dickson sent information about the claim to Ms McNamara. On 15 February 2022, Ms McNamara responded that Chubb did not require anything further and said,

“let’s keep the communications channel open”.
Mr Dickson wrote to Ms McNamara on 13 March 2022, asking if she had responded to Ms Copas within the timeframe. On 15 March 2022 Ms McNamara responded, “this is correct” and promised a “substantive update” shortly.
Mr Dickson said he “assumed Chubb had complied with the timetable and was dealing with the case”. He heard nothing further until, on 10 October 2024, he received the defendant’s summons dated 25 September 2024 and the supporting affidavits.
It is presently unclear why Chubb did not instruct solicitors to file an appearance in the proceeding. There is reference in an email from Ms McNamara dated 12 February 2022, to “waiting on response from a panel firm”, although that apparently did not happen. Ms McNamara has left Chubb’s employment. No other explanation was given as to why an affidavit by Ms McNamara had not been filed or whether any contemporaneous notes had been made by Ms McNamara or someone else at Chubb.
Ms Britz offered her opinion as to why an appearance had not been filed. She stated in paragraph 19 of her affidavit dated 30 October 2024 that, “it appears to me that Ms McNamara, although cognizant of the fact that a claim had been made against Creo, was unaware of the necessity to file a notice of appearance in the proceeding (within the time specified) and the consequences of failing to file and serve such a notice. Ms McNamara appeared to be proceeding on the mistaken apprehension that the matter would proceed regardless of any need to file an appearance within a prescribed time”.
In my view, this evidence is unsatisfactory and unlikely. I am unable to conclude why an appearance was not filed, although I do not consider it probable that the failure was due to a deliberate decision not to defend the proceeding.
On the hearing of Creo’s application, its counsel Mr Rollnik relied upon the explanation offered by Mr Dickson as to why Creo itself had not filed an appearance. In my view, that is not the relevant issue. Chubb, as Creo’s insurer, had accepted responsibility for protecting Creo’s interests in relation to the litigation. No credible explanation has been offered as to why Chubb did not ensure that an appearance was filed.
Occasionally, the default by a solicitor, or former solicitor, is relied upon by a party to explain a failure to take a necessary step in the proceeding. If the failure has minor consequences, for example a default that may be remedied by an order for costs against the party, the matter might be easily resolved by the solicitor accepting the financial consequences of its default.
However, if the consequences are more serious, or not so easily remedied, courts are less reluctant to point to the defaulting party’s possible right of action in negligence against the solicitor as the appropriate manner of resolving such a matter. Each case must be determined upon its own particular facts. In the present case, I consider that the possible prejudice to the parties is the decisive factor.

Prejudice to the parties

It is conceded that Creo has an arguable basis for defending the claim. Creo says that it constructed the footings for the new dwelling within the defendant’s property, according to the defendant’s surveyor. The surveyor, Richards, had been engaged by the defendant and Creo’s responsibility was, during construction, to follow the surveyor’s report and later, after the plaintiffs’ complaint of encroachment, to adhere to Richards’ directions.
During construction, when the plaintiffs believed that the footings encroached on their property, they engaged their own surveyor, Scott Carson of Carson Development Consultants. Subsequently, Mr Dickson said, Creo removed the alleged encroaching work, and all Creo’s further work was carried out within an area marked by Richards as being within the defendant’s property.
There is a possibility that the further building work still encroached on the plaintiffs’ property. It was on this basis, and in reliance upon their own surveyor’s (Mr Carson’s) opinion as to the location of the boundary line, that the plaintiffs commenced the proceeding against the defendant. Mr Dickson concedes further encroachment as a possibility in his second affidavit but says that the alleged encroachment was minor (8-15 cm), was below ground level and the encroaching portions might be removed very easily. In any event, Mr Dickson asserted that Creo, at all times, followed the instructions of Richards, which it was obliged to do.
In these circumstances, Mr Rollnik relied upon the decision of the Court of Appeal in Goldberg v Morrow [2003] VSCA 127 at paragraphs 12 and 13 where Ormiston JA (with whom Batt JA agreed), stated that it is a “well known … principle of practice … in the area of default judgments” that “the Court does not ordinarily enter a default judgment where it is pointless to do so because a defendant is seeking genuinely on a tenable basis to defend the proceeding [and] whatever the technical failure of the defendant may be, a default judgment serves no purpose and the failure can properly be taken into account only on other questions of discretion, such as the question of costs”.
It should be noted that the comments by the Court of Appeal were made in the context of refusing an application by a self-represented applicant for leave to appeal from a decision of a Supreme Court judge, on appeal from a Master, whom the applicant alleged, effectively “refused to deal with an application for judgment in default of defence which he says was both before the master and the judge” [paragraph 4]. In paragraph 6, Ormiston JA “briefly mentioned” the proposed proceeding against the defendant “David Morrow”, in which the applicant was “claiming damages for false arrest and wrongful imprisonment (and for certain rather more obscure claims)”.
The defendant in that matter had entered a conditional appearance, although later than the time required. However, the defendant had not filed a defence within time, as the Rules required a defence to be filed “as if he had filed an appearance on the last day for doing so under the Rules”. However, a defence had been delivered shortly after that date and prior to the initial hearing before the Master.
I would respectfully agree that the statement of principle by Ormiston JA was entirely appropriate in the circumstances before the Court of Appeal and as qualified by the use of the word “ordinarily”.
In the present case, however, I must take account of the fact that the defendant settled the proceeding at mediation on 6 June 2022 and with the only parties who were participating in the proceeding (the plaintiff and the third party, Richards). Of relevance, also, is the fact that the defendant’s solicitors had tried to communicate with Creo on a number of occasions to ascertain whether Creo would take part in the litigation. I will summarise the attempts by the defendant’s solicitors to communicate with Creo and Chubb.
On 11 March 2022, the defendant made an ex parte application by summons seeking judgment against the first third party, Creo. Judicial Registrar Bennett in his orders on 4 March 2022 noted in Other Matters that “the plaintiff [in fact the defendant] has informed the Court that the first third party has been served and has indicated to the plaintiff [defendant] an intention to defend but that it has not filed a notice of appearance. The plaintiff [defendant] advised the Court that the parties have agreed to allow the first third party an opportunity to file an appearance before setting the matter down for trial”.
The defendant’s solicitor’s email to the Court in advance of the hearing noted, “I have issued a warning to the first third party to file its appearance, failing which my client will seek judgment in default with damages to be assessed. The active parties request that the administrative mention is adjourned for at least 28 days to accommodate a reasonable time on my warning and for any judgment to be entered by the new listed administrative date”.
On 5 April 2022, Judicial Registrar Bennett made an order noting that the first third party had not filed an appearance. He set the proceeding down for trial on 23 November 2022. A further order provided that, “By 15 June 2022, the parties must have completed the mediation of the dispute”. On 19 May 2022, Judicial Registrar Bennett dismissed the defendant’s application dated 11 March 2022 for judgment against the first third party.
Following the mediation on 6 June 2022, Judicial Registrar Bennett made orders by consent on the papers that “the proceeding between the plaintiffs and the defendant is dismissed without adjudication on the merits, with a right of reinstatement” and that “the proceeding between the defendant and the second third party is dismissed”.
At the mediation on 6 June 2022, all parties to the proceeding, apart from Creo, participated. The defendant signed terms of settlement with the plaintiffs and separately with the second third party, Richards. It was agreed that:
a.the defendant agreed to pay the plaintiff $110,000.00, to arrange and pay for a new paling fence on the boundary for the total cost of $7,738.50 and to grant an easement of support.;
b. the second third party, Russell, would pay the defendant $10,000.00;
c. each party would bear their own costs;
d.Consent orders would be sought from the Court to dispose of the proceedings, being the plaintiffs’ claim, the defendant’s counterclaim for adverse possession and the third party proceeding against Richards.
Mr Rollnik submitted that the defendant, in reaching agreement, should have taken account of the fact that no settlement had been reached with Creo and no order had been obtained against Creo. In my view, this submission ignores the reality that the defendant was locked into a timetable imposed by the Court in respect of the proceeding which provided for mediation to be completed by 15 June 2022 and for a 5-7 day trial to commence on 23 November 2022, and in circumstances where the defendant’s solicitors had made significant efforts to contact Creo and Chubb to ascertain whether the third party proceeding would be defended by Creo.
The Court’s procedures place great importance on alternative dispute resolution. In commercial disputes, it is well known that only about 2% of cases initiated in the Court’s Commercial Division are determined by a judge after a trial.
In relation to the principles of Anshun estoppel, the courts have recognised that an estoppel may arise, not only where a previous proceeding has been determined by a decision of the court, but also where a previous proceeding has been resolved. In Whelan Kartaway Pty Ltd v Donnelly [2012] VSC 45 (“Whelan”), Davies J at [24] stated (citing authority) that, “There are a number of cases in which it has been held that Anshun estoppel may apply where the earlier proceeding was settled without adjudication”.
The Anshun test applies to both claims and defences which might have been advanced in an earlier proceeding and “whether it should be said that it was unreasonable of the party not to have advanced that claim or defence” (Timbercorp Finance Pty Ltd v Collins & Tomes [2016] VSCA 128 at [140]).
In the present case, the Court made orders to give effect to the settlements. The defendant’s solicitor, Megan Copas, in an affidavit sworn 18 April 2024, set out in detail the advice she gave to the defendant at the mediation, and in relation to the settlement reached. The affidavit was apparently filed to establish the reasonableness of the settlements for the purpose of the defendant’s application for judgment against the first third party.

The settlement by the defendant with the plaintiffs was essentially based upon the costs estimate Ms Copas made to that time, and if the matter went to trial, and the effect the encroachment would have on the redevelopment the plaintiffs apparently intended undertaking. Ms Copas also commissioned an independent survey to check the Richards’ surveys and obtained counsel’s opinion on the reasonableness of the settlements.
In these circumstances, I consider that I must take account of the defendant’s settlement with all parties who had participated in the proceeding, that she had done so at a court-directed mediation at which Creo did not participate, and that this was as a result of Creo’s own failure to file an appearance and participate in the proceeding.
I shall discuss shortly the options open to the Court when I come to consider the appropriate orders on the defendant’s application, whether an award of a money sum is appropriate or whether judgment should only be entered for damages to be assessed. I consider that the latter alternative is appropriate. To a degree, this will ameliorate the prejudice Creo (and its insurer) would suffer by denying Creo the opportunity to litigate the issue of its liability to the defendant. However, to allow matters to now be litigated between the defendant and Creo, after the defendant had significantly rearranged her position at the mediation, would be a serious and unacceptable prejudice.
In Winter-Cooke v Winter-Cooke [2022] VSCA 264, the Court of Appeal considered the circumstances in which it might be appropriate to refuse an application to extend the time for bringing an application under Part IV of the Administration and Probate Act 1958.
At paragraphs 89 and 91, the Court of Appeal observed that, “Statutory limitation periods advance the administration of justice because they ensure that members of the public are able to order their personal and business affairs on the basis that, once a limitation period has expired, their rights and interests are no longer at risk of litigation. This is particularly so where parties to a dispute who are aware of their legal rights have negotiated a settlement and can reasonably consider that the dispute has been laid to rest [and that] the exercise of the discretion to grant the extension of time must take account of the reasons for the Limitation regime”.
In my view, these statements by the Court of Appeal have equal application when considering the importance of the filing of an appearance, as the formal statement of a party’s intention to participate in the proceeding, and when a court considers the appropriate discretionary considerations upon an application by a party seeking leave to file an appearance after the participating parties in the proceeding have resolved their disputes at mediation and by orders of the Court.
Accordingly, I propose to dismiss Creo’s summons dated 23 October 2024 seeking leave to file an appearance in the proceeding.

Whether judgment might be entered against Creo pursuant to Rule 11.14

Order 11 is headed “Third Party Procedure”. Two sub-rules expressly give the Court power to enter judgment in respect of a third party claim; rules 11.11 and 11.14. The rules are as follows:
11.11 Default by third party
(1)Where at the time any judgment is entered or given for the plaintiff against the defendant by whom the third party was joined the third party has not filed an appearance or after appearance has not served a defence, and the time limited for filing an appearance or serving a defence has expired—
(a)the third party—
(i)shall be taken to admit any claim stated in the third party notice; and
(ii)shall be bound by the judgment between the plaintiff and the defendant insofar as it is relevant to any claim or question stated in the notice;
(b)the defendant may at any time after satisfaction of that judgment or, with the leave of the Court, before satisfaction, enter judgment against the third party—
(i)for any contribution or indemnity claimed in the notice; and
(ii)with the leave of the Court, for any other relief or remedy claimed therein.
(2)If a third party or the defendant by whom the third party was joined fails to serve any pleading within the time limited, the Court may give such judgment for the party not in default or make such order it thinks fit.
(3)The Court may set aside or vary any judgment or order under paragraph (1)(b) or (2).
11.14 Judgment between defendant and third party
(1)Where a third party has been joined under this Order, the Court may at or after the trial of the proceeding or on its determination otherwise than by trial give judgment for the defendant by whom the third party was joined against the third party or for the third party against that defendant.
(2)Where judgment is given for the plaintiff against the defendant and judgment is given for that defendant against a third party, unless the Court otherwise orders, the judgment against the third party shall not be enforced until the judgment against the defendant has been satisfied.

In Permanent Custodians v Petrovska [2015] VSC 42, Dixon J, at trial, made consent orders “for the plaintiff against the defendant” in accordance with terms of settlement reached by the parties (at [4]). Justice Dixon was then asked to make further orders in third party proceedings in which none of the three third parties had filed an appearance. At paragraph 12, Dixon J stated that, “No appearance having been filed, r 11.11 is the applicable rule”.
Justice Dixon said in respect of Rule 11.14, “That rule has no application in the present circumstances. It applies when judgment is sought or when leave to execute the judgment prior to satisfaction of the plaintiff’s judgment is sought at the trial of the third party proceeding or on its determination otherwise than by trial after an appearance and a defence have been filed by the third party” (at [12]).
In my view, Rule11.14 does have application in the present case. Clearly, Rule 11.11 has no application as judgment has not been “entered or given for the plaintiff against the defendant by whom the third party was joined”. I respectfully disagree with the statement by Dixon J that suggests that Rule 11.14 only applies “after an appearance and a defence have been filed by the third party”. There are, in my view, more appropriate reasons for considering that Rule 11.11 was the applicable rule in relation to the matter before the learned judge, as he had entered judgment for the plaintiff against the defendant.
On the other hand, Rule 11.14, although it does not specifically require that no appearance or defence has been filed (as Rule 11.11 provides), does not need to, as its operation is limited in other ways and it is not important whether an appearance and/or defence has been filed for the operation of Rule 11.14.
Mr Rollnik submitted that the words “or as otherwise determined” must refer to a determination by a court and not a resolution of a proceeding by agreement between the parties. As I noted earlier, alternative dispute resolution is such an important part of the Court’s processes, including in the Rules, that it makes no sense to read down Rule 11.14 in the manner suggested.
As Dixon J noted at paragraph 22, “the overarching purpose of the rules of court in relation to civil proceedings is to facilitate the just, efficient, timely and cost effective resolution of the real issues in dispute. That purpose may be achieved by agreement between the parties or through appropriate dispute resolution processes”.
On the plain reading of the Rule, and considering the circumstances in which Rule 11.11 applies and the general processes appropriate to third part proceedings, I am satisfied that the rule applies to the circumstances of the present case.
Accordingly, the defendant is entitled to judgment against Creo.

Should judgment be entered for a money sum or for damages to be assessed?

The defendant has sought judgment alternatively for a money sum or for damages to be assessed. The sum claimed of $107,738.50 is calculated as the sum agreed to be paid to the plaintiff of $110,000, less the $10,000 contribution agreed to be paid by Richards. To this must be added the cost of the new fence of $7,738.50.
The defendant’s amended defence and counterclaim dated 14 September 2021 sought a declaration that, as against the plaintiffs, the defendant was entitled, by adverse possession, to the disputed portion of land upon which the alleged encroachment occurred. It may be that there are arguments Creo might have as to the causal link between those claims and the matters for which Creo might be more directly responsible.
Usually, the Court would need to consider the “reasonableness” of any sum which a third party would be ordered to pay in circumstances where, in absence of a defence, the allegations in the third party claim are taken to be admitted. The “assessment” by the Court will require a determination of the reasonableness of the sum paid by the defendant to the plaintiffs and what part of that sum is attributable to the liability of Creo upon the admitted facts of the third party claim.
The Court would be required to take into account the claims of the plaintiffs against the defendant, the defendant’s counterclaim and third party claim against Richards, as well as the terms of settlement between the defendant and the plaintiffs and the defendant with the second third party, Richards.
In Whelan at [24], Davies J cited the observation of Corboy J in Rojanasaroj v Rachan (No 2) [2011] WASC 27 at [39] that, “the possibility that a party can be prevented [by application of the Anshun principle] from pursuing a claim in an action because the claim ought to have been made in an earlier proceeding that was compromised adds to the complexity of findings that must be made in determining what was truly disposed of by the settlement”.
Accordingly, the appropriate order would be judgment for the defendant against the first third party on the third party claim for the assessment of the damages the first third party must pay to the defendant.

Should judgment be entered against Creo?

If judgment were to be entered against Creo, it is likely that Creo could possibly suffer irreparable harm. Creo is an operating builder, although I have no evidence of the particular work it is currently undertaking. Usually, builders need to finance their building works with facilities from a financial institution. Such facilities would invariably be secured. Many standard security documents provide that the entry of judgment against a customer would be a triggering event, either being itself a default calling up the facility, or entitling the financial institution to do so.
In the circumstances of this case, Creo has had a “real” as opposed to a fanciful defence to the defendant’s claim against it, and its director Mr Dickson had done what he could to assure himself that the insurer was looking after Creo’s interests in the litigation. Chubb has agreed to indemnify Creo. It is as a result of Chubb’s failure to file an appearance for Creo that Creo finds itself in the present position.
I indicated to the parties at the hearing of the applications that I would not enter judgment against Creo without giving it the opportunity to make further submissions. I suggested to Mr Rollnik that perhaps Creo and Chubb should consider their respective positions as their interests do not presently seem to coincide.

Possible future courses of action

It is possible that the parties might themselves agree on a method by which the present position might be resolved. For example, the parties (the defendant, Creo and Chubb) might enter into an agreement for the assessment of the sum to be paid to the defendant to be referred to an arbitrator for determination, with Chubb accepting responsibility for the payment of any amount awarded.
Within the present proceeding, it may be possible for Creo to issue a fourth party proceeding against Chubb and for the court processes to be expedited so that Chubb would effectively become responsible for any final order made by the Court.
Alternatively, the three parties (the defendant, Creo and Chubb) might seek a resolution through mediation, either through a mediator appointed by the parties, or possibly, at a judicial resolution conference

Proposed orders

The Court will make the following orders:

The first third party’s summons dated 23 October 2024 is dismissed.
Unless, by 2:00 pm on 10 December 2024, the first third party makes application to the Court for orders to otherwise facilitate the determination of the damages the first third party must pay the defendant on the third party claim, there shall be judgment for the defendant against the first third party on the third party claim that the damages the first third party must pay the defendant shall be assessed as the Court directs.
The operation of the order in paragraph 2 will be stayed if an application is made in accordance with that order, and shall be stayed until the determination of such application or further order.
The defendant’s summons dated 25 September 2024 is otherwise dismissed.
The first third party must pay the defendant’s costs of the defendant’s summons dated 25 September 2024 and of the first third party’s summons dated 23 October 2024 to be assessed by the Costs Court on a standard basis in default of agreement.

[2024] VCC 1914

3 December 2024