Langridge v Insurance Commission of Western Australia
[2003] WASC 24
•21 FEBRUARY 2003
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: LANGRIDGE -v- INSURANCE COMMISSION OF WESTERN AUSTRALIA & ORS [2003] WASC 24
CORAM: BARKER J
HEARD: 13 FEBRUARY 2003
DELIVERED : 21 FEBRUARY 2003
FILE NO/S: CIV 1364 of 2002
BETWEEN: PETER LANGRIDGE
Plaintiff
AND
INSURANCE COMMISSION OF WESTERN AUSTRALIA
First DefendantAMACA PTY LTD (Formerly known as JAMES HARDIE & CO PTY LTD)
Second DefendantWALLABY GRIP LTD
Third DefendantQBE INSURANCE (AUSTRALIA) LTD
Fourth DefendantBRADFORD INSULATION (WA) LTD (IN LIQ)
Fifth Defendant
Catchwords:
Corporations Act 2001 (Cth) - Action by plaintiff against insurer pursuant to s 601AG of the Corporations Act 2001 - Application by first defendant insurer for judgment or dismissal of action - When action commenced insurer was "the insurer of a company that is deregistered" - Company reinstated after commencement of action and before trial - Whether reinstatement has the effect that plaintiff is unable to maintain the action against the insurer pursuant to s 601AG
Legislation:
Company Law Review Act 1998 (Cth)
Company Law Review Bill 1997
Corporations Act 2001 (Cth), s 601AG, s 601AH(5)
Corporations Law, s 574
Insurance Commission of Western Australia Act 1986 (WA)
Insurance Contracts Act 1984 (Cth), s 51
Law Reform (Miscellaneous Provisions) Act 1946 (NSW)
Rules of the Supreme Court, O 16 r 1(1)(a), O 20 r 19(1)(a), O 30 r 3(1)
Trade Practices Act 1974 (Cth), s 82(1), s 73
Result:
Application dismissed
Category: A
Representation:
Counsel:
Plaintiff: Mr T Lampropoulos
First Defendant : Mr K J Martin QC
Second Defendant : Ms J M Kubacz
Third Defendant : Mr M E Herron
Fourth Defendant : Mr S J Williams
Fifth Defendant : No appearance
Solicitors:
Plaintiff: Slater & Gordon
First Defendant : Downings Legal
Second Defendant : Minter Ellison
Third Defendant : Camm & Associates
Fourth Defendant : Pynt & Partners
Fifth Defendant : No appearance
Case(s) referred to in judgment(s):
Ellul v Active Home Improvements Pty Ltd (1993) 112 FLR 4
Hutchinson v Australian Securities and Investments Commission [2001] VSC 465; (2001) 167 FLR 90
Oswald v Bailey (1987) 11 NSWLR 715
Pagnon v Workcover Queensland [2000] QCA 421; [2001] 2 Qd R 492
State of Western Australia v Wardley Australia Ltd (1991) 30 FCR 245
Wardley Australia Ltd v State of Western Australia (1992) 175 CLR 514
Case(s) also cited:
Campbell v Mutual Life & Citizens Fire and General Insurance Co (NZ) Ltd [1971] NZLR 240
FAI (NZ) General Insurance Co Ltd v Blundell & Brown Ltd [1994] 1 NZLR 11
Kinzett v McCourt (1999) 46 NSWLR 32
Krstevska v ACN 010505012 Pty Ltd (2002) 20 ACLC 292
Norsworthy v SGIC [1999] SASC 496
Suncorp Metway Insurance v Clonmell Pty Ltd [2001] 2 Qd R 94
BARKER J: In this action, the plaintiff claims damages against each of the second, third and fifth defendants. He claims those damages in respect of the condition of mesothelioma which he says he has contracted as a result of the negligence of each of, or one or other of, these defendants.
The writ commencing the action was issued on 19 March 2002. The action was subsequently admitted to the Expedited List of this Court. The action is presently listed for a trial to commence before me on 4 March 2003, a matter of weeks from now.
The first defendant in the action is Insurance Commission of Western Australia (the Insurance Commission), a body established by the Insurance Commission of Western Australia Act 1986 (WA). The plaintiff pleads that, at certain material times between 1954 and 1965, when he was employed as a lagger by Bradford Insulation (WA) Ltd (Bradfords), the Insurance Commission, or its predecessors for whose acts it now has responsibility, was the on‑risk insurer of Bradfords.
The solicitors for the Insurance Commission acknowledge on behalf of the Commission that the Commission was Bradford's insurer on risk for the period 19 February 1963 to 1 January 1966, and that, subject to the terms and conditions of that policy, the policy is capable of responding if appropriate conditions are met.
It is pleaded by the plaintiff, and not denied by or on behalf of the Insurance Commission, that on or about 21 November 1997, Bradfords was deregistered pursuant to the provisions of s 574 of the Corporations Law.
In these circumstances, the plaintiff makes his claim against the Insurance Commission pursuant to the statutory right of action created by s 601AG of the Corporations Act2001 (Cth) (s 601AG).
However, the first defendant pleads, and it is not denied by the plaintiff, that on or about 30 May 2002 - in fact on 9 August 2002 - the registration of Bradfords was reinstated, pursuant to ch 5A of the Corporations Act2001.
In consequence of the reinstatement of Bradfords, the Insurance Commission says the plaintiff can no longer rely upon the statutory cause of action created by s 601AG in his action against it.
The plaintiff's claim against the fourth defendant (QBE Insurance) is made on a similar basis to that made against the Insurance Commission. QBE Insurance currently pleads that it is does not admit that the plaintiff is entitled to claim against it pursuant to the provisions of s 601AG.
The action was entered for trial by formal Entry for Trial dated 20 November 2002.
At a directions hearing on 14 November 2002, a "preliminary issue" was raised before the Expedited List Judge concerning the entitlement of the plaintiff to rely upon s 601AG as against the Insurance Commission.
An application by chamber summons pursuant to O 30, or in the alternative O 16 or O 20 of the Rules of the Supreme Court, dated 29 November 2002, was then filed by the solicitors for the Insurance Commission raising the "preliminary issue" in a formal manner and seeking either judgment in favour of the first defendant pursuant to O 30 r 3(1), or alternatively dismissal of the plaintiff's action against the first defendant pursuant to O 16 r 1(1)(a), or alternatively the striking‑out of the action pursuant to O 20 r 19(1)(a). It is that application which is now before me as the trial Judge, prior to commencement of the trial.
Following the filing of that application, the plaintiff obtained an order of the Expedited List Judge on 28 November 2002, joining the reinstated company, Bradford Insulation (WA) Ltd (In Liq), as a fifth defendant in the proceedings.
In summary, the factual position is as follows:
1.Bradford Insulation (WA) Ltd was deregistered on 2 June 1997.
2.The writ in this action was issued by the plaintiff against the first defendant on 19 March 2002.
3.Bradford Insulation (WA) Ltd was reinstated on 9 August 2002.
4.Bradford Insulation (WA) Ltd (In Liq) was joined as fifth defendant in this action on 28 November 2002.
In these circumstances, the Insurance Commission says that the plaintiff no longer has a cause of action against it pursuant to s 601AG.
In determining this application, attention needs to be directed to the terms of s 601AG, which provides as follows:
"A person may recover from the insurer of a company that is deregistered an amount that was payable to the company under the insurance contract if:
(a)the company had a liability to the person; and
(b)the insurance contract covered that liability immediately before registration."
The Insurance Commission says that an action brought against an insurer pursuant to s 601AG is founded upon the prerequisite that the company is, in fact, deregistered.
The Insurance Commission contends that if a deregistered company is, in fact, reinstated prior to the time the Court, in the action, makes a determination as to the plaintiff's entitlement to the remedy under s 601AG, the action pursuant to s 601AG falls away. In putting this submission, the Insurance Commission relies upon the express wording of s 601AG and the use made of the present tense in the expression "insurer of a company that is deregistered".
Further, the Insurance Commission says that the construction of s 601AG that it contends for is appropriate having regard to the terms of s 601AH(5) of the Corporations Act2001 (s 601AH5), that deals with the effect of reinstatement in the following terms:
"If a company is reinstated, the company is taken to have continued in existence as if it had not been deregistered. A person who was a director of the company immediately before the deregistration becomes a director again as from the time when ASIC or the court reinstates the company. Any property of the company that is still vested in ASIC revests in the company. If the company held particular property subject to a security or other interest or claim, the company takes the property subject to that interest or claim." (Emphasis supplied).
It is contended on behalf of the Insurance Commission that the underlying purpose of s 601AG "is to obviate the need to apply to the court for an order for reinstatement of the company's registration": Hutchinson v Australian Securities and Investments Commission [2001] VSC 465; (2001) 167 FLR 90. It is then said, as I understand it, that, as a corollary, for s 601AG to have application in the present factual circumstances relating to this action, the insured company must remain deregistered. Because Bradford Insulation (WA) Ltd (In Liq) now exists, it is said s 601AG is no longer applicable and the plaintiff is unable to maintain its action against the Insurance Commission.
The application of the first defendant was supported by the second defendant, the third defendant and the fourth defendant. The fourth defendant says, in effect, that it will be entitled to similar orders, should the application of the Insurance Commission succeed.
In opposition to the application of the Insurance Commission, the plaintiff contends that the argument of the Insurance Commission assumes that s 601AG provides a statutory cause of action, or in some way provides relief, that can only be used if Bradfords is currently deregistered at the time relief is ordered.
It is contended on behalf of the plaintiff that s 601AG should be read as though the following words in parenthesis appear in the statutory provision:
"A person may (take proceedings to) recover from the insurer of a company that is deregistered (at the time the proceedings are commenced) an amount that was payable to the company under the insurance contract if:
(a)the company had a liability to the person; and
(b)the insurance contract covered that liability immediately before deregistration."
Counsel for the plaintiff frankly acknowledges that the construction of s 601AG contended for on behalf of the plaintiff means that a plaintiff is entitled to institute, and maintain, proceedings against the insurer in reliance on s 601AG if, at the time the proceedings were commenced, the insured company was deregistered, notwithstanding that the company is later reinstated prior to determination of the action against the insurer.
Counsel for the plaintiff contends that such an outcome reflects the policy underlying the introduction of s 601AG into the Corporations Act. Part of the "policy" argument is that, if the position were otherwise, a plaintiff would lose the ability to rely on s 601AG in an action against an insurer whenever any person, even quite independently of a particular action then on foot, and for quite unrelated purposes, causes the reinstatement of the insured company.
By way of example, counsel for the plaintiff submits that, if in a particular action where s 601AG is relied upon, or in some other action where s 601AG is relied on by another plaintiff against the insurer of the same company, a defendant obtains the reinstatement of the insured company in order to pursue a contribution action against the company (and, ultimately, its insurer), it must follow, if the Insurance Commission's construction of s 601AG is correct, that the plaintiff's action against the insurer under s 601AG (if it has not been determined) must necessarily fail at the point of reinstatement. (That this would be the outcome, if the Insurance Commission's construction of s 601AG were found to be correct, was generally accepted in argument on the basis that it is clear that a contribution action must be brought against the insured company directly and that s 601AG does not provide a basis for a contribution action by another defendant directly against the insurer.)
Section 601AG was introduced following a review of the then Corporations Law. The Company Law Review Act 1998 (Cth), which commenced on 1 July 1998, included a new set of provisions in ch 5A relating to the deregistration and reinstatement of companies. Part 5A.1 includes ss 601AA‑601AH. Prior to the introduction of s 601AG, the circumstances in which a plaintiff could make a claim directly against a liability insurer of a deregistered company were quite limited by reason, obviously, of the lack of privity of contract between such persons. Section 51 of the Insurance Contracts Act 1984 (Cth) allows a "third party" claimant to recover directly from a liability insurer where the insured is dead, or after reasonable inquiry, cannot be found. In some States, provisions such as s 6 of the Law Reform (Miscellaneous Provisions) Act 1946 (NSW) allow a "third party" claimant to commence proceedings against a liability insurer with leave of the Court. There are equivalent sections and statutes in the Australian Capital Territory and the Northern Territory. In some jurisdictions, including Western Australia, there are also provisions that variously permit direct claims against insurers pursuant to legislation relating to motor vehicle accidents, workers' compensation and residential building work.
The Explanatory Memorandum that accompanied the Company Law Review Bill 1997 stated as follows:
"Third party rights against insured deregistered companies
15.22At present, a person wishing to make a claim against a deregistered company may need to apply to court for a reinstatement of the company in order to bring an action against it. The Bill enables a person to proceed directly against the insurer of a company that is deregistered, without seeking the company's reinstatement (Bill s 601AG). Comparable rights have previously been provided in other legislation, for example, sec 6 of the Law Reform (Miscellaneous Provisions) Act 1946 (NSW).
15.23The Bill enables a third party to recover directly from the insurer of the deregistered company an amount payable under the contract of insurance if two preconditions are met -
(a)the deregistered company had a liability to the third party;
(b)the insurance contract covered that liability (Bill s 601AG)."
It is contended on behalf of the plaintiff that the Explanatory Memorandum suggests that s 601AG is "a law reform provision of a general kind", with the consequence that it is legitimate to interpret it by reference to an amelioration of otherwise harsh consequences, such as might occur if a defendant in a s 601AG action caused the reinstatement of a deregistered company for the purposes of a contribution action. Thus, the submission put on behalf of the plaintiff, as noted earlier, is that, provided the plaintiff commences his action against the insurer of a deregistered company that was deregistered at the time the writ was issued, the action may be maintained against such insurer even though the insured company is later reinstated prior to determination of the action.
On behalf of the Insurance Commission, it is contended that, if one is to have regard to the "policy" that underlies s 601AG, then the position of the Insurance Commission is vindicated. In that regard, reliance is placed by the Insurance Commission, not only on the Explanatory Memorandum, but also on the observations of McPherson JA (with whom Thomas JA agreed) of the Queensland Court of Appeal in Pagnon v Workcover Queensland [2000] QCA 421; [2001] 2 Qd R 492. In that case, in determining whether s 186 of the Workers' Compensation Act 1990 (Qld) conferred a new right or cause of action against the substituted defendant and not simply a continuation of an existing cause of action against the original wrongdoer, subject to the unexpired duration of the limitation period fixed by the relevant limitation legislation, reference was made to s 601AG and s 601AH.
McPherson JA at par [11] noted that applications and orders to resurrect the dissolved company have often been made. He noted that some have been refused where, for example, the application was made by a contributory or director seeking to avoid personal liability for insolvent trading, or by a creditor aiming to enforce liability both against the company and a former officer. He noted, however, that applications are commonly granted where the applicant is a would‑be plaintiff attempting to recover damages, or compensation, in respect of which the company was insured for personal injuries sustained before dissolution. However, as McPherson JA noted at par [12], an order reviving a company by restoring its corporate status would be of little use to such a plaintiff if, in the meantime, the statute of limitations had run against him. Thus, in England, it became the practice to include in the order a direction that the time between dissolution and revival should not count for the purpose of the Limitation Act. In par [13] McPherson JA discussed the extent to which that practice had been followed in Australia and referred to the decision in Ellul v Active Home Improvements Pty Ltd (1993) 112 FLR 4 where, in exercising the discretion to declare a corporate dissolution void, Higgins J treated s 36 of the Limitation Act1985 (ACT) as exemplifying a legal policy that, in such circumstances, time should be extended.
McPherson JA observed, at par [14], that the same policy is now manifest in the provisions of ch 5A of the Corporations Law. Thus, on deregistration, the company ceases to exist: s 601AD(1). However, under s 601AH(1), ASIC may reinstate the registration of a company if satisfied that it ought not to have been deregistered. His Honour considered the power under s 601AH(3)(b), which permits the Court to make "any other order it considers appropriate", to be very wide. Thus, McPherson JA did not have any doubt that, under this power, the Court could order that the time between dissolution of the company and the expiration of the limitation period should not count against a plaintiff.
In this context, McPherson JA stated that any remaining doubt about the correctness of his conclusion to this effect was put to rest by s 601AG. At par [17] McPherson JA observed that:
"The legislative policy underlying s 601AG is, however, not open to doubt. It is to 'short‑cut' the need to reinstate the company, and to do so by enabling the ultimate recipient of the insurance proceeds to sue the insurer direct where the company has been dissolved, without imposing the additional trouble and expense of first applying to have it reinstated. The assets of the company divisible among its creditors are not diminished by adopting that procedure: Corporations Law, s 562. In a case like this where, so far as appears, the insurance policy covered the liability existing immediately before registration, there is to my mind no question that the Court, if application were made to it by the plaintiff, would or would have exercised its discretion under s 601AH(2) to reinstate the company Croway Pty Ltd."
In my view, these observations on the legislative policy underlying s 601AG, while helpful, do not directly go to the issue at hand.
The question remains, whether an action that has been commenced against an insurer in reliance on statutory cause of action created by s 601AG can no longer be maintained whenever the deregistered company is reinstated before the action is determined. Put another way, is the statutory cause of action lost is such circumstances?
On one view, having regard to the Explanatory Memorandum, the terms of s 601AG and to the context in which s 601AG has been introduced to permit a "third party" to make a direct claim on an insurer, s 601AG can only be availed of where, at all material times when an action is commenced and thereafter while it is maintained, the insured company no longer exists. If a company is not deregistered, or if it is reinstated, it exists. In such a case, it may be said there is no difficulty in commencing and maintaining an action against the company. There is no additional "trouble and expense" to be incurred by the plaintiff in having the company reinstated.
On this view, s 601AG is intended only to have application in circumstances where there is not, at all material times during the course of the action, a registered company in existence and the remedy given by the section is only available if the company remains deregistered. Section 601AH(5), which says the reinstated company is to be taken to have continued its existence as if it has not been deregistered, appears to support this view. Accordingly, where there is such a company, it should be sued. It follows, on this view, that, even though an action against an insurer of a deregistered company was properly commenced under s 601AG at an earlier time, because the company has since been deregistered, such action can no longer be maintained and no such remedy given.
Against that view stands a competing view, a view which I prefer, namely, that, properly construed, there is nothing in s 601AG, or in s 601AH(5), that negates the right of the plaintiff to maintain the action that was effectively commenced by him against the Insurance Commission.
On this view, proper recognition is accorded to the fact that a provision such as s 601AG creates a new statutory right of action and remedy. It permits a party such as the plaintiff, who has no privity of contract with a defunct defendant's insurer, to "recover from the insurer" of that defunct defendant "an amount that was payable … under the insurance contract", if the requirements of the provision are met. One of the requirements is that the "person may recover from the insurer of a company that is deregistered".
The language used in s 601AG is similar to that employed in certain provisions of the Trade Practices Act 1974 (Cth) which also express the right of a person to "recover" an "amount" in certain circumstances. At the time of the Wardley litigation referred to below, s 82(1) of the Trade Practices Act provided that:
"82(1)A person who suffers loss or damage by conduct of another person that was done in contravention of a provision of Part IV or V may recover the amount of the loss or damage by action against that other person or against any person involved in the contravention." (Emphasis supplied)
Unlike, s 601AG, s 82 of the Trade Practices Act by subs (2) went on to address the question of when the "action under sub‑section (1)" may be commenced.
Section 73 is another provision of the Trade Practices Act which, in the course of dealing with questions of misrepresentation or breach of an implied condition or warranty, states that "the consumer may recover that amount in accordance with this section in a court of competent jurisdiction".
In State of Western Australia v Wardley Australia Ltd (1991) 30 FCR 245 at 254 the Full Court of the Federal Court (Spender, Gummow and Lee JJ) observed of these two provisions of the Trade Practices Act as follows:
"Section 73(1) and (2) creates both right and remedy. Under s 73, a person who suffers loss or damage 'as a result of', inter alia, misrepresentation of [sic] breach of an implied condition or warranty may recover the amount of the loss or damage by action. No period of limitation is provided in respect of the time within which the action may be commenced and there is no reference to a day or date on which a cause of action accrues. Although s 82 provides a right of recovery by action for a person who suffers loss or damage 'by' rather than 'as a result of' conduct of another, it is, as in s 73, a right of recovery tied to the amount of the loss or damage suffered." (Emphasis in original).
The Full Court contrasted these provisions with that of s 52 of the Trade Practices Act which does not purport to create liability nor vest in any person any cause of action in the ordinary sense of that term: FCR 256 ‑ 57.
Of s 82 of the Trade Practices Act in particular, the Full Court further observed, at FCR 257, that:
"Section 82 is one of the provisions of the Act which creates both right and remedy: see Arnotts Ltd v Trade Practices Commission (No 1) (1989) 21 FCR 297 at 303 ‑ 4; 87 ALR 73. It is an example of what has been called 'double function' legislation: see Aitken, 'Jurisdiction, Liability and "Double Function" Legislation', (1990) 19 Fed L Rev 31. The section postulates a person who (i) suffers loss or damage, (ii) by conduct of another person (iii) which is done in contravention of a provision of Pt IV or Pt V of the Act. It confers a right to recover 'the amount of the loss or damage'. The right is exercisable by action not only against the person whose conduct contravened the Act, but against any person 'involved in the contravention'. That latter class of person is defined in s 75B. Thus, any particular contravention of a provision of Pt IV or V may give rise to causes of action vested in various persons to recover from various defendants, 'the amount of the loss or damage' the plaintiff has suffered 'by' the conduct in contravention of the legislation."
The Full Court then explained that the creation of the right and remedy by a section such as s 82 is separate from the question of conferral of jurisdiction to determine right and remedy. At FCR 257 ‑ 58, the Full Court added:
"But of itself, s 82 is insufficient to render justiciable in a court exercising Federal jurisdiction the controversy in which complaint is made of invasion of the rights we have described, and remedies under Pt VI are sought in relation to thereto. Conferral of jurisdiction is effect by s 86.
….
Jurisdiction is conferred on the Federal Court by s 86 of the Act in a defined manner. There is no general grant of jurisdiction with respect to civil matters under the Act: cf the Corporations Law s 42(3). In the form it takes after the Jurisdiction of Courts (Miscellaneous Amendments) Act 1987 (Cth), s 86 confers jurisdiction on the Federal Court 'in any matter arising under the Act in respect of which a civil proceeding' has been instituted under Pt VI of the Act and that jurisdiction in some respects is exclusive.
The jurisdiction invested in the several courts of the States within the limits of their several jurisdictions is defined in a different manner. Pursuant to s 86(2) of the Act, State courts are invested with jurisdiction with respect to any 'matter' arising under Div 1 or 1A of Pt V of the Act in respect of which a civil proceeding is instituted by a person other than the Minister or the Commission."
The decision of the Full Court was affirmed in Wardley Australia Ltd v State of Western Australia (1992) 175 CLR 514. Nothing in the judgments of the members of the High Court detracts, in my view, from the above dicta of the Full Court. Indeed, in the joint judgment of Mason CJ and Dawson, Gaudron and McHugh JJ at 525, the fact that s 82(1) of the Trade Practices Act creates a new cause of action that accrues at the time the circumstances referred to therein are satisfied, is emphasised. Their Honours stated:
"By virtue of s 82(2) of the Act, the period of limitation begins to run at the time when the cause of action under s 82(1) accrues. As loss or damage is the gist of the statutory cause of action which s 82(1) provides [footnote omitted], the cause of action does not accrue until actual loss or damage is sustained. The statutory cause of action arises when the plaintiff suffers loss or damages 'by' contravening conduct of another person."
See Deane J at CLR 539 and Toohey J at 551 to similar effect.
Thus, what is observable here in respect of s 601AG, is that the section provides a new statutory cause of action, both "right and remedy", in the circumstances in which it applies. Thus, a person may "recover" the "amount" relevantly referred to therein "from an insurer of a company that is deregistered" when the circumstances described in s 601AG are satisfied.
Jurisdiction to entertain such a recovery action is conferred, inter alia, upon this Court by virtue of the general grant of jurisdiction with respect to civil matters arising under the Corporations legislation: Corporations Act2001 s 1337B(2).
Such a recovery action is properly founded and the cause of action accrues, in my view, if the relevant circumstances are met; including, notably, if the insurer sued is the "insurer of a company that is deregistered".
At the time the action here was commenced by the plaintiff, this particular circumstance was satisfied. That being so, in my view, the plaintiff has an accrued cause of action against the Insurance Commission and is entitled to maintain its action against the Insurance Commission, notwithstanding that Bradfords has recently been reinstated, unless there is a clear statutory provision to the contrary. To find otherwise, would effectively be to divest the plaintiff of the cause of action, the "right and remedy", created by the Parliament in the form of s 601AG.
In this regard, attention is drawn to s 601AH(5). As noted, it provides, by the first sentence thereof: "If a company is reinstated, the company is taken to have continued in existence as if it had not been deregistered". It goes on to deal expressly with the position of former directors and the status of company property.
Nothing in s 601AH(5), in my view, derogates from the accrued cause of action of the plaintiff and the entitlement of the plaintiff to maintain an action that the plaintiff has properly instituted under s 601AG. A statutory statement to the effect that a reinstated company is "taken to have continued in existence as if it had not been deregistered", is not directed to the question of the maintenance of an action based on the cause of action created by s 601AG and is not inconsistent with the entitlement of a person who has commenced such an action to maintain it.
Indeed, if it were to be found otherwise, it may be said that the policy that underlies the legislation that introduced s 601AG - to permit direct action against the insurer of a deregistered company - would count for nothing if it could effectively be undone by a defendant in the plaintiff's action, or, indeed, by a defendant in some quite unrelated proceedings, moving to reinstate the deregistered company for the purposes of contribution proceedings.
One cannot imagine that the Parliament considered (if it considered the present issue at all - and there is no suggestion in the Explanatory Memorandum that it did) that a recovery action regularly commenced under s 601AG should be lost by the later reinstatement of the deregistered company for the purposes of a contribution action. In so remarking, I am heartened by the observations of Deane J in Wardley Australia Ltd v State of Western Australia at CLR 542, made in relation to the question of construction arising in relation to s 82 of the Trade Practices Act in that case, that:
"Such a question of construction is commonly phrased in terms of the legislative intent to be discerned in the relevant statutory provision construed in a statutory context. So to say does little, however, to advance the present case since there is nothing in either the words of s 82 or the context provided by the Act which really suggests that the Parliament ever directed its attention to the precise question whether to incur a liability to make a payment of money if some uncertain future state of affairs comes about is, of itself, immediately to suffer loss or damage for the purposes of s 82(1). The case is one in which the courts are constrained to impute a relevant legislative intent ascertained by reference to considerations of language, context, analogous principle and presumed policy. On balance, it appears to me that reference to those considerations favours a construction of s 82(1) which has the result that, in the circumstances of the present case, the State did not suffer loss or damage for the purpose of s 82 at the time when the indemnity was executed on its behalf."
For similar sorts of reasons, I have preferred a construction of s 601AG that does not deny the entitlement of the plaintiff to maintain an accrued cause of action against the Insurance Commission. It seems to me to be a construction that better serves the purposes of s 601AG than the alternative contended for by the Insurance Commission.
This approach to the proper construction of s 601AG is, I think, also generally supported by the construction placed on s 6(1) of the Law Reform (Miscellaneous Provisions) Act 1946 (NSW) by the New South Wales Court of Appeal in Oswald v Bailey (1987) 11 NSWLR 715. The Court held that the charge on all insurance moneys created by that section is a statutory right which accrues at the time of the happening of the events giving rise to the alleged liability and cannot be affected by any subsequent events or any changes to the contract of insurance made thereafter: see at 723, 730 and 734.
In Oswald v Bailey, Kirby P (as he then was) having noted that s 6 was designed to permit direct access by a claimant for damages or compensation to a fund of insurance moneys provided in consequence of a contract of insurance into which the insured has entered with an insurer, stated (at 717 ‑ 18):
"The very uniqueness of this statutory provision speaks against a narrow construction of it. So too does the beneficial object which lies behind it. The insured may disappear, die or, if a company, be wound up. Such events could, in the past, stultify the claimant's prospects of practical recovery. Out of recognition of the modern reality of insurance, the need to protect those with claims for damages or compensation, and the ready ability, normally, to trace insurers entering into contracts of insurance, provision has been made for a direct action against the insurer. The claimant must bring himself within the terms of s 6 of the Act. But if the claimant does, the benefit is secured of a charge on all insurance moneys that are or may become payable in respect of the insured's liability."
Kirby P further noted at 723 ‑ 724 that:
"The section is, as I have already mentioned, a novel reforming provision. As such, it should be construed beneficially to protect claimants such as the appellants. It gives a direct statutory right of action against an insurer which normally the law would not allow. Once the premises are established the appellants' rights no longer depend upon the contract of insurance. They are derived from the Act itself. The scheme of the Act is plainly not designed for the purpose of benefiting insurers … or the insured … . It is for the protection of persons claiming damages or compensation. … Events which occur after the right has accrued may be relevant to … leave [required to commence an action in respect of the charge] … . But they cannot be relevant to the existence of the charge and the right to which it gives rise."
In this case, the plaintiff is the person who has caused the reinstatement of the formerly deregistered Bradfords and who has joined it as a fifth defendant in this action. However this may be, it is conduct which in my view, is irrelevant to the issue of construction I am required to determine.
For these reasons, I do not consider that the recent reinstatement of Bradfords (In Liq), or its joinder as fifth defendant in the action, has the effect that the plaintiff is unable to maintain the recovery action instituted by him against the Insurance Commission pursuant to s 601AG of the Corporations Act2001, and I would dismiss the application of the Insurance Commission.
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