JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CIVIL
CITATION: LOIS NOMINEES PTY LTD -v- HILL [2011] WASC 53
CORAM: BEECH J
HEARD: 17 FEBRUARY 2011
DELIVERED : 2 MARCH 2011
FILE NO/S: CIV 2019 of 2009
BETWEEN: LOIS NOMINEES PTY LTD AND THE PERSONS DETAILED IN THE SCHEDULE ATTACHED TO THE WRIT OF SUMMONS DATED 2 JUNE 2009
Plaintiffs
AND
GORDON LESLIE HILL
DefendantQBE INSURANCE (AUSTRALIA) LTD
AMERICAN HOME ASSURANCE COMPANY
QBE CORPORATE LTD (T/AS 'DA CONSTABLE SYNDICATE 386 AT LLOYDS')
Proposed Second Defendants
Catchwords:
Equity - Declarations - Whether plaintiffs have arguable claim for declaration against defendant's insurer that insurer obliged to indemnify insured defendant against plaintiffs' claim - Where insured defendant does not join insurer - Whether any declaration would have foreseeable consequences for plaintiffs - Whether declaration in favour of plaintiffs would bind insurer in subsequent proceedings brought by insured - Whether insurer may arguably be precluded from challenging liability by doctrine of abuse of process
Practice and procedure - Amendment - Addition of new parties - Whether O 18 r 4 empowers the addition of new defendants to an existing action - Discretion - Whether arguable case for declaration against defendant's insurer
Legislation:
Rules of the Supreme Court 1971 (WA), O 18 r 4, O 18 r 6, O 21 r 5
Result:
Application dismissed
Category: A
Representation:
Counsel:
Plaintiffs: Mr J C Vaughan
Defendant: No appearance
Proposed Second Defendants : Mr S M Davies SC & Mr A J Musikanth
Solicitors:
Plaintiffs: Tottle Partners
Defendant: No appearance
Proposed Second Defendants : Jackson McDonald
Case(s) referred to in judgment(s):
ABB Service Pty Ltd v Hetherington [2001] WASCA 417
Amon v Raphael Tuck & Sons Ltd [1956] 1 QB 357
Anjin No 13 Pty Ltd v Allianz Australia Insurance Ltd [2009] VSC 371
APT Finance Pty Ltd v Bajada [2008] WASCA 73
Ashmere Cove Pty Ltd v Beekink (No 2) [2007] FCA 1421; (2007) 244 ALR 534
Beneficial Finance Corporation Ltd v Price Waterhouse (1996) 68 SASR 19
Brandsma & Crockett Pty Ltd v Heindal Pty Ltd [2002] WASCA 96; (2002) 26 WAR 323
CE Heath Casualty & General Insurance Ltd v Pyramid Building Society (In Liq) [1997] 2 VR 256
Elovalis v Elovalis [2008] WASCA 141 (S)
Employers Reinsurance Corporation v Ashmere Cove Pty Ltd [2008] FCAFC 28; (2008) 166 FCR 398
Graham Geoffrey Walker and Thelma Jean Walker as trustees for the Walker Superannuation Fund v Clough Property Claremont Pty Ltd [2009] WASC 367
Interchase Corporation Ltd (in liq) v FAI General Insurance Co Ltd [1998] QCA 180; [2000] 2 Qd R 301
JN Taylor Holdings Ltd (In Liq) v Bond (1993) 59 SASR 432
Jones v Dunkel (1959) 101 CLR 298
Kendall v Hamilton (1879) 4 App Cas 504
La Macchia v Minister for Primary Industries and Energy (1992) 110 ALR 201
Mansfield v Director of Public Prosecutions for Western Australia [2006] HCA 38; (2006) 226 CLR 486
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- Case
- [2011] WASC 53
- Decision Date
CaseChat Overview and Summary
The court considered whether a declaration in favour of the plaintiffs would have any foreseeable consequences for them. It also examined if such a declaration would bind the insurer in subsequent proceedings brought by the insured defendant. Additionally, the court looked into the possibility of the insurer being precluded from challenging its liability by the doctrine of abuse of process. The court referenced the decision in Interchase Corporation Ltd (in liq) v FAI General Insurance Co Ltd, where the majority held that the joinder of the insurer served no useful purpose. The minority opinion argued that the declaration would effectively determine the insurer's liability to the insured defendant, as it would be an abuse of process for the insurer to litigate the question in subsequent proceedings.
The court ultimately decided that the addition of the insurer as a defendant would not serve a useful purpose. The declaration would not preclude the insurer from disputing its liability to the insured defendant in later proceedings, and there was no controversy between the insured defendant and the insurer. The court rejected the argument that the declaration would have utility because any defence by the insurer in later proceedings would be struck out as an abuse of process. The court held that the insurer's decision to decline indemnity and the insured defendant's lack of contestation rendered the joinder of the insurer unnecessary. The appeal was dismissed, and no new defendants were added to the action.
Orders
Orders of the court
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Background
Background to the litigation
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Evidence
Evidence Before The Court
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Decision
Reasons for decision
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Ratio Decidendi
Legal Principle Established
The Insurers rely heavily on the decision of the majority of the Queensland Court of Appeal in Interchase Corporation Ltd (in liq) v FAI General Insurance Co Ltd [1998] QCA 180; [2000] 2 Qd R 301. The plaintiff (Interchase) commenced proceedings against valuers. FAI was the professional indemnity insurer of the valuers. After conducting the defence of the litigation on behalf of the valuers for some time, FAI declined indemnity. The valuers did not object to that decision, or foreshadow contesting it. Interchase sought to join FAI as an additional defendant to obtain a declaration that FAI was liable to indemnify the valuers in respect of their liability to Interchase. The primary judge made an order joining FAI. The majority upheld FAI's appeal and set aside the order. Byrne J upheld the appeal on the basis that the joinder serves no useful purpose. His reasoning was as follows:(a)the grant of a declaration in favour of Interchase would not preclude FAI from disputing its liability to the valuers in proceedings instigated by the valuers (or their liquidator or trustee in bankruptcy) claiming an indemnity;(b)the status of being co‑defendants does not mean that the valuers and their insurers were adversaries - there was no controversy between them;(c)consequently, contrary to what was said by King CJ in JN Taylor Holdings, there would be no res judicata or issue estoppel between the valuers and their insurers;(d)further, he rejected the contention that the declaration would have utility because any defence by FAI in later proceedings to enforce the policy inconsistent with a declaration would be struck out as an abuse of process. The considerations combining to mean that there was no 'appreciable prospect' of that were:(i)it would not be a case of ulterior or collateral purpose;(ii)the valuers, as plaintiffs in the later case, would have elected not to bring third party proceedings in this litigation;(iii)it would be the defence, rather than prosecution of a claim, that would need to be shown to be an abuse; and(iv)the subsequent proceedings would probably afford FAI procedural advantages that are not available to it in defending Interchase's actions, such as a capacity to interrogate, and given the issues between the parties, that could affect the result. McPherson JA agreed with Byrne J. Davies JA dissented. He accepted that if the declaration would not effectively determine FAI's liability to indemnify the valuers, as between FAI and the valuers, the discretion was wrongly exercised. Davies JA agreed with Byrne J that res judicata and issue estoppel would not operate between the valuers and FAI in relation to a declaration obtained by the plaintiffs (309). However, Davies JA held that the declaration would effectively determine the question of FAI's liability to the valuers, as between those parties, because it would be an abuse of process for FAI to litigate the question in subsequent proceedings. In coming to that conclusion, Davies JA stated that '[t]here can be no doubt that, in the present case, both FAI and the valuers will have full opportunity of contesting the question in respect of which the declaration is sought' (310).