Lopez v Star World Enterprises Pty Ltd

[1997] FCA 454

CATCHWORDS

CORPORATIONS LAW - representative action - whether leave should be given pursuant to s 440D(1) of the Corporations Law 

REPRESENTATIVE ACTION - whether the respondent should be ordered to produce for inspection relevant contracts of insurance

Corporations Law ss440D and 562

Foxcraft v The Ink Group 15 ACSR 203

RODOLFO LOPEZ v STAR WORLD ENTERPRISES PTY LTD
VG No.133 of 1997

Olney J
Melbourne
18 April 1997

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIAN DISTRICT REGISTRY
GENERAL DIVISION  VG 133/97

BETWEEN:
  RODOLFO LOPEZ
  Applicant
  -and-

STAR WORLD ENTERPRISES PTY LTD
  Respondent

Coram:    Olney J

Place:    Melbourne

Date:     18 April 1997

MINUTE OF ORDERS

THE COURT ORDERS THAT:

1. The time for filing and service of the applicant's notice of motion dated 16 April 1997 be abridged.

2. The applicant be given leave pursuant to section 440D(1)(b) of the Corporations Law to proceed with the application under Part IVA of the Federal Court of Australia Act 1976 on 1 April 1997 on condition that there be no execution of any judgment without the leave of the Court.

3. The respondent on or before 22 April 1997 provide to the applicant's solicitors for inspection any public liability insurance contract made between the respondent and Australian Unity Insurance Ltd or any other insurer, in respect of or covering the period 1 July 1996 - 30 June 1997 in respect of any liability the respondent may have to any third party including the applicant in relation to the allegations made in this proceeding.

4. For the purposes of s 33J(1) of the Federal Court of Australia Act 1976 the time and date of 4.00pm on 6 June
   1997 is fixed as the time and date before which a group member may opt out of these proceedings.

5. The applicant by his solicitors cause an advertisement of size approximately 2" x 8" to be placed in each of the following newspapers for a period of one day no later than 2 May 1997:-

(a)  Herald Sun;
     (b)  The Australian;
     (c)  Chieu Duong;

1. The applicant by his solicitors forward no later than 2 May 1997 to each person who has contacted the applicant's solicitors as referred to in paragraph 3 of the affidavit of Andrew Alexander Grech sworn 16 April 1997 and filed herein  and for whom an address is known by pre-paid post to such address a copy of the advertisement referred to in paragraph 5.

2. The applicant in the first instance shall bear the costs of placing such advertisement and giving such notice and his costs of so doing between himself and the respondent be otherwise reserved.

3. The applicant's notice of motion dated 1 April 1997 be adjourned to 13 June 1997 at 9.30am.

4. The directions hearing be adjourned to 13 June 1997 at 9.30am.

10.Costs reserved.

NOTE:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIAN DISTRICT REGISTRY
GENERAL DIVISION  VG 133/97

BETWEEN:
  RODOLFO LOPEZ

Applicant
  -and-

STAR WORLD ENTERPRISES PTY LTD

Respondent

Coram:    Olney J

Place:    Melbourne

Date:     18 April 1997

REASONS FOR JUDGMENT

Much of the conventional wisdom that traditionally is associated with civil litigation has been turned on its head and brought into the twentieth century, and hopefully, beyond, by the provisions of the Federal Court Act 1976 relating to representative actions.   In providing, as it has done for such proceedings in this Court, Parliament has extended to the Court very extensive powers to ensure that real justice is done between the parties and done in a way which does not, as has been suggested, require each individual with a virtually identical claim against a respondent to go to the Magistrates' Court and make out his or her own claim separately.   I am therefore of the view that the Court's powers in relation to  representative proceedings, are there to enable the Court properly to deal with problems which might otherwise beset an individual litigant.

The respondent has come under administration since the commencement of the proceeding, and for the proceeding to
continue it is necessary for leave to be granted under s 440D(1) of the Corporations Law, there being no consent forthcoming from the administrator.   It is obvious that the claim, an action for damages for personal injury said to result from the consumption of contaminated food, could involve a significant number of individual claimants and that there is potential for a substantial sum of damages being awarded if the claims, or some of them, are made out.

In these circumstances, in view of the fact that the respondent is obviously in a degree of financial difficulty and perhaps is in jeopardy of going into liquidation, it seems that the question of whether or not there is any insurance indemnity available in the event of the applicants being successful, is a matter that is proper to take into account in determining whether or not leave to proceed should be given.   This was a matter that was specifically referred to by Young J in Foxcraft v The Ink Group 15 ACSR 203 at p 205.

The Corporations Law addresses the situation where a corporation that is in liquidation has a liability covered by a contract of insurance, and I refer particularly to s 562. If it comes to pass that the respondent does go into liquidation, any successful applicant in this proceeding would have a right to know the particulars of the insurance cover, if any, that is held by the respondent. Without that information the right under s 562 could well be defeated. This proceeding has not been brought in a jurisdiction where issues of fact are tried by a jury. The traditional reluctance to requiring disclosure of details of insurance coverage has to do with the desirability of keeping that sort of information from a jury which is charged with the responsibility of determining liability and damages. But that case is not this case.

I am of the opinion that it is in the interests of justice that the applicant have leave to proceed against the respondent and that there be an order to that effect pursuant to s 440D of the Corporations Law.   I am also of the view that for the purposes of doing justice, and to progress the matter in an orderly fashion, the respondent should be required to produce for inspection evidence of any relevant insurance cover that it has.   This would normally be done by producing its insurance policy.   I am, accordingly, prepared to make orders as sought.   I think that paragraph 3 of the minute should be amended so as to make it clear that the obligation to produce for inspection applies only to any contract of insurance that is applicable to any liability the respondent may subsequently be found to have in respect of the claims made in this proceeding.

I certify that this and the preceding 2 pages are a true copy of the Reasons for Judgment of the Honourable Justice Olney

Associate:

Dated:

Heard:    18 April 1997

Place:    Melbourne

Judgment: 18 April 1997

Appearances:
Mr N. Styant-Browne and later Mr J. Beach (instructed by Slater & Gordon) appeared for the applicant.

Mr T. Irlich (instructed by Irlicht & Broberg) appeared for the respondent.