Lowery v Insurance Australia Limited

[2016] NSWDC 446

District Court

New South Wales

Medium Neutral Citation:	Lowery v Insurance Australia Limited [2016] NSWDC 446
Hearing dates:	1 and 4 April 2016
Date of orders:	05 April 2016
Decision date:	05 April 2016
Jurisdiction:	Civil
Before:	P Taylor SC DCJ
Decision:	(1)   Strike out the subpoenas in accordance with orders 3 to 7 of the notice of motion. (2)   Order the defendant to pay the costs of the notice of motion. (3)   Stay entry of order (2) for 2 weeks. (4)   Direct that evidence in the final hearing be given by way of affidavit. (5)   Direct the defendant to serve any affidavit evidence on which it intends to rely on in the final hearing by 19 April 2016. (6)   List the proceedings before the Judicial Registrar on Thursday, 21 April 2016 at 10am for the purposes of obtaining a date for the final hearing. (7)   Vacate the directions hearing listed before the Judicial Registrar on 11 April 2016.
Catchwords:	CIVIL PROCEDURE — subpoenas — application to set aside — earlier subpoenas set aside by Court of Appeal – further subpoenas fail to follow reasoning of Court of Appeal CIVIL PROCEDURE — pleadings — striking out — abuse of process
Legislation Cited:	Uniform Civil Procedure Rules 2005, r 13.1, r 14.28
Cases Cited:	General Steel Industries Inc v Commissioner for Railways (1964) 112 CLR 125 In the matter of Beechworth Land Estates Pty Ltd (admins apptd) and Griffith Estates Pty Ltd (admins apptd) [2014] NSWSC 1743 Joseph Brian Lowery v Insurance Australia Ltd (District Court (NSW), Maiden DCJ, 29 January 2015, unrep) Liristis v Gadelrabb [2009] NSWSC 441 Lowery v Insurance Australia Ltd [2015] NSWCA 303 Thomas v SMP (International) Pty Ltd (No 2) [2010] NSWSC 870
Category:	Procedural and other rulings
Parties:	Joseph Brian Lowery - first plaintiff Paula Louise Lowery - second plaintiff Insurance Australia Limited (ABN 11 000 016 722) - defendant
Representation:	Counsel: Mr A Fernon - plaintiffs Mr A Ahmad - defendant   Solicitors: Yates Beaggi Lawyers - plaintiffs Holman Webb Lawyers - defendant
File Number(s):	2014/139013
Publication restriction:	None

Judgment

BACKGROUND

1. Joseph and Paula Lowery first insured a 2008 Mercedes-Benz motor vehicle with NRMA Insurance in January 2012. That insurance was most recently renewed on 24 March 2014. On 27 March 2014 the vehicle was stolen and destroyed by fire. Mr and Mrs Lowery claimed on the policy but NRMA declined the claim. Mr and Mrs Lowery commenced proceedings.

2. NRMA defend the claim on the basis of a failure of Mr and Mrs Lowery to cooperate and to be truthful and frank, and NRMA also do not admit the theft, thereby putting Mr and Mrs Lowery to proof of an entitlement under the policy.

3. NRMA issued subpoenas to telephone companies, to the police, and to the Roads and Maritime Services (“RMS”). Mr and Mrs Lowery applied to set aside the subpoenas, but this Court in large measure declined relief. [1] An application for leave to appeal was granted by the majority (Basten and Emmett JJA, Adamson J dissenting) of the Court of Appeal. The Court of Appeal set aside the decision of this Court and set aside the subpoenas. [2]

   1. Joseph Brian Lowery v Insurance Australia Ltd (District Court (NSW), Maiden DCJ, 29 January 2015, unrep).

   2. Lowery v Insurance Australia Ltd [2015] NSWCA 303.

4. NRMA then issued further subpoenas, again to telephone companies, the police, and RMS, in terms somewhat different to the earlier subpoenas. Mr and Mrs Lowery applied to set aside these subpoenas. They also applied for summary judgment pursuant to Uniform Civil Procedure Rule 13.1(1)(b) and pursuant to the Court's "inherent jurisdiction to avoid an abuse of process".

5. In the alternative, Mr and Mrs Lowery applied for default judgment pursuant to UCPR 14.28. Given the threefold nature of NRMA's defence, indicated above and disclosed in the amended defence, Mr and Mrs Lowery have some hurdles to overcome to obtain relief under rr 13.1(1)(b) or 14.28.

6. The defect in the defence for the purpose of UCPR 14.28 was not identified and no submissions were made about the defence being manifestly groundless under the principles in General Steel Industries Inc v Commissioner for Railways. [3] Rather, the application for judgment relied principally on the ground that the issuance of the subpoenas constituted an abuse of process. Whether "inherent power" or some ancillary or implied power was the source of jurisdiction to grant a judgment because of the issuing of inappropriate subpoenas was not explored in any detail in submissions.

   3. (1964) 112 CLR 125, 129.

EVIDENCE

7. Mr and Mrs Lowery relied on affidavit evidence filed in late 2014 in respect of the trial as well as the history of the proceedings. A copy of the policy and the certificate of insurance and some legal correspondence were also in evidence.

8. NRMA tendered transcripts of interviews with Mr and Mrs Lowery and their son, Benjamin. There was no cross-examination of any deponent and no other oral evidence on the application.

THE SUBPOENAS IN THE COURT OF APPEAL

9. The new subpoenas bear some similarities with those set aside by the Court of Appeal. It is convenient to consider them in the three categories indicated earlier.

THE SUBPOENAS TO THE TELEPHONE COMPANIES

10. The original subpoenas to the telephone companies sought all phone records for the nominated phone numbers of various phones owned by Mr and Mrs Lowery, their son, Benjamin, and Mr Rapa, an associate of Mr Lowery, who owned the premises from which the car was stolen. The subpoenas sought those records for a period of six months surrounding the date of the incident of the destruction of the motor vehicle. In respect of these subpoenas, their Honours Basten and Emmett JJA regarded all the subpoenas, including those to the telephone companies, as a fishing expedition and not for a legitimate forensic purpose.

11. In respect of the subpoenas to the telephone companies, Basten JA stated:

“22.   The respondent submitted that the applicants, their son and Mr Rapa had all provided affidavits or statements referring to communications between them around the time of the loss and destruction of the motor vehicle. The respondent does not expect to obtain transcripts of those conversations, but merely whether or not there were communications and where each person was at the time of the communication. Such details may possibly be available from call logs.

23.   However, there are a number of respects in which this language was too broad to be justifiable, even on a speculative basis. The justification for seeking such records of communications, other than those between the four named parties, is the ability to identify where a particular individual (or at least his or her telephone) was, if in use, at a particular time. There is a sense in which it appears that such an exercise may have been sought to be undertaken, because it could be. There was no submission that any of the four individuals concerned was believed to be at any place, other than they had indicated, at or about the time the vehicle was taken. The potential intrusion in privacy was not warranted by any identifiable forensic purpose.

24.   A different conclusion might have been reached with respect to communications between the identified mobile phone numbers within a reasonable period on either side of the day of the incident. A period of three months on either side was not reasonably justifiable; nor was the scope, covering the total activity on all four phones.” [4]

4. Lowery (NSWCA) at [22]-[24].

12. The transcripts of interview indicate that one of the phone numbers the subject of a subpoena was not in existence until almost a year after the date of the theft.

13. Emmett JA stated:

“The Insurer says that the telephone records are required to test the asserted movements of the witnesses prior to and after the alleged theft. It wishes to test whether the location of telephone calls that would (it was said) be disclosed by the telephone records match the evidence by the witnesses as to their locations at the relevant times. The Insurer also seeks to test the frequency of the calls made between the witnesses in the period up to, and immediately following, the alleged theft. That would be a justification for some short period of time prior to the date of the alleged theft and the days after it until discovery of the Motor Vehicle. However, the arbitrary period of three months before and after the date of the alleged theft is hardly justified by those considerations.”[5]

5. At [47].

14. Accordingly, the particular defects in the subpoenas seem to be the inclusion of records of phone calls involving other than the four named persons for the purpose of identifying the locations of the named persons at the time of the calls, particularly in circumstances where there was nothing to indicate that the location of the persons was a genuine issue in the proceedings, and also that the subpoenas covered calls over a period of six months rather than "a reasonable period on either side of the day of the incident"[6] or "some short period of time prior to the date of the alleged theft and the days after it until discovery of the Motor Vehicle". [7]

    6. At [24].

    7. At [47].

15. NRMA responded to this judgment of the Court of Appeal by issuing identical subpoenas save that they limited the period to two months, one month either side of the incident. The other defect identified by Basten JA at [24] of covering the total activity on all phones of the four named persons was overlooked or disregarded by the NRMA. The apparent lack of significance of the location of the persons was also not remedied by any evidence before me. In subsequent correspondence, the parties to these proceedings agreed that a total period of one month was reasonable. That does not assist the NRMA in upholding the current subpoenas, which are for a greater period.

16. It might be argued that Emmett JA would have allowed a subpoena covering all activities on the phones for a short period. But the period of time covered by the subpoenas and the extent of the activity on the phones sought by the subpoenas are both relevant to the question of the propriety of the subpoenas. The location of Mr and Mrs Lowery could only be relevant for the ten days they claimed to be travelling interstate, while the records of communications between the parties might be relevant for a slightly longer period.

17. In view of the lack of any assertion that Mr and Mrs Lowery were not at the location claimed, the rulings of the Court of Appeal quoted above, and the apparent agreement of the parties that one month was an appropriate period, I would be inclined to allow subpoenas seeking records of telephone communications between the four named persons for the month of March 2014. However, as the current subpoenas seek records for a two-month period and for all communications from the specified numbers, I am not persuaded that there is any legitimate forensic purpose for the current subpoenas to the telephone companies and they must be set aside in the exercise of my discretion.

THE POLICE RECORDS SUBPOENA

18. The original subpoena sought the “complete record file…including but not limited to all criminal records, all complaints, reports and any documentation relating to any incidents involving” the four named persons. Both the original primary judge and the Court of Appeal[8] regarded the reference to “all complaints, reports and any documentation relating to any incidents involving” the four named persons as problematic.[9] Basten JA also stated:

“So far as the remaining reference to ‘all criminal records’ (unrelated to the incident) were concerned, it would be necessary for there to be offences of dishonesty, which might be the subject of cross-examination. The remaining reference was not so limited. Had it been more limited, it might have been objectionable on a different basis, namely that it would have required an independent third party to form a judgment as to what was and what was not covered by the subpoena.”[10]

8. See [16]-[17].

9. See [16], [17], and [45].

10. At [18].

19. Emmett JA determined:

“44.   The disputed material sought from the NSW Police Force could go only to the question of the credit of the individuals who may give evidence. However, the subpoena extends to all criminal matters and is not limited to matters that involve dishonesty that might be relevant to credit. Further, there is nothing to suggest that the police in fact have any material that might be relevant to credit. Rather, Mr and Mrs Lowery contend, the subpoena is nothing more than a fishing expedition to see whether any such documents are in existence.

45.   The Insurer contends that material concerning the criminal antecedents of the witnesses would throw light on the possibility of connivance between them. However, the very broad and unspecific nature of the description of the material goes well beyond criminal antecedents that might suggest connivance. The description in the subpoena addressed to NSW Police is unlimited as to the material that is to be produced.” [11]

11. At [44]-[45].

20. In drafting the further subpoenas, the NRMA sought to remedy one identified defect by limiting the subpoenas to matters of "dishonesty". NRMA also limited the records sought to those in relation to Mr and Mrs Lowery only, but the reference in the subpoena to complaints, incidents, and reports (in addition to criminal records) is not narrowed, nor is there any material before me to overcome the criticism of Emmett JA that “there is nothing to suggest that the police in fact have any material that might be relevant to credit”. [12]

    12. At [44].

21. It is well established that subpoenas cannot be used to trawl for material which might be adverse to credit where there is no basis to believe that such material exists. It needs to be "on the cards" that such material exists. [13]

    13. See In the matter of Beechworth Land Estates Pty Ltd (admins apptd) and Griffith Estates Pty Ltd (admins apptd) [2014] NSWSC 1743 at [8], [9], [11], Liristis v Gadelrabb [2009] NSWSC 441 at [5], [8], Thomas v SMP (International) Pty Ltd (No 2) [2010] NSWSC 870 at [19], and the judgment of the Court of Appeal in this matter at [42] and [52].

22. In correspondence, Mr and Mrs Lowery indicated that they would not object to the production of records of dishonesty offences by them, however that offer was not accepted, and in any event, this subpoena goes beyond what the Court of Appeal held to be permissible, even assuming there was a basis to believe that documents showing dishonesty offences would be produced. This subpoena must also be set aside.

THE ROADS AND MARITIME SERVICES SUBPOENA

23. NRMA originally sought all records of vehicles owned by the four persons without limit as to the time of ownership or nature of the vehicles. Emmett JA stated:

“The Insurer says that the RMS’s records are not strictly required to test the credibility of the witnesses, but are nonetheless required to assess the frequency with which those persons have vehicles registered in their names and disposed of. Relevantly, it says, Mr Lowery deposes to having been a motoring enthusiast and having owned a range of motor vehicles over the years. The Insurer says that evidence from the records of RMS would throw light on the tendency or practice to cycle through motor vehicles on a regular basis. However, it is unclear what relevance those matters would have in any event to the issues raised by the particulars.”[14]

14. Lowery (NSWCA) at [49].

24. Basten JA stated:

“Secondly, with respect to the subpoenas issued to Roads and Maritime Services, seeking registration records for ‘all vehicles registered by or in the name of’ one of the four individuals identified above (being the applicants, their son and Mr Rapa) could have served no legitimate forensic purpose having regard to the pleadings and the affidavit evidence filed. The primary judge gave no reasons for allowing a subpoena in that form: it should have been set aside.”[15]

15. At [20].

25. The response of NRMA was to issue a subpoena in the same terms, save that it was limited to Mr and Mrs Lowery. It is difficult to see how NRMA's new subpoena makes any attempt to deal with the reasons given by the Court of Appeal as to why the subpoena was set aside. The circumstance that NRMA appeared to concede that approximately 30 years of car ownership records could not be relevant to credit (and must be irrelevant to the primary facts in issue) underlines the lack of any justification for the subpoena. This subpoena must also be set aside.

26. In view of the submissions made, it was not easy to identify any records held by RMS in respect of vehicles other than the Mercedes the subject of the theft that could be relevant to the issues in these proceedings or the credit of the witnesses.

ABUSE OF PROCESS

27. NRMA has, at least in respect of the subpoenas to the communication companies and the police, not entirely ignored the reasons why the Court of Appeal set aside the original subpoenas. Whilst the new form of subpoenas remain unsatisfactory and must be set aside, I do not regard this as an abuse so as to warrant striking out of the proceedings, assuming I have such a power. I thus need not concern myself with the precise power to make such an order.

28. However, it is well past the time that NRMA should serve its evidence, if it has any to serve.

29. In submissions NRMA conceded that it might not serve any evidence. Whether it can, without evidence, establish breaches of the insurance contract such as a failure to cooperate and to be truthful and frank will be a matter ultimately to be determined.

30. So far as costs are concerned, the NRMA must pay the costs of the application. The application has resulted from subpoenas that have been shown to be defective. I do not see the Court's reluctance to strike out the proceedings, an issue that took only a fraction of the time of the application, as any reason why Mr and Mrs Lowery should not recover their costs of the motion.

31. I will stay entry of this costs order for two weeks in case the parties wish to seek an alternative or special costs order, as was foreshadowed by Mr and Mrs Lowery in the notice of motion. That stay is intended to give the parties an opportunity to be heard about costs if they hold the view that they have not had the opportunity to raise all relevant matters. It should not be taken as an invitation, or an indication about the Court's attitude to further orders in respect of costs.

ORDERS

1. Strike out the subpoenas in accordance with orders 3 to 7 of the notice of motion.

2. Order the defendant to pay the costs of the notice of motion.

3. Stay entry of order (2) for 2 weeks.

4. Direct that evidence in the final hearing be given by way of affidavit.

5. Direct the defendant to serve any affidavit evidence on which it intends to rely on in the final hearing by 19 April 2016.

6. List the proceedings before the Judicial Registrar on Thursday, 21 April 2016 at 10am for the purposes of obtaining a date for the final hearing.

7. Vacate the directions hearing listed before the Judicial Registrar on 11 April 2016.

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Endnotes

Decision last updated: 04 June 2019