Mills v Horan t/as WEPOWIE Pastoral Company
[2000] WADC 340
•21 DECEMBER 2000
JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CHAMBERS
LOCATION: PERTH
CITATION: MILLS -v- HORAN t/as WEPOWIE PASTORAL COMPANY [2000] WADC 340
CORAM: WILLIAMS DCJ
HEARD: 12 DECEMBER 2000
DELIVERED : 21 DECEMBER 2000
FILE NO/S: CIV 3475 of 1999
BETWEEN: SAMUEL MILLS
Plaintiff
AND
ALEXANDER SERGUIS EUSTACE HORAN t/as WEPOWIE PASTORAL COMPANY
DefendantRUSSELL EDWARD COUPE and PATRICIA DOROTHY COUPE and HOW GATE NOMINEES PTY LTD t/as RUSSELL COUPE AND ASSOCIATES
Third Party
Catchwords:
Procedure - Supreme Court procedure - Application to dismiss third party claim
Insurance - Right of subrogation - Section 65 and s 66 Insurance Contracts Act 1984
Legislation:
Rules of the Supreme Court
Insurance Contracts Act 1984
Result:
Refusal to give third party directions and dismissal of third party proceedings
Representation:
Counsel:
Plaintiff: No Appearance
Defendant: Mr G Pynt
Third Party : Mr G Hancy
Solicitors:
Plaintiff: Marks & Sands
Defendant: Pynt McKay
Third Party : Glynn & Gray
Case(s) referred to in judgment(s):
Co‑operative Bulk Handling Limited v Jennings Industries Limited (1997) 17 WAR 257
Woodside Petroleum Development Pty Ltd v H & R – E & W Pty Ltd (1999) 20 WAR 380
Case(s) also cited:
Nil
WILLIAMS DCJ: This is the return of a third party summons for directions in which the third party seeks:
(1)An order setting aside the ex parte order made by Deputy Registrar Harman on 17 August 2000 that gave the defendant leave to issue a third party notice;
(2)Further or alternatively an order dismissing the third party claim.
The court may set aside any order that is made ex parte: Rules of the Supreme Court O 58 r 23.
Further the court is empowered to refuse to make third party directions on the hearing of a summons for directions: Rules of the Supreme Court O 19 r 4(3)(c).
In the present case the defendant obtained an order without complying with O 19 r 2 in that the affidavit in support of the application for leave was required to but did not state the matters set out in O 19 r 2(2): see affidavit of Marie McKay sworn 26 June 2000.
However the third party says that the court should in any event refuse to give third party directions and dismiss the proceedings because:
(a)The action has been brought by the defendant's insurer in purported exercise of a right of subrogation: see affidavit of Marie McKay sworn 26 June 2000;
(b)The insured does not have a right of subrogation;
(c)Where an action is brought by an insurer in purported exercise of a right of subrogation that the insurer does not have, the court is empowered to dismiss the action: Co‑operativeBulk Handling Limited v Jennings Industries Limited (1997) 17 WAR 257; Woodside Petroleum Development Pty Ltd v H & R – E & W Pty Ltd (1999) 20 WAR 380;
(d)The third parties had a personal relationship of friendship with the defendant and there is no reason to conclude that the defendant, as opposed to his insurer would have brought the third party claim against them: see affidavit of Russell Edward Coupe sworn 27 September 2000;
(e)Further the relevant engagement of Mr Coupe by the defendant was probably as an employee: affidavit of Mr Coupe;
(f)None of the third parties is insured for any liability it may have to the defendant: affidavit of Mr Coupe;
(g)By virtue of the provisions of s 65 or s 66 of the Insurance Contracts Act 1984 the insurer does not have a right of subrogation that it can exercise against the third party.
For the purposes of this application it can be assumed that:
(a)Wesfarmers Federation Insurance Ltd is liable to indemnify the defendant under a liability insurance policy against the plaintiff's claim;
(b)The third party is not insured against any liability it might have to the defendant or the plaintiff;
(c)But for s 65 and s 66 of the Insurance Contracts Act1984 Wesfarmers Federation Insurance Ltd would be entitled to exercise a right of subrogation in the name of the defendant against the third party in respect of the plaintiff's claim against the defendant;
(d)There is no family relationship between the defendant and the third party.
Section 65 will prevent Wesfarmers Federation Insurance Ltd from exercising its right of subrogation against the third party if the defendant might reasonably be expected not to exercise his rights against the third party by reason of "a family or other personal relationship" between the defendant and the third party.
Whether defendant might reasonably be expected not to exercise his rights against the third party
In determining whether a reasonable person in the defendant's position might reasonably be expected not to exercise his rights against the third party, s 65 requires the court to balance the "family or other personal relationship" between the defendant and the third party against any other factors that may affect the defendants decision whether to exercise his rights against the third party such as the severity of the plaintiff's injuries, the size of the plaintiff's claim, the economic interdependence between the defendant and the third party and the financial position of the third party: Sutton Insurance Law in Australia, 3rd Edition par 16.26.
The plaintiff's statement of claim alleges that whilst employed as a farm hand by the defendant he was injured on two occasions. Paragraph 2 of the defence states that the plaintiff was employed as a farm manager. The third party notice alleges that the defendant engaged the third party under a contract for services.
The third parties are partners in a farm management consultancy.
Mr Coupe and his wife first met the defendant in 1976 when they attended the same church. They became acquainted on a social basis. Around 1993 the social acquaintance developed into a friendship. They shared meals together and met on other social occasions. Around 1990 the defendant appointed Mr Coupe to be the executor of his will. In early 2000 he appointed him the donee of an enduring power of attorney. In October 1995 the defendant required a second heart valve replacement. Mr Coupe became increasingly involved in the running of the defendant's farm business. Mr Coupe agreed to do it for less than the usual charges. The work performed by Mr Coupe included:
(a)Approving major expenditure;
(b)Paying accounts;
(c)Planning crop and stock programs;
(d)Organising and appointing permanent staff;
(e)Overseeing progress on farm programs;
(f)Maintaining farm records;
Mr Coupe visited the farm every 10 days. During the defendant's time in hospital Mr Coupe spoke with the defendant on the telephone and visited on one occasion. Thereafter he made a point of taking the defendant to the farm every six weeks. From November 1995 he visited the defendant weekly and took him to the farm every six weeks. In December 1998 the defendant sold the farm and the farm machinery was sold in February 1998. The defendant would not have expected Mr Coupe to train and supervise the plaintiff in respect to safety matters.
Mr Coupe had his solicitors write to the solicitors for Wesfarmers on 4 September 2000 advising that it was Mr Coupe's belief that no proceedings would have been brought against him had the decision been made by the defendant rather than his insurer. That letter was not responded to.
The evidence indicates that the defendant and Mr and Mrs Coupe had known each other since 1976 and that they had become close friends. The defendant became ill and required assistance. Mr Coupe gave that assistance but did not have any insurance cover.
In my view on these facts the defendant might reasonably be expected not to exercise his rights against the third party by reason of a personal relationship between the defendant and the third party.
It is said by the defendant that it is not possible for the defendant to have a "personal relationship" with How Gate Nominees Pty Ltd. In my view that matters not. Mr and Mrs Coupe are the only directors and shareholders of How Gate Nominees Pty Ltd. In these circumstances the defendant might reasonably be expected no to exercise his rights against any of the third parties including How Gate Nominees Pty Ltd.
Whether Mr Coupe an employee
In my view the evidence contained in the affidavit of Mr Coupe sworn 27 September 2000 suggest a relationship between the defendant and Mr Coupe of principal and independent contractor or professional adviser. It follows that the provisions of s 66 of the Insurance Contracts Act 1984 would not be available to the third party.
Conclusions
Counsel for the defendant conceded that the application for leave was deficient in that the defendant obtained an order without complying with O 19 r (2) of the Rules of the Supreme Court in that the affidavit in support of the application for leave was required but did not state the matters set out in O 19 r 2: see affidavit of Marie McKay sworn 26 June 2000. Additionally I have found that:
(a)The action has been brought by the defendant's insurer in purported exercise of a right of subrogation;
(b)The insurer does not have a right of subrogation by reason of the personal relationship;
(c)Where an action is brought by an insurer in purported exercise of a right of subrogation that the insurer does not have the court is empowered to dismiss the action: Co‑operative Bulk Handling Ltd v Jennings Industries Limited (1997) 17 WAR 257. Woodside Petroleum Development Pty Ltd v H & R – E & W Pty Ltd (1999) 20 WAR 380.
It follows in my view that I should refuse to give third party directions and dismiss the third party proceedings.
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