O'Brien v A & J (NSW) Logistics t/as Canberra Country
[2022] ACTSC 294
SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY
Case Title: | O’Brien v A & J (NSW) Logistics t/as Canberra Country Freight |
Citation: | [2022] ACTSC 294 |
Hearing Date: | 7 October 2022 |
DecisionDate: | 26 October 2022 |
Before: | Kennett J |
Decision: | (1) The Notice for Non-Party Production dated 16 December 2021 is set aside. (2) The second defendant is to pay Allianz Australia Insurance Limited’s costs of the application. |
Catchwords: | CIVIL LAW – PRACTICE AND PROCEDURE – Notice for non-party production – whether notice has legitimate forensic purpose where leave required to continue proceedings – notice set aside |
Legislation Cited: | Corporations Act 2001 (Cth) s 500 Court Procedures Act 2004 (ACT) s 5A Court Procedures Rules 2006 (ACT) rr 650, 651, 660 |
Cases Cited: | Commonwealth Bank of Australia v ACN 076 848 112 Pty Ltd [2015] NSWSC 666 Company Solutions (Aust) Pty Ltd v Keppel Cairncross Shipyard Limited (in liq) [2004] QSC 379 Wornes v Freewater Australia Pty Limited [2022] ACTSC 147 |
Parties: | Allianz Australia Insurance Limited ( Applicant) Benjamin John O’Brien ( Plaintiff) A & J (NSW) Logistics trading as Canberra Country Freight (First Defendant) Iron Mountain Australia Group Pty Limited (Second Defendant) |
Representation: | Counsel R Perla ( Applicant) A Giurtalis ( Second Defendant) |
| Solicitors Moray & Agnew ( Applicant) Clyde & Co ( Second Defendant) | |
File Number: | SC 195 of 2020 |
KENNETT J:
Background
The plaintiff in this proceeding (Mr O’Brien) was a delivery driver employed by the first defendant (A & J). He was part of the workforce provided to the second defendant (Iron Mountain) pursuant to a contract agreed between the two companies in March 2016 (the Subcontractor Agreement). On 28 August 2017, while performing his duties, Mr O’Brien suffered injuries.
Mr O’Brien commenced proceedings seeking damages against both of the defendants in 2020.
By a Defence and Counterclaim filed on 16 June 2021, Iron Mountain sought contribution and indemnity against A & J. The parts of Iron Mountain’s pleading articulating its claims against A & J are not a model of clarity. However, it appears that Iron Mountain relied on two bases for its claim: an allegation that A & J was liable as a joint tortfeasor; and cl 14.1 of the Subcontractor Agreement, a broadly expressed provision requiring A & J to indemnify it against all claims and losses arising out of the performance or non-performance of A & J’s services.
On 26 May 2022 Iron Mountain filed an Application in Proceeding seeking an order that its Counterclaim against A & J be heard separately from the other issues in the proceeding. That application has not been determined. It was overtaken on 8 June 2022 when, following a mediation, judgment was entered by consent for Mr O’Brien against both defendants (the Consent Orders). Damages were awarded in a specified sum, with a specified share of that sum to be paid by each of the defendants.
As a result of the Consent Orders, Mr O’Brien had no further role in the proceeding. All that remained was the determination of Iron Mountain’s counterclaim against A & J. I infer also that, with the defendants having consented to an order that they each pay a specified amount by way of damages, the claim for contribution also fell away, leaving only Iron Mountain’s claim to be indemnified by A & J pursuant to the Subcontractor Agreement.
For purposes related to the Counterclaim, in December 2021 Iron Mountain had procured the issue of a Notice for Non-Party Production (the Notice) under r 660 of the Court Procedures Rules 2006 (ACT) to A & J’s insurer, Allianz Australia Insurance Limited (Allianz). The Notice seeks production of any insurance policies taken out by or existing for the benefit of A & J that were in force as at 28 August 2017, including their contractual terms, wording, schedules and endorsements.
Production of these documents was required by 11 January 2022. At the time of the Consent Orders, the Notice had not been complied with. It has still not been complied with. Rather belatedly, Allianz has filed an Application in Proceeding seeking to have the Notice set aside on the ground that it lacks any legitimate forensic purpose.
Before turning to consider this application, another significant development should be noted. A & J is currently under external administration, being the subject of a creditors’ voluntary winding up under relevant provisions of the Corporations Act 2001 (Cth) (Corporations Act). It appears from the Company Extract contained in the evidence before me that the resolution of creditors to wind up the company occurred on 24 August 2021 (before the Consent Orders were made and before the Notice was issued). The Company Extract is dated 11 April 2022, and it is possible that matters have moved on since then; however, it was common ground that A & J still exists as a corporate entity albeit one that is currently externally administered under the Corporations Act.
Issues
By force of s 500(2) of the Corporations Act, following the resolution for voluntary winding up of A & J, no action or other civil proceeding was able to be proceeded with or commenced against it except by leave of “the Court” (which, as defined in s 58AA, includes this Court). Iron Mountain has not made any application for such leave. As a result, its Counterclaim against A & J is stayed. It was stayed at the time the Notice was issued.
As a result, whether or not the Notice has a legitimate forensic purpose is not to be tested by considering the relevance of the documents sought to issues arising on the merits of Iron Mountain’s Counterclaim. That claim cannot currently be pursued and, unless leave is sought and granted, will never be able to be pursued. The processes of the Court cannot legitimately be employed to investigate or support a claim that is incapable of being litigated. The merits of Iron Mountain’s Counterclaim are, as things presently stand, hypothetical.
If Iron Mountain had on foot an application under s 500(2) for leave to pursue its Counterclaim, the existence and scope of any insurance policies taken out by or existing for the benefit of A & J would clearly be a relevant issue. That is because a significant issue for the court determining such an application would be the effect of a grant of leave on the interests of creditors who have proved their debts in the winding up, including whether any liability to Iron Mountain would be met by a policy of insurance: see, for example, Re DSHE Holdings Ltd (recs and mgrs apptd) (in liq) [2018] NSWSC 82 at [18] and Company Solutions (Aust) Pty Ltd v Keppel Cairncross Shipyard Limited (in liq) [2004] QSC 379 at [3]. Documents tending to show the extent of A & J’s insurance cover would readily meet the fairly broad test of relevance arising from modern cases on the concept of a legitimate forensic purpose, which I discussed in Wornes v Freewater AustraliaPty Ltd [2022] ACTSC 147 (Wornes) at [13]–[19]. Those cases concerned applications to set aside subpoenas, but there is no reason why the principles discussed in them should not also apply to a notice for non-party production.
It was submitted for Allianz that, even in the circumstances contemplated in the previous paragraph, the documents sought in the Notice were otiose. This was put on the basis that Iron Mountain was already in possession of the schedule to the policy that was potentially relevant (although counsel conceded that there was no direct evidence of this), and that the solicitors for Iron Mountain had been advised about key features of that policy in correspondence by Allianz’s solicitor. However, I do not think that these points would provide a sufficient basis for excusing Allianz’s from compliance with the Notice. Plainly, the schedule to a policy of insurance provides less than a complete picture unless it can be read with the relevant policy wording. Further, Iron Mountain should not be expected to act solely on the opinions or understandings expressed by Allianz’s solicitor. It might quite properly wish to take its own advice about the effect of the policy; and it would very likely need to tender the policy document on its application in order to make good any submission to the effect that there was a policy of insurance which responded to its claim.
Although Ball J in Commonwealth Bank of Australia v ACN 076 848 112 Pty Ltd [2015] NSWSC 666 (Commonwealth Bank) at [11] regarded the production of insurance policies as irrelevant to the question of leave to proceed, this was in circumstances where the defendant was known to be insured and the insurers had not denied liability. That is not the position here: the outline of the insurance policy provided in correspondence by Allianz’s solicitor strongly indicates that it would deny liability in relation to an obligation of A & J to indemnify Iron Mountain. That leaves the existence of insurance cover as an issue on which Iron Mountain would need to take its own advice, and very likely an issue requiring evidence and argument in any leave application that Iron Mountain might make.
The question that gives rise to some complexity is whether the Notice has a legitimate forensic purpose in circumstances where an application under s 500(2), to which the documents sought would be relevant, has not been made.
Consideration
I have not been referred to any case analogous to the present circumstances. In Commonwealth Bank, Ball J said at [8] that “[n]ormally, the court requires production of the policy before the application for leave is heard”. This makes sense, as I have indicated above, although none of the decisions cited in that case furnishes an example of this being done. In each of the cases referred to by his Honour at [5], production of insurance documents was ordered at the time leave to proceed was granted or at a later time, and for reasons other than supporting the application for leave. Evidently (as illustrated by Commonwealth Bank at [11]), there are cases where an application for leave to proceed is able to be dealt with on the footing that the defendant company is insured, without any need to tender the policy documents. An order for the production of insurance documents was refused in Kirby v Centro Properties Limited [2009] FCA 695, having been sought for the purpose of preparing for a mediation (and not for the purpose of any application for leave to proceed). In Lehman Brothers Australia Ltd v Wingecarribee Shire Council [2009] FCAFC 63; 176 FCR 120, administrators of the appellant declined a request to provide insurance documents to the respondent in the lead-up to a meeting of creditors. Rares J ordered production of the documents on the basis that refusal of the request was an abuse of process, but the Full Court set that order aside. Again, this was not in the context of an application (actual or prospective) for leave to proceed.
It is therefore necessary to consider broader issues of principle.
The cases which I reviewed in Wornes tended to frame the existence of a legitimate forensic purpose for a subpoena by reference to “the issues in the proceedings”. I observed in that case at [16] that the concept of a legitimate forensic purpose was now to be understood in the light of s 5A of the Court Procedures Act 2004 (ACT), which required consideration of whether the procedure was being used to promote the just resolution of “the real issues in civil proceedings” (ss 5A(1) and (2)(a)). These formulations suggest that, even though a broad view is to be taken of relevance, the documents sought must have some connection to an issue that is actually alive in the proceeding at the time when the subpoena or non-party notice is served (or when compliance with it is sought to be enforced). On that understanding, because Iron Mountain needs to make an application for leave under s 500(2) before the nature of A & J’s insurance cover is enlivened as an issue, the Notice has no legitimate forensic purpose and is liable to be set aside.
Another way of putting the same point is that, by operation of s 500(2), Iron Mountain now has no proceeding on foot against A & J. It seeks to use the compulsory processes of the Court to obtain documents that will assist it in assessing the prospects of success of an application that it might make for leave to proceed against A & J. The circumstances in which the Court may lend its authority to an attempt to obtain information before any proceedings are on foot are, by design, very limited: preliminary discovery can be ordered against a person who has information that might assist in identifying a potential defendant (r 650), or against the potential defendant to seek information relevant to whether there exists a cause of action (r 651). These are exceptions to the general rule that the Court exercises judicial power only when its jurisdiction has been properly invoked by the commencement of a proceeding. Processes that exist to assist the fair and efficient resolution of the issues in a proceeding that is on foot in the Court should not be treated as extending to support investigations that relate only to possible future proceedings.
Against this, it might be said that Iron Mountain has commenced proceedings against A & J; events have intervened that prevent the proceeding being continued without leave; and the interests of justice are best served by allowing Iron Mountain to serve a notice in the proceeding in order to ascertain whether an application for leave should be made. This argument has the practical attraction (emphasised by counsel for Iron Mountain) that, if accepted, it saves Iron Mountain (and the Court) from a leave application made in the dark and potentially withdrawn if it turns out that no insurance policy would respond to its substantive claim. However, acceptance of such an argument would create an unprincipled distinction between cases (such as the present one) where s 500(2) prevents an existing proceeding from continuing and cases where the same provision prevents a proceeding being commenced.
For these reasons I consider that the Notice does not, as things presently stand, have a legitimate forensic purpose.
I have considered whether, nevertheless, the Notice should be allowed to remain on foot on the basis that it is not to be called upon unless and until Iron Mountain makes an application for leave to proceed against A & J. However, that would be inconsistent with the terms of the Notice itself (which required production by a certain date). It is also undesirable that a document should remain on the file, purporting to impose requirements on Allianz (as to which it is in default), where the Court has found that those requirements should not be enforced. I have therefore concluded that the Notice should be set aside. It follows from the views I have expressed above that, should it file an application for leave to proceed against A&J, it will be open to Iron Mountain to serve a notice for non-party production in similar terms to the present one.
Orders
The orders of the Court will be as follows.
(1)The Notice for Non-Party Production dated 16 December 2021 is set aside.
(2)The second defendant is to pay Allianz Australia Insurance Limited’s costs of the application.
| I certify that the preceding twenty-two [22] numbered paragraphs are a true copy of the Reasons for Judgment of his Honour Justice Kennett Associate: Date: |
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