Pearson v Commercial Union Assurance Co of Australia Ltd
[2002] WASC 97
PEARSON & ANOR -v- COMMERCIAL UNION ASSURANCE CO OF AUSTRALIA LTD & ANOR [2002] WASC 97
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2002] WASC 97 | |
| Case No: | CIV:1366/1995 | 26 APRIL 2002 | |
| Coram: | EM HEENAN J | 26/04/02 | |
| 6 | Judgment Part: | 1 of 1 | |
| Result: | Claims against party in liquidation stayed Otherwise adjournment refused | ||
| B | |||
| PDF Version |
| Parties: | REGINALD NEIL PEARSON JOAN HEATHER PEARSON COMMERCIAL UNION ASSURANCE CO OF AUSTRALIA LTD ROYAN TRANSPORT REPAIRS (VIC) PTY LTD |
Catchwords: | Application to adjourn trial Liquidation of one defendant Stay against party in liquidation Otherwise adjournment refused |
Legislation: | Nil |
Case References: | Nil Nil |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CIVIL
- JOAN HEATHER PEARSON
Plaintiffs
AND
COMMERCIAL UNION ASSURANCE CO OF AUSTRALIA LTD
First Defendant (Applicant)
ROYAN TRANSPORT REPAIRS (VIC) PTY LTD
Second Defendant
AND
ROYAN TRANSPORT REPAIRS (VIC) PTY LTD
Third Party
Catchwords:
Application to adjourn trial - Liquidation of one defendant - Stay against party in liquidation - Otherwise adjournment refused
(Page 2)
Legislation:
Nil
Result:
Claims against party in liquidation stayed
Otherwise adjournment refused
Category: B
Representation:
Counsel:
Plaintiffs : Mr S G Scott
First Defendant (Applicant) : Mr M E Herron
Second Defendant : Mr P D Evans
Third Party : Mr P D Evans
Solicitors:
Plaintiffs : Stables Scott
First Defendant (Applicant) : Basile Hawkins
Second Defendant : Pynt McKay
Third Party : Pynt McKay
Case(s) referred to in judgment(s):
Nil
Case(s) also cited:
Nil
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1 EM HEENAN J: This is an application by the first defendant to vacate the trial of this action generally, which has been listed for hearing for 11 days before this Court commencing on 27 May next. An objection to the listing was made by the first defendant at the callover but was not dealt with because of the inappropriate timing of that application.
2 To understand the application and its merits, one needs to dwell a little on the nature of the underlying proceedings. This is but a general outline of the litigation which will have its limitations because of the lack of familiarity of the details by counsel with limited instructions. Essentially the plaintiffs' action against both defendants is for damages for losses sustained by the breakdown of a heavy SAR Kenworth prime mover which was engaged in haulage operations for the profit of the plaintiffs. That vehicle was damaged in two accidents in January and March of 1989 and was placed for repair with the second defendant, Royan Transport Repairs (Vic) Pty Ltd. This arrangement occurred in a situation where the first defendant was a general insurer of the plaintiffs for the vehicle, including for the risks arising from this accident, and where the first defendant accepted that it was obliged to indemnify the plaintiffs for the loss and expense associated with the damage to the vehicle.
3 The vehicle was repaired, but it is alleged inadequately, and it broke down again. There were further repairs, again by the second defendant, and again the vehicle broke down and a fire resulted, causing severe damage. The costs associated with the second and third sets of repairs and of the partial destruction of the vehicle in the fire do not appear to have been met by the first defendant insurer.
4 Then the plaintiffs, as they allege, suffered a series of consequential losses through the unavailability of the vehicle for profit-making operations and eventually its surrender to, or repossession by, a financier. It is in respect of all those losses that the plaintiffs claim, both against the first defendant as insurer, and as against the second defendant as repairer.
5 It is said that the claims are put in contract and in tort and proceed, among other grounds, on the assertion that the first defendant accepted the responsibility of securing the proper repair of the vehicle and engaged the second defendant on its own behalf to do so. Those are issues between the parties in what I will call the principal proceedings.
6 In the course of the litigation the first defendant brought in Royan Transport Repairs (Vic) Pty Ltd, as a third party, claiming a breach of
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- duty both in contract and in tort, and sought an indemnity and damages against the third party/second defendant for those reasons.
7 The second defendant was at all material times covered by a policy of insurance with a different underwriter. It seems to have been agreed between the first and second defendants that one underwriter rather than two would defend the claim and solicitors were engaged on behalf of the second underwriter and given instructions to act on behalf of both the first and second defendant.
8 That other underwriter was a subsidiary of the HIH group of companies which collapsed in March of 2001, leaving the value of that indemnity in severe doubt. This meant that steps would need to be taken for another interest to take over the defence of the proceedings and to consider any division of interest which might then arise between the first defendant and the second defendant/third party. That did not happen for quite some time, but when it did, there was a change of solicitors for the first defendant. The new solicitors now acting for the first defendant are the ones who are bringing this application on their client's behalf for the adjournment.
9 A number of reasons are advanced in support of the application for the adjournment. Not necessarily in order of priority they are: (1) the collapse of the underwriter for the second defendant, (2) in addition, the second defendant itself has recently gone into liquidation and the effect of that liquidation, by virtue of s 500 of the Corporations Law, is to prohibit the continuation of these or any other proceedings against that company without leave of the court. I accept that that is the practical effect of s 500 of the Corporations Law in these circumstances.
10 Although both the plaintiffs and the first defendant have made it plain that they wish to keep open the prospect of making an application to the court for leave to proceed against the second defendant under s 500, neither has instituted any such application at present, nor appears to be in any position to make such an application in the near future. The best information presently available about the financial resources of the second defendant is a letter from the newly appointed liquidator expressing his provisional opinion that there will be no assets or dividends available for unsecured creditors.
11 Consequently, in view of the great uncertainty of recovery against the second defendant, I consider it unlikely that any major decision about the commitment of serious resources to pursuing the second defendant is
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- likely to be made in the near future and certainly not before the trial. Accordingly, it seems to me that it is very unlikely that an application under s 500 of the Corporations Law will be made or, if made, could be dealt with before the May trial. In the absence of any such order, that simply means that the present proceedings against the second defendant and third party cannot continue.
12 That leaves the situation that the action remains on foot by the plaintiffs against the first defendant alone and I am informed by counsel for the plaintiffs that, subject to satisfactory orders and directions being made about the orderly preparation for the trial, the plaintiffs are in a position to proceed and wish to proceed with the trial of the action against the first defendant.
13 If I were to sever the claims by the plaintiffs against the second defendant and the first defendant's claim against the second defendant as third party, although that is hardly necessary in view of the effect of s 500 of the Corporations Law, that would remove the legal problems about the continuation of the action. It would also seem to concentrate on the disposition of the major issue against a defendant who is in a position to satisfy any liability which may eventually emerge.
14 It appears to me that, in the interests of all parties and in the expeditious resolution of proceedings in this court, that is the obvious and desirable course to follow. Accordingly, I propose to order that the application to vacate the dates for the trial and to adjourn the proceedings which have been brought by the first defendant should be refused and that the principal action stand for trial on the dates as listed.
15 However, in addition I will order that there be a stay of proceedings by the plaintiffs and by the first defendant against the second defendant and third party pending any application by either or both parties for relief under s 500 of the Corporations Law, and I will make that order and give that direction not only in the realisation that it is unlikely that such an application will be made before the trial, but also on the basis that even if it were to be made, it is improbable that the claims against the second defendant and the third party could be heard at the trial of this action.
16 I also propose to direct that the parties should submit a minute of proposed orders and directions within seven days for the preparation for the trial of the action between the plaintiffs and the first defendant relating to such conventional matters as the preparation of a trial bundle of documents, the exchange of written witness statements and the
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- identification and exchange of any expert evidence which is to be relied upon. I will arrange for a date to deal with that matter in chambers within the next 10 days.
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