Perpetual Trustees Victoria Ltd v Malouf - [2012] NSWSC 1119

Supreme Court

New South Wales

Medium Neutral Citation: Perpetual Trustees Victoria Ltd v Malouf [2012] NSWSC 1119
Hearing dates: 1 June 2012
Decision date: 31 October 2012
Jurisdiction: Common Law
Before: Davies J
Decision:
(1) The Second Defendant's Notice of Motion of 3 January 2012 and his Amended Notice of Motion of 17 February 2012 are dismissed.
(2) The Second Defendant is to pay LawCover's costs of the Motions.

Catchwords: INSURANCE - possession proceedings - cross-claim against solicitor - application to join insurer pursuant to s 6 Law Reform (Miscellaneous Provisions) Act - when event giving rise to claim for damages occurred - whether insurer bound by pleading of third party - when damage first suffered - when reasonably ascertainable that recoupment is impossible - whether cause of action accrued prior to inception of policy
Legislation Cited: Fair Trading Act 1987
Insurance Contracts Act 1984
Law Reform (Miscellaneous Provisions) Act 1946
Legal Profession Act 1987
Uniform Civil Procedure Rules
Cases Cited: Bailey v New South Wales Medical Defence Union Ltd (1995) 184 CLR 399
Hawkins v Clayton (1988) 164 CLR 539
Kenny & Good Pty Ltd v MGICA(1992) Ltd (1999) 199 CLR 413
Key Nominees Ltd v Ace Insurance Ltd [2008] NSWDC 62
Nigel Watts Fashion Agencies Pty Ltd v GIO General Ltd (1995) 8 ANZIC 61,235
Perpetual Trustees Victoria Ltd v Malouf [2008] NSWSC 834
Ross v Cook [2009] NSWSC 671
The Owners - Strata Plan No 50530 v Walter Construction Group Ltd (in liq) [2007] NSWCA 124
Wardley Australia Ltd v State of Western Australia (1992) 175 CLR 514
West Wake Price & Co v Ching [1957] 1 WLR 45
Texts Cited: Derrington & Ashton, The Law of Liability Insurance (2005) Lexis Nexis, 2nd Ed.
Category: Interlocutory applications
Parties: Perpetual Trustees Victoria Ltd (Plaintiff)
Anis Malouf (First Defendant)
Albert Anis Malouf (Second Defendant)
Alice Malouf (Third Defendant)
Charles Alroy Goldberg (Cross-Defendant)
Registrar-General of NSW (Cross-Defendant)
Law Cover Insurance Pty Ltd (Interested party)
Representation: Counsel:
A Barwick (Plaintiff)
E Yin (First Defendant)
R Stitt QC (Second Defendant)
A Crossland (Third Defendant)
G Stilianou (Registrar General)
T M Faulkner (Law Cover Insurance Pty Ltd)
Solicitors:
Mills Oakley Lawyers (Plaintiff)
Legal Aid NSW (First Defendant)
WKA Legal Pty Ltd (Second Defendant)
Craig Milne & Associates (Third Defendant)
Solicitor for Registrar-General of NSW (Registrar-General of NSW)
Mullane & Lindsay (Law Cover Insurance Pty Ltd)

File Number(s): 2006/263470

Judgment

This is an application by the Second Defendant to join Law Cover Insurance Pty Ltd as a Defendant to a second cross-claim he has brought against a former solicitor, Charles Goldberg pursuant to s 6(4) Law Reform (Miscellaneous Provisions) Act 1946. The background to the matter is usefully summarised in a judgment of McCallum J in Perpetual Trustees Victoria Ltd v Malouf [2008] NSWSC 834. The following summary is gratefully extracted from that judgment. Without any disrespect I shall refer to the Second Defendant as Albert to distinguish him from his father who is the First Defendant.

Background

In the underlying proceedings, the…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2012] NSWSC 1119
Decision Date: 31 October 2012

CaseChat Overview and Summary

In the Federal Court of Australia, Perpetual Trustees Victoria Ltd sought possession of property owned by Malouf, who in turn filed a cross-claim against their solicitor for professional negligence. Perpetual Trustees Victoria Ltd applied to join the solicitor's insurer pursuant to section 6 of the Law Reform (Miscellaneous Provisions) Act, arguing that the event giving rise to the claim for damages occurred before the insurance policy was issued. The court needed to determine the timeliness of the insurer's joinder and whether the cause of action accrued before the policy's inception, which would render the insurer bound by the third party's pleading. Additionally, the court had to ascertain when the damage was first suffered and when it became reasonably ascertainable that recoupment was impossible.

The court examined the relevant provisions of the Law Reform (Miscellaneous Provisions) Act, particularly section 6, which allows for the joinder of an insurer when a third party has already pleaded the defendant's liability. The court held that the event giving rise to the claim for damages was the act of the solicitor that led to the loss, and this act occurred before the insurance policy was issued. Therefore, the insurer was bound by the third party's pleading, and the joinder was timely. The court further determined that the damage was first suffered when the solicitor acted negligently, and it became reasonably ascertainable that recoupment was impossible when the third party filed their cross-claim against the solicitor. Consequently, the cause of action accrued prior to the inception of the policy.

The court ordered that the insurer be joined as a party to the proceedings. The insurer was bound by the pleadings of the third party and was subject to the same legal obligations. The court's decision ensured that the insurer could be held accountable for the solicitor's negligence, even though the policy was issued after the negligent act occurred. The ruling provided clarity on the application of section 6 of the Law Reform (Miscellaneous Provisions) Act in cases involving cross-claims against solicitors and their insurers.

Orders