Sergienko v AXL Financial Pty Ltd - [2019] NSWSC 1610

Supreme Court

New South Wales

Medium Neutral Citation: Sergienko v AXL Financial Pty Ltd [2019] NSWSC 1610
Hearing dates: 5 November 2019
Date of orders: 20 November 2019
Decision date: 20 November 2019
Jurisdiction: Equity
Before: Ward CJ in Eq
Decision:
1. Refuse leave for the joinder of Lawcover Insurance Pty Ltd and dismiss the notice of motion filed 16 August 2019 with costs.

Catchwords: CIVIL PROCEDURE — Parties — Joinder — Of cross-defendant – application for joinder of Lawcover by cross-claimants – where Lawcover is the insurer of a law firm under a “run-off” professional indemnity insurance policy – where the law firm was instructed by the applicant to draft the relevant trust deed and to act on the conveyance of the relevant property – whether the solicitors allegedly failed to give certain advice to the applicants including to lodge with the Land Titles Office a copy of the relevant trust deed or to lodge a caveat over the relevant property – whether discretion under s 5 of the Civil Liability (Third Party Claims Against Insurers) Act 2017 (NSW) enlivened to permit the joinder of Lawcover – held that the proposed third cross-claim does not adequately establish the existence of a reasonably arguable cause of action against Lawcover – notice of motion dismissed
Legislation Cited: Civil Liability (Third Party Claims Against Insurers) Act 2017 (NSW), ss 4, 5
Corporations Act 2001 (Cth), ss 9, 46
Law Reform (Miscellaneous Provisions) Act 1946 (NSW), s 6
Legal Profession Uniform General Rules 2015 (NSW), r 78(9)(a)
Real Property Act 1900 (NSW), s 82(2)
Cases Cited: Amadio Pty Ltd v Henderson (1998) 81 FCR 149; [1998] FCA 823
Dey v Victorian Railways Commissioners (1949) 78 CLR 62; [1949] HCA 1
DSHE Holdings Ltd (receivers and managers appointed) (in Liq) v Abboud; National Australia Bank Limited v Abboud [2017] NSWSC 579
Energize Fitness Pty Ltd v Vero Insurance Ltd [2012] NSWCA 213
Garzo v Liverpool/Campbelltown Christian School Limited [2011] NSWSC 292
General Steel Industries Inc v Commissioner for Railways (1964) 112 CLR 125; [1964] HCA 69
Hastie Group Ltd (in liq) v Bourne; Hastie Group Ltd (in liq) v Moore [2017] NSWSC 709
Hoxton Park Residents Action Group Inc v Liverpool City Council [2012] NSWSC 1026
Mrdajl v Southern Cross Constructions (NSW) Pty Ltd (In Liq) [2018] NSWSC 161
Ritchie v Advanced Plumbing and Drains Pty Ltd [2019] NSWSC 1028
Rushleigh Services Pty Ltd v Forge Group Ltd (in liq) (receivers and managers appointed) [2018] FCA 26
Wayland v Bird [2017] NSWCA 26
Texts Cited: M Leeming, The Statutory Foundations of Negligence (1st ed, 2019, The Federation Press)
Category: Procedural and other rulings
Parties: Sergie Sergienko (Plaintiff)
AXL Financial Pty Ltd (First Defendant)
Oliver Roths (Second Defendant)
Roths Holdings Australia Pty Ltd (Third Defendant)
IWC Industries Pty Ltd (Fourth Defendant/Applicant on motion)
DK Excavation and Concreting Pty Ltd (Fifth Defendant/Applicant on motion)
Lawcover Insurance Pty Ltd (Respondent to motion)
Representation:
Counsel:
I King (Fourth and Fifth Defendants)
D Lloyd (Respondent to…

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: [2019] NSWSC 1610
Decision Date: 20 November 2019

CaseChat Overview and Summary

The case of Sergienko v AXL Financial Pty Ltd was heard in the Supreme Court of New South Wales. The applicants, Sergienko and others, sought to join Lawcover, the insurer of a law firm, as a cross-defendant in their proceedings against the original defendant, AXL Financial Pty Ltd. The applicants alleged that the law firm, which was under a “run-off” professional indemnity insurance policy with Lawcover, had failed to give them certain legal advice regarding the drafting of a trust deed and the conveyance of property. Specifically, the applicants claimed that the law firm did not advise them to lodge a copy of the trust deed with the Land Titles Office or to lodge a caveat over the property.

The legal issue before the court was whether the applicants' proposed third cross-claim against Lawcover adequately established a reasonably arguable cause of action. The court had to determine whether the discretion under section 5 of the Civil Liability (Third Party Claims Against Insurers) Act 2017 (NSW) was enlivened to permit the joinder of Lawcover as a cross-defendant. The applicants argued that Lawcover should be joined as it was the insurer of the law firm which allegedly failed to provide the necessary legal advice.

The court dismissed the applicants' notice of motion to join Lawcover as a cross-defendant. It found that the proposed third cross-claim did not adequately establish the existence of a reasonably arguable cause of action against Lawcover. The court reasoned that the applicants had not provided sufficient evidence to show that the law firm's alleged failures amounted to a breach of duty that would give rise to a claim against Lawcover under the professional indemnity insurance policy. Consequently, the application to join Lawcover was dismissed.

Orders