Sharp v Holbourn
[2000] NSWSC 890
•7 September 2000
CITATION: Sharp v Holbourn & Ors [2000] NSWSC 890 CURRENT JURISDICTION: Common Law FILE NUMBER(S): SC 12213/92 HEARING DATE(S): 1 September 1991 JUDGMENT DATE: 7 September 2000 PARTIES :
Kendra Sharp
(Plaintiff)Joyce Holbourn
(First Defendant/First Cross Claimant)Ian William Worley
(Second Defendant/Second Cross Cefendant)MLC Insurance Limited
GIO Australia Limited
(First Cross Defendant)
(Second Cross Defendant)
JUDGMENT OF: Master Harrison
COUNSEL : Mr F Tuscano
(Plaintiff)Mr L T Grey
(First/Second Defendants)Mr A Hewitt SC
Mr L Norris (Sol)
(First Cross Defendant)
(Second Cross Defendant)SOLICITORS: Gary Robb & Associates
Braddon ACT
(Plaintiff)Stephen O'Reilly
(Frist & Second Defendants)Curwood & Partners
(First Cross Defendant)Abbott Tout
(Second Cross Defendant)CATCHWORDS: Review registrar's decision - File amended cross claim LEGISLATION CITED: Supreme Court Rules - Part 61 r 3(1), Part 20 rr 1(1) & 4(5)
Trade Practices ActCASES CITED: Beaufort Air-Sea Equipment Pty Limited v Emhart Australia Pty Ltd (NSWSC unreported Master Malpass, 18 December 1992)
Westpac Banking Corporation v Abemond Pty Ltd & Westpac Banking Corporation v Cameron (NSWSC unreported, Santow J, 3 November 1994)
Modern Woodcraft Pty Ltd v Nett (NSWSC unreported, Young J, 7 March 1997)
Wardley Australia Limited & Anor v State of Western Australia (1992) 109 ALR 247
Brisbane South Regional Health Austhority v Taylor (1996) 186 CLR; 139 ALR 1DECISION: See para 21
10
THE SUPREME COURT
OF NEW SOUTH WALES
COMMON LAW DIVISIONMASTER HARRISON
THURSDAY, 7 SEPTEMBER 2000
12213/92 - KENDRA SHARP v JOYCE HOLBOURN & ORS
JUDGMENT (Review registrar’s decision;file amended cross claim)
1 MASTER: By notice of motion filed 17 May 2000 the first cross defendant, MLC Insurance Limited seeks to review the decision of Registrar Howe dated 8 May 2000 pursuant to Part 61 r 3(1) of the Supreme Court Rules (SCR). The second cross defendant, GIO Australia Limited (formerly trading as Government Insurance Office of New South Wales) (GIO) consents to the filing of the amended cross claim. To date there have been numerous interlocutory skirmishes in these proceedings. The matter is not yet ready to take a hearing date.
2 In 1992 the plaintiff filed a statement of claim. On or about 24 November 1989, it is alleged that the plaintiff (who was 14 years of age at the time) was on a property owned by the defendants when the horse she was riding reared and she fell to the ground. She was assisting with the mustering of cattle. She was severely injured. There are three cross claims of which the second and third are irrelevant for the purpose of the current application. The first cross claim was brought by the defendants against two insurers, namely MLC Insurance Limited (MLC) the first cross defendant and GIO the second cross defendant.
Review
3 There are several cases which are authority on the consideration that ought to be given on review. They are Beaufort Air-Sea Equipment Pty Ltd v Emhart Australia Pty Ltd (NSWSC unreported, Master Malpass, 18 December 1992); Westpac Banking Corporation v Abemond Pty Ltd and Westpac Banking Corporation v Cameron (NSWSC unreported, Santow J, 3 November 1994) and Modern Woodcraft Pty Ltd v Nett (NSWSC unreported, Young J, 7 March 1997).
4 From these decisions, the approach I should take is that I should inform myself of all the material before Deputy Registrar Howe at the time when he made the orders. I can consider the fresh evidence which the plaintiff has put on and which has not been objected to by the defendants. I can allow fresh evidence to be tendered. I should also make my own decision based on the material before me and having heard legal argument.
5 There were three affidavits before the registrar. The plaintiff relied on the affidavit of Ian William Worley sworn 13 December 1999 which was before the registrar. MLC relied on two fresh affidavits namely, those of William Todd sworn 22 August 2000 and William Ferguson Saunders sworn 21 August 2000 in lieu of the affidavit of Peter Ford. The defendants did not object to the new affidavits being filed. It is my view that MLC should be allowed to rely upon them.
6 The registrar referred to the amendment power in the Supreme Court Rules (SCR) namely Part 20 r 1(1). The registrar stated:
“The Court has a statutory obligation to completely and finally determine all matters in controversy between parties. The Court may order amendment at any stage of the proceedings, in such manner as the Court thinks fit. All necessary amendment shall be made for the purpose of determining the real questions raised by or depending on the proceedings. Amendments are generally allowed provided that any harm arising from doing so can be compensated by the imposition of terms, such as an order for costs or an adjournment. An amendment may be refused because it has been made at such a late stage of the proceedings, that neither costs nor an adjournment can compensate the other side, although it may be allowed if it can be done without injustice to the other party.”
7 After the accident occurred the second defendant immediately notified MLC. On 23 November 1995, the defendants’ original cross claim was filed against MLC and GIO. It alleged that the cross defendants refused to indemnify the defendants in respect of the plaintiff’s claim. The defendants were seeking to be indemnified under contracts of insurance which were identified.
8 According to the registrar, an amended cross claim, which is the subject of this application was apparently filed on 3 November 1999 notwithstanding leave was required. The front page of that document is endorsed “Filed pursuant to leave granted 21/9/99”. Leave was granted on that date for the defendants to bring a cross claim joining additional parties. No such cross claim joining additional parties has ever been filed. Thus the endorsement is incorrect and should be disregarded. This part of the registrar’s decision was not challenged.
9 As previously stated, the original cross claim was filed by the defendants seeking indemnity from the insurers. MLC insured the defendants for liability for bodily injury occurring as a result of an accident in connection with the business of farming. The limit of cover under this policy is $1,000,000. GIO insured the defendants for liability for bodily injury as a result of an accident occurring within Australia. The limit of cover under this policy is $5,000,000. Although the second defendant had discussed involving Mr Sanders in the proceedings at an earlier stage, he was reluctant to do so because firstly, since the commencement of these proceedings the second defendant had been anxious to see it finalised, and he was concerned that the addition of Mr Sanders may delay the conclusion. Secondly, the second defendant was sympathetic toward Mr Sanders and aware that he was elderly and retired; and thirdly, he was aware of the potential cost consequences in the event any claim against Mr Sanders was unsuccessful.
10 One crucial factor which the trial judge will have to determine is whether the plaintiff sustained injury as a result of an accident which occurred during the course of the business of farming. If so, the defendants will be indemnified only for $1,000,000 from MLC. The defendants will have to personally meet any damages awarded beyond the sum insured. The plaintiff’s claim at its highest is valued at $5,000,000, and if the plaintiff is successful on liability, it is most likely the damages will exceed $1,000,000.
11 The purpose of the amendments to the cross claim is twofold. The first is to allege negligence by the servants or agents of MLC in respect of the advice concerning the monetary limit and adequacy of cover of the policy. Prior to these foreshadowed amendments the argument raised in the cross claim was essentially a legal one, namely whether the accident occurred in connection with the business of farming. It is now alleged that the brokers Mr Todd and Mr Sanders gave negligent and misleading advice in relation to the policy taken out by the defendants in 1985, ie., 15 years ago. It is also alleged that in subsequent years MLC was negligent in that it continued to renew the policy without increasing the sort of events and amounts covered by the policy. The second purpose of the cross claim is to allege conduct contrary to the Trade Practices Act (TPA).
12 The defendant alleged that the claim under TPA is statute barred. On the basis of Wardley Australia Limited & Anor v State of Western Australia (1992) 109 ALR 247, the registrar, correctly in my view, held that it was unclear as to when the damages crystallised. Whether the claim is statute barred is a matter which should be properly determined at trial. If the defendants are found liable and the events are found to be in the business of farming, it will be at that point that the defendants will seek to recover against MLC pursuant to the insurance policy. It is arguable that this is the point where the damage crystallises.
13 In relation to prejudice, MLC argued that the two insurance agents are elderly and in poor health, have little or no recollection of the events alleged and they will suffer prejudice. MLC cited a well known passage from Brisbane South Regional Health Authority v Taylor (1996) 186 CLR 541; 139 ALR 1. McHugh J said:
“When a defendant is able to prove that he or she will not now be able to fairly defend him or herself or that there is a significant chance that this is so, the case is no longer one of presumptive prejudice. The defendant has then proved what the legislature merely presumed would be the case. Even on the hypothesis of presumptive prejudice, the legislature perceives that society is best served by barring the plaintiff’s action. When actual prejudice of a significant kind is shown, it is hard to conclude that the legislature intended that the extension provision should trump the limitation period. The general rule that actions must be commenced within the limitation period should therefore prevail once the defendant has proved the fact or the real possibility of significant prejudice. In such a situation, actual injustice to one party must occur.”
14 The registrar decided that MLC would not suffer actual prejudice of a significant kind due to the age and health of their agents as he identified deficiencies in the solicitor’s affidavit and gave little weight to the evidence contained in the affidavit. The deficiencies in the solicitor’s affidavit have since been rectified.
15 The registrar also referred to Part 20 r 4(5) (SCR) which states:
“Where a plaintiff, in his statement of claim, makes a claim for relief on a cause of action arising out of any facts, the court may order that he have leave to make an amendment having the effect of adding or substituting a new cause of action arising out of or substantially the same facts and a claim for relief on that new cause of action.”
16 The registrar stated that even if a new cause of action arises, it seems that it arises out of the facts which are already known to the parties. Thus it falls within Part 20 r 4(5). Until negligence was alleged, the defendant would have been unaware that the facts and circumstances surrounding the issuing of a policy were in dispute. Both cross claims rely on the policy itself. However, it is my view that the claims under the TPA and in negligence do not arise out of the same or substantially the same facts. It is my view that Part 20 r 4(5) is not applicable.
17 The second defendant has identified Messrs Todd and Sanders as the officers of MLC involved in the issuing of the policy. The second defendant deposed to two meetings and a conversation that took place on 16 February 1984. Mr Todd who was resident inspector for MLC is now semi-retired. Mr Todd admitted that he periodically accompanied MLC Life representatives when those representatives were attending clients when a particular client wished to discuss fire and general business. Mr Todd could not recall knowing of Mr Worley and had no recollection whatsoever of attending a Nundle property accompanied by William Ferguson Sanders.
18 Mr Sanders is a retired life insurance agent. He was born in 1918 (now 82 years of age) and is in poor physical health. There is medical evidence that he is unable to travel to Sydney. He can remember meeting Mr Worley on one occasion and then on another at his Nundle property. Mr Sanders says that his memory is not what it was before he suffered a burst aorta some five years ago. However, he can recall what his practice was in relation to explaining the policy at that time. However I accept that he cannot recall the conversation, if any he had with the second defendant. I accept that he cannot attend court but arrangements can be made to have his evidence taken by videolink at Tamworth.
19 The registrar in the exercise of his discretion granted leave because firstly, the action is still being case managed without any hearing date being set and so it cannot be asserted that the application comes “at a late stage”; secondly, the amendments can be allowed without prejudice to the cross defendants provided any harm can be cured by an appropriate costs order; and thirdly, the amendments will allow the determination of all real issues in controversy between the parties to be ventilated, so avoiding a multiplicity of actions. The defendants were ordered to pay the costs thrown away by reason of the amendment.
20 This is a borderline case. It must have been obvious to all parties’ legal representatives at an early stage of the proceedings that this claim had the potential to be a substantial claim. Brain damage was pleaded in the original statement of claim and the plaintiff was in a coma for 40 days after the accident. In my judgment of December 1998 I stated that the plaintiff alleged she suffered severe brain damage, such that her IQ had fallen from average to one within the defective range. The issue of whether the indemnities were sufficient to meet any verdict must have also crossed the minds of the parties’ legal representatives. However the onus was on the plaintiff to plead its case. MLC has the relevant documents namely insurance policy and renewals in its possession. The second defendant can remember a conversation that occurred 15 years ago but the two employees of MLC involved in issuing the policy cannot recall it. One agent played only a peripheral role and the other agent can remember his usual practice. I accept that MLC will suffer some prejudice. Taking these factors into account, justice is best served if the defendants are permitted to file an amended cross claim. The registrar’s decision of 8 May 2000 is affirmed. MLC’s notice of motion filed 17 May 2000 is dismissed. However, as Mr Sanders is in poor health, is 82 years of age, and the events that gave rise to these proceedings occurred in 1985 and 1989, these proceedings should be expedited. Costs should follow the event. MLC is to pay the defendants’ costs.
21 The orders I make are:
(1) The decision of Registrar Howe dated 8 May 2000 is affirmed.(2) MLC’s notice of motion filed 17 May 2000 is dismissed.
(3) The defendants are to file and serve an amended cross claim within 14 days.
(4) Expedition is granted.
(5) MLC is to pay the defendants’ costs of the review. The order for costs made by the registrar is affirmed.********
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