Shipowners' Mutual Protection & Indemnity Association v Hodgetts & Queensland Marine & General Insurance Pty Ltd

[1997] QCA 344

COURT OF APPEAL

[1997] QCA 344

DAVIES JA PINCUS JA de JERSEY J

Appeal No 6274 of 1997

THE SHIPOWNERS' MUTUAL PROTECTION

AND INDEMNITY ASSOCIATION (LUXEMBOURG)	Applicant
and
PETER HODGETTS	Respondent
and
QUEENSLAND MARINE AND GENERAL INSURANCE
PTY LTD	Respondent
BRISBANE
.	.DATE 25/08/97 250897 D.1 T3/TW12 M/T COA192/97

DAVIES JA: The applicant is the third party in an action in the District Court in which the plaintiff claims damages for personal injuries caused to him during the course of his employment on the defendant's fishing vessel. The defendant in turn has sought to be indemnified by the third third party insurer or alternatively against the first or second third parties who were apparently brokers.

Although the third third party has not filed a defence to the third party notice against it, it has denied its obligation to indemnify the defendant. It claimed in the District Court that it was entitled to a stay of the proceedings against it pursuant to section 7 of the International Arbitration Act 1974 (Cth). The learned District Court Judge refused that application and it is in respect of that refusal that the third third party seeks leave to appeal.

Section 7(2) of the Act relevantly provides:

"2. Subject to this part where -

(a)  proceedings instituted by a party to an arbitration agreement to which this section applies against another party to the agreement are pending in a court and

(b)  the proceedings involve the determination of a matter that in pursuance of the agreement is capable of settlement by arbitration -

on the application of a party to the agreement the court shall order upon such conditions (if any if it sees fit), stay the proceedings or so much of the proceedings as involve the determination of that matter as the case may be and refer the parties to arbitration in respect of that matter."

The learned District Court Judge held and it is common

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ground that the third party proceedings were instituted by a party to an arbitration agreement to which section 7 applies against another party to the agreement. However, the learned District Court Judge held that the proceedings did not involve the determination of a matter than in pursuance of the agreement was capable of settlement by arbitration.

Rule 63.1 of the agreement between the defendant and the third third party provided:

"If any difference or dispute shall arise between a member or former member and the association out of or in connection with these rules or arising out of any contract between the member or former member and the association as to the rights or obligation to the association or the member or former member there under or in connection therewith or as to any other matter whatsoever such difference or dispute shall in the first instance be referred to and adjudicated by the committee

..."

There were two bases for His Honour's decision. The first was that there was no relevant matter in dispute concerning the third third party's liability under the policy. There seems plainly to be a dispute between the defendant and the third third party as to the third third party's liability to indemnify a defendant. That is a dispute as to the rights and obligations of the party. That, it seems to me, at least arguably involves the determination of a matter that, in pursuance to the agreement, is capable of settlement by arbitration. It is not completely clear to me how the learned District Court Judge concluded otherwise, though plainly he did so. The respondents to this application today do not rely upon that basis for His Honour's decision.

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The second basis for His Honour's decision was that the claim made in the proceedings was not capable of resolution by arbitration because there was a claim by the first third party that the third third party was liable to indemnify the defendant.

As the learned District Court Judge said just prior to the hearing of the application before him there was a flurry of activity by the defendant and the first third party. This involved a delivery by the first third party of an amended defence to the defendant's claim against it pleading that the defendant was entitled to be indemnified in respect of the plaintiff's claim by the third third party.

The first third party then served on the third third party a notice claiming that the question whether or not the defendant was entitled to be indemnified by the third third party should be determined not only between the defendant and the third third party, but also between the third third party and the first third party.

The learned District Court Judge concluded that because these additional proceedings had commenced the claim made in the proceedings was not capable of resolution by arbitration. However, it seems to me at least arguable that there was a distinct matter arising in the proceedings between the defendant and the third third party which was capable of being determined in those proceedings. In that event the Court was obliged to stay those proceedings.

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The proper construction of section 7(2)(b) in circumstances such as this is in my view a question of such importance that this Court should resolve it. It is likely to arise frequently in actions of this kind.

The view taken by the District Court Judge is one which has a sensible practical result of having the issue determined between all relevant parties in one tribunal. However, it may be that the proper construction of the statute precludes that result and if that is so then all those involved in insurance of this kind should be made aware of that.

His Honour quite rightly said that there was no authority directly in point. I would therefore grant leave to appeal.

PINCUS JA: I agree.

de JERSEY J: I agree.

DAVIES JA: The order is as I have indicated. You need no further order, do you?

MR GRIFFIN: I believe we need an order extending the time in which to file.

DAVIES JA: Until?

MR GRIFFIN: Perhaps, 14 days, Your Honour, say until 7

September.

DAVIES JA: All right. No objection to that?

MR QUIRK: No, objection, Your Honour.

DAVIES JA: I so order. What about costs? Costs in the appeal

MR GRIFFIN: I would have thought so, if the Court pleases.
DAVIES JA: Mr Quirk, do you agree with that?

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MR QUIRK: I agree with that, Your Honour.

DAVIES JA: Costs in the appeal.
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