Simeone Pty Ltd v QBE Insurance (Australia) Limited - [2015] SADC 43

DISTRICT COURT OF SOUTH AUSTRALIA
(Civil: Minor Civil Review)
SIMEONE PTY LTD v QBE INSURANCE (AUSTRALIA) LIMITED
[2015] SADC 43
Judgment of His Honour Judge Tilmouth
1 April 2015
APPEAL AND NEW TRIAL - APPEAL - GENERAL PRINCIPLES
Review from a judgment given in a minor civil action construing settlement agreements, affirmed on the merits.
District Court Act 1991 (SA) s 38(5); Equuscorp Pty Ltd v Glengallon Investments Pty Ltd (2004) 218 CLR 471; Lucke v Cleary (2011) 111 SASR 134, referred to.
Masters v Cameron (1954) 91 CLR 353, applied.

SIMEONE PTY LTD v QBE INSURANCE (AUSTRALIA) LIMITED
[2015] SADC 43
The application for review

This is an application for a review of a minor civil decision given in the Adelaide Magistrates Court on 13 October 2014, dismissing a claim by the appellant (Simeone) to enforce a payment under a professional indemnity insurance risk policy. By this decision, a claim for a monetary sum of $25,000 (in round figures) was dismissed and an order made that the insurer (QBE) have costs in its favour of $1,100.
In so ruling, the learned Magistrate gave effect to a settlement agreement which he considered to be ‘clear and unequivocal’. This followed a mediation to resolve underlying disputes between the parties as to the effect of the insurance policy. His Honour held that Simeone was ‘seeking to re-litigate issues that were resolved at the time of the mediation in 2011’.
The underlying subject matter
The subject insurance policy provided professional indemnity insurance for the period commencing on 31 March 2002, for one year. It covered the risks and contingencies arising from professional negligence whilst carrying on its business. Separate proceedings were issued by five plaintiff families against an accountant who is said to have given them negligent advice. Simeone was joined as the third party, based in part upon advice given by Simeone as to the extent of coverage of an insurance policy taken out through it, by the accountant. Three of those actions, all of which were issued out of the District Court settled; two went to mediation.
By Heads of Agreement executed by various parties in the mediation dated 15 August 2011, all outstanding matters were settled as between the two remaining family litigants, the accountant, Simeone and others, pursuant to which a total of $250,000 was to be paid to those plaintiffs in the underlying negligence proceedings. Of this sum, $90,000 was to be paid by QBE, itself a signatory to the Heads of Agreement.
By clause 4 thereof, the parties agreed to discontinue all legal proceedings and gave mutual releases ‘from all further claims for damages, costs, interest or otherwise howsoever arising’. By clause 5 thereof, the parties further agreed ‘that these terms are binding upon them notwithstanding that they propose to enter into a more formal document’, and by clause 6 it was noted ‘the parties have separately agreed their contributions towards the cost of the mediation’. The document was signed by all the parties, including Simeone and QBE, although QBE was not a party to the underlying actions in the District Court.
Mr Simeone laid some stress during the appeal on the fact that QBE was not a party to those legal proceedings. The fact of the matter is however that the current action did not concern the underlying actions in professional negligence based upon negligent advice, it is founded upon the agreement to settle those causes. That settlement involved an agreement to which QBE was a party, for the payment by it of a considerable sum of money. Furthermore, the court was advised on appeal that the respective sums have been paid, so there has been performance under the agreement.
The formal agreement contemplated by the Heads of Agreement is undated. It is embodied in a document entitled ‘Settlement Agreement’ between the two family plaintiffs, the accountant, and a number of other parties including Simeone and QBE. Mr Simeone appeared to contend that the agreement was not validly executed. Although no single fully complete executed copy was produced, what appears to have happened is that various parties executed different parts, but as between them there was complete execution. This is evident from the documents tendered before the Magistrate as Exhibit D1 at pp 57 (other parties), 85 (Simeone interests) and p 115 (QBE). Having executed the document, Simeone became bound by it: Equuscorp Pty Ltd v Glengallan Investments Pty Ltd.[1] There is therefore no valid basis to set aside the Settlement Agreement which gave effect in any event to the binding heads of agreement, expressed to be binding in terms: Masters v Cameron;[2] Lucke v Cleary.[3]
[1] (2004) 218 CLR 471, [32]-[33].
[2] (1954) 91 CLR 353, 360.
[3] (2011) 111 SASR 134, [56]-[59].
The $25,000 claimed in the small claims action, essentially related to claims for indemnity under the insurance policy, for the legal costs incurred by Simeone in the defence of the original proceedings as a third party thereto and for the greater part its legal representation in the mediation process itself. Mr Simeone maintains he did not seek legal representation for the mediation, but that QBE insisted upon it. QBE accepts it did recommended Simeone obtain legal representation, no doubt for the obvious reason that there is a better likelihood of securing a binding agreement when a party has legal advice at the time of mediation.
The application for review – analysis
Whether or not QBE was insistent or merely recommended Simeone retain lawyers, is beside the point for the following reasons. Clause 2(b) of the subject policy of insurance provided as follows:
2. The Insurers shall also indemnify the Insured in respect of:
…
(b) all costs and expenses incurred by the Insured with the consent of the Insurers in the investigation, defence, settlement, avoidance or reduction of any claim against the Insured in respect of which the Insured is entitled to indemnity under this Policy, or would have been entitled to indemnity if the claim succeeded against the Insured (and for this purpose the Insured shall be taken to be entitled to indemnity notwithstanding that the claim against the Insured is for an amount less than the Excess);
A fundamental hurdle to the claim by Simeone is that there is simply no evidence the insurers expressly consented in the requisite sense, to the incursion of costs and expenses as contemplated by clause 2(b). Certainly there is no formal proof of same. The claim was therefore bound to fail on account of the failure to prove an express consent by QBE to the expenses of retaining solicitors during the mediation.
More than that, the recitations to the Heads of Agreement acknowledge the parties made their own arrangements for the provision of their legal costs. QBE had not thereby assumed responsibility for the payment of such costs. Further, clause 14.1 of the Settlement Agreement expressly provided ‘each party must pay its own costs and outlays connected with the negotiation, preparation and execution of this Agreement’. The Agreement, of course, gave effect to the settlement through the mediation process, envisaged by the earlier Heads of Agreement. It must follow therefore that the claim for costs would fail on that account as well, as both agreements expressly provided for the disposition of costs outside the ambit of clause 2(b) of the insurance policy.
Finally, it was put by Mr Simeone that there has been a fundamental misunderstanding all along between:[4]
… those costs and disbursements related to defending the uninsured allegations made against it in the proceedings, and those costs and disbursements necessarily incurred in being involved in litigation at the request of the respondent’s legal representatives.
[4] Notice of Appeal ground 4.
The question of any request for legal representation has already been dealt with. The question of whether there is any reason to differentiate between the two kinds of costs – assuming but without deciding there was such a distinction under the original policy of insurance - was subsumed and provided for in the manner described above, through the Heads and Settlement Agreements. That is to say, for the purposes of this review the rights and responsibilities as between Simeone and QBE were superseded and replaced by the Settlement Agreements.
Quite apart from this, clause 4.5 of the Settlement Agreement unequivocally contained a release by Simeone of QBE in the underlying proceedings from:
… all or any present, future, actual or contingent claim for indemnity, damages, costs, disbursements, interest or otherwise howsoever arising from, in connection with, caused by or in any way relating to the allegations contained
Conclusion and orders
It must follow therefore that Simeone’s application for review must fail on a number of bases. The Magistrate was correct in dismissing the action. Accordingly the application for review is refused, and the order of the Magistrate affirmed. There will be no order for costs of the review: s 38(5) Magistrates Court Act 1991 (SA).