Solari v CGU Insurance Limited (Ruling No 1)
[2015] VCC 207
•4 March 2015
| IN THE COUNTY COURT OF VICTORIA AT MELBOURNE | Revised Unrestricted Suitable for Publication |
GENERAL LIST
Case No. CI-14-04070
| MARK SOLARI | Plaintiff |
| v | |
| CGU INSURANCE LIMITED (ACN 004 478 371) | Defendant |
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JUDGE: | HIS HONOUR JUDGE MISSO | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 20 February 2015 | |
DATE OF RULING: | 4 March 2015 | |
CASE MAY BE CITED AS: | Solari v CGU Insurance Limited (Ruling No 1) | |
MEDIUM NEUTRAL CITATION: | [2015] VCC 207 | |
RULING
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Subject: PRACTICE AND PROCEDURE
Catchwords: Contract of insurance – construction of the definition of the business description of the insured – whether the contract of insurance responded to the basis of the plaintiff’s claim – claim against a deemed manufacturer pursuant to the Trade Practices Act 1974 – claim brought directly against insurer pursuant to s601AG of the Corporations Act 2001
Legislation Cited: Trade Practices Act 1974, s74A(4), s74B, s74D; s75AB, s75AF, s75AG; County Court Civil Procedure Rules, r23.03; Civil Procedure Act 2010, s63; Corporations Act 2001, s601AG
Cases Cited:Ottedin Investments Pty Ltd v Portbury Developments Co Pty Ltd & Anor (2011) 35 VR 1; Matthews v SPI Electricity Pty Ltd & Ors (Ruling No 2) (2011) 34 VR 584; JBS Southern Aust Pty Ltd & Anor v Westcity Group Holdings Pty Ltd & Ors [2011] VSC 476; Lysaght Building Solutions Pty Ltd (t/as Highline Commercial Construction) v Blanalko Pty Ltd [2013] VSCA 158
Ruling: The plaintiff’s proceeding is dismissed.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Ms S Cherry | Ligeti Partners |
| For the Defendant | Mr J Richardson | Norris Coates |
HIS HONOUR:
Introduction
1 The plaintiff filed a Writ endorsed with a Statement of Claim in which he alleged that the previous owners of his domestic premises, 55 Back Creek Road, Yackandandah (“the premises”), purchased a Smeg dishwasher in about early 2005, which was installed at the premises.
2 On 15 June 2013, the plaintiff turned the dishwasher on. He alleges that the operation of the dishwasher started a fire which destroyed the premises and its contents.
3 In summary, the Statement of Claim alleges the following:
· Smeg S.p.A. (“Smeg”) manufactured the dishwasher. It is registered in Italy. It has no place of business in Australia.
· Hagemeyer Brands Australia Pty Ltd (“Hagemeyer”)[1] was a company incorporated in New South Wales. It was a “trading corporation” for the purposes of the Trade Practices Act 1974 (“the TPA”). It was deregistered on 28 August 2013. It imported the dishwasher into Australia.
[1]The spelling of Hagemeyer is incorrect. In the insurance contract it is spelt ‘Hagameyer’. I will refer to it by its correct spelling
· Hagemeyer supplied the dishwasher to another, for the purpose of resupply.
· By the operation of s74A(4) and s75AB of the TPA, Hagemeyer is deemed to be the manufacturer of the dishwasher for the purposes of Division 2A of Part V and Part VA of the TPA.
· The dishwasher had a defect for the purposes of s75AF and s75AG of the TPA, and it was the defect which resulted in the loss and damage suffered by the plaintiff.
· The alternative claim to the above is that the dishwasher was not fit for purpose: s74B of the TPA, and was not of merchantable quality for the purposes: s74D.
· The defendant (“CGU”) was the insurer of Hagemeyer pursuant to an insurance contract number IOM 6363904 (“the insurance contract”). It provided insurance cover immediately prior to Hagemeyer’s deregistration.
· The plaintiff is entitled, pursuant to s601AG of the Corporations Act 2001, to recover against CGU the amount that would have been payable to Hagemeyer under the insurance contract.
4 CGU filed a Defence dated 1 October 2014. It admits its incorporation and that it is an insurance company. It admits that it issued the insurance contract (number IOM 6363904) on 31 December 2012 with Hagemeyer as an insured. Otherwise, the Defence either does not admit or denies the substance of the allegations contained in the Statement of Claim.
5 It occurred to me, after Mr Richardson completed his submissions, that the Defence is deficient in many respects. As a matter of general practice and procedure, it is no longer permissible to simply admit or deny allegations where it is proper to provide particulars which support the basis for the non-admission or denial.
6 The plaintiff made no complaint about the Defence. If it was properly pleaded, it might have led to a simple crystallisation of the issues in the proceeding.
The Summons
7 By Summons filed 29 January 2015, CGU seeks an order that the Statement of Claim be struck out for failing to have a proper basis and failing to disclose a cause of action.
8 The Summons was returnable before me on 6 February 2015. After hearing submissions made by Ms Cherry of counsel for the plaintiff, and Mr Richardson of counsel for the defendant, the hearing of the Summons was adjourned to 20 February 2015. I made a number of Orders on 6 February 2015 which essentially permitted the parties to file and serve further affidavits and written submissions.
9 On the return of the Summons on 20 February 2015, Ms Cherry and Mr Richardson were unable to agree whether the submissions made on 6 February 2015 entitled CGU to enlarge the relief sought in the Summons. Eventually, agreement was reached which led me to make an Order that CGU be given leave to amend the Summons as follows:
“1Pursuant to rule 23.03 of the County Court Civil Procedure Rules and s63 of the Civil Procedure Act 2010 the plaintiff’s proceeding is dismissed.
2Alternatively, pursuant to rule 23.02 of the County Court Civil Procedure Rules.
… .”
The evidence before the Court
10 CGU relied upon the following evidence:
· an affidavit of Steven Ronald Weybury, solicitor, sworn 29 January 2005, with exhibit SRW 1.
· A second affidavit of Mr Weybury sworn 12 February 2015.
· An affidavit of Shane Andrew Booth sworn 13 February 2015, with exhibits SAB1 – SAB 5.
11 The plaintiff relied on follow following evidence:
· An affidavit of Paul Steven Pratt, solicitor, sworn 4 February 2015.
· A second affidavit of Mr Pratt sworn 17 February 2015, with exhibits PSP1-PSP 15.
The summary judgement application
12 I propose to deal with the summary judgment application made pursuant to Rule 23.03 of the County Court Civil Procedure Rules 2008 and s63 of the Civil Procedure Act 2010.
13 Rule 23.03 of the County Court Civil Procedure Rules 2008 is in the following terms:
“On application by a defendant who has filed an appearance, the Court at any time may give judgment for that defendant against the plaintiff if the defendant has a good defence on the merits.”
14 Section 63 of the Civil Procedure Act 2010 is in the following terms:
“(1)Subject to section 64, a court may give summary judgment in any civil proceeding if satisfied that a claim, a defence or a counterclaim or part of the claim, defence or counterclaim, as the case requires, has no real prospect of success.
(2)A court may give summary judgment in any civil proceeding under subsection (1)—
(a) on the application of a plaintiff in a civil proceeding;
(b) on the application of a defendant in a civil proceeding;
(c)on the court’s own motion, if satisfied that it is desirable to summarily dispose of the civil proceeding.”
15 Mr Richardson did not make it clear why he relied upon Rule 23.03 rather than just on s63. It perhaps matters little in the end, but my reading of the notes under Rule 23.03 in Williams ‘Civil Procedure Victoria’ disclose that the test under Rule 23.03 imposes an onus on CGU to demonstrate that the plaintiff’s case is hopeless and that CGU has a good defence on the merits. In other circumstances, judgment can be given where a defendant can demonstrate that the claim is frivolous, vexatious or an abuse of process.
16 In Ottedin Investments Pty Ltd v Portbury Developments Co Pty Ltd & Anor,[2] Dixon J made a number of very helpful observations relevant to the application of s63:
[2](2011) 35 VR 1
“In summary I consider the principles which now apply, in the context of this application, to be:
(1) If a proceeding or defence, or any particular claim, cause of action or ground of defence (‘claim’) is hopeless, untenable, bound to fail, or could not possibly succeed, then it ought be summarily dismissed. In other words, a claim which ought be dismissed under the old test will be dismissed under s 63.
(2) Section 63, however, is less stringent. It does not direct an inquiry into whether a certain and concluded determination could be made that the proceeding, or a claim, would necessarily fail. What is required is a practical judgment by the court as to whether a claim has more than a ‘fanciful’ prospect of success.
(3) The court’s discretion whether to exercise the power of summary dismissal is very wide. Section 64 of the Act expresses that the power is based in a consideration of the interests of justice. The Act provides direction in Pt 2.1. The discretion is to be exercised to facilitate the just, efficient, timely and cost-effective resolution of the real issues in dispute between the parties. The court’s powers in furthering the overarching purpose are facilitated by having regard to the objects and matters set out in s 9 of the Act.
(4) The court may be satisfied, on an interlocutory application, that there is no real prospect of success in a civil proceeding but nevertheless consider the dispute to be of such a nature that only a full hearing on the merits is appropriate. Whether a full hearing on the merits is appropriate is a relevant discretionary consideration in the circumstances of each proceeding.
(5) The power to order summary dismissal is to be exercised with great care, as a trial upon evidence of issues raised is the well-settled approach to the determination of litigation. When proceeding on a summary application to assess the prospect of success, a judge ought to feel confident that an assessment can properly be made of whether the overarching purpose is facilitated on dismissal of the impugned claims.
(6) That argument directed to the issues relevant on the application, perhaps even extensive submissions, may be necessary to demonstrate that the case of the plaintiff has no real prospect of success is not ordinarily a relevant consideration.”[3]
[3]at 9-10 [18], Matthews v SPI Electricity Pty Ltd & Ors (Ruling No 2) (2011) 34 VR 584 and JBS Southern Aust Pty Ltd & Anor v Westcity Group Holdings Pty Ltd & Ors [2011] VSC 476
17 In Lysaght Building Solutions Pty Ltd (t/as Highline Commercial Construction) v Blanalko Pty Ltd,[4] the Court of Appeal had this to say regarding the test under s63:
[4][2013] VSCA 158
“Upon the present state of authority:
a) the test for summary judgment under s 63 of the Civil Procedure Act 2010 is whether the respondent to the application for summary judgment has a ‘real’ as opposed to a ‘fanciful’ chance of success;
b) the test is to be applied by reference to its own language and without paraphrase or comparison with the ‘hopeless’ or ‘bound to fail test’ essayed in General Steel;
c) it should be understood, however, that the test is to some degree a more liberal test than the ‘hopeless’ or ‘bound to fail’ test essayed in General Steel and, therefore, permits of the possibility that there might be cases, yet to be identified, in which it appears that, although the respondent’s case is not hopeless or bound to fail, it does not have a real prospect of success;
d) at the same time, it must be borne in mind that the power to terminate proceedings summarily should be exercised with caution and thus should not be exercised unless it is clear that there is no real question to be tried; and that is so regardless of whether the application for summary judgment is made on the basis that the pleadings fail to disclose a reasonable cause of action (and the defect cannot be cured by amendment) or on the basis that the action is frivolous or vexatious or an abuse of process or where the application is supported by evidence.”[5]
[5]at [34]
18 And in summary, the Court of Appeal added:
“It follows that, for present purposes, the test under s 63 of the Civil Procedure Act should be construed as one of whether the respondent to the application for summary judgment has a ‘real’ as opposed to a ‘fanciful’ chance of success; that the ‘real chance of success’ test is to some degree a more liberal test than the ‘hopeless’ or ‘bound to fail’ test; and that, as the law is at present understood, the real chance of success test permits of the possibility that there may be cases, yet to be identified, in which it appears that, although the respondent’s case is not ‘hopeless’ or ‘bound to fail’, it does not have a real prospect of succeeding.”[6]
[6]at [29]
19 It almost seems as if s63 has made applications for judgment under the Rules redundant.
The basis of the application
20 The cover provided by the insurance contract is for public liability and product liability. I propose to firstly set out some relevant aspects of the insurance contract.
21 I should interpolate that the insurance contract is exhibit SRW1 to Mr Weybury’s first affidavit. The first page of the exhibit is the schedule headed “PUBLIC & PRODUCTS LIABILITY SCHEDULE”. The next two pages are numbered “24” and “7”. Page 24 has a heading which reads:
“Submission prepared for Shriro Australia Group”.
22 The two pages appear to be part of a proposal for insurance. In Mr Weybury’s first affidavit, he described the documents constituting exhibit SRW1 as a:
“3.… true copy of the Policy Wording, Policy Schedule and Business Description for the Policy.”
23 In his second affidavit, he elaborated:
“2.I refer to my Affidavit of 29 January 2015. I am told by Albert Collie of the Defendant and believe that the Exhibit SRW 1 to that Affidavit contains the complete Policy Wording and Schedule for Policy 10M6363904 for the insured Shriro Australia Pty Ltd and Hagemeyer Brands Australia Pty Ltd for the period 31 December 2012 and 31 December 2013.
3.The documents headed Insurance Advisernet pages 24 and 7 are documents obtained from the insurance broker for Hagemeyer Brands Australia Pty Ltd containing the Business Description for the insured to the CGU policy. The documents pages 24 and 7 were obtained from the insurance broker by way of documents produced in response to a subpoena served on Insurance Advisernet by the plaintiff’s solicitors.
4.I am told by Brendan Sawyer of Insurance Advisernet and believe that the documents produced to the Court by Insurance Advisernet are the only documents in their possession.”
24 Following page 7 is the insurance contract, which is paginated 1-14. Page 1 refers to the cover provided by the insurance contract:
“…the Company will pay to or on behalf of the Insured all sums provided by the Policy which the Insured shall become legally liable to pay as compensation for Personal Injury or Property Damage caused by an Occurrence within the Geographical Limits as stated herein in connection with the Insured’s Business.”
25 The “Occurrence” which triggers the insurance cover is defined as follows:
“an event including continuous or repeated exposure to substantially the same general conditions, which causes Personal Injury or Property Damage neither of which is expected or intended from the standpoint of the Insured.”
26 The “Insured’s Products” is defined as follows:
“ anything, including any packaging or container thereof (after it has ceased to be in the possession or control of the Insured) manufactured, grown, extracted, produced, processed, assembled, constructed, erected, installed, repaired, serviced, treated, sold, supplied, resupplied or distributed by the Insured.”
27 The “Business” is defined as follows:
“the business stated in the Schedule and shall include the activities of any canteen, social, sports, welfare and /or child care organisation or first aid, medical, fire or ambulance services.”
28 Returning to the Schedule, it refers to the insured as comprising:
“Shriro Australia Pty Ltd, Shriro Property Australia Pty, Monaco Corporation Ltd, Shriro Properties Limited, Hagemeyer Brands Australia Pty Ltd t/as Hagemeyer NZ.”
(“The Shriro Group”).
29 The Schedule contains a “Business Description” which is defined as follows:
“ Manufacturer of and distributors of Electronic of Casio Products, Distributor of Bintone Dect home telephone and GPS navigational devices and Earhugger headphones, Distributor of General Electric Appliances to distribute their major home appliances in Australia, Distributor of Everdure gas heaters and manufacturer, Property Owners and Occupiers.”
30 It is now necessary to put into context the basis upon which the plaintiff submits that the insurance contract responds to the plaintiff’s claim.
31 What is critical to whether the insurance contract responds to the plaintiff’s claim, is what I make of “Distributor of Everdure gas heaters and manufacturer … .” Ms Cherry submitted that I should construe those relevant words as if there was a comma after the word “heater,” so that it would read thus: “Distributor of Everdure gas heaters, and manufacturer …”. The effect of that would be to construe the word “and” as disjunctive.
32 Ms Cherry submitted that if I construe the relevant words that way, then it demonstrates an intention by the Shriro Group and CGU to have the insurance contract extend to “manufacturing” generally. As I then understood Ms Cherry’s submissions, “manufacturing” ought to be given a definition which includes distribution, in the absence of an onshore manufacturer. This would accord with the definition given to “manufacturer” under the TPA. It would then follow that the insurance contract would cover product liability arising from Hagemeyer’s distribution of Smeg products.
33 I have considered the competing submissions made by Ms Cherry and Mr Richardson on the construction of the relevant words, and I have concluded that I should construe the relevant “and,” occurring after “heaters,” and before “manufacturers,” as conjunctive.
34 The “Business Description” refers to the insured’s business functions. Each function is described before mention of the relevant product. For example in the case of Casio products, the clause reads “Manufacturer of and distributors of” Casio products. The drafter then uses a comma to separate business functions as they relate to each product. The first letter following each comma is capitalised. This appears to me to have been used by the drafter to emphasise separate business functions. I think that is reasonably clear in the case of Bintone, General Electric Appliances and Casio.
35 The drafter departs, somewhat, from this pattern when referring to Everdure. Consistent with the pattern of drafting, there is a comma concluding the reference to General Electric Appliances, followed by the capitalisation of the first letter of the commencing description relevant to Everdure. What is different is that rather than list the two descriptive functions of Everdure prior to the product, as with Casio, the drafter uses the word “and” as a conjunction. Drafted another way, the relevant portion of the clause should read: “Manufacturer and Distributor of Everdure gas heaters”.
36 I am fortified in reaching that conclusion, because following the word “manufacturer” is a comma. The comma is used consistently to end a reference to the business description of each of the business functions, and what follows are two additional words descriptive of the business of the Shriro Group, namely, “Property Owners and Occupiers”. If the drafter had intended the word “manufacturer” to stand alone, then consistent with the pattern of drafting, the drafter would have capitalised the word “manufacturer” and placed a comma after the word “heaters” and before the word “and”.
37 Therefore, I am persuaded by the submissions that I should construe the relevant words as I have outlined above. In those circumstances, I find that the insurance contract does not respond to the plaintiff’s claim.
38 Ms Cherry’s next substantive submission is that the numbering of pages 24 and 7 suggest that there are other pages which have not been included in exhibit SRW1. She asked the question: Where are pages 1-6 and 8-23? The reference to the missing pages was accompanied by a submission that I could not be satisfied that I had the whole of the insurance contract before me. Further, that if I concluded that was the case, I could not engage in the exercise of construing “Business Description” because the missing pages may affect that determination.
39 I am not persuaded that, if there are other pages, those pages are relevant to the exercise I have undertaken. Ms Cherry did not suggest that the schedule is incomplete. That being so, in construing the insurance contract, I am directed by the definition of “Business” which directs me to the schedule. It does not direct to me to any other clauses in the insurance contract. It appears to me that whether the insurance contract responds to the plaintiff’s claim is to be resolved by construction of “Business Description” in the schedule.
Conclusion
40 On the basis of the foregoing reasoning, I find that the insurance contract does not respond to the plaintiff’s claim. Therefore, I am satisfied that CGU has a good defence on the merits, and that the plaintiff’s claim has no real prospect of success.
41 Therefore, I dismiss the plaintiff’s proceeding with costs.
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