Swan v Phoenix Combat Sports Pty Ltd (In Liquidation)

[2022] ACTSC 332

SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY

Case Title:

Swan v Phoenix Combat Sports Pty Ltd (In Liquidation)

Citation:

[2022] ACTSC 332

Hearing Date:

2 December 2022

DecisionDate:

2 December 2022

Before:

Elkaim J

Decision:

(i)      QBE Insurance (Australia) Ltd be added as a party to the proceedings.

(ii) Pursuant to r 502 of the Court Procedures Rules 2006 (ACT), the plaintiff is granted leave to file the proposed Further Amended Statement of Claim, substantially in the form annexed to the affidavit of Liam James Casey dated 4 November 2022, within seven days.

(iii)     The costs of the application are costs in the cause.

Catchwords:

CIVIL LAW – APPLICATION – Application to join a proposed party to the proceedings – where there is an arguable case against the proposed party 

Legislation Cited:

Court Procedures Rules 2006 (ACT) rr 220, 502 and 503

Parties:

Brendan Swan (Plaintiff)

Phoenix Combat Sports Pty Ltd (In Liquidation) (First Defendant)

QBE Insurance (Australia) Ltd (Second Defendant)

Representation:

Counsel

A Muller (Plaintiff)

R Gambi (Second Defendant)

Solicitors

Slater and Gordon (Plaintiff)

Hall & Wilcox (Second Defendant)

File Number:

SC 120 of 2022

ELKAIM J:

1․The plaintiff originally commenced proceedings against Phoenix Gym (Phoenix) in April of this year. He alleged that in July 2010, when he was a minor, he became a member of the gym and that thereafter his membership was renewed. He says that a number of incidents occurred at the gym through 2012 and up to 2014 as a result of which he, on each occasion, suffered a concussion.

2․The plaintiff alleged that the post-concussion management provided by the gym was negligent so that he has suffered injury attributable to a breach of duty of care on the part of the gym.

3․The statement of claim was amended in August 2022 because Phoenix had gone into liquidation. By an application in proceeding filed on 4 November 2022, the plaintiff now wishes to further amend the proceedings to join the insurer (“QBE”). The application is opposed by QBE.

4․QBE says that it is not liable to indemnify Phoenix in respect of the injury asserted by the plaintiff.

5․Rule 220 of the Court Procedures Rules 2006 (ACT) allows the joinder of another party. Rules 502 and 503 deal with amendments to the pleadings.

6․The issue at the heart of this application is whether or not the plaintiff has an arguable case against QBE, namely a case which would result in QBE being obliged to indemnify Phoenix, assuming of course that breach of duty of care was established.

7․QBE has pointed out four issues upon which it says it would be able to defeat any claim against it:

(a)A limitation argument,

(b)An argument as to whether the policy is one of public liability or professional indemnity.

(c)The nature of the business being insured.

(d)Whether there are provisions in the policy which exclude the claim.

8․QBE acknowledges that there is an arguable point in respect of the first two of the above four issues.

9․However, QBE says that on the third and fourth points there is not an arguable issue. I note that learned counsel for QBE properly informed me that the issues must be unarguable and that the onus was on QBE to establish that status.

10․The nature of the business being insured is an important issue because it distinguishes between whether or not the business, described and, more importantly, covered as a gymnasium also extended to the type of activity in which the plaintiff was concussed. QBE says that a gymnasium is not a venue for martial arts lessons, rather it is an establishment for persons to exercise in order to achieve some physical (or perhaps even mental) benefit. QBE has pointed out that it was not until after the dates of the incidents covered by the statement of claim that an endorsement was added to the policy to specifically refer to different types of martial arts.

11․The plaintiff’s response is that it is not unusual for a gymnasium to be used as a venue for different activities, not necessarily involving traditional gymnasium pursuits such as riding stationary bicycles and running on the spot. Thus there might be dancing lessons or yoga not unusually carried out in a gymnasium.

12․At the level at which I have to decide the matter I think the plaintiff’s point is arguable, or at least, as framed by QBE, it is not unarguable. I think it is well known that gymnasiums will allow various functions to occur on their premises. Further an activity such as that being undertaken by the plaintiff might well be considered an activity in pursuit of fitness.

13․The exclusion clause relied upon is in the following terms:

The Broadform Liability Section of this Policy does not cover liability for claims in respect of:

1.Personal injury or damage to property of persons actually participating in any performance, sport, game, contest or display involving athletic, acrobatic, military or equestrian skill or the use of firearms, missiles of any kind, explosives or combustibles.

2.Personal injury or damage to property of persons caused by the use of mechanical amusement devices.

14․It is important to note that in the first clause of the exclusion provision there is no reference to the personal injury being caused by one of the listed activities. The clause refers to persons “actually participating” in the activities. However, as stated above, the plaintiff’s point is that the negligence occurred after the participation in the activity in that the episodes of concussion, which did occur during the activity, were not thereafter properly dealt with.

15․QBE’s response was to refer to the words in the clause “in respect of” which gave the activities in the clause a breadth which would cover anything occurring between activities or following them.

16․I think QBE’s position may well be right, but I am not prepared to find that the plaintiff’s interpretation is unarguable. It might be found that treatment occurring after an incident is not part of the incident. This is analogous, but I accept with some elasticity, to negligent treatment of a road accident victim in a hospital. The negligent treatment, in terms of liability, can be separated from the liability attaching to the accident.

17․I have accordingly reached the conclusion that each of the arguments raised by QBE is susceptible to argument, thus permitting me to make the orders, with some consent amendments, sought in the application in proceeding.

18․I make the following orders:

(i)QBE Insurance (Australia) Ltd be added as a party to the proceedings.

(ii)Pursuant to r 502 of the Court Procedures Rules 2006 (ACT), the plaintiff is granted leave to file the proposed Further Amended Statement of Claim, substantially in the form annexed to the affidavit of Liam James Casey dated 4 November 2022, within seven days.

(iii)The costs of the application are costs in the cause.

I certify that the preceding eighteen [18] numbered paragraphs are a true copy of the Reasons for Judgment of his Honour Justice Elkaim.

Associate:

Date: