TNT Australia Pty Ltd v CMW Design and Construct Pty Ltd & Ors

[2007] VSC 228

IN THE SUPREME COURT OF VICTORIA Not Restricted

AT MELBOURNE

PRACTICE COURT

No. 8652 of 2001

TNT AUSTRALIA PTY LTD	Plaintiff
v
CMW DESIGN AND CONSTRUCT PTY LTD AND OTHERS	Defendants

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JUDGE:	OSBORN J
WHERE HELD:	MELBOURNE
DATE OF HEARING:	12 JUNE 2007
DATE OF JUDGMENT:	12 JUNE 2007
CASE MAY BE CITED AS:	TNT AUSTRALIA v CMW DESIGN AND CONSTRUCT & ORS
MEDIUM NEUTRAL CITATION:	[2007] VSC 228

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Appeal against decision of Master refusing leave to join a third party – principal claim by plaintiff against contractor and sub-contractor – contractor’s claim for contribution against subcontractor - subcontractor seeking to join contractor’s insurer as a third party to the claim for contribution  – contractor opposes the joinder on the basis that the proposed claim is hopeless and will involve additional cost to the contractor – held that the trial of the contractor against the subcontractor will not be prejudiced by the proposed joinder – subcontractor’s submission that the relevant policy of insurance applies to facts of the matter not so hopeless in the sense contemplated by the relevant authorities – appeal allowed and leave granted to subcontractor to join the contractor’s insurer as a third party.

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APPEARANCES:	Counsel	Solicitors
For the 7th Defendant	Mr M. Sifris SC with Mr G. Bloch	A’Beckett Lawyers
For the 2nd Defendant	Mr C. Harrison	Lander & Rogers Lawyers

HIS HONOUR:

1. In this matter the seventh-named defendant appeals the decision of the Listing Master refusing it leave to join as a third party to a contribution claim the insurer of the second-named defendant. 

1. The principal proceeding related to a claim by the plaintiff arising out of the failure of extensive concreting works carried out at a transport depot at Laverton North.  The second-named defendant was, as I understand it, the principal concreting contractor and retained the seventh-named defendant as a sub-contractor.  The plaintiff's claim has been settled, as have all other aspects of the proceeding, save for the second-named defendant's claim for contribution against the seventh-named defendant.  That claim is fixed for trial later this month on an estimate of 21 days. 

1. Both the second-named defendant and the seventh-named defendant were insured with respect to the plaintiff's claim.  In 2004 the seventh-named defendant obtained on discovery a copy of the second-named defendant's insurance policy.  It now seeks to claim against the second-named defendant's insurer on the basis that the seventh-named defendant is itself entitled to cover pursuant to the policy having regard to the extended nature of cover provided by such policy to persons associated with the second-named defendant.  The second-named defendant accepts that the joinder of the third party will not prejudice the trial date or materially extend the trial of its claim against the seventh-named defendant.  This is presumably because its insurer has been intimately connected with the proceeding to date.  The second-named defendant opposes the joinder of the proposed third party on the basis that the proposed claim is hopeless and will necessarily involve some additional cost to the second-named defendant. 

1. The appeal from the Master is by way of a hearing de novo and requires the court to consider for itself whether leave should be given to file a third party notice pursuant to rule 11.05(2)(b) of the Supreme Court Rules.  Nevertheless, in the present case, the Master has given carefully considered reasons and in my view she does succinctly encapsulate the critical issue at paragraph 10 of her reasons, where she says:

I accept that the joinder is unlikely to substantially alter the trial duration.  The trial is unlikely to be delayed as the proposed third party is already aware of and involved in argument as to the proper construction of the insurance policy.  The issue is whether or not the seventh defendant has an arguable case against the proposed third party.

1. This proceeding was commenced in 2001 and, as I have said, the relevant policy was obtained by the seventh-named defendant in 2004.  If the trial of the second-named defendant's claim against the seventh-named defendant were prejudiced by the present application, I would not grant leave to join the third party.  Accepting, however, that it is not contended that the second-named defendant will be so prejudiced, I have come to the view that leave should be granted. 

1. The issue is one of construction of the relevant policy of insurance and its application to the facts of the matter.  That policy includes a definition of “The "Insured" in the following terms:

(j)Any other person, party or entity controlled by The Insured or over which The Insured assumes active management control.

1. The affidavit in support of the application sworn by Victoria Nomikos on 3 May 2007 states:

I have been told by Ivan Vigliaroni, a director of the seventh defendant, and verily believe that the second defendant indeed managed and supervised the activities of the seventh defendant at the site in question in that it attended site meetings and gave instructions as to the concreting works required to be carried out by the seventh defendant as its sub-contractor.

1. I accept the thrust of Mr Harrison's submission that this is a relatively threadbare factual basis for the asserted claim.  Nevertheless, it seems to me the interpretation and application of the words "active management control" in the context of the policy as a whole involves arguable questions of both construction and fact.  The allegation made by the seventh defendant is not one which I would regard as properly susceptible of a striking out application if the third party claim had been made in time.  It is not in my view hopeless in the sense contemplated by the relevant authorities.[1]  It may well be that the Master's view of the proper interpretation of the policy will ultimately be held to be correct, or, alternatively, that even if a broader interpretation be given to the relevant category of insured persons, the seventh-named defendant fails in demonstrating "active management control" or some other basis for falling within the terms of the policy as a matter of fact.  In my view, however, these matters are matters for trial and I should not express further preliminary opinion upon them.

   [1]General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125, 129-30; Dey v Victorian Railways Commissioners (1949) 78 CLR 62, 91; Opat Decorating Service (Vic) Pty Ltd v Jennings Group Ltd (SC Vic, Byrne J, 9643 of 1992, 16 September 1996, unreported BC9405101).

1. Accordingly, I propose to allow the appeal and grant leave to the seventh-named defendant to join the proposed third party.  I will order:

·    First, the orders of Master Kings made on 1 June 2007 be set aside.

·    Second, the seventh Defendant have leave to join Royal & Sun Alliance Insurance (Global) Ltd (ACN 056 202 718) as a Third Party to the proceeding.

·    Third, the seventh Defendant on or before 18 June, 2007 file and serve a Third Party Notice substantially in accordance with exhibit “VN3” to the affidavit of Victoria Nomikos sworn 3 May, 2007.

1. My view is that the costs of the appeal should be paid by your client, Mr Harrison, but that the costs otherwise of the application should be reserved.  Effectively the seventh-named defendant has had an indulgence and it does not seem to me that the underlying costs of the application should do other than run with the proceeding, but the seventh-named defendant has won the appeal so the costs of the appeal should be paid.  The other order I will make is that the order be authenticated by the Judge pursuant to rule 60.04.  Mr Bloch can submit a form of order to me after sending a copy to you, Mr Harrison, and to my associates electronically because it is desirable, given the time frames, that it all be properly documented as quickly as possible.

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