Watson v Hannover Life Re of Australasia Limited

[2018] NSWSC 877

Supreme Court

New South Wales

Medium Neutral Citation:	Watson v Hannover Life Re of Australasia Limited [2018] NSWSC 877
Hearing dates:	12 June 2018
Date of orders:	12 June 2018
Decision date:	12 June 2018
Jurisdiction:	Equity
Before:	Hallen J
Decision:	See Paragraph 51
Catchwords:	PRACTICE AND PROCEDURE - Non-appearance by the Plaintiff at the hearing - UCPR rule 29.7 -Application by Defendants for dismissal of proceedings - No explanation for Plaintiff's absence – Evidence that Plaintiff aware of the hearing - Proceedings dismissed
Legislation Cited:	Superannuation Industry (Supervision) Act 1993 (Cth) Uniform Civil Procedure Rules 2005 (NSW)
Cases Cited:	Lezaja v Hannover Life Re of Australasia Ltd (No 2) [2016] NSWSC 167 NSW Trustee and Guardian as executor of the Will of Michael Robert Walsh (Dec'd) v Gregory (2012) 18 BPR 35,153; [2012] NSWSC 681
Category:	Principal judgment
Parties:	Shaun Roy Watson (Plaintiff) Hannover Life Re of Australasia Limited (first Defendant) United Super Pty Limited (second Defendant)
Representation:	Counsel: Ms B Nolan (Defendants)   Solicitors: Turks Legal (Defendants)
File Number(s):	2016/50017

Judgment – EX TEMPORE REVISED

Introduction

1. HIS HONOUR: The Plaintiff, Shaun Roy Watson, was working as a qualified boilermaker/welder on 14 September 2013, when he was injured, in the course of his employment with Allmen Engineering Projects Pty Limited ("the Employer"). He had commenced working with the Employer in about mid-October 2012.

2. United Super Pty Limited, the Second Defendant (“the Trustee”) is the trustee of the Construction and Building Union's Superannuation Fund (“the CBUS Fund”) constituted by a Trust Deed, relevantly dated 12 December 2012 (“the Trust Deed”), which provided for certain benefits to members of the CBUS Fund, including, in certain events, a total and permanent disablement benefit. It exercises its trustee functions pursuant to the Trust Deed, as amended from time to time.

3. Hannover Life Re of Australasia Ltd, the first Defendant (“the Insurer”) is an insurer, which entered into a Group Life Insurance Policy, bearing Policy number 4163, (“the Policy”), with a commencement date of 1 April 2002, which was varied with effect from 1 December 2011, with the Trustee, pursuant to which, in return for the Trustee agreeing to make certain payments to the Insurer, the Insurer agreed to insure members of the CBUS Fund against, amongst other things, total and permanent disablement.

4. The Trustee was the legal owner of the Policy and held the Policy for the benefit of members of the CBUS Fund.

5. The Plaintiff became a member of the CBUS Fund on 1 July 2013. He claimed that he ceased work as a consequence of the injuries suffered at work on 14 September 2013, when a 1.5 tonne steel beam landed on his left foot, crushing it. On presentation to the Nepean hospital, it was recorded that there was “a partial amputation of the left lateral foot with exposed tendons and bones and multiple comminuted fractures of the 3rd, 4th and 5th metatarsal bones, a gross displacement of the 5th metatarsal, with the metatarsal shaft displaced laterally, inferiorly and proximally”.

6. The Plaintiff asserted that as a result of the injuries and disabilities sustained by him, he has been unemployed since the date of the incident. It is not disputed that he remained continuously unemployed for a three month period until 14 December 2013. He claimed that, since then, he has been disabled, and that after that three month period, he qualified as being “totally and permanently disabled” within the provisions of the Policy from 14 September 2013.

The Proceedings

7. On 16 February 2016, the Plaintiff brought these proceedings, commenced by Statement of Claim, against both the Insurer and the Trustee. In summary, he challenged the Insurer’s decision to reject his claim asserting it was “void”; he sought a declaration that he “is totally and permanently disabled within the meaning of the Group Policy”; he sought an order for the Insurer to pay the total and permanent disablement benefit in accordance with his entitlements under the Policy; he sought a declaration that he “is totally and permanently disabled within the meaning of the Trust Deed”; and he sought an order directing the Trustee to pay the total and permanent disablement benefit to him; he also sought an order for interest and for costs.

8. Whilst he asserted that the Insurer owed a duty to the Plaintiff “to consider and determine the Claim in good faith”, a duty “to act reasonably in considering and determining the claim, including a duty to make a decision that was reasonable in all of the circumstances”, and a duty “to inform itself of the relevant facts prior to making a decision on the claim” and that “the [Insurer’s] denial of the claim was in breach of [its] duties to the Plaintiff, the Statement of Claim did not descend to any particularity of the reasons why there was a breach of each of the duties that he alleged.

9. There was no allegation of any duty owed to the Plaintiff by the Trustee or any breach of duty by the Trustee. There was no inkling of any substantive ground for the complaint against the Trustee.

10. The Insurer, in its verified Defence, filed on 23 May 2016, denied that the Plaintiff was entitled to any relief. The bases of the denial for relief were not articulated. Rather, there was simply a response to each of the factual allegations made by the Plaintiff in the Statement of Claim.

11. The Trustee, in its verified Defence, filed on 12 May 2016, also denied that the Plaintiff was entitled to any relief. The bases of the denial for relief were not articulated. Again, there was simply a response to each of the factual allegations made by the Plaintiff in the Statement of Claim and an allegation that “in answer to the whole of the Statement of Claim, the second Defendant says that the Statement of Claim does not contain any cause of action against it”.

12. There was no dispute, however, that, if the Plaintiff was totally and permanently disabled, he is entitled to $104,000 (“the Benefit”) under the Policy.

13. It was also not in issue that the Plaintiff had standing to sue the Insurer even though it was a Group Life Policy.

14. Prior to the hearing, the Court directed that an Outline of Submissions be provided and served. In a document entitled “Outline of the Defendants’ Opening Submissions” dated 6 June 2018, Ms B K Nolan of counsel, who appeared for both the Defendants, in summary, submitted that:

1. It was not clear on what cause of action the Plaintiff sued. He alleged that the Insurer’s denial of his claim was in breach of its asserted duties to act in good faith, to act reasonably in considering and determining the claim, including to make a decision that was reasonable in all the circumstances, and a duty to inform itself of the relevant facts prior to making a decision on the claim. Despite particulars having been sought as to the bases for the alleged breaches, none had been provided.

2. The Plaintiff did not allege any breach of duty by the Trustee. Accordingly, the role of the Trustee had not been considered except to say that the Insurer’s duty of good faith and fair dealing was owed to the Trustee. It is a chose in action held on trust for its beneficiaries. It is the Trustee’s duty to ensure that this duty of the Insurer is not breached. The remedy for a failure by the Insurer to abide by this duty might lie in the duty statutorily codified in s 52(7)(d) of the Superannuation Industry (Supervision) Act 1993 (Cth).

3. The Trustee and the Insurer accepted that the Plaintiff has standing to make a claim under both the Trust Deed and under the Policy and to bring proceedings against both the Trustee and the Insurer. However, the Trustee and the Insurer submitted that each has complied with all of its respective obligations in relation to the assessment of the Plaintiff's claim.

4. Each of the Insurer and the Trustee contended that the Plaintiff had failed to discharge his onus to establish that the pleaded decision to decline the Plaintiff’s claim was, on the basis of the medical and other evidence then available to each, so unreasonable in all the circumstances that the decisions cannot stand.

5. The Plaintiff’s claim should be dismissed.

15. The Plaintiff did not provide to the Court, or serve, any written submissions.

The Procedural History of the Proceedings

16. At the time of the commencement of the proceedings, and it would seem from about May 2014, the Plaintiff was legally represented by a firm of solicitors identified as “Law Partners Compensation Lawyers Pty Ltd”. It is that firm of solicitors that is identified in the Statement of Claim.

17. On 18 December 2017, the proceedings were listed for hearing before me today, with an estimated duration of 3 days, by Registrar L Walton. The Court’s record of proceedings, which forms part of the Court file, reveals that when it was listed, Mr M Saunders, who is described, elsewhere, as a “Senior Solicitor – Superannuation Claims”, at the firm, appeared for the Plaintiff. The Court also made the usual orders for hearing.

18. On the Court file, there are a number of different Notices of Intention to File Notice of Ceasing to Act, the most recent of which was filed 5 March 2018, by the Plaintiff’s solicitors. There is also a Notice of Ceasing to Act, filed 5 April 2018, in which the solicitor (Mr S Butcher) states that the firm has “ceased to act as the legal representative of …the Plaintiff in these proceedings”. It is noted in that document that “A notice of intention to file and serve this notice was filed on 5 March 2018 and served on [the Plaintiff] on 8 March 2018”. The Plaintiff’s “residential or business address …last known to me” was then identified.

19. Uniform Civil Procedure Rules 2005 (NSW), rule 7.29 relevantly provides:

7.29 Withdrawal of solicitor

(1) A solicitor who ceases to act for a party in any proceedings may file notice of the change and serve the notice on the parties.

(2) Except by leave of the court, a solicitor may not file or serve notice of the change unless he or she has filed and served on the client a notice of intention to file and serve the notice of change:

(a) in the case of proceedings for which a date for trial has been fixed, at least 28 days before doing so, or

(b) in any other case, at least 7 days before doing so.

(3) Unless notice of the change is filed with the leave of the court, a solicitor filing such a notice must include in the notice a statement as to the date on which service of the notice of intention required by subrule (2) was effected.

(4) A solicitor may serve a notice of change or notice of intention under this rule on the former client by posting it to the former client at the residential or business address of the former client last known to the solicitor.”

20. As the Notice of Ceasing to Act stated that a notice of intention had been served, it was unnecessary for the Plaintiff’s solicitors to seek leave to file a notice of ceasing to act. Furthermore, the notice was served more than 28 days before the trial.

21. The causes for the termination of the retainer by the Plaintiff’s solicitors are not known. Two usual causes are the client's failure to provide funds for costs and disbursements and where the client prevents the solicitor from properly carrying out the duties required by the retainer. In the circumstances of this case, it does not matter. It is not a case in which the Plaintiff’s former solicitors have left it to the very last minute to leave the Plaintiff, being the client, in a situation where he may be forced to seek an adjournment or otherwise defend the proceedings on his own.

22. As will also be read, the Plaintiff has been encouraged by the Defendants’ solicitor, to resurrect his professional relationship with his former solicitors but it appears that he has chosen not to do so.

Notice of the Proceedings

23. On 28 March 2018, I requested my Associate to forward an email stating that the matter was listed for a pre-trial directions hearing at 9:30 a.m. on 10 May 2018. A copy of the email was sent to the solicitors then on the record.

24. On 16 April 2018, my Associate received an email from Mr Saunders confirming that a Notice of Ceasing to Act was “recently filed and served by post” on the Plaintiff. It went on to state that “[o]ur covering letter to Mr Watson (attached) also advised of the Directions date before his Honour… on 10 May 2018. (In fact, the covering letter, which is also on the Court file, confirmed the hearing dates as well.)

25. There is evidence that on 27 April 2018, the Plaintiff was served with a letter dated 19 April 2018 from the solicitors for the Defendants, and with a copy of my Associate’s email dated 28 March 2018, as well as a draft Court Book, which was said to include the documents relevant to the proceedings. The documents were served by Mr J Khoury by leaving them with a servicing Officer at the Silverwater Correctional Complex at Silverwater.

26. By letter dated 1 May 2018, sent to the Plaintiff, the solicitors for the Defendants required the Plaintiff, as well as three medical experts upon whose reports reliance was likely to be placed by him, to be available for cross-examination.

27. On 10 May 2018, there was no appearance, by, or on behalf of, the Plaintiff and Ms Nolan appeared for the Defendants. The matter was adjourned until 16 May 2018.

28. On 16 May 2018, once again, there was no appearance, by, or on behalf of, the Plaintiff. Ms Nolan, again, appeared for the Defendants. Counsel sought, and was granted, leave to file in Court, an affidavit sworn 16 May 2018, of Mr M Iacuzzi, in which there was a reference to correspondence passing between his firm and the Metropolitan Remand Reception Centre of the Silverwater Correctional Complex. In some of that correspondence, the Plaintiff was referred to as “the inmate”.

29. Mr Iacuzzi’s affidavit also referred to a conversation between himself and Mrs Cheryl Watson, the Plaintiff’s mother. She told Mr Iacuzzi certain things.

30. By letter dated 18 May 2018, from the solicitors for the Defendants, personally served by Mr M N Smith, a Licensed Commercial Agent, on 22 May 2018, the Plaintiff was informed that he was required to attend at the hearing on 12, 13 and 14 June 2018, and in the event that he did not, “the Court may deal with the proceedings in your absence”. He was also informed that the Court was sitting in the Hospital Road complex, and a copy of a map of its position was provided.

31. On 4 June 2018, the Court received written notification from Ms Nolan stating that the solicitors acting for the Defendants had made contact with the Plaintiff and that he “wishes the matter to proceed next week”. (She had requested her instructing solicitors to provide a copy of her correspondence to the Plaintiff.)

32. The Court has not received any email, or other, correspondence directly from the Plaintiff. So far as is known, the Plaintiff remains unrepresented.

33. The matter was, first, called shortly after 10:00 a.m. today. There was no appearance, by, or on behalf of, the Plaintiff.

34. At the commencement of the hearing, counsel sought, and was granted, leave to file in Court another affidavit of Mr Iacuzzi, this one having been sworn on 7 June 2018. In that affidavit, Mr Iacuzzi referred to a number of the matters referred to above. He added that he had spoken with the Plaintiff on 1 June 2018 and again on 4 June 2018. His affidavit, relevantly, was in the following terms:

“25.    On 1 June 2018, I made a telephone call to the plaintiff. During that telephone call, words were said to the following effect:

Myself:   “Shaun, if this matter is going ahead, we have some preparations to do. Do you intend to get a solicitor involved?”

The plaintiff:   “I promise I’ll call Mark tomorrow”.

26.   After receiving an email from Ms Monteith dated 4 June 2018, I telephoned the plaintiff. During that telephone call, words were said to the following effect:

Myself:   “Have you called Mark yet?”

The plaintiff:   “No. I’ve been busy”. I’ll call him tomorrow”.

Myself:   “The Court has asked us to do some preparations for the hearing. I will send you a copy of the Associate’s email outlining those preparations. Do you have an email address or mobile number?”

The plaintiff:   “My partner deals with emails. I don’t know what the email address is. I don’t know my mobile number”

Myself:   “Ok, we have to get a Court Book done by 4pm on 6 June. Are you OK if I send the Associate a copy of the 2 folders you have been given? The only change I will make is to paginate each page”

The plaintiff:   “That’s fine”.

Myself:   “The Associate has also asked for the original affidavits, along with written submissions. These are also due by 4pm on 6 June. But it’s all outlined in the email I will post to you”.

The plaintiff:   “OK”.

Myself:   “Can I send you documents to the address at XXXX?”

The plaintiff:   “Yeah”

27.   On 4 June 2018, I forwarded the plaintiff (via Express Post) a copy of the email from Ms Monteith dated 4 June 2018. Annexed hereto and marked … is a true copy of my letter to the plaintiff dated 4 June 2018 (less the enclosure).”

35. Despite the Plaintiff having stated that he would contact Mr Saunders, Mr Iacuzzi was informed by Mr Saunders, on 4 June 2018, that the Plaintiff had not made contact with him following the filing of the Notice of Ceasing to Act.

36. Counsel also then sought, and was granted, leave to file in Court various affidavits of service of documents referred to in Mr Iacuzzi’s affidavit.

37. In case the Plaintiff had been delayed, or was having difficulty finding the Court, the matter remained in the List until 11:00 a.m., when it was again called outside the Court. There was no appearance by, or on behalf of the Plaintiff, on this occasion also.

38. During the adjournment, I requested my Associate to enquire whether any correspondence had been received in the Supreme Court Registry from the Plaintiff. The email response from the Registry was that nothing had been received from the Plaintiff or in relation to the matter.

39. In all the circumstances, I am satisfied that the Plaintiff has been made aware of the hearing date; of his need to appear; and in the event that he did not do so, the possibility that the Court may deal with the matter in his absence.

40. There being no appearance when the matter was called, not once, but twice outside the Court, counsel for the Defendants sought an order that the Plaintiff’s claim be dismissed.

The Hearing – Non-Appearance by the Plaintiff

41. UCPR rule 29.7 applies when a trial is called on. If any party is absent, the Court may proceed with the trial generally, or so far as concerning any claim for relief in the proceedings, or may adjourn the trial. There has been no application by the Defendants to proceed with the trial or to adjourn it.

42. UCPR rule 29.7(4) provides that, if, in relation to any proceedings, the Defendant appears, but the Plaintiff does not appear, the Court may dismiss the proceedings. It is upon this sub-rule that the Defendants rely in making the application that counsel has made.

43. A party is relevantly absent only if he, she, or it, had knowledge, or notice, of the hearing date, and is neither present, nor represented, when the matter is due to be heard. In NSW Trustee and Guardian as executor of the Will of Michael Robert Walsh (Dec'd) v Gregory (2012) 18 BPR 35,153; [2012] NSWSC 681, I wrote, at [18] - [22]:

“The clear purpose of UCPR r 29.7 is the efficient dispatch of court business. However, in dispatching court business, I cannot ignore the right of a defendant to be informed, or, at least, to be made aware, of a trial date. It is a fundamental principle that a party who may be adversely affected by the making of court orders has a right to be heard: Cameron v Cole [1944] HCA 5; (1944) 68 CLR 571, in which Rich J said (at 589):

It is a fundamental principle of natural justice, applicable to all courts whether superior or inferior, that a person against whom a claim or charge is made must be given a reasonable opportunity of appearing and presenting his case. If this principle be not observed, the person affected is entitled, ex debito justitiae, to have any determination which affects him set aside, and a court which finds that it has been led to purport to determine a matter in which there has been a failure to observe the principle has inherent jurisdiction to set its determination aside … In such a case there has been no valid trial at all.

In the circumstances, the first issue to address is whether I am satisfied that it is appropriate to proceed in the absence of the Defendant or of anyone representing her.

A party is “absent” within the meaning of the rule, when the trial is called on, only if it can be shown that he, or she, has knowledge, or notice, of the date of the trial, and is not physically present, or not represented. In other words, before the rule can be relied upon, there should be proof that the absent party has been given reasonable notice of, or has knowledge of, the date of the trial.

…

Finally, on the question, I have not forgotten what I said in Smirski v Macander [2010] NSWSC 929 at [34]:

It is to be remembered that the primary considerations on whether to proceed ex parte concern whether there is urgency; whether irreparable damage would flow from making an ex parte order; whether hardship would flow to a party against whom an order is made and whether such an order can be set aside: Ndjamba v Toyota Finance Australia Ltd [2010] NTSC 23, per Blokland J at [8].”

44. More recently, in Lezaja v Hannover Life Re of Australasia Ltd (No 2) [2016] NSWSC 167 (a case in which a Plaintiff had failed to appear at the hearing), after referring to some of the passages quoted above, I added, at [37], and at [40]:

"Of course, I must also have regard to the obligations imposed by s 56 to s 60 of the Civil Procedure Act 2005 (NSW). Section 56 emphasises that the overriding purpose of the Act and the rules of court, in their application to civil proceedings, is to facilitate the just, quick and cheap resolution of the real issues in dispute in the proceedings. The court is required to give effect to the overriding purpose when it exercises any power given to it by the Act or by the rules of court. Section 57 in turn requires the court to have regard to specified matters. Section 58 requires the court, in deciding whether to make any order or direction for the management of the proceedings, to act in accordance with the dictates of justice, and the court must have regard to the provisions of ss 56 and 57. These sections recognise the fact that delay and case backlog are matters which affect not only the public cost in delivery of justice, but the court's ability to provide individual justice, and that the reforms introduced by the Civil Procedure Act promote the provision of individual justice notwithstanding that they may have adverse effects on the claims of individual parties in particular circumstances: Hans Pet Constructions Pty Limited v Cassar [2009] NSWCA 230 at [37] (Allsop P).

…

… The Court is not required to indefinitely delay the completion of the hearing in the hope that he might change his mind and appear: Allesch v Maunz [2000] HCA 40; [2000] HCA 40; (2000) 203 CLR 172, at [182]-[186], [189]-[191]; Taylor v Taylor [1979] HCA 38; (1979) 143 CLR 1, at [4]. The Plaintiff, proved to be on notice of the proceedings, has been afforded the opportunity to appear and to be heard. He has chosen not to do so. It follows that it is appropriate for the proceedings to be determined in his absence."

45. The Plaintiff was legally represented when the matter was listed for hearing. There is no suggestion that he was not informed of the date of hearing. Indeed, he appears to have been informed of the hearing dates more than once since then. Furthermore, the most recent correspondence with him demonstrates that he was aware that the hearing was imminent.

46. The Plaintiff has been given the right to be heard at the hearing, but he has chosen not to take advantage of it, and he has not communicated any explanation for his non-appearance to the Court, or, it appears, to the legal representatives of the Defendants.

47. Whilst it cannot be said that there is an immediate urgency with the case being heard, in the sense that it needs to be determined today, the proceedings have been on foot for over two years. The Defendants have appeared throughout and have, no doubt, incurred legal costs.

48. I have considered whether the Court should adjourn the proceedings to give the Plaintiff a further opportunity to appear. However, it seems to me that there would be no utility in doing so, in the absence of an explanation why he has not appeared today. There is no reason to believe that he would be more likely to appear on the next occasion than on this occasion.

49. In my view, there is no ground upon which it would be appropriate for the Court to adjourn the hearing, of its own motion.

50. Finally, at 11:37 a.m., prior to making the following orders, the matter was again called. There was no appearance by, or on behalf of, the Plaintiff. In all the circumstances, I am satisfied that it is proper to dismiss the proceedings. There seems to be no reason why the Plaintiff should not pay the Defendants’ costs of the proceedings.

51. Accordingly, the Court:

1. Notes that the matter was called outside the Court and that there has been no appearance by, or on behalf of, the Plaintiff.

2. Grants leave to the Defendants to file in Court the Affidavit of Michael Iacuzzi sworn 7 June 2018.

3. Orders that the Statement of Claim be dismissed.

4. Orders that the Plaintiff pay the Defendants' costs of the proceedings.

5. Orders that the Court Books be returned to the Defendants' solicitors.

6. Orders that a copy of the orders that have been made today with a copy of the reasons for judgment be served upon the Plaintiff within 3 working days of the judgment being provided to the Defendants’ solicitors.

7. Orders that the hearing dates listed before Hallen J on 13 and 14 June 2018 be vacated.

8. Orders that these orders be entered forthwith.

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Decision last updated: 13 June 2018