Witcombe v Jordin

[1998] QSC 117

IN THE SUPREME COURT

OF QUEENSLAND
  No. 1389 of 1997
[Witcombe v Jordin & Anor]

BETWEEN:
  PAUL AND ANNE WITCOMBE
  Plaintiffs

AND:
  BELINDA JORDIN
  First Defendant

AND:
  ZURICH AUSTRALIAN INSURANCE LIMITED
  ACN 000 296 640   Second Defendant

CATCHWORDS:     Question of law under insurance policy - Case appraisal or mediation - Negligence - Mediation.

Counsel:Mr P. Hack for the applicants/plaintiffs

Mr P. Hastie for the respondent/second defendant

Solicitors:Dunhill Madden Butler for the applicants/plaintiffs

Minter Ellison for the respondent/second defendant

Hearing dates:          22 May 1998

JUDGMENT  -  DERRINGTON J

Judgment delivered 26 May 1998

The plaintiffs are the owners of a house which was damaged by fire, but those parties’ names are used by their insurer using its powers acquired by subrogation to sue in the insured’s name after providing indemnity.  The first defendant is the person who is said to have been negligently responsible for starting the fire and the second defendant is the insurer of the first defendant’s parents’ home.  The second defendant’s policy also provided liability cover which extended to the first defendant and would apply to the circumstances of the present case unless, relevantly, she had been in physical control of the plaintiffs’ premises at the time of the alleged negligence.

Invoking the latter exclusion, the second defendant denies liability to indemnify the first defendant and also puts her alleged negligence in issue.

At the time of the fire she was “house sitting” the home of the plaintiffs, her uncle and aunt, and during a party with her friends she placed a heater too close to bedclothes on a bed and they ignited. The plaintiffs seek a declaration of the second defendant’s obligation to indemnify the first defendant and it is agreed that this issue should be determined first since s.65 of the Insurance Contracts Act would protect the first defendant as a relative of the plaintiffs against a subrogation action by their insurer unless her liability is covered by the second defendant’s policy of insurance.

Although the plaintiffs and their insurer would normally not have any interest in a private contract of insurance between the second defendant and the first defendant’s parents, or in the statutory right of the first defendant against the second defendant, yet they have a serious legal interest in establishing that the second defendant is obliged to indemnify the first defendant in order to avoid the effect of s.65 on its claim against that party. Consequently, the second defendant does not raise any objection to its joinder in the action, no doubt recognising the futility of such an objection following on its denial of liability to indemnify the first defendant: J.N. Taylor Holdings Limited v Bond (1993) 59 SASR 432.

The only issue here is whether the claim of the plaintiffs against the second defendant should be referred to case assessment, as the plaintiffs request, or to mediation, as the second defendant suggests.

As it has been indicated, there are only two areas in contention.  The first is whether the first defendant had any physical control of the house at the relevant time;  the second is whether she was guilty of negligence.

There is no serious factual issue as to the former, and because there is a legal point in it the appraisal of which would assist both parties, it deserves a that process.  The plaintiffs say that the latter question is also factually non-controversial, but that is very doubtful and if it were so, because the consequences should be reasonably understood, the parties and their mediator would hardly gain any benefit from its case appraisal.

It would be best if there were appraisal of the first point and then, particularly if it were to go against the second defendant, it should be followed by mediation.

The parties agree that a composite order is valid in such circumstances.

It is therefore ordered that–

1. Paul and Anne Witcombe, the plaintiffs, and Zurich Australian Insurance Limited, the second defendant, participate in, and act reasonably and genuinely in a case appraisal to be conducted at a place, date and time to be agreed to determine, in the first instance, the issue of whether the first defendant had legal or physical control of the plaintiffs’ house within the meaning of the policy issued by the second defendant to R. & K. Jordin, and thereafter the same parties participate in, and act reasonably and genuinely in a mediation to be conducted at a place, date and time to be agreed.

2. The case appraiser and mediator is to be Mr R.G. Bain of Queen’s Counsel.

3. The solicitors for the parties will give to the case appraiser/mediator within the period nominated by the case appraiser/mediator all documents requested for the case appraisal to proceed.

4. The estimated period of the case appraisal/mediation is one day and may extend beyond that period only with the authorisation of the parties.

5. The case appraiser’s/mediator’s fee will be negotiated with the case appraiser/mediator.

6. The parties agree to pay the following percentages of the costs of the case appraisal/mediation,

   (a)Paul and Anne Witcombe, the plaintiffs  50%

   (b)Zurich Australian Insurance Limited, the second defendant  50%

7. The parties must pay their respective percentages of the case appraiser’s/mediator’s fees and the costs of the case appraisal/mediation to the case appraiser/mediator within fourteen days of the case appraiser/mediator issuing his account.

8. The cost of this application be costs in the cause.