Australian Guarantee Co Ltd v Ryhill Pty & Anor [1999] QSC 138

IN THE SUPREME COURT OF QUEENSLAND No 9283 of 1996 Brisbane Before the Hon Mr Justice Shepherdson [Australian Guarantee Corporation Limited v Ryhill Pty & Anor] BETWEEN: AUSTRALIAN GUARANTEE CORPORATION LIMITED (ACN 000015485) AND' -.-' AND: RYHILLPTY (ACN 060 394 345) RUSSELL BERTRAM REASONS FOR JUDGMENT - SHEPHERDSON J Judgment delivered 25 June 1999 Plaintiff First Defendant Second Defendant CATCHWORDS: PROCEDURE - DISCOVERY AND INTERROGATORIES - 0 40 r 38A - whether the documents subject to the writ of non-party discovery issued by plaintiff and directed to Suncorp General Insurance Limited relate to a matter in question in the cause. Uthmann v Ipswich City Council (1998) 1 Qd R 435 applied o 40 R 38A Supreme Court Rules, Qld -- 1 of 11 -- Counsel: Solicitors: o Hearing date: o PROCEDURE - COSTS - whether non-party applicant acted prudently in seeking court order to set aside the writ of non-party discovery - applicant continued application after unsuccessful application by plaintiff to strike out paragraph in the defence to which the sought documents were relevant - whether costs should follow the event. Uthmann v Ipswich City Council (1998) 1 Qd R 435 Mr JP Kimmins for the applicant Mr CA Wilkins for the defendant (solicitor) Heiser Bayly & Mortensen for the applicant Clayton Utz for the defendant 17 June 1999 -- 2 of 11 -- o o 2 3 IN THE SupREME COURT OF QUEENSLAND No 9283 of 1996 Brisbane Before the Hon Mr Justice Shepherdson [Australian Guarantee Corporation Limited v Ryhill Pty & Anor] BETWEEN: AUSTRALIAN GUARANTEE CORPORATION LIMITED (ACN 000 015485) AND: AND· -_. RYHILLPTY (ACN 060 394 345) RUSSELL BERTRAM REASONS FOR JUDGMENT - SHEPHERDS ON J Judgment delivered 25 June 1999 Plaintiff First Defendant Second Defendant On 28 May 1998 Suncorp General Insurance Limited applied for an order that a writ of non-party discovery dated 28 April 1998 and directed to its manager be set aside. The application, which was first returned in chambers on 22 June 1998, was not finally heard until 17 June 1999 and the decision which I am now writing is intended to· decide the fate of the application. The reasons for the apparent delay will appear shortly. The writ sought to have the applicant produce various classes of documents mentioned and described in the schedule to the writ. The documents are: -- 3 of 11 -- 2 "in respect of insurance cover provided or proposed to be provided by Suncorp General Insurance Limited to Evenpool Pty Ltd and/or the above named plaintiff with respect to the following vehicles: • 1987 FTE Jumbo 41" Refrig Pantech with SB 1 motor Reg 782-QBF Chas 1915 • 1992 Western Star 4864 FX Prime mover with 42" sleeper Reg - Eng 5KJ07620 White". Order 40 r.38A under which the writ of non-party discovery issued reads: "38A A party to a cause may, by writ of non-party discovery, require a person who is not a party to the cause, to produce to the party a document that - (a) relates to the matter in question in the cause; and (b) is in the person's possession or control; and (c) the person could be required to produce at the trial of the matter." By r 38C the respondent to a writ may within 14 days after its service apply to a judge to have it set aside or varied and the judge may make such order as the judge determines. The affidavit evidence before me and read by Mr J. P. Kimmins counsel for the applicant included an affidavit by Craig Ifi1and the applicant's manager of Fleet Motor "and Mr Ifi1and's affidavit showed quite clearly that: 1. Between 4 April 1995 and 2 May 1995 Jardine Australia Insurance Brokers submitted to the present applicant Suncorp General Insurance Limited a proposal dated 27 April 1995 and requests for comprehensive motor vehicle insurance on behalf of Evenpool Pty Ltd with respect to the vehicles which are referred to in the writ of non-party discovery together with other vehicles not referred to in that writ. 2. Craig Ifi1and has perused the applicant's files and records on Evenpool Pty Ltd and verily believes to be true that Evenpool Pty Ltd never paid the premium with respect to the proposed policy of insurance. -- 4 of 11 -- J 3 3. F or reasons stated in Mr Iflland's affidavit sworn 17 June 1999 the applicant's standard motor policy would have been issued to Evenpool had the premium been paid, the premium was not paid and "no comprehensive motor vehicle policy came into existence". 4. On 21 June 1995 Suncorp received a letter/closing from Jardine advising Evenpool's policy was cancelled in full from 8 March 1995 due to non-payment of the premium. 5. On 18 July 1996 the applicant wrote to Clayton Vtz the solicitors for the above named plaintiff Australian Guarantee Corporation Limited (and respondent to the present application) advising that the applicant had cancelled Evenpool's policy due to non-payment of the premium. In my view Iflland' s affidavit which deposes to each of the matters which I have just set out makes it abundantly clear that the applicant, at the time the non-party discovery was served on it did at least have documents "in respect of insurance cover ... proposed to be provided by Suncorp General Insurance Limited to Evenpool Pty Ltd ... with respect to" the two vehicles named in the writ of non-party discovery. In light of the matter No.4 above it further appears that insurance cover was in fact provided before being cancelled. Nevertheless before these proposal documents can be made subject to a writ of non-party discovery it must be shown that they relate to the matter in question in the above action. The pleadings which are before me show that the plaintiff is a finance company, the first defendant is a broker, whose employee and agent was the second defendant, and that the first defendant acted as an intermediary in several applications for finance to Evenpool Pty Ltd made to the plaintiff The plaintiff has sought damages against the defendants for (inter alia) negligence, alleging that the defendants (in the case of the first defendant by its agent and employee the -- 5 of 11 -- 10 11 12 13 4 second defendant) falsely attested having witnessed the execution of three guarantees, that properly executed guarantees were a pre-condition to the plaintiff entering into certain hire purchase agreements and that the plaintiff has suffered loss and damage caused by the negligence of the defendants in falsely attesting having witnessed the guarantees. Each defendant has filed a defence and each defence alleges in sub-para 8(b) that if the plaintiff suffered loss and damage (which is not admitted), and if each defendant was negligent (which is denied) any loss and damage suffered by the plaintiff was caused wholly or contributed to by the plaintiffs own negligence particulars of which are as follows: " (b) failing to ensure that the equipment purchased by Evenpool with loan funds advanced by the plaintiff was adequately ensured (sic) against loss and damage at all material times." It is said by the respondent that the documents of which production is sought under r 38A relate to the matter of contributory negligence raised by each defendant in its defence. Before I proceed further, I should say it is common ground that the application to set aside the writ of non-party discovery now before me, came before Ambrose J on 22 June 1998. His Honour took the view that the allegation of contributory negligence contained in sub-para 8(b) of the two defences should be struck out and His Honour therefore refused to make any order on the application to set aside the writ of non-party discovery until the question whether sub-para 8(b) should be struck out was first determined. Ambrose J therefore adjourned the application to a date to be fixed. The matter of striking out sub-para 8(b) was heard by Derrington J who on 23 April 1999 in a reasoned judgment found it was arguable that the plaintiffs alleged failure to insure could, if proven, amount to contributory negligence. -- 6 of 11 -- 14 l5 J J 17 18 5 The present applicant Suncorp General Insurance Limited is well aware of the decision of Derrington J but has persisted with its present application. Mr Kimmins has sought to set aside the writ for a number of reasons which are 1. That the pleadings between the plaintiff and the defendants do not raise with any clarity any issue as to why a failure to take out a policy of insurance against loss of or damage to the motor vehicles referred to in the writ of non-party discovery . is in any way relevant. 2. 3. 4. That the present applicant has repeatedly stated that no policy of insurance against loss and damage of the motor vehicles exists because Evenpool failed to pay the premium by the due date and the policy did not come into existence. That the writ of non-party. discovery is too wide in a number of respects. That because the writ seeks documents relating to insurance granted to or proposed to be granted to the plaintiff, the plaintiff was a party who should have possession of any such document. I propose to deal now with the first of these matters. In oral argument it appeared that the two vehicles in question were damaged. Mr Kimmins submitted that before sub-para 8(b) could be relied on to show that the writ of non-party discovery related to a matter in question in the cause, the defence pleaded must include an allegation of damage to the vehicles. In my respectful view this submission fails. Sub-para 8(b) alleges failure to ensure that the equipment "was adequately insured against loss and damage at all material times". In my view in the circumstances of this case it was unnecessary to plead actual damage to the vehicles and equipment concerned. If it were necessary to plead then that matter is irrelevant to the present application. If the pleadings show the document sought to be produced -- 7 of 11 -- 19 J 20 21 6 relates to a matter in the course that suffices for purposes of r 38A(a). The thrust of the pleading is directed to a failure by the respondent to ensure that adequate insurance cover was obtained. Once insurance is effected then if the property insured is damaged and the damage falls within a risk covered, a claim for payment under the policy may follow, but in my respectful view the matter of damage is not relevant. The first basis on which Mr Kimmins seeks to set aside the writ of non-party discovery fails. It is unnecessary to consider further the remaining matters raised by Mr Kimmins. However, I should say in respect of the second matter say that notwithstanding the applicant having repeatedly stated that no policy exists, the fact is that there are documents in respect of insurance cover proposed to be provided by the applicant to Evenpool Pty Ltd with respect to the two vehicles named in the writ of non-party discovery. I should at this stage refer to one of the "general principles" stated by Mr Justice Lee in Uthmann v Ipswich City Council (1998) 1 Qd R 435 at p 450 which relate to "non-party discovery" under 0 40 r 38A of the Rules of the Supreme Court. His Honour said: "(5) the third party must independently be satisfied that the documents relate to a matter in question in the cause before they are produced. " The present applicant is a business entity who, as is well known, has for many years been well experienced in litigation. It is also extremely well experienced in processing claims under its policies. It can fairly be said that it "knows the ropes" in respect of litigation before all levels of Queensland Courts. It has conceded that in fact it has documents in respect of insurance cover proposed to be provided by it to Evenpool Pty Ltd. The second matter is in my view irrelevant to the present application. -- 8 of 11 -- ~2 ~3 J M J~5 26 27 --- ------~-~ --~-----~ ---~ - - -------~~-- --- 7 As to the third matter, because the applicant has conceded that it does have the proposal documents in relation to the insurance cover sought to be provided by the applicant to Evenpool Pty Ltd, I regard this issue also as one which is irrelevant. As to the fourth matter, it appears this arises from a misreading of the writ of non-party discovery. It is true that writ referred to documents "in respect of insurance cover ... proposed to be provided by Suncorp General Insurance Limited to Evenpool Pty Ltd and/or the above named plaintiff'. It cannot be said, as the fourth matter states that the plaintiff (the present respondent) should have possession of the documents which are the subject of the writ of non- party discovery. This fourth issue has no substance. I am satisfied that this application must be dismissed. It is not necessary for me to consider what was said during argument to be a division of authority as to what must be shown and as to by whom it must be shown on an application to set aside a writ of non-party discovery. The authorities were Uthmann (supra), Moorooka Shopping Town (Nominees) Pty Ltd v Kilmartin and Anor (9682 of 1996 - judgment 18 November 1998; Butterworths unreported cases BC 9806104, (a decision of mine) and Petoneport Pty Ltd v Barnes (No 1923 of 1991 - judgment 16 November 1998 - Butterworths unreported judgment BC 9806077) a decision of Chesterman J. This leaves the matter of costs. Mr Wilkins, solicitor for the respondent, has sought costs of and incidental to the summons against the applicant. One of the principles stated by the Honourable Mr Justice Lee in Uthmann was: "(7) If the third party is of the view that the documents do not relate to a matter in question in the cause or if there is a doubt in relation to it or if there is any other proper basis for objection to produce the documents whether on the ground of -- 9 of 11 -- 28 8 privilege or on a discretionary basis or otherwise, the third party should prudently apply to the Court for an order." (at p 450) A further principle stated by His Honour was: "(10) There is no reason why before any application is brought to the Court, there should not be dialogue between the third party and the person who issues the writ for clarification or to state grounds of objection. The person who issues the writ may then satisfy the third party in writing or might desist if the objections raised are accepted." 29 . In the circumstances of this case it appears that when this summons first came before Mr Justice Ambrose, it was thought that sub-para 8(b) of each defence should be struck out. It seems J to me that the non-party's costs to and including the date of the hearing before Mr Justice Ambrose should be paid by the present respondent. The applicant was and is a stranger to the J litigation between the plaintiff and the defendants. However, after Mr Justice Derrington 30 \ '-/ 31 dismissed the application to strike out sub-par 8(b) on 23 April 1999 it appears quite clear that the present applicant persisted with its application to have the writ of non-party discovery struck out. In my view, after 23 April 1999 the present applicant was then not acting prudently. I have come to the conclusion that the present applicant should pay the respondent's costs of and incidental to the summons filed on 28 May 1998 incurred on and from 24 April 1999 such costs to be taxed. In the result the orders I make are: 1. That the summons filed 28 May 1999 dismissed. 2. That the respondent plaintiff, Australian Guarantee Corporation Limited do pay the present applicant's costs of and incidental to that summons to and including 23 April 1999 such costs to be taxed on a solicitor and client basis. -- 10 of 11 -- 9 3. That the present applicant do pay the respondent plaintiffs costs of and incidental to the summons filed on 28 May 1998 and incurred on and from 24 April 1999 to be taxed. J -- 11 of 11 --