Contor v Commercial Union Assurance Company of Australia Ltd [1995] QSC 333 [1996] 1 Qd R 604

TRANSCRIPT OF PROCEEDINGS (Copyright in this transcript is vested in the Crown. Copies thereof must not be made or sold without the written authority of the Director, State Reporting Bureau.) SUPREME COURT OF QUEENSLAND CIVIL JURISDICTION DOWSETT J No Misc 32 of 1995 OS No 21 of 1995 LYNETTE ANN CONTOR and COMMERCIAL UNION ASSURANCE COMPANY OF AUSTRALIA LIMITED (ACN 004 478 371) MACKAY .. DATE 04/10/95 ORDER r-----:-.. •-Pa•----------•-, · •,, q,morting Cur;,Ju b /0 1 6/s.✓ =-- Plaintiff Defendant SC#ti!F!Fl Bet t GW&6fi#f#WM&¥&iiitR MAS -- 1 of 7 -- 041095 (Dowsett J) HIS HONOUR: The plaintiff sues the defendant in the District Court at Mackay for moneys due and payable under an insurance policy upon a house and contents which were destroyed by fire .. The amount claimed in the plaint is for $170,000.00 together with "consequential losses interest and costs". The policy provides cover up to $140,000.00 for the house, $30,000.00 for contents and a further sum of $3,000.00 in respect of any costs incurred in renting alternative accommodation as a result of the loss of the house. The plaintiff was charged with arson, but that charge was taken away from the jury. The defendant has not paid out under the policy. The present application is to elevate the District Court action to this Court upon the basis that there is reasonable grounds for supposing that the relief or remedy sought is not available in the District Court. This is because the plaintiff wishes to add three additional heads of claim to the cause of action as presently constituted. Firstly, the plaintiff wishes to claim damages described in counsel's submissions as being for mental distress. Her affidavit indicates that she has, since the fire, suffered great personal distress and upset as a result of the fire itself, the proceedings against her in the District Court for arson and the delay in finalising the insurance claim, causing financial difficulty. I have little difficulty in assuming that each of those allegations is justified. However, it seems from a medical report exhibited to the applicant's affidavit and dated 21 2 ORDER i 10 20 30 40 50 60 -- 2 of 7 -- 041095 (Dowsett J) March ·1995 that even before the fire, she suffered from long- term emotional upset for which she was undergoing medical treatment. She had previously demonstrated suicidal tendencies. In those circumstances, even assuming that damages claim for mental distress are recoverable for the defendant's alleged breach of contract in failing to honour the insurance policy, it is most unlikely that the quantum of such award would in any way lead to this claim being beyond the jurisdiction of the District Court. The evidence indicates, at its best for the plaintiff, that the cost of reinstatement would be about $125,000.00. There is no evidence as to the value of the contents of the house, but one can, for the moment, assume the maximum amount of $30,000.00. Some other small amount must also be added for clearing the site prior to building. But having regard to all of those things, the claim for loss of the house and contents, together with what would, in my view, be a very moderate claim for nervous shock or mental distress, would still be well within the jurisdiction of the District Court. I have very grave doubts as to the entitlement of the plaintiff to claim damages for mental distress. The material does not suggest that the plaintiff comes within any of the categories referred to by the members of the High Court in Baltic Shipping Company v. Dillon (1992-93) 176 CLR 344, where the question of recovering such damages in an action in contract was discussed. I note the decision of Herron Jin the High Court of New Zealand in Stuart v. Guardian Royal Exchange Assurance of New Zealand Limited (No 2) reported in (1988) 5 ANZ Insurance Cases 60-844. His Honour there 3 ORDER 10 20 30 40 50 60 -- 3 of 7 -- 041095 (Dowsett J) appears to have allowed a small amount for mental distress caused by failure of an insurance company to pay the amount assured upon a finding of fact that - " the insurance of a domestic dwelling involves the initial contemplation by the insurer that in the event that resort is unsuccessfully made to the provision in the contract requiring only accidental damage by fire to be indemnified, considerable anxiety and distress is likely to follow." I find myself unable to come to the conclusion that a loss of 10 this kind can be so easily brought within the second limb of 20 the rule in Hadley v. Baxendale. However, for the other reasons which I have outlined, I am of the view that the claim for mental distress by itself is not sufficient to take this action out of the jurisdiction of the District Court. I should say that counsel for the applicant conceded as much in 30 his submissions. There is also a new claim for the cost of alternative accommodation. As I have said, pursuant to the policy, the maximum amount recoverable under this head is $3,000.00. However, counsel submits that there are additional amounts recoverable beyond that sum because the defendant has failed to honour its obligation under the contract of insurance. This is a very curious submission, given that the plaintiff 40 is suing on the policy. It is impossible, in my view, to sue so on the policy on the one hand and on the other, submit that you are not bound by its terms. This, with respect, appears to be the weakness of the position adopted by Herron Jin the case to which I have already referred (at page 57282) in considering a similar claim. I can see no basis upon which 60 4 ORDER -- 4 of 7 -- 041095 (Dowsett J) it can be argued that the plaintiff can recover more than the specified maximum under this heading. I should say that counsel for the plaintiff considered that this new claim plus the claim for mental distress would not take the matter beyond the jurisdiction of the District Court. Finally, and most importantly for present purposes, the plaintiff seeks to claim interest pursuant to the Insurance Contracts Act. That Act provides for interest upon any amount payable under a contract of insurance at 13 per cent per annum. The amount of such interest would, taken in conjunction with the other additional amounts referred to above, take this action out of the jurisdiction of the District Court, if the amount of such interest should be taken into account in determining jurisdiction. However, section 66 (3) (c) of the District Court Act makes it clear that in determining whether or not a claim is in excess 0f the monetary jurisdictional limit of the District Court, no account is to be taken of any amount awarded or liable to be awarded in the action by way of interest. Counsel for the plaintiff submits that because this question has never previously been considered in so far as concerns its application to interest under the Insurance Contracts Act, the matter is doubtful and the plaintiff should therefore assume the worst and litigate the matter in the Supreme Court. That submission really invites me to avoid my duty to decide the law. It is a simple question of law, and it is appropriate that I decide it. 5 ORDER 10 20 30 40 50 60 -- 5 of 7 -- 041095 (Dowsett J) Similar provisions have been held to have the effect of excluding the claim for interest from the amount of the claim for the purpose of determining jurisdiction. See Leydon v. Trigil Insurance Brokers, an unreported decision of Judge Wylie Q.C. in the District Court, which was upheld by the Full Court in Johns v. Johns [1988] 1 Qd.R. 138 at page 141. Of course, those cases were not concerned with a claim for interest under the Insurance Contracts Act. The problem depends upon the proper construction of section 66 (3) (c). I must determine whether or not a claim for interest under the Insurance Contracts Act is a claim for an amount liable to be awarded by way of interest. The Insurance Contracts Act says that, "the insurer is also liable to pay interest on the amount ... in accordance with this section.'' I can see no reason whatsoever for characterising a claim for such interest as other than a· claim for interest of the kind contemplated by section 66 (3) (c). I consider that this claim for interest is therefore not to be taken into account in considering questions of jurisdiction in connection with the monetary jurisdictional limit of the District Court. As I have said, it is common ground that the other proposed additional claims do not themselves take the matter beyond the jurisdiction of the District Court. In those circumstances, the application is refused. 6 ORDER 10 20 30 40 50 60 -- 6 of 7 -- 041095 (Dowsett J) As to the question of costs, I would normally award the defendant its costs of the application, it having been successful. However the material put before me indicates that the issue was raised in the form of a request to consent to an increase in jurisdiction of the District Court at a quite early stage, and there seems to have been no response to that query, or at least I am so informed by counsel for the plaintiff. The defendant is not in position to contradict that. The order I am making is on that basis. In those circumstances, the fairer order will be to order that the costs be the defendant's costs in the cause. 7 ORDER 10 20 30 40 50 60 -- 7 of 7 --