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Supreme Court of Victoria |
Last Updated: 14 July 2014
AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
CORPORATIONS LIST
IN THE MATTER of Section 6 of The Law Reform (Miscellaneous Provisions) Act 1946 (NSW)
BETWEEN:
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Second Plaintiff |
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v |
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PETER JOSEPH GILLOOLY
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Second Defendant
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QBE INSURANCE (AUSTRALIA) LTD (ACN 003 191 035) |
Third Defendant |
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JUDGE:
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WHERE HELD:
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Melbourne
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DATE OF HEARING:
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DATE OF JUDGMENT:
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CASE MAY BE CITED AS:
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CORPORATIONS — Proceeding referred to the Supreme Court of Victoria by order of the Supreme Court of New South Wales under the Jurisdiction of Courts (Cross-Vesting) Act 1987 (NSW) — Application by the plaintiffs for the Court to determine as a preliminary issue and as a matter of urgency whether the Supreme Court of Victoria had jurisdiction to make an order under the Law Reform Miscellaneous Provisions Act 1946 (NSW) to assist defendants in deciding whether to seek leave to appeal to the High Court of Australia against the order of the Supreme Court of New South Wales to transfer the proceeding — Whether hearing in the nature of advice — Application refused — Law Reform Miscellaneous Provisions Act 1946 (NSW), s 6.
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APPEARANCES:
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Counsel
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Solicitors
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For the Plaintiffs
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King & Wood Mallesons
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For the First and Second Defendants
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Norton Gledhill and
K&L Gates |
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For the Third Defendant
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Mr G G Macarthur QC with
Mr J P Slattery |
Wotton & Kearney
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Introduction
1 The plaintiffs, Opes Prime Stockbroking Ltd (in liquidation) (scheme administrators appointed) (ACN 086 294 028) and Opes Prime Group Limited (in liquidation) (scheme administrators appointed) (ACN 120 372 223) (references to “Opes Prime” includes both entities unless otherwise specified), instituted proceedings against two directors of the plaintiffs in the Supreme Court of New South Wales alleging the directors breach duties owed to Opes Prime in Opes Prime making certain loans.
2 In the proceeding in New South Wales, two applications were made. First, the first defendant, Alun Peter Stevens, applied to transfer the proceedings to the Supreme Court of Victoria.
3 Secondly, Opes Prime applied under s 6 of the Law Reform Miscellaneous Provisions Act 1946 (NSW) (the Act) to enforce a charge created by s 6(1) of the Act against the third defendant, QBE Insurance (Australia) Ltd (ACN 003 191 035) (QBE), which provided directors and officers liability cover to Mr Stevens and the second defendant, Peter Joseph Gillooly, and to join QBE as a third defendant to the proceedings for that purpose.
4 Section 6 of the Act provides:
Amount of liability to be charge on insurance moneys payable against that liability(1) If any person (hereinafter in this Part referred to as the insured) has, whether before or after the commencement of this Act, entered into a contract of insurance by which the person is indemnified against liability to pay any damages or compensation, the amount of the person’s liability shall on the happening of the event giving rise to the claim for damages or compensation, and notwithstanding that the amount of such liability may not then have been determined, be a charge on all insurance moneys that are or may become payable in respect of that liability.
(2) If, on the happening of the event giving rise to any claim for damages or compensation as aforesaid, the insured (being a corporation) is being wound up, or if any subsequent winding-up of the insured (being a corporation) is deemed to have commenced not later than the happening of that event, the provisions of subsection (1) shall apply notwithstanding the winding-up.
(3) Every charge created by this section shall have priority over all other charges affecting the said insurance moneys, and where the same insurance moneys are subject to two or more charges by virtue of this Part those charges shall have priority between themselves in the order of the dates of the events out of which the liability arose, or, if such charges arise out of events happening on the same date, they shall rank equally between themselves.
(4) Every such charge as aforesaid shall be enforceable by way of an action against the insurer in the same way and in the same court as if the action were an action to recover damages or compensation from the insured; and in respect of any such action and of the judgment given therein the parties shall, to the extent of the charge, have the same rights and liabilities, and the court shall have the same powers, as if the action were against the insured:
Provided that, except where the provisions of subsection (2) apply, no such action shall be commenced in any court except with the leave of that court. Leave shall not be granted in any case where the court is satisfied that the insurer is entitled under the terms of the contract of insurance to disclaim liability, and that any proceedings, including arbitration proceedings, necessary to establish that the insurer is so entitled to disclaim, have been taken.
(5) Such an action may be brought although judgment has been already recovered against the insured for damages or compensation in respect of the same matter.
(6) Any payment made by the insurer under the contract of insurance without actual notice of the existence of any such charge shall to the extent of that payment be a valid discharge to the insurer, notwithstanding anything in this Part contained.
(7) No insurer shall be liable under this Part for any greater sum than that fixed by the contract of insurance between the insurer and the insured.
(8) Nothing in this section shall affect the operation of any of the provisions of the Workers Compensation Act 1987 or the Motor Vehicles (Third Party Insurance) Act 1942.
(9) Despite subsection (8), this section applies in relation to a policy of workers compensation insurance entered into by an employer (whether entered into before or after the commencement of this subsection), where the employer:
(a) being a natural person, has died, or is permanently resident outside the Commonwealth and its Territories, or cannot after due inquiry and search be found, or
(b) being a corporation (other than a company that has commenced to be wound up), has ceased to exist, or
(c) being a company, corporation, society, association or other body (other than a company that has commenced to be wound up), was at the time when it commenced to employ workers to which the policy relates incorporated outside the Commonwealth and its Territories and registered as a foreign company under the laws of any State or Territory and is not so registered under any such law, or
(d) being a company, is in the course of being wound up.
5 Ball J of the Supreme Court of New South Wales granted the application to transfer the proceedings to the Supreme Court of Victoria under the Jurisdiction of Courts (Cross-Vesting) Act 1987 (NSW) and he did so in his decision of Opes Prime Stockbroking Ltd (In Liq) (Scheme Administrations Appointed) v Stevens.[1] His Honour refused the application to join QBE to the proceeding. His Honour said, in substance, that adequate grounds had not been shown at that time, implying that an application could be pursued at a later stage.
6 Opes Prime contends that the defendants and/or QBE maintain that the charge granted by s 6 of the Act would not be enforceable in Victoria and that accordingly the plaintiffs may lose the benefit of the statutory charge by reason of the transfer of the proceedings from New South Wales to Victoria may affect a loss to the plaintiffs of the statutory charge.
7 Opes Prime seeks an urgent hearing of an application for a declaration by this Court that s 6 of the Act applies in respect of the claim for damages and compensation made by the plaintiffs against the defendants in the proceeding in the Supreme Court of Victoria. The plaintiffs say that if this Court were to decide that the statutory charge would not be recognised in the Supreme Court of Victoria, then it will seek special leave to appeal to the High Court of Australia against the decision of Ball J to transfer the proceeding to Victoria on the grounds that, inter alia, the transfer had the effect of the plaintiffs losing its statutory charge.
8 Opes Prime says that if this Court were to decide that s 6 of the Act applies in respect of claims for damages and compensation made by the plaintiffs against the first and second defendants to the Victorian proceeding, then it would not seek leave to appeal to the High Court against the decision to transfer the proceedings from the Supreme Court of New South Wales to the Supreme Court of Victoria.
9 The defendants say that in the New South Wales Court of Appeal decision of Chubb Insurance Co v Moore,[2] the court decided that the charge under s 6 of the Act may only be enlivened if proceedings against the insurer are instituted in the Supreme Court of New South Wales. The defendants say that the declarations sought to be made in this case on the application of the plaintiffs is a “back-door” way of appealing against the decision of the New South Wales Court of Appeal.
10 QBE says that the declarations sought are of a hypothetical nature as there is no issue between the parties in this proceeding, in Victoria. It says that all the issues, including the application under s 6, have already been decided by Ball J in the Supreme Court of New South Wales, adverse to Opes Prime.
11 Mr Redwood, for the plaintiffs, argues that if this Court made the declaration sought, that the statutory right would not be enforced by the Supreme Court of Victoria, this would provide a solid basis to support the application for special leave to the High Court. The prejudice to the plaintiff would be clearly established and this would improve the plaintiffs’ chances of obtaining special leave. The plaintiffs contend that Ball J refrained from deciding whether s 6 would still be available to the plaintiffs in Victoria.
Discussion and relevant authorities
12 In my opinion, if the Court did make a declaration as sought by the plaintiffs, the decision would be in the nature of advice, rather than resolving an issue between the parties. At this stage, no application has been made to this Court for an order joining QBE as a party to the proceeding. If such an application were made, it may be resisted on the ground that such an application has already been made and refused in the Supreme Court of New South Wales.
13 Further, it may be resisted on the ground that the Court does not have jurisdiction to make such an order, or it may be resisted on the ground that even if there was jurisdiction in the Supreme Court of Victoria, leave should not be granted on discretionary considerations. It may also be resisted on other grounds.
14 If the Court were minded to resolve such an application on a jurisdictional basis, then the Court would be faced with considering the decision of Chubb, which I have previously referred to, and is currently the subject of an application for leave to appeal to the High Court. I would be reluctant to decide the matter on jurisdictional grounds, unless necessary, in view of the decision in Chubb; that s 6 of the Act only applies to claims brought in a court of New South Wales.[3]
15 The plaintiffs admit that their prospects of success in the High Court would be stronger if the Supreme Court of Victoria declared it had no jurisdiction under s 6 of the Act. Normally, however, the Supreme Court of Victoria would only decide it had jurisdiction if it were asked to exercise its jurisdiction.
16 In my view, the plaintiffs, by way of this application, are asking the Court to make findings or declarations as to whether or not the Court has jurisdiction so as to assist the plaintiffs in its application for leave to appeal to the High Court and/or to decide whether to pursue that application for special leave.
17 In my opinion, such a declaration would be in the nature of advice. Even if it is not advice, in my view, the hypothetical nature of the question or issue leads me to conclude that in my discretion it is not appropriate to make the declarations sought as a preliminary issue to be decided on an urgent basis. In my view, the plaintiffs’ legal rights are not likely to be adversely effected by the Court refusing to decide the matter as a preliminary issue.
18 At this stage, the Supreme Court of New South Wales has decided, on the merits, that QBE should not be joined under s 6. Whether further grounds emerge that would support an application under s 6 of the Act, is a matter of speculation.
19 In New South Wales Medical Defence Union v Crawford[4] Mahoney JA said in relation to s 6 of the Act:
I come therefore to the effect of the limitation law upon the cause of action given by s 6(4). This is the cause of action on which Mr Crawford has sued the New South Wales Medical Defence Union Ltd. For the purpose of the law of limitations, it is necessary to determine when, within the terms of the Limitation Act, that cause of action could first be sued upon.In this regard, two things at least are relevant: the time when the injured person is first entitled to sue as such on the cause of action; and the significance of the requirement that, before he sues on it, he have leave of the court under s 6(4).In general terms, the injured person may not sue on this cause of action unless and until the insured would be entitled to claim payment from the insurer pursuant to the indemnity granted by the insurance policy. The cause of action gives to the injured person “the same rights and liabilities and the court shall have the same powers, as if the action were against the insured” (s 6(4)). It is given to enforce a charge on “all insurance moneys that are or may become payable in respect of” the liability (s 6(1)). But the moneys secured by the charge are not payable immediately the charge arises. It follows that the moneys are not, as such, payable immediately the injured person is injured. Accordingly, I think, it is not, in general, enforceable until those moneys become payable. (I put aside special cases, for example, where the insured cannot or will not claim or sue.) A declaration of right may, of course, be given before that time.[5]
20 I accept that the Court does have jurisdiction to make the declarations sought by the plaintiffs, as suggested by Mahony JA. Nevertheless, that decision does not alter my view on whether or not I should entertain the application for the determination of the preliminary point and as a matter of urgency.
21 For the reasons given, in the exercise of my discretion, I decline to determine paragraph one of the originating motion of 11 June 2014, as a preliminary issue.
22 The plaintiffs also seek leave to appeal to the Court of Appeal of the Supreme Court of Victoria from the decision of Ball J in Opes Prime v Stevens, dismissing the plaintiffs’ application for leave under s 6(4) of the Act, to enforce their charge created by s 6(1) of the Act as against the defendants. The defendants contended that I had no such jurisdiction. The plaintiffs contended that I do.
23 In my view, where I have not decided the issues the subject of the proposed appeal, I consider it inappropriate for me to grant leave to appeal. In my view, that is a matter for the Court of Appeal.
24 I therefore refuse the application, without expressing any views as to the merits of the proposed appeal. I will otherwise adjourn the further hearing of the originating motion to a date to be fixed.
[1] [2014] NSWSC 659 (Opes Prime v Stevens).
[2] [2003] NSWCA 212 (Chubb).
[3] See Chubb, [204]; Opes Prime v Stevens, [4].
[4] [1993] 31 NSWLR 469 (Crawford).
[5] Ibid, 503-504.
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