Shapcott v W.R. Berkley Insurance (Europe) Limited
[2015] QDC 102
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- Shapcott v W.R. Berkley Insurance (Europe) Limited[2015] QDC 102
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Shapcott v W.R. Berkley Insurance (Europe) Limited[2015] QDC 102
Shapcott v W.R. Berkley Insurance (Europe) Limited[2015] QDC 102
DISTRICT COURT OF QUEENSLAND
CITATION: | Shapcott v W.R. Berkley Insurance (Europe) Limited & Anor [2015] QDC 102 |
PARTIES: | RAYMOND JOHN SHAPCOTT (applicant) v W. R. BERKLEY INSURANCE (EUROPE) LIMITED (ABN81126483681) (TRADING AS W. R. BERKLEY INSURANCE (AUSTRALIA)) (first respondent) and PAUL CAMAC (second respondent) |
FILE NO: | 1323/15 |
DIVISION: | Civil |
PROCEEDING: | Originating Application |
ORIGINATING COURT: | District Court, Brisbane |
DELIVERED ON: | 12 May 2015 |
DELIVERED AT: | Brisbane |
HEARING DATE: | 30 April 2015 |
JUDGE: | Dorney QC DCJ |
ORDERS: |
|
CATCHWORDS: | Personal injuries legislation – pre-court procedures – application for leave – whether “indemnity” includes insurance indemnity for contribution notice |
LEGISLATION CITED: | Acts Interpretation Act 1954, s 14A(1) Civil Proceedings Act 2011, s 7 Insurance Contracts Act 1984 (Cth), s 13, s 74 Limitation of Actions Act 1974, s 31 Personal Injuries Proceedings Act 2002, s 4(1), s 4(2), s 6(2)(b), s 9(2)(b)(ii), s 9(7), s 11(1), s 11(2), s 11(3), s 12(1), s 14, s 16(1), s 16(1)(a), s 16(2), s 17, s 25, s 27, s 27(1)(b)(ii), s 29, s 67(5)(e) Uniform Civil Procedure Rules 1999, r 5, r 8(2), r 32, r 209, 209(1)(c), r 390(b), r 430(2), r 554(1) WorkCover Queensland Act 1996 |
CASES CITED: | Fearnley v Finlay [2014] 2 Qd R 392 Prepaid Services v Atra Dius Credit Insurance [2013] NSWSC 608 Ridley Agriproducts Pty Ltd v CMAS Consulting Pty Ltd [2003] QDC 284 |
COUNSEL: | J Morris SC for the Applicant R S Ashton for the First and Second Respondents |
SOLICITORS: | Hayes Gabriel Lawyers for the Applicant Moray & Agnew Lawyers for the First and Second Respondents |
Introduction
- [1]The Originating Application filed 1 April 2015 raises the hitherto unresolved issue of whether the pre-court procedures detailed by the Personal Injuries Proceeding Act 2002 (“PIPA”) have an ambit that binds the legal entity that is a purported professional indemnity insurer of an identified “respondent” such that the insurer itself also can be made a “contributor”. It also seeks consequential directions.
- [2]The applicant has been the subject of a written notice of a claim, by a Mr Gary Michael, pursuant to PIPA. The second respondent, Mr Camac, is also the subject of a claim by the same claimant. In the most general of terms, those claims are for personal injury resulting from suffering a vertebral artery dissection and brain infarcts after massage and Atlas Profilax treatment. While there is dispute about whether the “therapy” performed on the claimant by the applicant was a massage or spinal manipulation, it is common ground that there was some evidence:
- that the claimant on 7 September 2014 sought massage treatment from the second respondent;
- that the second respondent was a massage therapist and operated from business premises in Nambour;
- that the second respondent had held himself out, at least by an issued business card of his, as providing “Atlas Profilax” treatment;
- that the second respondent initially treated the claimant with soft tissue massage and referred him to the applicant for treatment with the Atlas Profilax;
- that the date set by the second respondent for the Atlas Profilax treatment, to take place at the second respondent’s premises, was 24 November 2011;
- that the claimant attended on 24 November 2011 at the second respondent’s premises and was provided with Atlas Profilax treatment by the applicant; and
- that there is a dispute as to whether the claimant’s symptoms may have been caused other than by the Atlas Profilax treatment.
- [3]There are many disputes, also, about the relationship between the applicant and the second respondent, particularly as to matters which bear upon insurance cover.
- [4]It is not disputed that the second respondent held a professional indemnity policy of insurance with Marsh Pty Ltd, underwritten by the first respondent. The “terms” of the policy are before the Court only as stated by the first respondent in its letter to the applicant dated 11 September 2014 (at paragraphs 10 to 12, inclusive).
- [5]The applicant has no relevant policy of insurance for which he is the “named” insured.
- [6]It is unnecessary to canvass the background facts relating to the “injury” any further for the purposes of determining this application.
Status of claim
- [7]The claimant issued a Notice of Claim against the applicant which, though dated 11 July 2013, was not served until November 2013.
- [8]On 12 March 2014, the applicant accepted that that Notice of Claim was compliant (although it was served out of time).
- [9]Also, on 12 March 2014, the applicant issued a Contribution Notice to the second respondent (also pursuant to PIPA).
- [10]Sometime before 7 April 2014, the first respondent exercised its rights of subrogation with respect to the second respondent, retaining solicitors (Moray & Agnew) to act. By letter of those solicitors dated 16 April 2014 the second respondent denied the applicant’s claim for contribution against him.
- [11]In about July 2014, the applicant sought legal advice from counsel.
- [12]On 12 August 2014, the applicant sent an incident form, dated 8 August 2014, to Marsh Pty Ltd seeking to make a claim as an insured.
- [13]On 11 September 2014, the first respondent declined the applicant’s claim for indemnity. There was then a significant exchange of correspondence between the applicant’s solicitors (Hayes Gabriel) and the first respondent (and its solicitors).
- [14]The claimant then issued a Notice of Claim against the second respondent on 11 November 2014. The second respondent accepted that he was a proper respondent to the claim and that the claim was compliant with PIPA.
- [15]The first respondent then assumed conduct of the claim on behalf of the second respondent under its rights of subrogation.
- [16]On 13 November 2014, the first respondent, through its solicitors, on behalf of the second respondent, consented to the extension of time for the filing of the Notice by the claimant against the second respondent.
- [17]On 25 February 2015, the claimant’s solicitors (Shine Lawyers) consented to the issue of a Contribution Notice by the applicant against the first respondent. But that Notice, dated 16 February 2015, was “not consent(ed) to” by the first respondent, by its solicitors’ letter of 3 March 2015.
- [18]Further debate, by correspondence, followed, and thereafter, as already noted, this application was filed on 1 April 2015.
Relevant legislation
- [19]Section 4(1) of PIPA states that the main purpose of the Act is to assist the ongoing affordability of insurance through appropriate and sustainable awards of damages for personal injury. From that, s 4(2) states that that main purpose is to be achieved, generally, by a number of matters which, relevantly, include:
- providing a procedure for the speedy resolution of claims for damages for personal injury to which PIPA applies;
- promoting settlement of claims at an early stage wherever possible;
- ensuring that a person may not start a proceeding in a court based on a claim without being fully prepared for resolution of the claim by settlement or trial;
- putting reasonable limits on awards of damages based on claims; and
- minimising the costs of claims.
- [20]Before turning to the provisions directly applicable, the provisions of PIPA which refer to insurance have been identified by the first respondent as follows:
- s 9(2)(b)(ii);
- s 11(3);
- s 27(1)(b)(ii); and
- s 67(5)(e).
- [21]The pivotal section of PIPA for this application is s 16(1)(a), with leave being dealt with by s 16(2). Relevantly, s 16(1)(a) states that a respondent (such as the applicant here) who receives a complying Part 1 notice of claim may, within the time prescribed under a regulation, add “someone else” as “a contributor” for the purpose of the pre‑court procedures by giving that person a written notice (“contribution notice”) “claiming an indemnity from” the respondent’s “liability”.
- [22]As for s 16(2) of PIPA, it is common ground that the time prescribed under s 8 of the relevant Regulations has ended and therefore the “court’s leave” is required.
Relevant issues
- [23]Although many issues were canvassed, the pivotal one is (as mentioned) whether the relevant circumstances here engage s 16(1) of PIPA so as to make the first respondent a “contributor”.
- [24]Accordingly, I will deal with this issue first. Then, to the extent necessary, I will canvass the remaining issues.
“Contributor”?
- [25]Focusing on the meaning of “indemnity” in s 16(1)(a), the applicant relied, for elucidation, on Ridley Agriproducts Pty Ltd v CMAS Consulting Pty Ltd.[1] That decision involved, also, an application to join a contributor. The facts concerned a claimant who suffered personal injury while working at the premises of the applicant in July 1999 and who was employed by the respondent, a labour hire agency, on the day of the incident, pursuant to a labour hire agreement between the applicant and the respondent: at [2]. A potential distinguishing feature was the interplay between PIPA and WorkCover Queensland Act 1996 and whether concurrent actions could be maintained where s 6(2)(b) of PIPA provided that it did not apply to injuries as defined under the other Act. Another potential distinguishing feature was that the respondent to the application was alleged to be a concurrent tortfeasor, and not an insurer. It was, therefore, in that context that Shanahan DCJ held that the fact that the ground of liability sought to be established against the respondent as a contributor was “in relation to a breach of contract” was “irrelevant to the right of the applicant to add a contributor” under the PIPA “scheme”: at [28]. He added that s 16 of PIPA does not confine the ability to add, or seek leave to add, a contributor to circumstances where the grounds on which the proposed contributor is said to be liable must be in relation to a claim for personal injury: at [28]. He further held that, while the primary action under PIPA must relate to personal injury, s 16 “does not confine potential contributors to only those against whom a claim in relation to personal injury can be made”: at [28].
- [26]My attention was not drawn to any other case in which a consideration of the ambit of “indemnity” was considered – for instance, it was not an “issue” in Interpacific Resorts (Australia) Pty Ltd v Austar Entertainment Pty Ltd[2] – which would bear upon determining the proper interpretation of it in this context. The second respondent’s contention was that the absence in PIPA of relevant references to insurance (whether it be to an “insurer” or any other reference) means that the context in which “indemnity” is used in s 16(1)(a) is one which, however extensive its width might be otherwise, does not include a claim for indemnity under an insurance policy. At least at first reading, there can be no doubt from, for example, s 11(3) that PIPA explicitly acknowledges that an insurer who has a “relevant insurance policy” can “indemnify” a person under such a policy. Necessarily, it is in the further context, though, that s 11(2) states that the person does not “breach” a term or condition of “any relevant insurance policy” only because the person gives notice under s 11(1).
- [27]Furthermore, s 27(1)(b)(ii) of PIPA refers to a “respondent” that “is an insurer of a person for the claim”. That, of necessity, may be able to be confined to a respondent/insurer who admits such liability, if only because the obligation lies on such an insurer to find out information “from” the insured person for the claim about the circumstances of, or the reasons for, the incident. But, of itself, it does not give rise to a “clear presumption” that all indemnity references ought to be limited to those where that “has been granted”. Any apparent anomaly that an absence of disclosure rules (apart from personal injury concerns) might pose can be addressed by postulating that the same absence affects “indemnifiers” that are not such insurers as the first respondent, equally, should they also deny any right to indemnification.
- [28]It is also relevant that the Schedule defines “respondent” as a respondent either under s 12(1) or an entity that is added under s 14.
- [29]The obligations under s 17 of PIPA which are placed upon a contributor add little to the sum of understanding of whether an insurer of the present kind can be a contributor.
- [30]Before turning to the principles governing interpretation, it should be noted that the Schedule defines:
- “insured” as including “indemnified”;
- “insured person”, in relation to a claim, as meaning a person who is insured or “purportedly” insured against the claim; and
- “insurer” of a person in relation to a claim, as meaning the insurer or other entity providing or “purportedly” providing the person cover or “an indemnity against” the claim.
- [31]Recently, the Court of Appeal in Fearnley v Finlay,[3] with Jackson J speaking for the Court, reiterated that the method of the modern law of statutory interpretation requires that the task of statutory construction must begin with a consideration of the text itself and “so must the task of statutory construction end”, whilst not also forgetting that the modern approach to statutory interpretation insists that the context be considered in the first instance, not merely at some later stage when ambiguity might be thought to arise: at 397 [17], citing numerous High Court cases.
- [32]Further, when considering the purpose of the legislation, Jackson J referred to s 14A(1) the Acts Interpretation Act 1954, noting that purpose and intention are objective concepts and that the purpose of a statute is not something which exists outside the statute, though acknowledging that appropriate reference could be had to extrinsic materials: at 398 [26].
- [33]Given the first respondent’s approach to this proceeding as articulated by its counsel (particularly in oral submissions), while its adamant assertion that it does not intend to indemnify the applicant may be suggested to be contrary to the factors identified for the achievement of the main purpose of PIPA [in s 4(2)], nevertheless, the final determination must depend upon whether the pre-court procedures do have the purpose of including an insurer such as the first respondent here in the relevant negotiations directed to settlement. Submissions about potential bankruptcy of the second respondent (where indemnity has already been extended to him) and about acts engaged in in “conciliation” discussions potentially leading to prejudice by a possibly imprudent “insured” are interesting but are distractions to the interpretative process.
- [34]Acknowledging that this is a question about which reasonable minds can differ, I nevertheless conclude that, for the following reasons, the reference to “indemnity” in s 16(1)(a) of PIPA can include an indemnity under an insurance policy:
- an insurer can be a “respondent”;
- a respondent can join a “contributor” who, or that, can be an entity from whom, or which, an indemnity from liability can be claimed;
- the methods by which a main purpose of PIPA can be achieved – appropriate, speedy and early resolution – support the concept of all relevant entities having arguable “liability” being made part of the “pre-court procedures”;
- the meaning of “indemnity” in other parts of PIPA, besides s 16(1)(a), is consonant with insurance indemnity; and
- thus, the text of s 16(1)(a), in context, and upon understanding purpose, supports a wider meaning than indemnity as a joint or concurrent tortfeasor (whether in tort or pursuant to a concurrent obligation under contract) or as a purely contractual indemnifier (outside insurance).
Requirements for grant of leave
- [35]In Interpacific, Fryberg J considered issues which he identified as those which “generally seemed to bear on the question” of whether relevant leave under s 16(2) of PIPA should be given. It is not in dispute that those involve:
- questions of prejudice;
- whether there is an adequate explanation for the delay;
- “at a reasonably superficial level”, the merits of the claim; and
- the utility of the proposed course;
: at 25.
- [36]The applicant contended that those questions were not exclusive and stated that other considerations should include:
- whether the failure to exercise the discretion in an applicant’s favour would frustrate the objectives of PIPA and the Uniform Civil Procedure Rules 1999 (“UCPR”);
- whether there are common factual matters in the separate disputes identified;
- whether the failure to consent to the extension of time to issue a Notice under PIPA is “well-founded” or whether the refusal to consent “is overly technical”; and
- whether such a failure to exercise the discretion breaches the overall objectives of the UCPR, PIPA or the Civil Proceedings Act 2011 (“CPA”).
- [37]I will deal with those particular matters seriatim.
Prejudice
- [38]While the applicant contended that there was no evidence of prejudice, the respondents in their written submissions referred to a wish to avoid: the time and expense of an unmeritorious claim; an unnecessary burden upon the second respondent; an adverse effect on the Australian Traditional Medicine Society (“ATMS”) Scheme under which the second respondent was insured; and delay in handling the claim.
- [39]There was nothing in the oral submissions of the respondents that adds anything of moment to that. The fact that there might be price implications for other members of the ATMS Scheme is an inevitable by-product of contested insurance cover, which might have more traction if the applicant’s claim had been significantly “unmeritorious”.
- [40]The matters identified by the respondents, while consonant with the reasoning of Fryberg J (at 26), do not outweigh the absence of any prejudice such as the loss of evidence or the imbalance of the time which has already elapsed as against overall delay. Thus, relevant prejudice is not a significant factor here.
Adequate explanation
- [41]The applicant has pointed to several specific reasons for the delay. Importantly, he contended that the delay should be assessed from 12 March 2014 (being the time when the claimant’s solicitors were informed that the applicant accepted the claimant’s Notice of Claim as compliant, particularly where, immediately, a Contribution Notice was sent to the second respondent). Additional grounds were: that the applicant is and was uninsured; that this is a “complex” medical negligence claim; that the insurance issue was “not immediately apparent”; and that, subsequent to advice being sought from counsel, an insurance claim was lodged with the first respondent on 12 August 2014 (being five months only from the claim of the claimant “crystallising”). A detailed explanation was contended to be set out in the letter of the applicant’s solicitors, Hayes Gabriel, dated 31 March 2015.
- [42]The respondents’ contention was that there has been a delay of 17 months since the applicant first received the claimant’s Notice of Claim and not less than 8 months since the identification of the first respondent as a possible contributor.
- [43]Particularly in the context where the respondents accepted that it was unnecessary to call a solicitor from the applicant’s solicitors’ firm with respect to delay and especially where the first respondent engaged with the applicant (in person and by solicitors) in a lengthy exchange of correspondence which only gradually illuminated the particulars of the insurance contest, I determine that the delay has been adequately explained.
Merits of the claim
- [44]Accepting that the appropriate level is one of reasonable superficiality – which is little different from the test applicable under an extension of time application by a claimant under s 31 of the Limitation of Actions Act 1974 – I do not conclude that, in Fryberg J’s terms, the applicant’s case here is “on its face demonstrably weak”: at 25.
- [45]The identified aspects of this question which are maintained by the respondents rely upon the detailed analysis of what can be discerned from the correspondence between the applicant (and his solicitors) and the first respondent (and its solicitors), as well as absence of any sworn evidence by the applicant himself.
- [46]The way in which the applicant’s responses evolved in the correspondence between him (and his solicitors) and the first respondent (and its solicitors) does not present cogent evidence that the applicant does lack probative evidence to support an argument for a valid claim under the first respondent’s relevant policy. To the extent that any deficiency is identified in the absence of a full and complete observance of any “information and belief” deposition, it should be noted that, pursuant to r 390(b) of the UCPR, evidence in a proceeding started by application may “only” be given by affidavit, subject to the UCPR or a direction by the court. It is observed, though, that r 430(2) does provide that an affidavit for use in an application, other than final relief, may contain statements based on information or belief if the person making it states the sources of information and the grounds for the belief.
- [47]In circumstances where no objection was taken to the non-compliance with the UCPR concerning information and belief, and where so much of the substance of the assertions, from both sides, relied upon matters stated in letter form, while I agree with the observations by Fryberg J in Interpacific – though from a different angle – about potential difficulties with evidence at trial (at 25), there is sufficient evidence here to be satisfied, at that “reasonably superficial level”, that the applicant does have arguable merit in his claim against the first respondent. Even though it is true that the Contribution Notice served on 16 February 2015 is “not evidence of the truth of the assertions”, it does contain a significant level of detail. Additionally, the second respondent’s own clinical notes and document regarding the claimant provides some “affirmation” about the nature of the relationship underlying a potential third party extension of the insurance cover.
Utility
- [48]The applicant contended that there is no utility in refusing leave to permit the notice of contribution to be given out of time. In particular, the applicant submitted that the requirements of the UCPR and the CPA require all matters arising from the same facts, matters and circumstances to be determined at the one time to avoid undue expense, delay and resolution of all matters in dispute in one proceeding.
- [49]Furthermore, the applicant contended that the utility in granting leave would be: to permit all relevant parties to make proper investigations; to inform themselves of prespective strengths and weaknesses; to give the parties the capacity to attempt to achieve resolution by a compulsory conference; and to facilitate the capacity of the parties to exchange mandatory final offers. In addition, the applicant contended that the applicant is in no financial position to proceed to defend the claim brought by the claimant without the first respondent being present.
- [50]In response, the respondents submitted that any argument for utility based upon a requirement for the first respondent to disclose a copy of the insurance policy is misconceived, referring, in particular, to s 29 of PIPA with its limited scope of disclosure. It added that what “will” occur is that the first respondent will maintain its present position, that the applicant will be conducting two actions (one as a respondent in the personal injuries claim and the other as a plaintiff in the insurance contract claim) and that the latter claim “will act as a clog” on the former.
- [51]After considering those points, I conclude that there is utility in enabling all relevant parties to become appraised of all relevant information concerning the claimant’s claims and enabling at least some negotiation to take place in which the original claimant is also appraised of all likely arguments presented by the first respondent in its denial of a liability to indemnify the applicant.
Other factors
- [52]I will deal, in turn, with a summarised set of the additional factors raised by the applicant.
- [53]I doubt whether the mere failure of the Court to accede to the application here would, apart from the matters already canvased, frustrate the objectives of PIPA and the UCPR, where particularised matters such as UCPR r 5 and the CPA s 7 have quite limited operation in such statute directed pre-court procedures.
- [54]As for common factual issues in the separate disputes, they have been brought into account in the overall general consideration of the questions already canvased.
- [55]Finally, with respect to whether a failure, or refusal, by the first respondent to consent to an extension of time is “well-founded”, or “overly technical”, the arguments presented by the respondents are arguments that they are legally entitled to advance and to have considered.
Outcome
- [56]I accept, in an overall sense at least, the persuasive effect of the summation of his case in the applicant’s written submissions (namely, that the delay was not unreasonable, that there has been an adequate explanation for delay, that the applicant’s case is clearly arguable, that there is no demonstrated prejudice of a kind which would outweigh the other positive factors and that there is no particular utility in refusing leave).
- [57]Thus, I intend to order that leave be granted pursuant to s 16(2) of PIPA.
Obligation to disclose
- [58]The disclosure provisions in the UCPR do not apply to this application where there has been no direction by this Court pursuant to r 209(1)(c) that Part 1 of Chapter 7 applies to this application. No relevant application was made to the Court pursuant to that rule in the Originating Application brought pursuant to r 8(2). Since the relevant provisions of PIPA contain their own disclosure requirements for procedures preceding court pleadings (see, for instance s 29), even though r 209 was, incidentally, referred to in the applicant’s written submissions, I decline to make such an order pursuant to r 32.
- [59]It is also difficult to see how r 554(1) of the UCPR applies in this circumstance, particularly where this matter is still part of a pre-court procedure.
- [60]As for legislative provisions such those in the Insurance Contracts Act 1984 (Cth), this is not a timely, appropriate forum to decide such questions, especially where there is significant dispute about the ambit of coverage (in how the insurance policy engages, if at all, the applicant’s particular circumstances). This has particular resonance where s 74 of the ICA does not extend to cover a third party beneficiary, whether purported or otherwise. As for s 13 (with or without assistance from s 20), there is merit in the respondents’ assertion that the issue of “want of good faith” does depend not upon whether, at a “reasonably superficial level”, there is merit in the claim for indemnity but upon proof on the preponderance of probabilities: see Prepaid Services v Atra Dius Credit Insurance,[4] at [90]. These questions are premature and are best dealt with in a proceeding where there is specific engagement of them by pleaded allegations.
- [61]The conclusion I reach, therefore, is that any such issue of disclosure is an issue dependant on what occurs in the future with respect to obligations imposed upon relevant legal entities by PIPA: see, for example, under s 35 of PIPA.
Orders
- [62]The applicant has not successfully identified the source of power by which a medical examination can be ordered to be “arranged” by the second respondent on his application, either pursuant to PIPA or by any other accessible power. Certainly s 25 of PIPA does not provide the answer. Accordingly, the only order that I intend to make, besides costs, is one that gives leave to the applicant to add the first respondent as a contributor, despite the time prescribed under s 16(1) having “ended”. As for costs, given the “out of time” indulgence accorded to the applicant and the dismissal of the orders sought for consequential directions, I intend (subject to being persuaded otherwise by written submissions) to order that they be paid by the applicant to the respondents.