Niceforo v Berkshire Hathaway Specialty Insurance Company
[2023] QSC 282
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- Unreported Judgment
- Niceforo v Berkshire Hathaway Specialty Insurance Company[2023] QSC 282
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Niceforo v Berkshire Hathaway Specialty Insurance Company[2023] QSC 282
Niceforo v Berkshire Hathaway Specialty Insurance Company[2023] QSC 282
SUPREME COURT OF QUEENSLAND
CITATION: | Niceforo v Berkshire Hathaway Specialty Insurance Company & Ors [2023] QSC 282 |
PARTIES: | CARLO NICEFORO (plaintiff) v INSURANCE AUSTRALIA LIMITED ACN 000 016 722 (first defendant/applicant) BERKSHIRE HATHAWAY SPECIALTY INSURANCE COMPANY ARBN 600 643 034 (second defendant) THE HOUSE OF LORDS PTY LTD ACN 104 191 086 (third defendant) MIRELLA NICEFORO (non-party objector/respondent) |
FILE NO/S: | No 3229 of 2020 |
DIVISION: | Trial Division |
PROCEEDING: | Application |
ORIGINATING COURT: | Supreme Court at Brisbane |
DELIVERED ON: | 15 December 2023 |
DELIVERED AT: | Brisbane |
HEARING DATE: | 21 June 2023 |
JUDGE: | Burns J |
ORDER: | THE ORDER OF THE COURT IS THAT:
be varied so that paragraph 4 of the Schedule of Documents in each Notice reads: “All documents created, sent, received or held by the nominated party (electronically or otherwise) in relation to or connected with credit cards, bank accounts, mortgages or other financial services held by Roberto and Mirella”.
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CATCHWORDS: | PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – DISCOVERY AND INTERROGATORIES – DISCOVERY AND INSPECTION OF DOCUMENTS – PRODUCTION AND INSPECTION OF DOCUMENTS – GENERAL MATTERS – DOCUMENTS IN POSSESSION OF NON-PARTY – where first defendant served notices of non-party disclosure – where a person affected by the notices objected to the notices – where the making of objection operated as a stay on the notices – where the first defendant applied to lift the stay imposed by the objection – whether the stay should be lifted Insurance Contracts Act 1984 (Cth), s 60 Uniform Civil Procedure Rules 1999 (Qld) r 242, r 243, r 244, r 245, r 246, r 247 Deppro Pty Ltd v Hannah [2009] 1 Qd R 1, distinguished Goldenwater LDL Pty Ltd & Ors v Kin Sun Chan & Ors [2020] QSC 358, cited Lin & Anor v Lin & Ors [2003] QSC 177, cited NSW Commissioner of Police v Tuxford & Ors [2002] NSWCA 139, cited Robson v REB Engineering Pty Ltd [1997] 2 Qd R 102, followed Southern Equities Corp Ltd (in liq) v Arthur Anderson & Co (No 5) [2001] SASC 335, cited Uthmann v Ipswich City Council [1998] 1 Qd R 435, cited |
COUNSEL: | C C Heyworth-Smith KC with M A Eade for the applicant first defendant D A Skennar KC for the non-party objector |
SOLICITORS: | Hall & Wilcox for the applicant first defendant Australian Property Lawyers for the non-party objector |
- [1]Earlier this year, the first defendant, Insurance Australia Ltd (IAL), filed notices of non-party disclosure directed to four separate financial institutions. The notices were filed pursuant r 242(1) of the Uniform Civil Procedure Rules 1999 (Qld) and later served on the recipients. However, prior to doing so,[1] IAL served a copy of the notices and the latest set of pleadings on the plaintiff’s sister, Ms Mirella Niceforo, who is a person affected by the notices within the meaning of UCPR r 244.[2]
- [2]Ms Niceforo subsequently objected on various grounds to the production of all the documents sought in the notices: UCPR r 245. By reason of UCPR r 246, the service of such an objection operates as a stay on the notices.
- [3]By this application, IAL seeks an order lifting the stay pursuant to UCPR r 247(2)(a). This was opposed by Ms Niceforo in her capacity as non-party objector. The plaintiff did not pursue a grant of leave to be heard on the application.[3]
- [4]For the following reasons, apart from the making of one minor variation to the notices, the stay will be lifted.
Background to the notices
- [5]The plaintiff is the registered owner of a property in Mareeba which was destroyed by fire on 1 February 2016. At the time of the fire, the plaintiff held a building and contents policy of insurance for the property which had been taken out with IAL on 16 December 2015.
- [6]Following the fire, the plaintiff made a claim on the policy, but it was declined on 18 August 2016. At the same time, IAL cancelled the policy under s 60 of the Insurance Contracts Act 1984 (Cth).
- [7]On 23 March 2020, the plaintiff commenced this proceeding by the filing of a claim and statement of claim.[4] He seeks damages for breach of contract, that is to say, for the refusal of IAL to indemnify him for the loss occasioned by the fire, which refusal is alleged by him to have amounted to a repudiation of the policy. The second defendant was described in argument on the hearing of the application as “something of an artefact”[5] and, the third defendant, an insurance broker, was added later and is proceeded against on different grounds. Like the plaintiff, neither of these defendants took any part on the hearing of this application.
- [8]In defence of the claim,[6] IAL alleges material non-disclosure and serious fraud on the part of the plaintiff. A convenient summary of the allegations in these respects can be found in IAL’s written submissions on the hearing:
“IAL denies that it repudiated the [policy] on the grounds that [the plaintiff] had and has no entitlement to be paid any amount under the [policy] or otherwise because (inter alia):
- [the plaintiff] fraudulently failed to comply with his duty of disclosure to IAL prior to his entry into the [policy] by failing to disclose (among other things):[7]
- a property purchased by [the plaintiff] at Mareeba in late 2007 was the subject of renovations and thereafter a dwelling on the property was destroyed by fire for which a successful insurance claim to Wesfarmers Insurance (or a related entity) was made (the Mareeba Claim). The property was then sold and $480,000 of the proceeds of the claim were paid to [the plaintiff’s] brother, Roberto Niceforo (Roberto);[8]
- a property purchased by [the plaintiff] at Ravenshoe on or about 13 January 2009 was the subject of renovations and thereafter the dwelling on the property was destroyed by fire on 11 April 2009 for which a successful insurance claim to Suncorp Metway Insurance Limited was made (the Ravenshoe Claim). The purchase price of the property was paid in part by Roberto and [Ms Niceforo], and the stamp duty and legal fees paid by ‘Niceforo Farming’. The property was then sold and the insurance proceeds (in an amount in excess of what the property was purchased for) were paid to a bank account in the name of ‘R&M Niceforo’ after the discharge of the extant mortgage to the Commonwealth Bank of Australia;[9]
- a property purchased by Roberto at Tarzali in or about December 2010 was the subject of renovations and thereafter the dwelling on the property was destroyed by fire on 27 June 2011 for which a successful insurance claim to AMP Insurance (or a related entity) was made (the Tarzali Claim). The property was then sold and the insurance proceeds (in an amount in excess of what the property was purchased for) were paid to Roberto or as he directed after the discharge of the extant mortgage over the property;[10]
- from in or about late-2012, [the plaintiff] held the intention of perpetrating a fraud on an insurer for the purposes of obtaining money, the central features of which were that he and Roberto:[11]
- would obtain a property or utilise a property registered in the name of one of them;
- would construct or cause to be constructed a building on the property;
- would place used, second hand, or discarded chattels in the building;
- would obtain a policy of insurance for building and contents with the insured sums being well in excess of the value of the building and contents; and
- would cause, enable or permit the building and contents to be destroyed by fire, so that a claim could be made on the policy so arranged;
- [the plaintiff] implemented his fraudulent intent by (amongst other things):[12]
- having Roberto and [Ms Niceforo] transfer the [subject property] to his own name for no payment or consideration in about June 2013;
- causing four houses to be transported to the [subject property];
- causing or permitting Roberto to provide funds for building works to be performed whereby all houses were raised and joined together and then renovated;
- arranging for a person or persons to attend the [subject property] on 1 February 2016 and apply an accelerant to a part or parts of the building and deliberately set fire to it … ; and
- making a claim under the [policy].” [Emphasis in original]
- [9]In his reply and answer,[13] the plaintiff denied that there was any obligation on his part to disclose the Mareeba, Ravenshoe or Tarzali claims and denied all allegations of fraud. Of particular relevance to this application, the plaintiff also alleged that:
“… the [subject property] was transferred to [Ms Niceforo] from the plaintiff’s father and mother for no consideration in or around 2006, and it was a family arrangement that the plaintiff’s parents always intended to transfer the [subject property] to the plaintiff on their death as the plaintiff’s parents had clearly expressed their wishes that all three children would receive a property or farm and the transfer of the [subject property] was the realisation of these wishes.”[14] [Emphasis added].
- [10]It is also pleaded that, prior to the transfer of the property to the plaintiff, it was held by his brother and sister “beneficially in accordance with” the family arrangement just mentioned.[15] In addition, the plaintiff denied that he caused or permitted his brother to provide funds for building works on the property because “the funds were advanced in accordance with a family arrangement where all family funds were pooled and allocated in accordance with need”.[16] Likewise, it was pleaded that the insurance claim proceeds for the fire at the Mareeba property were paid to the plaintiff’s brother “…in accordance with the family arrangement”,[17] that the Ravenshoe property was purchased by the plaintiff in part with funds advanced by his brother and sister “…pursuant to the family arrangement”,[18] that the insurance claim proceeds for the fire at the Ravenshoe property were paid to the plaintiff’s Commonwealth Bank account and then transferred to the bank account in the names of his brother and sister “in accordance with the family arrangement”,[19] that the plaintiff’s brother did not “solely or primarily”[20] control the account in the names of his brother and sister because the transfer of money between the members of the Niceforo family, including the money in that account, was “done in accordance with the family arrangement”[21] and that the insurance claim proceeds for the fire at the Tarzali property were paid to his brother or as he directed.[22]
- [11]A request for particulars regarding the meaning of the expressions, “family arrangement” and “family funds” had not, despite an order of the court, been responded to by the plaintiff by the time the application was heard.
The notices
- [12]The four notices of non-party disclosure are in substantially the same terms and were directed to the following financial institutions:
- Suncorp-Metway Limited;
- National Australia Bank Limited;
- Commonwealth Bank of Australia;
- Bendigo & Adelaide Bank Limited.
- [13]After setting out an extract of the allegations in the third further amended defence and the reply and answer in relation to which the documents sought were specified to be relevant,[23] the notices seek production of three categories of documents, as follows:
- bank statements “for all accounts operated or held by” a family partnership registered as “M Niceforo & R Niceforo” (with the registered business name, “Robert Niceforo & Mirella Niceforo”, and also known as “Niceforo Farming”) (the Partnership) or under the names of “Robert [sic] Niceforo & Mirella Niceforo” or “R & M Niceforo”;
- all documents “created, sent, received or held by” the bank “in relation to or connected with any mortgage in favour of” the bank “for which the Partnership (or Roberto and Mirella jointly) were the mortgagor(s)”;
- all documents created, sent, received or held by the bank “in relation to or connected with credit cards, bank accounts, mortgages or other financial services” held by the plaintiff’s brother or sister.
- [14]The notices sought production of any documents falling within any of these categories which came into existence between 1 May 2008 and 31 December 2016.
Should the stay be lifted?
- [15]UCPR r 242(1) permits a party, by notice of non-party disclosure, to require a person who is not a party to the proceeding to produce any document:
- directly relevant to an allegation in issue in the proceeding;
- in the possession or under the control of the respondent; and
- that could be required to be produced by the respondent at trial.
- [16]Furthermore, a party may not require production of a document if there is available to the party another reasonably simple and inexpensive way of proving the matters sought to be proved by the document: UCPR r 242(2).
- [17]By UCPR r 245(4), the recipient may object to production for any one of a number of listed (and non-exhaustive) reasons including a lack of relevance of the documents sought to the proceeding, a lack of particularity with which the documents sought are described, a claim of privilege, the confidential nature of the documents sought or the effect disclosure would have on any person.
- [18]Assuming the other pre-conditions under UCPR r 242(1) are satisfied, the touchstone of the obligation of a non-party to disclose documents to a party to a proceeding is direct relevance. A document will be “directly relevant” to an allegation in issue in the proceeding if it would “tend to prove or disprove the allegation in issue”.[24] The expression should not be taken to mean direct evidence as opposed to circumstantial evidence.[25] For example, a document may not itself prove a fact in issue but it may nonetheless supply circumstantial evidence which, taken with other evidence, tends to do so. Such documents are caught by the disclosure obligation and must be produced unless there is another valid basis for objection such as privilege.
- [19]Of course, the notice will need to be founded on a legitimate forensic purpose; plainly enough, the rule will not authorise a fishing expedition.[26] It must accordingly represent a genuine attempt to obtain evidence to support the party’s pleaded case as opposed to what might be thought to be an exercise in speculation or general intelligence gathering. In this regard, the onus is on the party seeking production to demonstrate that the documents (or categories of documents) sought are directly relevant to an allegation in issue in the proceeding.[27]
- [20]Several grounds of objection were initially advanced on behalf of Ms Niceforo, but they reduced in substance by the time of the hearing to this: first, that the notices do not comply with the requirement in UCPR r 243(1)(b) to “state the allegation in issue in the proceeding about which the document sought is directly relevant”; second, that the documents sought are not directly relevant to an allegation in issue in the proceeding; and, third, that there is another way of proving the matters sought to be proved by the documents because the plaintiff might yet disclose the documents sought from the banks.
- [21]The first objection is, of course, one of form and seeks to rely on what was said by Daubney J in Deppro Pty Ltd v Hannah[28] regarding what his Honour was informed had become something of a practice for notices of non-party disclosure to assert that the documents sought were relevant to an allegation in issue “simply by referring to numbered paragraphs in the pleadings and serving copies of those pleadings with the notice on the non-party”.[29] As to this, his Honour observed:
“Rule 243(1)(b) relevantly provides that a notice of non-party disclosure must ‘state the allegation in issue in the pleadings about which the document sought is directly relevant’. This rule is mandatory in its terms. It specifically requires the notice to state the relevant ‘allegation in issue in the pleadings’. That necessarily calls for the party issuing the notice to distil from the pleadings, and articulate in the form of a statement, the ‘allegation in issue’ about which it is said the document held by the third party is directly relevant. This requires something more than the issuing party simply referring the recipient to paragraphs in the pleadings. A non- party, on whom a notice of non-party disclosure is served, should not be put in the position of having to interpret pleadings in an attempt to divine the allegations which the issuing party contends are at issue and about which the non-party’s documents are supposed to be directly relevant.”[30]
- [22]There can be no doubting the correctness of these observations; the issuing party must do what the rules require and specify what are the allegations in issue to which the non-party’s documents are said to be relevant. But the subject notices do that. Unlike the notice considered by Daubney J where the allegations were identified by no more than paragraph numbers, here the relevant portions of the pleadings were extracted and then set out in full in the notices. There can be no better source of the allegations in issue in the proceeding than the precise wording of those allegations in the pleadings. There is no merit in this objection.
- [23]The second objection was more substantial but, on proper analysis, of no greater merit. In support of the contention that the documents sought were not directly relevant to an allegation in issue in the proceeding, counsel for Ms Niceforo made a variety of submissions focussed on what could be discerned from the pleadings about the issues in this case. That was the correct approach, however I cannot accept the resulting analysis. It was to the effect that there was no pleaded allegation of fraud in relation to the “family arrangement” or the “pooling of funds” pursuant to that arrangement and that, therefore, there was no allegation in issue concerning those matters. But those matters are in issue; they were put in issue by the plaintiff in his reply to the specific allegations of non-disclosure and fraud made in the defence. They form part of the plaintiff’s explanation for his denials and IAL is perfectly entitled to contest those denials by reference to contemporaneous documents in the hands of non-parties. To the point, the documents sought from the four banks in question are documents that will tend to prove or disprove whether there existed a family arrangement or pooling of funds as pleaded by the plaintiff. In that way, the documents go to the proof or otherwise of the allegations of non-disclosure and fraud that are central to this case.
- [24]Another submission made in support of this objection was to the effect that the only bank account referred to in the pleadings was a bank account for “R & M Niceforo” and, accordingly, the pursuit in the notices of documents relating to differently styled bank accounts was impermissible. However, that again misunderstands what is in issue. First, the allegations of non-disclosure and fraud range well beyond the transactions on merely one bank account. Second, by the reply, the plaintiff has pleaded that the Niceforo family had an arrangement whereby “all family funds were pooled and allocated in accordance with need” and that the bank account just mentioned comprised “family funds”. As such, the documents generated in connection with that bank account along with other differently styled bank accounts through which “family funds” were transacted, the transactions themselves and any communications between the various banks and members of the family will all be directly relevant to the proof or disproof of the allegations of fraud and non-disclosure on one side of the case and what is pleaded in reply as the innocent explanation – the “family arrangement” and “pooling of funds” – on the other side. Moreover, because the plaintiff has pleaded the existence of a long-term financial relationship between the members of the Niceforo family and him, the other categories of financial documents sought in the notices – that is to say, mortgage, loan and credit documents – will also be directly relevant in this sense. Indeed, to the extent that complaint was made about the “long period” covered by the notices along with their width, that has more to do with what the plaintiff has put in issue by his denial and explanation than anything else. I do not accept that the notices are fishing. They focussed on the allegations in issue and are no wider than necessary.
- [25]The last objection was to the effect that, because the plaintiff had indicated that further disclosure would be made in relation to bank records, the banks “should not be put in a position of having to disclose vast numbers of documents that might be disclosed by the plaintiff”. It was for that reason submitted that the application to lift the stay on the notices was “premature” and should be put on hold until the plaintiff has made the promised further disclosure. The evidence received on the hearing of the application was in conflict regarding the scope of this further disclosure, but that can be put to one side because the plaintiff’s disclosure obligation is of course limited to documents in his possession or control. While some of the documents sought by the notices may already be in the possession or control of the plaintiff, it seems to me after reviewing the notices that many of the documents will not. In any event, an application such as this is not to be decided on conjecture; it is to be decided on the state of affairs subsisting at the time the application is heard. Until the plaintiff makes further disclosure and the scope of that disclosure is thereby made known, it cannot be said with any level of assurance that there is another way of proving the matters sought to be proved by the documents sought by the notices. There is no substance to this ground of objection.
- [26]It follows that none of the grounds of objection can be upheld and, save for one preliminary matter, it will be ordered that the stay be lifted.
- [27]That matter concerns one of the categories of documents specified in the Schedule to each notice where reference is made to documents generated in connection with bank accounts and the like held by the plaintiff’s brother or sister. It was conceded by IAL’s counsel that this ought to have been a reference to the plaintiff’s brother and sister. It is therefore appropriate to vary each notice pursuant to UCPR r 247(2)(b) to make that change and an order will be made accordingly.
Costs
- [28]Unless the court otherwise orders, each party to an application such as this must bear the party’s own costs: UCPR r 247(3). Further, by UCPR r 247(4), the court may make a different order if, having regard to the merit of the objections, the public interest in the efficient and informed conduct of litigation and the public interest in not discouraging objections in good faith by those not a party to the litigation, it is considered that the circumstances justify it.
- [29]Having found there was no merit in any of the objections, I note that this outcome along with most of the reasons for it were foreshadowed by IAL’s solicitors in correspondence to Ms Niceforo’s solicitors on 26 May 2023. Despite that, Ms Niceforo persisted in her opposition to a lifting of the stay. An invitation to narrow the scope of the notices in an attempt to resolve the impasse in advance of the hearing also fell on deaf ears. I am cognizant of the public interest in not discouraging objections in good faith by those not a party to the litigation, but Ms Niceforo did not act reasonably. Having objected, she failed to give proper consideration to what was said, and detailed, about the problems with her objections, and that runs counter to the public interest in the efficient and informed conduct of litigation. It would be wrong for IAL to be left with the payment of its own cost of this application. Ms Niceforo will be ordered to pay those costs, to be assessed on the standard basis.
Footnotes
[1]As to which, see UCPR r 243(2).
[2]The notices were also served on the plaintiff’s brother, Roberto Niceforo, for the same reason.
[3]Transcript, 1-2.
[4]The versions current at the time the application was argued were a further amended claim and further amended statement of claim filed 13 December 2021.
[5]Ibid.
[6]The version of its pleading current at the time of the application was the third further amended defence and counterclaim filed 12 October 2022.
[7]Ibid, paras 42-44.
[8]Ibid, Schedule B.
[9]Ibid, Schedule C.
[10]Ibid, Schedule E.
[11]Ibid, para 68.
[12]Ibid, para 69.
[13]Filed on 30 January 2023.
[14]Ibid, para 69(a).
[15]Ibid, Schedule B.
[16]Ibid, para 69(d).
[17]Ibid, Schedule B.
[18]Ibid, Schedule C.
[19]Ibid.
[20]Ibid.
[21]Ibid.
[22]Ibid, Schedule E.
[23]Primarily, paragraphs 68 and 69 and Schedules B and C of the third further amended defence and paragraph 69 and Schedules B and C of the reply.
[24]Robson v REB Engineering Pty Ltd [1997] 2 Qd R 102, 105.
[25]Ibid. And see Southern Equities Corp Ltd (in liq) v Arthur Anderson & Co (No 5) [2001] SASC 335; Lin & Anor v Lin & Ors [2003] QSC 177, [44].
[26]NSW Commissioner of Police v Tuxford & Ors [2002] NSWCA 139, [27]; Goldenwater LDL Pty Ltd & Ors v Kin Sun Chan & Ors [2020] QSC 358, [33].
[27]Uthmann v Ipswich City Council [1998] 1 Qd R 435, 450.
[28][2009] 1 Qd R 1.
[29]Ibid, 11-12.
[30]Ibid, 12.