CATCHWORDS
PRACTICE AND PROCEDURE - motion for stay - application for indemnity for legal expenses in Australian Capital Territory Supreme Court proceedings - applicant a medical practitioner - whether indemnity promised by respondent extends to the Supreme Court proceedings - whether stay should be granted pending determination of the Supreme Court proceedings.
Medical Defence Union Ltd v. Department of Trade [1980] Ch 82
ARNOLD MANN v THE MEDICAL DEFENCE UNION LIMITED VG 131 of 1995
COURT: Sundberg J
PLACE: Melbourne
DATE: 24 July 1995
IN THE FEDERAL COURT OF AUSTRALIA )
VICTORIA DISTRICT REGISTRY ) No VG 131 of 1995
GENERAL DIVISION )
BETWEEN: ARNOLD MANN
Applicant
AND: THE MEDICAL DEFENCE UNION LIMITED
Respondent
COURT: Sundberg J
DATE: 24 July 1995
PLACE: Melbourne
MINUTES OF ORDER
The Court orders that:
1. The Respondent's motion notice of which was dated 22 June 1995 be refused.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA )
VICTORIA DISTRICT REGISTRY ) No VG 131 of 1995
GENERAL DIVISION )
BETWEEN: ARNOLD MANN
Applicant
AND: THE MEDICAL DEFENCE UNION LIMITED
Respondent
COURT: Sundberg J
DATE: 24 July 1995
PLACE: Melbourne
REASONS FOR JUDGMENT
SUNDBERG J:
These reasons relate to a motion by the Respondent in the proceeding notice of which was given on 22 June 1995.
The Applicant is a medical practitioner. He claims that at all material times he was a member of the Respondent ("MDU") which "held itself out as prepared to indemnify its members for legal costs and to pay claimants where the latter were successful in a manner essentially similar to but much more comprehensive than indemnity insurance provided by insurance companies through professional indemnity policies ...". The Applicant has been refused indemnity in relation to two proceedings in the Supreme Court of the Australian Capital Territory. The first, which began in 1990, was a proceeding for an injunction against the Territory Board of Health in which the
Applicant successfully obtained what I assume was an interlocutory injunction restraining Board from suspending him from practice. The second, which began in 1991, is also against the Board for damages for breach of contract and libel. I have not seen any court documents relating to either proceeding. All I know is what is asserted in the Applicant's Statement of Claim. In paragraph 13 the Applicant pleads:
On the proper construction of the applicant's contract the MDU was obliged to pay for all reasonable legal costs incurred by the applicant in obtaining injunctions in 1990 and (as plaintiff) in his breach of contract cum libel suit in relation to the non renewal of his fee-for-service contract in March 1991, and to pay the costs of successful defendants should the applicant prove unsuccessful.
The Applicant then pleads that MDU's failure to provide him with financial support in relation to the proceedings was a breach of contract which he says has caused him financial loss and the probability of future loss. He then makes a claim under s.52 of the Trade Practices Act 1974 based on representations that MDU is said to have made to the effect that if members paid their subscriptions on time they "could expect to be provided cover for legal costs ...". These representations are alleged to have constituted misleading and deceptive conduct on MDU's part which has caused damage to the Applicant and will probably cause him further loss in the future.
In his Further Amended Application the Applicant claims, amongst other things, payment of all reasonable legal costs incurred to date in relation to the 1990 proceeding, payment of all reasonable legal costs relating to the 1991 case until trial, damages pursuant to s.82 of the Act, and a declaration that MDU is obliged to consider the Applicant's request for assistance fairly and without discrimination.
In its Defence MDU admits that "at all material times it provided to its members assistance and indemnities in accordance with its memorandum and articles which provided that the granting of assistance and indemnity was in the absolute discretion of its Board of Management and any person or committee authorised by the Board to decide on its behalf". MDU relies on other defences that I need not describe.
MDU has applied for an order that "the further preparation and hearing of this proceeding be adjourned until such time as there has been a final determination and final orders as to costs" in both proceedings. The basis of the application is that whether MDU is in breach of its contract depends on whether it has improperly exercised its discretion to refuse indemnity. It will not be possible to determine that question until the litigation is complete and MDU knows how the case was run and whether it is proper to grant an indemnity. MDU says that it is embarrassed because it knows nothing about the legal merits of the two cases. And it says that the Court will be embarrassed because it will have to make a prediction about the merits of the 1991 case in order to determine whether there has been a breach of contract and in order to assess damages, if the Applicant is otherwise successful. In short, says MDU, the nature of the Application is such that it cannot be heard until the conclusion of the two Australian Capital Territory proceedings.
I have some sympathy for
MDU's position. The Applicant is not
legally assisted, and his Application and Statement of Claim do not expose in a
clear fashion what I suspect are his real grievances. Nor do I think the relief he seeks is
expressed in a way that will provide him with what he really needs. Whether I should grant the stay sought by MDU
is of course a matter for my discretion, and having considered all the
circumstances,
including the fact that the Applicant is acting for himself, I have decided not
to accede to MDU's application. It
emerged during the course of argument that the 1990 action is effectively dead. The Applicant obtained the interlocutory
injunction he sought, and he says that the expense of determining any costs to
which he may be entitled does not justify pursuing them. So the matters which MDU says it needs to
know before it can exercise its discretion, and the matters it says the Court
needs to know in order to determine breach and to assess damages, have all
occurred. MDU is thus in no difficulty
on account of "futurity" or the incompleteness of the litigation.
The position with the 1991 action is admittedly more difficult. But I do not accept that the discretion MDU has as to whether to grant an indemnity enables it to force a member to fight an action from beginning to end before MDU is obliged to make up its mind as to whether to indemnify. That is what MDU's contention amounts to - until MDU knows how the case was conducted it cannot exercise its discretion. MDU's memorandum and articles were not before me, but both parties referred to the decision of Sir Robert Megarry V.C. in Medical Defence Union Ltd v. Department of Trade [1980] Ch.82. I was told that the Articles considered in that case were the same as those relevant to the present Application. Articles 43 and 44, which are set out on pages 90 and 91 of the report, do not seem to me to contemplate that MDU is not obliged to determine its position until the litigation is at an end. Accordingly I do not think MDU has made out a case for a stay until the 1991 action is complete.
The relief sought in the Notice of Motion is refused.
I certify that this and the preceding 4 pages are a true copy of the reasons for judgment of the Honourable Justice Sundberg
.............................................................
Associate
24 July 1995
The Applicant appeared in person.
Counsel for the Respondent: P R M Jones
Solicitors for the Respondent: Tress Cocks & Maddox
Date of Hearing: 13 July 1995
Place of Hearing: Melbourne
Date of Judgment: 24 July 1995
