FEDERAL COURT OF AUSTRALIA

Permanent Custodians Limited v ARMA Pty Limited (No 2)

[2006] FCA 847

INSURANCE – professional indemnity – relief by way of joinder of additional parties consequential to earlier reasons and orders

Law Reform (Miscellaneous Provisions) Act 1946 (NSW) s 6

Permanent Custodians Limited v ARMA Pty Limited [2006] FCA 640 applied

PERMANENT CUSTODIANS LIMITED v ARMA PTY LIMITED AND NEIL TEVES

NSD 1758 OF 2004

CONTI J

4 JULY 2006

SYDNEY

THE COURT ORDERS THAT:

1.         Leave be granted to the applicant Permanent Custodians Limited to join Macquarie Underwriting Pty Limited and SVB Syndicates Ltd as additional respondents to the proceedings.

2.         Costs of application be reserved.

3.         Liberty to either party to apply on seven (7) days’ previous written notice to the other.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

REASONS FOR JUDGMENT FOR GRANT OF INTERLOCUTORY ORDERS

1                     On 29 May 2006 I provided reasons for judgment in relation to the application of Permanent Custodians Limited for the joinder of Macquarie Underwriting Pty Limited (‘Macquarie’) and SVB Syndicates Ltd (‘SVB’) as additional respondents to the present proceedings, pursuant to s 6 of the Law Reform (Miscellaneous Provisions) Act 1946 (NSW) (‘LR Act’), and made the following interim orders:

‘1.        The making of final orders in the subject interlocutory proceedings for joinder of Macquarie Underwriting Pty Limited and/or SVB Syndicates Ltd be stood over for 21 days with liberty to apply in the meantime on two days notice.

2.         The applicant to provide to Macquarie Underwriting Pty Limited and SVB Syndicates Ltd at their address for service in Australia within seven days the text of the orders it proposes for the purpose of giving effect to the reasons for judgment, including orders as to costs of the subject interlocutory proceedings, and in relation to the matter of costs supported by reasons in writing. 

3.         Macquarie Underwriting Pty Limited and SVB Syndicates Ltd respond in writing within a further seven days.’

2                     I will adopt in these reasons the same abbreviated expressions as appear in those primary reasons for judgment.

3                     Subsequently on 20 June 2006, two issues were further debated by the parties arising directly or indirectly out of matters recorded in those reasons, one being the circumstance that according to Australian Securities & Investment Commission (‘ASIC’) records, Mr Teves was not formally disclosed as a director of ARMA in relation to the period from July 2001 to July 2004, notwithstanding that he had been earlier recorded as a director of ARMA since 15 December 1988, and ARMA bears all the indicia implicitly of a private family company.  His wife, Vivienne Teves (‘Mrs Teves’), was recorded by ASIC as having been a director at least during that controversial period of three years, though she was apparently replaced by Mr Teves at the time of his re-appointment subsequently in July 2004.  Mrs Teves had been in fact recorded in ASIC’s records as a director of ARMA as early as 22 October 1990, and as remaining thus continuously in that office at all material times thereafter.  Despite apparent attempts made by PCL’s solicitors to obtain copies of ARMA’s corporate returns and other documents filed with the Commission, no further official records have been further obtained by PCL’s solicitors in relation to Mr Teves’ formal appointments to any office in relation to ARMA during that interval of time.  Nevertheless there was admitted on the pleadings by ARMA the circumstance that Mr Teves was a registered valuer who had undertaken valuations on behalf of ARMA ‘at all material times’.  As I recorded at [7] of my earlier reasons for judgment, Mr Teves apparently signed the valuations on behalf of ARMA which are presently in issue, by implication as author thereof. 

4                     Following the handing down of my reasons for judgment of 29 May 2006, counsel for ARMA further addressed issues as to the construction of the indemnity provisions of the policies, and in particular those of the first (or earlier) policy, during the term of which, or proximately so as above indicated, Mr Teves’ name did not appear as a director of ARMA in ASIC records.  It was submitted by ARMA that the relevant indemnity provisions of that first policy could not conceivably be construed as having a conjunctive operation, contrary to the submission of senior counsel for PCL; see in that regard what I have recorded in [41]-[42] of my earlier reasons for judgment of 29 May 2006.  However I remain of the view that in the particular complexity of the controversial circumstances of this case which have already emerged at the interlocutory stages to date, I should not finally resolve that issue of construction raised by the now respondent insurers.  It is I think more appropriate to do so at a time when all construction issues conceivably arising can be resolved, and hence all documentary records are available for tender at least in that context, and also when any available oral testimony conceivably bearing upon at least those issues can be considered by the Court. 

5                     I am therefore of the view that on the somewhat elusive if not confused state of the evidence presently available (being evidence which may conceivably assist also to resolve outstanding issues as to construction of the first and second policies), leave to join Macquarie and SVB as respondent insurance underwriters together in the subject proceedings may now be formally implemented, Macquarie of course in its capacity as originally disclosed agent for then undisclosed principals.  The subject proceedings reflect the practical difficulties facing applicants for relief against undisclosed principal insurers, against whom there exists prima facie entitlement to indemnity pursuant to s 6 of the LR Act. 

6                     In the light of the complexity of the issues which have already arisen, the unresolved subject as to the costs of the interlocutory proceedings to date will remain reserved by the Court until further order.  I perceive that there is further evidence yet to emerge from third party sources in particular, at or before the final hearing of the proceedings, which will throw more light on the contextual circumstances concerning the underwriting of the subject policies for the successive years of indemnity of potential relevance.  I have accordingly made what seem to me to be appropriate orders in conformity with my reasons of 29 May 2006 and of today, including an order that the costs of the interlocutory proceedings to date be reserved. 

Associate:

Dated:              4 July 2006