FEDERAL COURT OF AUSTRALIA Wakim v HIH Casualty & General Insurance Ltd [2001] FCA 1601 GEORGE WAKIM v HIH CASUALTY & GENERAL INSURANCE LIMITED N 281 OF 2001 LINDGREN J 5 NOVEMBER 2001 SYDNEY IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY N 281 OF 2001 BETWEEN: GEORGE WAKIM APPLICANT AND: HIH CASUALTY & GENERAL INSURANCE LIMITED (PROVISIONAL LIQUIDATORS APPOINTED) RESPONDENT JUDGE: LINDGREN J DATE OF ORDER: 5 NOVEMBER 2001 WHERE MADE: SYDNEY THE COURT ORDERS THAT: 1. The application be adjourned to 4 December 2001 at 9.30 am for directions. 2. The applicant pay the respondent's costs thrown away by the adjournment. 3. Liberty be reserved to the respondent to apply in the following respects: (a) for an order that the costs thrown away should include the costs of preparation for the hearing today; (b) for an order under Order 62 subrule 3(3) that the respondent be entitled to have its costs taxed prior to conclusion of this proceeding; (c) for an order that the applicant not be at liberty to have a final hearing until the costs as taxed are paid. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY N 281 OF 2001 BETWEEN: GEORGE WAKIM APPLICANT AND: HIH CASUALTY & GENERAL INSURANCE LIMITED (PROVISIONAL LIQUIDATORS APPOINTED) RESPONDENT JUDGE: LINDGREN J DATE: 5 NOVEMBER 2001 PLACE: SYDNEY REASONS FOR JUDGMENT 1 The applicant ("Mr Wakim") seeks an extension of time in which to file and serve a notice of appeal from the judgment of Einfeld J given on 20 February 2001 (George Wakim v HIH Casualty & General Insurance Ltd & Ors [2001] FCA 103 in proceeding NG 981 of 1993). He also seeks leave to proceed under s 471B of the Corporations Law – now see s 471B of the Corporations Act 2001. The matter was listed for hearing today but upon the matter being called Mr Wakim sought an adjournment. The basis of the application for the adjournment is that Mr Wakim's solicitor has been told by Dallas Booth, the Managing Director of HIH Claims Support Limited, that he, Mr Booth, believes that Mr Wakim satisfies the criteria for the making of a successful claim under the HIH Claims Support Scheme ("the Scheme"). 2 Evidence as to the nature of the Scheme was before the Court as long ago as 8 August 2001 when an affidavit by Kate Booth of the respondent's solicitors, Blake Dawson Waldron, sworn 30 July 2001 was filed in Court. The annexures to that affidavit described the Scheme as a scheme set up pursuant to an announcement made on 21 May 2001 by the Minister for Financial Services and Regulation. One of the documents stated that the Scheme was available only to policyholders and persons insured in certain categories who had a claim under an insurance policy issued by a company in the HIH Group. 3 The same document identified classes of claims not eligible under the Scheme. One of these was claims under compulsory professional indemnity insurance for legal practitioners. A possible preliminary view of the document is that in order to qualify, a claimant would have to be a policyholder or person insured, but that there would be excluded such a person who was, for example, a legal practitioner insured under compulsory professional indemnity insurance. According to this understanding of the Scheme there would be a problem in the present case if the late Mr Darvall QC's insurance with HIH Casualty & General Insurance Limited ("HIH") was in the nature of compulsory professional indemnity insurance. 4 The difficulty would be that the claimant recognised by the Scheme would be, not Mr Wakim, but the legal personal representative of the late Mr Darvall, and that even that person would not be eligible if the insurance was in the nature of compulsory professional indemnity insurance. The respondent to the proceeding below (and therefore to the present application) was not the legal personal representative of the late Mr Darvall but rather HIH itself. In relation to the question whether the insurance in this case was compulsory professional indemnity insurance for legal practitioners, Mr R W Cameron, counsel for Mr Wakim, states that professional indemnity insurance for legal practitioners was made compulsory by State legislation in New South Wales more recently than the relevant operation of the policy in this case. 5 Whatever the position may ultimately be as to the issues to which I have just referred, those issues have clearly been involved in this application since 8 August last at the latest. In an affidavit sworn on 19 June 2001, Mr B W Hurley, the solicitor for Mr Wakim, stated: " ... the appellant [a misnomer for "the applicant"] may receive some financial assistance from HIH Claims Support." 6 In oral evidence this morning, Mr Hurley said that he telephoned a number for the HIH Claims Support Scheme about last May or June and after some delay received a claim form which he completed and returned on behalf of Mr Wakim on 10 July. Subsequently there was further correspondence and also oral communications between Mr Hurley and "the Scheme". In the course of one of the telephone conversations Mr Booth told Mr Hurley that he (Mr Booth) believed Mr Wakim met the Scheme criteria and that he (Mr Booth) was awaiting advice from Clayton Utz in this respect. 7 By a letter dated 24 October 2001 Mr Booth advised Mr Hurley that he (Mr Booth) had not yet concluded an internal review of the decision relating to the granting of assistance and was seeking detailed advice in relation to the application of criteria for eligibility for assistance and in relation to the proper execution of an offer of assignment of rights. 8 Mr Hurley attempted to contact the relevant person at Blake Dawson Waldron late last Friday afternoon, 2 November, and again this morning about the hearing but these were the first occasions that Mr Hurley attempted to advise of the intention to apply for the adjournment. 9 Mr G Scarcella, the solicitor for HIH, does not oppose the application for the adjournment. He has informed the Court that if Mr Wakim qualifies under the Scheme, a person will be appointed to manage this particular claim and will, in substance, take over the conduct of it from the provisional liquidator of HIH although there will be no change of parties. In substance, the effect of the granting of the leave for which Mr Wakim applies would be that the claim would not be one to the detriment of unsecured creditors of HIH. Whether the present claim is to the detriment of other unsecured creditors of HIH and is an interference with the administration of the liquidation is a significant consideration on the present application for an extension of time. 10 While not opposing the application for the adjournment, Mr Scarcella seeks costs on the basis that he prepared for the hearing today and that it would have been possible and was reasonable for the application for the adjournment to have been foreshadowed to his firm in ample time to save that unnecessary expense. I agree. I do, however, think that the adjournment should be granted because clarification on the issues which I have mentioned is important so that a just result on Mr Wakim's application will be reached. 11 For the above reasons the Court orders that: 1. The application be adjourned to 4 December 2001 at 9.30 am for directions. 2. The applicant pay the respondent's costs thrown away by the adjournment. 3. Liberty be reserved to the respondent to apply in the following respects: (a) for an order that the costs thrown away should include the costs of preparation for the hearing today; (b) for an order under Order 62 subrule 3(3) that the respondent be entitled to have its costs taxed prior to conclusion of this proceeding; (c) for an order that the applicant not be at liberty to have a final hearing until the costs as taxed are paid. I certify that the preceding eleven (11) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Lindgren. Associate: Dated: 13 November 2001 Counsel for the Applicant: R W Cameron Solicitors for the Applicant: Hurley & Associates Solicitor for the Respondent: G Scarcella of Blake Dawson Waldron Date of Hearing: 5 November 2001 Date of Judgment: 5 November 2001