Supreme Court New South Wales Medium Neutral Citation: Lamichhane v Plumbcorp Solutions Pty Ltd [2024] NSWSC 1402 Hearing dates: 5 November 2024 Date of orders: 5 November 2024 Decision date: 05 November 2024 Jurisdiction: Common Law Before: Elkaim AJ Decision: 1. The Plaintiff has leave under s 5 of the Civil Liability (Third Party Claims Against Insurers) Act 2017 (NSW) to join AAI Limited ABN 48 005 297 807 AFSL 230859 trading as Vero Insurance as a Sixth Defendant. 2. The Plaintiff has leave under s 5 of the Civil Liability (Third Party Claims Against Insurers) Act 2017 (NSW) to join Insurance Australia Limited trading as NRMA Insurance as a Seventh Defendant. 3. An order under Uniform Civil Procedure Rules 2005 (NSW), r 6.32(1)(b) for leave to amend the Statement of Claim. 3. Costs of the motion are to be costs in the cause. Catchwords: CIVIL PROCEDURE — parties — joinder of insurers — where seventh defendant opposes joinder due to exception in s 5(4) of the Civil Liability (Third Party Claims Against Insurers) Act 2017 (NSW) — whether the seventh defendant's insurance policy will not respond to the claim — where seventh defendant's policy limited liability to a contract price of $500,000 — where the only evidence of contract value was an unsigned statement by the director of the third defendant — joinder allowed Legislation Cited: Civil Liability (Third Party Claims Against Insurers) Act 2017 (NSW), ss 4, 5 Uniform Civil Procedure Rules 2005 (NSW), rr 6.29, 6.32 Category: Procedural rulings Parties: Shambhu Lamichhane (Plaintiff) Plumbcorp Solutions Pty Ltd (First Defendant) D E Plumbing Pty Ltd (Third Defendant) Balintore Developments Pty Ltd (Fifth Defendant) AAI Limited t/as Vero Insurance (proposed Sixth Defendant) Insurance Australia Limited t/as NRMA Insurance (proposed Seventh Defendant) Representation: Counsel: Mr J Hallion (Plaintiff) Mr M Skelly (Fifth Defendant and proposed Sixth Defendant) Mr W S Reynolds (proposed Seventh Defendant) Solicitors: Bond Legal (Plaintiff) Turks Legal (First Defendant) Ian Roche Lawyers (Third Defendant) – Check Mills Oakley Lawyers (Fifth Defendant and proposed Sixth Defendant) Holman Webb Lawyers (proposed Seventh Defendant) File Number(s): 2022/197621 Publication restriction: Nil JUDGMENT 1. These reasons concern a further amended notice of motion filed by the plaintiff on 12 August 2024. The motion seeks the following: 1. AAI Limited (Vero) be joined as a sixth defendant. 2. Insurance Australia Limited (NRMA) be joined as a seventh defendant. 3. Leave to file a further amended statement of claim. 1. The motion is supported by affidavits of Ms Samita Kafle, sworn on 11 March 2044, 22 July 2024 and 12 August 2024. Ms Kafle is the plaintiff's solicitor. 2. NRMA relies on an affidavit of Ms Jayne Fearnley, sworn on 4 October 2024 and an affidavit of Mr Patrick Hill sworn on 29 October 2024. Ms Fearnley is a principal underwriter employed by NRMA. Mr Hill is a private investigator who was engaged by NRMA. 3. Mr Hill's affidavit, in its entirety, was the subject of objection by the plaintiff. I allowed NRMA to rely on the affidavit but observed that the objections to its admissibility probably sounded in the evidentiary weight of its contents. 4. The orders joining Vero and NRMA are sought pursuant to s 5 of the Civil Liability (Third Party Claims Against Insurers) Act 2017 (NSW). Sections 4 and 5 of this Act state: 4 Claimant may recover from insurer in certain circumstances (1) If an insured person has an insured liability to a person (the claimant), the claimant may, subject to this Act, recover the amount of the insured liability from the insurer in proceedings before a court. (2) The amount of the insured liability is the amount of indemnity (if any) payable pursuant to the terms of the contract of insurance in respect of the insured person's liability to the claimant. (3) In proceedings brought by a claimant against an insurer under this section, the insurer stands in the place of the insured person as if the proceedings were proceedings to recover damages, compensation or costs from the insured person. Accordingly (but subject to this Act), the parties have the same rights and liabilities, and the court has the same powers, as if the proceedings were proceedings brought against the insured person. (4) This section does not entitle a claimant to recover any amount from a re-insurer under a contract or arrangement for re-insurance. 5 Leave to proceed (1) Proceedings may not be brought, or continued, against an insurer under section 4 except by leave of the court in which the proceedings are to be, or have been, commenced. (2) An application for leave may be made before or after proceedings under section 4 have been commenced. (3) Subject to subsection (4), the court may grant or refuse the claimant's application for leave. (4) Leave must be refused if the insurer can establish that it is entitled to disclaim liability under the contract of insurance or under any Act or law. 1. Vero neither consents to, nor opposes, its joinder to the proceedings. NRMA opposes its joinder. I was informed that the first defendant did not wish to be heard on the motion. 2. NRMA's stance is taken because it says its policy does not respond to the plaintiff's claim (s 5(4)). 3. Counsel for the NRMA, in his written submissions, set out the test to be applied. I will summarise the test as follows: 1. Giving leave involves the exercising of a discretion. This discretion may be exercised against the plaintiff even if the plaintiff otherwise satisfies the court of its entitlement to the order under s 4. 2. There must be an arguable case against the alleged tortfeasor. 3. The alleged tortfeasor would be unlikely to meet any judgment against it. 4. The insurer may escape joinder if it can establish that the policy of insurance issued to the alleged tortfeasor would not respond to the claim. At this stage the question is whether or not there is an arguable case for indemnity. It is not a final decision on indemnity. Background 1. As at June 2018 the plaintiff was employed by the first defendant. The first defendant is a labour hire company. The first defendant provided the plaintiff's services to the third defendant. 2. The fifth defendant was the head contractor in respect of building works being carried out in Campsie. The fifth defendant contracted with the third defendant to carry out certain plumbing works at the building site. 3. On 5 June 2018 the plaintiff fell into a trench at the building site. He was injured and says that his injuries were caused by the negligence of the defendants. 4. The fifth defendant went into liquidation on 8 May 2023. Vero was its public liability insurer at the relevant time. 5. The third defendant was placed into liquidation on 10 April 2024. Vero 1. Vero accepted that all of the requirements for its joinder had been met. It raised no issue that might have influenced the exercise of a discretion in its favour. There is no reason why Vero should not be joined. NRMA 1. The third defendant had a policy of insurance with the NRMA called an EasyBiz Tradesperson Business Insurance Policy which had originally been issued in December 2017 and was effective until January 2019. 2. On 28 December 2017 NRMA wrote to the third defendant providing a number of documents relating to the policy. These included a certificate of insurance issued on 28 December 2017. The certificate refers to s 4 of the policy which details the liability cover under the policy. The certificate specifically refers to two aspects relating to liability: 1. The number of full-time persons engaged in the business is limited to 5. 2. "We will not pay for claims arising out of construction, erection, demolition, alteration, or installation work by you or on your behalf except where the total contract price payable to or by you at the time of commencement of all work is less than $500,000 (Specific Exclusion 4.5 (20))". 1. The director of the third defendant was Mr Deeb Elias. NRMA engaged Mr Hill to investigate the plaintiff's alleged accident. Mr Hill spoke to Mr Elias on 18 January 2023. Following their conversation Mr Hill prepared a draft statement which he emailed to Mr Elias the following day. 2. On 27 January 2023 Mr Elias replied to Mr Hill's email, stating: "All is well with the statement only one thing I believe will point the finger back at us is in point16 where it says that shanbhu was under the direct supervision of Nick. I believe this should be removed so that no one says well he was under your direct supervision therefore your responsible." 1. Mr Elias did not sign the statement and Mr Hill apparently took no further action to either amend the statement or endeavour to have it signed. 2. Point 16 is irrelevant to the motion before me. The relevance of the unsigned statement appears in paragraph 7: "I can confirm that one of these plumbing contracts in the 2017/2018 financial year was with Balintore Constructions NSW Pty Ltd (BCN). I remember this plumbing contract related to BCN's constructions site known as Duo at 75 to 83 Second Avenue Campsie NSW 2194 (the Site). I have provided a copy of the unsigned version of the relevant plumbing contract which is headed Subcontract Agreement Contract No. 002. Ido not have the signed version on file or the Annexures Parts A to I but I can confirm this plumbing contract was for the provision of all necessary plumbing services at the Site including water, gas, sewerage and stormwater drainage at the (sic) and BCN's works involved the construction of 38 residential units and all common areas. DEP's fee for these plumbing services at the Site was for $542000 plus GST plus variations and incidentals not included within the plumbing contract." 1. In paragraph 7 Mr Elias says he has provided a copy of the unsigned version of the contract. If he gave it to Mr Hill, it has not been annexed to Mr Hill's affidavit. 2. NRMA's point arising from Mr Elias's statement is the reference to $542,000 plus GST. This figure is obviously in excess of the $500,000 limitation imposed upon coverage under the policy. If the evidence relating to the contract price was admissible and persuasive it would be a powerful argument in NRMA's favour. 3. Mr Reynolds, who appeared for NRMA, frankly conceded that he had no other evidence, besides the unsigned statement, upon which he could advance an argument that the policy would not respond to the plaintiff's claim. 4. This brings me back to the arguments that had been raised by the plaintiff as to why Mr Hill's affidavit should not have been admitted into evidence. It was submitted that the unsigned statement of Mr Elias was prejudicial, that there had been a breach of a duty of good faith because Mr Hill was engaged to investigate the alleged accident, not the question of insurance cover, and there was nothing else, not even the unsigned contract, to corroborate the unsigned statement. 5. As I have said above, I decided to admit the affidavit subject to its weight. In doing so I was cognisant of the fact that the NRMA would be able to advance the statement at any ultimate hearing if it chose to continue to deny cover under the policy. 6. Whether the affidavit should have been excluded or whether its contents are of low probative value does not really matter. This is because the defendant, absent any other evidence, will in my view have considerable difficulty in relying upon Mr Hill's evidence to defeat the claim. I note the following: 1. Mr Elias's statement is unsigned. 2. The statement was taken in January 2023. In the ensuing almost 2 years no other evidence to confirm the contract price has come to light. Mr Reynolds told me that, with the third defendant now being in liquidation, difficulty had been experienced in obtaining any further documents. 3. Mr Hill's evidence may not be admitted at a final hearing because of the lack of good faith argument relied upon by the plaintiff. Even if it is admitted, it suffers from the failings listed above. 1. Because of the limited weight of Mr Hill's affidavit (including the annexed draft statement of Mr Elias) I am not persuaded that NRMA has established that the insurance policy will not respond to the claim. 2. The result is that the only remaining obstacle to the orders sought by the plaintiff is the exercise of the discretion provided by s 5. NRMA submitted that the discretion could still be exercised in its favour because of the circumstances described by Mr Hill. I do not think that would be a proper basis for the exercise of the discretion against the plaintiff because of the view I have taken about the weight of the evidence. 3. There is no other reason for the discretion for to be exercised against the plaintiff. 4. Accordingly, I make the following orders: 1. The Plaintiff has leave under s 5 of the Civil Liability (Third Party Claims Against Insurers) Act 2017 (NSW) to join AAI Limited ABN 48 005 297 807 AFSL 230859 trading as Vero Insurance as a Sixth Defendant. 2. The Plaintiff has leave under s 5 of the Civil Liability (Third Party Claims Against Insurers) Act 2017 (NSW) to join Insurance Australia Limited trading as NRMA Insurance as a Seventh Defendant. 3. An order under Uniform Civil Procedure Rules 2005 (NSW) r 6.32(1)(b) for leave to amend the Statement of Claim. 4. Costs of the motion are to be costs in the cause. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 06 November 2024