Case: Beneficial Finance Corporation Ltd v Price Waterhouse (1996) 68 SASR 19
Outcome: distinguished
however, his Honour held that the Court, as a matter of jurisdiction had power to grant the relief sought. Lehman Brothers argues, however, that in formulating the limits of this power the Court should be guided by the decision of the Full Court of the Supreme Court of South Australia in Beneficial Finance Corporation Ltd v Price Waterhouse (1996) 68 SASR 19. In that case, there were solvent defendants. The evidence established that they would be unlikely to be able to meet more than the costs of a lengthy and highly complicated piece of litigation, in circumstances, were the plaintiff successful, which might result in an award of very substantial damages. The Full Court held that the defendants could not be required to discover documents relating to their insurance position or otherwise to produce them in accordance with particular rules of the Supreme Court of South Australia. The Full Court was unanimous in that view, although Cox J dissented on the basis that he felt constrained to follow an earlier decision to the contrary of the Full Court of the Supreme Court of South Australia. Importantly, in that case, as on the evidence now before me, the insurer had not declined liability under the professional indemnity policy. There the insurer treated itself as having had a claim made on it, but had not at that stage either admitted or denied liability. Rather, the insurer was treating the claim as one which might attract liability under the relevant policy. Perry J accepted that an earlier decision of the Full Court, J N Taylor Holdings Limited (In liq) v Bond (1993) 59 SASR 432 , illustrated that an insurer may be properly joined as a defendant, where, first, it had denied liability and, secondly, there was a need to ensure that if the proceedings went ahead, the insurer would be bound by the findings of fact and law that may enliven liability in its insured: see Beneficial Finance 68 SASR at 28. However, his Honour concluded that because the insurer was not denying liability under the policy, any attempt to have access to the insurance documents must, in those circumstances, have amounted to nothing more than a fishing exercise designed to reveal whether the documents indicated a basis for the plaintiff seeking a declaration. He held that the necessity or desirability of a declaration that the insurance responded to the claim could not be demonstrated at that stage. In that way, he distinguished the earlier decision in J N Taylor 59 SASR 432: see Beneficial Finance 69 SASR at 36 and at 52-53, Lander J was of a similar view. In my opinion, Beneficial Finance 68 SASR 19 is distinguishable. The current application is not an application for discovery but for production of documents. I accept that considerations relevant to the issue of discovery may also govern or assist in the formulation of discretionary judgments as to whether documents ought be produced in particular circumstances. But the present circumstances are that the council is involved in the current litigation and an event has occurred in its course that has given rise to this application being made. That event is the administration of Lehman Brothers. No longer is Lehman Brothers the same entity as that with which the council dealt unlike in Beneficial Finance 68 SASR 19 , where the plaintiff had to take the solvent defendants as it found them. The same circumstances that enlivened Olney J's exercise of discretion to order production in Lopez [1997] FCA 454 have been introduced here by the intervening event of the administration and the consequent, inferred admission that Lehman Brothers is insolvent.