Case: Fishwives Pty Ltd v FAI General Insurance Co Ltd &amp; Ors (2002) 12 ANZ Insurance Cases 61-515
Outcome: applied
More recently in the context of an appeal to the Court of Appeal of the Supreme Court of New South Wales in Fishwives Pty Ltd v FAI General Insurance Co Ltd (2002) 12 ANZ Insurance Cases 61-515, Mason P (with whom Meagher and Handley JJA agreed) described the operation of the applicable principle in the following more comprehensive terms: '47. I do not accept the appellant's submission that the judge was bound to grant leave if there was an arguable case on the non-disclosure issue. I can readily accept that leave may be given where the Court is satisfied that there is an arguable point on the insurer's indemnity issue. It is now established that the grant of leave to proceed against an insurer does not foreclose the insurer's right to litigate issues going to its liability to indemnify the insured in the substantive proceedings.... But it does not follow, in my view, that a court that is positively satisfied of the insurer's entitlement to disclaim, after issue has been joined on that matter as between the plaintiff and the insurer, must exercise the discretion in favour of the grant of leave. The court is "seized of the discretion to grant leave" (National Mutual Property Services (Australia) Pty Ltd v Citibank Savings Ltd (1996) 9 ANZ Insurance Cases 61-335 at 76,711; (1996) 138 ALR 409 at 418 per Lindgren J), but it is not driven to exercise the discretion in a particular way.' The outcome of the appeal in that case was summarised by Mason P as follows: '48. In the present case Delaney DCJ was satisfied on the balance of probabilities that the insurer was entitled to disclaim. He was in my view entitled to reach this conclusion.' In reaching that conclusion, the Court of Appeal was presented with findings below as to facts establishing the objective falsity to answers provided in the insurance proposal form. It is the case of the Insurers on the present application of PCL for joinder of Macquarie and also SVB as additional respondents to the proceedings that I should find on the balance of probabilities that the Insurers are entitled to disclaim liability, and therefore that leave to join the Insurers should be refused. 7 PCL's business included the provision of loans to assist the funding of the purchase of real property, the loans being usually secured by mortgage over that real property. On 22 May 2003, ARMA provided valuations for mortgage lending purposes to PCL as prospective mortgagee in respect of two adjacent freehold properties comprising Lots 15 and 20 at Nos 22-24 Oyster Court Trinity Beach in the State of Queensland. The valuations were apparently signed by Mr Teves on behalf of ARMA, though the valuations were not tendered into evidence, the view understandably taken by the parties being that the same were not material to the resolution of the present interlocutory proceedings. 8 It is PCL's case that in reliance on those valuations, it lent to the freehold owner Brett Robinson the sum of $598,000 secured by way of registered first mortgage over the properties, and that when the freehold owner defaulted under the mortgage, PCL exercised its power of sale as mortgagee and sold the properties, thereby sustaining a shortfall in the available proceeds of sale in relation to the moneys by then secured by PCL's mortgage. PCL's case was further that the valuations were provided to PCL by the respondents ARMA and Mr Teves in breach of sections 52 and 53A of the TP Act, for the reason that the valuations substantially overstated the market values of the properties and those existing respondents did not have reasonable grounds for their assessments of market value. PCL has claimed damages in the first instance against ARMA as the provider of the valuations and Mr Teves as the author of the valuations, he being allegedly also a director of ARMA, but it is apparent that recovery from ARMA and Mr Teves individually is at least dubious. 42 I have reached the conclusion, subject to provision of evidence formally as to Mr Teves' status as a director and shareholder of PCL at the material times, being a circumstance of course asserted by PCL, that PCL has demonstrated satisfaction of the test exemplified in Andjelkovic, and subsequently as articulated more expansively in Fishwives , in relation to both successive insurance policies, and that it would be erroneous on my part to shut out PCL from pursing its presently framed causes of action at this interlocutory stage upon the demurrable basis advanced on behalf of the Insurers. I think that I should exercise my discretion in favour of the grant of the leave sought in relation to the operation of both policies, and thus in relation to the successive years of indemnity from 26 July 2003 to 26 July 2004 and from 26 July 2004 to 2005. The addition of SVB as a respondent is more problematical, but I gained the ultimate understanding that no objection would be raised in principle to the inclusion of SVB as an additional respondent, apparently as a representative of the individual Lloyds underwriters involved.