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District Court 12 November 2014

Crane v Insurance Australia Limited trading as NRMA Insurance

[2014] NSWDC 218

Fraud & dishonesty
PRACTICE AND PROCEDURE SUBPOENA SET ASIDE

Citation: Crane v Insurance Australia Limited trading as NRMA Insurance [2014] NSWDC 218
Court: District Court of New South Wales
Date: 12 November 2014
Judge: Gibson DCJ

Background

The plaintiff brought a claim against his insurer for payment under a comprehensive motor vehicle policy following damage to his 2006 Ford Falcon F6 Typhoon, insured for an agreed value of $40,000. The insurer defended the claim by pleading fraud under section 13 of the Insurance Contracts Act 1984 (Cth), alleging the plaintiff had breached his obligation to be truthful in all statements made in connection with the claim.

While the proceedings were being case-managed by the Registrar, the plaintiff issued a subpoena on 8 September 2014 seeking production of all documents held by the insurer relating to the insurance claim. This occurred just one week before the Registrar directed the plaintiff to file and serve his own witness statements by 29 October 2014. The plaintiff served material on quantum by the due date but failed to file any statement addressing liability.

The insurer moved to set aside the subpoena, arguing it was oppressively broad, lacked a legitimate forensic purpose, amounted to a fishing expedition, and would allow the plaintiff to tailor his evidence to meet the insurer's case before filing his own.

  • Whether the subpoena was impermissibly broad and therefore oppressive
  • Whether the subpoena served a legitimate forensic purpose, or was instead issued to allow the plaintiff to "tailor" his evidence to the insurer's case before filing his own statements
  • Whether the subpoena amounted to a fishing expedition
  • Whether the principle in Markus v Provincial Insurance Co Ltd (1983) NSWCCR 1 applied to deny inspection of the produced documents

Decision

Gibson DCJ found the subpoena was impermissibly wide in its terms. It sought "all" documents, including copies and electronic records, across broad categories including witness statements, with only the date of the claim as a limiting factor. Her Honour noted that seeking documents in this generalised fashion goes beyond attempting to obtain discovery by subpoena: it reaches documents that would not be available even on discovery, because discovery is constrained by relevance and privilege. The court observed that neither the opponent nor the court should be required to redraft the subpoena to identify what is actually being sought.

Her Honour further found that the subpoena lacked a legitimate forensic purpose. The test requires that it be "on the cards" that the documents will materially assist the issuing party's case. The plaintiff's case was straightforward: he left his vehicle stalled in the street overnight and an unknown person damaged it. No alternative hypothesis needed to be established, and it was not necessary to obtain the insurer's investigative reports to prove that case. The court rejected the submission that seeing the insurer's evidence first would allow the plaintiff to rely on favourable portions to corroborate his claim.

The court also found the subpoena was issued for the purpose of enabling the plaintiff to view the insurer's witness statements before filing his own, which does not constitute a legitimate forensic purpose. On the Markus privilege question, her Honour was satisfied there was a real likelihood that access to the material in advance would allow the plaintiff to tailor his evidence and that of his witnesses. The subpoena was set aside on all grounds advanced.

Costs were reserved, with her Honour noting that the trial judge would be better placed to assess costs issues connected to the fraud allegations, and that further applications might arise if the plaintiff remained non-compliant with timetable orders.

Orders Made

  • The subpoena issued on 8 September 2014 to the defendant was set aside.
  • The parties were directed to provide short minutes of order extending the time for the plaintiff to serve witness statements on a mutually convenient date before 12 December 2014, followed by the defendant's statements and any further steps.
  • The defendant's Amended Notice of Motion was dismissed.
  • Proceedings listed before the Registrar on 19 January 2015 for directions.
  • Costs reserved.
  • The confidential affidavit of the defendant and all annexures were returned.

Key Takeaways

  • A subpoena seeking "all documents" across broad, non-exhaustive categories is impermissibly wide and will be set aside, even where the issuing party nominates a date or event as a reference point. Neither the opposing party nor the court is required to redraft or read down the terms to identify what is genuinely sought.
  • The legitimate forensic purpose test requires that it be "on the cards" that documents will materially assist the issuing party's case. Where a plaintiff's case rests on a straightforward factual narrative, production of the defendant's investigative file does not automatically satisfy that test.
  • Issuing a subpoena for the purpose of viewing an opponent's witness statements before filing one's own, in breach of a case management timetable, does not constitute a legitimate forensic purpose.
  • The Markus privilege principle, which recognises a court's power to withhold access to evidence where there is a real likelihood of evidence tailoring, applies to documents produced on subpoena and is not confined to discovery or Anton Piller contexts.
  • Under Halpin v Lumley General Insurance Ltd (2009) 78 NSWLR 265, the Markus principle is particularly relevant in insurance fraud disputes, where the insured bears the burden of proving not only the events claimed but all facts and circumstances lending credibility to that evidence.

Legislation and Cases Referenced

Legislation
- Insurance Contracts Act 1984 (Cth), s 13
- Uniform Civil Procedure Rules 2005 (NSW), r 33.4

Cases
- Askarou v Nominal Defendant (NSW) (1989) 8 MVR 491
- Azar Building and Construction Services Pty Ltd v Transport Infrastructure Development Corporation [2010] NSWLEC 110
- Broadwater Taxation and Investment Services Pty Ltd v Hendriks (Supreme Court of NSW, 9 September 1993)
- Dimovski v GIO (1995) 21 MVR 288
- Halpin v Lumley General Insurance Ltd (2009) 78 NSWLR 265
- Hammoud Brothers Pty Ltd v Insurance Australia Limited [2004] NSWCA 366
- Ho v Fordyce (ex parte) [2012] NSWSC 1404
- ICAP Australia Pty Ltd v BGC Partners (Australia) Pty Ltd [2009] NSWCA 307
- Markus v Provincial Insurance Co Ltd (1983) NSWCCR 1
- Marsden v Amalgamated Television Services Pty Ltd [1999] NSWSC 428
- McLennan v Insurance Australia Ltd [2011] NSWDC 132
- Morton v Colonial Mutual Life Insurance Society Ltd [2013] FCA 681
- Prasad v AMP Life Ltd [2012] NSWSC 1076
- TZ Ltd v ZMS Investments Pty Ltd & Ors; Sigalla v TZ Ltd [2010] NSWSC 138
- Vidal v NRMA Insurance Ltd [2005] NSWCA 390