Dorrough C.J. v Bank of Melbourne Ltd [1995] FCA 785

Dorrough C.J. v Bank of Melbourne Ltd [1995] FCA 785

The bank's cross-claim against the insurer based on paragraphs 27A-27R is so clearly untenable that it cannot possibly succeed: the alleged facts do not establish proximity, reliance, assumption of responsibility or a reasonable expectation of disclosure sufficient to found a duty of care, utmost good faith, or misleading conduct; nor is there any statutory or contractual foundation for a cause of action by the bank against National Mutual in the pleaded terms. Thus, those paragraphs are struck out. Leave was properly granted for National Mutual to join FAI General Insurance Company Limited as a cross-respondent for potential indemnity, and the insurer is entitled to costs accordingly.

Parties
Applicant / First Cross Respondent: Christopher James Dorrough; Applicant / First Cross Respondent: Carole Hazel Dorrough; Respondent / Cross Claimant: Bank of Melbourne Limited (ACN 007 270 448); Second Cross Respondent: National Mutual Life Association of Australasia Limited (ACN 004 020 437); Third Cross Respondent: Maurice Bernard Byrne; Proposed Cross Respondent: FAI General Insurance Company Limited
Jurisdiction
Australia
Judgment Date
27 September 1995
Procedural Posture
Practice and Procedure / Interlocutory Application Strike Out/cross Claim/joinder
Outcome
Strike out granted for paragraphs 27A to 27R of the amended defence and cross-claim; leave granted for cross-claim against FAI; costs to National Mutual and FAI as stated.
Legal Topics
Strike Out of Pleadings, Duty of Care in Economic Loss, Proximity in Negligence, Utmost Good Faith in Insurance, Misleading or Deceptive Conduct, Section 52 Trade Practices Act, Contribution and Indemnity, Standing of Cross Claimants, Bankruptcy/vesting of Rights
Practice and Procedure Negligence Trade Practices Insurance Bankruptcy Strike Out of Pleadings Duty of Care in Economic Loss Proximity in Negligence +6 more

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Parties

Christopher James Dorrough

Applicant / First Cross Respondent

Carole Hazel Dorrough

Applicant / First Cross Respondent

Bank of Melbourne Limited (ACN 007 270 448)

Respondent / Cross Claimant

National Mutual Life Association of Australasia Limited (ACN 004 020 437)

Second Cross Respondent

Maurice Bernard Byrne

Third Cross Respondent

FAI General Insurance Company Limited

Proposed Cross Respondent

Procedural Posture

Practice and Procedure / Interlocutory Application Strike Out/cross Claim/joinder

Legal Issues

  1. 1 Whether paragraphs 27A-27R of the amended defence and cross-claim disclose any cause of action against the insurer
  2. 2 Whether a duty of care or utmost good faith was owed by the insurer to the applicants/borrowers
  3. 3 Whether silence or failure to disclose could amount to misleading or deceptive conduct under s.52 of the Trade Practices Act 1974 (Cth)

Ratio Decidendi

The bank's cross-claim against the insurer based on paragraphs 27A-27R is so clearly untenable that it cannot possibly succeed: the alleged facts do not establish proximity, reliance, assumption of responsibility or a reasonable expectation of disclosure sufficient to found a duty of care, utmost good faith, or misleading conduct; nor is there any statutory or contractual foundation for a cause of action by the bank against National Mutual in the pleaded terms. Thus, those paragraphs are struck out. Leave was properly granted for National Mutual to join FAI General Insurance Company Limited as a cross-respondent for potential indemnity, and the insurer is entitled to costs accordingly.

Court Disposition

Strike out granted for paragraphs 27A to 27R of the amended defence and cross-claim; leave granted for cross-claim against FAI; costs to National Mutual and FAI as stated.

Orders

  • Paragraphs 27A to 27R inclusive of the amended defence and cross-claim of Bank of Melbourne Limited be struck out.
  • Bank of Melbourne Limited pay National Mutual Life Association of Australasia Limited its costs of and incidental to the notice of motion to strike out, including reserved costs, if any, to be taxed if not agreed.