Burwood Council v Jardine Lloyd Thompson Pty Ltd

1. [1]

   HIS HONOUR: By a Further Amended Statement of Claim (“the further ASOC”) filed 6 July 2017, Ms Elisa Lorenzato (“the plaintiff”) brought an action for a declaration, nuisance and negligent misstatement against the first defendant, Burwood Council (“the Council”), and an action for breach of contract (and non-disclosure of draining structures) and negligent misstatement against the second defendant, Mr Michael Lewis Della-Franca. Save for the declaratory relief claim, the plaintiff claimed relief primarily by way of damages.

2. [2]

   The plaintiff was the registered proprietor of the property at 13 Appian Way, Burwood, being the land in Folio Identifier 33/12249 (“the property”). The property was within the Burwood local government area. The plaintiff had been the registered proprietor of the property since about 12 August 2011.

3. [3]

   The Council was the local council constituted for the Burwood local government area under the Local Government Act 1993 (NSW).

4. [4]

   The second defendant was the registered proprietor of the property from about 24 August 1989 to 12 August 2011. The second defendant sold the property to the plaintiff. (The Council and Mr Della-Franca shall hereinafter be collectively referred to as “the defendants”).

5. [5]

   In summary, the primary proceeding between the plaintiff and the defendants broadly concerned two matters:

   1. (1)

      First, the existence of a drainage pipe running through the property (“the pipe”), which forms part of the local drainage system used by the Council to drain water away from Appian Way. The plaintiff alleged that the defendants had a duty to disclose to her the existence of the pipe running through the property before she purchased the property in 2011 and that both the first and second defendants failed to do so.

   2. (2)

      Second, the plaintiff’s allegation that the property is flood affected due to the inadequacy of the local drainage system in and around the property and was flooded in the period between 7 November 2011 and 18 August 2012. Again, the plaintiff alleged that both the Council and the second defendant had a duty to disclose to her the fact that the property was flood affected before she purchased the property in 2011, and that both the first and second defendant failed to do so.

6. [6]

   Some explanation of the pleadings by the plaintiff against the Council will usefully provide further background. The plaintiff pleaded three claims against the Council:

   1. (1)

      First, a claim that the plaintiff and not the Council is the owner of the pipe running through the property (“the pipe ownership claim”);

   2. (2)

      Secondly, a claim against the Council for nuisance allegedly caused to the plaintiff by a series of flooding events to the property in the period 7 November 2011 to 18 August 2012, caused by the inadequacy of the local drainage system (“the nuisance claim”); and

   3. (3)

      Thirdly, a claim against the Council for allegedly negligent advice given to the plaintiff in a planning certificate issued by the Council on 9 August 2010, pursuant to s 149 of the Environmental Planning and Assessment Act 1979 (NSW), because the Section 149 Certificate issued for the property did not disclose either:

7. [7]

   On 11 August 2017, the Council filed a defence. The Council denied that it had any liability to the plaintiff in respect of the nuisance claim or the Section 149 Certificate claim

The Second Cross-Claim

1. [8]

   On 23 February 2018, the Council filed a second cross-claim (“the second cross-claim”).

2. [9]

   The parties to the second cross-claim were:

   1. (1)

      The Council as the cross-claimant; and

   2. (2)

      Jardine Lloyd Thompson Pty Ltd as the cross-defendant (“JLT”).

3. [10]

   Under the heading “Pleadings and Particulars”, the first sub-heading appearing was “Background”. Paragraph 3 under that sub-heading was as follows:

4. [11]

   I pause at that juncture to deal with some uncontentious preliminary factual matters and abbreviations arising in that context.

5. [12]

   As mentioned in the pleading, an unincorporated self-insurance scheme for local councils in NSW was established. It was known as “the NSW Local Government (Jardines) Mutual Liability Scheme”. The Scheme was variously described in communications between parties, in short form, as “Statewide” and “Statewide Mutual”. For convenience, the Scheme shall be described as “the Statewide Scheme”.

6. [13]

   Local Councils joined the Statewide Scheme by entering into a Deed entitled: “Deed Establishing the NSW Local Government (Jardines) Mutual Liability Scheme” (“the Statewide Deed”).

7. [14]

   The parties to the Statewide Deed were specified as “The councils whose names are set out in Schedule 1” and “Jardine Australian Insurance Brokers Pty Ltd” (abbreviated to “Jardines” in the Deed). The scheme of the Statewide Deed will be revisited in this judgment.

8. [15]

   Ms Keli Law, solicitor for the Council, deposed in her affidavit sworn 22 May 2018 that she believed JLT was the same entity as Jardines Australian Insurance Brokers Pty Ltd (“Jardines”) by virtue of the fact that “both entities have the same Australian Company Number, namely ACN 009 098 864”. That view has merit. Jardines has the same ACN as JLT. The 2011-2012 certificate of currency, issued to the Council with respect to the Statewide Scheme on 1 July 2011 stated “Statewide Mutual” was managed by JLT. No demur from that approach was advanced by JLT in submissions. I proceed on that basis for the purposes of this judgment.

9. [16]

   Policies were issued to the Council for 2011-2012 and 2012-2013, which will be discussed further below. However, mention may be made of the pleadings in that respect.

10. [17]

    The relevant pleadings in the second cross-claim with respect to the 2011-2012 policy were as follows:

11. [18]

    The pleading with respect to the 2012-2013 policy was as follows:

12. [19]

    The relevant pleadings entered with respect to the claim made by the Council for indemnity under the 2012-2013 policy for a professional indemnity claim was relevantly as follows:

13. [20]

    As to the claim for indemnity under the 2011-2012 policy and the 2012-2013 policy for damage to property the following was relevantly pleaded:

14. [21]

    By the second cross-claim, the Council sought the following primary relief (when converted into the abbreviations used in this judgment):

    1. (1)

       Declare that the Council is entitled to indemnity under the 2011-2012 policy and/or the 2012-2013 policy issued by JLT, as manager of the Statewide Scheme, in respect of any liability that the Council may have to the plaintiff in respect of the relief claimed in the further ASOC.

    2. (2)

       Further, or alternatively, order that JLT, as manager of the Statewide Scheme, indemnify the Council under the 2011-2012 policy and/or the 2012-2013 policy issued by the Statewide Scheme in respect of any liability that the Council may have to the plaintiff in respect of the relief claimed in the further ASOC.

15. [22]

    JLT did not file a defence to the second cross-claim.

The Notices of Motion before the Court

1. [23]

   On 27 April 2018, JLT filed two notices of motion seeking the following relief:

   1. (1)

      that the second cross-claim filed on 23 February 2018 by the Council be struck out pursuant to Uniform Civil Procedure Rules 2005 (NSW) (“UCPR”) r 14.28 or summarily dismissed pursuant to r 13.4 (“the Motion”);

   2. (2)

      that the notice to produce dated 21 March 2018 issued by the Council to JLT be set aside (“the NTP Motion”); and

   3. (3)

      that the Council pay JLT’s costs related to the NTP Motion, the Motion and the costs related to the second cross-claim.

2. [24]

   By the Motion, JLT sought that the second cross-claim be struck out or summarily dismissed on the basis that the second cross-claim does not disclose any cause of action against JLT as “manager” of the Statewide Scheme. That motion was opposed.

3. [25]

   The issues concerning the NTP Motion dissipated at the hearing of the matter. The focus of the NTP Motion was paras 2 and 3 of the notice to produce. It was indicated by Mr M Wright, senior counsel for the Council (with whom Mr D Robertson appeared), that those aspects of the notice to produce were not pressed.

4. [26]

   In the result, this judgment concerns the Motion. Prior to turning to the submissions of the parties, with respect to the Motion, it is appropriate to further outline some background circumstances and the terms of the Statewide Deed.

FACTUAL BACKGROUND

1. [27]

   Correspondence from JLT to the Council dated 27 October 1983 would suggest the concept of a mutual self-insurance scheme for local councils in NSW was devised by JLT itself, with JLT carrying out investigations into the feasibility of such a scheme. JLT then marketed the Statewide Scheme to local councils, with membership of the Statewide Scheme offered to all local councils that had their current insurance arrangements administered by JLT. In an attachment to that correspondence described as a “report” there was a section entitled “Key Benefits of NSW Local Government (Jardine) Mutual Liability Scheme known as Statewide”. It stated that the benefits derived from “adopting a ‘Statewide Mutual’ concept” included, inter alia, “the ULTIMATE DECISION (particularly on claims) is made by Local Government itself, and not influenced by external parties, e.g. insurers” (original emphasis). Further, it was stated that the Statewide Scheme was to be “controlled by a Deed of Agreement, which exercises discretionary powers in the settlement of claims and therefore avoids the complications of interpreting technical and complex liability policy wordings” and “Councils CONTROL the future of STATEWIDE” (original emphasis). It was said that the Statewide Scheme would self-insure the first $2 million of each claim and “members” would receive protection on a discretionary basis.

2. [28]

   A further section of the report dealt with the intended administration of the Statewide Scheme indicating that it could be administered by a “Governing Committee, comprising of Council Officers and Jardine’s representatives”. Further it stated: “The implementation and day-to-day administration will be attended to by the Fund Manager”.

3. [29]

   The Council joined the Statewide Scheme by entering into the Statewide Deed in about 1994.

4. [30]

   JLT produced in evidence a report of the Deputy Town Clerk of the Council dated 17 April 1990. In that report, the Clerk referred to the proposal as consisting of legal agreements for “the Scheme” and “The appointment of a Manager”. It was said the proposal concerned 14 councils. By that report, it was recommended that the Council do not join the Statewide Scheme.

5. [31]

   Ms Law deposed that JLT had been the "manager" of the Statewide Scheme at all times since about 1993.

6. [32]

   On 16 May 2011, a tax invoice was issued to the Council under the heading Statewide Mutual. There appeared on the letterhead “Managed by [JLT]”.

7. [33]

   On 25 May 2011, JLT provided an invoice by "Statewide Mutual" to the Council for its "cover" under the Statewide Scheme for the 2011-2012 year, for which the Council was charged a "contribution" of $416,328 for its "Public Liability-Professional Indemnity" cover. A document attached referred to the Council as “Member”. As to the “interest protected” it was stated that “Statewide Mutual will pay to or on behalf of The Member all sums which The Member shall become legally liable to pay by way of compensation…”. As to the “scheme wording and conditions”, the recipient of the invoice was instructed to refer to the “Statewide Mutual Liability Scheme Wording for full details of Terms, Conditions and Exclusions”.

8. [34]

   In a document entitled “NSW Local Government (Jardine Lloyd Thompson) Mutual Liability Scheme: Statewide Mutual Broad Form Liability Protection Wording”, it was stated: “The Member named in the Schedule is a Member of the NSW Local Government (Jardine Lloyd Thompson) Mutual Liability Scheme”. It was also stated that, “[s]ubject to payment of the Contribution for the period of protection stated in the schedule the Member will be protected by Statewide…”. As to liability coverage, it was stated: “Statewide will pay to or on behalf of The Member all sums for which The Member shall become legally liable to pay by way of compensation…”.

9. [35]

   On 1 July 2011, "Statewide Mutual" issued to the Council a "Certificate of Currency" to certify that the Council's membership of Statewide was current for the 2011-2012 year for the Protection Class "Public Liability/Professional Indemnity" (“the 2011-2012 certificate of currency”). As earlier mentioned, the 2011-2012 certificate of currency stated that "Statewide Mutual" was "Managed by: Jardine Lloyd Thompson Pty Limited".

10. [36]

    On 24 August 2012, JLT issued to the Council a document entitled "Summary of Insurances: Burwood Council", which stated that, for the 2012-2013 year, the Council had obtained "cover" from "Statewide Mutual" for Public Liability, Products Liability and Professional Indemnity.

11. [37]

    The Council's cover under the Statewide Scheme for claims for Damage to Property (which was part of the Public Liability cover) was for an "occurrence" happening during the “period of protection”.

12. [38]

    On 5 December 2012, the Council notified JLT that the plaintiff had made a verbal demand to the Council for compensation for the Council's alleged negligent failure to disclose the existence of the pipe in the property in the Section 149 Certificate issued by the Council in respect of the property. The Council notified JLT of the plaintiff’s demand for compensation. On that basis, the Council contended that it had notified JLT of a claim made by the plaintiff during the 2012-2013 period of cover under the Statewide Scheme.

13. [39]

    On 11 December 2012, JLT sent an email responding to a communication from the Council regarding the claim by the plaintiff indicating that:

14. [40]

    The Council contended in argument before the Court the plaintiff’s nuisance claim in the primary proceeding alleged that she suffered damage to property as a result of flooding events to the property in the period 7 November 2011 to 18 August 2012, caused by the inadequacy of the local drainage system maintained and operated by the Council.

15. [41]

    It is unnecessary to reach any final determination on that question, but it would appear, given the dates on which the flooding events occurred, the damage caused by those flooding events constituted "Damage to Property" which was, prima facie, covered by the Statewide Scheme given the Council's membership of the Statewide Scheme over the period 1 July 2011 to 30 June 2013.

16. [42]

    On 21 April 2017, the Council's claims manager notified JLT that the plaintiff had made the nuisance claim against the Council.

17. [43]

    On 26 July 2017, JLT wrote to the Council referring to the “Statewide Mutual Broad Form Liability Protection Wording”, indicating the Statewide Scheme had “no record of any notifications of complaints, claims or circumstances relating to flooding in the Appian Way” and stating that the Council’s knowledge appears to pre-date becoming a Member and stating that if such information had been provided “Statewide Mutual would have excluded claims related to flooding in and about the Appian Way”. It was stated coverage was declined by the Statewide Scheme. The Council was invited to make representation to Board.

18. [44]

    The Council's cover under the Statewide Scheme for "Professional Indemnity" was on a claims-made basis, that is, coverage was in respect of any "Claim" or "Claims" first made against the Council and notified during the period of protection. A Claim in respect of "Professional Indemnity" included any act alleged to have been committed by the Council in the conduct of the Council's "Business", which was defined as "Municipal or other Local Government Authorities, and all incidental and associated functions of The Member".

19. [45]

    Here, the s 149 Certificate claim was potentially a claim covered by the Council's "Professional Indemnity" cover under the Statewide Scheme in the period 1 July 2011 to 30 June 2013, so long as a claim was notified during the period of protection.

20. [46]

    On 30 October 2017, JLT notified the Council that "Statewide Mutual" had decided to deny coverage to the Council in respect of the s 149 Certificate claim.

21. [47]

    As noted above, the Council filed the second cross-claim against JLT on 23 February 2018.

22. [48]

    On the same day, the Council's solicitors sent a letter to JLT's solicitors which requested, inter alia, that JLT confirm its acceptance that JLT was the proper party to the second cross-claim.

23. [49]

    On 27 February 2018, JLT's solicitors sent a letter to the Council's solicitors, which stated that:

    1. (1)

       JLT did not accept that it was the proper party to the second cross-claim, on the basis that, when "viewed as a whole", the Statewide Deed "does not provide JLT with any right to determine whether the Claims Committee will exercise its ultimate discretion to make a recommendation to the Board of Management that, in relation to a claim, any payment from the Liability and Annual Fund should be made"; and

    2. (2)

       JLT's solicitors were "instructed to suggest the Council name Albury City Council as a member representative of [the Statewide Scheme]”.

24. [50]

    On 1 March 2018, the Council's solicitors requested that JLT provide a number of documents to enable the Council to "better assess the matters raised in your letter dated 27 February 2018".

25. [51]

    On 8 March 2018, JLT's solicitors sent a letter to the Council's solicitors, which stated that:

    1. (1)

       JLT refused to provide any of the requested documents to the Council; and

    2. (2)

       JLT's solicitors were now "instructed that, instead of Albury City Council, you should name Queanbeyan-Palerang Regional Council as the representative Council”, or alternatively, "you might like to consider suing all of the Members of [the Statewide Scheme], which obviously includes your client".

26. [52]

    On 21 March 2018, the Council served the notice to produce on JLT, which sought the same documents that the Council's solicitors had previously requested from JLT in their letter dated 27 February 2018.

27. [53]

    Subsequently, on 27 April 2018, JLT filed the motions.

THE STATEWIDE SCHEME

1. [54]

   The Statewide Scheme was established by the Statewide Deed. In order to become a Member of the Statewide Scheme, each local council was required to enter into the Statewide Deed with JLT “in such a form as Board of Management may from time to time require” (the Council contended an identically worded deed was entered by all Members). That is, the Statewide Scheme was, in effect, established through a series of bilateral agreements between each Member and JLT. The Council correctly described these arrangements as a mutual insurance scheme for local councils in NSW.

2. [55]

   The parties to the Statewide Deed have been earlier referred to in this judgment.

3. [56]

   Recital “B” of the Statewide Deed is as follows:

4. [57]

   Recital “C” of the Statewide Deed stated that:

5. [58]

   Part 1 of the Statewide Deed concerns “Definitions and Interpretation”. In cl 1.1, a “Member” is defined as “a Member which is a party to this deed and any additional person admitted under clause 10.1”. “Fund Manager” is defined as meaning “Jardine Australian Insurance Brokers Pty Limited or a replacement pursuant to clause 9.10” (as mentioned, for the purposes of the judgment the primary part of that definition concerns JLT).

6. [59]

   “Claim” and “Claiming Member” are defined as follows:

7. [60]

   “Liability” means the amount of liability incurred by a Member which, inter alia, “the Claims Committee determines would be indemnified under the terms and conditions (including exclusions) of the Primary Insurance which would respond if a nil retention applied under that Primary Insurance… less the amount of any deductible which the Member has agreed with Jardines will apply at the relevant time”.

8. [61]

   “Primary Insurance” and “Primary Insurer” are defined as follows:

9. [62]

   Part 2 of the Statewide Deed deals broadly with the Statewide Scheme itself. It includes clauses with respect to following:

   1. (1)

      “Establishment” (cl 2.1);

   2. (2)

      “Duty to Act fairly and in good faith” (cl 2.2);

   3. (3)

      “No partnership or association” (cl 2.3);

   4. (4)

      “General organisation of the Scheme” (cl 2.4);

   5. (5)

      “Liability of committee members” (cl 2.5); and

   6. (6)

      “Enforcement of this deed” (cl 2.6).

10. [63]

    Those clauses are extracted below:

11. [64]

    Part 4 is entitled “The Claims Committee”. It provides for the constitution of the Claims Committee as follows (in cl 4.1.1):

12. [65]

    That part also provided for the secretary of the Claims Committee, a person appointed by JLT (cl 4.1.5) and for quorum and voting (cl 4.2). Clause 4.2.1 is in the following terms:

13. [66]

    The functions of the Claims Committee are set out in cl 4.3.1 as follows:

14. [67]

    The expression “Fund Manager”, as earlier mentioned, is defined in cl 1.1 as meaning JLT or a replacement pursuant to cl 9.10.

15. [68]

    Part 5 of the Statewide Deed deals with the “Appointment and Functions” of JLT. It is in the following terms:

16. [69]

    Part 6 deals with “Primary Insurances”. Clause 6.1 is as follows:

17. [70]

    Clause 6.2 provides that, following notification from the Board of Management, JLT must arrange Primary Insurance in a Fund Year.

18. [71]

    Part 7 deals with the “Establishment of Annual Funds and Contributions”. Clauses 7.1 and 7.8.2 is extracted below:

19. [72]

    Part 8 deals with the “Handling and Payment of Claims”. Clauses 8.1.1, 8.2.1, 8.2.2 and 8.3.1 provide:

20. [73]

    Part 9 deals with the “Management of Annual Funds”. An “Annual Fund” is defined in cl 1.1 as meaning: “the Annual Fund established under this deed to provide indemnity to Claiming Members who have suffered Liability in a particular Fund Year”.

21. [74]

    Clause 9.1 deals with the “Appointment of a Fund Manager” as follows:

22. [75]

    Clause 9.3 deals with the “Fund Manager’s authority to apply the Annual Fund”.

23. [76]

    Part 10 deals with the “Admission, Retirement and Expulsion of Members”. Clauses 10.1 and 10.2 are as follows:

24. [77]

    Part 11 is entitled: “Jardines’ and the Fund Manager’s Fees and Indemnities and General Powers.”

25. [78]

    Clause 11.2 deals with the “Fund Manager’s and Jardines’ indemnities” and cl 11.4, the “Indemnity of Members” of the Statewide Scheme. Those provisions are in the following terms:

26. [79]

    Clause 11.6 concerns “General powers” and is in the following terms:

JLT Submissions

1. [80]

   In summary, the submissions for JLT were as follows:

   1. (1)

      The second cross-claim fails to disclose a cause of action.

   2. (2)

      The Council does not seek to identify any legal consequence arising from the use of the term “manager”, such as might conceivably flow from an allegation that a person is a receiver and manager.

   3. (3)

      The Council does not articulate in the pleadings a legal basis for the result it pleads arises from JLT’s role of “manager”.

   4. (4)

      An alternative claim for relief seems to proceed without reference to a policy of insurance and merely seeks to have JLT “as manager of [the] Statewide [Scheme]” indemnify the Council. No legal foundation for indemnity is pleaded: in this context it seems to be that the Council contends that this right to indemnity springs from a contract of insurance. The difficulty with that benevolent interpretation is that the Council nowhere alleges that JLT was an insurer or even held itself out as an insurer.

   5. (5)

      There is a dichotomy between JLT and the Statewide Scheme (or the Members of the Statewide Scheme). JLT does not have a majority on the Claim’s Committee. JLT would not be in a position to determine outright any claims.

   6. (6)

      JLT is not alleged to be and is not a Member of the Statewide Scheme, that is, the unincorporated self-insurance scheme for local councils in New South Wales. Clause 2.3 of the Statewide Deed provides that “this deed constitutes separate agreements between each Member and [JLT] and does not constitute an agreement between any of the Members”. Hence, “no Member shall have rights against any other Member” under the Statewide Deed (unless arising independently of the Statewide Deed). In particular, cl 2.4.3 of the Statewide Deed does not provide for JLT to become a Member of the Statewide Scheme. Rather, JLT participates in the Statewide Scheme as a manager of business. A manager is not a relevant legal relationship in the present context: JLT is not part of an unincorporated association.

   7. (7)

      The pleadings do attempt to define the role played by JLT in the capacity of manager by reference to the legal incidents of its functioning or by characterisation or categorisation so as to identify how JLT comes to have responsibility for accepting the claim. No reference is made to the Statewide Deed to show how JLT comes to be liable to the Council. There was no pleading that JLT would be “underwriting that mutually beneficial enterprise”.

   8. (8)

      The authorities make it clear that it is necessary to sue the relevant member. The fact of JLT being a party to the Statewide Deed does not change the nature of the mutual body. It has not joined together with others and it has not contributed financially.

   9. (9)

      The declaration sought in the second cross-claim recognised that dichotomy as indemnity is sought from JLT as Manager of the Statewide Scheme. JLT is not an agent or an insurer. There is no suggestion of a breach of the Statewide Deed. There is no pleading based on contract – the pleading is that JLT has a primary obligation to provide the indemnity. It was not pleaded that JLT had a central role in the administration and management of the Statewide Scheme.

   10. (10)

       Under the heading “Relief Claimed” in the second cross-claim, the order sought at para 2 maintains the dichotomy by seeking an order against JLT “as manager of [the] Statewide [Scheme]”.

   11. (11)

       The pleadings are to the same effect in para 3 of the second cross-claim. JLT is described as the manager of the Statewide Scheme. That description is a conclusion and sheds no light on the legal consequences that arise from the conclusion.

   12. (12)

       This pleading as to the 2011-2012 policy refers to “JLT as manager of Statewide, as insurer, issued to the council”. Again, there is no identification of what are or might be the legal consequences of JLT being the manager of an insurer. It is not alleged JLT is an insurer.

   13. (13)

       The same distinction is maintained with respect to the 2012-2013 policy for professional indemnity. JLT made a number of submissions regarding this policy (as outlined below).

   14. (14)

       In para 8 of the pleadings, the Council referred to notice to the Statewide Scheme, meaning a notice to the Members of the Statewide Scheme; and in para 9, notice to JLT as manager of the Statewide Scheme (again, including notice to Members of the Statewide Scheme).

   15. (15)

       A subsequent request of JLT “as manager” of the Statewide Scheme was made for confirmation that “it” had accepted liability, in respect of the Section 149 Certificate Claim, under a particular policy year (see para 11 of the pleadings). Paragraph 12 of the pleadings contended that JLT did not notify the Council as to whether “it” accepted liability.

   16. (16)

       The pleadings do not explain how JLT came to be in a position where “it” could (or would or should) be liable, given that the Council accepted that the Statewide Scheme was the insurer. Nor is it pleaded how a manager would be obligated to signify its acceptance of a claim made on the insurer, the Statewide Scheme. It was not identified by what rights and obligations JLT became liable.

   17. (17)

       The Statewide Deed setting up the Statewide Scheme, to which the Council was a party, reposes claims acceptance responsibility in a Claims Committee, which is a sub-committee of the Board of Management. The Statewide Deed makes it plain that, at its highest, JLT’s role is one of giving advice and for the provision of logistical support to implement the decisions of the Board of Management. The Statewide Deed does not support the suggestion that JLT had a role involving determination of claims.

   18. (18)

       There was no pleaded basis on which a “manager” would issue a policy of insurance nor any indication as to how a “manager” would be liable under a policy of insurance and nor does the Council seek to draw anything from the governing deed which would support a different view.

   19. (19)

       The term “as manager” has no legal meaning, no meaning is assigned to it by the pleading and nor does the Council plead the nature of the liability JLT is said to have.

   20. (20)

       The Council only contends that the insurer was the Statewide Scheme. When the Council pleads that a “policy” responds, it must be speaking of one or more of the policies issued by the Statewide Scheme and it must be speaking of the legal entities which combine to create the unincorporated body it identifies as the Statewide Scheme.

   21. (21)

       It was not pleaded that JLT is the agent of the Members of the Statewide Scheme or that it is a fiduciary of, either, the Statewide Scheme, the Members of the Statewide Scheme or the Council.

   22. (22)

       The pleading identified no legal basis or conception upon which JLT would come to be liable for the acts or omissions of the Statewide Scheme either generally or with specific respect to the issue of cover in relation to any given claim or set of notified circumstances, which were said to have been claimed or notified by reference to an insurance policy.

   23. (23)

       Overall, the pleading failed to disclose any legal basis on which JLT was said to be the embodiment of the Statewide Scheme, its agent or fiduciary or, for that matter, its insurer. Since the claim was said to be based on an entitlement to indemnity, it is bad for want of any identified basis on which JLT would be liable to indemnify an alleged insured of a third party.

   24. (24)

       Similar submissions were advanced with respect to the claim for indemnity under the 2011-2012 policy for damage to property.

   25. (25)

       A particular submission was made as to the pleading in para 16 of the second cross-claim as follows:

   26. (26)

       Absent some pleading to identify how JLT becomes liable under the policy, or was the issuer of the policy or came into a contractual (or similar) arrangement with Council, the pleading fails to disclose a cause of action.

   27. (27)

       The Statewide Deed confers upon JLT clerical and similar tasks associated with obtaining insurance for the pooled Risk of Member’s Claims as determined by a Claims Committee. JLT is involved in the Board of Management, in the constitution of the Claims Committee and it acts as Secretary of the Claims Committee. JLT does not determine or pay claims from its own resources or indemnify a Member.

   28. (28)

       It is clear from the definition of “Primary Insurance” that the Members of the Statewide Scheme purchase insurance. JLT is not the Primary Insurer as defined in cl 1.1 of the Statewide Deed.

   29. (29)

       Whilst cl 2.3 closes off much litigation between Members, it does not shut out litigation which seeks to enforce a right of indemnity under a policy which has been purchased by the Members because that is not a dispute under the Statewide Deed. Rather, it is a dispute under either the arrangement between the Members of the Statewide Scheme and the insurer or it arises under the insurance policy.

   30. (30)

       Clause 10.1 of the Statewide Deed is consistent with the proposition that JLT is not a Member of the Statewide Scheme because membership is confined to a “Member” Council, the local government and the Government Association of New South Wales and the Shires Association of New South Wales and any other person approved for admission by a unanimous resolution of the Board of Management.

   31. (31)

       There is no warrant in the Statewide Deed to find that JLT would have to indemnify a council. That is taken care of by the placement of insurance with others or the Statewide Scheme becoming, through its Members, an insurer of all of the Members. The Council failed to identify how the advisory role performed by JLT rendered it liable to indemnity under the policy of insurance (it was not suggested that it was the insurer or the insurer’s agent). It was also not alleged that JLT took a role in the making of the decision to acquire an indemnity. Members of the Claims Committee and the Board of Management made the relevant decisions.

Council Submissions

1. [81]

   In summary, the Council made the following submissions:

   1. (1)

      Primarily it was submitted that it is impermissible to strike out or summarily dismiss the second cross-claim where there exists a debatable question of law.

   2. (2)

      That question is whether JLT is a proper party for the Council to sue in respect of an alleged liability of the unincorporated self-insurance scheme.

   3. (3)

      There are no clearly defined legal rules or principles as to who is a proper party to sue in respect of an alleged liability of an unincorporated entity or association. Rather, it depends on all the facts and circumstances as to whether or not a particular person or entity is a proper party to sue in respect of an alleged liability of an unincorporated entity or association.

   4. (4)

      The relevant facts and circumstances include:

   5. (5)

      These matters involve mixed questions of fact and law which are not amendable to strike out or summary dismissal applications because they depend upon the resolution of evidentiary questions.

   6. (6)

      Alternatively, the terms of the Statewide Deed made it clear that JLT is a proper party for the Council to sue with respect to the Statewide Scheme.

   7. (7)

      JLT has the central role in the administration and management of the Statewide Scheme.

   8. (8)

      The only contractual relationship under the Statewide Deed was between a council and JLT. This was a strong indicator that JLT was a proper party.

   9. (9)

      Clause 2.1.1(c) of the Statewide Deed suggests that the contractual relationship for the management and resolution of a Member Council claims under the Statewide Scheme was exclusively between the Member Council and JLT.

   10. (10)

       Given that JLT is authorised by cl 2.6.1 to commence proceedings against a Member Council in respect of a matter arising in relation to the Statewide Scheme, it follows that a Member Council was entitled to commence proceedings against JLT with respect to matters arising in relation to the Statewide Scheme.

   11. (11)

       In its management role, JLT can effectively dictate how the Board of Management must behave. Reference was made to cll 2.2 and 8.2.2(b) of the Statewide Deed, together with cl 4.1.1 which provides that JLT is required to appoint 2 of 5 representatives to the Claims Committee. JLT is not a mere advisor to the Claims Committee.

   12. (12)

       Further, pursuant to cl 11.4, each Member Council indemnifies JLT against any loss, liability, or expense incurred in connection with their obligations under the Statewide Deed.

   13. (13)

       The Statewide Scheme is not an entity capable of committing any acts or omissions and accordingly the Council cannot plead a basis upon which the acts or omissions of the Statewide Scheme are attributable to JLT.

   14. (14)

       The Statewide Deed makes it clear that a council cannot sue another Member Council of the Statewide Scheme in respect of a liability in the unincorporated self-insurance scheme, whether as a representative defendant or otherwise. Clause 2.3 of the Statewide Deed is fatal to the contention raised by JLT that the proper cross-defendants are two councils that were nominated by JLT to act as a representative council on behalf of the Statewide Scheme.

Principles Applicable on Strike Out and Summary Dismissals

1. [82]

   There was no dispute as to the relevant principles outlined by the Council as to the determination of the Motion. It should also be noted, no delineation was undertaken in the discussion of principles between the requirements of UCPR r 13.4(1)(b) regarding the application to have the second cross-claim dismissed for failing to disclose a cause of action and UCPR r 14.28(1)(a) regarding the application to have the second cross-claim struck out.

2. [83]

   The Council was correct to submit that JLT has a heavy burden to discharge in moving the Court at an interlocutory stage for relief under the Motion.

3. [84]

   The principles concerning summary dismissal under UCPR r 13.4(1)(b) were recently discussed in National Australia Bank Ltd v Charlton; Charlton v The General Manager, NSW Rural Assistance Authority [2018] NSWSC 157 at [51]-[57] as follows:

4. [85]

   In the context of a motion seeking the strike out of a statement of claim under UCPR r 14.28(1), the Court recently gave consideration to General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125; [1964] HCA 69 (“General Steel”) in Renshaw v New South Wales Lotteries Corporation Pty Ltd [2018] NSWSC 1954 at [140]-[144] as follows:

5. [86]

   Those principles extend to debatable or triable questions of law. Strike out applications should not be used in cases of doubt or difficulty or where the pleading raises a debatable question of law. That is the effect of Dixon J’s judgment in Dey v Victorian Railways Commissioners (1949) 78 CLR 62 at 91 (although his Honour was concerned with the issues of abuse of process and frivolous and vexatious proceedings); (see also General Steel at 130 and Brimson v Rocla Concrete Pipes Ltd [1982] 2 NSWLR 937 (“Brimson”) at 941).

6. [87]

   Further, if the Court reaches the view that the Council may have a good cause of action against JLT but that the pleading of that cause of action in the second cross-claim is deficient in some respect, the appropriate course is to grant the Council leave to amend the second cross-claim not to strike out or dismiss it: Brimson at 942.

Principles Applicable to Unincorporated Associations

1. [88]

   The Statewide Scheme is an unincorporated, mutual, self-insurance scheme for local councils in New South Wales.

2. [89]

   In addressing the relevant principles as to what entity is the proper party to sue, in respect of alleged liability, both parties made reference to the judgment of Hammerschlag J in Anglican Development Fund Diocese of Bathurst in its own capacity and in its capacity as trustee of the Anglican Development Fund Diocese of Bathurst (receivers and managers appointed) v The Right Reverend Ian Palmer, Bishop of The Diocese of Bathurst; Commonwealth Bank of Australia v The Right Reverend Ian Palmer, Bishop of The Diocese of Bathurst (2015) 336 ALR 372; [2015] NSWSC 1856 (“ADF”) at [199]-[217].

3. [90]

   Some basic principles may be distilled from that judgment as follows:

   1. (1)

      An unincorporated entity, such as a voluntary association, does not, in law, have any existence apart from its members, and in itself can acquire no rights and incur no obligations (see at [199]).

   2. (2)

      However, it is possible for persons, natural or juristic, combining together for a purpose and identifying themselves by a name to enter into legal relations with others. Whether the result is a contract having legal force and in whom vests resultant rights and obligations depends upon the particular circumstances and on the means adopted (see at [199]).

   3. (3)

      Because an unincorporated association has no legal capacity, no contract can be made with the association itself unless provided by statute. Accordingly, when a person contracts on behalf of an unincorporated association, the rules of agency must be applied to ascertain the individuals who are liable as principals on the contract (see at [202]).

   4. (4)

      Where the only contract which can be alleged is one with the members for the time being of an unincorporated association having a fluctuating membership, the allegation of contract will fail (see at [203]).

4. [91]

   That distillation leads inexorably to the consideration of the law of consensus or contracts. His Honour expanded upon that concept in ADF in the context of voluntary associations as follows (at [201]):

5. [92]

   References were made in ADF to the judgment of Mason P in Trustees of the Roman Catholic Church for the Archdiocese of Sydney v Ellis (2007) 70 NSWLR 565; [2007] NSWCA 117 (“Ellis”). In their submissions going to the substantive issues in these proceedings, the parties’ discussion did not extend beyond ADF and Ellis. However, attention may also be given to Bradley Egg Farm Ltd v Clifford [1943] 2 All ER 378 (“Bradley Egg”). For the purpose of discussing this authority it is sufficient to extract [204]-[208] of ADF, incorporating, as it does, passages from the judgment of Scott and Goddard LJJ in that judgment:

CONSIDERATION

1. [93]

   By the Motion, JLT sought that the second cross-claim be dismissed or struck out, essentially because it disclosed no cause of action against JLT.

2. [94]

   It was contended that, insofar as the Council pleaded that an indemnity arose out of the 2011-2012 and 2012-2013 contracts of insurance, there was no legal foundation for the indemnity pleaded.

3. [95]

   Central to JLT’s interlocutory application was a contention that there was incurably defective pleadings.

4. [96]

   Without repeating the expansive summary of JLT’s submissions above, JLT contended that, as pleaded, the second cross-claim brings an action against it as a mere manager; a proposition (and position) which conveys no obligation for liability to or indemnification of the Member Councils. It was contended that there was no pleading – by function, characterisation or category – as to how a manager would be obligated to signify its acceptance of a claim made on the insurer, the Statewide Scheme. Neither the pleading nor the Statewide Deed identifies the legal basis upon which JLT is liable for the act or omissions of the Statewide Scheme either generally or with respect to the issue of cover in relation to a given claim or notified circumstances. The Statewide Deed reposes claims acceptance responsibility in a Claims Committee which is a sub-committee of the Board of Management. The manager gives advice and logistical support. The manager does not determine claims. JLT is not a Member of the Statewide Scheme.

5. [97]

   The Statewide Scheme is not a legal entity and is not capable of committing, itself, any acts or omissions. It is a mutual liability scheme which is an unincorporated self-insurance scheme for local councils in NSW.

6. [98]

   No party submitted that the “entity” was anything other than an unincorporated entity or association falling, broadly speaking, within the principles governing such bodies as distilled in the judgment from ADF (set out earlier in this judgment). This was notwithstanding the fact that some features of the body differed, as will be discussed below, from those commonly associated with voluntary unincorporated associations (see as discussed below in K L Fletchers, The Law Relating to Non-Profit Associations in Australian and New Zealand (Sydney Law Book Co, 1986) at Ch 3).

7. [99]

   The circumstances of this matter differ from cases such as Bradley Egg Farm where the question was whether persons or groups of persons who were members of an association (having a set of rules and arrangement intended to create legally binding rights and obligations) were liable as principals under contract because of their role in the organisation. In other words, those persons or groups had, in fact, joined an unincorporated or voluntary association, as such, and were sued in their capacity or role as part of a management committee (see Bradley Egg Farm at 381).

8. [100]

   JLT is not a “Member” of or under the Statewide Scheme. By cl 1.1, a Member means, inter alia, a Member who is a party to the Statewide Deed. The “Parties” provision of the Statewide Deed provides that the Members shall be Councils whole names appear in Schedule 1 to the Statewide Deed. That Schedule is divided into Regions. The first named Region is “Metropolitan” and the Council is the first name appearing therein. By parity of reasoning, JLT is not a Member of the Statewide Scheme – JLT is a party to the Statewide Deed but is distinguished in the “Parties” provision of the Statewide Deed from Members and does not appear in Schedule 1.

9. [101]

   Further, the definition of “Member” in cl 1.1 contemplates additional Members being “admitted” under cl 10.1. Clause 10.1 is consistent with membership being confined to entities other than JLT. The clause provides for eligibility of “a council”, representative bodies of councils and “any other person approved for admission by a unanimous resolution of the Board of Management”. The last mentioned eligibility provision would not seem to contemplate JLT, as cl 10.2 provides that a Member admitted as an additional Member will enter the Statewide Deed with JLT. I note for completeness, there is no pleading by the Council that JLT is a Member.

10. [102]

    JLT is correct to contend that, by cl 2.3 of the Statewide Deed, the unincorporated self-insurance scheme was created by the Council and other councils entering the Statewide Deed. In the result, no agreement was made between the Members of the Statewide Scheme. No Member of the Statewide Scheme had any right against another Member under the Statewide Deed unless arising independently of the Statewide Deed.

11. [103]

    The status of JLT as a party but non-member of the Statewide Scheme adds support to the contentions of JLT that it should not be found to be a principal with respect to the Statewide Scheme (and to challenges by JLT to the pleadings in the second cross-claim, which ascribe JLT in the role of manager without necessarily specifying the legal incidents of that role which, absent membership, constituted a basis for JLT being found as a principal under the Statewide Scheme). It was not pleaded that JLT was an agent for the Members of the Statewide Scheme.

12. [104]

    However, local councils do not become Members by means of joining an unincorporated association as such or, as mentioned above, by agreements reached between prospective or existing Members. The only mechanism by which a local council may become a Member of the Statewide Scheme is by entering the Statewide Deed with JLT. Thus, the only party with which the Council contracted, in becoming a Member of the Statewide Scheme, was JLT via the execution of the Statewide Deed.

13. [105]

    I accept the submission of the Council that the establishment of an unincorporated mutual self-insurance scheme with attendant legal obligations arising under the Statewide Deed in that manner is suggestive that JLT is the proper entity to be sued under the Statewide Deed as a principal in respect of the Statewide Scheme.

14. [106]

    That impression is substantially reinforced when regard is had to the management role and functions conferred upon JLT under the Statewide Deed and the level of control under the same afforded to JLT over the Statewide Scheme. Elaboration as to the extent of JLT’s management and control, in relation to the Statewide Scheme should, however, be undertaken in considering a further contention made by JLT.

15. [107]

    JLT submitted that whilst cl 2.3 of the Statewide Deed closes off much litigation between Members, it does not shut out litigation which seeks to enforce a right of indemnity under a policy which has been purchased by the Members because that is not a dispute under the Statewide Deed. Rather, it is a dispute under either the arrangement between the Members of the Statewide Scheme and the insurer or it arises under the insurance policy.

16. [108]

    However, that submission requires closer analysis both with respect to the nature of the indemnification of Members provided under the Statewide Scheme who have suffered a liability as defined within the Statewide Deed (“Claiming Members”), the management of claims where liability arises and JLT’s involvement with respect to the same.

17. [109]

    Clause 2.1.1(c) of the Statewide Deed provides that each Member agrees with JLT to enter the Statewide Deed for the purposes of having its claims “managed and resolved”. I agree with the submission advanced by the Council that that provision suggests that the existence of a contractual arrangement for the management and resolution of a Member’s claim under the Statewide Scheme is between the Member and JLT.

18. [110]

    Clause 8.2.1 provides that a claim is “covered by this Scheme if and to the extent that any payment which the Member against which the Claim is made would be covered under the Primary Insurance which would respond to the Claim if there was not retention under such Primary Insurance…”. Under cl 1.1 “Primary Insurance” means that public liability and professional indemnity insurance purchased by the Members from time to time pursuant to the Statewide Scheme. There was no specific evidence before the Court as to any Primary Insurer or Primary Insurance.

19. [111]

    Clause 7.1 requires that the Board of Management must establish an Annual Fund for each Fund Year. This is a separate and distinct fund vested in and held by the Fund Manager, namely, JLT in trust to be applied for the benefit of Members in accordance with the Statewide Deed.

20. [112]

    Clause 9.1 provides that each Member appoints JLT to hold, administer and manage the Annual Funds. Clause 1.1 defines the Annual Fund to be one established to provide indemnity to Claiming Members who have suffered a liability in a particular Fund Year. (Clause 1.1 defines “Claiming Member” to mean a Member against which a claim is made). Clause 9.3 authorises JLT to apply the Annual Fund in paying liability to a Claiming Member. Liability is defined under cl 1.1 to mean the amount of liability incurred by a Member which the Claims Committee determines would be indemnified under the terms and conditions of the Primary Insurance or is not covered, inter alia, by any other insurance. Clause 9.3 authorises JLT to pay any liability to the Claiming Member.

21. [113]

    The Statewide Deed deals with the management of claims under the Statewide Scheme. Clause 4.3.1 provides that the Claims Committee is to consider claims by the Member and make recommendations to the Board of Management in relation to “Claims, payment of Liability and the Annual Fund from which payments should be made”.

22. [114]

    The Board of Management must determine the amount and terms of Primary Insurance to be purchased jointly by the Members and the amount of contribution for such Primary Insurance (cl 6.1). JLT is the entity responsible for the organisation of Primary Insurance. JLT may also commence proceedings against a Member for any unpaid contribution to the Annual Fund. The Board of Management must determine whether and, if so, the extent to which a claim is covered by the Statewide Scheme. In making such a determination the Board of Management is not bound to follow any Primary Insurer.

23. [115]

    Hence, the Statewide Deed provides for a detailed scheme for the resolution of claims for indemnification against liability under the Statewide Scheme. There are provisions within the Statewide Deed which, in addition to those mentioned in [108]-[114] above, repose in JLT, as a party to the Statewide Deed, substantial and relevant control in the management and administration of the Statewide Scheme.

24. [116]

    I might interpose, before elaborating upon that observation, to note two matters. First, the resolution of the issue here under consideration is not illuminated by the concept developed by the Council in argument such as JLT was the “embodiment” of the Statewide Scheme, any more than of the concept of a “dichotomy” raised by JLT is helpful to resolution of the issues raised by the Motion.

25. [117]

    Secondly, whether JLT has, as contended by senior counsel for the Council, the central role in the management and administration of the Statewide Scheme, that issue is unnecessary to decide and, in my view, should properly await further evidence as I will discuss below.

26. [118]

    It is sufficient for the conclusion I will reach on the Motion to find on the evidence presently before the Court on the Motion that JLT exercises palpable active management and control over the Statewide Scheme for the following reasons:

    1. (1)

       It is true that cl 2.4.3 defines JLT’s “participation” in the Statewide Scheme as providing functions which, in the broad, may be described as managerial or administrative in nature. However, that provision does not, on its face, purport to exhaustively define the roles and functions of JLT under the Statewide Deed and, when the Statewide Deed, is read as a whole, such a construction is not properly available. On the material presently before the Court, and having regard to the whole of the Statewide Deed, JLT may not simply be described as having the role and function of giving advice and offering logistical support to implement Board of Management decisions or managing a business to meet the ends provided for in the Statewide Deed.

    2. (2)

       JLT does not have the legal capacity to deny a claim of a Member. However, under cl 3.1, JLT both appoints representatives to the Board of Management (although they do no hold the majority, 3 of 13 votes do not make JLT a mere advisor) and may require a representative of the Board of Management to comply with the terms of the Statewide Deed. It is unclear, on the evidence, whether JLT can, as the Council submitted, effectively dictate how the Board of Management must behave, but it may be accepted that, if JLT formed the view that the Board of Management had breached a duty of good faith imposed on representatives imposed by cl 2.2 of the Statewide Deed in the exercise of the Board of Management’s discretion to reject a member’s claim (under cl 8.2.2(b)), JLT has power to require, under cl 2.6.2, representatives to the Board of Management to comply with the obligation under those claims.

    3. (3)

       Clause 4.3.1 provides that the Claims Committee is a sub-committee of the Board of Management whose functions include the receiving and consideration of claims by a Member and making recommendations to the Board of Management. It is true, the Claims Committee is to liaise with JLT to organise payment (cl 4.3.1(c)). However, JLT’s role is far beyond an advisor or administrator. By cl 4.1.1, JLT controls 2 out of 5 votes in determining which claims made under the Statewide Scheme will be accepted or refused.

    4. (4)

       There is no provision in the Statewide Deed allowing JLT to sue on behalf of all Members. Nor does JLT have a representative status under the Statewide Deed. However, cl 2.1.1(c) provides that each Member agrees with JLT to enter the Statewide Deed “for the purposes of … having its claims managed and resolved”. JLT is possessed under the Deed of all powers which are reasonably necessary to perform its roles (as JLT and Fund Manager). This contractual relationship for the management and resolution of Members claims under Statewide Scheme is between the Member Council and JLT.

    5. (5)

       Further, cl 2.6.1 of the Statewide Deed authorises JLT to commence proceedings against a Member Council with regard to a matter arising under or in relation to the Statewide Scheme. When read with cll 2.6.2 and 11.1.4, it is arguable that an implication arises that a Member Council may commence proceedings against JLT arising in relation to the Statewide Scheme. It may also be noted that cl 9.1 provides that each Member Council appoints the Fund Manager, who is defined as JLT, to hold, administer and manage the Annual Fund.

    6. (6)

       Whilst JLT does not have itself the legal capacity to deny a claim, this does not preclude JLT being sued and then joining additional cross-defendants in the primary proceedings or commence separate proceedings. I agree with the submission of the Council that, in the event JLT is sued by a Member Council with respect to the Statewide Scheme, it cannot be “personally liable” because it had contractual rights under the Statewide Deed to have recourse to the Annual Fund and to Members contributions to cover any liability to which it is exposed (see cll 2.4.4, 7.1, 9.1, 9.3, 11.2.1 and 11.4).

    7. (7)

       Hence, in the event that the Court ultimately found that the Statewide Scheme was liable to cover the Council's claims in respect of the nuisance claim and/or the Section 149 Certificate Claim, and judgment was entered against JLT in respect of those claims, JLT would then have its contractual rights under the Statewide Deed with the Member Councils of the Statewide Scheme for the judgment to be paid out of the relevant Annual Fund and/or out of Member Councils' contributions.

    8. (8)

       The various Member Councils nominated by JLT to be sued would not seem to constitute the proper parties for suit given the terms of cl 2.3 of the Statewide Deed.

27. [119]

    Those deliberations are not finally dispositive of the question as to who is the proper entity to be sued under the Statewide Scheme as principal. I accept the submission of the Council that there remains the need for the Court to hear full argument in that respect and, further, there remains in prospective issues of fact relevant to the resolution of that issue.

28. [120]

    It is clear from ADF that where a person or entity alleges an entity or person is liable for the acts or omissions of an unincorporated association, the Court is required consider all the relevant facts, matters and circumstances to determine whether that person is liable.

29. [121]

    It appears to me that there may well be disputed questions of fact arising with respect to the role played by particular persons and entities in the conduct of the Statewide Scheme, particularly with respect to the contractual relations between Members of the Statewide Scheme and the nature and extent of the control exercised by JLT (a modest illustration of such an issue is exposed by paras 16-17 of the pleadings in the second cross-claim). A matter posed of such questions is not ordinarily amendable to a summary dismissal or strike out application.

30. [122]

    I turn then specifically to the issues raised by JLT as to the pleadings in the second cross-claim.

31. [123]

    The principal complaint by JLT, in this respect, was the use of various formulations in the relief claimed and the pleadings and particulars which referred to JLT as a manager which, it was contended, did not disclose a legal relationship, no basis (or pleadings), for indemnity and ultimately no cause of action (see, for example, JLT written submissions at paras 4, 11, 18, 19, 20 and 26 and my earlier summary of JLT’s submissions).

32. [124]

    The expression “JLT, as manager of [the] Statewide [Scheme]” (in proposed orders 1 and 2 of the relief claimed on second cross-claim) and “JLT as manager of [the] Statewide [Scheme], as insurer” (in paras 5 and 7 of the second cross-claim) contain some infelicities as they may be, for instance, construed as referring to a role of JLT as other than a “principal” or describing only the roles referred to in cl 2.4.3.

33. [125]

    I have not understood the expression “manager” as taking its meaning other than by reference to the full functions (or characterisation of functions) of JLT within the relevant provisions of the Statewide Deed as discussed in this judgment. The expression appears to have been employed to give effect to, as I have earlier discussed, the law of consensus or contracts; attributing liability to persons or entities involved in the management and control of unincorporated associations. I do not consider that the pleadings convey that JLT has acted as a third party but as a principal.

34. [126]

    That said, just whether the pleadings properly contain a pleading (and particulars) that JLT is, in that sense, a principal of the Statewide Scheme and is liable on that basis because of the nature and extent of its management and control of the entity is another matter. The Council referred to an alternate expression such as JLT being sued in its capacity as “manager of Statewide” and that “JLT as manager of Statewide” was the “insurer”.

35. [127]

    The deficiencies, such as they are, are amendable to cure by legitimate amendment. No amendment is presently sought but the issue of amendment was raised in the written submissions of the Council. If sought, I would give leave to bring an application to amend.

CONCLUSION

1. [128]

   It is not plain and obvious that the second cross-claim discloses no cause of action or that it is so deficient, hopeless or untenable as to make it inappropriate to allow the proceedings to continue.

2. [129]

   The pleadings in the second cross-claim raise a debatable question of law. In fact, I consider the pleadings of the Council to be arguable. An allowance is available to be made for legitimate amendment to cure any defect. Further, I consider there are aspects of the issues raised as to the proper entity to sue under the Statewide Scheme which raises mixed questions of fact and law.

3. [130]

   It follows that the Motion should be dismissed. The issue should be determined at trial, after any amendment sought by the Council is considered, and once the parties have adduced evidence and the Court has had the benefit of full argument on the issues ventilated in this judgment and otherwise.

4. [131]

   No submissions were received on the question of costs. The question raised by the Motion was a discrete one. However, there is also the outstanding issue of orders with respect to the NTP Motion.

5. [132]

   I propose to make orders for the preparation of short minutes of order dealing with the motions. If an agreed position can be reached as to costs then that position may be recorded in the short minutes of order. Otherwise the parties should provide a draft program to deal with the question of costs.

ORDERS

1. [133]

   The Court makes the following orders:

   1. (1)

      The Council shall file short minutes of order reflecting this judgment within 14 days of the publication of this judgment.

   2. (2)

      In the event that the short minutes of order do not reflect consent as to the question of costs, costs are reserved.

   3. (3)

      In the event costs are reserved, the parties shall provide a program to deal with any issues as to costs within 21 days of the publication of this judgment.