Australia: Plaintiff Denied Access To Insurance Documents

Last Updated: 22 June 2009
Article by Shayne Thompson, Baron Alder and Mark Dobbie

Key points

  • Access to insurance policy documents, notifications and relevant correspondence denied.
  • Consideration of power of the Court to order a party to produce insurance documents under section 23 of the Federal Court Act 1976 (Cth).


Lehman Brothers (Lehman) is the defendant in proceedings brought by the Wingecarribee Shire Council (Council) for alleged misleading and deceptive conduct.

Before proceedings were commenced, Lehman went into voluntary administration. A meeting of creditors was scheduled to be held on 9 October 2008. Before the meeting, the Council requested that the administrators produce a copy of Lehman's professional indemnity insurance policy. The request was declined.

The Council then applied to the Federal Court for an order requiring Lehman to produce its insurance policy. The Council did not contend that the documents were relevant to any matter in the proceedings. Instead, the Council relied on section of the Federal Court of Australia Act (Act) which provides:

"The Court has power, in relation to matters in which it has jurisdiction, to make orders of such kinds, including interlocutory orders, and to issue, or direct the issue of, writs of such kinds, as the Court thinks appropriate."

At first instance, Rares J ordered Lehman to produce copies of its insurance policies to the Council. His Honour relied on the principle in Jackson v Sterling Industries Limited (1987) 162 CLR 612, that the power under section 23 of the Act permits the court to make orders to prevent the abuse or frustration of its processes. Rares J thought that the potential abuse of process, or the event which might frustrate the process of the Court, was that at the forthcoming creditors' meeting, the administrators could propose a deed of company arrangement which would extinguish the Council's entitlement to claim damages from Lehman and its directors. His Honour stated:

"In my opinion, the question whether there is insurance that, in fact, responds or there may be a charge that the council is entitled to under s.6 of the Law Reform (Miscellaneous Provisions) Act are matters which it is entitled, as a litigant in this Court, to know in the interests of justice before it has to determine what it will do in Lehman Brothers' second creditors meeting."

Lehman appealed Rares J's decision.

The Full Court's Decision

The Full Court (Jacobson, Middleton and Perram JJ) found in favour of Lehman, denying the Council access to Lehman's insurance documents.

The parties did not dispute that the principles involving exercising the powers under section 23 of the Act were outlined by the High Court in Jackson v Sterling. The Full Court commented that there is no doubt that the Court has power to prevent and remedy abuses of its process and that this can extend to an order requiring a respondent in proceedings to state its asset position. However the Court stated that:

"... it is to be kept steadily in mind that the power arises from the existence of an apprehended or antecedent abuse of process. It is not a free ranging power to compel respondents to produce evidence as to their assets where it might be convenient to the other party to the litigation so to order."

The Full Court reasoned that where a step that might otherwise be an abuse of process was permitted by statute, that generally suggested that the step was not, per se, an abuse of process. In this case Parliament intended, by Part 5.3 of Corporations Act, that a deed of company arrangement might extinguish a plaintiff's rights against a company under administration. On that basis, the ordinary operation of that Part could not, of itself, constitute an interference with the Council's proceedings which could be remedied pursuant to section 23 of the Act.

The Full Court held that it was necessary to establish a link between the conduct said to constitute the abuse of process (in this case, the failure by Lehman to produce its insurance documents) and the impact upon the proceedings. There was no evidence to suggest that a majority of Lehman's creditors would vote against the deed of company arrangement if the insurance documents were produced.

The Full Court also indicated it was then necessary to establish that the remedy sought would provide a solution to the identified abuse. It was at this point, the Full Court reasoned that the Council's case failed. The Full Court stated:

"There is, as far as we can see, no connection between the provision to the Council of the respondent's insurance arrangements and the prevention of the termination of the Council's proceedings in this Court should the [deed of company arrangement] be passed."


It is frequent for plaintiffs, particularly in cases against companies in administration, to attempt to ascertain details of the defendant's insurance entitlements. It is clear that the court can require a defendant to disclose insurance material, even if it is not relevant to a matter in issue in the proceedings. However, this case suggests that there must be a real risk of an abuse of process or the frustration of the court's processes before the court will order production of an insurance policy.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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