Arms v WSA Online Limited (ACN 081 121 495) (Subject to a Deed of Company Arrangement)

The applicant, Arms, sought a declaration that they are entitled to a lien or charge over moneys paid or payable by CGU Professional Risks Insurance to the first respondent, WSA Online Limited, in respect of a professional indemnity insurance policy. The matter was before the court as WSA Online Limited was subject to a Deed of Company Arrangement. The applicant's claim arose from professional negligence by the first respondent. The court was required to determine whether the applicant had a valid lien or charge over the indemnity payments, and if so, whether it would take priority over the claims of the administrators and creditors under the Deed of Company Arrangement.

The court found that the applicant had a valid lien or charge over the indemnity payments as it was a necessary means to recover the costs and disbursements reasonably expended by the applicant in prosecuting the action. The court held that the lien or charge would take priority over the claims of the administrators and creditors under the Deed of Company Arrangement as it was a necessary means to recover the applicant's costs and disbursements. The court further held that the applicant's costs of and incidental to the claim to the lien or charge should be taxed and paid by the first respondent and form part of the costs and disbursements referred to in the lien or charge.

The court made an order declaring that the applicant is entitled to a lien or charge over any moneys paid or payable by CGU Professional Risks Insurance to the first respondent by way of indemnity pursuant to a Civil Liability Professional Indemnity Insurance Policy in respect of the claim by the applicant. The order also provided that the lien or charge would have priority over the claims of the administrators and creditors under the Deed of Company Arrangement in relation to the first respondent. The order further provided that the applicant's costs of and incidental to the claim to the lien or charge should be taxed and paid by the first respondent and form part of the costs and disbursements referred to in the lien or charge.