Ashmere Cove Pty Ltd v Beekink - [2009] FCA 564

FEDERAL COURT OF AUSTRALIA
Ashmere Cove Pty Ltd v Beekink [2009] FCA 564
TRADE PRACTICES - preliminary issues – construction of insurance policy – fair trading Acts – misleading and deceptive conduct – s 995(2) of Corporations Law – similar legislation – interpretation of exclusion clause – not the function of the court to re-write clear and plain words used in exclusion clause
Corporations Law, Ch 5C, s, 601FC, s 995, s 995(A), s 995(2)
Trade Practices Act 1974 (Cth), s 51AF(2)(a), s 52
Fair Trading Act 1987 (NSW)
Fair Trading Act 1985 (Vic)
Fair Trading Act 1987 (WA)
Alex Kay Pty Ltd v General Motors Acceptance Corporation [1963] VR 458
Australian Paper Manufacturers Ltd v American International Underwriters (Australia) Pty Ltd [1994] 1 VR 685
Carlingford Australia General Insurance Ltd v EZ Industries Ltd [1988] VR 349
Dickinson v The Motor Vehicle Insurance Trust (1987) 163 CLR 500
Distillers Co Bio-chemicals Australia Pty Ltd v Ajax Insurance Co (1974) 130 CLR 1
FAI General Insurance Co Ltd v Maracorp Financial Services Ltd [1994] 1 VR 455
Fraser v BN Furman (Productions) Limited [1967] 1 WLR 898
Halford v Price (1960) 105 CLR 23
International Air Transport Association v Ansett Australia Holdings Limited (2008) 234 CLR 151
McCann v Switzerland Insurance Australia Limited (2000) 203 CLR 579
Maggbury Pty Limited v Hafele Australia Pty Limited (2001) 210 CLR 181
Maye v The Colonial Mutual Life Assurance Society Ltd (1924) 35 CLR 14
Quintano v B W Rose Pty Ltd [2008] NSWSC 793
Suncorp Metway Insurance Ltd v Landridge Pty Ltd (2005) 12 VR 290
Wilkie v Gordian Runoff Limited (2005) 221 CLR 522
ASHMERE COVE PTY LTD, CG SUPER PTY LTD, CHORAL PTY LTD, PULLINGTON INVESTMENTS PTY LTD, GERALDINE GRAY, MANTEL BREWING SERVICES, CATHERINE EMMA HUSK, JENNIFER ANNE ALLEN & MIKAYLA KIM DUNNE, BLYTH NOMINEES PTY LTD, JOHN ANDREW MASLEN & JOAN CARMEL MASLEN and CREATON PTY LTD v PETER CORNELIUS BEEKINK, HERSH SOLOMON MATJELES, GREGORY PHILLIP GAUNT, GIOVANNI MAURIZIO CARELLO (LIQUIDATOR OF KNIGHTSBRIDGE MANAGED FUNDS LIMITED (IN LIQUIDATION)), KNIGHTSBRIDGE MANAGED FUNDS LIMITED (IN LIQUIDATION), SUNCORP METWAY INSURANCE LIMITED and EMPLOYERS REINSURANCE CORPORATION; PETER CORNELIUS BEEKINK, HERSCH SOLOMON MAJTELES and GREGORY PHILLIP GAUNT; LATROBE HOLDINGS PTY LTD
WAD 305 of 2006
BARKER J
2 JUNE 2009
PERTH

IN THE FEDERAL COURT OF AUSTRALIA

WESTERN AUSTRALIA DISTRICT REGISTRY

WAD 305 of 2006

BETWEEN:
ASHMERE COVE PTY LTD
First Applicant

CG SUPER PTY LTD
Second Applicant

CHORAL PTY LTD
Third Applicant

PULLINGTON INVESTMENTS PTY LTD
Fourth Applicant

GERALDINE GRAY
Fifth Applicant

MANTEL BREWING SERVICES
Sixth Applicant

CATHERINE EMMA HUSK
Seventh Applicant

JENNIFER ANNE ALLEN & MIKAYLA KIM DUNNE
Eighth Applicant

BLYTH NOMINEES PTY LTD
Ninth Applicant

JOHN ANDREW MASLEN & JOAN CARMEL MASLEN
Tenth Applicant

CREATON PTY LTD
Eleventh Applicant

PETER CORNELIUS BEEKINK
First Cross-Claimant

HERSCH SOLOMON MAJTELES
Second Cross-Claimant

GREGORY PHILLIP GAUNT
Third Cross-Claimant

AND:
PETER CORNELIUS BEEKINK
First Respondent

HERSH SOLOMON MATJELES
Second Respondent

GREGORY PHILLIP GAUNT
Third Respondent

GIOVANNI MAURIZIO CARELLO (LIQUIDATOR OF KNIGHTSBRIDGE MANAGED FUNDS LIMITED (IN LIQUIDATION))

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2009] FCA 564
Decision Date: 2 June 2009

CaseChat Overview and Summary

The case of Ashmere Cove Pty Ltd v Beekink was before the court to determine the applicability of certain clauses in an insurance policy concerning claims made by one party against another. Ashmere Cove Pty Ltd sought indemnity from KMF, which was managed by Fieldmont Holdings Pty Ltd, due to alleged misleading or deceptive conduct. KMF was insured under a policy with an endorsement that the court needed to interpret in the context of the claims made by Ashmere.

The legal issues that the court had to resolve involved the interpretation of specific clauses in the insurance policy. Firstly, the court had to determine if the claims made by Ashmere against KMF, relating to alleged breaches of the Trade Practices Act 1974, were within the exclusions outlined in the policy. Secondly, the court needed to ascertain whether an endorsement in the policy excluded any indemnity that might otherwise be available to KMF in relation to the claims made by Ashmere. The court's task was to interpret these clauses in light of the facts of the case and to decide if the claims were indeed within the scope of the exclusions.

The court found that the claims made by Ashmere against KMF fell within the exclusions specified in clause 1.2.3 of the policy, which excluded coverage for breaches of certain legislation. Additionally, the court determined that the endorsement in the policy did exclude any indemnity that might otherwise be available to KMF concerning the claims made by Ashmere. The endorsement explicitly excluded indemnity for claims arising from the non-repayment of loans managed by KMF, which was the situation in this case. The court's interpretation of these clauses led to the conclusion that the claims were not covered by the policy due to the explicit exclusions.

In light of these findings, the court dismissed the proceedings against the sixth and seventh respondents and ordered that the applicants pay the costs of the proceedings against these respondents. The court's decision was clear in finding that the claims were excluded by the terms of the policy, and this conclusion was reflected in the final orders made.

Orders

Orders of the court

1. In relation to the question posed by Gilmour J on 21 October 2008, in the following terms:

(1) In so far as clause 1.2.3 of the insurance policy the subject of this proceeding (Policy) refers to any:

‘unintentional breach of the Trade Practices Act 1974 (Commonwealth), the Fair Trading Act 1987 (NSW), the Fair Trading Act 1985 (Victoria), or similar legislation enacted by any state or territory of Australia’

[underlining added]

are the claims made by the first applicant (Ashmere) against the fifth respondent (KMF) in respect of alleged misleading or deceptive conduct in breach of s 995(2) of the Corporations Law, claims within the ambit of clause 1.2.3.

The answer is: Yes.

2. In relation to the question posed by Gilmour J on 21 October 2008, in the following terms:

(2) It being agreed that:

(a) Ashmere advanced to Fieldmont Holdings Pty Ltd (Fieldmont) the amount of $100,000, as part of a loan managed by KMF;

(b) except for the sum of $27,225, Fieldmont did not repay Ashmere; and

(c) the Policy contains an endorsement that excludes indemnity for any “Claim” made against KMF, or any claim by KMF for indemnity under the Policy, directly or indirectly arising out of the non-repayment of any loan which was managed by KMF (Endorsement);

having regard to the claims made by Ashmere against KMF in the amended substituted statement of claim, does the Endorsement exclude any indemnity that might otherwise be available to KMF under the policy in respect of Ashmere’s claims against KMF.

The answer is: Yes.

3. The proceedings against the sixth and seventh respondents are dismissed.

4. The applicants pay the sixth and seventh respondents’ costs of the proceedings, including any reserved costs, to be taxed, if not agreed.

Note:

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

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Decision

Reasons for decision

BARKER J

Therefore, the answer to Question 2, whether the endorsement excludes any indemnity that might otherwise be available to KMF under the Policy in respect of Ashmere's claim against KMF, is "Yes".CONCLUSION AND ORDER For the reasons above,(1)the answer Question 1 is "Yes"; and(2)the answer to Question 2 is "Yes". I will now hear from the parties as to what orders should be made in light of these findings.

Ratio Decidendi

Legal Principle Established

Established by: BARKER J

Full text does not contain this section.

IN THE FEDERAL COURT OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY	WAD 305 of 2006