Asset Insure Pty Ltd v New Cap Reinsurance Corp Ltd (in liq)

Asset Insure Pty Ltd appealed to the High Court of Australia against a decision of the Court of Appeal of the Supreme Court of New South Wales concerning the winding up of New Cap Reinsurance Corporation Limited (NCRC). The dispute centred on whether liabilities incurred by NCRC under a specific reinsurance contract, FC3A, constituted "liabilities in Australia" for the purposes of section 116(3) of the *Insurance Act 1973* (Cth), and whether NCRC's reinsurance contracts were "relevant contracts of insurance" under section 562A of the *Corporations Act 2001* (Cth). NCRC, an Australian incorporated reinsurer, had entered voluntary administration and subsequently a creditors' voluntary winding up. Contract FC3A reinsured risks occurring outside Australia, although the contract was accepted in Australia.

The High Court was required to determine two principal legal issues. Firstly, whether the liabilities arising from contract FC3A were "liabilities in Australia" within the meaning of section 116(3) of the *Insurance Act 1973* (Cth), considering that the insured risks were located overseas but the contract was accepted in Australia. This involved interpreting whether the situs of the liability was Australia according to common law conflict of laws principles, or if the definition was confined to liabilities under contracts meeting specific criteria in section 31(4) of the *Insurance Act*. Secondly, the Court had to decide whether contracts of reinsurance entered into by NCRC were considered "relevant contracts of insurance" for the purposes of section 562A of the *Corporations Act 2001* (Cth), which governs the application of proceeds from such contracts in a winding up.

The High Court reasoned that the task of statutory construction required consideration of the language of the legislative text, alongside other relevant sources such as statutory context, legislative history, and admissible parliamentary materials. Applying this approach, the Court concluded that the liabilities under contract FC3A were not "liabilities in Australia" for the purposes of section 116(3) of the *Insurance Act 1973* (Cth), overturning the decision of the Court of Appeal on this point. The Court also affirmed the primary judge's finding that the reinsurance contracts were indeed "relevant contracts of insurance" within the meaning of section 562A of the *Corporations Act 2001* (Cth).

Consequently, the High Court allowed the appeal in part. It set aside an order of the Court of Appeal and, in its place, ordered that the second cross-appeal to that Court be dismissed. This outcome restored the declarations and directions made by the primary judge concerning both the *Insurance Act* and *Corporations Act* issues. The parties were granted 21 days to file written submissions regarding the appropriate orders for costs.