AssetInsure Pty Limited (formerly Gerling Global Reinsurance Company of Australia Pty Limited) v New Cap Reinsurance Corporation Limited (In Liq) & 3 Ors

The case of *AssetInsure Pty Limited (formerly Gerling Global Reinsurance Company of Australia Pty Limited) v New Cap Reinsurance Corporation Limited (In Liq) & 3 Ors* was heard by the Court of Appeal of New South Wales, with Justices Hodgson, Ipp, and Bryson JJA presiding. The dispute concerned the priority of certain liabilities of an insurance company in liquidation, specifically whether liabilities under reinsurance contracts were to be treated as "liabilities in Australia" for the purposes of the *Insurance Act 1973* (Cth) and whether certain accrued rights of creditors were extinguished by legislative changes.

The court was required to determine several key legal issues. These included the interpretation of "liabilities in Australia" under the *Insurance Act 1973* (Cth), whether section 31(4) of that Act provided an exhaustive definition, and the general law principles regarding the satisfaction of debts. Further issues involved whether section 116(3) of the *Insurance Act 1973* (Cth) conferred accrued rights on creditors at the commencement of a winding up, and if so, whether these rights were subsequently extinguished by section 562A of the *Corporations Act 2001* (Cth) or by the replacement of section 116 of the *Insurance Act 1973* (Cth) under the *General Insurance Reform Act 2001* (Cth). The court also had to consider whether contracts of reinsurance qualified as "contracts of insurance" for the purposes of section 562A of the *Corporations Act 2001* (Cth).

The court's reasoning involved a detailed examination of statutory interpretation, particularly concerning the *Insurance Act 1973* (Cth) and the *Corporations Act 2001* (Cth). It considered the meaning of "insurance" and "reinsurance" within these legislative frameworks, and the distinction between a contract of insurance, a policy accepted in Australia, and a policy issued in Australia. The court also addressed whether an informal policy constituted a policy for the purposes of section 31 of the *Insurance Act 1973* (Cth) and the requirements for the acceptance of a proposal. The court ultimately made declarations and orders regarding which contracts were to be considered "relevant contracts of insurance" under section 562A of the *Corporations Act 2001* (Cth) and whether the provisions of that section were applicable to contracts of reinsurance entered into by the company in liquidation. The court dismissed the first cross-appeal and the main appeal, but upheld the second cross-appeal, setting aside certain declarations and making new directions. Costs were awarded accordingly, with liberty to parties to make further submissions.