Calliden Insurance Ltd v Chisholm - [2009] NSWCA 398

NEW SOUTH WALES COURT OF APPEAL

CITATION:
Calliden Insurance Limited v Chisholm [2009] NSWCA 398

FILE NUMBER(S):
40200/09

HEARING DATE(S):
23 November 2009

JUDGMENT DATE:
23 November 2009

EX TEMPORE DATE:
23 November 2009

PARTIES:
Calliden Insurance Limited
Danial Arthur Chisholm

JUDGMENT OF:
Allsop P Young JA Sackville AJA

LOWER COURT JURISDICTION:
District Court

LOWER COURT FILE NUMBER(S):
127/2009

LOWER COURT JUDICIAL OFFICER:
Elkaim DCJ

LOWER COURT DATE OF DECISION:
22 April 2009

COUNSEL:
A S Bell SC; A Lo Surdo (Appellant)
G R Graham (Respondent)

SOLICITORS:
Hunt & Hunt (Appellant)
Emery Partners (Respondent)

CATCHWORDS:
INSURANCE - Accident and sickness insurance - construction of insurance policy - policy including excess – excess defined to be amount “insured first bears” – claim against now insolvent company - whether insured has to pay the excess before claim can be bought against insurance company – payment by insured not precondition for claim against insurance company
Law Reform (Miscellaneous Provisions) Act 1947 (NSW) – s 6

LEGISLATION CITED:
Insurance Contracts Act 1984 (Cth)
Law Reform (Miscellaneous Provisions) Act 1947 (NSW)

CATEGORY:
Principal judgment

CASES CITED:
Baulderstone Hornibrook Engineering Pty Ltd v Gordian Runoff Ltd [2008] NSWCA 243
Charter Reinsurance Co Ltd v Fagan [1997] AC 313
Firma C-Trade SA v Newcastle Protection and Indemnity Association [1991] 2 AC 1

TEXTS CITED:

DECISION:
1. Leave to appeal is refused.
2. The application to pay the costs of the respondent of the application for leave to appeal and of the appeal heard concurrently.

JUDGMENT:

THE SUPREME COURT
OF NEW SOUTH WALES
COURT OF APPEAL

40200/09
ALLSOP P
YOUNG JA
SACKVILLE AJA

MONDAY 23 NOVEMBER 2009

CALLIDEN INSURANCE LIMITED v CHISHOLM

JUDGMENT

ALLSOP P delivering the judgment of the Court: The applicant insurer seeks leave to appeal from an interlocutory decision of a judge in the District Court (Elkaim DCJ). His Honour granted leave to the respondent, the plaintiff, pursuant to the Law Reform (Miscellaneous Provisions) Act 1947 (NSW), s 6 (4) (the “Act”) to commence proceedings against the applicant insurer. Section 6 of the Act relevantly provides as follows:

“6 Amount of liability to be charge on insurance moneys payable against that liability
(1) If any person (hereinafter in this Part referred to as the insured) has, whether before or after the commencement of this Act, entered into a contract of insurance by which the person is indemnified against liability to pay any damages or compensation, the amount of the person’s liability shall on the happening of the event giving rise to the claim for damages or compensation, and notwithstanding that the amount of such liability may not then have been determined, be a charge on all insurance moneys that are or may become payable in respect of that liability.

(2) If, on the happening of the event giving rise to any claim for damages or compensation as aforesaid, the insured (being a corporation) is being wound up, or if any subsequent winding-up of the insured (being a corporation) is deemed to have commenced not later…

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] NSWCA 398
Decision Date: 23 November 2009

CaseChat Overview and Summary

The applicant insurer, Calliden Insurance Ltd, sought leave to appeal an interlocutory decision of the District Court of New South Wales. The respondent, the plaintiff, had been injured in the course of his employment and alleged negligence by an employee of Employ (No 14) Pty Limited, the insured. The insured company was subsequently placed into liquidation. The plaintiff sought leave under section 6(4) of the Law Reform (Miscellaneous Provisions) Act 1947 (NSW) to commence proceedings directly against the insurer, claiming damages for personal injury.

The central legal issue before the Court of Appeal was whether the insured's payment of a $25,000 excess, as stipulated in the insurance policy, was a condition precedent to the insurer's liability and, consequently, to the plaintiff's ability to commence proceedings against the insurer under section 6 of the Act. The insurer argued that because the insured's liquidator had declined to pay the excess and the insured lacked the resources to do so, this condition precedent had not been met, entitling the insurer to disclaim liability.

The Court of Appeal, in dismissing the application for leave to appeal, reasoned that the policy's definition of "excess" as the amount "the insured first bears" did not, on its proper construction, establish payment of the excess as a condition precedent to the insurer's liability under the policy. The Court found that the insurer's obligation to indemnify arose upon the insured incurring a legal liability, and the excess was merely the amount the insured was obliged to contribute towards that liability. The Court noted that the definition of "excess" did not refer to the word "claim" and that the conditions of the policy did not explicitly state that payment of the excess was a prerequisite for the insurer's engagement of indemnity. Therefore, the plaintiff was entitled to commence proceedings against the insurer pursuant to section 6 of the Act.

Orders

Orders of the court

1. Leave to appeal is refused.

2. The application to pay the costs of the respondent of the application for leave to appeal and of the appeal heard concurrently.

Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

ALLSOP P delivering the judgment of the Court: The applicant insurer seeks leave to appeal from an interlocutory decision of a judge in the District Court (Elkaim DCJ). His Honour granted leave to the respondent, the plaintiff, pursuant to the Law Reform (Miscellaneous Provisions) Act 1947 (NSW), s 6 (4) (the “Act”) to commence proceedings against the applicant insurer. Section 6 of the Act relevantly provides as follows: The plaintiff was injured in the course of his employment in March 2007. He alleges that his injuries were caused by the negligence of an employee of a company called Employ (No 14) Pty Limited. Employ 14 was the beneficiary of a broad form liability insurance policy issued by the insurer which was in force for the period 14 December 2006 to 14 December 2007. The policy covered “the insured’s legal liabilities for personal injury or property damage occurring during the period of employment arising out of the insured’s operations”. The insured carried on business as a labour hire agency. Liquidators were appointed to the insured on 29 August 2007 apparently in consequence of the resolution of its creditors on 17 August 2007. The appointment of a liquidator is deemed to have commenced on 17 August 2007. By a summons filed on 22 April 2009 the plaintiff sought leave under s 6(4) of the Act to commence proceedings against the insurer claiming damages for personal injury allegedly suffered by reason of the insurer’s negligence. The insurer resisted the application for leave on two grounds: The insurer’s application below and for leave to appeal rested, and rests, on a short point of construction of the policy. The insurer says that Condition 3, set out below, required the insured to pay an excess of $25,000 in respect of the plaintiff’s claim as a condition precedent to the engagement of indemnity under the policy. Since, as is common ground, the liquidator of the insured has declined to pay any excess and the insured has no resources to do so, the condition precedent has not been met and the insurer is said to be entitled to disclaim liability thereby. The policy schedule provides public liability cover for any one occurrence of $20 million. As already noted, the cover is for “the insured’s legal liability for personal injury or property damage occurring during the period of insurance arising out of the Insured operation”. That definition comes from the policy schedule. The policy schedule also stipulates a “standard excess” for “Each and every claim” of $25,000. The terms of the policy contained in what is called a product disclosure statement of a “Broadform Liability Insurance” contains a number of sections. Relevantly first is the Definition section of the policy which includes the following definitions of “Excess” and “Occurrence”: It is to be noted that the definitions in the policy do not include the word “Claim”. After the Definition section comes a section on Conditions. Conditions 3 and 4 of the policy are in the following terms:

Ratio Decidendi

Legal Principle Established

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