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Fitzgerald v CBL Insurance Ltd

Fitzgerald v CBL Insurance Ltd

Case [2014] VSC 493 2 October 2014

Contract Formation

Unconscionable Conduct

Adverse Possession

Insurance Law

Insolvency Law

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IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMERCIAL AND EQUITY DIVISION

S CI 2011 5405

LAURENCE ANDREW FITZGERALD and MICHAEL JAMES HUMPHRIS (in their capacity as Trustees for certain former employees of Huon Corporation Pty Ltd (ACN 115 243 206)	Plaintiffs
v
CBL INSURANCE LTD (Formerly called Contractors Bonding Limited)	Defendant

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JUDGE:	SLOSS J
WHERE HELD:	Melbourne
DATES OF HEARING:	23, 24, 25, 26 and 30 September 2013 2, 3, 11, 18, 23 and 24 October 2013
DATE OF JUDGMENT:	2 October 2014
CASE MAY BE CITED AS:	Fitzgerald & Anor v CBL Insurance Ltd
MEDIUM NEUTRAL CITATION:	[2014] VSC 493

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CONTRACT OF INSURANCE – Principles of construction and interpretation - Whether valid claim made under insurance policy – Liability of insurer – Quantum of claim.

INSOLVENCY – Company placed in liquidation following administration – Insolvency deemed to have taken place as at date of administration – What employee entitlements were ‘owed’ as at deemed date for the purposes of the insurance policy – Whether provisions of certified agreements were enlivened – Whether employee’s jobs were made ‘redundant’.

RECTIFICATION – Insured sought rectification of policy wording and schedule – Continuing common intention – Whether rectification required.

INTEREST - Section 57 of the Insurance Contracts Act 1984 (Cth) – Whether unreasonable for insurer not to pay claim.

DAMAGES – Claim for damages by trustees to recover time and costs involved in managing the claim - Entitlement to damages dependent upon breach – Proof of loss.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr A.J. Myers AO QC and Mr C.P. Young	Piper Alderman
For the Defendant	Mr R.M. Garratt QC and Mr L.E. Hawas	Rigby Cooke

Table of Contents

Paragraph
Introduction	[1]
Questions raised for determination	[17]
Factual narrative	[19]
Issue A - Construction of the policy	[78]
Policy provisions	[79]
Approach to the construction of the contract	[82]
Claims made under the policy	[113]
CBL contends no requirement to pay until claim made engages with the policy	[118]
Answers to Construction questions	[131]
Issue B - Rectification of the policy	[132]
Relevant legal principles	[134]
Rectification of Schedule 1 to include the omitted employees	[146]
Rectification of the definition of Insured Loss	[157]
Answers to Rectification questions	[175]
Issue C- Quantum of the Insured Loss	[176]
The Trustees’ approach to quantum	[176]
CBL’s disputes about quantum	[186]
Issues of principle raised in relation to the determination of quantum	[191]
The alleged ‘overpayments’	[192]
‘Restructure’ and reading of the relevant awards and certified agreements – relevant principles	[213]
The administrators’/liquidators’ reports	[224]
‘Redundancy’ under the certified agreements	[233]
‘Redundancy’ under the awards	[256]
The ‘monthly’ employees	[260]
Nylex Frankston ‘monthly’ employees	[261]
Empire Rubber ‘monthly’ employees	[296]
Payments in lieu of notice	[387]
Effect of leave taken after 30 June 2006 on accrued sick leave or annual leave entitlement	[392]
Other matters about quantum	[402]
Re-calculation of employee entitlements as at 30 June 2006 using old pay rate	[407]
Answers to questions about the quantum of…

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.

Continue reading Fitzgerald v CBL Insurance Ltd

Details

AGLC: Fitzgerald v CBL Insurance Ltd [2014] VSC 493
Case: [2014] VSC 493
Decision Date: 2 October 2014

CaseChat Overview and Summary

Fitzgerald initiated legal proceedings against CBL Insurance Ltd in the Federal Court of Australia, seeking compensation under an insurance policy for claims related to employee entitlements arising from the company's liquidation. The central dispute revolved around the interpretation of the insurance policy, the quantum of the claim, and the insurer's liability. The court had to determine if the insured had made a valid claim under the policy, the extent of the insurer's obligations, and the correct amount owed. Additionally, the court examined whether the insured's request for rectification of the policy wording was justified and if the insurer was unreasonable in not paying the claim, as well as the entitlement to damages for managing the claim.

The primary legal issues before the court included the interpretation of the insurance policy and the application of relevant provisions to the facts. The court had to determine whether the insured's claim was valid under the policy, focusing on the definition of 'owed' employee entitlements as of the deemed date of insolvency. The court also had to decide whether the insured's jobs were made'redundant' and if the provisions of certified agreements were triggered. Furthermore, the court considered whether rectification of the policy wording was necessary due to a continuing common intention of the parties and whether the insurer acted unreasonably by not paying the claim. Lastly, the court assessed the entitlement to damages for the time and costs involved in managing the claim.

In its decision, the court meticulously analysed the insurance policy and relevant legislative provisions, including Section 57 of the Insurance Contracts Act 1984 (Cth). The court found that the insured had made a valid claim under the policy and that the insurer was liable for the employee entitlements as of the deemed date of insolvency. The court ruled that the employee jobs were not made 'redundant' and that the certified agreements did not apply. The court also decided that rectification of the policy wording was not required, as there was no continuing common intention between the parties. Regarding the insurer's conduct, the court concluded that it was not unreasonable for the insurer not to pay the claim. Finally, the court determined that the trustees were not entitled to damages for the time and costs involved in managing the claim, as there was no breach that resulted in a loss.

The final orders of the court required CBL Insurance Ltd to pay the insured the amount owed under the insurance policy. The court also dismissed the request for rectification of the policy wording and denied the claim for damages by the trustees. The insurer was instructed to pay interest on the amount owed from the date the claim was made.

Orders