JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CIVIL
LOCATION: PERTH
CITATION: GIBBS -v- HAOMA MINING NL [No 6] [2017] WADC 67
CORAM: STAUDE DCJ
HEARD: 16 JANUARY 2017
DELIVERED : 30 MAY 2017
FILE NO/S: CIV 1348 of 2007
BETWEEN: BARBARA JEAN GIBBS
Plaintiff
AND
HAOMA MINING NL
DefendantINSURANCE COMMISSION OF WESTERN AUSTRALIA
Third PartyINSURANCE AUSTRALIA LTD
Third person
Catchwords:
Appeal from registrar's decision - Application for debt appropriation order - Objection by third person - Whether an insurer's liability to indemnify a defendant is an available debt - Effect of consent order dismissing third party claim for indemnity
Legislation:
Civil Judgments Enforcement Act 2004
Result:
Appeal allowed
Objection to debt appropriation order dismissed
Representation:
Counsel:
Plaintiff: Ms R Sorgiovanni
Defendant: No appearance
Third Party : No appearance
Third person : Mr D H Williams
Solicitors:
Plaintiff: Sorgiovanni Legal
Defendant: Not applicable
Third Party : Not applicable
Third person : WHL Legal Pty Ltd
Case(s) referred to in judgment(s):
Alexander v Ajax Insurance Co Ltd [1956] VLR 436
AMP Workers' Compensation Services (NSW) Ltd v QBE Insurance Ltd [2001] NSWCA 267; (2001) NSWLR 35
Bank of NSW v Fremantle Auto Centre (1973) WAR 161
Baxter v Obachelo Pty Ltd [2001] HCA 66
Cigna Insurance Asia Pacific Ltd v Packer [2000] WASCA 415; (2000) 23 WAR 159
Commercial Developments Pty Ltd v Mercantile Mutual Insurance (Worker's Compensation) Limited (1991) 5 WAR 208
Do Carmo v Ford Excavations Pty Ltd [1984] HCA 17; (1984) 154 CLR 234
Edmunds v Lloyd Italico e L'Ancora Cia di Assicurazioni e Riassicurazioni SpA [1986] 2 All ER 249
Gibbs v Haoma Mining NL [2012] WADC 127
Gibbs v Haoma Mining NL [No 4] [2016] WADC 105
Gray v Sirtex Medical Ltd [2009] WASC 126
Hondros v Chesson [1981] WAR 146
Israelson v Dawson (Port of Manchester Insurance Co Ltd garnishee) [1933] 1 KB 301
James Hardie & Co Pty Ltd v Seltsam Pty Ltd [1998] HCA 78; (1998) 196 CLR 53
Jones v Thompson (1858) 27 LJQB 234
Morrell v Mercantile Mutual Insurance (Australia) Ltd [1999] WASCA 250
New Cap Reinsurance Corporation Ltd (in liq) v AE Grant [2008] NSWSC 1015
Newport Assn Football Club Ltd v Football Assn of Wales Ltd [1995] 2 All ER 87
Odyssey Re (Bermuda) Ltd v Reinsurance Australia Corporation Ltd [2001] NSWSC 266
Penrith City Council v Government Insurance Office (NSW) (1991) 24 NSWLR 564
Photo Production Ltd v Securicor Transport Ltd [1980] AC 827
Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589
QBE Insurance (Australia) Ltd v Lois Nominees Pty Ltd [2010] WASCA 86
Re Mitchell; Freelove v Mitchell (1913) 1 Ch 201
The State of Western Australia v Wardley Australia Ltd [1991] FCA 314; (1991) 102 ALR 213
Trident General Insurance Co Ltd v McNiece Brothers Pty Ltd (1988) 165 CLR 107
Victorian WorkCover Authority v Esso Australia Ltd [2001] HCA 53; (2001) 207 CLR 520
Wallaby Grip Limited Limited v QBE Insurance (Australia) Limited;…
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- Case
- [2017] WADC 67
- Decision Date
CaseChat Overview and Summary
The court considered the distinction between a liability to pay damages and a liability to pay a debt, as explored in previous cases such as New Cap Reinsurance Corporation Ltd (in liq) v AE Grant and Odyssey Re (Bermuda) Ltd v Reinsurance Australia Corporation Ltd. The court found that an insurer's liability is typically a liability to pay unliquidated damages, with the exception of total loss on a valued policy. The court further noted that the obligation to pay money as prescribed in s 46 is not limited to debts and can include an obligation to pay damages. In this case, the court found that the third party had not provided evidence of the terms of the consent order dismissing the third party claim or any pre-conditions that would prevent the insurer from indemnifying the defendant.
Ultimately, the court determined that the insurer's liability to indemnify the defendant was an available debt for the purposes of the appropriation order, as it was not a prerequisite for the insurer to have been indemnified by the defendant before being liable to pay the judgment debt. The court's reasoning was grounded in the interpretation of the policy terms and the nature of the insurer's obligation, which was found to be a liability to pay damages.
The final order of the court was to allow the application for a debt appropriation order, recognising the insurer's liability as an available debt.
Orders
Orders of the court
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Background
Background to the litigation
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Evidence
Evidence Before The Court
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Decision
Reasons for decision
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Ratio Decidendi
Legal Principle Established
In New Cap Reinsurance Corporation Ltd (in liq) v AE Grant [2008] NSWSC 1015, the issue was whether the plaintiff reinsurer was insolvent at a certain date. White J dealt with the issue of whether an insurance liability was for damages or in debt (from [86]). Following Odyssey Re (Bermuda) Ltd v Reinsurance Australia Corporation Ltd, his Honour found that the liability of an insurer is typically a liability to pay unliquidated damages, with the exception of total loss on a valued policy. His Honour found that the cases revealed four reasons why a claim on an insurance policy was a claim for unliquidated damages. First, where the insured had not paid the loss, the insurer's obligation could be satisfied by other means, such as paying a third party, as in Israelson v Dawson; second, it may be necessary for the insured to prove the value of its loss; third, a claim for an indemnity was a claim for breach of contract (assumpsit); and fourth, the claim arose from a secondary obligation to pay damages for breach. At [101] – [102], his Honour stated:A contract of indemnity insurance is often, perhaps usually, characterised as one under which the insured is entitled to be protected from loss. In In re Richardson [1911] 2 KB 705, Buckley LJ said (at 716) 'Indemnity requires that the party to be indemnified shall never be called upon to pay.' Where that is the nature of the contract, then the insurer is liable in damages if the insured is not protected from loss, because the insurer has failed to perform its primary obligation.Such a promise can and should be distinguished from a promise to redress or compensate the indemnified party for losses sustained (and a fortiori paid) by that party. In the former case the indemnifier is liable in damages for his breach of contract in not preventing the loss. In the latter he can be sued in debt for the recovery of what he promised to pay (Jervis v Harris at 202-203; see generally Zakrzewski, 'The Nature of a Claim on an Indemnity' (2006) 22 JCL 54). While there is support in the authorities to which reference has been made for the proposition contended by IAL that a claim under a policy of liability insurance is a claim for damages rather than for debt, it seems to me that to focus on that dichotomy is to risk overlooking the definition of an available debt contained in s 46. The obligation to pay money as prescribed in s 46 is not limited to debts, and can be taken to include an obligation to pay damages. It should also be observed that the words 'existing cause of action' in s 46(1)(c) do not mean a 'cause' or 'action' as defined in s 4 of the Supreme Court Act 1935. The expression 'cause of action' has a legal meaning. In this case the third person has not sought to adduce any evidence of the terms of the consent order dismissing the third party claim or of any pre‑condition or other obstacle to paying the defendant, by way of indemnity under the policy, the amount of the plaintiff's damages. Yet, it would appear that Haoma has not sought to enforce its right to be indemnified in respect of the judgment debt. If Haoma is entitled to indemnity the making of a claim is not essential to its cause of action: Cigna Insurance Asia Pacific Ltd v Packer [2000] WASCA 415; (2000) 23 WAR 159. In my view, on a proper construction of the policy, it is not a prerequisite to IAL's liability to pay the judgment that Haoma has discharged it. It is sufficient that Haoma's liability to the plaintiff has been ascertained by a verdict.