HIH Casualty & General Insurance Ltd v Building Insurers' Guarantee Corporation - [2003] NSWSC 1083

No judgment structure available for this case.

Reported Decision:
(2004) 13 ANZ Insurance Cases 61-597
(2004) 22 ACLC 345

Supreme Court

CITATION: HIH Casualty & General Insurance Ltd v Building Insurers' Guarantee Corporation [2003] NSWSC 1083

HEARING DATE(S): 19/08/03, 20/8/03

JUDGMENT DATE:
26 November 2003

JURISDICTION:
Equity Division
Corporations List

JUDGMENT OF: Barrett J

DECISION: Originating process stood over for formulation of directions

CATCHWORDS: STATUTES - operation and effect of statutes - provisions of State and Territory Acts purporting to alter incidents of company winding up under Commonwealth Act - interpretation of provisions of Commonwealth Act as to interaction with State and Territory Acts - INSURANCE - reinsurance - application of proceeds of reinsurance - statutory regulation of insurers - CORPORATIONS - winding up - application of property and priority of claims - territorial quality of winding up process under Commonwealth law - impact of State and Territory laws - EQUITY - subrogation - whether third party compelled by law to meet insured loss upon reinsured risk is subrogated to insurer's right under reinsurance - whether equitable right to subrogation displaced by statutory right

LEGISLATION CITED: Australian Capital Territory (Self-Government) Act 1988 (Cth)
Companies Act 1961 (Vic)
Companies (Western Australia) Code
Constitution of the Commonwealth of Australia
Corporations Act 1989 (Cth)
Corporations Act 2001 (Cth)
Corporations (Consequential Amendments) Act (No 2) 2003 (WA)
Corporations Law
Corporations (New South Wales) Act 1990 (NSW)
Corporations (Western Australia) Act 1990 (WA)
Employers' Indemnity Supplementation Fund Act 1980 (WA)
General Insurance Reform Act 2001 (Cth)
Home Building Act 1989 (NSW)
Insurance Act 1973 (Cth)
Insurance Protection Act 2001 (NSW)
Insurance (Policyholders Protection) Legislation Amendment Act 2001 (NSW)
Motor Accident Insurance Act 1994 (Qld)
Motor Accidents Compensation Act 1999 (NSW)
Work Health Act (NT)
Workers Compensation Act 1987 (NSW)
Workers Compensation Act 1958 (Vic)
Workers Rehabilitation and Compensation Act 1988 (Tas)
Workers Compensation Supplementation Fund Act 1980 (ACT)
Workers Compensation (Acts of Terrorism) Amendment Act 2002 (ACT)

CASES CITED: Australian Securities and Investments Commission v Rowena Nominees Pty Ltd (2003) 45 ACSR 419
Butterell v Douglas Group Pty Ltd (2000) 35 ACSR 398
Director of Public Prosecutions v Loo (2002) 42 ACSR 459
Re Dominion Insurance Co of Australia Ltd [1980] 1 NSWLR 271
Re Crust 'n' Crumbs Bakers (Wholesale) Pty Ltd [1992] 2 QdR 76
In re Law Guarantee Trust and Accident Society [1915] 1 Ch 341
In re Harrington Motor Co Ltd; ex parte Chaplin [1928] 1 Ch 105
N A Kratzmann Pty Ltd v Tucker (No 2) (1968) 123 CLR 295
New Cap Reinsurance Corporation Ltd v Faraday Underwriting Ltd [2003] NSWSC 842
Nepean v Martin (1895) 11 TLR 256
New South Wales Medical Defence Union Ltd v Crawford (1993) 31 NSWLR 469
Northern Territory v GPAO (1999) 196 CLR 553
Omaha Indemnity Co v Carpenter and Australian Transport Insurance Pty Ltd (1987) 5 ANZ Ins Cas 60-831
Re Palmdale Insurance Ltd (No 3) [1986] VR 439
Public Service Association of New South Wales v Industrial Commission of New South Wales (1985) 1 NSWLR 627
R v Credit Tribunal; ex parte General Motors Acceptance Corporation Australia (1977) 137 CLR 545
Rose v Hvric (1963) 108 CLR 353
Skandia American Reinsurance Corporation v Schenk 441 F Supp 715 (1977)
Tariff Reinsurances Ltd v Commissioner of Taxes (Victoria) (1938) 59 CLR 194
Telstra Corporation Ltd v Worthing (1999) 197 CLR 61
Trident General Insurance Co Ltd v McNiece Bros Pty Ltd (1988) 165 CLR 107
University of Wollongong v Metwally (1984) 158 CLR 447
In re Usines de Melle and Firmin Boinot's Patent (1954) 91 CLR 42
Victoria v Commonwealth (1937) 58 CLR 618

PARTIES :
HIH Casualty & General Insurance Limited (In Liquidation), FAI General Insurance Company Limited (In Liquidation), CIC Insurance Limited (In Liquidation), World Marine & General Insurances Pty Limited (In Liquidation), FAI Traders Insurance Company Pty Limited (In Liquidation), FAI Reinsurances Pty Limited (In Liquidation), HIH Underwriting & Insurance (Australia) Pty Limited (In Liquidation), HIH Underwriting & Agency Services Limited (In Liquidation), HIH Insurance Limited (In Liquidation), Lanlex No 65 Pty Limited (In Liquidation), FAI Leasing Finance Pty Limited (In Liquidation), FAI Insurances Limited (In Liquidation), FAI Investments Pty Ltd (In Liquidation), FAI Overseas Investments Pty Limited (In Liquidation), HIH Overseas Holdings Limited (In Liquidation), FAI Financial Services Limited (In Liquidation), FAI Overseas Holdings Pty Limited (In Liquidation), Hannan & Company Pty Limited (In Liquidation), Notestir Pty Limited (In Liquidation), First Mentor Group Pty Limited (In Liquidation), World Wide Weather Underwriting Agencies (Australia) Pty Limited (In Liquidation), HIH Investment Holdings Limited (In Liquidation), HIH Company Limited (In Liquidation), ACN 006 495 987 Pty Limited (In Liquidation) (formerly "Industrial Rehabilitation Services Pty Limited"), CIC General Insurance Holdings Ltd (In Liquidation), FAI Home Security Holdings Limited (In Liquidation), ACN 005 312 345 Pty Limited (In Liquidation) (formerly "Ready Plan Asia Pacific Pty Limited), FAI Film Distribution Pty Limited (In Liquidation), FAI Workers Compensation (Vic) Pty Limited (In Liquidation), HIH (Real Estate) Pty Limited (In Liquidation), Integrated Commercial Finance Pty Limited (In Liquidation), Innes Owens Pty Limited (In Liquidation), RiskCorp Australia Pty Limited (In Liquidation) - First Plaintiffs
Anthony Gregory McGrath and Alexander Robert Mackay Macintosh - Second Plaintiffs
Building Insurers' Guarantee Corporation - First Defendant
Motor Accident Insurance Commission - Second Defendant

FILE NUMBER(S): SC 5353/02

COUNSEL: Mr B A J Coles QC/Mr G Scarcella, Solicitor - Plaintiffs
Mr S W Gibb SC/Mr C L Lonergan - First Defendant and Motor Accidents Authority of NSW
Mr A J L Ogborne - Second Defendant
Mr A Robertson SC/Mr G B Carolan - Interested parties, ACT, NT, Vic and NSW WorkCover
Mr M B Oakes SC/Mr M J Dawson - Amicus Curiae

SOLICITORS: Blake Dawson Waldron - Plaintiffs
I V Knight, Crown Solicitor - First Defendant
Bain Gasteen by their City Agents Hicksons - Second Defendant

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
CORPORATIONS LIST

BARRETT J

WEDNESDAY, 26 NOVEMBER 2003

5353/02 – HIH CASUALTY & GENERAL INSURANCE LIMITED (IN LIQUIDATION) & ORS v BUILDING INSURERS’ GUARANTEE CORPORATION & ANOR

JUDGMENT

Background

1 The second plaintiffs, Mr McGrath and Mr Macintosh, are the liquidators of the first plaintiffs, being 33 companies in respect of which orders for winding up have been made by this court. It is convenient to refer to the second plaintiffs as “the liquidators” and to the first plaintiffs as “the HIH companies”. The liquidators make application to the court under s.479(3) of the Corporations Act 2001 (Cth) for directions in relation to certain matters arising under the windings up. In general terms, the matters concern the correct treatment of proceeds of certain contracts of reinsurance.

2 The HIH companies carried on business as insurers. In the course of doing so, they effected contracts of reinsurance under which other parties agreed to protect them against portions of their liabilities to their own policyholders in respect of certain risks. The liquidators’ application raises, in relation to certain kinds of insurance made compulsory by statute, the question whether the proceeds of related reinsurance represent, in each winding up, assets available for the general purposes of the winding up (and therefore ultimately available for the benefit of the body of creditors generally) or whether rights in respect of those proceeds accrue to statutory authorities by which claims not met by the insolvent HIH companies are paid, so that those authorities have an entitlement to or interest in the reinsurance proceeds which prevents their being assets available for the general purposes of the winding up.

3 The risks covered by the relevant insurances written by the HIH companies are risks in respect of which legislation of States and Territories makes insurance compulsory. At a functional level, there are three classes of such insurance: motor vehicle third party insurance, workers’ compensation insurance and builders’ warranty insurance. Legislation requires certain persons to effect and hold insurances of these kinds, the social objective being to ensure that others who suffer loss for which such persons are liable are not confined to recovery from the assets of an individual vehicle owner, employer or builder. As will be seen, provisions of the State and Territory laws imposing the requirement to insure have a bearing on the question of entitlement to recoveries under reinsurance contracts entered into by insurers who write policies of the kinds required by the statutory schemes.

4 Several of the State and Territory statutory authorities by which these schemes are administered made submissions upon the hearing of the liquidators’ application for directions. Some were parties, others were not but I do not think anything really turns on that. Submissions were also made on behalf of the liquidators and by Mr Oakes SC who, with Mr Dawson of counsel, appeared as amicus curiae to meet the concern of the court that there be an appropriate means of ensuring that arguments which might favour the position of the general body of creditors should be placed before the court.

5 The general background I have stated is dealt with in greater detail in the statement of facts agreed for the purposes of the proceedings. It is convenient to quote from it, although with nomenclature altered to accord with that used in these reasons (and with footnotes omitted):

“ State statutory insurance schemes

12. Several of the HIH companies wrote insurance policies as required by the State Schemes (the State Schemes Policies ). The State Schemes Policies were written out of the offices of several of the HIH companies located in Australia and related to events that would happen in Australia. Payments in respect of claims made under the State Schemes Policies were to be made out of funds of several of the HIH companies located in Australia.

Reinsurance

13. Reinsurance can be described as the insurance entered into by an insurer (the cedant or reinsured) in respect of its contractual liabilities to pay claims incurred under its contracts of direct insurance. It is entered into to limit the exposure of the reinsured to losses on the insurance business written.

14. A reinsurance contract constitutes a separate contract of insurance between the reinsurer and the reinsured. It is not an assignment of all or any part of the rights and liabilities already existing under a contract of direct insurance and the original insured does not acquire any rights or liabilities thereunder.

Reinsurance arrangements in respect of the State Schemes

16. The HIH companies (and other entities within the HIH Group) are parties to many reinsurance contracts which give rise to existing and potential future claims for payments by reinsurers to the HIH companies. The contracts provide for various different types of reinsurance cover, including both facultative reinsurance and treaty reinsurance.

17. The liquidators of the HIH companies have made application herein for directions under s 479(3) of the Corporations Act in relation to particular contracts and arrangements of reinsurance entered into by one or more of the HIH companies (the State Schemes Reinsurance Contracts ) and which are referable to State Schemes Policies underwritten by one or more of the HIH companies.

19. The State Schemes Reinsurance Contracts identified by the liquidators of the HIH companies are listed in Schedule B hereto. Part 1 of Schedule B lists the contracts referrable to the Workers Compensation Schemes. Part 2 of Schedule B lists the contracts referrable to the CTP Schemes. Part 3 of Schedule B lists the contract referrable to the Builders' Warranty NSW Scheme. There may be other State Schemes Reinsurance Contracts which are subsequently identified.

22. The identified reinsurance program in relation to the CTP Schemes and, except as set out in paragraph 23 below, the Builders' Warranty NSW Scheme operate in a similar way.

23. Part of the reinsurance program in respect of the Builder's Warranty NSW Scheme is comprised of one or more concurrent quota share reinsurance contracts for particular policy periods.

Reinsurance recoveries

24. The liquidators of the HIH companies have commenced recovery of the entitlements of the HIH companies pursuant to the HIH reinsurance program including in respect of the State Schemes Reinsurance Contracts. This is an ongoing process which is likely to take a considerable period of time. The figures stated below are based on the preliminary analysis conducted by the liquidators and are subject to review.

25. It is currently estimated that there will be total reinsurance recoveries for the HIH companies in the amount of approximately $1,847 million. This amount includes recoveries in respect of the State Schemes Reinsurance Contracts.

26. In respect of the CTP Schemes, it is currently estimated that reinsurance recoveries will be in the range of approximately 5 – 20% of the existing and future acknowledged creditor claims. It is estimated by the liquidators that reinsurance recoveries in relation to the CTP Schemes will be a minimum of $10 million. It is estimated by the Motor Accidents Authority of NSW that total past and future liability of the reinsurers in relation to CTP Schemes will be a minimum of $25 million.

27. In respect of the Workers' Compensation Schemes, it is currently estimated that reinsurance recoveries will be in the range of approximately 5 – 20% of the existing and expected future acknowledged creditor claims. It is estimated that reinsurance recoveries in relation to the Workers' Compensation Schemes will be a minimum of $10 million.

The windings up

6 Immediately before the Corporations Act 2001 (Cth) came into operation on 15 July 2001, each of the HIH companies was in existence and registered as a company under the Corporations Law of one of the States and Territories. The orders of this court for the winding up of the HIH companies were made on various days between 27 August 2001 and 7 May 2003. Some of the companies had previously been the subject of orders for the appointment of provisional liquidators made before the Corporations Act 2001 (Cth) commenced

7 Despite the earlier provisional liquidation that applied in some cases, it is clear that the winding up of each HIH company derives solely from the provisions of the Corporations Act of the Commonwealth and that no question of the operation of transitional provisions in relation to windings up produced by orders made under provisions of the Corporations Laws of the States and Territories needs to be addressed. For the purposes of the Corporations Act itself, each winding up commenced on the day on which the winding up order was made: s.513A(e).

8 These matters of timing must be borne in mind particularly in relation to those aspects of the matters on which the liquidators seek guidance that relate to the interaction of specific provisions of State and Territory laws concerning the various compulsory insurance schemes with provisions of the Corporations Act dealing with winding up generally and reinsurance contracts held by insurance companies in the course of being wound up.

Reinsurance and privity of contract

9 The general nature of reinsurance was described by Dixon J in Tariff Reinsurances Ltd v Commissioner of Taxes (Victoria) (1938) 59 CLR 194:

“Though, unlike facultative reinsurance, a treaty does not insure an existing risk in which the reassured has an insurable interest as the original insurer, it is nevertheless a contract of reinsurance, an antecedent contract for the reinsurance for a defined portion of risks of a specified kind to be undertaken in the future by the reassured. The original insured is a stranger to the reinsurer. He is unaffected by the reinsurance and obtains no legal advantage from it. It establishes no relations except with the reassured, and it does not authorise the reassured to bring about any relations between third persons and the reinsurer.”

10 Reinsurance exists to see an insurer protected against the risk of having to pay out on policies issued by it. Summaries of relevant reinsurance contracts held by the HIH companies are in evidence. They provide cover in respect of ultimate net loss and loss occurrences defined, in general terms, as sums actually paid in the settlement of losses or liabilities under various classes and sub-classes of insurance business written by the HIH companies.

11 In the absence of statutory intervention, a person insured by an insurer has no right to the proceeds of reinsurance held by the insurer in respect of the relevant risk, at least where that insured is not named in the contract of reinsurance as a third party beneficiary in such a way as to activate principles discussed in Trident General Insurance Co Ltd v McNiece Bros Pty Ltd (1988) 165 CLR 107 (see also Omaha Indemnity Co v Carpenter and Australian Transport Insurance Pty Ltd (1987) 5 ANZ Ins Cas 60-831). There is no suggestion that any such principles apply in the present case or would ordinarily have sensible application to reinsurance. In general, principles of privity of contract operate in the way I have stated to exclude an individual insured from access to proceeds of reinsurance received by his or her insurer, whether before or after the onset of insolvency: see generally Nepean v Martin (1895) 11 TLR 256, In re Law Guarantee Trust and Accident Society [1915] 1 Ch 341 and In re Harrington Motor Co Ltd; ex parte Chaplin [1928] 1 Ch 105.

12 Various social considerations have from time to time prompted legislation creating a link between a person having a claim upon another and rights under insurance held by the second person in respect of the risk of claims of the kind made by the first person. An early example was the Third Party’s (Rights Against Insurer) Act 1930 (Eng). In New South Wales, s.6 of the Law Reform (Miscellaneous Provisions) Act 1946 owes its existence to considerations of this kind, as discussed by Mahoney JA in New South Wales Medical Defence Union Ltd v Crawford (1993) 31 NSWLR 469 at 501.

13 The particular case of insurance held by an insolvent company was dealt with by s.297(5) of the Companies Act 1936 (NSW), counterparts of which were included in all subsequent companies legislation. The applicability of the 1961 provision (s.292(5) of the uniform Companies Acts 1961-2) to contracts of reinsurance, in the case of the insolvent winding up of an insurance company, was confirmed by Needham J in Re Dominion Insurance Co of Australia Ltd [1980] 1 NSWLR 271 and by Crockett J in Re Palmdale Insurance Ltd (No 3) [1986] VR 439, a case which, for other reasons, will be considered in some detail in due course. A provision dealing expressly with the treatment of reinsurance proceeds in the winding up of an insurance company was introduced into the Corporations Law with effect from 23 June 1993 as a result of a recommendation in the Harmer Report. This provision became s.562A of the Corporations Law. It now exists as s.562A of the Corporations Act 2001 (Cth) and plays a part in the present proceeding. Its background and effect were examined by Young J in Butterell v Douglas Group Pty Ltd (2000) 35 ACSR 398 and by Dr Donald E Charrett in “Insured’s access to insolvent insurer’s reinsurance” (2003) 14 ILJ 221. Difficulties in applying and giving effect to it are noted in the judgment of Windeyer J in New Cap Reinsurance Corporation Ltd v Faraday Underwriting Ltd [2003] NSWSC 842 (12 September 2003) and by Robert Cameron, “Reinsurance and the Australian context” (2001) 12 ILJ 199 and John Martin, “Distribution complexities in the winding up of an insurance company in Australia” (2002) 10 Insolv LJ 80.

14 Of immediate relevance, however are provisions of State and Territory law dealing specifically with reinsurance in relation to the particular classes of insurance made compulsory by statute.

The specific State and Territory legislation

15 Central to the questions upon which the liquidators seek guidance are provisions of the various State and Territory statutes that establish and regulate compulsory insurance schemes. The statutes address and deal with the possibility that an insurer by which the forms of compulsory insurance are written will become insolvent or otherwise fail to honour its engagements. They do not, however, deal with the matter in any fully uniform way and it is appropriate to set out and comment on the relevant provisions. Generally speaking, they share two themes: first, a requirement that a statutory authority apply a statutory fund in making good deficiencies resulting from the failure of an insurer to meet claims under policies of the kind with which the legislation is concerned; and, second, the notion that the statutory authority should then have rights in relation to reinsurance held by the insurer in connection with risks of the relevant kind.

16 The submissions made to the court concentrated on the State and Territory provisions as they stood at 15 July 2001, being the date on which the Corporations Act 2001 (Cth) commenced. The reasons lie in Part 1.1A of that Act which will be considered in due course. For the moment, therefore, I shall concentrate on the provisions in force on 15 July 2001, referring to them, for convenience, in the present tense. Subsequent amendments of relevance will then be identified.

17 As will be seen, the general aim of the State and Territory provisions is to cause the authority holding or administering a statutory fund from which is met a claim that would in the normal course have been met by an insurer to obtain the benefit of reinsurance held by the insurer in respect of the claim. The provisions create, in one way or another, a link between the statutory authority and the reinsurance. For that reason (and in accordance with United States terminology) they have been referred to in submissions as “cut-through” provisions. I shall adopt that label here.

Workers Compensation Act 1987 (NSW) (as at 15 July 2001)

18 Division 7 of Part 7 of the Workers Compensation Act 1987 makes provision for the establishment and regulation of the Insurers’ Guarantee Fund managed by the WorkCover Authority. For present purposes, there is no need to consider the elements that go to make up this fund. It is sufficient to refer first to the provisions concerning application of the fund in relation to an “insolvent insurer”. Section 225(1) defines “insolvent insurer” for the purposes of Division 7 of Part 7 as an insurer to which an order of the Minister in force under s.226 of the Act relates. I proceed on the footing reflected in the statement of facts that such an order is in force in relation to each of the HIH companies and that each is accordingly an “insolvent insurer”.

19 Section 234 is as follows:

20 The consequences of a payment out of the Guarantee Fund by the Authority are specified in s.235:

Motor Accidents Compensation Act 1999 (NSW) (as at 15 July 2001)

21 Part 7.3 of this Act deals with “insolvent insurers”. For the purposes of that part, “insolvent insurer” means an insurer in relation to which an order of the Treasurer under s.16A of the Insurance Protection Tax Act 2001 or an order of the Minister under s.185 of the Motor Accidents Compensation Act itself is in force. The hearing before me provided on the agreed basis that each of the HIH companies is within this definition. Section 190 deals with application of the Nominal Defendant’s Fund (a fund established and maintained pursuant to s.40 and held by the Motor Accidents Authority) in relation to certain matters concerning insolvent insurers. Section 190 is as follows:

22 Section 191 then provides:

“To the extent that any amounts are paid out of the Nominal Defendant’s Fund in respect of a claim or judgment pursuant to section 190 the Nominal Defendant is, where an insolvent insurer (if it had provided indemnity to that extent under a third-party policy) would have been entitled to recover any sum under a contract or arrangement for re-insurance, entitled to the benefit of and may exercise the rights and powers of the insolvent insurer under that contract or arrangement so as to enable the Nominal Defendant to recover from the re-insurer and pay into the Nominal Defendant’s Fund the amount due under that contract or arrangement.”

Home Building Act 1989 (NSW) (as at 15 July 2001)

23 Part 6A of this Act deals with “insolvent insurers”. For the purposes of Part 6A, “insolvent insurer” means an insurer in relation to which an order of the Treasurer under s.16A of the Insurance Protection Tax Act 2001 or an order of the Minister under s.103G of the Home Building Act itself is in force. According to the statement of facts, each of the HIH companies is such an “insolvent insurer”.

24 Section 103P provides for the creation and regulation of the Building Insurers’ Guarantee Fund vested in the Building Insurers’ Guarantee Corporation. Section 103I (which appears in Division 2 of Part 6A) provides in part:

25 Sections 103J, 103K and 103L (also in Division 2) have the effect that the s.103I indemnity may only be enforced in such a way as to result in a payment out of the Building Insurers’ Guarantee Fund. Section 103V provides:

“To the extent that any amounts are paid out of the Building Insurers' Guarantee Fund in respect of an indemnity under Division 2, the Guarantee Corporation is, where an insolvent insurer (if it had provided indemnity to that extent under a contract of insurance) would have been entitled to recover any sum under a contract or arrangement for re-insurance or co-insurance, entitled to the benefit of and may exercise the rights and powers of the insolvent insurer under that contract or arrangement so as to enable the Guarantee Corporation to recover from the re-insurer or co-insurer and pay into the Building Insurers' Guarantee Fund the amount due under that contract or arrangement.”

Workers Compensation Act 1958 (Vic) (as at 15 July 2001)

26 Part IVA applies to and in relation to awards of workers compensation referred to in s.85(1):

27 There is provision in s.85 for the County Court to order that compensation awarded as referred to in s.85(1) be paid out of the Tribunal Fund constituted under and regulated by the Act.

28 Section 98 provides:

(1A) Nothing in this Part shall be taken to require or authorize payment out of the Fund of the amount of any claim award or judgment under paragraph (a) of sub-section (1) where an injury is incurred more than 28 days from the date of a winding-up order in relation to the relevant insurer made by the Supreme Court.

(2) Nothing in this Part shall be taken to require or authorize payment out of the Fund of the amount of any claim award or judgment to which this Part applies if any proceeding or step required to enforce payment of that amount by the relevant insurer can no longer be taken because of any failure on the part of the employer or any other person to take it within the time allowed by law.

Workers Rehabilitation and Compensation Act 1988 (Tas) (as at 15 July 2001)

29 Section 97 requires an employer who is not a self-insurer to maintain in force with a licensed insurer a policy of insurance that indemnifies the employer in respect of the full amount of the employer’s liability to pay compensation under the Act, as well as certain other matters.

30 The Act also establishes a body known as the Nominal Insurer. Section 126(1) provides:

the same claims, whether by way of legal proceedings or not, may be made against the Nominal Insurer in respect of any liability in respect of which such a policy is required under section 97(1) to be maintained by the employer, and the same judgment may be obtained against the Nominal Insurer, as could, apart from subsection (3), have been made or obtained against the person by whom the liability was incurred.”

31 Section 129 then provides:

Workers Compensation Supplementation Fund Act 1980 (ACT) (as at 15 July 2001)

32 This Act establishes and regulates the Workers Compensation Supplementation Fund. Provisions with respect to claims upon the fund appear in ss.26, 27, 28 and 29:

(2) On receipt of an amount paid by the Manager under subparagraph (1)(a)(i), the liquidator shall pay the amount to the claimant in satisfaction of the claim.

(3) Where the Manager receives from the liquidator of an insurer a claim referred to in subsection (1) and the insurer is dissolved under the law of the Territory or of a State or another Territory before the Manager makes a payment to the liquidator in accordance with that subsection, the Manager shall pay to the claimant out of the Fund such amount as is necessary to satisfy the claim.

33 The concept of dissolution with which these provisions are concerned is not explained. The expression “liquidator” is defined as follows:

“’liquidator’, in relation to an insurer, includes official manager, receiver or receiver and manager.”

34 Section 40 provides:

“(1) Where—

(a) an insurer is, under a contract of reinsurance, insured against liability in respect of employer’s policies issued by the insurer and such liability is incurred by the insurer; and
(b) any part of the liability of the insurer is met by moneys paid out of the fund in pursuance of this Act; and
(c) an amount in respect of that part of the liability of the insurer is received by the liquidator of the insurer from the reinsurer;
the amount so received from the reinsurer shall, after the deduction of any expenses of or incidental to getting in that amount, be paid by the liquidator to the manager, in priority to all payments in respect of the debts referred to in section 556 of the Corporations Law, for payment into the fund.

(2) Where the liquidator of an insurer recovers any amount due to the insurer as a consequence of the payment, with moneys paid out of the fund, of any part of any claim, judgment, order or award arising out of or in relation to any employer’s policy issued by the insurer, the amount so recovered shall, after the deduction of any expenses of or incidental to the recovering of that amount, be paid by the liquidator to the manager in priority to all payments in respect of debts referred to in section 556 of the Corporations Law, for payment into the fund.
(3) This section shall have effect notwithstanding any agreement to the contrary whether made before or after the commencement of this Act.”

Work Health Act (NT) (as at 15 July 2001)

35 The relevant provision of this Act is s.137:

Employers’ Indemnity Supplementation Fund Act 1980 (WA) (as at 15 July 2001)

36 The relevant provisions of this Act closely resemble those of the Workers Compensation Supplementation Fund Act 1980 (ACT). Claims upon the fund created by the Act are regulated by s.19:

Workers' Compensation and Rehabilitation Act 1981

;

Workers' Compensation and Rehabilitation Act 1981

;

[(4) repealed]

compensation

;

Workers' Compensation and Rehabilitation Act 1981;

damages

37 Section 36 of the Act is as follows:

Companies (Western Australia) Code

(2) If the liquidator of an insurer recovers any amount due to the insurer as a consequence of the payment, with moneys charged to the Fund, of any part of a claim, judgment, order or award arising out of or in relation to an employer’s policy issued by the insurer, that liquidator shall pay the amount so recovered, after the deduction of any expenses of or incidental to the recovery of that amount, to the Commission, in priority to all payments in respect of debts referred to in section 441 of the Companies (Western Australia) Code , to the credit of the Fund.

Motor Accident Insurance Act 1994 (Qld) (as at 15 July 2001)

38 Relevant provisions of this Act operate by reference to the following definition of “CTP insurance policy”:

39 Section 33(2) provides:

“If the insurer under a CTP insurance policy becomes insolvent, the Nominal Defendant becomes the insurer under CTP policies in force under this Act for which the insolvent insurer was formerly the insurer unless the policies are transferred to some other licensed insurer.”

40 Section 61 provides:

“(1) If an insurer becomes insolvent, any costs reasonably incurred by the Nominal Defendant on claims under CTP insurance policies for which the insolvent insurer was the insurer become debts of the insolvent insurer to the Nominal Defendant and provable in the insolvency.

(2) The debts of the insolvent insurer that arise under subsection (1) have the same order of priority in the winding-up of the insolvent insurer as if the Nominal Defendant were the insured person under policies of insurance issued by the insolvent insurer.

41 There does not appear to be any provision giving guidance on the question when an insurer is to be regarded as insolvent. The question is therefore to be approached according to general law principles. I assume, for present purposes, that each HIH company is “insolvent” in that sense.

Amendments to State and Territory legislation since 15 July 2001

42 Two of the relevant Acts have been amended since 15 July 2001 in ways affecting the provisions set out above. They are the Workers Compensation Supplementation Fund Act 1980 (ACT) and the Employers’ Indemnity Supplementation Fund Act 1980 (WA).

43 The amendments to the Australian Capital Territory Act, so far as presently relevant, affect s.40. The references in ss.40(1) and 40(2) to “section 556 of the Corporations Law” have been replaced by references to “the Corporations Act, section 556”. In addition and by virtue of the Workers Compensation (Acts of Terrorism) Amendment Act 2002 (ACT), references in s.40 to “employer’s policies” and “employer’s policy” have been replaced by references to “compulsory insurance policies” and “compulsory insurance policy” and the words “whether made before or after the commencement of this Act” have been omitted from s.40(3).

44 In the case of the Western Australia Act, the amendments that are material affect s.36 and are most easily appreciated by setting out the section in full in the amended form in which it now exists:

Corporations Act

(2) If the liquidator of an insurer recovers any amount due to the insurer as a consequence of the payment, with moneys charged to the Fund, of any part of a claim, judgment, order or award arising out of or in relation to an employer’s policy issued by the insurer, that liquidator shall pay the amount so recovered, after the deduction of any expenses of or incidental to the recovery of that amount, to the Commission, in priority to all payments in respect of debts referred to in section 556 of the Corporations Act , to the credit of the Fund.

Corporations Act

45 Section 36 of the Western Australian Act assumed this form by virtue of the Corporations (Consequential Amendments) Act (No 2) 2003 of that State. That Act did three relevant things: first, it substituted references to s.556 of the Corporations Act for references to s.441 of the Companies (Western Australia) Code in s.36(1) and s.36(2); second, it inserted a new s.36(4); and, third, it stated, in s.2(1), that the amending provision making those changes “is deemed to have come into operation immediately after the Corporations Act 2001 of the Commonwealth came into operation”. So far as the law of Western Australia is concerned, therefore, s.36 is to be regarded as having been in the form set out above continuously since 15 July 2001 even though, before the Corporations (Consequential Amendments) Act (No 2) 2003 came into operation on 23 April 2003, the law of Western Australia did not regard s.36 as being in that form.

Grouping the State and Territory cut-through provisions

46 The statutory provisions may, for present purposes, be considered in groups. The first group (which I shall call “Class A”) consists of the Workers Compensation Act 1987 (NSW), the Motor Accidents Compensation Act 1999 (NSW), the Home Building Act 1989 (NSW), the Workers Rehabilitation and Compensation Act 1988 (Tas) and the Workers Compensation Act 1958 (Vic). Under each of these Acts, provision is made for resort to a statutory fund or statutory authority to satisfy a liability or claim recoverable under insurance which is, in one way or another, unavailable or deficient. In some cases, the circumstance of unavailability or deficiency is expressly linked to the insurer’s insolvency; in others it is not. Each statute then deals expressly with a case where a payment is made out of the fund or by the authority in circumstances where the provider of the unavailable or deficient insurance would have been entitled to recover as against another person under a contract or arrangement for reinsurance.

47 The wording applicable in each such Class A case is to the effect that the particular authority (or the authority by which the fund is administered) is “entitled to the benefit of and may exercise the rights and powers of” the relevant insurer “under that contract or arrangement so as to enable” the relevant authority “to recover from the reinsurer … the amount due under that contract or arrangement” and, in effect, to apply that recovery in replenishing the statutory fund depleted by payments to insured persons. There are some minor differences in the wording of the provisions creating or conferring the entitlement and ability of the statutory authority to enjoy and take advantage of the insurer’s rights under a relevant reinsurance contract or arrangement. There are also differences (sometimes more than minor) in the statutory description of the events giving rise to the entitlement and ability. They need not be discussed here since the liquidator’s concern is to obtain guidance as to the consequences of the triggering of the statutory entitlement and ability rather than with identification of the events giving rise to the entitlement and ability.

48 The second class (“Class B”) consists of the Motor Accidents Insurance Act 1994 (Qld). In that case, a claim met by the statutory authority in lieu of an insolvent insurer represents a debt of that insurer to the statutory authority having the same priority in the winding up as if the statutory authority were the insured person. In addition, if the claim met by the statutory authority in lieu of the insurer is covered by a contract of reinsurance, the statutory authority “succeeds to the rights of the insolvent insurer under the contract of reinsurance”.

49 The third class (“Class C”) consist of the Work Health Act (NT) alone. That Act proceeds on the footing that if an insurer is, to any extent, unable to make a payment required by a policy issued to it and the deficiency is made good by a payment by the statutory authority, two consequences follow. First, that statutory authority is entitled by subrogation to rights of the employer against any person in relation to the occurrence underlying the claim under the policy. Second, all rights the insurer has to receive payments under any reinsurance contract in respect of the claim is, by the Act itself, deemed to be assigned to the statutory authority at the time it meets the claim, such assignment being “to the exclusion of” any liquidator or like officer.

50 A fourth group of provisions (“Class D”) consists of those which work on the initial premise that the proceeds of recovery under any reinsurance contract existing for the benefit of an insurer liabilities of which are met out of the particular statutory fund come home to that insurer (or its liquidator) in the ordinary way. The statutory provision then deals with the amount received from the reinsurer by requiring it to be paid by the liquidator to the authority administering the statutory fund, with such payment being in priority to all other payments in the order of priority provided for in the corporations legislation. The provisions in Class D are those of the Workers Compensation Supplementation Fund Act 1980 (ACT) and the Employers’ Indemnity Supplementation Fund Act 1980 (WA).

General effect of the State and Territory cut-through provisions

51 The Class A provisions purport to confer on the relevant authority an entitlement to the benefit of contractual rights and powers of the relevant insurer and an ability to exercise those contractual rights and powers. The person against whom the contractual rights and powers are enforceable and exercisable is, of course, the reinsurer under the reinsurance contract or arrangement, that contract or arrangement being the source of the rights and powers. The statutory provision thus purports to operate in such a way that, upon the happening of the event upon which accrual of the entitlement to the authority is predicated, the reinsurer must recognise the relevant authority, apparently to the exclusion of the insurer with which the reinsurer has actually contracted, as in a position to demand contractual performance towards the authority itself (in lieu of the insurer) in the same way as if the authority were the insurer. Before that event happens, there can be no more than an expectancy on the part of the statutory authority, given the inherent uncertainty at any given time about whether a triggering event will ever occur. The regime which, upon each occasion on which such an event happens, is thus produced by the statute in place of (or, perhaps more accurately, as an adjunct to) the contractual regime voluntarily brought into existence between insurer and reinsurer is thus entirely the creation of an enactment of a particular State legislature – in three cases the legislature of New South Wales, in one case the legislature of Tasmania and in the fifth case the legislature of Victoria.

52 I should amplify what has just been said by referring to the terms of the particular sections. The three New South Wales provisions (s.237 of the Workers Compensation Act 1987, s.191 of the Motor Accidents Compensation Act 1999 and s.103V of the Home Building Act 1989) are in substantially identical terms. Each says:

“To the extent that any amounts are paid out of [the relevant fund] in respect of [a relevant matter], the [statutory authority] is [or shall be], where an insolvent insurer (if it had provided indemnity …) would have been entitled to recover any sum under a contract or arrangement for reinsurance, entitled …”

53 No entitlement accrues to the statutory authority under these provisions unless and until two things have happened. First, there must have been a payment out of the statutory fund (so that some relevant “extent” is established) and, second, all conditions must have been satisfied which would have entitled the insurer to recover under the reinsurance. Upon the happening of those events the statute causes the statutory rights of the authority to intrude into the contractual relationship between insurer and reinsurer so that contractual rights of the insurer become exercisable by the authority to the exclusion of the insurer. Under s.98(3)(a) of the Workers Compensation Act 1958 (Vic), the position is the same, the words being indistinguishable in any material sense. In the case of s.129 of the Workers Rehabilitation and Compensation Act 1988 (Tas), the position is even clearer. The section starts with the word “Where” and, by reference to that word, states conditions that must be met before “the Nominal Insurer shall be entitled …”.

54 In the case of Class B, the meeting of a claim by the authority in place of the insurer is an event by virtue of which the authority “succeeds to” the insurer’s rights under the contract of reinsurance, with the insurer thereby ceasing to enjoy those rights. The whole of s.61 of the Motor Accident Insurance Act 1994 (Qld) is predicated upon an insurer’s becoming insolvent. That is made clear by the opening words of s.61(1). Unless and until that event happens and the authority meets a claim in place of the insurer, the section is not a source of rights on the part of the Nominal Defendant and the succession provided for in s.61(3) does not occur.

55 The approach in Class C is to cause the relevant authority to be subrogated to rights of the insurer and to be the assignee, by operation of law, of rights the insurer has to receive payments from a reinsurer. There is thus a similarity with Class A in that the statutory provision purports to inject the authority into the contractual relationship between the insurer and reinsurer in such a way that the reinsurer is bound to perform in favour of the authority rather than the insurer and, by clear implication, the insurer is deprived of the right to receive performance by the reinsurer. And as with Class A, the happening of specified events (being those stated at the beginning of s.137(3), brings about the authority’s entitlement and the insurer’s deprivation.

56 Provisions of the Class D kind do not attempt to intrude into the contractual relationship between insurer and reinsurer. Their effect is only to create a liability upon the liquidator of the insurer, being a liability to pay to the relevant authority. The terminology makes it clear, in each case, that the statutory payment liability thus created is in the nature of a debt and that there is no attempt to cause moneys received by the liquidator from the reinsurer to be subject to some form of statutory trust in the liquidator’s hands in favour of the authority. This follows from the direction that payment by the liquidator to the manager be “in priority to all payments in respect of the debts” referred to in provisions of corporations legislation dealing with priority of payments in a winding up. Class D, thus leaves the contractual position between insurer and reinsurer untouched, but creates a right of the authority as against the insurer’s liquidator.

The matters to be addressed in the light of the State and Territory legislation

57 The guidance the liquidators of the HIH companies seek centres upon the effect of three Commonwealth statutes. The first relevant provision is s.116 of the Insurance Act 1973 (Cth) which, although now repealed, was in force when the winding up of each HIH company began and, for that reason, is seen by the liquidators as having potential relevance. The second provision is s.116 of the General Insurance Reform Act 2001 (Cth). Third, the liquidators seek guidance in relation to certain provisions of the Corporations Act 2001 (Cth).

58 The submissions address the relevance and impact, in respect of these provisions of Commonwealth law, of not only the particular State and Territory statutory provisions but also general equitable principles of subrogation. It is convenient to deal first with the purely statutory matters as they affect the operation and application of the three Commonwealth statutes.

Insurance Act 1973 (Cth), s.116

59 This provision is no longer in force, having been repealed by Item 60 of Schedule 1 to the General Insurance Reform Act 2001 (Cth). It was, however, in force when the winding of each HIH company began and, for that reason, may have some application in relation to the winding up: see generally the discussion by Windeyer J in New Cap Reinsurance Corporation Ltd v Faraday Underwriting Ltd (above).

60 Section 116 of the Insurance Act 1973 (Cth) was in the following terms:

Gazette

(2) A body corporate is not guilty of a contravention of subsection (1) by reason only that it is carrying on business for the purpose of discharging liabilities assumed by it before the date of commencement of the winding up.

(3) In the winding up of a body corporate authorized under this Act to carry on insurance business, or in the winding up of a supervised body corporate, the assets in Australia of the body corporate shall not be applied in the discharge of its liabilities other than its liabilities in Australia unless it has no liabilities in Australia.

(4) Section 31 has effect for the purposes of this section.

(5) Nothing in this section affects the validity of a contract entered into by a body corporate after it is commenced to be wound up.

61 The central question posed by s.116 in the present context arises under s.116(3), namely, whether sums paid by reinsurers under arrangements relevant to insurances effected with an HIH company for the purposes of the various statutory schemes are properly regarded as “assets” of the relevant HIH company. The contractual right of each HIH company under the reinsurance arrangement, being a chose in action, is no doubt an “asset”, although, of its nature, not one capable of being “applied” in any sense relevant to s.116(3). Only the proceeds, in the form of money representing satisfaction of the right, are “assets” capable of being so “applied” in the active sense with which s.116(3) is obviously concerned.

62 I am satisfied that, in cases within what I have designated Class A, Class B and Class C, proceeds produced by relevant reinsurance arrangements were not (or will not be) “assets” of the relevant HIH company, at least if the State and Territory cut-through provisions take effect in the windings up according to their terms and despite any contrary provisions in the Corporations Act. Those State and Territory provisions are such that, upon payment by the reinsurer, proceeds pass direct into the ownership of the relevant statutory authority. While the chose in action as against the reinsurer may still reside with the HIH company as insurer, the sum payable upon fruition of the chose in action never comes within the dominion of the HIH company and is never an “asset” of that company.

63 In the case of Class D, however, this analysis does not hold good. In that case, as I have said, the proceeds of recovery under the reinsurance are recognised by the relevant State or Territory legislation as coming home to the insurer (HIH company) or, more precisely, its liquidator. There is thus an acceptance of the pre-existing contractual position. At that point the proceeds must be regarded as “assets” of the relevant HIH company, there being no indication, as I see it, that the liquidator should be regarded as receiving such proceeds otherwise than as an agent of the company. Even so, obedience by the liquidator to the statutory requirement to pay the proceeds (net of expenses) to the statutory authority would not be contrary to s.116 if that section applied. This is because the effect of the Class D State or Territory statutory provision is to create a liability which, in terms of s.116(3), is part of the HIH company’s “liabilities in Australia”, so that the payment to the statutory authority would be by way of discharge of “liabilities in Australia” as referred to in s.116(3). This conclusion requires a little explanation. Section 31 of the Insurance Act 1973 says that “liabilities” includes certain things, unless a contrary intention appears. Section 31 also refers to circumstances which bring certain liabilities within the concept of “liability in Australia”. But the section does not purport or attempt to define exhaustively either “liabilities” or “liability in Australia”. Each expression is left to enjoy, in addition to the meaning to which the section refers, its ordinary and natural meaning. An obligation to pay money imposed by statute must be within the ordinary and natural meaning of “liability”; and, given its source in State or Territory legislation and the Australian locus of the paying liquidator, the company subject to winding up and the receiving statutory authority, the liability must be regarded as having such a connection with Australia as to make it part of the “liabilities in Australia”. Effectuation of the State or Territory statutory scheme is therefore consistent with the prescription under s.116(3) that assets in Australia of an insurer in the course of being wound up are not to be applied in discharge of liabilities other than “liabilities in Australia”.

64 If, contrary to what I have just said, the true effect of the Class D provisions is to cause reinsurance proceeds to come into the hands of a liquidator in some independent and separate right that is not and cannot be equated with the right of the company (cf N A Kratzmann Pty Ltd v Tucker (No 2) (1968) 123 CLR 295), s.116(3) will not apply because those proceeds are not “assets” of the company.

65 Whatever view may be taken of the capacity in which the liquidator receives relevant proceeds, the conclusion is that effectuation of the statutory scheme concerning reinsurance proceeds will, in the case of Classes A, B and C, be irrelevant to the operation of s.116(3) and, in the case of Class D, will not be inconsistent with the provisions of that section. But this conclusion, as I have said, depends on a finding that the State and Territory cut-through provisions have effect despite Corporations Act provisions concerning application of assets in a winding up with which they may be inconsistent. That is a matter to be considered presently.

General Insurance Reform Act 2001 (Cth), s.116

66 The General Insurance Reform Act 2001 (Cth) came into operation on 1 July 2002. The provisions of its s.116 are, in relevant respects, generally similar to those of s.116 of the Insurance Act 1973 (Cth). A major difference, however, is that the provisions of the 2001 Act apply only in relation to the winding up of a “general insurer”, as defined. The expression “general insurer” is defined by s.11 as “a body corporate that is authorised under s.12 to carry on insurance business in Australia”.

104 Returning to the conditions in the third column against item 1 in the table in s.5G(3) of the Corporations Act 2001 (Cth), it will be seen that the second condition (condition (b)) entails the absence of any regulation made under the Act and any law of the particular State or Territory declaring the State or Territory provision in question to be one to which s.5G does not apply, either generally or specifically in relation to the corresponding provision of the Corporations Act 2001 (Cth).

105 If a particular State or Territory provision is of the kind specified in the second column against item 1 in the s.5G(3) table and satisfies the conditions in the second column, the consequence is that s.5G applies to the interaction between the State or Territory provision and a provision of the Corporations Act itself.

106 Having examined the general workings of ss.5E, 5F and 5G of the Corporations Act, I now proceed to consider their application in relation to the State and Territory cut-through provisions.

Impact of ss.5E and 5F on State and Territory cut-through provisions

107 For reasons outlined at paragraph 71 above, I do not consider that any of the State and Territory cut-through provisions is capable of concurrent operation with ss.555, 556 and 562A of the Corporations Act 2001 (Cth). The State and Territory provisions are therefore not accommodated by s.5E. Provisions within Classes A, B and C cause the chose in action against the relevant reinsurer that would otherwise be part of the property of the company for the purposes of s.555 to be denied to the company and therefore to be unavailable for the purposes of implementing s.562A. Class D provisions, by contrast, leave intact the matters dealt with by Class A, B and C provisions but cut across both the application of assets in accordance with s.555 and the scheme of priorities laid down by s.556. There is accordingly, in each case, a situation of “direct inconsistency” for the purposes of Part 1.1A, with the result that it is necessary to consider whether s.5F or s.5G allows the State and Territory provisions to operate.

108 Section 5F may be dealt with shortly. As discussed at paragraphs 87 to 92 of these reasons, that section can do no more than to cause a Corporations Act provision not to apply “in” a particular State or Territory “to” (or “in relation to”) a particular matter. Because the relevant sections of the Corporations Act (ss.555, 556 and 562A) do not have any distinct and separate territorial operation susceptible to that kind of displacement, s.5F can play no role in reconciling those provisions and the State and Territory cut-through provisions.

Impact of s.5G on State and Territory cut-through provisions: “pre-commencement (commenced) provision”

109 It is therefore necessary to focus upon the applicability of s.5G. The first question here is whether each State and Territory cut-through provision is a “pre-commencement (commenced) provision”. Because each had been enacted and was in force immediately before commencement of the Corporations Act 2001 (Cth) on 15 July 2001, it satisfies paragraph (a) of the definition of “pre-commencement (commenced) provision” in s.5G(12). It will also satisfy paragraph (b) of the s.5G(12) definition – and therefore be a “pre-commencement (commenced) provision” - if it has not been “materially amended” after commencement, a matter to be determined by reference to ss.5G(15), 5G(16) and 5G(17). Two of the provisions have been amended since commencement, as noted at paragraphs 42 to 45 above. It is therefore necessary to examine the amendments against the ss.5G(15), 5G(16) and 5G(17) criteria.

110 In the case of s.40 of the Workers Compensation Supplementation Fund Act 1980 (ACT), the amendments by which references to s.556 of the Corporations Law were replaced by references to the corresponding provision of the Corporations Act are within s.5G(16)(a) and therefore outside the “materially amended” concept. The amendments made by the Workers Compensation (Acts of Terrorism) Amendment Act 2002 (ACT) merely substituted new nomenclature. The references to “insurer” were replaced by references to “approved insurer”; and the references to “employer’s policies” were replaced by references to “compulsory insurance policies”. These changes, while going beyond the limits contemplated by s.5G(16) are within the limits referred to in s.5G(17), as they do nothing to vary the range of persons, acts and circumstances to which any Corporations Act provision applies. Having regard to s.5G(15), a conclusion that a provision is “materially amended after commencement” depends on a finding that neither s.5G(16) nor s.5G(17) applies to it. No such finding is warranted in relation to any of the amendments made to s.40 of the Workers Compensation Supplementation Fund Act 1980 (ACT) since 15 July 2001.

111 The amendments made to s.36 of the Employers’ Indemnity Supplementation Fund Act 1980 (WA) after 15 July 2001 entailed substitution of references to s.556 of the Corporations Act for references to s.441 of the Companies (Western Australia) Code in s.36(1) and s.36(2) and insertion of the new sub-s.(4) purporting to declare payment of an amount under s.36(1) or s.36(2) to be an “excluded matter” for the purposes of s.5F of the Corporations Act. I do not consider the added s.36(4) to have any meaningful operation. It is a provision obviously designed to capture the benefit of s.5F by embodying a declaration in terms of s.5F(1). But for reasons I have stated at paragraphs 87 to 92 above, s.5F cannot operate to give s.36 of the Western Australia Act precedence over the winding up provisions of the Corporations Act of the Commonwealth. I therefore proceed on the basis that, although s.36(4) was inserted into the text of the Western Australia Act, it really has no effective operation and therefore cannot, in any realistic sense, be regarded as having amended (in the sense of modifying the ongoing operation of) any provision in force immediately before 15 July 2001. For that reason - and because, in any event, each of s.36(1) and s.36(2) may itself be regarded as a distinct “provision” for the purposes of s.5G of the Corporations Act (see the s.9 definition of “provision” in relation to a “law”, the general meaning of which is indicated, although not fixed, by the note to the s.9 definition of “law”) – the questions posed by ss.5G(16) and 5G(17) in relation to the amendments since 15 July 2001 should be approached solely by reference to the amendments to s.36(1) and s.36(2) being, in each case, the substitution of the reference to s.556 of the Corporations Act for the reference to s.441 of the Companies (Western Australia) Code.

112 Taken at face value, that substitution is not within s.5G(16)(a) because the reference replaced by a reference to a provision of the Corporations Act was not a reference to a provision of the Corporations Law. It was a reference to a provision of the Companies (Western Australia) Code. But closer analysis shows, I think, that the change is in reality within s.5G(16)(a). Section 90(4) of the Corporations (Western Australia) Act 1990 (WA) provided:

“Subject to subsection (4) and to any regulations in force under subsection (7), a reference in an instrument to a provision of a co-operative scheme law or of Code regulations is to be taken to include a reference to the corresponding provision of a national scheme law of this jurisdiction or of the Corporations Regulations, or ASIC Regulations, of Western Australia as the case may be.”

113 In the end, therefore, the conclusion is that neither the Australian Capital Territory provision nor the Western Australia provision has been “materially amended since commencement” and that each of the nine State and Territory cut-through provisions is, for the purposes of s.5G, a “pre-commencement (commenced) provision”. The nature of the interaction between each such provision and a provision of the Corporations Act must therefore be determined by reference to item 1 in the table in s.5G(3).

Impact of s.5G on State and Territory cut-through provisions – item 1, condition (a)

114 The next step is to consider each of the State and Territory cut-through provisions in the light of the conditions in the third column against item 1 in the table in s.5G(3). The question posed by condition (a) is whether, immediately before commencement of the Corporations Act on 15 July 2001, it “operated … despite” the provision of the Corporations Law of the State or Territory in question corresponding to the provision of the Corporations Act interaction which is being considered. The several State and Territory provisions need to be considered separately for this purpose.

115 I begin with the Australian Capital Territory provision, being s.40 of the Workers Compensation Supplementation Fund Act 1980. Immediately before commencement of the Corporations Act 2001 (Cth) on 15 July 2001, s.40 operated “despite” Division 6 of Part 5.6 of the Corporations Law of the Australian Capital Territory. This is because of s.11(2) of the Corporations Act 1989 (Cth):

Workmen's Compensation Supplementation Fund Act 1980

116 Dealing with the remainder of the provisions and having regard to s.5 and s.6 of the 1990 corporations statute of each State and the Northern Territory, it is first necessary to determine, for the purposes of condition (a), when each of the State and Territory cut-through provisions was enacted. This is because s.5 and s.6 of each of those statutes distinguish between Acts enacted before the commencement of the 1990 statute on 1 July 1991 and those enacted after that commencement. Acts amending existing Acts are clearly relevant to this. Five of the State and Territory cut-through provisions – s.235 of the Workers Compensation Act 1987 (NSW), s.98(3) of the Workers Compensation Act 1958 (Vic), s.129 of the Workers Rehabilitation and Compensation Act 1988 (Tas), s.137(3) of the Work Health Act (NT) and s.36 of the Employers Indemnity Supplementation Fund Act 1980 (WA) – were enacted before 1 January 1991. By virtue of s.6 of the 1990 corporations statute of the relevant State or the Northern Territory, therefore, the continued operation of each of those five provisions after 1 January 1991 without interference from the Corporations Law of the relevant jurisdiction was assured. That, in turn, means that each such State or Territory provision, in the words of condition (a), “operated, immediately before this Act commenced, despite” the potentially conflicting provisions as to winding up in the Corporations Law of the relevant State or the Northern Territory.

117 The three remaining cut-through provisions – s.191 of the Motor Accident Compensation Act 1999 (NSW), s.103V of the Home Building Act 1989 (NSW) (inserted by the Insurance (Policyholders Protection) Legislation Amendment Act 2001 (NSW)) and s.61 of the Motor Accident Insurance Act 1994 (Qld) – were all the product of Acts enacted after 1 January 1991. Immediately before 15 July 2001, therefore, the interaction of each such provision with the Corporations Law of the relevant State was as specified in s.5 of the 1990 corporations statute of that State. According to s.5(1) in each case, the Act by which the cut-through provision was introduced was “not to be interpreted as … altering the effect or operation of” the State’s Corporation Law, except insofar as the Act introducing the cut-through provision “provides expressly for that Act … to have effect despite a specified provision, or despite any provision” of the State’s Corporations Law.

118 It was not suggested in submissions that the relevant introducing Act (or, for that matter, any other Act) of the relevant State said in explicit terms, by means of references to enactments by name, that any of these three provisions was “to have effect despite” Corporations Law provisions. Rather, there was reliance in the submissions on general principles of statutory interpretation, in particular the principle that a later specific enactment must be taken to qualify the operation of an earlier general enactment. It is necessary to decide whether such matters of implication are sufficient to meet the “provides expressly” requirement of s.5(2).

119 In general, one would be inclined to think that a formulation employing the words “provides expressly” was not satisfied by something that did not, in direct and explicit terms, make the specified provision by direct words. But, as authority binding on me shows, that is too simplistic a view. In Public Service Association of New South Wales v Industrial Commission of New South Wales (1985) 1 NSWLR 627, the Court of Appeal was called upon to interpret s.8 of the Public Service Act 1978:

“Unless otherwise expressly provided, nothing in this Act affects the Industrial Arbitration Act 1940.”

Industrial Arbitration Act 1940

Public Service Act

Watt v Geddes

Re Silver Brothers Ltd; Attorney-General for Quebec v Attorney-General for Canada

Rose v Hvric

means

120 Kirby P took the view that effect would be afforded to s.8 “by limiting the competition of the Public Service Act to explicit and implicit contradiction and excluding inferential contradiction”. Priestley JA likewise saw the relevant question as whether the meaning of the operative provisions said to affect the Industrial Arbitration Act “is, by way of negative implication, that the functions and powers they create are to be exercised under that Act by the persons mentioned in them and no other persons”. Street CJ also regarded a negative implication as sufficient to satisfy the “otherwise expressly provided” condition.

121 The three provisions of State law with which I am currently concerned carry a clear negative implication. Each made specific provision concerning administration of the winding up of a company of a particular kind (that is, an insurer providing insurance for the purposes of the particular statutory scheme) that could only be meaningful if the otherwise applicable Corporations Law provisions were displaced and overridden. The negative implication against the continued operation of the Corporations Law provisions was central to each provision. In the words used in Rose v Hvric, “the necessary result of the operation of one Act would be to affect the operation of the other”. In these circumstances, I consider the correct approach to be that which regards each of the three State provisions as one which, although made effective by an Act enacted by the Parliament of the State after the commencement of its 1990 corporations statute, “provides expressly” for the consequences the provision envisages “despite” the inconsistent Corporations Law provisions of general application.

122 Condition (a) in the third column of item 1 in the table in s.5G(3) is accordingly satisfied in relation to each of the eight cut-through provisions of the States and the Northern Territory – in one case for the reasons stated at paragraph 115 above, in four cases for the reasons stated at paragraph 116 and in three cases for the reasons stated at paragraphs 117 to 121.

123 This conclusion, combined with the absence of any regulation or other provision relevant to condition (b), means that each of State and Territory cut-through provisions is a provision of the kind in the second column of item 1 in the s.5G(3) table in respect of which both conditions in column 3 are met. Each such provision is accordingly one to whose interaction with a provision of the Corporations Act s.5G applies.

Conclusions on the Corporations Act issues

124 I now record in summary form the conclusions reached with respect to the interaction between the State and Territory cut-through provisions and ss.555, 556 and 562A of the Corporations Act 2001 (Cth). First, each of the cut-through provisions will be adversely affected by s.109 of the Constitution unless one of s.5E, s.5F and s.5G of the Corporations Act operates in relation to its interaction with the substantive Corporations Act provisions. Second, neither s.5E nor s.5F so operates. Third, however, the interaction is, in each case, one to which s.5G of the Corporations Act applies by virtue of s.5G(3). This is because the State or Territory provision is, in each case, both a provision of the kind referred to in the second column against item 1 in the table in s.5G(3) and a provision that satisfies the conditions in the third column against that item 1.

125 The fourth and final conclusion is therefore that

(a) none of s.555, s.556 and s.562A of the Corporations Act prohibits the doing of an act or imposes a liability for doing an act where one of the State and Territory cut-through provisions specifically authorises or requires the doing of that act (s.5G(4)); and

126 There are no doubt questions to be addressed as to the precise implications of this fourth conclusion. Apart from anything else, there are likely to be questions about what is within the scope of the words “specifically authorises or requires” in s.5G(4) and about the effect of “to the extent to which” and “in accordance with” in s.5G(8). These, however, are not matters than can usefully be dealt with at this stage.

The subrogation issues

127 It was submitted on behalf of the liquidators that, apart altogether from the cut-through provisions of State and Territory legislation, the several statutory authorities which make substitute payments to persons holding policies issued by the HIH companies are, simply by virtue of the making of those payments, entitled by subrogation to certain rights of a preferred kind in the winding up of the HIH companies. The general principle upon which reliance is placed is, in effect, that a person (A) who discharges a liability of another (B), in circumstances where that other (B) has some right of reimbursement or recoupment in respect of the liability as against a third person (C), is regarded by equity as succeeding to that right. In cases where such a principle is asserted,

“… the quest always is to isolate that attribute of the relations between A, B and C … which makes A more than a stranger to the nexus between B and C and generates in his favour an equity satisfied only by requiring B to pursue his legal rights against C for the benefit of and at the direction of A.”

128 In support of the contentions concerning subrogation, the liquidators rely heavily on the decision of Crockett J in Re Palmdale Insurance Ltd (No 3) (above). That case involved two insurance companies in the course of insolvent winding up. Certain claims under workers compensation policies issued by the companies had been met and paid by statutory authorities required by State and Territory legislation to meet the claims. That matter is described as follows in the judgment (at 442):

“In each State and Territory of the Commonwealth there was either prior to the making of orders for winding up in existence or subsequent thereto enacted with retrospective effect legislation that made provision for payment of workers compensation to claimants whose employers held policies of workers compensation with one or other of the companies. Pursuant to those enactments such payments have been made and have been so made by the particular authority (‘insurance Commissioner’) prescribed by the particular statute or ordinance as being subject to the liability to meet the claim. Although the object of each enactment is the same the technique adopted for its implementation and the language in which it is expressed varies for the most part from one enactment to another. It was for this reason that (apart from the Insurance Commissioner of Western Australia --actually described as ‘The Workers' Assistance Commission of the State of Western Australia’--who was unrepresented) in the proceedings before me each Insurance Commissioner, other than those in Victoria and Tasmania, was separately represented. Thus, in the case of each claim in the windings up made pursuant to a workers compensation policy, as it has not been the employer but the relevant Insurance Commissioner who has discharged the liability created by the claim, the Insurance Commissioners maintain that they are accordingly subrogated to the rights of the employer and so have bestowed on them a right in law to be recouped in respect of the discharged liability out of the assets of the companies in liquidation.”

129 The claim of each insurance commissioner extended beyond a claim “to be recouped in respect of the discharged liability out of the assets of the companies in liquidation”. It was a claim to have recoupment in the way in which the insured employer would have been entitled to recoupment by reference to s.292(5) of the Companies Act 1961 (Vic), the application of which was also in issue in the proceedings. Section 292(5) (the equivalent of which, in the Corporations Act 2001 (Cth), is s.562) provided that, where the company in the course of winding up was insured against a liability to a third party, such a liability was incurred and an amount in respect of the liability was received by the company or the liquidator from the insurer, the amount received was, after deduction of expenses, to be paid by the liquidator to the third party to the extent necessary to discharge the liability to the third party, such payment being in priority to other payments in the winding up. The claims of the insurance commissioners were thus claims to be subrogated to the statutory rights in the winding up conferred by this section upon the insured employers whose workers compensation liabilities the insurance commissioners had discharged in accordance with statutory requirements that they do so.

130 The claims by the insurance commissioners based on subrogation were successful. Crockett J dealt with the matter thus (at 446):

“The right to be so subrogated was said to arise from the application of general principles or alternatively from the express or implied right to be so subrogated conferred by Act of Parliament and to be found in the various statutory provisions of each of the States and Territories. Counsel for each of the represented Insurance Commissioners relied principally upon the general law to support their claim to a right of subrogation. This was because in the case of some of the statutory provisions no express right of subrogation was granted to the Insurance Commissioner and it might have been difficult to imply a statutory creation of the right. Then, even in the case of the statutory creation of the right it was thought that (save for the case of the Victorian legislation) in a winding up in Victoria the law to be applied, including Victorian private international law, might not include the statutory provisions of other jurisdictions.

However, as I understood them, counsel for each of creditors other than the Insurance Commissioners did not contend that the Insurance Commissioners were not subrogated to the rights of the third parties (employers). Nor, in my opinion, could they realistically have done so. The present is a classic case of its being just and equitable that the Insurance Commissioner should have the benefit of the remedy of subrogation. Such a remedy will be granted where one unofficiously confers a benefit on another such as the payment of money and it is just in all the circumstances that the former should be allowed to have the benefit of the latter's rights in order to prevent his unjust enrichment: see Goff and Jones, The Law of Restitution, 2nd ed., p. 406. The right of subrogation is a remedy designed to transfer rights from one person to another by operation of law: Orakpo v Manson Investments Ltd [1978] AC 95, at p. 104, per Lord Diplock.”

131 Central to the conclusion reached by Crockett J was the notion that equitable principle may operate to supplement specific statutory provisions conferring a right of recoupment and recourse. In some cases, it seems, there was no such statutory right, while in others there was an apprehension that because the statutory right derived from legislation of a State or Territory other than Victoria (the law of which governed the winding up), it was ineffective to bind the company and the liquidator.

132 This notion should, I think, be approached with caution in the present case. The question whether statutory rights and remedies coexist with general law rights and remedies or supplant them is, in every case, to be answered by construing the statute. It will sometimes be clear that the statute aims merely to supplement a general law right or to assist the vindication of that right. On other occasions, the statute will evidence an intention of creating a substituted right or remedy.

133 On the whole, it seems to me that the several cut-through provisions of State and Territory law, as they operate with the assistance of s.5G of the Corporations Act, are of a substitutional kind. In the first place, there is not here, as there was in the Palmdale case, doubt as to the territorial reach and effect of the cut-through provisions. According to the analysis I have made, they are all effective to change the course of events that would otherwise flow from ss.555, 556 and 562A of the Corporations Act. Second, each cut-through provision now in issue deals comprehensively with the nature and extent of the statutory authority’s recourse in respect of reinsurance referable to claims met by it in accordance with its statutory duties. There does not seem to me to be any gap that needs to be filled by reference to general equitable principle. An attempt by a body akin to the statutory authorities involved here to enhance or supplement a clear and comprehensive statutory scheme of recoupment by resort to general law principles was unsuccessful in Skandia America Reinsurance Corporation v Schenck 441 F Supp 715 (1977).

134 Third and, I think, most significantly, the position to which the statutory authorities would seek to succeed by subrogation is, in the present statutory context, a position under s.562A of the Corporations Act, that being the provision that here plays the role of s.292(5) of the Companies Act 1961 in the Palmdale case. The effect of the cut-through provisions, however, is to create either a new and special right in respect of the reinsurance that is inconsistent with the effectuation of s.562A in relation to the particular payment or a new and special right to participate in the winding up that is superior to the s.562A right. Section 562A operates only if an amount is received by the company or its liquidator under a contract of reinsurance. This is the effect of s.562A(1)(b). The section then addresses in s.562A(2) and (3) two alternative possibilities, namely, that the amount received, after deducting expenses, equals or exceeds the amounts payable by the company under relevant insurance contracts; and that the net amount received is insufficient to cover all such amounts. In the first situation, persons covered by the relevant insurance contracts have a priority right to the net reinsurance recovery limited, however, to their entitlements under insurance contracts. In the second situation, there is a priority right to a proportion of the net recoveries pro rata according to entitlements under insurance contracts. Under a Class A cut-through provision, on the other hand, the statutory right is a right directed towards recovery from the reinsurer of “the amount due under” the reinsurance contract being, it appears, the whole of the amount (although limited by the “extent” of the payments out of the statutory fund) without regard for any margin by which the total recoverable under the reinsurance is less than the total involved in the insurances the subject of the reinsurance. This is one example of the way in which the specific statutory schemes are incompatible with the concept of mere succession by subrogation to independently existing s.562A rights. The incompatibility exists, however, in relation to each statutory scheme.

135 In short, I do not see how an authority or body given by statute a special right or position in relation to reinsurance that differs from and is superior to that afforded to an insured holding a policy of the class to which the reinsurance relates can disregard that special right or position and somehow fall back on a derivative position claimed through that insured.

136 Directions given to the liquidators in relation to the matters on which they seek guidance should therefore be formulated without reference to the operation of the principles of subrogation discussed in the Palmdale case.

Framing the directions

137 It was agreed at the conclusion of the hearing of the liquidators’ application for directions under s.479(3) that formulation of the precise terms of any directions should await my conclusions on the matters of substance with which these reasons deal. Those terms will depend in part on those conclusions and in part on features of the actual wording of the State and Territory provisions. I have not attempted, at this point, to deal with the latter matter comprehensively.

138 The appropriate course now will be for the liquidators to give consideration to the form of the directions they will ask the court to make in light of the matters covered in these reasons. The liquidators’ second further amended originating process will be stood over to allow further submissions to be assembled and made.

139 It remains only to emphasise the nature and effect of directions under s.479(3). Despite the fact that State and Territory authorities became parties to the liquidators’ application (or, in some cases, were heard without becoming parties), the jurisdiction invoked by the liquidators is the jurisdiction created by s.479(3). It is a jurisdiction available only to liquidators. Directions eventually made by the court will accordingly have no operation inter partes. I respectfully adopt, in this connection, the following description of the jurisdiction and its implications in the judgment of Pullin J in Australian Securities and Investments Commission v Rowena Nominees Pty Ltd (2003) 45 ACSR 419 at 422-3:

Re Murphy & Allen; Re BPTC (in liq)

Re G B Nathan

Re Magic Aust Pty Ltd (in liq)

Re Ansett Australia Ltd

Re Murphy & Allen

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Last Modified: 12/03/2003

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Citations

HIH Casualty & General Insurance Ltd v Building Insurers' Guarantee Corporation [2003] NSWSC 1083

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CITATION:	HIH Casualty & General Insurance Ltd v Building Insurers' Guarantee Corporation [2003] NSWSC 1083
HEARING DATE(S):	19/08/03, 20/8/03
JUDGMENT DATE:	26 November 2003
JURISDICTION:	Equity Division Corporations List
JUDGMENT OF:	Barrett J
DECISION:	Originating process stood over for formulation of directions
CATCHWORDS:	STATUTES - operation and effect of statutes - provisions of State and Territory Acts purporting to alter incidents of company winding up under Commonwealth Act - interpretation of provisions of Commonwealth Act as to interaction with State and Territory Acts - INSURANCE - reinsurance - application of proceeds of reinsurance - statutory regulation of insurers - CORPORATIONS - winding up - application of property and priority of claims - territorial quality of winding up process under Commonwealth law - impact of State and Territory laws - EQUITY - subrogation - whether third party compelled by law to meet insured loss upon reinsured risk is subrogated to insurer's right under reinsurance - whether equitable right to subrogation displaced by statutory right
LEGISLATION CITED:	Australian Capital Territory (Self-Government) Act 1988 (Cth) Companies Act 1961 (Vic) Companies (Western Australia) Code Constitution of the Commonwealth of Australia Corporations Act 1989 (Cth) Corporations Act 2001 (Cth) Corporations (Consequential Amendments) Act (No 2) 2003 (WA) Corporations Law Corporations (New South Wales) Act 1990 (NSW) Corporations (Western Australia) Act 1990 (WA) Employers' Indemnity Supplementation Fund Act 1980 (WA) General Insurance Reform Act 2001 (Cth) Home Building Act 1989 (NSW) Insurance Act 1973 (Cth) Insurance Protection Act 2001 (NSW) Insurance (Policyholders Protection) Legislation Amendment Act 2001 (NSW) Motor Accident Insurance Act 1994 (Qld) Motor Accidents Compensation Act 1999 (NSW) Work Health Act (NT) Workers Compensation Act 1987 (NSW) Workers Compensation Act 1958 (Vic) Workers Rehabilitation and Compensation Act 1988 (Tas) Workers Compensation Supplementation Fund Act 1980 (ACT) Workers Compensation (Acts of Terrorism) Amendment Act 2002 (ACT)
CASES CITED:	Australian Securities and Investments Commission v Rowena Nominees Pty Ltd (2003) 45 ACSR 419 Butterell v Douglas Group Pty Ltd (2000) 35 ACSR 398 Director of Public Prosecutions v Loo (2002) 42 ACSR 459 Re Dominion Insurance Co of Australia Ltd [1980] 1 NSWLR 271 Re Crust 'n' Crumbs Bakers (Wholesale) Pty Ltd [1992] 2 QdR 76 In re Law Guarantee Trust and Accident Society [1915] 1 Ch 341 In re Harrington Motor Co Ltd; ex parte Chaplin [1928] 1 Ch 105 N A Kratzmann Pty Ltd v Tucker (No 2) (1968) 123 CLR 295 New Cap Reinsurance Corporation Ltd v Faraday Underwriting Ltd [2003] NSWSC 842 Nepean v Martin (1895) 11 TLR 256 New South Wales Medical Defence Union Ltd v Crawford (1993) 31 NSWLR 469 Northern Territory v GPAO (1999) 196 CLR 553 Omaha Indemnity Co v Carpenter and Australian Transport Insurance Pty Ltd (1987) 5 ANZ Ins Cas 60-831 Re Palmdale Insurance Ltd (No 3) [1986] VR 439 Public Service Association of New South Wales v Industrial Commission of New South Wales (1985) 1 NSWLR 627 R v Credit Tribunal; ex parte General Motors Acceptance Corporation Australia (1977) 137 CLR 545 Rose v Hvric (1963) 108 CLR 353 Skandia American Reinsurance Corporation v Schenk 441 F Supp 715 (1977) Tariff Reinsurances Ltd v Commissioner of Taxes (Victoria) (1938) 59 CLR 194 Telstra Corporation Ltd v Worthing (1999) 197 CLR 61 Trident General Insurance Co Ltd v McNiece Bros Pty Ltd (1988) 165 CLR 107 University of Wollongong v Metwally (1984) 158 CLR 447 In re Usines de Melle and Firmin Boinot's Patent (1954) 91 CLR 42 Victoria v Commonwealth (1937) 58 CLR 618
PARTIES :	HIH Casualty & General Insurance Limited (In Liquidation), FAI General Insurance Company Limited (In Liquidation), CIC Insurance Limited (In Liquidation), World Marine & General Insurances Pty Limited (In Liquidation), FAI Traders Insurance Company Pty Limited (In Liquidation), FAI Reinsurances Pty Limited (In Liquidation), HIH Underwriting & Insurance (Australia) Pty Limited (In Liquidation), HIH Underwriting & Agency Services Limited (In Liquidation), HIH Insurance Limited (In Liquidation), Lanlex No 65 Pty Limited (In Liquidation), FAI Leasing Finance Pty Limited (In Liquidation), FAI Insurances Limited (In Liquidation), FAI Investments Pty Ltd (In Liquidation), FAI Overseas Investments Pty Limited (In Liquidation), HIH Overseas Holdings Limited (In Liquidation), FAI Financial Services Limited (In Liquidation), FAI Overseas Holdings Pty Limited (In Liquidation), Hannan & Company Pty Limited (In Liquidation), Notestir Pty Limited (In Liquidation), First Mentor Group Pty Limited (In Liquidation), World Wide Weather Underwriting Agencies (Australia) Pty Limited (In Liquidation), HIH Investment Holdings Limited (In Liquidation), HIH Company Limited (In Liquidation), ACN 006 495 987 Pty Limited (In Liquidation) (formerly "Industrial Rehabilitation Services Pty Limited"), CIC General Insurance Holdings Ltd (In Liquidation), FAI Home Security Holdings Limited (In Liquidation), ACN 005 312 345 Pty Limited (In Liquidation) (formerly "Ready Plan Asia Pacific Pty Limited), FAI Film Distribution Pty Limited (In Liquidation), FAI Workers Compensation (Vic) Pty Limited (In Liquidation), HIH (Real Estate) Pty Limited (In Liquidation), Integrated Commercial Finance Pty Limited (In Liquidation), Innes Owens Pty Limited (In Liquidation), RiskCorp Australia Pty Limited (In Liquidation) - First Plaintiffs Anthony Gregory McGrath and Alexander Robert Mackay Macintosh - Second Plaintiffs Building Insurers' Guarantee Corporation - First Defendant Motor Accident Insurance Commission - Second Defendant
FILE NUMBER(S):	SC 5353/02
COUNSEL:	Mr B A J Coles QC/Mr G Scarcella, Solicitor - Plaintiffs Mr S W Gibb SC/Mr C L Lonergan - First Defendant and Motor Accidents Authority of NSW Mr A J L Ogborne - Second Defendant Mr A Robertson SC/Mr G B Carolan - Interested parties, ACT, NT, Vic and NSW WorkCover Mr M B Oakes SC/Mr M J Dawson - Amicus Curiae
SOLICITORS:	Blake Dawson Waldron - Plaintiffs I V Knight, Crown Solicitor - First Defendant Bain Gasteen by their City Agents Hicksons - Second Defendant