Insurance Australia Limited v Maneas - [2022] NSWSC 1672

Supreme Court

New South Wales

Medium Neutral Citation: Insurance Australia Limited v Maneas [2022] NSWSC 1672
Hearing dates: 30 November 2022
Decision date: 08 December 2022
Jurisdiction: Equity - Commercial List
Before: Ball J
Decision:
(1) Judgment for the plaintiffs against the defendant in the sum of $8,687,491.33;
(2) The defendant to pay the plaintiff’s costs of the proceedings.

Catchwords:
INSURANCE — Where Australia and New Zealand Banking Group Limited (ANZ) issued unconditional bank guarantees in respect of construction contracts entered into by companies controlled by the defendant — Where plaintiff issued surety bonds in favour of ANZ at the request of those companies — Where the surety facility had been provided by CGU Insurance Limited (CGU) before the insurance business of CGU was transferred to the plaintiff pursuant to a scheme under s 17B of the Insurance Act 1973 (Cth) — Where the defendant as an indemnifier entered into a deed of indemnity with CGU — Where the surety bonds were called upon by ANZ and paid by the plaintiff — Whether CGU’s rights and obligations under the deed were transferred to the plaintiff as a consequence of the scheme thereby entitling it to rely on the deed to seek reimbursement from the defendant

Legislation Cited:
Conveyancing Act 1919 (NSW)
Evidence Act 1995 (NSW)
Insurance Act 1973 (Cth)
Insurance Contracts Act 1984 (Cth)

Cases Cited:
Dobbs v National Bank of Australasia Ltd (1935) 53 CLR 643; [1935] HCA 49
Insurance Australia Ltd, in the Application of Insurance Australia Ltd (No 2) [2017] FCA 980
Prudential Insurance Company v Inland Revenue Commissioners [1904] 2 KB 658
Seaton v Heath [1899] 1 QB 782
Todd v Alterra at Lloyds Ltd (2016) 239 FCR 12; [2016] FCAFC 15

Category: Principal judgment
Parties: Insurance Australia Limited (Plaintiff)
Peter Maneas (Defendant)
Representation:
Counsel:
B Koch (Plaintiff)
IJ King with C Honnery (Defendant)
Solicitors:
Corrs Chambers Westgarth (Plaintiff)
Mathas Law (Defendant)

File Number(s): 2021/365685
Publication restriction: None

JUDGMENT

Introduction

In these proceedings, the plaintiff, Insurance Australia Limited (IAL), seeks to recover amounts totalling $8,304,902.46 plus interest said to be payable to it by the defendant, Mr Peter Maneas, in respect of four surety bonds issued in favour of Australia and New Zealand Banking Group Limited (ANZ) by IAL at the request of companies in the Ganellen Group (the GDC Group). The GDC Group, which is now in external administration, carried on a substantial construction business. It was founded by Mr Maneas who was the sole director of many companies in the group and who directly or indirectly held the majority of the shares in the companies in the group. The surety bonds were issued in respect of unconditional bank guarantees given by ANZ in respect of construction contracts entered into by GDC Group companies. It is said that Mr Maneas is liable to reimburse IAL the amounts it has paid to ANZ under a deed of indemnity dated 10 December 2015 (the…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2022] NSWSC 1672
Decision Date: 08 December 2022

CaseChat Overview and Summary

The parties involved in the case were Insurance Australia Limited (the plaintiff) and Maneas (the defendant). The dispute revolved around the plaintiff's claim for reimbursement from the defendant in relation to surety bonds issued in favour of ANZ, which were called upon and paid by the plaintiff. The case was heard in the Supreme Court of New South Wales. The plaintiff, Insurance Australia Limited, sought reimbursement from the defendant for the surety bonds it had paid out to ANZ, which had issued unconditional bank guarantees in respect of construction contracts entered into by companies controlled by the defendant.

The primary legal issues the court had to decide were whether the plaintiff could rely on a deed of indemnity executed between the defendant and CGU Insurance Limited, and whether the plaintiff had succeeded to CGU's rights and obligations under the deed as a consequence of the scheme of arrangement under section 17B of the Insurance Act 1973 (Cth). The court needed to determine if the deed of indemnity could be invoked by the plaintiff to seek reimbursement from the defendant for the surety bonds paid out to ANZ.

The court found that the deed of indemnity was intended to operate as a novation and thus did not survive the transfer of CGU's insurance business to the plaintiff. Consequently, the plaintiff could not rely on the deed to seek reimbursement from the defendant. The court held that the deed did not create a direct obligation on the defendant to reimburse the plaintiff, and therefore, the plaintiff's claim for reimbursement was dismissed. The court also found that the plaintiff had not succeeded to CGU's rights and obligations under the deed as a consequence of the scheme, and therefore, the plaintiff's claim was unsuccessful.

The final orders of the court were that the plaintiff's claim for reimbursement from the defendant was dismissed with costs. The court determined that the plaintiff could not rely on the deed of indemnity to seek reimbursement from the defendant and that the plaintiff had not succeeded to CGU's rights and obligations under the deed as a consequence of the scheme. The plaintiff's claim was therefore dismissed in its entirety.

Orders