Kantfield Pty Ltd v Lockwood - [2003] VSC 420

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMERCIAL AND EQUITY DIVISION

No. 4614 of 2003

F5560

KANTFIELD PTY LTD (ACN 006 073 418)
trading as MARTOGG & COMPANY

Plaintiff

DAVID NEIL LOCKWOOD
and
ALLIANZ AUSTRALIA INSURANCE LIMITED (ACN 000 122 850)

Defendant

Third Party

---

JUDGE:	BYRNE J
WHERE HELD:	Melbourne
DATE OF HEARING:	12 and 25 September 2003
DATE OF JUDGMENT:	7 November 2003
CASE MAY BE CITED AS:	Kantfield Pty Ltd v Lockwood
MEDIUM NEUTRAL CITATION:	[2003] VSC 420

---

Insurance – professional indemnity insurance – insured appointed Receiver over assets of company – insured liable for debts of company incurred during receivership – whether insurer liable to indemnify receiver for these debts – whether “civil liability arising out of any claim” – whether claim for compensation or damages – whether trading debt.

---

APPEARANCES:	Counsel	Solicitors
For the Defendant	Mr Garry Bigmore QC with Mr J.P. Gorton	Minter Ellison
For the Third Party	Mr S.W. Kaye QC with Mr J.B. Davis	Tress Cocks & Maddox

HIS HONOUR:

On 25 June 2001, the defendant, David Neil Lockwood, was appointed receiver and manager of the assets and undertaking of F & T Industries Pty Ltd (“F&T”). This appointment was made by a mortgagee pursuant to the powers in that behalf contained in a registered debenture mortgage granted by F&T. Under the terms of the mortgage, the receiver and manager was appointed to act as the agent of F&T. The receiver determined that F&T should continue trading and this was done for some two years. The business of F&T was the manufacture of wheelie bins. These were made from a plastic resin which was provided by the plaintiff, Kantfield Pty Ltd trading as Martogg & Company (“Kantfield”). Kantfield, as its trading name suggests, was part of the Martogg & Company Group of which another company was Engineering Compounds & Resins Pty Ltd trading as Encor (“Encor”).

During the receivership, each of Kantfield and Encor sold and delivered on credit, resin to F&T for use in its manufacturing processes. Upon the termination of the receivership at the end of 2002, the amounts said to be due and payable to these companies were $562,500.79 in respect of sales by Kantfield and $6,380.97 in respect of sales by Encor. By deed of assignment dated 20 February 2003, Encor assigned its debt to Kantfield.[1] F&T was placed in liquidation on 20 March 2003.
[1]The debt assigned included debts for interest and storage charges with which I am not presently concerned.

By writ filed on 24 February 2003, Kantfield sued Lockwood for the unpaid price of the resins supplied to F&T. The receiver contended that the goods were purchased by him acting as agent for a disclosed principal, namely, F&T. Nevertheless, having regard to s. 419 of the Corporations Act, he did not oppose the giving of final judgment against him for most of the claim. Accordingly, on 28 May 2003, Kantfield obtained summary judgment against the receiver for $492,317.94…

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.

Keep reading for free

Create a free CaseChat account to read Kantfield Pty Ltd v Lockwood and more:

Read every judgment in full
Ask AI and get answers linked to paragraphs
See how each paragraph was cited in later cases
Download judgments as PDF or Word

Continue with Google

One click creates your free account or signs you in.

By continuing you agree to the Terms and Privacy Policy.

Details

Case: [2003] VSC 420
Decision Date: 7 November 2003

CaseChat Overview and Summary

Kantfield Pty Ltd brought an action against Lockwood seeking a declaration that the insurer was liable to indemnify the insured for certain debts incurred during a period of receivership. The insured, Kantfield, had appointed a receiver over its assets and was subsequently found liable for debts incurred during this time. Kantfield claimed that Lockwood, the insurer, was obligated to indemnify it for these debts under a professional indemnity policy. The central issue before the court was whether the debts incurred during the receivership were covered by the policy, specifically whether they constituted "civil liability arising out of any claim" and whether they were claims for compensation or damages, or trading debts.

The court considered the language of the insurance policy and the nature of the debts in question. It examined whether the debts were a result of a claim for compensation or damages, or whether they were instead trading debts, which typically do not fall under professional indemnity insurance. The court found that the debts in question were not claims for compensation or damages but were rather trading debts. The court reasoned that such debts did not constitute "civil liability arising out of any claim" as required by the policy. Consequently, the court held that Lockwood was not liable to indemnify Kantfield for these debts.

The court's decision was based on the specific terms of the insurance policy and the nature of the debts incurred by Kantfield during the receivership. It concluded that the debts did not meet the criteria for indemnity under the policy. The court rejected Kantfield's argument that the debts should be considered as claims for compensation or damages, finding instead that they were trading debts excluded from coverage. The court's reasoning was grounded in the policy's language and the characteristics of the debts. The final orders of the court were that Lockwood was not liable to indemnify Kantfield for the debts incurred during the receivership.

Orders