Malamit Pty Ltd v WFI Insurance Ltd - [2017] NSWCA 162

Court of Appeal

Supreme Court

New South Wales

Medium Neutral Citation: Malamit Pty Ltd v WFI Insurance Ltd [2017] NSWCA 162
Hearing dates: 13 June 2017
Decision date: 04 July 2017
Before: Bathurst CJ at [1];
Beazley P at [2];
Meagher JA at [3]
Decision:
1. Arthur J Gallagher (Aus) Pty Ltd and Martin Andrews are joined as second and third respondents in the appeal.
2. Appeal dismissed.
3. The appellant pay WFI Insurance Ltd’s costs of the appeal.
4. The appellant pay the second and third respondents’ costs of the notice of motion that they be joined as parties to the appeal.

Catchwords:
INSURANCE – professional indemnity insurance – exclusions – insured and associate exclusion – distributive construction of composite insurance – where several insured indemnified with respect to their liabilities in conducting professional business – where cover extended to director of insured company – where insured company contracted with trustee for unit trust – where director and shareholder of insured company also sole director and shareholder of trustee – where director of insured company and his family members held shares in corporate unitholders of trust – where trustee brings civil proceedings against insured company – whether civil proceeding brought by third party within insuring clause – whether claim brought by subsidiary of insured within exclusion clause – whether claim brought for benefit of insured within exclusion clause – whether claim brought on behalf or for benefit of family members of insured
PROCEDURE – uniform civil procedure – joinder of parties – joinder on appeal of defendants alleged to be alternatively liable – where insured seeks declaration of indemnity against insurer and alternatively damages against insurance brokers – where non-liability of insurer essential to claims against brokers – where appeal from separate determination of insurer’s liability – whether brokers directly affected by relief sought in appeal
Legislation Cited: Civil Liability Act 2002 (NSW), Pt 4
Insurance Contracts Act 1984 (Cth), s 48
Uniform Civil Procedure Rules 2005 (NSW), rr 28.2, 51.4(1)
Cases Cited: Arab Bank Plc v Zurich Insurance Co [1999] 1 Lloyd’s Rep 262
Baker v Archer-Shee [1927] AC 844
Charles v Federal Commissioner of Taxation (1954) 90 CLR 598
Chubb Insurance Company of Australia Ltd v Robinson (2016) 239 FCR 300; [2016] FCAFC 17
FAI Insurance Co Ltd v Australian Hospital Care Pty Ltd (2001) 204 CLR 641; [2001] HCA 38
Federation Insurance Ltd v Wasson (1987) 163 CLR 303
Fidelitas Shipping Co Ltd v V/O Exportchleb [1966] 1 QB 630
General Accident Fire & Life Assurance Corporation Ltd v Midland Bank Ltd [1940] 2 KB 388
Lake v Simmons [1927] AC 487
Macaura v Northern Assurance Co Ltd [1925] AC 619
O’Toole v Charles David Pty Ltd (1990) 171 CLR 232
Provincial Insurance Australia Pty Ltd v Consolidated Wood Products Pty Ltd (1991) 25 NSWLR 541
Trident General Insurance Co Ltd v McNiece Bros Pty Ltd (1988) 165 CLR 107
Wilkie v Gordian Runoff Ltd (2005) 221 CLR 522; [2005] HCA 17

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: [2017] NSWCA 162
Decision Date: 04 July 2017

CaseChat Overview and Summary

Malamit Pty Ltd (the appellant) appealed a decision concerning a professional indemnity insurance policy issued by WFI Insurance Ltd (the respondent). The dispute arose from civil proceedings commenced by the trustee for a unit trust against Malamit. Malamit sought a declaration of indemnity from WFI under its policy and, alternatively, damages against its insurance brokers. The appeal concerned the interpretation of the insurance policy, specifically whether the claim brought by the trustee fell within the scope of cover or was excluded by certain provisions.

The central legal issues before the Court of Appeal were whether the civil proceeding brought by the trustee constituted a claim brought by a third party within the insuring clause of the policy, and whether the claim was excluded by provisions relating to claims brought for the benefit of the insured or its associates, particularly given the director and shareholder connections between Malamit, the trustee, and entities associated with the director's family. The court also considered whether the insurance brokers should be joined as parties to the appeal, given that their liability was contingent on the insurer's non-liability.

The Court of Appeal reasoned that the insurance policy was a composite policy, and its terms were to be construed distributively. The court found that the claim brought by the trustee was indeed a claim brought by a third party within the insuring clause. However, it also determined that the claim was brought for the benefit of the director of Malamit and his family members, who were unitholders in the trust through corporate entities. This brought the claim within the scope of the exclusion clause, which excluded claims brought on behalf or for the benefit of associates of the insured. Consequently, the appeal was dismissed.

The Court of Appeal ordered that Arthur J Gallagher (Aus) Pty Ltd and Martin Andrews be joined as second and third respondents to the appeal. The appeal itself was dismissed, with the appellant ordered to pay WFI Insurance Ltd’s costs of the appeal and the second and third respondents’ costs of their notice of motion to be joined as parties.

Orders

Orders of the court

1. Arthur J Gallagher (Aus) Pty Ltd and Martin Andrews are joined as second and third respondents in the appeal.

2. Appeal dismissed.

3. The appellant pay WFI Insurance Ltd’s costs of the appeal.

4. The appellant pay the second and third respondents’ costs of the notice of motion that they be joined as parties to the appeal.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

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Medium Neutral Citation:	Malamit Pty Ltd v WFI Insurance Ltd [2017] NSWCA 162
Hearing dates:	13 June 2017
Decision date:	04 July 2017
Before:	Bathurst CJ at [1]; Beazley P at [2]; Meagher JA at [3]
Decision:	1. Arthur J Gallagher (Aus) Pty Ltd and Martin Andrews are joined as second and third respondents in the appeal. 2. Appeal dismissed. 3. The appellant pay WFI Insurance Ltd’s costs of the appeal. 4. The appellant pay the second and third respondents’ costs of the notice of motion that they be joined as parties to the appeal.
Catchwords:	INSURANCE – professional indemnity insurance – exclusions – insured and associate exclusion – distributive construction of composite insurance – where several insured indemnified with respect to their liabilities in conducting professional business – where cover extended to director of insured company – where insured company contracted with trustee for unit trust – where director and shareholder of insured company also sole director and shareholder of trustee – where director of insured company and his family members held shares in corporate unitholders of trust – where trustee brings civil proceedings against insured company – whether civil proceeding brought by third party within insuring clause – whether claim brought by subsidiary of insured within exclusion clause – whether claim brought for benefit of insured within exclusion clause – whether claim brought on behalf or for benefit of family members of insured PROCEDURE – uniform civil procedure – joinder of parties – joinder on appeal of defendants alleged to be alternatively liable – where insured seeks declaration of indemnity against insurer and alternatively damages against insurance brokers – where non-liability of insurer essential to claims against brokers – where appeal from separate determination of insurer’s liability – whether brokers directly affected by relief sought in appeal
Legislation Cited:	Civil Liability Act 2002 (NSW), Pt 4 Insurance Contracts Act 1984 (Cth), s 48 Uniform Civil Procedure Rules 2005 (NSW), rr 28.2, 51.4(1)
Cases Cited:	Arab Bank Plc v Zurich Insurance Co [1999] 1 Lloyd’s Rep 262 Baker v Archer-Shee [1927] AC 844 Charles v Federal Commissioner of Taxation (1954) 90 CLR 598 Chubb Insurance Company of Australia Ltd v Robinson (2016) 239 FCR 300; [2016] FCAFC 17 FAI Insurance Co Ltd v Australian Hospital Care Pty Ltd (2001) 204 CLR 641; [2001] HCA 38 Federation Insurance Ltd v Wasson (1987) 163 CLR 303 Fidelitas Shipping Co Ltd v V/O Exportchleb [1966] 1 QB 630 General Accident Fire & Life Assurance Corporation Ltd v Midland Bank Ltd [1940] 2 KB 388 Lake v Simmons [1927] AC 487 Macaura v Northern Assurance Co Ltd [1925] AC 619 O’Toole v Charles David Pty Ltd (1990) 171 CLR 232 Provincial Insurance Australia Pty Ltd v Consolidated Wood Products Pty Ltd (1991) 25 NSWLR 541 Trident General Insurance Co Ltd v McNiece Bros Pty Ltd (1988) 165 CLR 107 Wilkie v Gordian Runoff Ltd (2005) 221 CLR 522; [2005] HCA 17