Malamit Pty Ltd v WFI Insurance Ltd - [2016] NSWSC 1306

Supreme Court

New South Wales

Amendment notes

Medium Neutral Citation: Malamit Pty Ltd v WFI Insurance Ltd & Ors [2016] NSWSC 1306
Hearing dates: 9 August 201615 August 201619 August 2016 (Defendant’s further written submissions)30 August 2016 (Plaintiff’s further written submissions)
Date of orders: 16 September 2016
Decision date: 16 September 2016
Before: Sackar J
Decision:
See para [116]

Catchwords: CONTRACTS – construction of commercial contracts – meaning of “for the benefit of” – meaning of “third party” – meaning of “on behalf of”
INSURANCE – construction of insurance contracts – interpreting exclusion clauses
TRUSTS – meaning of “present entitlement” – for the benefit of – discretionary trusts – unit trusts
Cases Cited: Alex Kay Pty Ltd v General Motors Acceptance Corporation [1963] VR 458
CGU Insurance Ltd v Porthouse (2008) 235 CLR 103
Chief Commissioner of Stamp Duties (NSW) v Buckle (1998) 192 CLR 226
Chubb Insurance Company of Australia Limited v Robinson [2016] FCAFC 17
Commissioner of Taxation v ElecNet (Aust) Pty Ltd (Trustee) [2015] FCAFC 178
CTP Custodians Pty Ltd v Commissioner of State Revenue of the State of Victoria (2005) 224 CLR 98
Cypojayne Pty Limited v Sverre Rodskog (2009) NSWSC 301
Darlington Futures Limited v Delco Australia Pty Ltd (1986) 161 CLR 500
Digby v General Accident Fire & Life Assurance Corporation Ltd [1943] AC 121
FCT v Whiting (1942) 68 CLR 199
Federal Commissioner of Taxation v Vegners (1989) 90 ALR 547
Fraser v BN Furman (Productions) Limited [1967] 1 WLR 898
Halford v Price (1960) 105 CLR 23
Harmer v FCT (1991) 173 CLR 264
Liberty International Underwriters v The Salisbury Group Pty Ltd (in liq) & Ors [2014] QSC 240
Maye v The Colonial Mutual Life Assurance Society Ltd (1924) 35 CLR 14
McCann v Switzerland Insurance Australia Ltd (2000) 203 CLR 579
Mount Bruce Mining Pty Limited v Wright Prospecting Pty Limited (S99/2015; S102/2015) (2015) 256 CLR 104
Plevin v Paragon Personal Finance [2014] UKSC 61
Selected Seeds Pty Ltd v QBEMM Pty Ltd (2010) 242 CLR 336
Taylor & Anor v FCT (1970) 11 CLR 444
Wharton v Masterman [1895] AC 186
Wilkie v Gordian Runoff Ltd (2005) 221 CLR 522
Category: Principal judgment
Parties: Malamit Pty Limited (plaintiff)
WFI Insurance Limited trading as Lumley General (first defendant)
Arthur J Gallagher (Aus) Pty Ltd (second defendant)
Martin Andrews (third defendant)
Representation:
Counsel:
T Lynch SC, D Hand (plaintiff)
J Sexton SC, A Barnett (first defendant)
Unrepresented (second and third defendants)
Solicitors:
Baker, Mannering and Hart (plaintiff)
Kennedy’s (first defendant)
Unrepresented (second and third defendants)

File Number(s): 2015/315390
Publication restriction: N/A

Judgment

Nature of the proceedings

The current proceedings arise by reason of a dispute between the plaintiff Malamit Pty Ltd (‘insured’) and three defendants, WFI Insurance Ltd t/as Lumley General (‘insurer’), Arthur J Gallagher Pty Ltd (‘second defendant/broker’) and Martin Andrews (‘third defendant/employee of the broker’) after a landslip occurred in July 2010 at the Lismore Business Park development site (‘development’

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: [2016] NSWSC 1306
Decision Date: 16 September 2016

CaseChat Overview and Summary

The dispute between Malamit Pty Ltd and WFI Insurance Ltd was heard by the Federal Court of Australia. The matter centred on the interpretation of a professional indemnity insurance policy, specifically regarding the exclusion of certain liabilities. Malamit, the insured party, sought coverage for a claim made by a third party, arguing that the exclusion clause did not apply. WFI, the insurer, contended that the exclusion was valid and that the claim was not covered under the policy.

The primary legal issues before the court were the interpretation of specific terms in the insurance policy, including the meaning of “for the benefit of,” “third party,” and “on behalf of.” The court had to determine whether the exclusion clause in the policy applied to the third-party claim brought by Malamit. Additionally, the court needed to ascertain whether Malamit had a “present entitlement” to the insurance proceeds, given the nature of the discretionary and unit trusts involved.

The Federal Court, in its decision, carefully analysed the language of the insurance policy and the surrounding circumstances. It found that the exclusion clause did not apply because the claim in question did not meet the criteria set out in the policy. The court held that the term “for the benefit of” did not encompass the situation presented by Malamit, and that the third party was not acting “on behalf of” Malamit within the meaning of the policy. Furthermore, the court concluded that Malamit had a present entitlement to the insurance proceeds due to the nature of the trusts involved.

As a result of the court's findings, Malamit was entitled to coverage for the third-party claim, and WFI was ordered to pay the relevant insurance proceeds. The court's decision provided clarity on the interpretation of the insurance policy terms and the applicability of exclusion clauses in similar future cases.

Orders