Nguyen v QBE Insurance Ltd - [2007] SASC 320

SUPREME COURT OF SOUTH AUSTRALIA
(Civil)
NGUYEN v QBE INSURANCE LTD
[2007] SASC 320
Judgment of The Honourable Justice Duggan
31 August 2007
INSURANCE - GENERAL - POLICIES OF INSURANCE - CONSTRUCTION
Plaintiff seriously injured in course of an attack upon him outside a hall - alleged that security guards on duty at function in hall failed to provide plaintiff assistance during attack - action for breach of duty of care against proprietor of security firm (the insured) - default judgment entered against insured and damages for personal injuries assessed - insured declared bankrupt subsequent to default judgment - pursuant to s 117(1) of Bankruptcy Act 1966 (Cth) right of bankrupt to indemnity under insurance policy vests in trustee in bankruptcy - assignment by Official Trustee in Bankruptcy to plaintiff of the insured's right of indemnity under liability insurance policy - whether default judgment established liability under indemnity clause - whether liability in respect of bodily injury happening as a result of an occurrence in connection with the insured's business.
Held: plaintiff entitled to recover against the defendant insurance company damages awarded to him in previous action against insured.
Bankruptcy Act 1966 s 117(1); Third Parties (Rights Against Insurers) Act 1930 s 1, referred to.
Pioneer Concrete (UK) Ltd v National Employers Mutual General Insurance Association Ltd [1985] 2 All ER 395; Our Town FM Pty Ltd v Australian Broadcasting Tribunal (1987) 16 FCR 465, applied.
GIO Australia Ltd v P Ward Civil Engineering Pty Ltd & Anor (2000) 11 ANZ Insurances Cases 61-467; GIO General Ltd v Newcastle City Council [1996] 38 NSWLR 558, distinguished.

ESTOPPEL - ESTOPPEL IN PAIS
Defendant advised court during interlocutory stages of action that liability denied on a particular basis and no other ground – subsequent amendment of proceedings to raise other grounds – whether defendant’s conduct gave rise to estoppel.
Sargent v ASL Developments (1974) 131 CLR 634; The Commonwealth of Australia v Verwayen (1990) 170 CLR 394; Grundt v Great Boulder Gold Mines Ltd (1937) 59 CLR 641; Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387, applied.

NGUYEN v QBE INSURANCE LTD
[2007] SASC 320
Civil

DUGGAN J. On 7 October 1995 the plaintiff was severely injured in an attack outside the Woodville Town Hall as he left a function in the building. The town hall is situated on Woodville Road. During the attack the plaintiff was stabbed with a knife and was rendered paraplegic.
The organisers of the function at the town hall contracted with Mr Angelo Hiotis to provide security for the function. Mr Hiotis engaged a number of employees to act as security guards for the occasion. There is some doubt on the evidence as to how many guards were engaged, but there were at least four including Mr Hiotis.
The plaintiff attended the function with a group of friends and they sat at a table in the main hall. While sitting there, they became conscious of another group, some of…

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: [2007] SASC 320
Decision Date: 31 August 2007

CaseChat Overview and Summary

The matter before the court in Nguyen v QBE Insurance Ltd involved the plaintiff, Nguyen, who was seriously injured during an attack outside a hall. Nguyen alleged that the security guards, employed by the insured, Mr Hiotis, failed to assist him during the attack. Nguyen sought damages against Mr Hiotis and obtained a default judgment against him. Following this, Mr Hiotis declared bankruptcy, and the Official Trustee in Bankruptcy assigned Nguyen's right to indemnity under Mr Hiotis's insurance policy to Nguyen. QBE Insurance Ltd, the insurer, argued that the default judgment did not establish a liability under the indemnity clause and that the incident did not occur in connection with Mr Hiotis's business.

The legal issues for the court to decide were whether the default judgment established a liability for indemnity under the insurance policy and whether the injury sustained by Nguyen was a result of an occurrence in connection with Mr Hiotis's business. The court had to interpret the indemnity clause in the policy and determine if it covered liabilities arising from a default judgment. Additionally, the court needed to assess if the incident that caused Nguyen's injury fell within the scope of "an occurrence in connection with The Business."

The court held that a default judgment, despite its provisional nature, does create a legal liability to pay, which is sufficient to trigger the indemnity clause in the insurance policy. The court reasoned that the ordinary meaning of "legally liable" encompasses liability arising from a default judgment, until such judgment is set aside. The court rejected the insurer's argument that the policy only indemnifies against liabilities established by final judgments. The court also found that the incident causing Nguyen's injury was connected to Mr Hiotis's business, as it occurred while the security guards were on duty at an event managed by Mr Hiotis. Consequently, the court ruled in favour of Nguyen, declaring that QBE Insurance Ltd was required to indemnify Nguyen for the damages awarded against Mr Hiotis.

Orders

Orders of the court

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Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

DUGGAN J

In the present proceedings the plaintiff seeks a declaration that the defendant was required to indemnify the estate of Mr Hiotis in respect of the claim against him in the first action. A declaration is also sought that the Official Trustee in Bankruptcy validly assigned to the plaintiff the right of Mr Hiotis to indemnity by the defendant. The plaintiff seeks an order that the defendant pay to the plaintiff the sum awarded to the plaintiff in the first action plus interest.The effect of the default judgment The first submission of the defendant is that a default judgment cannot create a liability which will give rise to indemnity under the policy. It is further submitted that, even if the default judgment can give rise to a liability for the purposes of the contract of insurance, the circumstances of the incident which resulted in personal injury to the plaintiff did not occur as a result of an occurrence in connection with the business of Mr Hiotis as required in order to give rise to indemnity under the terms of the policy. The indemnity provided in section 1 of the policy is as follows:QBE will pay to or on behalf of The Insured all sums which The Insured shall become legally liable to pay by way of compensation (excluding punitive or exemplary damages) in respect of:-(a) bodily injury (which expression includes death and illness)(b) property damage (which expression includes loss of property)happening during the Period of Insurance as a result of an Occurrence in connection with The Business. As stated above, the defendant’s first argument addresses the phrase “legally liable to pay”. According to the argument, the policy provides an indemnity only in those cases where liability is established by a judgment entered after a trial or following an informed settlement. It is argued that, for the purposes of the policy, a default judgment which is never final cannot be equated with a final judgment. In my view, this argument must be rejected. Any differences which might exist between a default judgment and a judgment entered after a trial of the issues are irrelevant for the purposes of the indemnity clause in the contract of insurance. The consideration that a default judgment can be set aside does not alter the fact that, until set aside, it is enforceable in the same manner as a judgment obtained after a trial or by consent. The policy indemnifies the insured against sums which the insured becomes legally liable to pay. There can be no doubt that the effect of the default judgment in the present case was to create a legal liability to pay which remains in existence. “Legally liable” is not defined in the policy, but the ordinary meaning of the phrase must include legal liability resulting from the entry of a default judgment. There is support for the plaintiff’s case on this issue in the judgment of Bingham J in Pioneer Concrete (UK) Ltd v National Employers Mutual General Insurance Association Ltd[1]. The plaintiffs commenced an action against contractors who had negligently installed machinery owned by the plaintiffs. The contractors were insured under a policy which indemnified them against sums which they might become legally liable to pay as damages in respect of accidental damage to property. By the time the action was commenced the contracting company was in liquidation. The plaintiffs obtained a default judgment against the company. They then took action against the insurers pursuant to s 1 of the Third Parties (Rights Against Insurers) Act 1930 under which the rights of an insured in liquidation were transferred to the third party to whom liability was incurred.[1] [1985] 2 All ER 395.

Ratio Decidendi

Legal Principle Established

Established by: DUGGAN J

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