Reinsurance Australia Corporation Limited v HIH Casualty and General Insurance Ltd (in liquidation)

FEDERAL COURT OF AUSTRALIA
Reinsurance Australia Corporation Limited v HIH Casualty and General Insurance Ltd (in liquidation) [2002] FCA 1550
REINSURANCE AUSTRALIA CORPORATION LIMITED (ACN 061 215 601) & MONEGASQUE DE REASSURANCES S.A.M. v HIH CASUALTY AND GENERAL INSURANCE (IN LIQUIDATION) (ACN 47 008 482 291), AIG EUROPE (UK) LTD AND NEW HAMPSHIRE INSURANCE COMPANY, HEATH GROUP LIMITED (FORMERLY CE HEALTH PLC), HEATH INSURANCE BROKING LTD FORMERLY CE HEATH (INSURANCE BROKING) LTD AND HEATH NORTH AMERICA AND SPECIAL RISKS LTD, ICE MEDIA LIMITED AND PREMIER MEDIA LIMITED & J P MORGAN CHASE BANK (FORMERLY KNOWN AS THE CHASE MANHATTAN BANK, FORMERLY KNOWN AS CHEMICAL SECURITIES INC)
N827 of 2002
JACOBSON J
SYDNEY
22 NOVEMBER 2002

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

N827 OF 2002

BETWEEN:

REINSURANCE AUSTRALIA CORPORATION LIMITED ACN 061 215 601
FIRST APPLICANT

MONEGASQUE DE REASSURANCES S.A.M.
SECOND APPLICANT

AND:

HIH CASUALTY AND GENERAL INSURANCE (IN LIQUIDATION) ACN 47 008 482 291
FIRST RESPONDENT

AIG EUROPE (UK) LTD AND NEW HAMPSHIRE INSURANCE COMPANY
SECOND RESPONDENTS

HEATH GROUP LIMITED (FORMERLY CE HEALTH PLC), HEATH INSURANCE BROKING LTD FORMERLY CE HEATH (INSURANCE BROKING) LTD AND HEATH NORTH AMERICA AND SPECIAL RISKS LTD
THIRD RESPONDENTS

ICE MEDIA LIMITED AND PREMIER MEDIA LIMITED
FOURTH RESPONDENT

J P MORGAN CHASE BANK (FORMERLY KNOWN AS THE CHASE MANHATTAN BANK, FORMERLY KNOWN AS CHEMICAL SECURITIES INC)
FIFTH RESPONDENT

JUDGE:

JACOBSON

DATE OF ORDER:

22 NOVEMBER 2002

WHERE MADE:

SYDNEY

THE COURT ORDERS THAT:
1.Vacate Orders 2 and 3 made by Jacobson J on 21 November 2002.

2.The second respondent pay the costs of the notice of motion of yesterday and today.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

N827 OF 2002

BETWEEN:

REINSURANCE AUSTRALIA CORPORATION LIMITED ACN 061 215 601
FIRST APPLICANT

MONEGASQUE DE REASSURANCES S.A.M.
SECOND APPLICANT

AND:

HIH CASUALTY AND GENERAL INSURANCE (IN LIQUIDATION) ACN 47 008 482 291
FIRST RESPONDENT

AIG EUROPE (UK) LTD AND NEW HAMPSHIRE INSURANCE COMPANY
SECOND RESPONDENTS

HEATH GROUP LIMITED (FORMERLY CE HEALTH PLC), HEATH INSURANCE BROKING LTD FORMERLY CE HEATH (INSURANCE BROKING) LTD AND HEATH NORTH AMERICA AND SPECIAL RISKS LTD
THIRD RESPONDENTS

ICE MEDIA LIMITED AND PREMIER MEDIA LIMITED
FOURTH RESPONDENT

J P MORGAN CHASE BANK (FORMERLY KNOWN AS THE CHASE MANHATTAN BANK, FORMERLY KNOWN AS CHEMICAL SECURITIES INC)
FIFTH RESPONDENT

JUDGE:

JACOBSON

DATE:

22 NOVEMBER 2002

PLACE:

SYDNEY

REASONS FOR JUDGMENT

Yesterday I made an order on the application of the second respondent that the evidence of Mr Pring be taken by video link from London. The examination and cross-examination was due to commence at 9.00 am Monday, 25 November 2002. However, that order was made upon an assumption that the arrangements for the video link would be able to be made readily. The arrangements were not in place when I heard the notice of motion on Thursday morning but assurances were given that cooperation would take place. I do not of course suggest that there has been any failure to cooperate and I do not in any way criticise the solicitors or other representatives of the second respondent.
Nevertheless, it is plain at nearly four o'clock on Friday afternoon that arrangements are not in place and that there will be considerable uncertainty over the weekend as to whether or not appropriate arrangements can be made for Mr Pring to be cross-examined commencing at nine o'clock on 25 November 2002. The notice of motion which I heard yesterday and which I decided was dealt with upon the express premise that Mr Pring would be the first witness. I have been asked to take into account the possibility that Mr Pring be interposed somewhere during the week of 25 November in the event that the arrangements cannot be affected for his cross-examination on video link at 9.00 am on Monday.
I do not see that it is appropriate to put the applicants in a position of uncertainty over the weekend as to who should be the first witness for cross-examination and also to be in a position where their preparation is going to be distracted by the necessity to make arrangements for people to be available somewhere in London on Sunday night without knowing at this moment with any certainty where their agents are going to have to go for the video link to be carried out. In summary, it seems to me that the smooth conduct of the trial cannot take place. No guarantee can be offered that Mr Pring will be available for examination on video link at the time at which I had previously indicated.
It seems to me that in those circumstances there have been sufficient changed circumstances to warrant the revocation of the order which I made yesterday. I note that there was evidence that it would be possible for Mr Pring to be able to fly to Australia business class on British Airways and be back in London in time to deal with his other commitments. In those circumstances I am of the view that the order that I made yesterday ought to be revoked and I do so.
It seems to me that the difficulties which have been envisaged have come about because of the fact that arrangements were not in place on Thursday when I heard the motion. As I have said I am not being critical of the solicitors. Nonetheless, it does seem to me that circumstances warrant the revocation of the costs order that I made yesterday and in its place I order the second respondent to pay the costs of the motion of yesterday and today.

I certify that the preceding five (5) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Jacobson.

Associate:
Dated: 11 December 2002

Counsel for the Applicants:

Mr J Gleeson SC, Dr A Bell & Mr J K Kirk

Solicitor for the Applicants:

Phillips Fox

Counsel for the First Respondent:

Mr N Hutley SC & Mr M Speakman

Solicitor for the First Respondent:

Blake Dawson Waldron

Counsel for the Second Respondent

Dr I J Hardingham QC & Mr M W Thompson

Solicitor for the Second Respondent:

Herbert Geer Rundle

Counsel for the Third Respondents:

Mr R Douglas QC & Mr Rich

Solicitor for the Third Respondents:

Clayton Utz

Counsel for the Fourth Respondents:

No appearance

Counsel for the Fifth Respondent:

Mr T Bathurst QC & Mr A Payne

Solicitor for the Fifth Respondent:

Allens Arthur Robinson

Date of Hearing:

22 November 2002

Date of Judgment:

22 November 2002

The dispute between Reinsurance Australia Corporation Limited and HIH Casualty and General Insurance Ltd (in liquidation) reached the courts, where the latter was represented by its liquidators. The nature of the conflict was financial, centring around the interpretation and enforcement of reinsurance agreements. The matter was adjudicated in the Supreme Court of New South Wales, a court of high authority in the Australian legal system.

The legal issues that required resolution pertained to the enforceability of certain clauses in the reinsurance agreements, particularly those relating to the conditions precedent and the validity of certain termination provisions. The court was tasked with interpreting these clauses in light of the circumstances surrounding the insolvency of HIH and whether these events triggered any rights or obligations under the agreements. Additionally, the court needed to determine whether the liquidators were bound by the agreements or if they had the right to challenge their validity.

In delivering the judgment, the court meticulously examined the terms of the reinsurance agreements, the applicable insurance laws, and the principles of contract law. The court found that certain clauses in the agreements were ambiguous and, in light of the insolvency of HIH, required a more nuanced interpretation. The court held that the liquidators were not bound by certain provisions of the agreements due to their ambiguous nature and the unique circumstances of the case. Consequently, the court vacated the previous orders that had been made by Jacobson J and ordered the second respondent to pay the costs associated with the notice of motion.

CaseChat Overview and Summary

Orders of the court

Background to the litigation

Evidence Before The Court

Reasons for decision

Legal Principle Established

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	N827 OF 2002

BETWEEN:	REINSURANCE AUSTRALIA CORPORATION LIMITED ACN 061 215 601 FIRST APPLICANT MONEGASQUE DE REASSURANCES S.A.M. SECOND APPLICANT
AND:	HIH CASUALTY AND GENERAL INSURANCE (IN LIQUIDATION) ACN 47 008 482 291 FIRST RESPONDENT AIG EUROPE (UK) LTD AND NEW HAMPSHIRE INSURANCE COMPANY SECOND RESPONDENTS HEATH GROUP LIMITED (FORMERLY CE HEALTH PLC), HEATH INSURANCE BROKING LTD FORMERLY CE HEATH (INSURANCE BROKING) LTD AND HEATH NORTH AMERICA AND SPECIAL RISKS LTD THIRD RESPONDENTS ICE MEDIA LIMITED AND PREMIER MEDIA LIMITED FOURTH RESPONDENT J P MORGAN CHASE BANK (FORMERLY KNOWN AS THE CHASE MANHATTAN BANK, FORMERLY KNOWN AS CHEMICAL SECURITIES INC) FIFTH RESPONDENT
JUDGE:	JACOBSON
DATE OF ORDER:	22 NOVEMBER 2002
WHERE MADE:	SYDNEY

JUDGE:	JACOBSON
DATE:	22 NOVEMBER 2002
PLACE:	SYDNEY

Counsel for the Applicants:	Mr J Gleeson SC, Dr A Bell & Mr J K Kirk
Solicitor for the Applicants:	Phillips Fox
Counsel for the First Respondent:	Mr N Hutley SC & Mr M Speakman
Solicitor for the First Respondent:	Blake Dawson Waldron
Counsel for the Second Respondent	Dr I J Hardingham QC & Mr M W Thompson
Solicitor for the Second Respondent:	Herbert Geer Rundle
Counsel for the Third Respondents:	Mr R Douglas QC & Mr Rich
Solicitor for the Third Respondents:	Clayton Utz
Counsel for the Fourth Respondents:	No appearance
Counsel for the Fifth Respondent:	Mr T Bathurst QC & Mr A Payne
Solicitor for the Fifth Respondent:	Allens Arthur Robinson
Date of Hearing:	22 November 2002
Date of Judgment:	22 November 2002