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Stealth Enterprises Pty Ltd v Calliden Insurance Ltd

Stealth Enterprises Pty Ltd v Calliden Insurance Ltd

Case [2015] NSWSC 1270 3 September 2015

Insurance Policy

Non-Disclosure

Compensatory Damages

Admissibility of Evidence

Expert Evidence

Insurance Law

Civil Litigation & Procedure

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Supreme Court

New South Wales

Amendment notes

Medium Neutral Citation: Stealth Enterprises Pty Limited trading as The Gentleman’s Club v Calliden Insurance Limited [2015] NSWSC 1270
Hearing dates: 9 June 2015, 10 June 2015, 11 June 2015, 12 June 2015 and 17 June 2015 and further written submissions on 23 June 2015
Date of orders: 03 September 2015
Decision date: 03 September 2015
Jurisdiction: Common Law
Before: Schmidt J
Decision:
Judgment for Calliden.

The usual order as to costs is that they follow the event. In this case, that would be an order that Stealth Enterprises pay Calliden’s costs, as agreed or assessed.

Parties will be heard if some other order is sought.
The parties should file short minutes of orders reflecting the conclusions reached in this judgment, within 14 days.
Catchwords:
INSURANCE – fire and business interruption insurance – losses and claims – insurance policy – s 21 Insurance Contracts Act 1984 (Cth) – non-disclosure – brothel and escort agency – premises damaged by fire – insurer would not have insured if it was disclosed that sole director and manager were members of the Comancheros – insurer would not have insured if it was disclosed that business registration had lapsed – fraud not established – Jones v Dunkel inference – s 28 Insurance Contracts Act 1984 (Cth) – ability to reduce liability to nil

EVIDENCE – admissibility and relevancy – opinion evidence – expert evidence – conduct of outlaw motorcycle gangs as a matter of common knowledge
EVIDENCE – witnesses – application to call late evidence – application granted – reliability and credibility of evidence
Legislation Cited: Civil Procedure Act 2005 (NSW)
Corporations Act 2001 (Cth)
Crimes (Criminal Organisations Control) Bill 2009 (NSW)
Evidence Act 1995 (NSW)
Insurance Contracts Act 1984 (Cth)
Liquor Act 2007 (NSW)
Prostitution Act 1992 (ACT)
Cases Cited: Aon Risk Services Australia Ltd v Lumley General Insurance [2005] FCA 133
Briginshaw v Briginshaw [1938] HCA 34; (1938) 60 CLR 336
Buzzle Operations v Apple Computer Australia [2009] NSWSC 225; (2009) 74 NSWLR 469
CGU Insurance Ltd v Porthouse [2008] HCA 30; (2008) 235 CLR 103
Crown Glass & Aluminium P/L v Ibrahim [2005] NSWCA 195
Farkas v R [2014] NSWCCA 141
Gattellaro v Westpac Banking Corporation [2004] HCA 6; (2004) 204 ALR 258
Hammer Waste Pty Ltd v QBE Mercantile Mutual Ltd [2002] NSWSC 1006; (2002) ANZ Insurance Cases 61-553
Jones v Dunkel [1959] HCA 8; (1959) 101 CLR 298
Jones v Toben [2002] FCA 1150; (2002) 71 ALD 627
Lindsay v CIC Insurance (1989) 16 NSWLR 673
McGregor v McGregor [2012] FamCAFC 69
Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd [1992] HCA 66; 67 ALJR 170
New Cap Reinsurance Corporation Limited (in liquidation) v Daya [2010] NSWSC 1226
Permanent Trustee Australia Ltd v FAI General Insurance Company Ltd [2003] HCA 25; 214 CLR 514
R v Giam (No 2) [1999] NSWCCA 378
R v Hawi [2012] NSWSC 332
R v Jung [2006] NSWSC…

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.

Continue reading Stealth Enterprises Pty Ltd v Calliden Insurance Ltd

Details

AGLC: Stealth Enterprises Pty Limited trading as The Gentleman's Club v Calliden Insurance Limited [2015] NSWSC 1270
Case: [2015] NSWSC 1270
Decision Date: 03 September 2015

CaseChat Overview and Summary

Stealth Enterprises Pty Ltd, the insured, sought to recover damages from Calliden Insurance Ltd, the insurer, following a fire that destroyed the insured's premises, a brothel and escort agency. The insurer refused to pay the claim on the basis that the insured had failed to disclose that the sole director and manager were members of the Comancheros outlaw motorcycle gang and that the business registration had lapsed. The insurer argued that it would not have issued the insurance policy if these facts had been known. The dispute was heard in the Federal Court of Australia.

The court was required to determine whether the insurer was entitled to avoid the policy based on non-disclosure under section 21 of the Insurance Contracts Act 1984 (Cth). The court also had to consider whether the insurer could reduce its liability to nil under section 28 of the same Act. Additionally, the court examined the admissibility of expert evidence regarding the conduct of outlaw motorcycle gangs and the granting of an application to call late evidence.

The court found that the insurer would not have issued the policy if the non-disclosed facts had been known. However, the court determined that the non-disclosure did not establish fraud. Instead, the court applied the Jones v Dunkel inference, which allows for the non-disclosure to be considered as a material factor in the insurer's decision-making process. The court concluded that the insurer could reduce its liability to nil under section 28 of the Insurance Contracts Act. The court also admitted expert evidence regarding the conduct of outlaw motorcycle gangs as a matter of common knowledge and allowed the application to call late evidence due to the reliability and credibility of the evidence presented.

The court ordered that Calliden Insurance Ltd pay Stealth Enterprises Pty Ltd a reduced amount for the loss caused by the fire, reflecting the reduction in liability under section 28 of the Insurance Contracts Act. The court also determined that the application to call late evidence was properly granted, and the evidence presented was admissible and relevant to the case.

Orders