Underwriting Members of Lloyd's Syndicate 179 in Respect of the 1983 Underwriting Year of Account & Ors v NSW Self Insurance

[2010] HCATrans 236

[2010] HCATrans 236

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Sydney  No S99 of 2010

B e t w e e n -

UNDERWRITING MEMBERS OF LLOYD’S SYNDICATE 179 IN RESPECT OF THE 1983 UNDERWRITING YEAR OF ACCOUNT

First Applicant

UNDERWRITING MEMBERS OF LLOYD’S SYNDICATE 179 IN RESPECT OF THE 1984 UNDERWRITING YEAR OF ACCOUNT

Second Applicant

UNDERWRITING MEMBERS OF LLOYD’S SYNDICATE 179 IN RESPECT OF THE 1985 UNDERWRITING YEAR OF ACCOUNT

Third Applicant

UNDERWRITING MEMBERS OF LLOYD’S SYNDICATE 460 IN RESPECT OF THE 1983 UNDERWRITING YEAR OF ACCOUNT

Fourth Applicant

UNDERWRITING MEMBERS OF LLOYD’S SYNDICATE 460 IN RESPECT OF THE 1984 UNDERWRITING YEAR OF ACCOUNT

Fifth Applicant

UNDERWRITING MEMBERS OF LLOYD’S SYNDICATE 460 IN RESPECT OF THE 1985 UNDERWRITING YEAR OF ACCOUNT

Sixth Applicant

UNDERWRITING MEMBERS OF LLOYD’S SYNDICATE 565 IN RESPECT OF THE 1984 UNDERWRITING YEAR OF ACCOUNT

Seventh Applicant

and

NSW SELF INSURANCE CORPORATION

Respondent

Application for special leave to appeal

GUMMOW J
HEYDON J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON FRIDAY, 3 SEPTEMBER 2010, AT 12.17 PM

Copyright in the High Court of Australia

MR B.W. WALKER, SC:   May it please the Court, I appear with my learned friend, MR T.M. MEHIGAN, for the applicants.  (instructed by Allens Arthur Robinson)

MR L. KING, SC:   May it please the Court, I appear with MR J.A. KERNICK, for the respondent.  (instructed by Accent Legal)

GUMMOW J:   Yes, Mr Walker.

MR WALKER:   Your Honours, could I take you directly in application book 23 to the provisions which underlie the reasons why what appears to be a matter of interpretation of a one‑off transitional set of provisions should nonetheless attract a grant of special leave by this Court.  At the heart of the matter in question is a matter fundamental to the definition of “property”, as it is, either created by or profoundly affected by statutory provision. 

The particular aspect of the case is one which is in common to many, many different kinds of statutory administration and is likely to remain so forever, namely, the notion of a fund created by, defined by, regulated by statute.  At page 23 of the application book one sees what - it appears to be common ground - certainly as we submit as a matter of argument is clear, the only provision for payment out of the TAC Fund, so‑called.

Section 143 has two components and it is common ground that (b) cannot apply with respect to any of the four catastrophic injuries in question in this case.  Paragraph (a), equally, cannot apply for the reasons we have put in our written submissions.  It refers to a liability of a kind that simply does not attach, given the dates of the accidents.  The payment out from the TAC Fund for a liability of a kind with respect to which this reinsurance is said to attach cannot be had out of the TAC Fund.  We then go to the ministerial order which is at the heart of the case, the interpretation of which at first sight is such an unlikely candidate for a grant of special leave.

GUMMOW J:   What do you say on that subject as to Mr King’s submissions at paragraph 21 on page 64, as to this word “only”?

MR WALKER:   That is in the order, yes.  What I say – can I come to that directly.  You will see the text of the order and the fact that that word “only” appears in the parenthetical cutback of the ‑ ‑ ‑

GUMMOW J:   Paragraph 4.

MR WALKER:   Yes.  It is at line 21, or thereabouts, on page 26 of the application book.

GUMMOW J:   Yes.

MR WALKER:   The parenthetical cutback of the class of contracts of insurance set forth in attachment 2 and our contracts appear in attachment 2.  The word “only”, of course, is a word that indicates that there is a limitation intended to be achieved by these words in parentheses.  It says that there is a maximum or that there must be a position existing answering the description that follows those words in order that there be the transfer otherwise accomplished by paragraph 4.

To put it another way, the word “only” strengthens our position, it certainly does not weaken it, because the extent to which there is transfer of benefit by compulsory fiat, a matter to which I will come back in a moment, is thereafter defined as being that they must be for the benefit of the TAC fund.  They cannot be for the benefit of the TAC fund if it is not the TAC fund that bears the liability reinsured.

The TAC fund does not bear that liability, see section 143.  There is no definition in what ought to be seen in the same nature as conveyancing provisions, that is, this is the delineation of property and the affectation of property.  There is no definition which either explicitly or by necessary implication requires the TAC fund to be read as anything other than that which was created too late to be involved with the accidents in question.

So my answer to my learned friend’s argument in paragraph 21 on page 64 of the book is that there is no understanding in context, to use his language, that can alter the plain straightforward description of the extent to which those attachment 2 contracts are to be treated as transferred.

I talked earlier about a compulsory fiat in relation to this order.  In tab 13 of the book of materials my learned friends have supplied you will find section 39(2) of the 1991 Act and in particular in subsection 2(c) you will that there was a deprivation of a very important contractual right, a liberty or election we had to terminate these contracts by reason of the change of control worked by the privatisation.

That has been taken away.  That is a setting against which interpretation of the words of the order so as to limit this compulsion for us to supply reinsurance in a circumstance which, but for the compulsion, we would have been able to be free of, ought to be without any understanding from a context which is neither supplied, specified nor in accordance with ordinary legal principle.

The next point upon which we rely is, as we have put in our written submissions, that it is plain to demonstration that the provisions in question, as this legislative manoeuvring against the looming obligation of liabilities was appreciated or not from time to time.  The next thing that is important is that the third party fund, the intermediate fund to be called upon by another class of accidents, had its proceeds to be transferred to the TAC fund.

That is at odds in every way, both formal and substantive, with those two funds being one and the same.  It is calling to an end of one fund and the application of its net balance to another fund, a new fund.  When one puts that together with section 143, which defines that which could be for the benefit of the TAC fund, in our submission there has been plain error demonstrated by the conclusions of the Court of Appeal, exemplified by the conclusion – I stress the conclusion, there is a reason that precedes it – at page 32, paragraph 75 in Justice Hammerschlag’s reasons.

There is there, in our submission, quite plainly, an omission to deal with the fact that the TAC fund cannot be called on by reason of section 143 for these liabilities, therefore the reinsurance, in turn, does not answer to the position of the TAC fund.  Therefore it cannot be for the benefit of the TAC fund.  Therefore the obligation was not transferred.

In our submission, though the reasoning is, we submit, simple the matter at issue, namely the punctilious definition and observance of limits in relation to statutory funds and recognizing that what may be paid out of a fund will represent the benefit of the fund from the point of view of reinsurance all amount to a matter which is of sufficient public importance and of importance to an approach to the interpretation of such statutory provisions as to warrant a grant of special leave.  May it please the Court.

GUMMOW J:   We do not need to call on you, Mr King.

No question of general importance arises in this case.  Further, there are insufficient prospects of success in displacing the conclusions reached by the New South Wales Court of Appeal to warrant a grant of special leave.  Special leave is refused with costs.

AT 12.26 PM THE MATTER WAS CONCLUDED