Zhang v Minox Securities Pty Ltd - [2009] NSWCA 182

NEW SOUTH WALES COURT OF APPEAL

CITATION:
ZHANG & ANOR v MINOX SECURITIES PTY LTD & ORS; LIU & ORS v MINOX SECURITIES PTY LTD & ORS [2009] NSWCA 182

FILE NUMBER(S):
(1) 40234/08; (2) 40235/08

HEARING DATE(S):
24/02/09

JUDGMENT DATE:
7 July 2009

PARTIES:
(1) Ding Yang Zhang and Mei Li - Claimants
Minox Securities Pty Ltd (formerly Quantum Securities Pty Ltd) (Administrator Appoined) (ACN 064 185 897) - respondent
(2) Jun Liu and Lan Liu - Claimants
Minox Securities Pty Ltd (formerly Quantum Securities Pty Ltd) (Administrator Appointed) (ACN 064 185 897) - Respondent

JUDGMENT OF:
Hodgson JA Macfarlan JA Handley AJA

LOWER COURT JURISDICTION:
Supreme Court - Equity Division

LOWER COURT FILE NUMBER(S):
SC (1) 1815/07; (2) 1816/07

LOWER COURT JUDICIAL OFFICER:
Barrett J

LOWER COURT DATE OF DECISION:
09/07/08

LOWER COURT MEDIUM NEUTRAL CITATION:
[2008] NSWSC 689

COUNSEL:
Mr N Hutley SC and Mr A J Abadee - Appellants
Mr McArthur SC and Mr P Rooney - Respondent

SOLICITORS:
Slater & Gordon - Appellants
Wotton & Kearney - Respondent

CATCHWORDS:
INSURANCE – liability insurance – whether claimants should have leave to commence proceedings against the insurer – whether arguable case.
INSURANCE – composite policy – construction of exclusion clause for unauthorised acts – whether exclusion denied cover for innocent employer.

LEGISLATION CITED:
Corporations Act
Financial Services Reform Act 2001
Law Reform (Miscellaneous Provisions) Act 1946

CATEGORY:
Principal judgment

CASES CITED:
Federation Insurance Limited v Watson (1987) 163 CLR 303
General Accident Fire and Life Assurance Corporation Ltd v Midland Bank Ltd [1940] 2 KB 388 CA
405-6
Gilmore v AMP General Insurance Co. Ltd (1996) 67 SASR 387 FC.
Lombard Australia Ltd v NRMA Insurance Limited (1968) 72 SR (NSW) 45 CA
McCann v Switzerland Insurance Australia Ltd [2000] HCA 65
203 CLR 579
Oswald v Bailey (1987) 11 NSWLR 715CA

TEXTS CITED:

DECISION:
(1) Leave to appeal granted.
(2) Claimants to file and serve their draft notice of appeal within 10 days. Further compliance with the rules dispensed with.
(3) Appeal allowed in part.
(4) Orders one and two in the Equity Division set aside
and in lieu thereof grant leave to the appellants to commence proceedings against QBE Insurance (Australia) Ltd to enforce their rights under s 6 of the Law Reform (Miscellaneous Provisions) Act 1946 in respect of the Professional Indemnity policy the subject of these proceedings.
(5) Appeal otherwise dismissed.
(6) Respondent is to pay the appellants’ costs of the appeal and of the relevant proceedings in the Equity Division.

JUDGMENT:

IN THE SUPREME COURT
OF NEW SOUTH WALES
COURT OF APPEAL

40234/08
40235/08
HODGSON JA
MACFARLAN JA
HANDLEY AJA
7 JULY 2009

ZHANG & ANOR v MINOX SECURITIES PTY LTD & ORS
LIU & ORS v MINOX SECURITIES PTY LTD & ORS

CATCHWORDS

INSURANCE – liability insurance – whether claimants should have leave to commence proceedings against the insurer – whether arguable case.
INSURANCE – composite policy – construction of exclusion clause for unauthorised acts – whether exclusion denied cover…

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: [2009] NSWCA 182
Decision Date: 7 July 2009

CaseChat Overview and Summary

The dispute in *Zhang v Minox Securities Pty Ltd* concerned an application for leave to commence proceedings against an insurer. The claimants sought to enforce their rights under a professional indemnity policy. The matter came before the Court of Appeal of New South Wales, with judgment delivered by Hodgson JA, Macfarlan JA, and Handley AJA.

The primary legal issues before the Court of Appeal were whether the claimants had an arguable case to commence proceedings against the insurer, QBE Insurance (Australia) Ltd, and how an exclusion clause within a composite policy should be construed, particularly whether it denied cover to an innocent employer.

The Court of Appeal allowed the appeal in part. It set aside the orders of the Equity Division and granted the appellants leave to commence proceedings against QBE Insurance (Australia) Ltd to enforce their rights under section 6 of the *Law Reform (Miscellaneous Provisions) Act 1946* in respect of the professional indemnity policy. The appeal was otherwise dismissed, and the respondent was ordered to pay the appellants' costs of the appeal and the proceedings in the Equity Division.

Orders

Orders of the court

(1) Leave to appeal granted. (2) Claimants to file and serve their draft notice of appeal within 10 days. Further compliance with the rules dispensed with. (3) Appeal allowed in part. (4) Orders one and two in the Equity Division set aside and in lieu thereof grant leave to the appellants to commence proceedings against QBE Insurance (Australia) Ltd to enforce their rights under s 6 of the Law Reform (Miscellaneous Provisions) Act 1946 in respect of the Professional Indemnity policy the subject of these proceedings. (5) Appeal otherwise dismissed. (6) Respondent is to pay the appellants' costs of the appeal and of the relevant proceedings in the Equity Division.

Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

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