Abstract

Article

Enjoining Breach of a Negative Contractual Stipulation

A court has power to grant an injunction to restrain the breach of a negative contractual stipulation: see Dalgety Wine Estates Pty Ltd v Rizzon (1979) 141 CLR 552; [1979] HCA 41; Maggbury Pty Ltd v Hafele Aust Pty Ltd (2001) 210 CLR 181; [2001] HCA 70; and the discussion in Orleans Investments Pty Ltd v MindShare Communications Ltd (2009) 254 ALR 81; [2009] NSWCA 40 per Giles JA at [93]ff. Muriniti; Newell v Lawcover Insurance Pty Ltd (No 2) [2018] NSWCA 311.

Direct Action

Jurisdiction and Authority of Prior Cases

Although under the Civil Liability (Insurers) Act, “court” is defined to mean “a court or tribunal of New South Wales”, pursuant to s 79 of the Judiciary Act 1903 (Cth), it would be binding on and could be applied by the Federal Court in appropriate circumstances: Hopkins (as trustee for the Hopkins Superannuation Fund) v AECOM Australia Pty Ltd (No 4) (2015) 328 ALR 1; [2015] FCA 307 in relation to s 6 of the Law Reform (Miscellaneous Provisions) Act 1946 (NSW); Rushleigh No 1 at [94] not following Chubb Insurance Company of Australia Ltd v Moore (2013) 302 ALR 101; [2013] NSWCA 212. Authorities dealing with s 6 of the LRMP Act apply to s 5 of the Civil Liability (Insurers) Act. Rushleigh Services Pty Ltd v Forge Group Limited (In Liquidation) (Receivers and Managers Appointed) [2018] FCA 26.

 

Leave

In an application pursuant to s 6(4) of the LRMP Act for leave to commence an action against an insurer, the plaintiff must show that there was an arguable case against the insured, that there was an arguable case that the policy responds, and that there was a real possibility that, if judgment were obtained, the insured would not be able to meet it, but that satisfaction of the conditions confers a discretion: Bede Polding College v Limit (No 3) Limited and Anor [2008] NSWSC 887; Opes Prime Stockbroking Ltd (In Liq) (Scheme Administrators Appointed) v Stevens [2014] NSWSC 659. There are no restrictions the exercise of that discretion except that leave not be granted if the insurer is entitled to disclaim liability. It must be exercised for the purpose of ensuring that insurers are not exposed unnecessarily to claims: Oswald v Bailey (1987) 11 NSWLR 715; Tzaidas v Child [2004] NSWCA 252; (2004) 61 NSWLR 18.Generally, it will be answered by whether the matters are satisfied, but it remains discretionary, and may be refused for other reasons such as that it is statute-barred or would cause irreparable prejudice or for want of utility. Gorczynski v W & FT Osmo Pty Ltd [2009] NSWSC 693; (2009) 258 ALR 189; SHE Holdings Ltd (receivers and managers appointed) (in liq) v Abboud; National Australia Bank Limited v Abboud [2017] NSWSC 579; Rushleigh Services Pty Ltd v Forge Group Limited (In Liquidation) (Receivers and Managers Appointed) [2018] FCA 26.

Application of Act to Appeal Costs

There is a risk that pursuant to the Civil Liability (Third Party Claims Against Insurers) Act, s 4 the insurer would remain liable for any costs ordered against the insured as appellants without the authority of the insurer: Muriniti; Newell v Lawcover Insurance Pty Ltd (No 2) [2018] NSWCA 311.

Personal Costs Order against a Lawyer

Details of the proceedings in which a lawyer acted is admissible on a summary application for a personal costs order against the him, if, having regard to his connection with them, it is fair and just to do so: Symphony Group plc v Hodgson [1994] QB 179 at 193; Newell; Muriniti v De Costi [2018] NSWCA 49. That statement of principle was endorsed in Flinn v Flinn; King v Muriniti (2018) 359 ALR 291; [2018] NSWCA 98; Muriniti; Newell v Lawcover Insurance Pty Ltd (No 2) [2018] NSWCA 311.

Independent Lawyer Clause

  Issues of whether to appeal are sometimes covered by an independent lawyer clause whichprovides for the appointment of an independent lawyer  agreedby the parties and in default of agreement, appointed by the President of the Law Society to provide  binding opinion as to whether the insurer’s decision as to an appeal is justified. Its purpose includes assisting insureds to protect their reputation by not facing proceedings where further adverse findings may be made in a superior court: see West Wake Price & Co v Ching [1957] 1 WLR 45 at 49.A policy may allow the insurer to give consideration to its commercial interests: TAL Life Ltd v Shuetrim; Metlife Insurance Ltd v Shuetrim (2016) 91 NSWLR 439; [2016] NSWCA 68 at [187], and that the insurer may consider its pecuniary interests in seeking to invoke the independent lawyer regime of the policy. A decision to do so is not inconsistent with its obligation to act in utmost good faith towards the insured. It does not purport to exclude, restrict or modify the operation of s 52.of the Insurance Contracts Act. Muriniti; Newell v Lawcover Insurance Pty Ltd (No 2) [2018] NSWCA 311. A policy may allow the insurer to give consideration to its commercial interests: TAL Life Ltd v Shuetrim; Metlife Insurance Ltd v Shuetrim (2016) 91 NSWLR 439; [2016] NSWCA 68 at [187], and that the insurer may consider its pecuniary interests in seeking to invoke the independent lawyer regime of the policy. A decision to do so is not inconsistent with its obligation to act in utmost good faith towards the insured. It does not purport to exclude, restrict or modify the operation of s 52.of the Insurance Contracts Act. Muriniti; Newell v Lawcover Insurance Pty Ltd (No 2) [2018] NSWCA 311

Apprehended Bias

That parties and witnesses are the subject of even harsh criticism in a judgment is without more insufficient to establish apprehended bias: Royal Guardian Mortgage Management Pty Ltd v Nguyen (2016) 332 ALR 128; [2016] NSWCA 88 at [233]–[234]; Muriniti; Newell v Lawcover Insurance Pty Ltd (No 2) [2018] NSWCA 311.