Abstract

Article

 

Effect of Off-set on the Amount of Indemnity

If the insured is entitled to a set-off against damages, it is usually applied before the application of any policy limit as to the amount of the cover. Global Constructions Aust Pty Ltd (in liq) v AIG Aust Ltd 2018 FCA 98.

 

Federal Court Jurisdiction Part of Claim Abandoned

If a claim in the Federal Court included, amongst other things, a claim for breach of the Insurance Contracts Act 1984 (Cth), which brought it within federal jurisdiction under s 39B(1A)(c) of the Judiciary Act 1903 (Cth),  but that claim is then abandoned, the Court will retain jurisdiction. Moorgate Tobacco Co Ltd v Philip Morris Ltd [1980] HCA 32; 145 CLR 457 and Unilan Holdings Pty Ltd v Kerin [1993] FCA 605; 44 FCR 481). A fortiori if there is a claim for interest under s 57 of the Insurance Contracts Act. See, generally, Rana v Google Inc [2017] FCAFC 156; 350 ALR 280 at 283-287 [15]- [24]; Global Constructions Aust Pty Ltd (in liq) v AIG Aust Ltd 2018 FCA 98.

Application for Leave fo Dirct Action Agaiinst Insurer.

In a claim to join the insurer under the Civil Liability (Third Party Claims Against Insurers) Act 2017 (NSW), to enliven the court’s discretion to permit the joinder it must be be established that there is an arguable case as to the liability of the insured and that the policy responds to the claim against the insured, (including that the policy was in place at the time of the risk Mrdajl v Southern Cross Constructions (NSW) Pty Ltd (In Liq) [2018] NSWSC 161 (at [10]-[13])). and there is a real possibility that if judgment is obtained, he would be unable to meet it. The party seeking leave bears the evidentiary and persuasive onus of establishing those matters. Energize Fitness Pty Ltd v Vero Insurance Ltd [2012] NSWCA 213. but if the insurer asserts the application of an exclusion, it bears the onus of proof. Ritchie v Advanced Plumbing and Drains Pty Ltd [2019] NSWSC 1028.

Leave does not automatically follow. Wayland v Bird at [26]). The principles as to itd exercise are similar to those under the previous legislation. Rushleigh Services Pty Ltd v Forge Group Ltd (in liq) (receivers and managers appointed) [2018] FCA 26 at [42]- [43]). That is, it must be exercised to ensure that insurers are not exposed to unnecessary, unwarranted or inappropriate claims: Oswald v Bailey; Tzaidas v Child; Opes Prime Stock Broking Ltd (in Liq) v Stevens [2014] NSWSC 6598 [17]; Wayland v Bird at [20]-[26], whether it is reasonable for the insurer to be joined, and whether there is utility in the joinder of the insurer. DSHE Holdings Ltd (receivers and managers appointed) (in Liq) v Abboud; National Australia Bank Limited v Abboud [2017] NSWSC 579.

The quality of the applicant’s pleading of the case against the insured must reasonably be sufficient to enable the insurer to address the first two issues. The insurer is entitled to know precisely what case the insurer would have to meet. Insofar as the factual circumstances may give rise to a range of claims, the pleading would need to be quite clear as to what precisely is being alleged.  Sergienko v AXL Financial Pty Ltd [2019] NSWSC 1610; Hastie Group Ltd (in liq) v Bourne; Hastie Group Ltd (in liq) v Moore [2017] NSWSC 709. But an action will not be dismissed once it appears that there is a real question to be determined whether of fact or law and that the rights of the parties depend upon it. General Steel Industries Inc v Commissioner for Railways (1964) 112 CLR 125; Dey v Victorian Railways Commissioners (1949) 78 CLR 62 at 91; [1949] HCA 1.

one would need to take into account the fact that there would be no issue estoppel if the insurer were not joined to the proceeding and had not be accepted or would not challenge the factual findings in proceedings without its involvement. But if the claim as pleaded does not adequately establish a reasonably arguable cause of action, if the applicant has had a resonable opportunity to amend the pleading and can make a further application, and particularly where the need for a proper pleading is especially important to reveal whether or how the policy should respond to the claim, the discretion may be exercised against the application, resulting in dismissal. Sergienko v AXL Financial Pty Ltd [2019] NSWSC 1610.

 

Exclusion Control or Financial Interest.

Here, a “financial interest” in an exclusion clause of a Professional Indemnity policy means an interest “that can give rise to an expectation, which is not too remote, of a ‘gain or loss of money’”. The purpose of the exclusion is to relieve the insurer from liability when a conflict of interest arises. Amadio Pty Ltd v Henderson (1998) 81 FCR 149; [1998] FCA 823. This is consistent with r 78(9)(a) of the Legal Profession Uniform General Rules 2015 (NSW) which states that professional indemnity insurance for law practices except barristers “must not provide the insurer with a right to avoid, cancel or reduce cover because of any innocent or non-fraudulent non-disclosure or misrepresentation by the law practice”. There maybe argument as to whether a mere shareholding, without evidence of more, is sufficient to trigger the exclusion. Sergienko v AXL Financial Pty Ltd [2019] NSWSC 1610.