Kernaghan v Corrections Corporation of Australia Staff Superannuation Pty Ltd (No.2) [2007] FCA 1040

FEDERAL COURT OF AUSTRALIA

Kernaghan v Corrections Corporation of Australia Staff Superannuation Pty Ltd (No.2) [2007] FCA 1040

INSURANCE – Trustee's liability insurance – Settlement of claim against superannuation fund for breach of duties as trustee – Settlement included component not covered by liability policy – Whether settlement reasonable – Whether liability of superannuation fund ascertainable from settlement – Whether onus on insurer to prove that the settlement was not reasonable – Whether superannuation fund entitled to reopen case to quantify liability. Smith v New South Wales Bar Association (1992) 176 CLR 256 followed Lumbermens Mutual Casualty Company v Bovis Lend Lease Limited [2004] EWHC 2197 (Comm) distinguished Enterprise Oil Limited v Strand Insurance Company Ltd [2006] EWHC 58 (Comm) considered AIG Europe (Ireland) Limited v Faraday Capital Limited [2006] EWCH 2707 (Comm) considered Unity Insurance Brokers Pty Ltd v Rocco Pezzano Pty Ltd (1998) 192 CLR 603 applied BNP Paribas v Pacific Carriers Ltd [2005] NSWCA 72 considered DONALD KERNAGHAN & ORS v CORRECTIONS CORPORATION OF AUSTRALIA STAFF SUPERANNUATION PTY LTD (ACN 065 347 186), TERENCE ARTHUR LAWSON, JOHN KENNETH TWOMEY, AUSTRALIAN INTEGRATION MANAGEMENT SERVICES PTY LTD (FORMERLY CORRECTION CORPORATION OF AUSTRALIA PTY LTD (ACN 010 921 641), AND CGU INSURANCE LIMITED (ACN 004 478 317), CHUBB INSURANCE COMPANY OF AUSTRALIA PTY LTD (ACN 003 710 647) VID 247 OF 2002

NORTH J

11 July 2007

MELBOURNE

IN THE FEDERAL COURT OF AUSTRALIA

VICTORIA DISTRICT REGISTRY VID 247 OF 2002

BETWEEN: DONALD KERNAGHAN & ORS

Applicants

AND: CORRECTIONS CORPORATION OF AUSTRALIA STAFF SUPERANNUATION PTY LTD (ACN 065 347 186)

AND First Respondent and First Cross-Claimant

TERENCE ARTHUR LAWSON