National Australia Bank Limited v Nautilus Insurance Pte Ltd (No 3) [2019] FCA 2139

FEDERAL COURT OF AUSTRALIA

National Australia Bank Limited v Nautilus Insurance Pte Ltd (No 3) [2019] FCA 2139 File number: VID 527 of 2019

Judge: LEE J

Date of judgment: 18 December 2019

Catchwords: INSURANCE – construction of insurance policy – where insured enters into settlement agreement with third party without prior consent of insurer – whether insured is required to prove underlying legal liability to pay third party separate from settlement agreement – general position at law not determinative – proper construction of contract demonstrates insured not required to prove underlying legal liability COURTS AND JUDGES – declarations sought – declarations objected to on basis of being too broad and not quelling the entire controversy before the Court – declaration appropriate but on terms different than the relief sought by the applicant WORDS AND PHRASES – "acknowledge"

Legislation: Insurance Contracts Act 1984 (Cth) ss 41, 54 Federal Court of Australia Act 1976 (Cth)

Cases cited: Ainsworth v Criminal Justice Commission (1992) 175 CLR 564 Australasian Correction Services Pty Limited v AIG Australia Limited [2018] FCA 2043 Distillers Co Bio-Chemicals (Aust) Pty Ltd v Ajax Insurance Co Ltd (1974) 130 CLR 1 Ecosse Property Holdings Pty Ltd v Gee Dee Nominees Pty Ltd [2017] HCA 12; (2017) 261 CLR 544 Edwards v Santos Limited [2011] HCA 8; (2011) 242 CLR 421 Electricity Generation Corporation v Woodside Energy Ltd [2014] HCA 7; (2014) 251 CLR 640 Lohar Corporation Pty Ltd v Dibu Pty Ltd (1976) 1 BPR 97,014 McCann v Switzerland Insurance Australia Limited [2000] HCA 65; (2000) 203 CLR 579 National Australia Bank Limited v Nautilus Insurance Pte Ltd (No 2) [2019] FCA 1543 Pacific Carriers Ltd v BNP Paribas [2004] HCA 350; (2004) 218 CLR 451 Penrith City Council v Government Insurance Office of New South Wales (1991) 24 NSWLR 564 QBE Insurance Ltd v Nguyen [2008] SASC 138; (2008) 100 SASR 560 Re Cotton Crops Pty Ltd [1986] 2 Qd R 328 Simic v New South Wales Land and Housing Corporation [2016] HCA 47; (2016) 260 CLR 85 VACC Insurance Ltd v BP Australia Ltd [1999] NSWCA 427; (1999) 47 NSWLR 716 Vero Insurance v Baycorp Advantage Limited [2004] NSWCA 390; (2005) 13 ANZ Ins Cas 61-630 Warramunda Village Inc v Pryde [2001] FCA 61; (2001) 105 FCR 437 Wilkie v Gordian Runoff Limited [2005] HCA 17; (2005) 221 CLR 522 Derrington, D K, and Ashton, R S, The Law of Liability Insurance (LexisNexis, 3rd ed, 2013) Sutherland, K, "An Uneasy Compromise: An Analysis of the Effect of a Settlement Reached by an Insured with a Third Party Claimant vis-a-vis his or her Insurer" (1998) 9 ILJ 1 Traves QC, R N, "In what circumstances is an insurer bound by a judgment or settlement against its insured? (an Australian perspective)" (2015) 26 ILJ 209