New South Wales District Court CITATION: SWAN v TRANS PACIFIC INSURANCE CORPORATION [2007] NSWDC 17 HEARING DATE(S): 24 January 2007 EX TEMPORE JUDGMENT DATE : 24 January 2007 JURISDICTION: Civil JUDGMENT OF: Sidis DCJ CATCHWORDS: Leave to proceed against insurer - Clause in policy excluding cover where person charged with criminal assault LEGISLATION CITED: Insurance Contracts Act 1984 Law Reform (Miscellaneous Provisions) Act 1946 PARTIES: Neal Michael Swan Trans Pacific Insurance Corporation FILE NUMBER(S): 2731/06 A G Rogers Plaintiff COUNSEL: T J Clarke Defendant Fitzpatrick Solicitors Plaintiff SOLICITORS: Vardanega Roberts Defendant JUDGMENT HER HONOUR 1 In this matter by way of an amended summons filed on 29 June 2006 the plaintiff seeks to proceed against Trans Pacific Insurance Corporation in respect of an assault in which he was injured on 9 January 2005. His application is based upon a contract of insurance between the proposed defendant and a company Altoni Pty Limited which provided security services for the Crowne Plaza Hotel at Terrigal. 2 The plaintiff's claim arises out of what he say was an assault by a security guard at the hotel premises on 9 January 2005. Altoni Pty Limited is in liquidation and is thus not able to respond to the claim directly. 3 The application is brought pursuant to s 6(4) of the Law Reform (Miscellaneous Provisions) Act 1946. 4 My attention has been drawn to the relevance of the second part of that section which provides that leave is not to be granted if the Court is satisfied that the insurer was entitled under the terms of the contract of insurance to disclaim liability. 5 My attention has also been drawn to a number of authorities which indicate that, provided I am satisfied that there is a claim of some merit, that it is arguable that the policy responds and subject to proof of the plaintiff's claim, leave may be granted. 6 There are three aspects to the claim which require consideration. 7 The first can be dealt with shortly, that is, exemplary damages have been claimed. It is agreed that they are excluded by the insurance policy. Therefore, no leave may be granted in respect of that part of the proposed claim. 8 There is a claim against Altoni itself in respect of a failure to supervise its security guards. My attention is drawn to an exclusion in the policy of failure to take reasonable care but it is acknowledged that the question of whether reasonable care was taken is an issue that will be aired during the course of the litigation with the result that there is an arguable case in respect of that part of the plaintiff's claim. In the circumstances leave, if I am otherwise satisfied, may be granted in respect of that part of the claim. 9 The real issue between the parties is whether or not the claim in respect of the actions of the security guards per se can be pursued on the basis that Altoni was vicariously liable for their actions. 10 The insurer relies upon an exclusion clause which reads: In respect of a person charged with criminal assault, this insurance shall not apply to liability or defence costs arising out of the incident in which the assault occurred. 11 I am informed, and there is no dispute, that one of the security guards involved was charged with assault. The insurer therefore relies upon this exclusion and argues that leave should not be granted in respect of this part of the claim. 12 The plaintiff in response relies upon s 54 of the Insurance Contracts Act 1984 to claim that the exclusion clause should not be applied in the circumstances of the plaintiff's claim. It was argued that the act referred to in s 54(1) was an act of a police officer which could not affect the liability of the insurer which arose independently of that act out of the assault on the plaintiff. I am clearly aware of the difficulties that arise in the application of s 54 of the Insurance Contracts Act 1984. 13 Another question which arises is what exactly is meant by the exclusion clause which I have set out. In debate with counsel for the proposed defendant this morning, a number of hypothetical interpretations have been put and it seems to me that it is arguable that the clause itself is so imprecise and so wide as to be incapable of application. 14 The result is that on the basis that there is an argument as to whether s 54 of the Act applies and there is an argument as to whether the exclusion clause applies in this case or can be applied in this case, it is appropriate to grant the leave sought in respect of the claim based upon vicarious liability for the actions of the security guard. 15 The orders which I make are as follows: 1. The plaintiff is given leave pursuant to s 6(4) of the Law Reform (Miscellaneous Provisions) Act 1946 to commence proceedings against Trans Pacific Insurance Corporation in respect of injury, loss and damage alleged suffered by the plaintiff by reason of the incident on or about 9 January 2005 at or near the Crowne Plaza Hotel, Terrigal, New South Wales. 2. The defendant is to pay the plaintiff's costs of the application. 3. Leave is not granted in respect of the claim for exemplary damages. 4. The statement of claim is to be filed and served by not later than 4pm on 2 February 2007. ********** ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.