Baycorp Advantage Limited v Royal and Sun Alliance Insurance Australia Limited [2003] NSWSC 941

Reported Decision : (2004) 13 ANZ Insurance Cases 61-609

New South Wales Supreme Court

CITATION : Baycorp Advantage Limited v Royal and Sun Alliance Insurance Australia Limited [2003] NSWSC 941 HEARING DATE(S) : 16/10/03 JUDGMENT DATE : 23 October 2003

JURISDICTION: Equity Division Commercial List JUDGMENT OF : Einstein J DECISION : Reasons for judgment given in answer to Separate Questions ordered under Part 31.

CATCHWORDS : Insurance - Proper construction of directors and officers indemnity policy - Three sets of proceedings against corporate entity and individual officers - Proceedings settled - Policy definition of "Loss" as including the amount determined by settlement which an insured person is legally liable to pay in respect of a claim - Deed of Settlement providing that "corporate defendant on behalf of itself and each of the other defendants will pay [the plaintiffs]" - Whether on the proper construction of clause 2.1 of the policy, the deed of settlement properly construed resulted in the insurer being liable under the policy to indemnify the corporate entity - Principles of construction of policy and of commercial agreement - Joint and several liability - Insurer electing not to exercise its entitlement to take over and conduct the defence or settlement of the claim - Insurer claims unconscionable conduct by reason of conversations between the solicitors concerning the proposed terms of the deed of settlement - Defence costs - Where legal and experts fees, costs, charges and expenses have been incurred in defending, investigating, monitoring or setting a claim, whether insurer is relieved of its obligation to pay those costs simply because a corporate entity receives a benefit from those costs being incurred - Apportionment of defence costs - Claims condition providing that in the event that that both an insured person and others (including the insured entity) are parties to the proceedings, then the insured and the insurer will agree on a fair and proper allocation of damages, interest, claimants costs and expenses and defence costs between loss covered by the policy and loss not covered by the policy held to be unenforceable as an agreement to agree and/or void for uncertainty Aboriginal Land Rights (Northern Territory) Act 1976 LEGISLATION CITED : Insurance Contracts Act, 1984 (Cth) Legal Profession Act 1987 (NSW) Australian Broadcasting Commission v Australasian Performing Right Association (1973) 129 CLR 99 Booker Industries Pty Ltd v Wilson Parking (Qld) Pty Ltd (1982) 149 CLR 600 Australis Media Holdings Pty Ltd v Telstra Corporation Ltd (1998) 43 NSWLR 104 Biotechnology Australia Pty Ltd v Pace (1988) 15 NSWLR 130 C. Evans & Sons Ltd v Spritebrand Ltd [1985] 1 WLR 317 Coal Cliff Collieries Pty Ltd v Sijehama Pty Ltd (1991) 24 NSWLR 1 Council of the Shire of Noosa v Farr [2001] QSC 60 Gillespie v City of Glasgow Bank (1879) 4 App Cas 632 Hide & Skin Trading v Oceanic Meat Traders Ltd (1990) 20 NSWLR 310 HO Brandt & Co v HN Morris & Co [1917] 2 KB 784 Holt v Cox (1994) 15 ACSR 313 Humphries v The Proprietors "Surfers Palms North" Group Titles Plan 1955 (1994) 179 CLR 597 Johnson v American Home Assurance Company (1998) 192 CLR 266 CASES CITED : MCA Records Inc v Charly Records Ltd [2003] 1 BCLC 93 McCann v Switzerland Insurance Australia Ltd [2000] 203 CLR 579 McFarlane v Daniell (1938) 38 SR (NSW) 337 Meehan v Jones (1982) 149 CLR 571 Moneywood Pty Ltd v Salamon Nominees Pty Ltd (2001) 202 CLR 351 State of New South Wales v Banabelle Electrical Pty Ltd (2002) 54 NSWLR 503 New Zealand Forest Products Ltd v New Zealand Insurance Co Ltd [1997] 1 WLR 1237 Queensland Electricity Generating Board v New Hope Collieries Pty Ltd [1989] 1 Lloyd's Rep 205 Reardon Smith Line v Hansen-Tangen [1976] 1 WLR 989 Ross, re: Ex Parte Attorney General for Northern Territory of Australia (1980) 54 ALJR 145 Robt Jones (363 Adelaide Street) Pty Limited v First Abbott Corp Pty Ltd (Queensland Court of Appeal, unreported, 5 March 1999) Standard Chartered Bank v Pakistan National Shipping Corporation (No 2) [2000] 1 Lloyds Rep 218 The King v Portus; ex parte Federated Clerks Union of Australia (1949) 79 CLR 428 Williams v Natural Life Health Foods Ltd [1998] 1 WLR 830 PARTIES : Baycorp Advantage Limited (Plaintiff) Royal and Sun Alliance Insurance Australia Limited (Defendant) FILE NUMBER(S) : SC 50035/02 COUNSEL : Mr MA Pembroke SC, Mr TM Faulkner (Plaintiff) Mr DL Davies SC, Mr WV McManus (Defendant) SOLICITORS : Allens Arthur Robinson (Plaintiff) Hunt & Hunt (Defendant)