John Collyear v CGU [2007] NSWSC 379

Reported Decision : (2007) 14 ANZ Insurance Cases 61-729

New South Wales Supreme Court

CITATION : John Collyear v CGU [2007] NSWSC 379

HEARING DATE(S) : 21 March 2007

JUDGMENT DATE : 27 April 2007

JURISDICTION : Commercial List

JUDGMENT OF : McDougall J at [1]

DECISION : See para [32] of judgment

CATCHWORDS : INSURANCE - double insurance - contribution between insurers - whether same risk insured by both underwriters - whether obligation to contribute rateably to loss

LEGISLATION CITED : Crown Lands Act 1989

Albion Insurance Company Limited v Government Insurance Office of New South Wales (1969) 121 CLR 342 CASES CITED : American Surety Co of New York v Wrightson (1910) 103 L.T. 663 Government Insurance Office of New South Wales v Crowley (1975) 2 NSWLR 78

PARTIES : John Collyear acting on behalf of Euclidian Underwriting Ltd and Lloyds Syndicates 1173, 1229, 861, 1209, 588, 1242, 727, 114, 780, 994 and 190 (Plaintiff) CGU Insurance Limited (Defendant)

FILE NUMBER(S) : SC 50174/04

COUNSEL : G M Watson SC/A P Coleman (Plaintiff) S R Donaldson SC/R A Cavanagh (Defendant)

SOLICITORS : Hunt & Hunt (Plaintiff) Holman Webb Lawyers (Defendant)

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION COMMERCIAL LIST

McDOUGALL J

27 April 2007

50174/04 JOHN COLLYEAR ACTING ON BEHALF OF EUCLIDIAN UNDERWRITING LTD AND LLOYDS SYNDICATES 1173, 1229, 861, 1209, 588, 1242, 727, 114, 780, 994 and 190 v CGU INSURANCE LIMITED JUDGMENT

1 HIS HONOUR: Emibarb Pty Limited (Emibarb) conducted a restaurant and kiosk business known as "Lagoon Restaurant" from premises in Stuart Park, North Wollongong (the premises). The premises were destroyed by fire. Emibarb was insured under an industrial special risks policy underwritten by the plaintiffs (Euclidian). Euclidian ultimately agreed to indemnify Emibarb. It paid out to or at the direction of Emibarb substantial amounts of money including, it says, $2.3 million for the reinstatement of the premises. Euclidian claims that the lessor of the premises to Emibarb was itself entitled to be indemnified, in respect of the events just described, under an industrial special risks policy in favour of Wollongong City Council (the Council) underwritten by the defendant (CGU). In these proceedings, Euclidian claims from CGU contribution towards the amount paid by Euclidian for the reinstatement of the premises. Background 2 The first plaintiff is the lead underwriter of a syndicate at Lloyds known as the Euclidian Syndicate. On 15 January 1999, brokers known as Underwriting Solutions issued on behalf of Euclidian policy No. PR990088 (the Euclidian policy). That policy was renewed, on relevantly identical terms, in December 2000. It was current when the fire occurred. 3 On 23 August 1999, CGU issued policy No. 01R9905659 (the CGU policy). That policy was effective for three years from 30 August 1999, although it was subject to annual renewal. It was in fact renewed on about 28 August 2000. It too was current when the fire occurred. 4 Emibarb occupied and used the premises pursuant to a lease made on 21 March 1997. In its contentions in these proceedings, Euclidian alleged that it leased the premises from the Council pursuant to that lease (para C6). CGU admitted that contention (para 2 of its defence). At a late stage in the hearing, CGU sought and was granted leave to withdraw that admission. As the price of that grant of leave, Euclidian sought and was granted leave to file a reply alleging that the lessor to Emibarb was an entity known as "the Stuart Park (D580060) Reserve Trust" (the trustee), and that the trustee too was insured under the CGU policy. 5 The parties did not put before me any title search or other indication of the estate held by the trustee. I proceed on the assumptions (engendered by cl 3.3 of the lease, which makes it subject to the provisions of the Crown Lands Act 1989) that the trustee holds dedicated or reserved land pursuant to the provisions of Pt 5 of the Crown Lands Act, and that the Council has been appointed as manager of the Trust pursuant to s 95 of that Act. Thus, I conclude, the lessor to Emibarb was the trustee and not the Council. The issues 6 Against that background, the parties agreed that the real issues for decision were as follows: "Nb: Although the Euclidian interests acknowledge the issues raised in paragraphs 4 to 10 and 15 to 21 are arguments raised by CGU, it is not conceded that such considerations are relevant to the determination of a claim of the type made in this case.