Prepaid v Atradius (No.2) [2014] NSWSC 21

Supreme Court New South Wales

Medium Neutral Citation: Prepaid v Atradius (No.2) [2014] NSWSC 21 Hearing dates: 09/12/2013 Decision date: 07 February 2014 Jurisdiction: Equity Division - Commercial List Before: McDougall J Decision: Judgment for defendant. Reserve costs. Catchwords: INSURANCE - Insurance Policy - Non-disclosure and misrepresentation - Whether insurer entitled to reduce liability to nil on basis of non-fraudulent misrepresentation - whether proved on balance of probabilities that insurer would not have issued a policy - Application of Insurance Contracts Act 1984 (Cth), s 28(3) Legislation Cited: Insurance Contracts Act 1984 (Cth) Cases Cited: Australian Securities and Investments Commission v Hellicar (2012) 247 CLR 347 Jones v Dunkel (1959) 101 CLR 298 Prepaid v Atradius [2012] NSWSC 608 Prepaid v Atradius [2013] NSWCA 252 Category: Principal judgment Parties: Prepaid Services Pty Limited (Plaintiff) Optus Mobile Pty Limited (Second Plaintiff) Virgin Mobile (Australia) Pty Limited (Third Plaintiff) Atradius Credit Insurance NV (Defendant) Representation: Counsel: NC Hutley SC / DA McLure (Plaintiffs) CRC Newlinds SC / TM Mehigan (Defendant) Solicitors: Minter Ellison (Plaintiff) Allens (Defendant) File Number(s): 2009/298684

Judgment 1HIS HONOUR: The defendant (Atradius) issued a trade credit insurance policy (the policy) in favour of the plaintiffs (collectively, Optus). In broad terms, the policy insured Optus against the insolvency of one of its major debtors, a company known as Bill Express Limited (BXP), and against BXP's failure to pay amounts owing to any of the plaintiffs. BXP became insolvent during the currency of the policy. Optus made a claim. Atradius denied liability on a number of grounds. 2As a result of my decision at first instance ([2012] NSWSC 608) and of the Court of Appeal therefrom ([2013] NSWCA 252), the only live question is whether, pursuant to s 28(3) of the Insurance Contracts Act 1984 (Cth), Atradius is entitled to reduce its liability under the policy to nil, on the basis of non-fraudulent misrepresentation. That question has been remitted for retrial (see at [63] below). 3Atradius' position is that, had the proper disclosures been made, it would not have issued a policy at all. It did not submit that a policy would or might have issued, but on different terms. The only issue argued on the remitter was whether or not, had proper disclosure been made, Atradius would have issued the policy that in fact was issued.