It’s been a busy financial year for insurance issues in the Courts across Australia1. With insurers having now survived the end of financial year renewals, we provide a summary of what has been happening around Australia, together with our comments on why these decisions are relevant to insurers.
In All Class Insurance Brokers2, Allsop CJ held an insurer was entitled to obtain security for costs (in the sum required for a short hearing on Policy construction issues) where it could establish an insured was unlikely to be able to pay its costs of that dispute. The security was allowed, even though it was agreed that both insurer and insured had reasonable prospects of success in the Policy interpretation dispute.
In Oceanview Developments3 Allsop CJ held the ‘Property Insured’ comprised all property in the ‘Situation’, even if part of that property was not used for the ‘Business’ of the insured. This was due to the indemnity extending to damage which occurred at the ‘Situation’, and the relevant land (which was not part of the ‘Business’) being included in the ‘Situation’ by extended definition.
In QBE v Allianz4 the principles of dual insurance and contribution were considered under two public liability policies, and whether such contribution extended to defence costs. Allsop CJ held the right of contribution extended to defence costs incurred in defending the claim, as these costs formed part of the indemnity afforded to the insured under the Policy.
The decision of Delor Vue Apartments5 considered whether pre-existing defects in a Strata Building was something which should have been disclosed to an insurer for the renewal of public liability insurance. Allsop CJ determined (on the evidence) a reasonable person in the position of the Strata Manager and Body Corporate committee would know that pre-existing defects were relevant to underwriting insurance for personal injury (and property damage), but may not know pre-existing defects were relevant for underwriting considerations for property insurance.
The Federal Court considered whether a broker’s failure to provide advice on the availability and suitability of copyright infringement cover constituted negligence and a breach of the terms of its retainer in the decision of PC Case Gear6. In finding against the broker, Anderson J determined a reasonably competent broker in the same position would have identified copyright exposure as being a risk to the insured business, and provided advice on the available cover.
Epsilon Insurance Broking Services7 considered a claim for contribution where two policies provided separate types of cover with some overlap for the insured’s own costs by Endorsement. Allsop CJ held no “orthodox process of construction or implication can operate … to extend or imply cover” for the insured’s mitigation costs, where the cover was intended for fines and penalties paid by the insured.
In National Australia Bank8, the Federal Court was asked to make a preliminary determination as to whether an insured was required to prove an underlying liability for a settlement made without the prior consent of its Public Liability insurer. Lee J determined there was no requirement for the insured to establish a liability for the loss for the purpose of securing insurance cover, as doing so would require the insured to undertake the exercise of determining the claim, which is exactly what a settlement avoids.
In the decision of Allianz v Lloyds9, the NSW Court of Appeal considered a claim for contribution between insurers, where both policies contained ‘Other Insurance’ provisions (which operated to limit the cover in the event another policy covered the same loss). The Majority (Bathurst CJ and Meagher JA) held the presence of ‘Other Insurance’ provisions in both policies effectively cancelled each other out, thereby resulting in both policies providing cover for the loss. Macfarlan J, dissenting, held there was no double insurance as the ‘Other Insurance’ provisions meant each of the policies provided different cover.
In Bank of Queensland10, the NSW Court of Appeal considered whether a single, or multiple retentions were payable for Representative Proceedings which were settled on the basis of payments being made to all investors. The Court held that multiple claims were attributed to one cause and/or series of related wrongful acts, and therefore, only one retention was payable.
In Ritchie v Advanced Plumbing11 the Supreme Court of NSW determined the factors which are relevant to the granting of leave to proceed against an insurer directly, pursuant to section 5 of the Civil Liability (Third Party Claims Against Insurers) Act 2017 (NSW). Campbell J held the onus was on an insurer to establish it was entitled to disclaim liability for the claim, and in doing so, the insurer had to establish “beyond argument” it had no liability. Accordingly, leave will be granted if an arguable case can be made for the policy to respond.
The decision of Worth v International Insurance12 looked at various issues following the provisional granting of indemnity for a house fire in circumstances where the insured was considered to be a person of interest in causing the fire. One of the issues considered was the evidence required by an insurer to prove the insured’s wrongful conduct, with Parker J determining the insurers’ obligation was “to prove that Ms Worth had lit the fire herself, not to go on and prove all of the details of her plan, if she had one.”
The Supreme Court of NSW determined, as a separate question, whether the Proposal Form completed by an insured forms part of a policy of insurance in Bechini v IUS13. Rothman J determined, “the Proposal submitted… was an invitation to treat, which excited from Lumley an offer, including the premium amounts, which offer was accepted by IUS. It was that latter offer and acceptance that formed the contract.” Relevantly, the definition of ‘Policy’ within the Policy included the Proposal.
The Court of Appeal considered the application of an ‘Employers Liability’ exclusion in a Public Liability Policy in the decision of Ashcroft Supa IGA14. The Court (Ward CJ, Leeming JA and Payne JA) concluded the phrase “with or for” in the exclusion created two separate limbs for the exclusion, being either a contract with the insured (as an employee), or a contract (with a third party) for labour services for the insured.
The Court of Appeal considered the application of an exclusion for valuations undertaken without a prudent lender clause in XL Insurance15, where it was an agreed fact this had not caused the loss the subject of the claim. The Court (Gleeson JA, Bell P and Emmett AJA) held a businesslike and common sense approach to the wording of the Policy meant the exclusion operated for the Loss, even if the loss was not caused by the excluded circumstances.
In DIF III16 the NSW Court of Appeal considered whether any ‘fact, circumstance or event which could reasonably be anticipated to give rise to a Claim’ had arisen during the policy period, in considering the coverage available under a Professional Indemnity Policy for a subsequent claim. The Court (Bathurst CJ, Bell P and Meagher JA) dismissed the Appeal, in consideration of the documentation which was available during the relevant period.
In Danbol17 the Supreme Court of Victoria considered a discreet issue as to whether an agreement had been reached for extending an outgoing policy during negotiations about terms for renewal. Following fire damage after the expiration of the Policy, the insured submitted the Policy had been extended by ‘unilateral agreement’, following an offer of terms for extending the Policy being made by the insurer. Riordan J held some form of acceptance (being direct or implied) was required for the extension, and there was no cover for the fire damage.
One of the issues considered by the Supreme Court of Victoria in UDP Holdings18 was whether a arbitration award made in favour of an insured constituted a ‘Loss’ under the Policy, or whether it constituted a contractual entitlement for recovery against the wrongdoer. and therefore, fell outside the definition of ‘Loss. On this issue, Garde J held “the amount of the award does not instantly translate to the ‘Loss’ suffered under the policy”, and the insured was required to establish the claim was made in accordance with the provisions of the Policy.
In Re Murray (deceased)19 the Supreme Court of Queensland considered a discreet point as to whether the claimant (the son of the insured) was living at the insured address at the time of an incident, for the application of an exclusion. The claimant was a resident of the UK who had been staying with his father at the time of the incident. Dalton J held the claimant did not live at the insured address as the evidence supported a finding that he was “a visitor, for a limited period of time and with a limited purpose in mind. He had plans to depart when he had fulfilled that purpose; he had no plans to stay permanently or semi-permanently.”
In Royal and Sun Alliance20, the Queensland Court of Appeal considered a claim where the market value of a lost navy vessel was considerably less than the replacement cost, and the application of betterment. In dismissing the Appeal, the Court (Fraser and McMurdo JJA and Boddice J) determined the insured was required to put the Commonwealth in the same position as if the loss had not occurred, and the obligation did not allow for any betterment in circumstances where an equivalent vessel was not available. Consequently, this was the Loss which was insured under the Policy.
In Tokio Marine21 the Western Australian Court of Appeal considered who was insured under the definition of ‘You’ in a Construction and Legal Liability Policy, following fire damage during building works. The issue arose as a result of a subrogated recovery being commenced against the contractor responsible for the fire, where the policy in question had a waiver of subrogation clause.
The Court held that as the contractor responsible for the fire could show it was a contractor of the named insured, it came within the definition of Insured in the Policy schedule, being ‘all Principals, Contractors, and Sub-Contractors.’ Accordingly, the Primary Judge’s determination that the use of the phrases ‘You’ and ‘Insured’ in the Policy were interchangeable by operation of the definitions was upheld.
The above decisions have confirmed a businesslike and commercial interpretation is given to the terms and conditions of policies of insurance, and the Courts will look at the intention of the parties to the contract in order to determine the scope of available cover.
1 There were no decisions addressing insurance issues in Tasmania, Northern Territory, South Australia or the Australian Capital Territory during this period.
2 All Class Insurance Brokers Pty Ltd (in liquidation) v Chubb Insurance Australia Limited  FCA 840.
3 Oceanview Developments Pty Ltd trading as Darwin River Tavern & Darwin River Supermarket v Allianz Australia Insurance Ltd trading as Territory Insurance Office  FCA 852.
4 QBE Insurance Limited v Allianz Australia Insurance Limited  FCA 589.
5 Delor Vue Apartments CTS 39788 v Allianz Australia Insurance Ltd (No 2)  FCA 588.
6 PC Case Gear Pty Ltd v Instrat Insurance Brokers Pty Ltd (in liq)  FCA 137.
7 Epsilon Insurance Broking Services Pty Ltd v Liberty Managing Agency Limited (No 2)  FCA 20
8 National Australia Bank Limited v Nautilus Insurance Pte Ltd (No 3)  FCA 2139
9 Allianz Australia Insurance Ltd v Certain Underwriters at Lloyd’s of London Subscribing to Policy Number B105809GCOM0430  NSWCA 271
10 Bank of Queensland Limited v AIG Australia Limited  NSWCA 190
11 Ritchie v Advanced Plumbing and Drains Pty Ltd  NSWSC 1028
12 Worth v International Insurance Company of Hannover SE  NSWSC 249
13 Bechini v IUS Pty Limited (ABN 93 003 359 279 (In Liquidation)  NSWSC 427
14 Marketform Managing Agency Ltd for and on behalf of the Underwriting Members of Syndicate 2468 for the 2009 Year of Account v Ashcroft Supa IGA Orange Pty Ltd  NSWCA 36
15 XL Insurance Co SE v BNY Trust Company of Australia Limited  NSWCA 215
16 DIF III – Global Co-Investment Fund L.P v DIF Capital Partners Limited  NSWCA 124
17 Danbol Pty Ltd v Swiss Re International Se  VSC 23.
18 UDP Holdings Pty Ltd (subject to deed of company arrangement) (rec and mgr apptd) v Ironshore Corporate Capital Ltd (No 2)  VSC 645
19  QSC 155.
20 Royal and Sun Alliance Insurance Plc v DMS Maritime Pty Limited  QCA 264
21 Tokio Marine & Nichido Fire Insurance Co Ltd v Hans Bo Kristian Holgersson trading as Holgerssons Complete Home Service  WASCA 114.
In June 2023, a Canadian Court in South-West Terminal Ltd v Achter Land and Cattle Ltd, 2023 SKKB 116, held that the "thumbs-up" emoji carried enough weight to constitute acceptance of contractual terms, analogous to that of a "signature", to establish a legally binding contract. Facts This case involved a contractual dispute between two parties namely South-West Terminal ("SWT"), a grain and crop inputs company; and Achter Land & Cattle Ltd ("ALC"), a farming corporation. SWT sought to purchase several tonnes of flax at a price of $17 per bushel, and in March 2021, Mr Mickleborough, SWT's Farm Marketing Representative, sent a "blast" text message to several sellers indicating this intention. Following this text message, Mr Mickleborough spoke with Mr Achter, owner of ALC, whereby both parties verbally agreed by phone that ALC would supply 86 metric tonnes of flax to SWT at a price of $17 per bushel, in November 2021. After the phone call, Mr Mickleborough applied his ink signature to the contract, took a photo of it on his mobile phone and texted it to Mr Archter with the text message, "please confirm flax contract". Mr Archter responded by texting back a "thumbs-up" emoji, but ultimately did not deliver the 87 metric tonnes of flax as agreed. Issues The parties did not dispute the facts, but rather, "disagreed as to whether there was a formal meeting of the minds" and intention to enter into a legally binding agreement. The primary issue that the Court was tasked with deciding was whether Mr Achter's use of the thumbs-up emoji carried the same weight as a signature to signify acceptance of the terms of the alleged contract. Mr Mickleborough put forward the argument that the emoji sent by Mr Achter conveyed acceptance of the terms of the agreement, however Mr Achter disagreed arguing that his use of the emoji was his way of confirming receipt of the text message. By way of affidavit, Mr Achter stated "I deny that he accepted the thumbs-up emoji as a digital signature of the incomplete contract"; and "I did not have time to review the Flax agreement and merely wanted to indicate that I did receive his text message." Consensus Ad Idem In deciding this issue, the Court needed to determine whether there had been a "formal meeting of the minds". At paragraph , Justice Keene considered the reasonable bystander test: " The court is to look at “how each party’s conduct would appear to a reasonable person in the position of the other party” (Aga at para 35). The test for agreement to a contract for legal purposes is whether the parties have indicated to the outside world, in the form of the objective reasonable bystander, their intention to contract and the terms of such contract (Aga at para 36). The question is not what the parties subjectively had in mind, but rather whether their conduct was such that a reasonable person would conclude that they had intended to be bound (Aga at para 37)." Justice Keene considered several factors including: The nature of the business relationship, notably that Mr Achter had a long-standing business relationship with SWT going back to at least 2015 when Mr Mickleborough started with SWT; and The consistency in the manner by which the parties conducted their business by way of verbal conversation either in person or over the phone to come to an agreement on price and volume of grain, which would be followed by Mr Mickleborough drafting a contract and sending it to Mr Achter. Mr Mickleborough stated, "I have done approximately fifteen to twenty contracts with Achter"; and The fact that the parties had both clearly understood responses by Mr Achter such as "looks good", "ok" or "yup" to mean confirmation of the contract and "not a mere acknowledgment of the receipt of the contract" by Mr Achter. Judgment At paragraph , Keene J said: "I am satisfied on the balance of probabilities that Chris okayed or approved the contract just like he had done before except this time he used a thumbs-up emoji. In my opinion, when considering all of the circumstances that meant approval of the flax contract and not simply that he had received the contract and was going to think about it. In my view a reasonable bystander knowing all of the background would come to the objective understanding that the parties had reached consensus ad item – a meeting of the minds – just like they had done on numerous other occasions." The court satisfied that the use of the thumbs-up emoji paralleled the prior abbreviated texts that the parties had used to confirm agreement ("looks good", "yup" and "ok"). This approach had become the established way the parties conducted their business relationship. Significance of the Thumbs-Up Emoji Justice Keene acknowledged the significance of a thumbs-up emoji as something analogous to a signature at paragraph : "This court readily acknowledges that a thumbs-up emoji is a non-traditional means to "sign" a document but nevertheless under these circumstances this was a valid way to convey the two purposes of a "signature" – to identify the signator… and… to convey Achter's acceptance of the flax contract." In support of this, Justice Keene cited the dictionary.com definition of the thumbs-up emoji: "used to express assent, approval or encouragement in digital communications, especially in western cultures", confirming that the thumbs-up emoji is an "action in an electronic form" that can be used to allow express acceptance as contemplated under the Canadian Electronic Information and Documents Act 2000. Justice Keene dismissed the concerns raised by the defence that accepting the thumbs up emoji as a sign of agreement would "open the flood gates" to new interpretations of other emojis, such as the 'fist bump' and 'handshake'. Significantly, the Court held, "I agree this case is novel (at least in Skatchewan), but nevertheless this Court cannot (nor should it) attempt to stem the tide of technology and common usage." Ultimately the Court found in favour of SWT, holding that there was a valid contract between the parties and that the defendant breached by failing to deliver the flax. Keene J made a judgment against ALC for damages in the amount of $82,200.21 payable to SWT plus interest. What does this mean for Australia? This is a Canadian decision meaning that it is not precedent in Australia. However, an Australian court is well within its rights to consider this judgment when dealing with matters that come before it with similar circumstances. This judgment is a reminder that the common law of contract has and will continue to evolve to meet the everchanging realities and challenges of our day-to-day lives. As time has progressed, we have seen the courts transition from sole acceptance of the traditional "wet ink" signature, to electronic signatures. Electronic signatures are legally recognised in Australia and are provided for by the Electronic Transactions Act 1999 and the Electronic Transactions Regulations 2020. Companies are also now able to execute certain documents via electronic means under s 127 of the Corporations Act. We have also seen the rise of electronic platforms such as "DocuSign" used in commercial relationships to facilitate the efficient signing of contracts. Furthermore, this case highlights how courts will interpret the element of "intention" when determining whether a valid contract has been formed, confirming the long-standing principle that it is to be assessed objectively from the perspective of a reasonable and objective bystander who is aware of all the relevant facts. Overall, this is an interesting development for parties engaging in commerce via electronic means and an important reminder to all to be conscious of the fact that contracts have the potential to be agreed to by use of an emoji in today's digital age.
The McCabes Government team are pleased to have assisted Venues NSW in successfully overturning a District Court decision holding it liable in negligence for injuries sustained by a patron who slipped and fell down a set of steps at a sports stadium; Venues NSW v Kane  NSWCA 192 Principles The NSW Court of Appeal has reaffirmed the principles regarding the interpretation of the matters to be considered under sections5B of the Civil Liability Act 2002 (NSW). There is no obligation in negligence for an occupier to ensure that handrails are applied to all sets of steps in its premises. An occupier will not automatically be liable in negligence if its premises are not compliant with the Building Code of Australia (BCA). Background The plaintiff commenced proceedings in the District Court of NSW against Venues NSW (VNSW) alleging she suffered injuries when she fell down a set of steps at McDonald Jones Stadium in Newcastle on 6 July 2019. The plaintiff attended the Stadium with her husband and friend to watch an NRL rugby league match. It was raining heavily on the day. The plaintiff alleged she slipped and fell while descending a stepped aisle which comprised of concrete steps between rows of seating. The plaintiff sued VNSW in negligence alleging the stepped aisle constituted a "stairwell" under the BCA and therefore ought to have had a handrail. The plaintiff also alleged that the chamfered edge of the steps exceeded the allowed tolerance of 5mm. The Decision at Trial In finding in favour of the plaintiff, Norton DCJ found that: the steps constituted a "stairwell" and therefore were in breach of the BCA due to the absence of a handrail and the presence of a chamfered edge exceeding 5mm in length. even if handrails were not required, the use of them would have been good and reasonable practice given the stadium was open during periods of darkness, inclement weather, and used by a persons of varying levels of physical agility. VNSW ought to have arranged a risk assessment of the entire stadium, particularly the areas which provided access along stepped surfaces. installation of a handrail (or building stairs with the required chamfered edge) would not impose a serious burden on VNSW, even if required on other similar steps. Issues on Appeal VNSW appealed the decision of Norton DCJ. The primary challenge was to the trial judge's finding that VNSW was in breach of its duty of care in failing to install a handrail. In addition, VNSW challenged the findings that the steps met the definition of a 'stairwell' under the BCA as well as the trial judge's assessment of damages. Decision on Appeal The Court of Appeal found that primary judge's finding of breach of duty on the part of VNSW could not stand for multiple reasons, including that it proceeded on an erroneous construction of s5B of the Civil Liability Act 2002 and the obvious nature of the danger presented by the steps. As to the determination of breach of duty, the Court stressed that the trial judge was wrong to proceed on the basis that the Court simply has regard to each of the seven matters raised in ss 5B and 5C of the CLA and then express a conclusion as to breach. Instead, the Court emphasised that s 5B(1)(c) is a gateway, such that a plaintiff who fails to satisfy that provision cannot succeed, with the matters raised in s 5B(2) being mandatory considerations to be borne in mind when determining s 5B(1)(c). Ultimately, regarding the primary question of breach of duty, the Court found that: The stadium contained hazards which were utterly familiar and obvious to any spectator, namely, steps which needed to be navigated to get to and to leave from the tiered seating. While the trial judge considered the mandatory requirements required by s5B(2) of the CLA, those matters are not exhaustive and the trial judge failed to pay proper to attention to the fact that: the stadium had been certified as BCA compliant eight years before the incident; there was no evidence of previous falls resulting in injury despite the stairs being used by millions of spectators over the previous eight years; and the horizontal surfaces of the steps were highly slip resistant when wet. In light of the above, the Court of Appeal did not accept a reasonable person in the position of VNSW would not have installed a handrail along the stepped aisle. The burden of taking the complained of precautions includes to address similar risks of harm throughout the stadium, i.e. installing handrails on the other stepped aisles. This was a mandatory consideration under s5C(a) which was not properly taken into account. As to the question of BCA compliance, the Court of Appeal did not consider it necessary to make a firm conclusion of this issue given it did not find a breach of duty. The Court did however indicated it did not consider the stepped aisle would constitute a "stairway" under the BCA. The Court of Appeal also found that there was nothing in the trial judge's reasons explicitly connecting the risk assessment she considered VNSW ought to have carried out, with the installation of handrails on any of the aisles in the stadium and therefore could not lead to any findings regarding breach or causation. As to quantum, the Court of Appeal accepted that the trial judge erred in awarding the plaintiff a "buffer" of $10,000 for past economic loss in circumstances where there was no evidence of any loss of income. The Court of Appeal set aside the orders of the District Court and entered judgment for VNSW with costs. Why this case is important? The case confirms there is no obligation in negligence for owners and operators of public or private venues in NSW to have a handrail on every set of steps. It is also a welcome affirmation of the principles surrounding the assessment of breach of duty under s 5B and s 5C of the CLA, particularly in assessing whether precautions are required to be taken in response to hazards which are familiar and obvious to a reasonable person.
The recent decision in New Aim Pty Ltd v Leung  FCAFC 67 (New Aim) has provided some useful guidance in relation to briefing experts in litigation.