Insurance – practice and procedure

Insurer not entitled to rely on s28(3) of Insurance Contracts Act 1984 (Cth) – estoppel – distinction between concise statements and pleadings

In Allianz Australia Insurance Limited v Delor Vue Apartments CTS 39788 [2021] FCAFC 121 (9 July 2021), the Full Court heard an appeal determining separate questions in insurance litigation.

The respondent (Delor) is the body corporate for a complex of apartment buildings in far north Queensland. The buildings were constructed in 2008 and 2009, and various issues in relation to the eaves of the buildings had arisen by late 2014.

Before any works were undertaken to repair certain defects, there was substantial roof damage to the buildings on 28 March 2017 during Tropical Cyclone Debbie. Shortly before the cyclone, Delor had taken out a policy of insurance for public liability and property damage to the buildings with the appellant (Allianz). Delor notified a claim under that policy of insurance.

The parties proceeded on the basis that the underwriting agency that Allianz controlled (SCI) had agreed to indemnify. Subsequently, SCI gave notice that it would rely on s28 of the Insurance Contracts Act 1984 (Cth) (Act), and would pay $nil on the basis of alleged non-disclosure by Delor.

Delor commenced proceedings and orders were made for two issues to be determined before the other issues in the proceedings, namely:

  1. whether Allianz was entitled to reduce its liability to nil under the Act
  2. whether by some operative rule or principle, Allianz was not able to rely on s28.

The primary judge (Allsop CJ) determined the first issue favourably to Allianz.

However, on the second issue, the primary judge found Allianz was estopped from resiling from the representation made in an email that the claim by Delor would be honoured and indemnity provided and not by reference to s28(3).

Allianz had waived any entitlement to adopt a position based on an assertion of right under s28(3). In seeking to resile from the representations made by the relevant email and to rely on a non-disclosure of Delor, Allianz failed to act towards Delor regarding the resolution of the claim with the utmost good faith, contrary to s13.

The appeal by Allianz was dismissed.

A considerable part of its complaint on appeal was to the effect that the primary judge’s decision rested on an understanding of the estoppel case that was not advanced below (at [39]). The Full Court considered closely the nature of the estoppel case that was put by Delor at trial.

This involved considering:

  • the nature of Delor’s case as to material detriment as disclosed by the concise statement and how it came to be amended
  • the written submissions
  • the opening submissions at the hearing
  • the way the estoppel case was dealt with in the course of closing submissions (at [138]; see also [155]-[203]).

As the matter proceeded by concise statement and concise response instead of pleadings, the Full Court made detailed observation on the nature and purpose of a concise statement (at [140]-[154]). A concise statement is not a de facto pleading (at [148]). A concise statement and concise response, unlike pleadings, are not conceived as a comprehensive statement of all the matters that must be established in order for a claim or defence to succeed (at [144]).

Mackerracher, Derrington and Colvin JJ stated: “If a claim that is at the heart of the case that a party seeks to advance at the final hearing, is not to be found in the concise statement, then there will need to be an application for leave to amend that will be dealt with in accordance with the established procedural law, as to late amendments to alter a case.”

“However, where the nature of a claim is broadly disclosed by the concise statement, it is fundamental to the new approach of case management that a party cannot sit by passively and insist upon some strict curtailment of the case that may be run by reference to pleading rules.

“Both parties have a duty to expose the real issues. Where an issue is properly raised concerning the particular nature of an aspect of the concise statement, then the party relying on that statement must assist in clarifying the position.

“And where an issue is expressed broadly in a concise statement and the other party considers that it will be unfair to its forensic preparation of the case for the issue to remain stated in such broad terms, then it behoves that party to seek clarification.

“The request may be met with the response that the clarification will be provided by affidavits and witness statements or the delivery of a statement of issues in due course. However, it may be the case that fairness dictates that earlier disclosure is required, in which case the Court will make appropriate orders by way of case management.

“But what the party cannot do is save up its complaint that the case is stated too broadly until the conduct of the final hearing, and then maintain that no detailed case can be run because no such case has been disclosed. To do so is to treat the concise statement as having the same character as a pleading which it is not.

“It is also to adopt a strategic and technical approach of a kind that is inconsistent with the obligation imposed upon parties and their lawyers by Part VB of the Federal Court of Australia Act (at [149]).”

Dan Star QC is a Senior Counsel at the Victorian Bar, ph 03 9225 8757 or email danstar@vicbar.com.au. The full version of these judgments can be found at austlii.edu.au. Numbers in square brackets refer to a paragraph number in the judgment.

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