Lambert Leasing Inc. v QBE Insurance Ltd (No 2) [2015] NSWSC 1196

Lambert Leasing Inc. v QBE Insurance Ltd (No 2) [2015] NSWSC 1196

The words "shall pay" in the QBE Policy were capable of being construed consistently with the purpose of insurance as requiring that insurance money paid to Lambert be used to meet the claimant's liability, rather than requiring Lambert first to pay from its own funds. The policy did not contain sufficiently clear language to impose payment by Lambert as a condition precedent to QBE's indemnity. The defendants were not entitled to indemnity costs because the June 2014 Calderbank offer was not a genuine compromise and it was not unreasonable for Lambert to reject it, and the January 2015 UCPR offer was effectively sent simply to trigger a costs outcome and lacked genuine compromise.

Jurisdiction
Australia
Judgment Date
20 August 2015
Procedural Posture
Equity Commercial List; Aviation Insurance Dispute and Costs Application / Principal Judgment Following Further Submissions on the Pay to Be Paid Clause and Costs
Outcome
QBE was not entitled to require Lambert to pay any liability to a claimant first as a precondition of indemnity. Indemnity costs were refused; the plaintiffs were ordered to pay costs on the ordinary basis.
Legal Topics
['aviation Insurance' 'pay to Be Paid Clause' 'indemnity Costs' 'calderbank Offers' 'offers of Compromise' 'genuine Compromise' 'reasonable Refusal']
['equity' 'insurance Law' 'civil Procedure' 'costs'] ['aviation Insurance' 'pay to Be Paid Clause' 'indemnity Costs' 'calderbank Offers' 'offers of Compromise' 'genuine Compromise' 'reasonable Refusal']

Case Brief

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Procedural Posture

Equity Commercial List; Aviation Insurance Dispute and Costs Application / Principal Judgment Following Further Submissions on the Pay to Be Paid Clause and Costs

Legal Issues

  1. 1 ['Whether the words "and shall pay" in the QBE Policy required Lambert to pay any liability to a claimant before QBE was required to indemnify it.' "Whether QBE's reliance on the pay to be paid clause would constitute a breach of the duty of utmost good faith." 'Whether the defendants were entitled to indemnity costs based on the Calderbank offer of 5 June 2014.' 'Whether the defendants were entitled to indemnity costs based on the offer of compromise of 15 January 2015 under the Uniform Civil Procedure Rules.']

Ratio Decidendi

The words "shall pay" in the QBE Policy were capable of being construed consistently with the purpose of insurance as requiring that insurance money paid to Lambert be used to meet the claimant's liability, rather than requiring Lambert first to pay from its own funds. The policy did not contain sufficiently clear language to impose payment by Lambert as a condition precedent to QBE's indemnity. The defendants were not entitled to indemnity costs because the June 2014 Calderbank offer was not a genuine compromise and it was not unreasonable for Lambert to reject it, and the January 2015 UCPR offer was effectively sent simply to trigger a costs outcome and lacked genuine compromise.

Court Disposition

QBE was not entitled to require Lambert to pay any liability to a claimant first as a precondition of indemnity. Indemnity costs were refused; the plaintiffs were ordered to pay costs on the ordinary basis.

Orders

  • ['QBE is not entitled to require Lambert pay out any liability itself first to the claimant as a precondition of indemnity.' 'The plaintiffs pay the costs of the defendant on the ordinary basis.']