McGrath & Anor re HIH Insurance Limited [2008] NSWSC 9

McGrath & Anor re HIH Insurance Limited [2008] NSWSC 9

Section 562A did not apply because the proceeds paid under the 27 June 2001 cancellation agreement were not amounts in respect of any liability of FAI or HIH C&G to pay amounts under contracts of insurance entered into by them as insurers, and were not received under the 21 January 2000 reinsurance agreement. The payment obligation arose under the new cancellation agreement. As HIH received the money as agent for FAI and HIH C&G, and those companies alone had contributed the premiums, they were entitled to the proceeds and interest in the same proportions as their contributions.

Jurisdiction
Australia
Judgment Date
30 January 2008
Procedural Posture
Application by Liquidators for a Direction Under S 479(3) of the Corporations Act 2001 (cth) Concerning Proceeds Received on Cancellation of a Reinsurance Agreement / Principal Judgment on Ex Parte Application
Outcome
Direction to be given to liquidators
Legal Topics
["liquidators' Directions" 'application of Reinsurance Proceeds in Winding Up' 'corporations Act 2001 (cth) S 562 A' 'agency and Entitlement to Proceeds' 'cancellation of Reinsurance Contract']
['corporations' 'insolvency and Winding Up' 'insurance and Reinsurance'] ["liquidators' Directions" 'application of Reinsurance Proceeds in Winding Up' 'corporations Act 2001 (cth) S 562 A' 'agency and Entitlement to Proceeds' 'cancellation of Reinsurance Contract']

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Procedural Posture

Application by Liquidators for a Direction Under S 479(3) of the Corporations Act 2001 (cth) Concerning Proceeds Received on Cancellation of a Reinsurance Agreement / Principal Judgment on Ex Parte Application

Legal Issues

  1. 1 ['Whether s 562A of the Corporations Act 2001 (Cth) applied to proceeds received under the Cancellation of Reinsurance Agreement dated 27 June 2001 between HIH Insurance Limited and Swiss Reinsurance Company.' 'Whether the proceeds and interest should be distributed to FAI General Insurance Company Limited and HIH Casualty & General Insurance Company Limited in the proportions 67.884% and 32.116%.']

Ratio Decidendi

Section 562A did not apply because the proceeds paid under the 27 June 2001 cancellation agreement were not amounts in respect of any liability of FAI or HIH C&G to pay amounts under contracts of insurance entered into by them as insurers, and were not received under the 21 January 2000 reinsurance agreement. The payment obligation arose under the new cancellation agreement. As HIH received the money as agent for FAI and HIH C&G, and those companies alone had contributed the premiums, they were entitled to the proceeds and interest in the same proportions as their contributions.

Court Disposition

Direction to be given to liquidators

Orders

  • ['The Court will make the direction sought by the liquidators of HIH.' 'The liquidators would be justified in distributing the proceeds received under the Cancellation of Reinsurance Agreement dated 27 June 2001, together with interest received thereon, on the basis that s 562A of the Corporations Act 2001 (Cth) is...