CGU Insurance Limited v One.Tel Limited (In Liquidation) [2010] HCA 26

CGU Insurance Limited v One.Tel Limited (In Liquidation) [2010] HCA 26

The trustee, as equitable assignee of Mr Greaves's rights under the insurance policy, was entitled to continue the proceedings after the termination of the Deed of Arrangement because the obligation to vindicate rights attached to trust property persists unless expressly negated; the operation of the Deed, including any fate of cl 11, did not extinguish the trustee's duties nor create an impediment to continuing the action, and the definition of 'Loss' in the policy encompassed the judgment debt despite any enforcement stays, so the appellant's contrary arguments failed.

Parties
Appellant: CGU Insurance Limited; First Respondent: One.Tel Limited (In Liquidation); Second Respondent: Christine Watson (executrix of David Patrick Watson); Fourth Respondent: Australian Securities and Investments Commission (ASIC); Third Respondent: John Huyshe Greaves
Jurisdiction
Australia
Judgment Date
04 August 2010
Procedural Posture
Appeal / High Court of Australia – Judgment on Appeal From the Supreme Court of New South Wales
Outcome
Appeal allowed in part, and otherwise dismissed; appellant to pay first respondent's costs.
Legal Topics
Deed of Arrangement, Equitable and Legal Assignment, Directors and Officers Liability Insurance, Bare Trust, Trustee Powers and Duties
Bankruptcy Insurance Law Trusts Deed of Arrangement Equitable and Legal Assignment Directors and Officers Liability Insurance Bare Trust Trustee Powers and Duties

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Parties

CGU Insurance Limited

Appellant

One.Tel Limited (In Liquidation)

First Respondent

Christine Watson (executrix of David Patrick Watson)

Second Respondent

Australian Securities and Investments Commission (ASIC)

Fourth Respondent

John Huyshe Greaves

Third Respondent

Procedural Posture

Appeal / High Court of Australia – Judgment on Appeal From the Supreme Court of New South Wales

Legal Issues

  1. 1 Whether trustee could continue proceedings after Deed of Arrangement termination
  2. 2 Whether Deed of Arrangement clauses survive termination
  3. 3 Whether rights under insurance policy were assigned to trustee

Ratio Decidendi

The trustee, as equitable assignee of Mr Greaves's rights under the insurance policy, was entitled to continue the proceedings after the termination of the Deed of Arrangement because the obligation to vindicate rights attached to trust property persists unless expressly negated; the operation of the Deed, including any fate of cl 11, did not extinguish the trustee's duties nor create an impediment to continuing the action, and the definition of 'Loss' in the policy encompassed the judgment debt despite any enforcement stays, so the appellant's contrary arguments failed.

Court Disposition

Appeal allowed in part, and otherwise dismissed; appellant to pay first respondent's costs.

Orders

  • Appeal allowed in relation to order 2 of the Court of Appeal of the Supreme Court of New South Wales made on 18 December 2009.
  • Answers to the nine questions reserved for separate determination (questions 3A, 3B and 4: not necessary to answer; others: as stated in the judgment).