Murphy, McCarthy & Associates Pty Limited v Zurich Australian Insurance Limited [2018] NSWSC 627


The requirement for leave under s 5(4) of the Act is one imposed to insulate insurers from exposure to untenable claims. The discretion to give leave to bring such a claim is to be exercised with this in mind.

MMA must have an arguable case against CFC, there must be an arguable case that the Policy responds to it and there must be a real possibility that if judgment is obtained CFC would not be able to meet it; Opes Prime Stockbroking Ltd (in liq) (Scheme Administrators Appointed) v Stevens [2014] NSWSC 659; Oswald v Bailey (1987) 11 NSWLR 715; Tzaidas v Child (2004) 61 NSWLR 18; Bede Polding College v Limit (No 3) Ltd [2008] NSWSC 887. A residual discretion to refuse leave remains even if these requirements are met; DSHE Holdings Ltd (receivers and managers appointed) (in liq) v Abboud [2017] NSWSC 579.

It is not in issue that MMA has an arguable case against CFC or that if judgment is obtained, CFC would not be able to meet it.

The only question is whether it is arguable that the Policy would respond to the claimed liability of CFC to MMA. It is not suggested that if it is arguable, leave should be refused.

Does the Policy, on its proper construction, arguably respond to the claim? If it does, that is on a construction which can seriously be put and is not untenable, this requirement, in respect of which MMA bears the burden, will be satisfied; Nettle v Mathieson Group Pty Limited & Anor [2007] NSWCA 98; Macquarie Underwriting Pty Ltd v Permanent Custodians Ltd (2007) 240 ALR 519.

Zurich accepted that at least part of MMA’s claim is arguably in respect of a sum for which CFC would be legally liable to pay for compensation in respect of property damage, as defined in the Policy.

Zurich argues only that the Policy would not respond because MMA’s claim falls under one or more of the exclusions.

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