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[2025] NSWSC 1525
General information, not legal advice.
Supreme Court of NSW
2025-12-16
Peden J
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Source: NSW Caselaw (www.caselaw.nsw.gov.au). Converted to plain text by ZoeLaw. Not the official version.
Medium Neutral Citation: i-Prosperity Pty Ltd (in liquidation) v Crown Melbourne Ltd [2025] NSWSC 1525
Hearing dates: 4 December 2025; further submissions 5 December 2025
Date of orders: 16 December 2025
Decision date: 16 December 2025
Jurisdiction: Equity - Commercial List
Before: Peden J
Decision: ATE Policy with further amendments adequate as form of security for costs; parties to confer on appropriate form of orders
Catchwords: COSTS – Security for costs – dispute as to form of security – whether after-the-event insurance policy with anti-avoidance endorsement in favour of defendant adequate to achieve the objective of security for costs – whether policy may be readily, legitimately and contractually avoided
CONTRACTS – Parties – Privity – whether third party able to enforce contract of insurance to which it is not party – no question of principle
Legislation Cited: Insurance Act 1973 (Cth)
Insurance Contracts Act 1984 (Cth)
Cases Cited: Blue Oil Energy Pty Ltd v Tan [2014] NSWCA 81
DIF III Global Investment Fund LP v BBLP LLC [2016] VSC 401
APFC No.1 Corporation v Insurance Australia Limited [2024] NSWSC 534
Re Tiaro Coal Ltd [2018] NSWSC 746
Trident General Insurance Co Ltd v McNiece Bros Pty Ltd (1988) 165 CLR 107
Benson v Rational Entertainment Enterprises Ltd (2018) 97 NSWLR 798
Re Tyler; Ex parte Foley (1994) 181 CLR 18
Scruttons Ltd v Midland Silicones Ltd [1962] AC 446
Central Coast Council v Norcross Pictorial Calendars Pty Ltd [2021] NSWCA 75
Insurance Australia Limited, in the application of Insurance Australia Limited [2016] FCA 1387
Musst Holdings Ltd v Astra Asset Management Ltd [2024] EWHC 2310 (Ch)
Saxon Woods Investments Limited v Costa [2023] EWHC 850 (Ch)
Asertis Ltd v Lewis Barry Bloch [2024] EWHC 2393 (Ch)
Premier Motor Auctions Ltd (in liq) v Pricewaterhouse Coopers LLP [2018] 1 WLR 2955
Michael Phillips Architects Ltd v Riklin [2010] EWHC 834
Petersen Superannuation Fund Pty Ltd v Bank of Queensland Ltd [2017] FCA 699
Category: Procedural rulings
Parties: i-Prosperity Pty Ltd (in Liquidation) (First Plaintiff)
iProsperity Underwriting Pty Ltd (Receiver & Manager Appointed) (in Liquidation) (Second Plaintiff)
iProsperity Australia Pty Ltd (In Liquidation) (Third
Plaintiff)
Planet Tel Network Pty Ltd (In Liquidation) (Fourth
Plaintiff)
Barry Wight and Jeremy Joseph Nipps in their capacity as joint and several liquidators of the First to Fourth Plaintiffs (Fifth Plaintiffs)
Crown Melbourne Limited (Defendant)
Representation: Counsel:
T E O’Brien (Plaintiffs)
M Izzo SC with R Jameson (Defendants)
Solicitors:
Norton Rose Fulbright Australia (Plaintiffs)
White & Case (Defendants)
File Number(s): 2025/271295
Publication restriction: Nil
The plaintiffs, who have litigation funding from LCM Funding Pty Ltd (LCM), have agreed that the defendant (Crown) is entitled to security for costs, in tranches, totalling $2,000,000. The only issue in dispute is the form the security should take.
LCM is the Policyholder under an after-the-event insurance policy (Policy) with seven Lloyd’s syndicates of insurers (Insurers). LCM proposed that security could be provided by way of an “anti-avoidance endorsement indemnity” to the ATE Policy in favour of Crown (Endorsement). A copy of the relevant terms is attached as Annexure A to these reasons.
The relevant principles concerning a determination of appropriate forms of security were not in dispute and may be summarised as follows:
The Court must determine “whether the form of security offered [is] adequate to protect the party seeking it”: Blue Oil Energy Pty Ltd v Tan [2014] NSWCA 81 at [22] (Beazley P and Tobias AJA); DIF III Global Investment Fund LP v BBLP LLC [2016] VSC 401 (DIF III) at [38] (Hargrave J).
The plaintiffs bear a “practical onus” of satisfying the court that the proposed security will not impose an “unacceptable disadvantage” on the defendant: DIF III at [39]; APFC No.1 Corporation v Insurance Australia Limited [2024] NSWSC 534 (APFC) at [23] (Nixon J).
In order to be adequate, the proposed security must satisfy the protective object of security for costs, being to provide a fund or asset against which the successful defendant can readily enforce an order for costs: DIF III at [40]; Re Tiaro Coal Ltd [2018] NSWSC 746 (Tiaro Coal) at [10] (Gleeson JA).
The mere fact that there may be “some delay” in enforcing the form of security, while relevant, is “not decisive”: DIF III at [38]; APFC at [23].
A defendant is not considered to be at an unacceptable disadvantage in having to enforce a judgment overseas: Tiaro Coal at [13]; APFC at [23].
It is inappropriate to undertake “a comparison exercise of the relative attributes of the security offered by the plaintiff and the ‘conventional’ or ‘familiar’ forms of security by cash deposit or bank guarantee, with a view to determining which form of security was superior”: Tiaro Coal at [22].
On the eve of the hearing, the plaintiffs proffered a proposed amended Endorsement, in an attempt to deal with the concerns raised by Crown in its earlier served written submissions. Nevertheless, Crown maintained its objections to the amended form of security on the following bases:
Crown would not be party to a “contract of insurance” and therefore would have no cause of action against the insurers to enforce the Endorsement.
Because the insurance was being offered by various Lloyd’s syndicates, there was a real risk that one or more of those syndicates would legitimately resist paying a claim by Crown.
There was insufficient evidence of any fund, against which Crown could have access, should the insurers wrongly refuse to pay on its claim.
Crown’s position was that only a deed of indemnity from the Insurers would be adequate security.
Where an ATE policy is offered as security the question is whether it is adequate, which “requires consideration of the terms of the policy, their meaning and effect, and an assessment of whether there is a risk that the insurer, acting in good faith but in its own commercial interests, could seek, on legitimately contestable grounds, to avoid, limit or reduce its liability under that policy in respect of any costs order made in the defendant’s favour”: APFC at [49].
As noted above, Crown complains the Endorsement is inadequate, focusing on what it claims are risks of uncertainty as to “all of the issues which the insurers may raise to refuse cover under the endorsement”. Each are dealt with in turn.
I accept the plaintiffs’ submission that the Endorsement is part of a “contract of insurance”, as it clearly states that it “amends and adds” to the Policy.
Crown’s submission that there was no “contract of insurance” was developed this way:
“[Y]ou can have provisions of insurance, but you can have provision in a contract that are not properly part of the contract of insurance”, because “this is not a promise to pay if something adverse happens” to Crown.
“The key point is that it doesn’t involve an adverse event … its’ saying if something good happens to you, we’re going to make sure that you’re secure”.
“[T]here is at least a very serious argument that this is nothing more than indemnity so far as it concerns the promise to pay us the amount of any adverse costs order made in our favour…”
The argument appeared to be that there is not a “contract of insurance” if Crown does not have the benefit of a promise to pay on an “adverse event”, because it would be a “positive event” if Crown obtained a costs order in its favour. I do not accept that construction. The proper construction of the Endorsement is that Crown can take advantage of the insurance LCM has for an adverse event, namely an adverse costs order against it.
That is evident from the following:
Clause 1 of the Endorsement is a “confirmation” that Crown “is indemnified for Adverse Costs” up to the agreed amounts of security tranches. I do not accept that in order for Crown to have the benefit of a “contract of insurance” it needs to be indemnified for a specified risk, in circumstances where LCM has insurance for the risk of being ordered to pay Crown’s costs in the proceedings, and necessarily Crown is indemnified in relation to the costs it has incurred in proceedings, should it succeed.
That clause also provides that “any claim made against it by [Crown] for Adverse Costs will be honoured in full… irrespective of any exclusions or any provisions of the Policy or of the general law, or any breach (asserted or actual) of the Policy by the Policyholder which would have otherwise rendered the Policy or the claim unenforceable or entitled the Insurer to avoid, rescind or discharge the Policy or avoid, reduce or deny cover or otherwise repudiate liability or not pay a claim…”
On the basis that there is a contract of insurance, the issue is whether Crown can sue the Insurers to take advantage of the Endorsement, or whether it cannot because it is not privy to the contract. I consider this is overcome by either the analysis in Trident General Insurance Co Ltd v McNiece Bros Pty Ltd (1988) 165 CLR 107 (Trident), or by s 48 of the Insurance Contracts Act 1984 (Cth) (ICA).
Properly construed, the Endorsement has the effect of demonstrating an intention by the Insurers that Crown has the benefit of the contract of insurance. This arises from the following.
Clause 3 provides that LCM “irrevocably authorises and instructs the Insurer to pay claims made by [Crown] pursuant to clause 1”. Crown submitted that this clause did not assist it, because it required LCM to enforce, and it did not overcome any reasons why the Insurers may not pay a claim. However, that clause must be read in the context of the other clauses and the Insurers’ obligations of good faith. Clause 3 indicates that from LCM’s position, Crown is entitled to make a claim and will not be involved in the processing of the claim.
Clause 4.3 provides that a claim made by Crown under the Policy “will be paid by the Insurer” to Crown on the later of the Adverse Costs being agreed between Crown and either LCM or the plaintiffs, or a costs taxation certificate.
Clause 6(a) and (c) provide an agreement between LCM and the Insurers that:
(a) Irrespective of any other provisions of the Policy, the terms of this Endorsement are intended to benefit [Crown] and may be enforced by [Crown] directly pursuant to the terms of this Endorsement, provisions of the Insurance Contracts Act 1984 (Cth), Civil Liability (Third Party Claims Against Insurers) Act 2017 (NSW) or otherwise. For the avoidance of doubt, and in accordance with clause 1 of the Endorsement, the Insurer acknowledges and irrevocably agrees it shall not assert or in any way seek to rely on any defence to a claim made in accordance with paragraph 1 and paragraph 4.3 of this Endorsement (or the enforcement of such claim) including but not limited to:
(i) any defence of privity of contract; and
(ii) any defences to a claim that would have otherwise been available to it under section 48(3) of the Insurance Contracts Act 1984.
…
(c) If the Insurer fails to pay any amount to [Crown] in accordance with paragraph 1 and paragraph 4.3 of this Endorsement, the Insurer hereby unconditionally and irrevocably undertakes to consent to judgment being entered against it in favour of [Crown] in any competent court in the Commonwealth of Australia to pay such amount [up to the limit] and the Insurer confirms that it will not to [sic] contest the registration of the judgment in the court or appeal the judgment.
In oral submissions the plaintiffs indicated that they would agree to amend the definition of “court” in clause 6(c) to include a court in Australia or the United Kingdom. That amendment is appropriate and ought to occur.
Crown submitted that there is no such thing as a “defence of privity” and clause 6 did not provide it with assistance in enforcing the Insurers’ agreement with LCM to pay adverse costs. For present purposes, nothing turns on whether privity is a “defence” or whether Crown must establish that it can enforce a contract made for its benefit, to which it is not a party and where it has not provided consideration. That is because, on its proper construction, Crown would be entitled to sue the Insurers for payment of a claim submitted in accordance with the administrative process outlined in clause 4, relying on Trident.
In that case, McNiece, a contractor of Blue Circle Southern Cement Ltd, sought to take advantage of a policy of insurance issued by Trident which was expressed to apply to “Blue Circle Southern Cement Limited, all its subsidiary, associated and related Companies, all Contractors and Sub-Contractors and/or Suppliers” (defined as the “Assured”) and the site at which McNiece was performing work: Trident at 111 (Mason CJ and Wilson J). The policy indemnified “the Assured against all sums which the Assured shall become legally liable to pay in respect of … death of or bodily injury to or illness of any person…” aside from the employees or apprentices of the Assured.
McNiece sued Trident directly and was successful for various and different reasons given in the High Court judgments. That difference in reasoning means that Trident lacks any ratio decidendi: see Benson v Rational Entertainment Enterprises Ltd (2018) 97 NSWLR 798 at [113] (Leeming JA, Beazley P and Emmett AJA agreeing) (Benson). Only three of the four members of the majority considered McNiece could succeed based on an exception to the doctrine of privity in relation to contracts of insurance: see Trident at 123-124 (Mason CJ and Wilson J); 172 (Toohey J).
Mason CJ and Wilson J concluded at 123-124:
In the ultimate analysis the limited question we have to decide is whether the old rules apply to a policy of insurance. The injustice which would flow from such a result arises not only from its failure to give effect to the expressed intention of the person who takes out the insurance but also from the common intention of the parties and the circumstance that others, aware of the existence of the policy, will order their affairs accordingly. … It stands to reason that many sub-contractors will assume that such an insurance is an effective indemnity in their favour and that they will refrain from making their own arrangements for insurance on that footing.
However, it is accepted that Trident binds this Court in relation to the relaxation of the doctrine of privity in insurance contracts in circumstances which are not reasonably distinguishable: Benson at [113], citing Re Tyler; Ex parte Foley (1994) 181 CLR 18 at 37 (McHugh J) and Scruttons Ltd v Midland Silicones Ltd [1962] AC 446 at 479 (Lord Reid); see also Central Coast Council v Norcross Pictorial Calendars Pty Ltd [2021] NSWCA 75 at [152], [158] (Bathurst CJ, Macfarlan and Gleeson JJA agreeing).
The circumstances of the Policy and Endorsement here are not reasonably distinguishable from Trident, such that Crown is entitled to sue the Insurers for payment of a claim submitted in accordance with the administrative process outlined in clause 4.
Alternatively, Crown could have the benefit of s 48 ICA. Crown is a “third party beneficiary” under the ICA, because of the language of the Endorsement.
Section 48 provides:
(1) A third party beneficiary under a contract of general insurance has a right to recover from the insurer, in accordance with the contract, the amount of any loss suffered by the third party beneficiary even though the third party beneficiary is not a party to the contract.
(2) Subject to the contract, the third party beneficiary:
(a) has, in relation to the third party beneficiary’s claim, the same obligations to the insurer as the third party beneficiary would have if the third party beneficiary were the insured; and
(b) may discharge the insured’s obligations in relation to the loss.
(3) The insurer has the same defences to an action under this section as the insurer would have in an action by the insured, including, but not limited to, defences relating to the conduct of the insured (whether the conduct occurred before or after the contract was entered into).
I accept that there are no obligations imposed upon Crown as a “third party beneficiary” for the purposes of s 48(2) other than the manner in which a claim must be made.
While s 48(3) purports to preserve to the Insurers any defences relating to the conduct of the insured in order to not pay on a claim, the Insurers here have agreed not to raise any such defences by virtue of cl 6, even if they exist.
I reject Crown’s submission that s 28 ICA remains to operate in favour of the Insurers. That section provides that where there is a material non-disclosure or misrepresentation then the insurer may either avoid the contract if there is fraud, or the insurer’s liability is reduced. The natural reading of clauses 1 and 6 is that the Insurers will not take advantage of any rights that may arise that have the effect of reducing or avoiding the payment of a claim, including those it may have against LCM under, inter alia, s 28. Crown vaguely suggested (and the plaintiffs did not direct submissions to this point) that this could amount to “contracting out” prohibited by s 52 ICA. But s 52 only prohibits contracting out where the relevant provision excludes, restricts or modifies the operation of the ICA “to the prejudice of a person other than the insurer”: s 52(1) ICA. To the extent there is any contractual restriction of s 28 here, it is to the Insurers’ prejudice, not of any other person.
Therefore, I consider that there is no real risk that Crown could not enforce the policy.
The plaintiffs relied upon the Lloyd’s Australian Trust Deed as providing a source of assets in Australia, to which Crown could look when enforcing any costs judgment.
Crown raised three concerns.
First, Crown submitted that Clause 4.1 of the Trust Deed only permits claims on the relevant trust fund to be made by “Policyholders”, who hold an “Australian Policy” in respect of which the “Relevant Underwriter” has a liability to that holder. Crown submitted that it is not a “Policyholder” in respect of the Endorsement and Policy, relying on cases concerning s 17C of the Insurance Act 1973 (Cth) (which deals with, inter alia, the provision of notice to any “affected policyholder” before an application can be made for approval of a scheme for the transfer or amalgamation of an insurance business): see Insurance Australia Limited, in the application of Insurance Australia Limited [2016] FCA 1387 (Gleeson J). I do not consider that different statutory context assists, and in any event, the point is an academic one; the submission was made before the terms of the Endorsement were amended (including by email in response to a query from me) to provide that Crown is a “Third Party Policyholder”, which “is a holder of the Policy in respect of which the Insurer has liability to, as a holder”. I do not accept that this amounts to merely an agreement between the Insurers and LCM. Instead, the Insurers are accepting that Crown is a holder of the Policy and can make claims directly against them, as privity does not pose an issue for the above reasons.
Secondly, Crown submitted that there was no evidence that the Policy was an “Australian Policy” as required under the Trust Deed, and that may be a basis to deny a claim. There was evidence that Mr Philip Lomax, the Managing Director of Litica Australia Pty Ltd, a Coverholder at Lloyd’s and the authorised underwriter for the Insurers, had informed the plaintiffs’ solicitor that the Insurers would consider the Policy and Endorsement as an Australian Policy. Crown complained that the evidence was merely an assumption by Mr Lomax with no direct evidence. However, Mr Lomax is prepared to amend the terms of the Endorsement to ensure its adequacy as security. For abundance of caution, I will require the Insurers to take steps to ensure the Policy is accepted as an “Australian Policy”.
Thirdly, Crown submitted that clause 4.2(b) reserves to the Insurers the right to determine whether a judgment or order falls within an Australian Policy and the relevant syndicate and year of account. I do not consider this represents a real risk to Crown. The clause is a mechanical or administrative process to allocate a claim to the correct account.
Crown submitted that there are no Australian authorities where an ATE policy has found to be an adequate form of security, and that instead a deed of indemnity ought to be proffered to Crown.
However, there are authorities in the United Kingdom where such policies, including anti-avoidance endorsements, have been accepted after an analysis of their terms: see eg Musst Holdings Ltd v Astra Asset Management Ltd [2024] EWHC 2310 (Ch) (Musst Holdings); Saxon Woods Investments Limited v Costa [2023] EWHC 850 (Ch) (Saxon Woods). In some cases the terms of the ATE policy in question have not been considered satisfactory: see Asertis Ltd v Lewis Barry Bloch [2024] EWHC 2393 (Ch) (no ability for third party to enforce the policy directly); Premier Motor Auctions Ltd (in liq) v Pricewaterhouse Coopers LLP [2018] 1 WLR 2955 (no anti-avoidance clause or endorsement); Michael Phillips Architects Ltd v Riklin [2010] EWHC 834 (policy provided no real security for defendants’ costs).
In determining whether to accept an ATE policy as adequate security, the English cases focus on those matters identified by Nixon J in APFC:
the meaning of the policy, and
how readily it may be avoided legitimately and contractually, and
the likelihood of circumstances arising which will enable to the policy to be readily, legitimately and contractually avoided: see Saxon Woods at [33]; Musst Holdings at [22].
The Australian cases where proffered ATE policies have been rejected included the following features:
There was no endorsement in favour of the defendant, and the insurer did not have any presence of assets in the jurisdiction (in the context of a policy issued by an insurer not authorised in Australia and without any presence or assets in the jurisdiction): Petersen Superannuation Fund Pty Ltd v Bank of Queensland Ltd [2017] FCA 699 (Yates J).
In APFC, Nixon J found there were unacceptable risks because:
(a) The definition of “adverse costs” which were insured was limited to “fully mitigated” costs, leaving it open to the insurer to argue that an order for the payment of costs did not represent “fully mitigated costs”. (b) The endorsement provided that the insurer would not be liable to pay adverse costs until the proceedings had finally concluded, so that costs may not be payable before all appeal rights had been exhausted. (c) The policy provided for automatic termination upon certain events which were not covered in the endorsement.
None of those concerning features exist here because:
There is an endorsement in Crown’s favour.
There is no right of termination or change to the policy terms without Crown’s consent: see clause 2.5.
There is no right of delaying payment of a claim, for example until an appeal is determined; instead, any claim it is to be paid within specific timeframes based on agreement of quantum or taxation: clause 4.3.
Any concerns about the absence of assets within the jurisdiction are ameliorated by the existence of the security trust fund, and the syndicates have assets overseas.
For the reasons above, I consider the natural and ordinary meaning of the Policy, including the Endorsement, entitles Crown to enforce it directly against the Insurers. I do not consider it may readily be avoided by reason of the clauses identified above. I further do not consider there is a real likelihood of circumstances arising which would enable the Policy to be readily, legitimately and contractually avoided.
That conclusion is made on the basis that:
(a) The Endorsement is amended to:
(i) define “court” in clause 6(c) as “any Australian or English court”; (ii) change the definition of “Third Party Policyholder” to read “... in respect of which the Insurer has liability to, as a holder”, consistent with clause 2.9; and
(b) the Insurers provide a form of undertaking, or an amendment to the Endorsement, that the Policy is accepted as an "Australian Policy" for the purposes of the Trust Deed.
I consider it appropriate to make the following orders:
Parties to confer as to the appropriate orders to give effect to these reasons, including issues of costs, and send a single joint communication to the Chambers of Peden J by 10am, 18 December 2025, with consent orders.
If no joint communication is received, the matter will be listed at 9.15am on 19 December 2025 for determination of final orders, if appropriate.
**********
INSURER ANTI-AVOIDANCE ENDORSEMENT INDEMNITY
Endorsement No. #
Policy: LIT/AUS/2025/02902
Case: i-Prosperity Pty Ltd (ACN 142 091 585) (In Liquidation) & Ors v Crown Melbourne Ltd (ACN 006 973 262) (case number: 2025/00271295)
Policyholder: LCM Funding Pty Ltd (ACN 638 076 098) whose registered address is Suite 12.06, Level 12, The Chifley Tower, 2 Chifley Square, Sydney NSW, Australia.
Third Party Policyholder: Crown Melbourne Limited (ACN 006 973 262)
Inception Date: 7 November 2025
ENDORSEMENT PREAMBLE
A. The relevant definitions from the Policy are repeated below for ease of reference; and
B. In accordance with paragraph 2.7 of this Endorsement, if there are any inconsistencies between the terms, conditions, definitions and/or any other provision of the Policy and those of this Endorsement, the terms of this Endorsement shall prevail.
It is hereby noted and agreed that the following amendments and additions are made to the Policy LIT/AUS/2025/02902:
Definitions
“AAE Limit” means AUD $900,000 which is the Insurer’s maximum aggregate limit of liability to the Third Party Policyholder for Adverse Costs under this Endorsement, subject to each Insurer’s respective amounts detailed in the table at paragraph 7 of this Endorsement.
…
“Insurer” means the underwriters at Lloyd’s set out in the table at paragraph 7 of this Endorsement, which are led by ASTA Managing Agency Limited, Brace Lloyd’s Consortium 9642.
“Limit” means the Insurers’ maximum aggregate limit of liability under the Policy (including any Anti-Avoidance Endorsement) subject to each Insurer’s respective subscription of the Limit as set out in paragraph 7 to this Endorsement.
“Opponent” means Crown Melbourne Limited (ACN 006 973 262).
“Policy” means the policy of insurance (policy number LIT/AUS/2025/02902), the Schedule to the Policy and any Endorsements.
“Policyholder” means LCM Funding Pty Ltd (ACN 638 076 098) of Suite 12.06, Level 12, The Chifley Tower, 2 Chifley Square, Sydney NSW, Australia, which is the holder of the Policy. “Senior Counsel” means a barrister holding a current practising certificate issued by the Bar Association of an Australian jurisdiction who is entitled to use the designation Senior Counsel or King’s Counsel.
“Third Party Policyholder” means the Opponent, which with effect from the date of this Endorsement is a holder of the Policy in respect of which the Insurer has liability as a holder, whose registered address is 8 Whiteman Street, Southbank, VIC 3006.
- The Insurer confirms the Third Party Policyholder is indemnified for Adverse Costs up to the AAE Limit and that the Policy is non-voidable and any claim made against it by the Third Party Policyholder for Adverse Costs will be honoured in full up to the AAE Limit, irrespective of any exclusions or any provisions of the Policy or of the general law, or any breach (asserted or actual) of the Policy by the Policyholder which would have otherwise rendered the Policy or the claim unenforceable or entitled the Insurer to avoid, rescind or discharge the Policy or avoid, reduce, exclude or deny cover or otherwise repudiate liability or not pay a claim for any Adverse Costs under the terms of the Policy.
- The Insurer confirms:
2.1 the Policy commenced on the Inception Date;
2.2 no material changes to the terms of the Policy which limit the cover available under paragraph 1 of this Endorsement (including without limitation a reduction to the AAE Limit) shall be made without the prior written consent of the Policyholder and the Third Party Policyholder. Any change that is not made in accordance with this paragraph 0 of this Endorsement will be of no effect;
2.3 the AAE Limit does not exceed the Limit;
2.4 the currency and all premium payable under the Policy is in Australian dollars and all premium which has become due has been paid to the Insurer;
2.5 no claim has been made on the Policy and the Policy has not been cancelled, as at the date of this Endorsement and (for the avoidance of doubt) the Insurer cannot terminate, cancel or otherwise void the indemnity provided by the Insurer to the Third Party Policyholder under this Endorsement;
2.6 this Endorsement shall continue to apply notwithstanding the liquidation or insolvency of the Policyholder or the Insurer;
2.7 where there is any inconsistency between the terms, conditions, definitions and/or any other provision of the Policy and those of this Endorsement, the terms of this Endorsement shall prevail;
2.8 the Third Party Policyholder’s obligations to the Insurer in relation to a claim under this Endorsement are contained in their entirety in the terms of this Endorsement (and any obligations of the Policyholder to the Insurer in relation to a claim under the Policy do not apply to a claim by the Third Party Policyholder under this Endorsement); and
2.9 the Opponent is a Third Party Policyholder and thereby a holder of the Policy in respect of which the Insurer has a liability to, as a holder.
- The Policyholder irrevocably authorises and instructs the Insurer to pay claims made by the Third Party Policyholder pursuant to paragraph 1 of this Endorsement. No instruction by any person (including the Policyholder) other than the Third Party Policyholder to make a payment shall be honoured by the Insurer unless the instruction is given by the Third Party Policyholder in writing.
- The following terms will apply in respect of a claim made by the Third Party Policyholder under the Policy:
4.1 Any notification in respect of any claim arising under this Endorsement shall be made by a person duly authorised to act on the behalf of the Third Party Policyholder as soon as reasonably practicable to:
Litica Australia Pty Ltd…
4.2 The notification of a claim should include the following information:
(a) the amount of Adverse Costs that the Insurer is liable to pay to the Third Party Policyholder;
(b) the Policy number and relevant supporting Adverse Costs order, certificate of taxation or evidence of the agreement in accordance with the definition of Adverse Costs at paragraph (iii).
4.3 A claim by a Third Party Policyholder will be paid by the Insurer to the Third Party Policyholder:
(a) if the Adverse Costs are agreed between the Claimant and the Third Party Policyholder or Policyholder and the Third Party Policyholder, within 14 Business Days of the Third Party Policyholder’s notification of a claim, which is accompanied by the agreement pursuant to (iii) of the definition of Adverse Costs; or
(b) within 30 Business Days of issue of an order or certificate of taxation in respect of Adverse Costs,
whichever is later.
4.4 In the event that the Insurer makes payment to the Third Party Policyholder for Adverse Costs pursuant to paragraph 4.3 of this Endorsement and the order, certificate of taxation and/or agreement in respect of Adverse Costs is subsequently reversed, amended or terminated, then the Third Party Policyholder shall, within 14 Business Days of receiving notice of such an event, repay to the Insurer any amount that it has received from the Insurer to which it is no longer entitled.
…
- The parties to the Policy agree that:
(a) Irrespective of any other provisions of the Policy, the terms of this Endorsement are intended to benefit the Third Party Policyholder and may be enforced by the Third Party Policyholder directly pursuant to the terms of this Endorsement, provisions of the Insurance Contracts Act 1984 (Cth), Civil Liability (Third Party Claims Against Insurers) Act 2017 (NSW), or otherwise. For the avoidance of doubt, and in accordance with paragraph 1 of this Endorsement, the Insurer acknowledges and irrevocably agrees it shall not assert or in any way seek to rely on any defence to a claim made in accordance with paragraph 1 and paragraph 4.3 of this Endorsement (or the enforcement of such claim) including but not limited to:
(i) any defence based on privity of contract; and
(ii) any defences to a claim that would have otherwise been available to it under section 48(3) of the Insurance Contracts Act 1984.
(b) No other third party is entitled to the benefit of or to enforce any term of the Policy (including this Endorsement) under any provision of the Insurance Contracts Act 1984 (Cth), Civil Liability (Third Party Claims Against Insurers) Act 2017 (NSW), or otherwise.
(c) If the Insurer fails to pay any amount to the Third Party Policyholder in accordance with paragraph 1 and paragraph 4.3 of this Endorsement, the Insurer hereby unconditionally and irrevocably undertakes to consent to judgment being entered against it in favour of the Third Party Policyholder in any competent court in the Commonwealth of Australia to pay such amount subject to the total liability not exceeding the AAE Limit and the Insurer confirms that it will not to contest the registration of the judgment in the court or appeal the judgment.
(d) The Insurer shall also be liable to pay to the Third Party Policyholder any simple interest accrued in respect of the sum(s) demanded pursuant to paragraph 1 of this Endorsement, at the judgment rate prevailing in the relevant Australian jurisdiction at the date of the demand. Such interest shall accrue from the fifteenth (15th) day after the date such sum was payable in accordance with paragraph 4.3 of this Endorsement until payment is made by the Insurer.
(e) If a dispute arises under this Endorsement, it will be subject to Australian law and practice and the Insurer will submit to the jurisdiction of any competent court in the Commonwealth of Australia.
(f) Any summons notice or process to be served upon the Insurer may be served upon:
Lloyd’s Underwriters’ General Representative in Australia
Level 32
225 George Street
Sydney NSW 2000
Australia,
who has authority to accept service on the Underwriters’ behalf;
- The Insurers’ liability for Adverse Costs under this Endorsement are several and not joint and are limited in application solely to the extent of their individual proportions as detailed in the table below. No Insurer shall be responsible to make any payments to the Third Party Policyholder in relation to the proportion of any other Insurer who for any reason does not satisfy all or part of its obligations under this Endorsement.
| Insurer | Insurer’s % subscription under Policy | Insurer’s amount of liability for AAE Limit (AUD) | | Brace Lloyd’s Consortium 9642 (per ASTA Managing Agency Limited) | 24.242424% | $218,181.82 | | Lloyd’s Syndicate CIN 318 (per Cincinnati Global Underwriting Limited) | 15.151515% | $136,363.64 | | Lloyd’s Syndicate AUW 609 (per Atrium Underwriters Limited) | 9.090909% | $81,818.18 | | Lloyd’s Syndicate TMK 510 (per Tokio Marine Kiln Syndicates Limited) | 12.121213% | $109,090.92 | | Lloyd’s Syndicate MRS 457 (per Munich Re Syndicate Limited) | 15.151515% | $136,363.64 | | Lloyd’s Syndicate NSM 2358 (per Nephila Syndicate Management Limited) | 15.151515% | $136,363.64 | | Lloyd’s Syndicate IQUW 1856 (per IQUW Syndicate Management Limited) | 9.090909% | $81,818.18 | | Total: | 100% | $900,000.00 |
8. Other than Adverse Costs up to the AAE Limit, the Insurers shall have no liability to the Third Party Policyholder under the Policy for any other direct loss, loss of profits or any indirect or consequential loss incurred by the Third Party Policyholder in connection with the Case.
- All other terms and conditions remain unchanged.
…
i-Prosperity Pty Ltd (in liquidation)
Crown Melbourne Ltd [2025] NSWSC 1525
(1988) 165 CLR 107
(2018) 97 NSWLR 798
(1994) 181 CLR 18