Plaintiff v Defendant

Insurance - Costs - Whether insurer liable to make contribution in respect of costs incurred without its consent - Insurance Contracts Act 1984 s 54

1 At the Australian Grand Prix held at Albert Park in March 1998, a large and valuable video screen was damaged, when the structure which was supporting it collapsed. That incident led to legal proceedings in two States, to determine who was liable to pay in respect of the structure's collapse. The situation has been complicated by the fact that one of the relevant insurers was a member of the HIH group of insurance companies, which itself collapsed in 2001.

2 This is the third proceeding arising out of the incident. The plaintiff seeks equitable contribution from the defendant, in the following circumstances.

3 The Australian Grand Prix Corporation ("the Corporation") conducted the 1998 Grand Prix event. The Corporation engaged Screenco Pty Ltd ("Screenco"), a Sydney company, to provide the screen. Screenco engaged RL Dew & Co Pty Ltd ("Dew") to erect scaffolding to support the screen.

4 Dew subcontracted the erection of the scaffolding to Ronald Steele, a Melbourne scaffolder who traded as Dragon Scaffolding ("Steele"). Steele hired some of the components for the scaffolding, including the steel beam by which the screen was to be supported, from Highrise Group Pty Ltd ("Highrise").

5 Steele was insured in respect of his business under a general liability insurance policy issued by a company in the HIH group ("the HIH policy").

6 The Corporation was insured under a liability insurance policy issued by SGIC[1] ("the SGIC policy"). The SGIC policy covered not only the Corporation, but also its contractors and sub-contractors. It is common ground that Steele was an insured by definition under the SGIC policy. All of SGIC's rights, liabilities and obligations subsequently vested in the current defendant, Insurance Australia Limited ("IAL").[2]

7 In May 1999, Screenco commenced a proceeding (No 50067 of 1999) in the Supreme Court of New South Wales, claiming damages from Dew and Steele arising out of the incident ("the NSW proceeding"). There were various cross-claims between the defendants, and against Highrise, seeking indemnity or contribution.

8 HIH accepted Steele's claim under the HIH policy to be indemnified in respect of the incident and any liability he may have in the NSW proceeding, and began paying Steele's legal costs of defending the proceeding.

9 In January 2000, HIH sought an admission from SGIC that Steele was insured and entitled to indemnity under the SGIC policy. SGIC disputed that fact, which led to the commencement in June 2000 of a proceeding (No 5769 of 2000) in this court ("the first Victorian proceeding").

10 In the first Victorian proceeding, HIH sought equitable contribution from SGIC. Steele sought indemnification under the SGIC policy. The initial defendant was SGIC, but was later replaced by IAL.

11 Prior to the trials in the NSW and first Victorian proceedings, the HIH group collapsed. HIH was placed in provisional liquidation and, in August 2001, was ordered to be wound up by the Supreme Court of New South Wales.

12 Prior to HIH being wound up, it had paid approximately $80,000 for legal costs of defending the NSW proceeding on behalf of Steele ("the HIH defence costs").

13 The Commonwealth Government established the HIH Claims Support Scheme, to alleviate the financial distress caused to individuals and small businesses by the collapse of the HIH group. On 1 July 2001, the plaintiff in this proceeding, HIH Claims Support Limited ("HCSL"), was appointed as trustee and administrator of the support scheme. HCSL appointed functioning insurance companies to act as its agents in the investigation and payment of claims from a $640 million fund set up by the Government. QBE Management Services Pty Ltd ("QBE") was the relevant HCSL agent in respect of Steele.

14 On 10 July 2001, Steele applied for assistance from the support scheme, in respect of HIH's inability to honour his entitlement to indemnity and defence costs in the NSW proceeding.

15 In October 2001, Steele was informed that he was eligible for assistance under the support scheme, subject to confirmation of his entitlement to indemnity under the HIH policy, which confirmation was subsequently made.

16 In general terms, Steele agreed to assign to HCSL his right to receive any benefit from any claim made under the HIH policy and to make any claims against any other parties, and HCSL agreed to pay 90% of any award against him and of his own defence costs. The precise terms of the arrangements will be considered later in these reasons.

17 Thereafter, Steele's defence was provided by solicitors instructed on his behalf by HCSL. Those solicitors were paid by the support scheme, up to a limit of 90% of the costs incurred in Steele's defence (excluding the HIH defence costs, which had previously been paid).

18 In November 2002, judgments were entered in the NSW proceeding. Dew and Steele were ordered to pay Screenco the sum of $1,461,045 as damages on Screenco's claim, together with costs. Steele was ordered to indemnify Dew for its liability to Screenco, including Dew's liability for Screenco's legal costs. Steele was also ordered to pay Dew's legal costs of the second cross-claim. Finally, Steele's cross-claim against Highrise was unsuccessful, and he was ordered to pay Highrise's costs.

19 In December 2002, HCSL paid Screenco $1,314,941, in part satisfaction of the judgments against Steele in favour of both Screenco and Dew. That was 90% of the judgment sum of $1,461,045; Steele remained liable for the other 10% (which he has apparently never paid, due to his financial situation).

20 HCSL subsequently paid 90% of the costs of all other parties which Steele had been ordered to pay.[3]

21 HCSL also paid defence costs totalling $215,603 to the solicitors engaged to conduct Steele's defence in the NSW proceeding.

22 The pleadings were amended several times before the trial in the first Victorian proceeding. By the latest amended statement of claim:[4]

(a) HIH sought equitable contribution of one half of the HIH defence costs;

(b) Steele claimed a full indemnity in respect of the damages and costs which he had been ordered to pay in the NSW proceeding, as well as his own defence costs;

(c) Steele pleaded the fact of the equitable assignment of his rights to HCSL, but HCSL chose not to be a party to the first Victorian proceeding, and made no claim for contribution in that proceeding.

(a) Sought to rely upon three exclusions to establish that the SGIC policy did not respond, and it therefore had no liability to contribute to HIH or to indemnify Steele;

(b) Argued that the payment by HCSL to Screenco had extinguished all liability of Steele towards Screenco and Dew. Therefore, to the extent of the settlement payment, there was no remaining liability in Steele for IAL to indemnify;

(c) Further and alternatively, argued that because Steele had assigned his rights and benefits under the SGIC policy to HCSL, he had no rights to claim under the SGIC policy.

24 In August 2005, Bongiorno J entered judgment at trial in the first Victorian proceeding, in favour of HIH and Steele.[6] His Honour held that none of the three exclusions applied, and the SGIC policy did respond to Steele's liability in the NSW proceeding. It followed that IAL was liable to contribute to HIH one half of the HIH defence costs. After analysing the nature of the support scheme, he concluded that there was no contract of insurance or indemnity between Steele and HCSL. Instead, Bongiorno J concluded that the proper characterisation of the payments under the support scheme was that they were a merciful benefit or subvention by the Commonwealth Government, resembling social security payments, bushfire relief payments and the like. It followed that Steele was entitled to a full indemnity from IAL in respect of his liability in the NSW proceeding and 90% of his defence costs.[7]

25 In October 2007, the Court of Appeal agreed that none of the exclusions applied and upheld the judgment in favour of HIH.[8] However, the judgment in favour of Steele was overturned. The Court of Appeal did not agree with Bongiorno J's characterisation of the support scheme payments. It held that the indemnity obligation of IAL to Steele was discharged by the settlement payments which had been made by HCSL, under what it characterised as a contract of indemnity ("the HCSL contract").

26 On 23 May 2008, an application by Steele to the High Court of Australia for special leave to appeal the decision of the Court of Appeal was refused.

27 HCSL now seeks equitable contribution from IAL, in such sum as is just and equitable, being one half of each payment it has made.

28 IAL denies that it has any obligation to make contribution to HCSL, for a number of reasons:

(a) Upon a proper analysis of the support scheme and the arrangements between Steele and HCSL, HCSL has a primary obligation of indemnification and any obligation on IAL is a secondary obligation;

(b) Alternatively, even if HCSL and IAL's obligations are equal, HCSL had no obligation at the relevant date, being the date of the incident;

(c) If either (a) or (b) is established, the obligations of HCSL and IAL are not co-ordinate, and there is no obligation on IAL to make equitable contribution to HCSL;

(d) Even if it were otherwise obliged to contribute, IAL should not make contribution in respect of Steele's defence costs, as they were incurred without its consent and are therefore not covered by the SGIC policy; and

(e) HCSL is estopped from bringing this proceeding, in accordance with the principles outlined in Port of Melbourne Authority v Anshun Pty Ltd ("Anshun"),[9] because it could and should have claimed contribution in the first Victorian proceeding.

29 HCSL says by way of reply that, by its conduct in the first Victorian proceeding, IAL has elected not to contend, or has waived any right which it may have had to contend, that an Anshun estoppel applies. In particular, it relies upon statements by IAL's counsel to the High Court, to the effect that IAL would not take any objection to HCSL's rights to contribution being argued in another proceeding.

30 As far as the defence costs paid by HCSL are concerned, HCSL replies that s 54 of the Insurance Contracts Act 1984 prevents IAL from relying upon the absence of consent. In any event, it says that IAL is precluded from raising the defence costs argument by an Anshun estoppel arising out of the first Victorian proceeding.

31 There are four principal questions to be answered in this proceeding:

(a) Does the failure by HCSL to seek equitable contribution in the first Victorian proceeding give rise to an Anshun estoppel against HCSL, such that HCSL is prevented from claiming contribution in this proceeding?

(b) If the answer to the previous question is yes, has there been a waiver of that estoppel, or an election not to rely on that estoppel, by IAL's conduct in the special leave application?

(c) If HCSL is able to bring this proceeding, were the indemnity obligations of HCSL and IAL co-ordinate, such that IAL is liable in equity to make contribution for the payments made by HCSL to indemnify Steele, in such sum as is just and equitable?

(d) If the answer to the previous question is yes, is IAL liable to contribute in respect of Steele's defence costs?

Does an Anshun estoppel arise in relation to HCSL's claim for contribution?

32 An Anshun estoppel may arise where a matter sought to be raised by way of claim or defence in a later proceeding is so closely connected with the subject matter of an earlier proceeding, that it was to be expected that it would have been relied upon in that earlier proceeding.[10] No such estoppel arises unless it appears that the matter relied upon in the later proceeding was "so relevant to the subject matter of the first action that it would have been unreasonable not to rely upon it."[11]

33 Although Anshun itself involved a failure to raise a defence in an earlier proceeding, the principle applies equally in respect of a proceeding on a cause of action which should have been raised in a previous proceeding.[12]

34 A significant factor in determining the unreasonableness of refraining from pursuing a claim relates to whether there arises the potential for conflicting judgments.[13]

35 The law is clear that the principles of res judicata and issue estoppel apply to prevent a later proceeding being brought by somebody who was a privy of one of the parties in the earlier proceeding. The law seems less clear as to whether and how the concept of privity applies to an Anshun estoppel.

36 On the one hand, in Australian Associated Motor Insurers Limited v NRMA Insurance Limited,[14] a Federal Court judge, Conti J, applied the privity concept in an Anshun estoppel context. And, in CB Darvall & Darvall v Moloney,[15] Wilson J in the Queensland Supreme Court said by way of obiter dicta that an Anshun estoppel may arise where there is privity of interest.[16]

37 On the other hand, in Effem Foods Pty Ltd v Trawl Industries of Australia Pty Ltd,[17] another Federal Court judge, Burchett J, said by way of obiter dicta that "plainly there would be a difficulty in applying [Anshun principles] to a privy on the basis that he had acted unreasonably in not raising an issue in an action to which he had not even been a party."[18] His Honour later commented that "cases where a party is bound by, and reciprocally may assert the benefit of an estoppel on the basis of privity proceed upon a principle entirely different from that in [Anshun]."[19] There may be some force in those observations.

38 However, as the parties argued the matter before me on the assumption that the concept of privy applied in considering Anshun estoppel, and I have therefore not had the benefit of full argument in relation to this question, I will assume, without deciding, that an Anshun estoppel may arise where there is privity.

39 IAL pleads[20] that HCSL is precluded from bringing its contribution claim by an Anshun estoppel, by reason of the following matters:

(a) HCSL and Steele are privies in the same interest for the purposes of the first Victorian proceeding and the claim made in this proceeding, because:

(i) By the HCSL contract, Steele assigned to HCSL any rights he had against SGIC for indemnity under the SGIC policy for any liability arising in the NSW proceeding;

(ii) HCSL brought or maintained in the name of Steele the claim for indemnity in the first Victorian proceeding;

(iii) Further or alternatively, Steele brought or maintained the first Victorian proceeding for the benefit of HCSL;

(b) The relief sought by HCSL in this proceeding is based on the same facts as were raised by the claim of Steele as privy of HCSL in the first Victorian proceeding;

(c) The claim brought in this proceeding is so closely connected with the subject matter of the first Victorian proceeding, that it was to be expected that it would have been brought in that proceeding; and

(d) It was unreasonable for HCSL not to have brought in the first Victorian proceeding the claim for contribution made in this proceeding.

40 HCSL denies that any such estoppel arises. It denies that there is any relevant privity between it and Steele. Even if there were privity, HCSL says that it was not unreasonable for it not to have claimed contribution in the first Victorian proceeding. HCSL says the parties always contemplated the possibility of a later contribution proceeding.

41 HCSL was not a party to the first Victorian proceeding, so it could only be bound by an Anshun estoppel if it was a privy of Steele.

42 A person may be a privy by blood, interest or title. Here, the relevant privity is said to be one of interest. The basic requirement of privity in interest is that the privy must claim "under or through" the person of whom they are said to be privy.[21]

43 The relevant test for privity of interest is whether there is a "sufficient degree of identification between the two to make it just to hold that the decision to which one was a party should be binding in proceedings to which the other is a party."[22]

44 There is no dispute that privity of interest may arise between an insured and his or her insurer.[23] Nor is it disputed that there is normally privity between a trustee and beneficiary.[24] The Court of Appeal has already held in the first Victorian proceeding that HCSL is not Steele's insurer, and there is no suggestion here that HCSL is a trustee for Steele. Nevertheless, IAL argues that, as equitable assignee of Steele's rights against third parties, HCSL is in a similar position to an insurer or trustee, because all claim "under or through" the other party.

45 By the HCSL contract, Steele assigned to HCSL any rights he had against SGIC for indemnity under the SGIC policy for any liability arising in the NSW proceeding. Even though HCSL was not a party to the first Victorian proceeding, as equitable assignee, it stood behind Steele in that proceeding. Had Steele been successful in claiming an indemnity under the SGIC policy, HCSL would have been the ultimate recipient of such money. In those circumstances, it may be appropriate to regard HCSL as the "real"[25] plaintiff in the first Victorian proceeding, having regard to its interest in that proceeding.

46 In this proceeding, HCSL does not claim by or under Steele, either as equitable assignee or under some sort of right of subrogation. HCSL's claim is independent of any claim Steele might bring.

47 It is not necessary to consider this matter further because, even if HCSL and Steele could be regarded as privies in the relevant sense,[26] I am not persuaded that it was unreasonable for HCSL not to have brought the contribution claim in the first Victorian proceeding.

48 IAL says that HCSL was the de facto plaintiff in the first Victorian proceeding, exercising assigned rights, and that "logic dictates" that it ought to have brought a claim for equitable contribution in its own name in that proceeding.

49 In order to seek contribution from a co-indemnifier, HCSL needs to be a party to the relevant proceeding. It cannot bring such a claim through Steele, or in Steele's name (unlike a claim brought by an insurer in the name of the insured by way of subrogation).

50 HCSL was not a party to the first Victorian proceeding, even though it stood to benefit from the outcome of Steele's claim. It did not need to be a party in order for its equitable assignor, Steele, to claim indemnity under the SGIC policy.

51 An affidavit dated 3 July 2003 was sworn by the solicitor for HIH and Steele, in support of an application for leave to amend the statement of claim in the first Victorian proceeding. Paragraph 4 of that affidavit refers to an earlier affidavit by the same deponent, in which he had foreshadowed that HCSL might apply to be joined as a plaintiff. In the later affidavit, he says he has been advised that HCSL has declined to be joined as a plaintiff. No further explanation was provided in that affidavit, nor has any evidence been led in this proceeding, as to why HCSL chose not to be joined as a party in the first Victorian proceeding.

52 That said, HCSL does not have to prove that it was reasonable for it not to claim contribution in the first Victorian proceeding. Rather, in order to establish that an Anshun estoppel arises, IAL needs to establish that it was unreasonable for HCSL not to seek to be joined as a party in its own right, so as to claim contribution in that proceeding.

53 In the first Victorian proceeding, Steele sought full indemnity in respect of Steele's liability in the NSW proceeding. In this proceeding, HCSL seeks a contribution of one half of the amounts actually paid by it, that is to say, one half of 90% of Steele's liability in the NSW proceeding.

54 Of course, there is considerable overlap in the underlying factual matrix in the two proceedings. But that will usually be the situation in any case in which the court is being asked whether an Anshun estoppel has arisen. The principal vice which the court has to guard against in the case of factual overlap between proceedings is the possibility of inconsistent findings on those facts.

55 HCSL's interest in the first Victorian proceeding was as equitable assignee of Steele's rights of indemnity under the SGIC policy. In this proceeding, HCSL's claim is founded on an argument that IAL's liability to Steele under the SGIC policy is co-ordinate with HCSL's liability to Steele under the HCSL contract. In that broad sense, the extent of IAL's liability in respect of the SGIC policy is relevant to both proceedings. But the actual issues which have arisen in relation to the SGIC policy are quite different.

56 In the first Victorian proceeding, the issues between Steele and IAL in relation to the SGIC policy concerned whether the three exclusions applied, and the effect of HCSL's indemnification of Steele on IAL's liability to indemnify Steele. None of those issues arises in this proceeding.

57 The primary issue in this proceeding in relation to the SGIC policy is whether IAL's liability under the SGIC policy is co-ordinate with HCSL's liability under the HCSL contract. There is the secondary issue concerning the extent of the obligation to indemnify in respect of defence costs incurred without IAL's permission. Neither of those issues was determined in the first Victorian proceeding.

58 I am not persuaded that the claims asserted by Steele and HIH in the first Victorian proceeding were so closely connected with HCSL's claim for contribution that it was to be expected that HCSL would seek to be joined as a party in that proceeding. The claim to contribution is an alternative claim by a different plaintiff arising out of a different contract.

59 Ashley JA made the following remarks about contribution in the Court of Appeal:

[157] What I have so far said leads to this point: if what was paid by HCSL was, by contract or in fact, indemnification of Steele otherwise than pursuant to a contract of insurance, then in my opinion - subject to an important matter which must next be considered - the indemnification should be regarded as having been made by a person primarily liable. That is so although the contract pursuant to which moneys were paid was somewhat different in type to contracts where the "primary" and "secondary" liability dichotomy has been considered - contracts imposing, for instance, an obligation on a tenant to leave premises in good repair, or an obligation on a contractor to indemnify the liability of a principal. At its highest, I think, the liability of HCSL was co-ordinate with the liability of [IAL]; and in those circumstances HCSL should have brought a proceeding seeking contribution.

[158] It follows from what I have just said that Steele could not sue [IAL] seeking indemnification in respect of amounts paid for or on his behalf in [the NSW proceeding]; and that HCSL could not sue in Steele's name to recoup its payments. Nor could HCSL sue to recoup its payments in a stand alone proceeding against [IAL]. That would leave open the question whether it might successfully claim contribution from [IAL], a question which was agitated on the appeal, and to which I briefly referred a moment ago. That question need not be resolved. If the liabilities of HCSL and [IAL] were co-extensive or co-ordinate then there would be such a right. But that question did not arise on the pleaded claim in its amended form, save in respect of the [HIH defence costs].

[185] ... [a]t best, HCSL could recover equitable contribution from [IAL].[27]

60 Neither Chernov nor Redlich JJA said anything about the question of contribution.

61 IAL says that there is the potential for conflicting findings, in that each court is called upon "to determine the respective priorities in status of the respective obligations to indemnify under the HCSL contract and the SGIC policy." I disagree, for the following reasons.

62 Ashley JA's remarks were made by way of obiter dicta, and are not binding on this court. And, notwithstanding his preliminary observations, his Honour clearly regarded the question of whether the respective liabilities were co-ordinate as an open question for another day.

63 In so far as he expressed an opinion, Ashley JA determined that "at best" or "at its highest", the liability of HCSL was co-ordinate with that of SGIC. But nobody in this proceeding seeks to challenge that finding: HCSL seeks a finding that the liabilities are co-ordinate, IAL seeks a finding that HCSL's liability was greater than its. Neither of those findings would be inconsistent with Ashley JA's remarks.

64 It also seems, from the limited evidence before me, that the possibility of a separate contribution claim by HCSL was discussed and appreciated at all levels in the first Victorian proceeding. That is very relevant in considering the question of unreasonableness.

65 Apparently, IAL's outline of argument at trial had contended that HCSL's only proper claim against IAL was a proceeding for contribution. IAL's counsel then acknowledged in oral submissions before Bongiorno J the possibility of contribution being sought by HCSL in other proceedings.[28]

66 That possibility was clearly in the contemplation of the Court of Appeal, as just discussed.

67 IAL did not suggest before Bongiorno J, or the Court of Appeal, that HCSL's claim for contribution ought to be brought in the first Victorian proceeding. All parties seem to have been happy to leave it for another proceeding, if necessary.

68 The matter was also addressed by IAL's counsel before the High Court on the special leave application. How the matter arose, and precisely what IAL's counsel said, are discussed in detail below, as HCSL relies upon them in support of its waiver and election arguments. But, in substance, IAL's counsel informed the High Court that IAL would not raise any Anshun estoppel argument in subsequent contribution proceedings. From the way in which the questioning proceeded, it seems likely that IAL's statements influenced that court's decision to refuse special leave.

69 Even assuming the existence of relevant privity between HCSL and Steele, I am not persuaded that it was unreasonable for HCSL not to have brought its current claim for contribution in the first Victorian proceeding, a proceeding to which it was not a party.

70 In coming to that conclusion, I am particularly influenced by the different legal questions posed in the two proceedings, and the fact that there is no real possibility of inconsistent findings, notwithstanding considerable factual overlap. I am also influenced by the fact that the parties (and the courts) clearly contemplated and accepted that, depending on the outcome in the first Victorian proceeding, there may be a later contribution proceeding brought by HCSL.

Is IAL precluded from relying upon any Anshun estoppel?

71 If, contrary to the above finding, the court was satisfied that an Anshun estoppel arose, HCSL argues that IAL is, by its conduct in response to Steele's application for special leave to appeal to the High Court, precluded from relying on any Anshun estoppel. Its argument is pleaded[29] as a matter of election, waiver or estoppel, in accordance with the principles espoused by the High Court in Commonwealth v Verwayan ("Verwayan"),[30] although its outline of submissions only addressed the matter in terms of waiver.

72 The special leave questions posed by Steele included the following:

1. When the [support scheme] paid [Steele] with respect to his liability, being a liability for which he was indemnified by two insurance policies issued by [IAL and HIH] respectively, was that payment sufficient to discharge [IAL], on the ground that that payment was on an account equal and co-ordinate with [IAL's] liability to indemnify [Steele]?

2. Is the distinction between primary and secondary liabilities as explained by the House of Lords in [Caledonia] appropriate to be used as a matter of Australian law for the purposes of distinguishing between cases where payment by one party liable discharges another party liable, and cases where it does not?

73 Although asked in Steele's name, the person in the plaintiffs' camp with the greatest interest in those questions was clearly HCSL.

74 In the course of oral submissions in opposition to the grant of special leave, IAL's senior counsel, Mr Murdoch QC, said that whether or not HCSL had a right of contribution was a matter for argument on the substantive merits of a properly constituted proceeding. He also informed the High Court that IAL would not plead an Anshun estoppel in any subsequent contribution proceedings. The following discussion occurred on that occasion:

GLEESON CJ: What has happened to those rights of contribution?

MR MURDOCH: If there are rights of contribution then they were not determined by this proceeding.

GLEESON CJ: Could they be determined at some future time?

MR MURDOCH: A claim might indeed be made in that regard.

HEYDON J: Yes, but could they be made without objection by you?

MR MURDOCH: There are grounds upon which objection could be made by my client.

GLEESON CJ: What do you have in mind, Anshun estoppel, or something like that? What other grounds?

MR MURDOCH: The grounds of a finding by the Court of Appeal that properly construed the situation here revealed that the primary liability was the liability of the [support scheme] and the secondary liability was the liability of the insurer.

GLEESON CJ: But the Court of Appeal did, for that matter, Justice Bongiorno, did not purport to adjudicate upon a claim for contribution, did they?

HEYDON J: Mr Walker's claim for special leave will be much weaker if you accept that his - I withdraw that - that [HCSL] has a right of contribution and his claim will be much stronger if you maintain that it no longer has any right of contribution.

MR MURDOCH: We do not maintain that it no longer has a right of contribution, what we maintain is whether it does or does not have a right of contribution is still an arguable issue.

HEYDON J: You will not take any objection to that being argued in properly constituted proceedings? In those proceedings you will concentrate on the substantive merits rather than the events of these proceedings?

75 I do not agree with IAL's suggestion that the last "yes" response clearly responded only to the second of the questions asked by Heydon J. His Honour asked two questions, to both of which counsel responded in the affirmative.

76 In seeking to now rely upon an Anshun estoppel, IAL has done a complete about-face from the position it adopted before the High Court. The question is whether it is able to do so.

77 Verwayan concerned a claim by a member of the navy against the Commonwealth Government, arising out of the 1964 collision involving HMAS Voyager. Mr Verwayan did not bring the proceeding until 1984. The Commonwealth disputed damages, but did not dispute liability; in particular, it did not plead that the action was statute-barred because of an applicable limitation provision. Both before and after it delivered its defence, the Commonwealth stated that its policy in relation to claims arising out of the collision was not to contest liability and not to plead a limitations defence. After a change in government policy, in 1986 the Commonwealth obtained leave to amend its defence to rely upon the limitations defence and to dispute the existence of a duty of care.

78 By a 4:3 majority, the High Court held that the Commonwealth was not free to dispute its liability to Mr Verwayan, although the majority arrived at that conclusion by different lines of reasoning. Of the majority, Deane and Dawson JJ held that the Commonwealth was estopped from so doing, the equity raised by the Commonwealth's conduct being such as could only be accounted for by holding it to the assumed state of affairs. Toohey and Gaudron JJ held that the Commonwealth had waived its rights to rely on either defence.

79 HCSL says that the statements by IAL's senior counsel to the High Court constituted a clear representation that IAL would not rely on a particular defence in any future contribution proceeding (namely, a defence based on an Anshun estoppel).

80 As mentioned earlier, it seems likely that IAL's statements influenced the High Court's decision to refuse special leave. If so, that may be said to have altered the parties' relations, in the broad sense.

81 Even if the statements did not influence the High Court, it may have influenced HCSL's decision to commence this proceeding once Steele's claim in the first Victorian proceeding was unsuccessful. I say "may have", because there is simply no evidence before me as to why HCSL chose to bring the separate proceeding, rather than seeking to be joined in the first Victorian proceeding, or otherwise relating to questions of reliance.

82 It is not necessary for me to reach any conclusion in relation to waiver or estoppel, given my finding that no Anshun estoppel arises. In any event, it would not be appropriate for the court to determine that intervention was required by way of waiver or estoppel under Verwayan principles, without a proper evidentiary basis.

Is there an entitlement to equitable contribution?

83 Were the indemnity obligations of HCSL and IAL co-ordinate, such that IAL is liable in equity to contribute for the payments made by HCSL to indemnify Steele?

84 There is no dispute that, subject to the issue of defence costs, if there is a liability for equitable contribution, a just and equitable sum would be one half of the payments.

85 HCSL says that it is entitled to equitable contribution because:

(b) Its obligation to indemnify Steele was "founded in" the obligation of HIH to indemnify Steele under the HIH policy;

(c) IAL's obligation to indemnify Steele under the SGIC policy was equal to and co-ordinate with the obligation of HIH to indemnify Steele under the HIH policy;

(d) Therefore, the indemnity obligations of HCSL and IAL were common, co-extensive, of the same nature, and in respect of the same loss or liability; and

(e) Therefore, IAL is liable to make equitable contribution.

86 IAL does not dispute that HCSL made the payments to indemnify Steele. Nor does it dispute that IAL's obligation under the SGIC policy was equal to and co-ordinate with HIH's obligation under the HIH policy. But IAL denies any obligation to contribute, because it says that:

(a) HCSL did not simply assume HIH's obligation under the HIH policy. Instead, HCSL's obligation to indemnify was created by the HCSL contract;

(b) The HCSL contract was a contract of indemnification, which imposed a primary obligation of indemnification on HCSL;

(c) Any obligation of IAL to indemnify Steele was pursuant to the SGIC policy, which imposed a secondary obligation of indemnification;

(d) It follows that the obligations of HCSL and IAL are not co-ordinate;

(e) Alternatively, there could be no double obligation of indemnity between HCSL and IAL, because neither HCSL nor the HCSL contract existed at the relevant date, namely 3 March 1998. It is not permissible to simply equate HCSL with HIH and then assess whether HIH and IAL were double insurers at that date. To do so ignores the fact that HIH and HCSL are completely different legal entities, and their obligations to indemnify Steele arose from quite different legal instruments creating quite different legal obligations.

When does an entitlement to contribution arise?

87 In general terms, the principle of equitable contribution requires that those who are jointly or severally liable in respect of the same loss or damage should contribute to the compensation payable in respect of that loss or damage, either equally, where they are liable in the same amount, or proportionately, where the amount of their liability differs.[31] The principle has been regularly applied between co-sureties, co-insurers, partners, and co-owners, where payment is made by one in discharge of a common liability.

88 With a claim to contribution, as is the position generally with the intervention of equity to apply its doctrines or to afford its remedies, the plaintiff must show the presence of "an equity" founding the case for that intervention. The "natural justice" in the provision of the remedy for contribution is the concern that the common exposure of the obligors to the obligee and the equality of burden should not be disturbed or defeated by the accident or chance that the obligee has selected or may select one or some rather than all for recovery. [32] So, equity does not interfere with the action of the obligee, but seeks to ensure the sharing of the burden between those subjected to it.

89 The right of contribution does not arise merely because obligations are owed to the same party, or relate to the same transaction, or are otherwise connected in time and circumstance, or because one party's payment operates to the financial benefit of the other; something more is required.[33]

90 It has long been said[34] that equitable contribution is required between those sharing "co-ordinate liabilities" or "a common obligation to make good the one loss", where the liabilities were "of the same nature and to the same extent."[35] In the recent High Court decision in Friend v Brooker ("Friend"),[36] the court said that the terminology of "co-ordinate liabilities" is to be preferred to that of "common obligation", which it subsumes, as indicative of the class of circumstances in which the equity arises.[37]

91 The notion of "co-ordinate liability" is one that depends on both common interest and common burden.[38] The liability must be "of the same nature and to the same extent",[39] a concept which includes notions of equal or comparable culpability, and equal or comparable causal significance.[40] This will not arise where the respective burdens, obligations and rights owed and enjoyed are different quantitatively and qualitatively.[41]

92 In considering whether there is co-ordinate liability, it is also appropriate to consider whether the respective obligations have distinct characteristics, which mean that they are not on the same level of liability: that one is a primary liability and one is secondary.[42]

93 It has been said that the relevant date when the common liability must exist is the date of the casualty, so that subsequent events which throw the loss onto one insurer rather than the other are irrelevant in determining whether there is a liability to contribute.[43] In the recent decision in QBE Insurance (Aust) Ltd v Lumley General Insurance Ltd ("QBE"),[44] the Court of Appeal affirmed that general principle,[45] subject to two qualifications. The first relates to terminology: use of terms such as "casualty" or "incident" are apt for "occurrence" policies and less apt for "claims made and reported" policies.[46] In order to accommodate both types of insurance policies, the Court of Appeal suggested the expression "insuring clause event", as it is simple and focuses on the event that triggers cover under the insuring clause of the relevant policy.[47] The second qualification relates to the question whether subsequent events could ever affect rights of contribution; the Court of Appeal preferred to leave that open for another day.[48]

94 Because the doctrine of contribution is based on the principle of natural justice, it has been said that the operation of such a principle should not be defeated by "too technical an approach."[49] In Friend, the High Court affirmed that equity looks to substance, and not merely legal form, in considering the parties' situation. But that does not mean that the equitable doctrine of contribution "is not confined by legal structures", as Mason P had asserted in the Court of Appeal below. A view such as that put forward by Mason P may too easily produce idiosyncratic outcomes.[50]

The position as between an insurer and an indemnifier

95 IAL referred the court to two authorities for the proposition that an obligation to indemnify under a contract of indemnity, and an obligation to indemnify under a contract of insurance, are generally not co-ordinate. That is because a contract of insurance ordinarily constitutes a secondary obligation, whereas a contract of indemnity ordinarily constitutes a primary obligation.

96 In Speno Rail Maintenance Australia Pty Ltd v Hamersley Iron Pty Ltd ("Speno"),[51] Hamersley engaged a contractor, Speno, to work on Hamersley's railway. Clause 37 of the relevant contract required Speno to indemnify Hamersley from any injury to any persons employed by Speno. One of Speno's employees was injured when a Hamersley employee negligently operated rail switches on the railway. The employee claimed damages from Hamersley, which in turn sought indemnity from Speno under cl 37 of the contract, and from Zurich Australian Insurance Ltd ("Zurich") under an insurance policy.[52] Zurich claimed contribution from Speno of one half of any amount it was liable to pay Hamersley.

97 The Full Court of the Supreme Court of Western Australia decided that there was no right of contribution, as the liability of Zurich under the insurance policy and of Speno under cl 37 were not co-ordinate; the insurance policy was a secondary obligation to the primary obligation of indemnity under the contract.

98 The members of the Full Court all agreed that, as a matter of general principle, liability under a contract of insurance is not co-ordinate with liability under a contract of indemnity, and it is generally appropriate to regard insurance as a secondary rather than a primary obligation.[53] However, their Honours recognised that that may not invariably be the case, and the terms of the particular indemnity provision need to be considered.

99 The court held that cl 37 dealt in some detail with the respective rights and liabilities of Speno and Hamersley, and intended to allocate primary responsibility to Speno. Further, Zurich's liability arose under a contract of insurance, which was governed by particular legislation which did not apply to Speno's liability under cl 37. An insurance benefit also has a peculiar character, which differs from a benefit conferred by a contract which is not insurance. The respective liabilities of Speno and Zurich were therefore intrinsically different in character, and not co-ordinate.

100 The decision in Speno was cited with approval by the House of Lords in Caledonia North Sea Ltd v British Telecommunications plc ("Caledonia").[54] That case arose out of an explosion on the Piper Alpha oil platform, in which 167 people died. The operators of the oil platform had hired various contractors to carry out specialist works. Each of the contractors had entered into contracts with the operators, which contained clauses to the effect that the contractors would indemnify the operators in the event of injury suffered by the contractors' employees while working on the platform.

101 The insurers of the operators settled each of the claims of the victims and their families. The insurers then sought to recover from the contractors by means of subrogation. The contractors disputed any entitlement to claim by way of subrogation, and argued that the claim was really a claim for contribution between persons liable to indemnify the operators.

102 The House of Lords held that the insurers' claim was one by way of subrogation, not contribution. The contracts between the parties, and the commercial scheme of which it was a part, made it plain that the primary liability was to fall on the contractors. After considering decisions in the United States and Australia, the House of Lords said that the absence of UK cases directly on this point was because it had always been assumed that a contractual indemnity would be the primary indemnity, in situations where the other indemnity was provided by an insurer of a party to a contract, where there was no obligation on the party to make any insurance arrangement.[55]

103 Lord Mackay referred to the question posed by Lord Mansfield CJ in Mason v Sainsbury:[56] "Who is first liable?" This question does not refer to any issue of chronology, but to establishing where the primary responsibility lies to make good the loss. Lord Mackay said that, in the present case, that question could be rephrased as: "Is the contractor liable to indemnify the operator only if and to the extent that the operator's insurer fails to do so, or is the operator's insurer liable to indemnify the operator only if and to the extent that the contactor fails to do so?"[57]

104 Whilst describing the situation which ordinarily exists, neither Speno nor Caledonia purported to state an absolute principle, namely, that liability under a contract of indemnity and a contract of insurance could never be co-ordinate. It is therefore necessary to consider the nature and extent of HCSL and IAL's respective obligations, to determine whether or not they were co-ordinate.

105 The Court of Appeal determined in the first Victorian proceeding that the liquidator of HIH was entitled to equitable compensation from IAL in respect of the HIH defence costs. That is to say, the liabilities of HIH under the HIH policy and IAL under the SGIC policy were found to be co-ordinate.

106 But the first question to be determined here is: what is the source and nature of HCSL's obligation?

107 HCSL seeks to put itself in the same position as HIH. It pleads that its obligation to indemnify Steele was "founded in the obligation of HIH to indemnify Steele under the HIH policy."[58] HCSL explains what it means by the concept of "founded in the obligation of HIH" in its written outline of argument. There, it says "the fact that the indemnity payment was made by HCSL, not HIH, is strictly irrelevant if the indemnity provided by HCSL is, in substance, the same obligation."[59] It also asserts that what was assigned to HCSL was HIH's "legal obligation to indemnify its insured" and that the HCSL contract "discharged the obligation of HIH to indemnify Steele".[60]

108 HCSL says that the interposition of the support scheme should be seen as merely procedural, and the court should not adopt "too technical an approach"[61] in analysing the relevant obligations.

109 I agree with IAL that it is inappropriate to refer to the obligation of HIH as the point of comparison. The comparable liabilities are not the obligation of IAL as insurer under the SGIC policy and HIH as insurer under the HIH policy.

110 It is simply wrong to assert that HCSL is an assignee of HIH's legal obligation under the HIH policy; there was no assignment by HIH to HCSL of anything. The only assignment is that by Steele to HCSL, which will be considered shortly.

111 Nor did the HCSL contract "discharge" the obligation of HIH to indemnify Steele. That obligation continued, although Steele assigned in equity to HCSL his rights against HIH.

112 Nor is HCSL's contractual obligation of indemnity "in substance the same obligation" as HIH's obligation as insurer.

113 In the first Victorian proceeding, the Court of Appeal held that HCSL's obligation to indemnify Steele arose from an enforceable contract of indemnity.[62] The HCSL contract arose from Steele's application to the support scheme, pursuant to which he offered to assign his rights to HCSL, which offer was accepted by HCSL by the payment of benefits. HCSL's obligation to indemnify Steele arose from an enforceable contract of indemnity, not by way of insurance. The Court of Appeal noted the significant differences between those different types of contract.

114 The Court of Appeal was not required to make any finding as to whether HCSL's liability was "founded in" HIH's obligation, or was "in substance the same obligation as HIH's obligation". But, in the course of considering whether or not to grant IAL leave to amend its notice of appeal against HIH, Ashley JA briefly noted by way of obiter dicta that the effect of the assignment by Steele of his right to receive a benefit under the HIH policy "was not to place HCSL in the shoes of HIH for purpose of contribution between it and [IAL]."[63] That is an observation with which I respectfully agree.

115 As in the first Victorian proceeding, no oral evidence was led at the trial in this proceeding; the parties relied upon relatively few documents and some agreed facts.

116 Ashley JA described in some detail[64] the documents by which the support scheme was established, and which constitute the HCSL contract with Steele; I adopt that summary, without reproducing it in full here.

117 Steele's offer to HCSL is contained in an "application for assistance" document, and an "offer to assign your policyholder rights" document. The offer was accepted by the first payment by HCSL of a benefit under the support scheme.

118 Both documents require the policy holder to assign all its rights against HIH and third parties to HCSL. The application says:

In return for assistance under the [support scheme], you will be required to assign your rights under the policy against your insurer, along with any legal rights you may have against anyone else relating to your claim under the policy, to [HCSL].

(i) all rights to receive or demand the receipt of any benefit arising from any claim which you have made or make under your HIH policy, where the claim is the subject of the payment of a benefit under the [support scheme]; and

(ii) any rights, however arising, which you may have or obtain against any person or organisation other than the HIH insurer, in connection with the matters which have given rise to your need to make a claim under the policy.

120 In paragraph 26 of its outline of submissions, HCSL points to some particular features of the HCSL contract and the support scheme, which it says establish that its liability is "founded in" HIH's liability under the HIH policy. But none of those matters is sufficient to effectively place HCSL in HIH's position for the purposes of a contribution claim, for the following reasons.

121 It was a necessary condition that an applicant for a benefit under the support scheme have "a valid claim under an insurance policy issued by a company in the HIH group". Presumably that condition was imposed because the whole purpose of the support scheme was to assist victims of the HIH group collapse. It is simply a qualifying requirement for participation in the support scheme.

122 If the applicant had not already filled in and lodged an HIH claim form, it was required to do so. The applicant was also obliged to fully comply with the terms of the HIH policy, to provide all reasonable assistance with legal action and to continue to perform and observe all the obligations and conditions of the HIH policy. As HCSL was to be the equitable assignee of the applicant's rights against HIH, it would need the applicant to take steps such as those in order to protect HCSL's assigned rights against HIH. Those matters do not put HCSL in HIH's position, they allow HCSL to benefit from the applicant's position in relation to HIH.

123 The amount which HCSL agreed to pay to an applicant was 90% of the amount "that would have been provided by the original HIH insurer under the HIH policy." That is to say, the amount of the benefit was calculated by reference to the amount payable under the HIH policy. But that does not mean that HCSL undertook the obligations of the original HIH insurer.

124 Because of the equitable assignment of its rights against HIH, the applicant would no longer have any rights to recover in the liquidation of HIH. Instead, HCSL would be equitably entitled to any such recovery. So, HCSL might pay out 90% of the amount of an applicant's original claim, and then be reimbursed in respect of some part of that through HIH's liquidation. Using a purely hypothetical example, were there to be a return of 50 cents in the dollar in the liquidation, then HCSL would only have paid a net sum of 40 cents for every dollar claimed by the applicant (HCSL would have paid out 90 cents in the dollar, and recovered back 50 cents in the dollar, leaving a net payment by it of 40 cents in the dollar).[65] In no sense is that equivalent to HIH's obligations under the HIH policy.

125 To come to this conclusion is not to adopt "too technical an approach." It simply reflects the legal structure of the scheme which the Government chose to put in place to assist victims of the HIH collapse. It is true that equity looks to substance and not mere legal form, but, as the High Court observed in Friend, that does not mean that the equitable doctrine of contribution is not confined by legal structures.[66]

126 For these reasons, I conclude that HCSL's obligation was not "founded in" HIH's obligation under the HIH policy. HCSL's obligation to indemnify Steele was created solely by the HCSL contract.

Did HCSL and IAL have a common obligation at the relevant date?

127 The parties agree that the relevant date (being the date of "the insuring clause event"[67]) for determining whether there is an entitlement to contribution is 3 March 1998, being the date of the incident. It is not the date that judgment was entered in the NSW proceeding, or the date of the payments by HCSL.

128 I agree with IAL that, even if the obligations of HCSL and IAL were in the same degree, HCSL had no indemnity obligation as at 3 March 1998. HCSL did not even exist until 2001. The HCSL contract only came into existence when HCSL made the first payment under the support scheme.

129 For the reasons given earlier, it is not permissible to simply equate HCSL with HIH, and rely on the fact that HIH and IAL were double insurers at the relevant date.

130 It follows that there was simply no entitlement to contribution at the relevant date. That is sufficient to dispose of the matter, without resolving whether HCSL's liability was higher than IAL's. However, I will briefly consider the arguments on priority.

131 I agree with and adopt, for the reasons given in those cases, the general principle enunciated in Speno and Caledonia,[68] namely, that an obligation to indemnify under a contract of indemnity, and an obligation to indemnify under a contract of insurance, are generally not co-ordinate; a contract of insurance ordinarily constitutes a secondary obligation, a contract of indemnity ordinarily constitutes a primary obligation.

132 I have already quoted from that part of Ashley JA's reasons in the Court of Appeal decision, where his Honour made some obiter dicta remarks about contribution.[69] Those comments also support the general principle that a contract of indemnity ordinarily imposes a primary obligation.

133 I do not accept IAL's suggestion that Ashley JA's comment at [157] that the HCSL indemnification "should be regarded as having been made by a person primarily liable" indicates a conclusion by Ashley JA that HCSL's obligation under the HCSL contract was in fact a primary obligation for present purposes. His Honour made it perfectly clear in the following paragraph of his reasons that the question whether HCL and IAL's obligations were co-extensive and co-ordinate was an open question, which he did not need to resolve.

134 Here, HCSL's argument that its liability is co-ordinate with IAL's was essentially based on the assertion that its obligation is founded in or a performance of HIH's obligation, an assertion which must fail for the reasons I have already given.

135 Given my conclusion that HCSL's indemnity obligation arose under the HCSL contract, not the HIH policy, HCSL needs to establish that its obligation under that contract does not fall within the general principle put forward in Speno and Caledonia.

136 HCSL really did not advance any satisfactory argument as to why the HCSL contract, as a stand alone contract of indemnity, does not impose a primary obligation on it.

137 Were it necessary to decide, I am not persuaded that there is anything in the HCSL contract (or even in the documents establishing the support scheme, in so far as they may be relevant), which would displace the general principle that HCSL's indemnity obligation is primary, and IAL's indemnity obligation is secondary. In particular, there is nothing which relevantly qualifies the obligation of HCSL to pay benefits by reference to other rights of Steele, such as his rights under an insurance policy.

138 For the reasons given, I find that the liabilities of HCSL and IAL are not co-ordinate, either because:

(a) HCSL had no indemnity obligation at the relevant date; or

(b) HCSL's obligation to indemnify was primary in nature, whereas IAL's obligation as insurer was secondary in nature.

139 It follows that HCSL has no entitlement to any contribution from IAL.

140 Even if, contrary to the above, IAL was liable to contribute to HCSL, IAL argues that HCSL cannot make any claim to contribution in respect of Steele's defence costs, because of the terms of the SGIC policy.

141 Clause 1(c)(2) of the SGIC policy imposes an obligation to pay "all expenses incurred by or with the permission of [IAL] for investigation, negotiation and defence of claims and suits."

142 There is no dispute that neither SGIC nor IAL's permission was ever sought to the incurring of Steele's defence costs.

143 In those circumstances, and relying on the decision in Government Insurance Office (NSW) v Crowley ("Crowley"),[70] IAL says that there can be no liability to indemnify the insured (Steele), and no liability to contribute to a party (HCSL) which has indemnified the insured in respect of those costs.

144 In Crowley, GIO had defended an insured's claim and paid damages and costs awards and defence costs. GIO sought contribution from another insurer which had covered the relevant liability. Helsham J held that although the second insurer was liable to contribute in respect of the damages and costs awards, its liability did not extend to defence costs.[71] That was because the second policy only required the insurer to pay costs and expenses incurred with the written consent of the insurer, and no such consent had been obtained before the defence costs were incurred.

145 IAL had raised this very argument against HIH on the pleadings in the first Victorian proceeding.[72] HIH had responded[73] that IAL was not entitled to rely on that defence, because of s 54 of the Insurance Contracts Act 1984 ("ICA"). The issue did not need to be resolved in the first Victorian proceeding, as IAL's counsel told the judge at trial that the defence was abandoned.[74]

146 I do not accept HCSL's argument that an Anshun estoppel arises so as to prevent IAL from relying on that defence. First, the issue was raised between HIH and IAL, not Steele and IAL. There is no relevant privity between HCSL and HIH. In any event, there was simply no consideration of this defence by the court in the first Victorian proceeding, so there is no possibility of inconsistent findings. The abandonment of the argument against HIH does not preclude IAL from raising it against a different party, namely, HCSL.

147 HCSL seeks to distinguish Crowley, on the basis that it was decided before the introduction of s 54 of the ICA.

148 Section 54 of the ICA provides:

Insurer may not refuse to pay claims in certain circumstances

(1) Subject to this section, where the effect of a contract of insurance would, but for this section, be that the insurer may refuse to pay a claim, either in whole or in part, by reason of some act of the insured or of some other person, being an act that occurred after the contract was entered into but not being an act in respect of which subsection (2) applies, the insurer may not refuse to pay the claim by reason only of that act but the insurer's liability in respect of the claim is reduced by the amount that fairly represents the extent to which the insurer's interests were prejudiced as a result of that act.

(2) Subject to the succeeding provisions of this section, where the act could reasonably be regarded as being capable of causing or contributing to a loss in respect of which insurance cover is provided by the contract, the insurer may refuse to pay the claim.

(3) Where the insured proves that no part of the loss that gave rise to the claim was caused by the act, the insurer may not refuse to pay the claim by reason only of the act.

(4) Where the insured proves that some part of the loss that gave rise to the claim was not caused by the act, the insurer may not refuse to pay the claim, so far as it concerns that part of the loss, by reason only of the act.

(6) A reference in this section to an act includes a reference to:

(b) an act or omission that has the effect of altering the state or condition of the subject-matter of the contract or of allowing the state or condition of that subject-matter to alter.

149 In Antico v Fielding Australia Pty Ltd,[75] the High Court considered a provision in an insurance policy which required the insurer's consent prior to the incurring of legal expenses. The majority[76] held that the insured's failure to obtain the insurer's consent prior to incurring the expenses was an omission to which s 54 applied. As the section was remedial in character, it should be construed so as to give the most complete remedy consistent with the actual language used.

150 IAL argued in reply that s 54 only applies to assist an insured, not a party seeking contribution. That is not an issue which arose for consideration in Antico.

151 The argument as to defence costs was only raised during the course of the trial. Little time was spent arguing it, and the issue of how s 54 might impact on a claim by somebody other than the insured was not really developed. In those circumstances, and having regard to my finding that there is no liability to contribute, I will leave that question for determination in a more suitable case.

(a) HCSL is not prevented from claiming contribution in this proceeding by reason of any Anshun estoppel;

(b) HCSL's claim for contribution must be dismissed.

153 I will hear from the parties as to appropriate orders, and as to costs.

[1] Originally State Government Insurance Corporation and then SGIC General Insurance Ltd.

[2] It is an agreed fact that SGIC's rights, liabilities and obligations vested in IAL. The details of when and how that occurred are not before the court. It is not necessary to consider this further, as nothing is said to turn on the change of insurer under the SGIC policy.

[3] In late 2003, HCSL paid Screenco's lawyers the sum of $175,500. In late 2004, HCSL paid Highrise the sum of $81,000. Whilst the details are not known to me, there seems to be no dispute that HCSL has, since the decision of Bongiorno J, paid 90% of Dew's costs as well.

[4] Third further amended statement of claim dated 28 July 2005.

[6] HIH Casualty & General Insurance v Insurance Australia [2005] VSC 342.

[7] There was evidence that Steele had no legal liability for the remaining 10% of his defence costs, because the lawyers retained on his behalf did not regard him as a debtor for that amount; they had accepted the 90% payable under the support scheme in full satisfaction of their fees.

[8] Insurance Australia Ltd v HIH Casualty & General Insurance (in Liquidation) and Ronald Steele (Trading as Dragon Scaffolding) [2007] VSCA 223 per Chernov, Ashley and Redlich JJA.

[9] [1981] HCA 45; (1981) 147 CLR 589.

[10] Anshun at 604 per Gibbs CJ, Mason and Aickin JJ.

[11] Anshun at 602 per Gibbs CJ, Mason and Aickin JJ.

[12] See for example Bryant v Commonwealth Bank [1995] FCA 1299; (1995) 57 FCR 287 at 297 per Beaumont, Wilcox and Moore JJ. Special considerations may arise in relation to cross-claims.

[13] Anshun at 604; Gibbs v Kinna [1998] VSCA 52; [1999] 2 VR 19 at 27 per Kenny JA; Egglinshaw v Australian Crime Commission [2007] FCAFC 183; [2008] 243 ALR 177 at 184; Snowy Mountains Organic Dairy Products v Wholefoods Pty Ltd [2008] VSC 405 at 15-16.

[14] [2002] FCA 1061.

[15] [2006] QSC 345; (2006) 236 ALR 796.

[17] [1993] FCA 342; (1993) 43 FCR 510.

[20] Amended defence dated 14 November 2008 at [25].

[21] Ramsay v Pilgrim [1968] HCA 34; (1967) 118 CLR 271 at 279 per Barwick CJ.

[22] Re Australasian Memory Pty Ltd (1997) 149 ALR 393 at 413 per Santow J, quoting from Megarry V-C in Gleeson v J Wippell & Co Ltd [1977] 1 WLR 510 at 515.

[23] Tiufino v Warland (2000) NSWLR 104 at 111 per Handley JA, with whom Mason P and Powell JA agreed; AAMI v NRMA [2002] FCA 1061 at [32]- [34], [74], [79] and [97].

[24] CB Darvall & Darvall v Moloney [2006] QSC 345; (2006) 236 ALR 796 at [29].

[25] To use the concept discussed by Barwick CJ in Ramsay v Pilgrim at 279.

[26] And assuming that the concept of privity applies to an Anshun estoppel.

[27] The paragraph numbers have been taken from the published reasons, not the AUSTLII version of the published reasons; there is a slight discrepancy in paragraph numbers between the two versions.

[28] At T111 ("and whether or not the scheme may have other avenues of address (sic) is all for another day") and T113 (where IAL's counsel acknowledged that a claim for equitable contribution may be made "but that's not in this proceeding").

[29] Further amended reply dated 20 November 2008 at [4].

[31] Burke v LFOT Pty Ltd (2002) 209 CLR 272 ("Burke") at [14] per Gaudron A-CJ and Hayne J.

[32] Friend v Brooker [2009] HCA 21 at [38] per the joint judgment. Counsel for both parties drew my attention to this case and the recent Court of Appeal case of QBE Insurance (Australia) Ltd v Lumley General Insurance Ltd [2009] VSCA 124; (2009) 256 ALR 574, after I had reserved my decision, and assisted by providing supplementary written submissions addressing those authorities.

[33] Friend at [48] per the joint judgment.

[34] For example, in Burke at [15], and the authorities discussed therein.

[35] Friend at [40] per the joint judgment.

[37] Friend at [41] per the joint judgment.

[38] Burke at [16] per Gaudron A-CJ and Hayne J and at [41]-[42] per McHugh J.

[39] Street v Retravision (NSW) Pty Ltd [1995] FCA 1197; (1995) 56 FCR 588 at 597 per Gummow, citing BP Petroleum Development Ltd v Esso Petroleum Co Ltd [1987] SLT 345 at 347-8 and Caledonian Railway Co v Colt (1860) 3 Macq 833 at 844.

[40] Burke at [16] per Gaudron A-CJ and Hayne J.

[41] Burke at [145] per Callinan J.

[42] Street v Retravision at 599 per Gummow J.

[43] AMP Workers Compensation Services (NSW) Ltd v QBE Insurance Ltd [2001] NSWCA 267; (2001) 53 NSWLR 35.

[44] [2009] VSCA 124.

[45] At [65] per Neave and Dodds-Streeton JJA and Kyrou AJA.

[49] Mahoney v McManus [1981] HCA 54; (1981) 180 CLR 370 at 375 per Gibbs CJ.

[50] Friend at [47] per the joint judgment.

[51] [2000] WASCA 408; (2000) 23 WAR 291.

[52] There were in fact several insurance policies considered in the case, but the only relevant one for our purposes was a general liability policy which Zurich had issued to Hamersley.

[53] At [24] per Malcolm CJ, at [93] per Ipp J and at [167] per Wheeler J.

[54] [2002] Lloyd's Rep 261, [2002] UKHL 4, at [16] per Lord Bingham, at [61] per Lord Mackay, at [71] per Lord Nicholls, and at [103] per Lord Scott.

[55] At [64] per Lord Mackay, with whom the other members of the House agreed.

[58] Statement of claim dated 18 August 2008 at [20].

[59] HCSL's outline of contentions dated 11 November 2008 at [23].

[61] To adopt the phrase used by Gibbs CJ in Mahoney v McManus op cit.

[62] At [9] per Chernov JA and at [141]-[143] and [157] per Ashley JA, with whom Redlich JA agreed.

[65] The example just given also ignores the fact that HCSL may also recover against third parties, as equitable assignee of the applicant's rights against third parties, including rights of indemnity.

[67] To use the terminology suggested by the Court of Appeal in QBE at [67].

[68] Discussed at [96] to [104] above.

[70] [1975] 2 NSWLR 78 at 81.

[72] Amended defence dated 6 June 2005 at [15B]-[15BB] and [18A].

[73] Further amended reply dated 20 July 2005 at [1]-[3] and [5].

[75] (1997) 146 CLR 385.

[76] Dawson, Toohey, Gaudron and Gummow JJ.