Supreme Court New South Wales

• Medium Neutral Citation: Allianz Australia Insurance Limited v Botros Soliman & Anor [2014] NSWSC 737
• Hearing dates: 27 & 28 May 2014
• Decision date: 05 June 2014
• Jurisdiction: Common Law
• Before: Hidden J

Decision

Judgment against each defendant for $400,000

• Catchwords: INSURANCE - home warranty insurance - proceedings for recovery from directors of building company pursuant to deeds of indemnity - no question of principle
• Legislation Cited: Home Building Act 1989; Civil Procedure Act 2005
• Category: Principal judgment
• Parties: Allianz Australia Insurance Limited (plaintiff); Botros Soliman (1st defendant); Hany Soliman (2nd defendant)
• Representation: Counsel: M Dolonec (plaintiff); Solicitors: Moray & Agnew Lawyers (plaintiff)
• File Number(s): 2012/93004

Judgment

1 The plaintiff, Allianz Australia Insurance Limited, has brought proceedings in this court against the defendants, Botros Soliman and his son, Hany Soliman, pursuant to deeds of indemnity entered into by each of them in respect of the plaintiff's liability as a home warranty insurer under the Home Building Act 1989. The defendants were directors of a building company, Soliman and Sons Pty Limited. In 2002 that company undertook the construction of home units in Eskineville and Dee Why, and the plaintiff issued certificates of home warranty insurance in respect of each project.

2 It is not necessary for present purposes to examine the statutory scheme underpinning that insurance cover. It is sufficient to say that the Home Building Act required the company to take out the insurance for the benefit of unit owners and the owners' corporation in the event of non-completion of the work or breach of warranties as to the quality of the work prescribed in the Act. As a condition of the provision of the insurance cover, the plaintiff required indemnities from each of the directors of the company in respect of its liability under any claim made against it in relation to the work. There were four directors, each of whom executed such an indemnity. However, the present proceedings are brought against only two of them because, of the other two, one is bankrupt and the other is deceased.

3 When the matter came before me for hearing last week, neither defendant appeared. They were not legally represented, although they had been at an earlier stage. I proceeded to hear the matter ex parte, for reasons which I gave on 28 May. I was satisfied that they were on notice of the proceedings and had elected not to attend. The company went into liquidation in 2006.

4 Each indemnity relates to any claim in respect of either project, and is in identical terms. Relevant for present purposes are cll 2, 3(c) and 4(a).

5 Clause 2 provides:

"The Indemnifier unconditionally and absolutely agrees to indemnify and keep indemnified the insurer for all loss, damage, cost, charges or other liabilities incurred or paid as a result of any claim arising under the Policy and all amounts which the Insurer must pay and is liable or may become liable to pay under the said Policy (whether or not the insurer has paid any amount) in all cases, whether or not the claim arises or is made before or after the date of this deed, PROVIDED ALWAYS that the amount of such indemnity shall be no greater than $200,000 per claim."

Clause 3(c) requires the indemnifier to pay any money demanded under the deed forthwith.

6 Clause 4(a) refers to "Dexta", being an agent of the plaintiff, Dexta Corporation Limited. That clause provides:

"The indemnifier unconditionally, irrevocably and without any reservation, requests, authorizes and consents to Dexta settling or compromising any claim, suit or judgment under or relating to any Policy without any notice, consent or any communication with the Indemnifier or the obtaining of further consent, and the Indemnifier shall not compete with Dexta for any claim howsoever obtained against the Contractor."

7 The indemnities were executed by the directors in October 2001. For reasons which are not entirely clear, they executed indemnities in the same terms in August 2002, but this does not affect the validity of the earlier indemnities. The amended statement of claim relies upon deeds of indemnity said to have been executed on both those occasions.

8 There is a large volume of affidavit evidence, including extensive annexed documents, upon which the plaintiff relies. Counsel for the plaintiff, Ms Dolonec, took me through this material to establish each step in the plaintiff's case. It is unnecessary to repeat that process in these reasons.

9 It sufficient to say that the evidence clearly establishes the engagement of Soliman and Sons to construct the units at Erskineville and Dee Why, that company's application to the plaintiff for home warranty insurance, the issue of certificates of insurance in respect of each project, and the defendants' execution of the indemnities. It also establishes claims made to the plaintiff in respect of defects in the construction of each project amounting to breaches of the statutory warranties, and the progress and resolution of those claims. Finally, the evidence establishes the legal costs incurred by the plaintiff in resolving the claims, its demand upon the defendants for payment under the indemnities and their failure to do so.

10 In relation to the Erskineville project, two claims were made by the owners' corporation: the first in October 2006 and the second, being an amendment of the first, in April 2009. In relation to the Dee Why project, three claims were made. The first was in June 2007 and the second, again an amendment of the first, in September 2009. There was a third claim, made in June 2008, relating to one unit in the block. These claims were the subject of negotiation between the parties but, final agreement not being reached, appeals against the plaintiff's decisions were lodged in the Consumer, Trader and Tenancy Tribunal (CTTT). As the amounts involved exceeded the jurisdictional limit of that tribunal, the matters were transferred to this court. In due course, the claims were the subject of mediation and settlement was achieved.

11 In relation to the Erskineville project, Allianz agreed to pay compensation of $1,000,000 and incurred costs of a little over $120,000. In respect of the Dee Why project, compensation was agreed at $1,400,000 and costs incurred were a little over $158,000. Nothing has been paid by either defendant in response to demands by the plaintiff under the indemnities.

12 It is apparent that the defendants were liable to indemnify the plaintiff in accordance with the terms of the deeds which I have set out above. Each defendant was required to provide indemnity in respect of each claim up to the limit of $200,000 specified in cl 2. While that limit applies to each of the claims, the plaintiff is content to seek the aggregate of the claims arising from each project as one claim in respect of that project. The amounts required to be paid by the plaintiff in relation to each of the Erskineville and Dee Why developments are, of course, well in excess of the amounts limited by the indemnity. Accordingly, in respect of each development the plaintiff claims $200,000 from each of the defendants, seeking judgment against each of them severally for $400,000.

13 The defendants have put on no evidence. They forwarded to the registry a brief written submission, in point form, adverting to the issues raised in an amended defence filed when they were legally represented.

14 Butros Soliman alleges that he did not execute the deed of August 2002. A copy of that document is in evidence, and it does appear to bear his signature and that of a witness to it. In the absence of evidence to the contrary, I would find that he did execute the document. In any event, it is of no moment because he remains bound by the deed of October 2001, the execution of which he does not deny.

15 Otherwise, the submission attributes non-completion of the work to disputes with the developer or with sub-contractors and asserts that the defendants were not given the opportunity to verify whether the works were carried out. It also asserts that the plaintiff did not "comply with time limits under the deed", and did not "satisfy evidence in respect of authenticity of documents." These bare statements are not elucidated in the context of the issues in the proceedings and, in any event, are not supported by any evidence.

16 On the material before me I am satisfied that the plaintiff has made out its case against each defendant. There will be judgment against each of them in the amount of $400,000. Although the deeds provide for interest, the plaintiff seeks interest pursuant to s 100 of the Civil Procedure Act 2005, and I make that order. Ms Dolonec foreshadowed a submission about the costs of the proceedings, which I have yet to determine.

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Decision last updated: 05 June 2014