Abstract

Article

Admissions and settlements

 An admission made otherwise than in the course of a formal court process is merely evidence to be weighed up against all other relevant evidence: The Nominal Defendant v Gabriel [2007] NSWCA 52; (2007) 71 NSWLR 150; NSWCA 52 at [113] ; Mobis Parts Aust Ltd v XL Insurance Co (2017) NSWSC 1321. An admission by the insurer of its liability contains the recognition or admission, in perhaps customary language, of liability under the policy but is not a settlement contract. An admission of liability may in certain circumstances, give rise to another agreement. For instance, if after some dispute as to coverage, an insurer stated that the parties should now proceed on the basis of an admission of liability, a fresh agreement, supported by fresh consideration may come into existence. : Baulderstone Hornibrook Engineering Pty Ltd v Gordian Runoff Ltd [2008] NSWCA 243.

Acceptance of liability is more than a bare admission of liability.An acceptance of its insured’s claim removes potential uncertainties, and replaces them with its intimation or promise that it will pay the claim. There is an element of compromise, or of admission of contractual right to the indemnity, the consideration being the insurer’s benefit that it will not be liable for costs of an action, and the insured’s detriment in forbearing to sue. By accepting liability it offers him an inducement and impliedly requests him to forebear from taking action with avoidance of costs of formal proceedings at its expense.The acceptance of the claim is in form and substance an agreement which will normally amount to a binding contract. Newton, Bellamy & Wolfe v State Government Insurance Office (Qld) [1986] 1 Qd R 431.; Thiess Pty Ltd v ERC Frankona Reinsurance Limited [2007] QSC 4. But each case must depend on its own facts, and a binding settlement wouldnnot emerge if the insured is aware that there are issues still in dispute or that the insurer was reserving its rightsor that the acceptance of liability was made on the basis of known facts and circumstances. Mobis Parts (supra).

Waiver by election

Waiver by election by an insurer to accept or deny liability under a policy which the policy does not extend cover does not, without more, constitute an irrevocable election. National Vulcan Engineering Insurance Group Ltd v Transfield Pty Ltd; National Vulcan Engineering Insurance Group Ltd v Connell Wagner Pty Ltd; National Vulcan Engineering Insurance Group Ltd v Coffey Partners International Pty Ltd [2003] NSWCA 327; (2003) 59 NSWLR 119; NSWCA 327 at [64]. The election must be made with knowledge of the relevant facts (for example, see Moore v The National Mutual Life Association of Australasia Limited [2011] NSWSC 416 at [73].