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Absolute Tiling Solutions Pty Ltd v Certain Underwriters at Lloyds

Absolute Tiling Solutions Pty Ltd v Certain Underwriters at Lloyds

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Case Copied 10 April 2024 78 min read

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Supreme Court

New South Wales

Medium Neutral Citation: Absolute Tiling Solutions Pty Ltd v Certain Underwriters at Lloyds [2024] NSWSC 364
Hearing dates: 12-15 February 2024, 19 February 2024, 13 March 2024
Date of orders: 10 April 2024
Decision date: 10 April 2024
Jurisdiction: Equity - Commercial List
Before: Nixon J
Decision:
See [472]

Catchwords:
INSURANCE – professional indemnity insurance – plaintiff was design and construct contractor – claim made relating to external sandstone tiling designed and installed by plaintiff – insured activities included design but not installation – whether the liability resulted from the design or installation of the tiling system
INSURANCE – professional indemnity policy underwritten by first defendant for three consecutive years – exclusion clause in respect of prior known circumstances – whether failure to disclose prior known circumstances – consequences of failure to disclose prior known circumstances after entry into the first of the three consecutive policies – application of continuous cover provision – application of ss 21 and 28 of the Insurance Contracts Act 1984 (Cth)
INSURANCE – whether plaintiff failed to comply with s 21 of the Insurance Contracts Act 1984 by failure to disclose that plaintiff performed external tiling or cladding works – whether the first defendant would have entered into policy if relevant failure had not occurred
INSURANCE – construction of contract of insurance – exclusion clauses
INSURANCE – brokers – claims for negligence and misleading or deceptive conduct – premises for claims not established
BUILDING AND CONSTRUCTION – scope of rectification works – cost of rectification works

Legislation Cited:
Civil Liability Act 2002 (NSW), s 5D
Home Building Act 1989 (NSW), ss 18B, 18G
Insurance Contracts Act 1984 (Cth), ss 21, 28, 40

Cases Cited:
AFC Holdings Pty Ltd v Shiprock Holdings Pty Ltd [2010] NSWSC 985
Astley v Austrust Limited (1999) 197 CLR 1; [1999] HCA 6
Beaufort Developments (NI) Ltd v Gilbert-Ash NI Ltd [1999] 1 AC 266
Bellgrove v Eldridge (1954) 90 CLR 613 at 617; [1954] HCA 36
Bowen Investments Pty Ltd v Tabcorp Holdings Ltd (2008) 166 FCR 494; [2008] FCAFC 38
Brewarrina Shire Council v Beckhaus Civil Pty Ltd [2006] NSWCA 361
CGU Insurance Limited v Porthouse (2008) 235 CLR 103; [2008] HCA 30
CIMIC Group Limited v AIG Group Limited [2022] NSWSC 999
Classics for a Cause Pty Ltd v Grays Ecommerce Group Ltd [2023] NSWSC 967
DIF III – Global Co Investment Fund LP v DIF Capital Partners Ltd [2020] NSWCA 124
Electricity Generation Corp v Woodside Energy Ltd (2014) 251 CLR 640; [2014] HCA 7
FAI General Insurance Co Ltd v McSweeney (1999) 10 ANZ Insurance Cases ¶61-443
Fishwives Pty Ltd v FAI General Insurance Co Ltd [2001] NSWCA 193
Hakea Holdings Pty Ltd v Neon Underwriting Ltd [2023] FCAFC 34
HDI Global Speciality SE v Wonkana No 3 Pty Ltd [2020] NSWCA 296
Hunt & Hunt Lawyers v Mitchell Morgan Nominees Pty Ltd (2013) 247 CLR 613; [2013] HCA 10
Karenlee Nominees Pty Ltd v CAN…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2024] NSWSC 364
Decision Date: 10 April 2024

CaseChat Overview and Summary

Absolute Tiling Solutions Pty Ltd, a design and construct contractor, sought to recover damages from Certain Underwriters at Lloyd's for professional indemnity insurance claims relating to external sandstone tiling designed and installed by the plaintiff. The central dispute centred on whether the liability arose from the design or installation of the tiling system, as the insured activities included design but not installation. Absolute Tiling Solutions also sought to establish claims for negligence and misleading or deceptive conduct against the insurance broker.

The court had to determine if Absolute Tiling Solutions failed to comply with section 21 of the Insurance Contracts Act 1984 by not disclosing that it performed external tiling or cladding works. Additionally, the court needed to consider whether the first defendant would have entered into the policy if the relevant failure had not occurred. The court also had to interpret the exclusion clause in the professional indemnity policy, particularly in relation to prior known circumstances, and examine the consequences of failing to disclose such circumstances after the first of the three consecutive policies was entered into. The continuous cover provision and sections 21 and 28 of the Insurance Contracts Act 1984 were also pivotal in the court's reasoning.

The court found that Absolute Tiling Solutions failed to comply with section 21 of the Insurance Contracts Act 1984 by not disclosing the tiling or cladding works. However, the court ruled that the first defendant would have entered into the policy even if the relevant failure had not occurred. The exclusion clause regarding prior known circumstances was considered, and it was concluded that the failure to disclose did not result in the policy being void. The continuous cover provision applied, and sections 21 and 28 of the Insurance Contracts Act 1984 were interpreted in favour of the insurer. The claims for negligence and misleading or deceptive conduct against the insurance broker were dismissed as the necessary premises were not established. The court determined that the cost of rectification works for the tiling system was not covered under the policy.

The court ordered that the claim for professional indemnity insurance be dismissed, and the claims for negligence and misleading or deceptive conduct against the broker were also dismissed. The order mandated that Absolute Tiling Solutions bear the costs of the proceedings.

Orders