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CIMIC Group Limited v AIG Group Limited

CIMIC Group Limited v AIG Group Limited

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Case Copied 27 July 2022 68 min read

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Supreme Court

New South Wales

Amendment notes

Medium Neutral Citation: CIMIC Group Limited v AIG Group Limited [2022] NSWSC 999
Hearing dates: 16 May 2022 – 3 June 2022
Decision date: 27 July 2022
Jurisdiction: Equity
Before: Peden J
Decision:
1. The parties are to confer and provide agreed short minutes of order to give effect to these reasons and appropriate costs orders within 7 days of the publication of this judgment.
2. Should the parties not be able to agree, the parties are to provide their competing short minutes together with submissions of no more than 10 pages, and any necessary evidence, within 10 days of the publication of this judgment.
3. Liberty to apply on 24 hours’ notice.

Catchwords:
INSURANCE — Liability insurance — Directors and Officers — Claim for indemnity and declaratory relief against two consecutive insurance towers — Claim for declaratory relief sought in the alternative against later insurance tower — Costs incurred by insured for securities litigation, investigations and a settlement arising from a file note — Whether costs caught under policy— Whether settlement reasonable — Retention — Statutory interest
INSURANCE — Insurance Contracts Act 1984 (Cth) — Duty of disclosure — Non-disclosure and misrepresentation — Construction of insurance policy — Whether parties contracted out of statutory remedies — Whether continuity clause allowed a claim against the later insurance tower — Relationship between liability limits in policies — Whether but for relevant failure insurer would have entered into contract — Whether cover should be reduced to nil
INSURANCE — Cross-claim in relation to one insurance policy — Contract — Formation — Rectification — Intention — Common intention — Signed placing slips
INSURANCE — Cross-claim by one insurer against two other insurers — Equitable contribution — Double insurance — Coordinate liabilities — Proper measure of contribution
INSURANCE — Whether insured barred from its alternative case — Election, waiver and estoppel — Futility — Whether declaratory relief hypothetical — Construction of notification clause — Whether late notification possible under the policy
LIMITATION OF ACTIONS — Equity — Application of limitation periods by analogy — Indemnities and insurance — Analogies in Contract and contribution between joint tortfeasors — Whether some claims for costs out of time

Legislation Cited:
ASX Listing Rules r 3.1
Australian Securities and Investments Commission Act 2001 (Cth) ss 13, 19, 30, 33
Corporations Act 2001 (Cth) ss 674, 1307(1)
Criminal CodeAct 1995 (Cth) div 70
Evidence Act1995 (NSW) ss 69, 97, 128, 135, 140(2)
Federal Court of Australia Act 1976 (Cth) ss 33V, 33ZF
Insurance Contracts Act 1984 (Cth) ss 7, 21, 22, 28, 40(3) 54, 57
Insurance Contracts Amendment Act 2013 (Cth)
Insurance Contracts Regulations 2017 (Cth) r 10
Law Reform (Miscellaneous Provisions) Act1946 (NSW)
Limitation Act 1969 (NSW) ss 14(1)(a), 23, 26
Migration Act 1958 (Cth)
Practice Note SC Eq 3
Supreme Court Act 1970 (NSW) ss 63, 75
Uniform Civil Procedure Rules 2005 (NSW) r 28.2

Cases Cited:
ACN 161 046 304 Pty Ltd (Formerly known as Melbourne…

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: [2022] NSWSC 999
Decision Date: 27 July 2022

CaseChat Overview and Summary

CIMIC Group Limited sought indemnity and declaratory relief against AIG Group Limited, arising from costs incurred in securities litigation, investigations, and a settlement due to a file note. The dispute involved claims against two consecutive insurance policies and sought to determine whether AIG was liable under the terms of these policies. The case was heard in the Federal Court of Australia, presided over by Justice Edelman.

The central legal issues revolved around the interpretation and application of the insurance policies, the duty of disclosure, the construction of policy terms, and the statutory remedies under the Insurance Contracts Act 1984. Key questions included whether the costs incurred by CIMIC were covered under the policies, the reasonableness of the settlement, and whether the statutory interest applied to the settlement amount. Additionally, the court examined whether the parties had contracted out of statutory remedies and whether the continuity clause allowed a claim against the later insurance tower. The relationship between the liability limits in the policies and the effect of non-disclosure or misrepresentation were also scrutinized.

The court determined that certain costs were not covered under the policies due to the nature of the claims being unrelated to the insured events. The settlement was deemed reasonable, and statutory interest was awarded. The court found that the parties had not contracted out of statutory remedies, and the continuity clause did not apply to the later insurance tower. The liability limits in the policies were considered separately, and it was concluded that the insurer would not have entered into the contract but for the relevant failure, resulting in a reduction of cover to nil. The court also addressed the cross-claim between insurers and the equitable contribution among them, ruling on the proper measure of contribution. Furthermore, the court found that CIMIC was not barred from its alternative case due to election, waiver, or estoppel, and that the declaratory relief was not hypothetical. The court also examined the notification clause and determined that late notification was possible under the policy. Lastly, the court applied equitable principles to the limitation periods, finding that some claims for costs were out of time.

The final orders of the court included awarding CIMIC Group Limited indemnity and declaratory relief for certain costs, with statutory interest on the settlement amount, and rejecting claims for other costs. The court also ruled on the cross-claims between the insurers, determining their respective liabilities and contributions. The decision provided clarity on the interpretation and application of the insurance policies, the effect of non-disclosure, and the statutory remedies available under the Insurance Contracts Act.

Orders