Forbes Shire Council v AG Australia Holdings Ltd

The case of Forbes Shire Council v AG Australia Holdings Ltd involved a dispute between the Forbes Shire Council and AG Australia Holdings Ltd. The council claimed against the insurer for damages related to the development of contaminated land. The predecessor council had operated gas works on the site, and the plaintiff council had negligently allowed the development of the contaminated land. The insurer argued that the policy excluded liability where the insured was responsible for the discharge of pollution. The court was required to determine whether the insurer could rely on the exclusion clause, and if the settlement of claims by the plaintiff was defective, thereby excusing the defendant's liability.

The court held that the contamination of the site had ceased to be connected to the plaintiff's activities at the time the claim was made. Therefore, the defendant insurer could not rely on the exclusion clause. The court also examined whether the defendant's liability was excused because the plaintiff's original settlement of claims was defective. The settlement was found to be reasonable in the circumstances, and thus the defendant remained liable.

The court ruled that the successor council could not be made liable for all inchoate claims that may arise against its predecessor due to the amalgamation of councils. The court found that there was inchoate liability at the date of amalgamation, and the successor council could not be held responsible for all claims against its predecessor.

The court ordered AG Australia Holdings Ltd to pay the damages to the Forbes Shire Council as claimed, as the defendant's liability was not excused by the defective settlement or the exclusion clause in the insurance policy.