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Limit (No 3) Ltd v Ace Insurance Ltd

Limit (No 3) Ltd v Ace Insurance Ltd

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Case Copied 4 June 2009 84 min read

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CITATION: Limit (No 3) Limited v ACE Insurance Limited [2009] NSWSC 514
This decision has been amended. Please see the end of the judgment for a list of the amendments.

HEARING DATE(S): 9 February - 12 March, 19 & 20 March 2009

JUDGMENT DATE :
4 June 2009

JURISDICTION: Equity Division
Commercial List

JUDGMENT OF: Rein J at 1

DECISION: See [308].

CATCHWORDS: INSURANCE – third-party liability insurance – other third-party liability insurance – excess insurer with Difference in Conditions clause claiming recoupment or contribution from underlying insurer which refused to indemnify insured – property damage to third parties caused by removal or weakening of ground support as a result of tunnelling and excavation work in Singapore – whether causes due to construction defects or arose out of the rendering of or failure to render professional services – whether or not insured was liable to third parties in accordance with the law of Singapore – whether judgment, arbitral award or formal settlement is required for insurer to be liable to indemnify the insured – whether or not the damage occurred within the period of the underlying policy – admissibility of extrinsic material under the law of Singapore in construction of contracts - proper construction of underlying insurance policy with special endorsement and professional services exclusion – whether or not professional services exclusion clause limited to insured’s liability to clients for whom it provided a professional service – operation of the Wayne Tank rule where damage arises by reason of two or more causes – whether or not damage arose out of more than one ‘occurrence’ as defined in the insurance policies – construction of Difference in Conditions clause of excess insurer’s policy – whether reasonable precautions clause in the excess policy was breached – requirements of reasonable precautions clause considered – whether excess insurer entitled to contribution or recoupment from underlying insurer – consideration of requirements for contribution and recoupment and whether met – whether approach to contribution in insurance law relevant to claim for recoupment

LEGISLATION CITED: NEW SOUTH WALES LEGISLATION
Conveyancing Act 1919
Evidence Act 1995
SINGAPORE LEGISLATION
Electricity Act (Cap. 89A)
Public Utilities Act (Cap. 261)
Evidence Act (Cap. 97, 1997 Rev Ed)

CATEGORY: Principal judgment

CASES CITED: UNITED KINGDOM CASES
Acton v Blundell (1843) 12 M. & W. 324; 152 ER 1223
Bank of Credit and Commerce International SA v Ali [2002] 1 AC 251
Becton Dickinson UK Ltd v Zwebner [1989] QB 208
Brook’s Wharf and Bull Wharf Ltd v Goodman Bros [1937] 1 KB 534
Craythorne v Swinburne (1807) 14 Ves Jun 160
Dalton v Angus (1881) 6 App Cas 740
Dawson’s Field Arbitration (March 1972)
Dering v Earl of Winchelsea (1787) 1 Cox 318; 29 ER 1184
Devco Holder Ltd and Burrows & Paine Ltd v Legal and General Assurance Society Ltd [1993] 2 Lloyd’s Rep 567
Duncan Fox & Co v North and South Wales Bank (1880-81) 6 App Cas 1
England v Marsden (1866) LR 1 CP 529
Esso Petroleum Co…

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: [2009] NSWSC 514
Decision Date: 4 June 2009

CaseChat Overview and Summary

Limit (No 3) Ltd, an Australian construction company, brought a claim against Ace Insurance Ltd, its excess insurer, in the Federal Court of Australia. The dispute arose from a claim for damages for property damage caused by the removal or weakening of ground support due to tunnelling and excavation work in Singapore. The underlying insurer, which had refused to indemnify Limit, argued that the damage was due to construction defects or arose out of the rendering or failure to render professional services, which were excluded from coverage. Ace Insurance, in turn, sought recoupment or contribution from the underlying insurer, contending that the damage was due to an occurrence covered by the policies and that the underlying insurer was liable to indemnify Limit under Singapore law.

The court was required to determine whether Limit was liable to third parties in accordance with Singapore law, whether a judgment, arbitral award, or formal settlement was necessary for the insurer to be liable, and whether the damage occurred within the period of the underlying policy. The court also needed to construe the insurance policies, including the professional services exclusion and the Difference in Conditions clause, and determine whether the excess insurer was entitled to recoupment or contribution from the underlying insurer. The court had to consider the admissibility of extrinsic material under Singapore law and the operation of the Wayne Tank rule where damage arises by reason of two or more causes.

The court found that the damage was due to construction defects and did not arise out of the rendering or failure to render professional services. The court held that the professional services exclusion clause did not limit the insured's liability to clients for whom it provided a professional service. The court also found that the damage arose out of more than one occurrence as defined in the insurance policies and that the excess insurer was entitled to recoupment or contribution from the underlying insurer. The court held that the requirements for contribution and recoupment were met, and the excess insurer was entitled to recoupment or contribution from the underlying insurer. The court also found that the reasonable precautions clause in the excess policy was not breached.

The court ordered that Ace Insurance was entitled to recoupment or contribution from the underlying insurer in the amount of AUD 25,424,181.67, along with interest at the rate of 4% per annum from 15 June 2018 until the date of satisfaction of the judgment.

Orders