Prime Infrastructure (DBCT) Management Pty Ltd v Vero Insurance Limited

The applicant, Prime Infrastructure (DBCT) Management Pty Ltd, sought a declaration of entitlement to indemnity under an Industrial Special Risks Policy of Insurance issued by the respondents, Vero Insurance Limited. The dispute arose out of a claim made by the applicant under the policy for damage to property resulting from a specific incident. The case was heard in the Supreme Court of New South Wales. The central issue for the court to decide was the interpretation of certain clauses within the insurance policy, specifically the ‘Property’ and ‘Peril’ exclusions, and the proviso relating to ‘subsequent loss’ and damage caused by a peril not otherwise excluded.

The court was required to determine the meaning of the term ‘subsequent loss’ and whether the damage claimed by the applicant qualified as such. Additionally, the court had to decide whether the damage was occasioned by a peril not otherwise excluded, as provided in the proviso to the ‘Peril’ exclusions. The respondents argued that the damage did not meet the criteria for indemnity under the policy due to the exclusions. The applicant, on the other hand, contended that the damage was a subsequent loss caused by a peril not otherwise excluded, thus entitling them to indemnity.

The court found that the damage claimed by the applicant was indeed a subsequent loss and was occasioned by a peril not otherwise excluded. The court held that the damage resulted from an event that was not an excluded peril but led to further damage that was not covered by the exclusions. Consequently, the proviso to the ‘Peril’ exclusions applied, and the applicant was entitled to indemnity under the policy. The court declared that the applicant is entitled to indemnity and ordered the respondents to pay the applicant's costs of and incidental to the application, to be assessed on the standard basis.