SunWater Limited v Liberty Mutual Insurance Company

SunWater Limited (SunWater) and Liberty Mutual Insurance Company (Liberty Mutual) were parties to a dispute concerning an insurance policy. The case came before the Court of Appeal of the Supreme Court of New South Wales. The central issue revolved around whether an exclusion clause in SunWater's liability insurance policy operated to deny cover for a particular claim.

The court was required to determine whether SunWater's liability arose out of the rendering of, or failure to render, professional advice or service for a fee. Specifically, the court had to consider whether SunWater itself had rendered such advice or service, and whether the actions of a subordinate could be attributed to SunWater for the purposes of the exclusion. Furthermore, the court needed to ascertain whether the exclusion clause was confined to liability owed to a client or extended to liability owed to third parties, and whether an interpretation favouring the insurer would excessively circumscribe the scope of the cover provided.

The Court of Appeal reasoned that the exclusion clause was engaged because the liability in question arose from the actions of SunWater's employees in providing advice and services, which were integral to SunWater's operations and thus attributable to SunWater itself. The court held that the exclusion was not limited to liability owed to a direct client but extended to third-party claims where the underlying cause of action involved the rendering of professional advice or services. The court found that the exclusion clause, when interpreted in this manner, did not excessively circumscribe the cover provided by the policy.

Consequently, the appeal was dismissed, and SunWater was ordered to pay Liberty Mutual's costs.