The Owners - Strata Plan No.50530 v Walter Construction Group Limited (In Liquidation)

The Owners - Strata Plan No.50530 (the Owners) brought proceedings against Walter Construction Group Limited (In Liquidation) (Walter Construction) seeking damages. The Owners sought to join Walter Construction's insurer, CGU Insurance Limited (CGU), directly to the proceedings pursuant to section 6 of the *Law Reform (Miscellaneous Provisions) Act 1946* (NSW). The dispute concerned whether section 6 of the Act permitted the Owners to proceed directly against CGU in circumstances where the event giving rise to Walter Construction's liability to the Owners occurred before Walter Construction entered into the relevant insurance policy with CGU. The case was heard in the Court of Appeal of New South Wales.

The primary legal issue before the Court of Appeal was the construction and effect of section 6 of the *Law Reform (Miscellaneous Provisions) Act 1946* (NSW). Specifically, the court had to determine whether the statutory right conferred by section 6, which allows a plaintiff to proceed directly against the insurer of a party alleged to be liable, was available when the cause of action against the insured party arose prior to the insured party entering into the contract of insurance with the insurer. This involved considering the temporal relationship between the occurrence of the liability and the existence of the insurance policy in the context of a claims-made policy.

The Court of Appeal reasoned that section 6 of the *Law Reform (Miscellaneous Provisions) Act 1946* (NSW) operates to allow a plaintiff to pursue an insurer directly where the insured party is liable to the plaintiff and has become an external administrator. The court held that the critical factor for the operation of section 6 is the existence of a liability on the part of the insured to the plaintiff at the time the proceedings are commenced against the insurer, and the subsequent insolvency or external administration of the insured. The court found that the timing of the insurance policy's commencement relative to the event giving rise to the liability was not determinative of the availability of section 6, particularly in the context of a claims-made policy, as the liability to the plaintiff had crystallised.

The Court of Appeal dismissed the appeal with costs.