Chubb Insurance Australia Limited v WSP Structures Pty Ltd [2024] FCAFC 123

Chubb Insurance Australia Limited v WSP Structures Pty Ltd [2024] FCAFC 123

The majority held the policy definition of 'subcontractor' was to be construed by reference to a party contracted to perform obligations which the insured was itself obliged to perform, and the context and business description in the Schedule supported that engineers such as WSP, performing engineering design work required under Icon's main contract, fell within 'sub-contractor' and thereby were Insureds for the purposes of the policy. However, a strong dissent (Derrington J) reasoned express policy limits on engineers (Item 8) should not be overridden by the general item for subcontractors (Item 4), so WSP's claim for indemnity fails.

Parties
First Appellant: Chubb Insurance Australia Limited; Second Appellant: Tokio Marine & Nichido Fire Insurance Co Ltd; First Respondent: WSP Structures Pty Ltd; Second Respondent and Cross Appellant: Liberty Mutual Insurance Company trading as Liberty Specialty Markets; First Cross Respondent: Chubb Insurance Australia Limited; Second Cross Respondent: Tokio Marine & Nichido Fire Insurance Co Ltd; Third Cross Respondent: WSP Structures Pty Ltd
Jurisdiction
Australia
Judgment Date
20 September 2024
Procedural Posture
Appeal / Full Court Decision on Appeal and Cross Appeal
Outcome
Appeal dismissed by majority; cross-appeal dismissed (operative orders per majority decision)
Legal Topics
Construction of Insurance Contracts, Subcontractor Coverage, Third Party Indemnity, Construction Industry Liability Policies
Insurance Law Commercial Law Construction of Insurance Contracts Subcontractor Coverage Third Party Indemnity Construction Industry Liability Policies

Case Brief

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Parties

Chubb Insurance Australia Limited

First Appellant

Tokio Marine & Nichido Fire Insurance Co Ltd

Second Appellant

WSP Structures Pty Ltd

First Respondent

Liberty Mutual Insurance Company trading as Liberty Specialty Markets

Second Respondent and Cross Appellant

Chubb Insurance Australia Limited

First Cross Respondent

Tokio Marine & Nichido Fire Insurance Co Ltd

Second Cross Respondent

WSP Structures Pty Ltd

Third Cross Respondent

Procedural Posture

Appeal / Full Court Decision on Appeal and Cross Appeal

Legal Issues

  1. 1 Whether WSP Structures Pty Ltd is covered as an 'Insured' under the Liberty Policy as a 'sub-contractor'
  2. 2 Proper construction of the term 'subcontractor' within the context of the policy definitions and the relevant business structure
  3. 3 Interaction between items in policy definition of 'Insured', specifically Items 4 and 8

Ratio Decidendi

The majority held the policy definition of 'subcontractor' was to be construed by reference to a party contracted to perform obligations which the insured was itself obliged to perform, and the context and business description in the Schedule supported that engineers such as WSP, performing engineering design work required under Icon's main contract, fell within 'sub-contractor' and thereby were Insureds for the purposes of the policy. However, a strong dissent (Derrington J) reasoned express policy limits on engineers (Item 8) should not be overridden by the general item for subcontractors (Item 4), so WSP's claim for indemnity fails.

Court Disposition

Appeal dismissed by majority; cross-appeal dismissed (operative orders per majority decision)

Orders

  • The appeal be dismissed.
  • The cross-appeal be dismissed.