CIMIC Group Limited v AIG Group Limited [2022] NSWSC 999

CIMIC Group Limited v AIG Group Limited [2022] NSWSC 999

CIMIC breached its pre-inception duty of disclosure (s 21 IC Act) and made a misrepresentation by not disclosing material facts regarding the Iraq File Note when taking out the 2011 policies. The Court found the 2011 Insurers did not waive their s 28(3) rights for Company Securities claims, and on the evidence, had they known, the insurers would have excluded the risk or declined renewal on the same terms. Consequently, the 2011 Insurers’ liability for Company Securities claims (class actions and settlement) is reduced to nil under s 28(3) IC Act. The 2011 Insurers remain liable for certain AFP and Iraq-related ASIC Investigation Costs. Non-Iraq ASIC Investigation and Gregg Prosecution...

Parties
Plaintiff: CIMIC Group Ltd; First Defendant: AIG Australia Ltd; Second Defendant: Chubb Insurance Australia Ltd; Third Defendant: Catlin Syndicate Ltd; Fourth Defendant: Catlin Australia Ltd; Fifth Defendant: Liberty Mutual Insurance Company; Sixth Defendant: Berkley Insurance Company; Seventh Defendant: Swiss Re International SE; Eighth Defendant: Zurich Australian Insurance Ltd; Ninth Defendant: Arch Underwriting at Lloyd's Limited on behalf of Syndicate 2012; Tenth Defendant: Dual Australia Pty Ltd
Jurisdiction
Australia
Judgment Date
27 July 2022
Procedural Posture
Equity (insurance Contract Dispute) / Principal Judgment on Liability, Declaratory Relief, and Directions Regarding Quantification and Costs; Interest and Quantum to Be Determined at Subsequent Hearing.
Outcome
2011 Insurers entitled to reduce liability for Company Securities claims to nil under s 28(3) Insurance Contracts Act 1984 (Cth) due to non-disclosure; 2011 Insurers (other than Catlin as per continuity date) liable for indemnity for Iraq AFP Investigation and Iraq ASIC Investigation Costs; Chubb liable for Non-Iraq...
Legal Topics
Directors and Officers Liability Insurance, Duty of Disclosure, Non Disclosure and Misrepresentation, Construction of Insurance Policy, Continuity Clause, Contribution Between Insurers, Limitation of Actions, Declaratory Relief, Interest Under Insurance Contracts Act
Insurance Law Contract Law Equity Civil Procedure Directors and Officers Liability Insurance Duty of Disclosure Non Disclosure and Misrepresentation Construction of Insurance Policy +5 more

Case Brief

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Parties

CIMIC Group Ltd

Plaintiff

AIG Australia Ltd

First Defendant

Chubb Insurance Australia Ltd

Second Defendant

Catlin Syndicate Ltd

Third Defendant

Catlin Australia Ltd

Fourth Defendant

Liberty Mutual Insurance Company

Fifth Defendant

Berkley Insurance Company

Sixth Defendant

Swiss Re International SE

Seventh Defendant

Zurich Australian Insurance Ltd

Eighth Defendant

Arch Underwriting at Lloyd's Limited on behalf of Syndicate 2012

Ninth Defendant

Dual Australia Pty Ltd

Tenth Defendant

Procedural Posture

Equity (insurance Contract Dispute) / Principal Judgment on Liability, Declaratory Relief, and Directions Regarding Quantification and Costs; Interest and Quantum to Be Determined at Subsequent Hearing.

Legal Issues

  1. 1 Whether CIMIC breached its duty of disclosure and/or made a misrepresentation pre-inception of the 2011 policy period regarding the Iraq File Note
  2. 2 Whether the 2011 Insurers are entitled under the Insurance Contracts Act 1984 (Cth) s 28(3) to reduce their liability for Company Securities claims to nil due to non-disclosure or misrepresentation
  3. 3 Proper construction of key policy clauses (notably cl 7.1 Non-Rescindability and cl 5.3 Continuity Clause)

Ratio Decidendi

CIMIC breached its pre-inception duty of disclosure (s 21 IC Act) and made a misrepresentation by not disclosing material facts regarding the Iraq File Note when taking out the 2011 policies. The Court found the 2011 Insurers did not waive their s 28(3) rights for Company Securities claims, and on the evidence, had they known, the insurers would have excluded the risk or declined renewal on the same terms. Consequently, the 2011 Insurers’ liability for Company Securities claims (class actions and settlement) is reduced to nil under s 28(3) IC Act. The 2011 Insurers remain liable for certain AFP and Iraq-related ASIC Investigation Costs. Non-Iraq ASIC Investigation and Gregg Prosecution...

Court Disposition

2011 Insurers entitled to reduce liability for Company Securities claims to nil under s 28(3) Insurance Contracts Act 1984 (Cth) due to non-disclosure; 2011 Insurers (other than Catlin as per continuity date) liable for indemnity for Iraq AFP Investigation and Iraq ASIC Investigation Costs; Chubb liable for Non-Iraq...

Orders

  • Parties to confer and provide agreed short minutes of order to give effect to reasons and appropriate costs orders within 7 days of judgment publication.
  • Failing agreement, parties to provide competing proposed orders, with submissions (within 10 pages) and any necessary evidence, within 10 days of judgment publication.