Court of Appeal Supreme Court New South Wales Medium Neutral Citation: Citiline Concrete Pumping Pty Ltd v Chubb Insurance Australia Ltd [2023] NSWCA 123 Hearing dates: 30 May 2023 Date of orders: 1 June 2023 Decision date: 01 June 2023 Before: Ward P, Meagher and Kirk JJA at [1] Decision: 1. Order that the appeal be dismissed with costs. 2. Note that the costs in order 1 include the respondent's costs of its motion filed on 30 January 2023. Catchwords: INSURANCE — Claim — Plant and equipment policy — Non-disclosure and misrepresentation — insurer entitled to reduce liability to nil Legislation Cited: Insurance Contracts Act 1984 (Cth) ss 21(1), 26(2), 28(1), (3), 56(1) Cases Cited: Nil Texts Cited: Nil Category: Principal judgment Parties: Citiline Concrete Pumping Pty Ltd (Appellant) Chubb Insurance Australia Ltd (Respondent) Representation: Counsel: P Menzies KC with KP Tang (Appellant) MT McCulloch SC with C Purdy (Respondent) Solicitors: Fortis Law (Appellant) HWL Ebsworth (Respondent) File Number(s): 2022/288094 Publication restriction: Nil Decision under appeal Court or tribunal: Supreme Court of New South Wales Jurisdiction: Equity — Commercial List Citation: [2022] NSWSC 1152 Date of Decision: 30 August 2022 Before: Stevenson J File Number(s): 2021/10722 [Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.] JUDGMENT 1. THE COURT: The primary judge (Stevenson J) dismissed the appellant's (Citiline) claim against the respondent insurer (Chubb) to an indemnity against property damage to its Volvo truck and attached Boom Pump which occurred on 21 February 2019 (Citiline Concrete Pumping Pty Ltd v Chubb Insurance Australia Ltd (No 2) [2022] NSWSC 1152). 2. His Honour did so on two bases. Each was separately sufficient to justify Chubb's rejection of Citiline's claim and the dismissal of the proceedings. First, Citiline failed to comply with its duty of disclosure and made a misrepresentation to Chubb before the contract was entered into, entitling Chubb to reduce its liability in respect of Citiline's claim to nil under the Insurance Contracts Act 1984 (Cth), s 28(1), (3) (the Act). Secondly, Citiline's claim was made fraudulently, entitling Chubb to refuse payment of that claim under s 56(1) of the Act. Grounds of appeal 1. Citiline's amended notice of appeal contains the following two grounds of appeal: 1. Stevenson J erred in making findings on the evidence to support either the director or plant operator were aware at the time of seeking indemnity from the defendant on the insurance policy that: a. The plant had suffered damage on a previous occasion; b. The plant had failed at the same point previously; and c. Any repairs which were carried out were substandard and ineffective. 2. The Trial Judge erred in relation to making any findings of fraud made in the absence of evidence. 1. In the course of the truncated hearing of the appeal, grounds 1(b) and (c) were abandoned. That decision, communicated by junior counsel, was plainly correct. There were no such findings made or relied on by the primary judge in reaching the first of the conclusions outlined above. 2. Ground 1(a) is directed to one of the underlying facts which the primary judge found had not been disclosed in breach of Citiline's duty of disclosure under s 21(1) of the Act. For the reasons which follow, this ground must be dismissed. 3. Ground 2 is directed to the second of the conclusions outlined above. It is unnecessary to address this ground because the dismissal of ground 1(a) is dispositive of the appeal from the order dismissing Citiline's summons. The findings as to non-disclosure and misrepresentation 1. The Chubb Mobile Plant & Equipment Policy was current from 31 January 2019 to 31 January 2020. The policy was arranged by a broker acting on behalf of Citiline. In the email exchanges on 24 January 2019 which preceded the placement of cover, the broker's description of the risk to be quoted on by Chubb included: Current Insurance: Expired in Sept last year as not working. Insurer Unknown. No accidents / claims / convictions 1. In his response two hours later, the Chubb underwriter, having attached his quote and the applicable policy wording, noted: Terms are issued on the basis of: • nil losses or claims last 5 years; • nil dry hire of machines; … 1. There was no reply to this email correcting what the underwriter had identified as the basis for issuing the terms. 2. The position in fact was that Citiline had not previously insured the assets and undertaking of its business, which was described in the broker's email as "Concrete Pumping", against material damage and third-party liability. 3. However, there had been two previous incidents involving significant damage to the Volvo truck and Boom Pump. The first occurred on 23 August 2017, when a tow crane operated by the head contractor on the relevant site backed into, and collided with, that machinery. The second occurred a little over a year later on 11 September 2018 on another site, when a piece of metal became detached from a Boral concrete agitator truck, fouling the Boom Pump's pumping apparatus. 4. Neither of these incidents involved fault on the part of Citiline, which recovered, in each case from the insurers of the party responsible for the incident, $450,000 in relation to the first, and in the order of $197,000 in relation to the second. 5. Nevertheless, each involved an event which was unexpected or unintended that resulted in loss or damage to the principal asset used in Citiline's concrete pumping business. Accordingly, each event involved an "accident" and, from the perspective of the business, a "loss" being the damage sustained to the equipment as a result of each event. As would have been clearly understood between the broker and Chubb, the damage to the truck and Boom Pump in each event would also have been insured under a comprehensive material damage policy of the kind sought by the broker. 6. These incidents were not disclosed to Chubb at the time the insurance was being negotiated by Citiline's broker and, as appears above, a statement was made by the broker to the effect that there had been no such incidents. Disposition 1. Ground 1(a) challenges the primary judge's findings in relation to occurrence of each of these incidents. That ground must be rejected. There is ample evidence establishing the happening of those events, and in the proceedings before the primary judge their occurrence was not contested. 2. Although not challenged in terms, the primary judge's finding that Citiline failed to comply with its duty of disclosure with respect to these two events involved no error. The relevant circumstances included that Citiline had an experienced broker acting on its behalf, and that in the email exchanges the underwriter had made clear that the quoted terms were issued on the basis of "nil losses or claims", which, in one way or another, communicated that there had been no significant loss of or damage to machinery or equipment of the concrete pumping business. As a result of those exchanges, the broker was left in no doubt before the contract was entered into as to the relevance to the underwriting exercise of the fact of any earlier accidents or events resulting in loss of or damage to such machinery or equipment. 3. His Honour's finding that there was a misrepresentation was also justified. The broker's first email relevantly stated with respect to a business which was described as having been conducted for "4 years" that there had been "No accidents". Before the primary judge, it was contended that this description was to be understood as referring only to accidents in which Citiline had been at fault. His Honour rightly rejected that argument on the basis that the policy covered any accidental damage to property and irrespective of whether the cause was a third party or the insured; and that accordingly it was relevant that the insurer know of any accidents which had resulted in loss or damage. Accordingly, the reference to "accidents" in the broker's email, and for the same reason the reference to "losses" in the underwriter's response, was to any incidents resulting in loss or damage to property of the business. 4. It followed that the statement that there had been no accidents in the conduct of Citiline's business was not correct. For the same reasons as are given above in relation to non-disclosure that statement constituted a 'misrepresentation' within s 26(2) of the Act because a reasonable person in the circumstances could be expected to have known that such a statement would have been relevant to Chubb's decision to accept the risk, and, if so, on what terms. 5. Finally, the evidence of Mr Leafe, a senior underwriter at Chubb, was that if the broker or Citiline had disclosed the two earlier incidents, Chubb would not have provided any of the cover sought. That evidence was not challenged before the primary judge, who made a finding to that effect (J[44]); and that finding is not challenged in the appeal. Conclusion 1. Ground 1(a) fails and the above analysis shows that the primary judge did not err in dismissing Citiline's claim to an indemnity on the basis that there was non-disclosure and misrepresentation entitling Chubb to reduce its liability to nil. 2. As stated at the outset, this conclusion makes it unnecessary to address ground 2. 3. The appeal should be dismissed with costs. 4. For the avoidance of doubt those costs would include Chubb's costs of its motion filed on 30 January 2023 that the appeal be summarily dismissed. The basis of the motion was that the appeal could not succeed in circumstances where the notice of appeal, as it then stood, did not challenge the finding of the primary judge that Citiline's claim was made fraudulently, which was the second and independent basis for the judge's rejection of Citiline's claim. In response to that motion Citiline amended its notice of appeal so as also to challenge that finding. That change meant it was not necessary to determine the motion. Nevertheless, the motion was reasonably brought and Chubb should have its costs. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 01 June 2023