Zurich Australian Insurance Limited v CIMIC Group Limited & Ors [2024] NSWCA 229

Court of Appeal Supreme Court New South Wales Medium Neutral Citation: Zurich Australian Insurance Limited v CIMIC Group Limited & Ors [2024] NSWCA 229 Hearing dates: 19-22 September 2023 Date of orders: 18 September 2024 Decision date: 18 September 2024 Before: White JA, Stern JA and Griffiths AJA Decision: (1) Zurich Appeal (2022/00334409) (a) Zurich's appeal allowed in part. (b) CIMIC's cross-appeal dismissed. (c) AIG's cross-appeal dismissed. (2) Berkley Appeal (2022/00334264) (a) Berkley's appeal allowed. (b) CIMIC's cross-appeal dismissed. (3) Arch/Dual Appeal (2022/00335502) (a) Arch/Dual's appeal allowed. (4) Chubb Appeal (2022/00336236) (a) Chubb's appeal dismissed. (5) Set aside Orders 9, 10, 11 and 13 made on 12 October 2022 and Orders 7 and 8 made on 23 June 2023. (6) In lieu thereof order that: (a) Subject to the relief granted by Orders 2 to 5 made on 12 October 2022 and Orders 1-6 and 9 made on 23 June 2023, CIMIC's further amended summons dismissed with costs. (b) AIG's first cross-claim against Berkley dismissed with costs. (7) Within 28 days hereof the parties provide the Court with consent orders as to the costs of the proceedings in this Court, to the extent agreement has been reached. (8) To the extent agreement as to the costs of the appeals, cross-appeals, and notices of contention has not been reached, within 28 days hereof the parties concerned are to file and serve written submissions not exceeding six pages identifying the areas of disagreement and containing that party's submissions on the matters in contention concerning costs. The issues of costs will, subject to any contrary order, be dealt with on the papers and without a further hearing. Catchwords: INSURANCE – Insurance Contracts Act 1984 (Cth) – non-disclosure and misrepresentation – duty of disclosure – where senior executive of Leighton made a file note in November 2010 detailing conversations with another senior executive ("Iraq File Note") – where that executive advised he had an opportunity to extend/vary a contract for a major infrastructure project in Iraq but it would require payment to a third party nominated subcontractor of $50-$60 million where the real value of the work was less than 50% of the payment, and that the current contract was won by a payment to a nominated subcontractor "on the same terms" – where Iraq File Note not disclosed to insurers for 2011 year ("2011 Insurers") – where Leighton subsequently entered into primary and excess layers of D&O Insurance for the 2011 year ("2011 Policies") – whether Leighton breached its duty of disclosure under s 21 of the Insurance Contracts Act and made a misrepresentation to the 2011 Insurers INSURANCE – Insurance Contracts Act 1984 (Cth) – whether the 2011 Insurers were entitled to reduce their liability to nil under s 28(3) of the Insurance Contracts Act INSURANCE – Liability insurance – directors and officers – whether cll 5.3 and 7.1 of the 2011 Policy precluded the 2011 Insurers from reducing their liability under s 28 of the Insurance Contracts Act – whether cl 5.3(ii) of the 2011 Policy operated so that limit of liability under previous years policy (as reduced by amounts previously paid) applied to CIMIC's claims INSURANCE – Insurance Contracts Act 1984 (Cth) – contribution – whether AIG entitled to equitable contribution of 50% from Berkley and Swiss Re – where, without recourse to s 54 of the Insurance Contracts Act, AIG could not have contribution from Berkley – whether an omission to form an expectation that a claim could arise is a relevant omission for the purposes of s 54 of the Insurance Contracts Act INSURANCE – Liability insurance – directors and officers – where primary judge granted declaratory relief against insurers for the 2010 year – whether Court had jurisdiction to grant declaratory relief or alternatively whether the exercise of jurisdiction to grant declaratory relief miscarried APPEALS – Procedural fairness – whether primary judge denied Berkley procedural fairness in limiting its cross-examination of two witnesses Legislation Cited: Australian Securities and Investments Commission Act 2001 (Cth), s 33 Bankruptcy Act 1966 (Cth) Commonwealth Constitution, Ch III, s 76(ii) Corporations Act 2001 (Cth), ss 9, 181, 184, 1307 Corrections Management Act 2007 (ACT) Corrective Services Regulation 1989 (Qld), s 13(2) Evidence Act 1995 (NSW), ss 69, 136, 140 Foreign Corrupt Practices Act, 15 USC §§ 78dd-1 (1977) Insurance Contracts Act 1984 (Cth), ss 21, 27AA, 28, 40, 51(1), 54, 57 Judiciary Act 1903 (Cth), s 39(2) Limitation Act 1969 (NSW), s 14(1)(a) Migration Act 1958 (Cth), ss 417, 485 Supreme Court Act 1970 (NSW), ss 63, 75 Cases Cited: Aidzan Pty Ltd (in liq) v K. & A. Laird (N.S.W.) Pty Ltd (in liq) [2024] NSWCA 185 Ainsworth v Criminal Justice Commission (1992) 175 CLR 564; [1992] HCA 10 Albion Insurance Company Limited v Government Insurance Office of New South Wales (1969) 121 CLR 342; [1969] HCA 55 All Class Insurance Brokers Pty Ltd (in liq) v Chubb Insurance Australia Limited (No 2) [2021] FCA 782 Anderson v Canaccord Genuity Financial Ltd (2023) 113 NSWLR 151; [2023] NSWCA 294 Antico v Heath Fielding Australia Pty Limited (1997) 188 CLR 652; [1997] HCA 35 Aussie Airlines Pty Ltd v Australian Airlines Ltd (1996) 68 FCR 406 Aussie Tax Pty Ltd v Markel Capital Limited [2008] VSC 592 Australian Broadcasting Corporation v Wing (2019) 271 FCR 632; [2019] FCAFC 125 Australian Hospital Care Pty Ltd v Swinbank (Court of Appeal (Qld), 9 July 1999, unrep) Australian Securities and Investments Commission v Hellicar (2012) 247 CLR 345; [2012] HCA 17 Australian Securities and Investments Commission v Westpac Banking Corporation (No 2) (2018) 266 FCR 147; [2018] FCA 751 Avant Insurance Ltd v Burnie [2021] NSWCA 272 AZC20 v Minister for Immigration, Citizenship, Migrant Services and Multicultural Affairs [2023] HCA 26; (2023) 97 ALJR 674 Bartz v Department of Corrective Services [2000] QSC 336 Bass v Permanent Trustee Company Limited (1999) 198 CLR 334; [1999] HCA 9 Blair v Curran (1939) 62 CLR 464; [1939] HCA 23 Boensch v Pascoe (2019) 268 CLR 593; [2019] HCA 49 Bradshaw v McEwans Pty Ltd (1951) 217 ALR 1 Branir Pty Ltd v Owston Nominees (No 2) Pty Ltd (2001) 117 FCR 424; [2001] FCA 1833 Brighton Ceiling Pty Ltd v Pocrnja [2005] NSWCA 175 Briginshaw v Briginshaw (1938) 60 CLR 336; [1938] HCA 34 Brotherton v Aseguradora Colseguros SA (No 2) [2003] EWCA Civ 705; [2003] 2 All ER (Comm) 298 Burgundy Royale Investments Pty Ltd v Westpac Banking Corporation (1987) 18 FCR 212 Cabal v United Mexican States (2001) 108 FCR 311; [2001] FCA 427 Caledonia North Sea Ltd v London Bridge Engineering Ltd 2000 SLT 1123 Cantone v Insurance Australia Limited [2022] FCA 1009 CGU Insurance Limited v Blakeley (2016) 259 CLR 339; [2016] HCA 2 CGU Insurance Ltd v Porthouse (2008) 235 CLR 103; [2008] HCA 30 Chamberlain v The Queen (No 2) (1984) 153 CLR 521; [1984] HCA 7 CIMIC Group Limited v AIG Australia Limited (No 2) [2023] NSWSC 640 Commercial Union Assurance Co of Australia Ltd v Beard (1999) 47 NSWLR 735; [1999] NSWCA 422 Commercial Union Assurance Company of Australia Ltd v Ferrcom Pty Ltd (1991) 22 NSWLR 389 Edwards v Santos Limited (2011) 242 CLR 421; [2011] HCA 8 ET-China.com International Holdings Ltd v Cheung [2021] NSWCA 24 FAI General Insurance Co Limited v Australian Hospital Care Pty Limited (2001) 204 CLR 641; [2001] HCA 38 FAI General Insurance Co Ltd v Australian Hospital Care Pty Ltd (1999) 153 FLR 448 Fencott v Muller (1983) 152 CLR 570; [1983] HCA 12 Forster v Jododex Australia Pty Limited (1972) 127 CLR 421; [1972] HCA 61 Galaxy Communications Pty Ltd v Paramount Films of Australia Inc [1998] NSWCA 89 GIO General Limited v Wallace [2001] NSWCA 299 Gregg v R [2020] NSWCCA 245 Gregory v Philip Morris Ltd (1988) 80 ALR 455 HIH Casualty and General Insurance Ltd v Chase Manhattan Bank [2003] UKHL 6; [2003] 1 All ER (Comm) 349 HIH Claims Support Limited v Insurance Australia Limited (2011) 244 CLR 72; [2011] HCA 31 Hobart International Airport Pty Ltd v Clarence City Council (2022) 276 CLR 519; [2022] HCA 5 House v The King (1936) 55 CLR 499; [1936] HCA 40 Inversiones Manria S.A. v Sphere Drake Insurance Co. Plc. (The 'Dora') [1989] 1 Lloyd's Rep 69 Islam v Director-General, Justice and Community Safety Directorate [2022] ACTSC 124 Jennings v Wilden [2023] NSWCA 41 Jones v Dunkel (1959) 101 CLR 298; [1959] HCA 8 Khoury v Government Insurance Office of New South Wales (1984) 165 CLR 622; [1984] HCA 55 Kimberley Developments Pty Ltd v Bale [2023] NSWCA 25 Kuru v State of New South Wales (2008) 236 CLR 1; [2008] HCA 26 Lee v Lee (2019) 266 CLR 129; [2019] HCA 28 Lend Lease Real Estate Investments Ltd v GPT RE Ltd [2006] NSWCA 207 Lohar Corporation Pty Ltd v Dibu Pty Ltd (1975) 1 BPR 9177 Luxton v Vines (1952) 85 CLR 352; [1952] HCA 19 Macks v Viscariello (2017) 130 SASR 1; [2017] SASCFC 172 Macteldir Pty Limited v Dimovski [2005] FCA 1528 Manchester Unity Total Care Building Society v MGICA Ltd (1991) 6 ANZ Ins Cas 61-062 Mann v Paterson Constructions Pty Limited (2019) 267 CLR 560; [2019] HCA 32 Maxwell v Highway Hauliers Pty Ltd (2014) 252 CLR 590; [2014] HCA 33 Meridian Global Funds Management Asia Ltd v Securities Commission [1995] 2 AC 500 Minister for Immigration and Multicultural Affairs v Ozmanian (1996) 71 FCR 1 Moltoni Corporation Pty Limited v QBE Insurance Limited (2001) 205 CLR 149; [2001] HCA 73 Murphy v Abi-Saab (1995) 37 NSWLR 280 National Australia Bank Limited v Nautilus Insurance Pte Ltd (No 2) [2019] FCA 1543 Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd [1992] HCA 66; (1992) 67 ALJR 170 Neeta (Epping) Pty Limited v Phillips (1974) 131 CLR 286; [1974] HCA 18 Nicholls v Michael Wilson & Partners Limited [2010] NSWCA 222 Onley v Catlin Syndicate Ltd as the Underwriting Member of Lloyd's Syndicate 2003 [2018] FCAFC 119 Palmer v Ayres (2017) 259 CLR 478; [2017] HCA 5 Permanent Trustee Australia Limited v FAI General Insurance Company Limited (in liq) (2003) 214 CLR 514; [2003] HCA 25 Plaintiff M61/2010E v The Commonwealth of Australia (2010) 243 CLR 319; [2010] HCA 41 Prepaid Services Pty Ltd v Atradius Credit Insurance NV [2013] NSWCA 252 Prepaid Services Pty Ltd v Atradius Credit Insurance NV [2014] NSWCA 440 QBE Insurance (Australia) Ltd v Lumley General Insurance Ltd (2009) 24 VR 326; [2009] VSCA 124 R v Commonwealth Court of Conciliation and Arbitration; Ex parte Barrett (1945) 70 CLR 141; [1945] HCA 50 Re James; Ex parte Carter Holt Harvey Roofing (Aust) Pty Ltd (1993) 46 FCR 183 Robinson Helicopter Company Incorporated v McDermott [2016] HCA 22; (2016) 90 ALJR 679 Royal Guardian Mortgage Management Pty Ltd v Nguyen [2016] NSWCA 88 Sanderson Computers Pty Ltd v Urica Library Systems BV (1998) 44 NSWLR 73 Stealth Enterprises Pty Ltd t/as The Gentlemen's Club v Calliden Insurance Limited [2017] NSWCA 71 Strive Shipping Corp v Hellenic Mutual War Risks Association (Bermuda) Ltd (The 'Grecia Express') [2002] EWHC 203 (Comm); [2002] 2 All ER (Comm) 213 Tosich v Tasman Investment Management Limited [2008] FCA 377 Trans Realties Pty Ltd v Grbac [1975] 1 NSWLR 170 Unions NSW v New South Wales [2023] HCA 4; (2023) 97 ALJR 150 Uniting Church in Australia Property Trust (NSW) v Allianz Australia Insurance Limited (Liability Judgment) [2023] FCA 190 Viterra Malt Pty Ltd v Cargill Australia Limited [2023] VSCA 157 Warren v Coombes (1979) 142 CLR 531; [1979] HCA 9 Wass v Director of Public Prosecutions (NSW) (2023) 111 NSWLR 210; [2023] NSWCA 71 Watkins Syndicate 0457 at Lloyds v Pantaenius Australia Pty Ltd (2016) 244 FCR 5; [2016] FCAFC 150 Yarrabee Coal Company Pty Ltd v Lujans [2009] NSWCA 85 Texts Cited: Insurance Contracts Bill 1984 (Cth) JD Heydon, MJ Leeming and PG Turner, Meagher, Gummow and Lehane's Equity: Doctrine & Remedies (5th ed, 2014, Butterworths) Mark Leeming, Authority to Decide: The Law of Jurisdiction in Australia (2nd ed, 2020, The Federation Press) RS French, "Declarations – Homer Simpson's Remedy – is there anything they cannot do?" (2007) Federal Judicial Scholarship 24 Category: Principal judgment Parties: Zurich Appeal (2022/334409) Zurich Australian Insurance Limited (Appellant) CIMIC Group Limited (First Respondent) AIG Australia Limited (Second Respondent) Chubb Insurance Australia Limited (Third Respondent) Catlin Syndicate Limited (Fourth Respondent) Catlin Australia Pty Limited (Fifth Respondent) Liberty Mutual Insurance Company (Sixth Respondent) Berkley Insurance Company (Seventh Respondent) Swiss Re International SE (Eighth Respondent) Arch Underwriting at Lloyd's Limited on Behalf of Syndicate 2012 (Ninth Respondent) Dual Australia Pty Ltd (Tenth Respondent)