The Owners – Strata Plan 89005 v Stromer (No 2)

In these proceedings the Owners Corporation seeks damages and other relief against the defendant builders (the “Stromer parties”).

By a Cross-Claim filed on 23 December 2021 the Stromer parties seek relief against Mondan Management Pty Ltd trading as Vic Lilli & Partners, the certifier of the relevant project and the entity that certified an occupation certificate issued in relation to the project on or about 16 November 2013.

The certifier is now in liquidation.

The certifier is named as insured under a policy issued by Lloyd’s syndicates.

By Notice of Motion filed on 6 June 2022 the Stromer parties seek leave under s 5 of the Civil Liability (Third Party Claims Against Insurers) Act 2017 (NSW) to continue their proceedings against the Lloyd’s syndicates.

In order to obtain such leave, the Stromer parties must show, among other things, that there is an arguable case that the relevant policy would respond to a claim made against it by the certifier.

In my opinion there is no such arguable claim.

The policy is a “claims made” policy.

Section 1 cl 1 reads, taking into account the amendments made by the Addenda at cll 2-3:

The policy period was 30 September 2013 to 30 September 2014. The claim made on the insured was done so by the Cross-Claim of 23 December 2021.

Mr O'Sullivan, who appeared for the Stromer parties, contends that the policy responds by reason of provisions in what he described as a "carve out", being an “Australian Conditions Endorsement”.

That endorsement provides that where, as is the case here, the policy “includes the jurisdiction of Australia”, the conditions set out therein are added to the policy and override any existing terms or conditions.

The first of those conditions is as follows:

Mr O'Sullivan also relies upon cl 4 in the endorsement, which is in the following terms:

It appears to me that the only effect of cl 1 in the endorsement is to extend the subject matter of claims that may be made under the policy to those therein described, namely claims for misleading or deceptive conduct under s 52 of the Trade Practices Act 1974 (Cth) and its analogues. I cannot see how the wording of that endorsement in any way affects the “claims made” nature of the policy as set out in cl 1.

As to cl 4 in the endorsement, its effect, it seems to me, is to do no more than remove from the ambit of the policy wording which, but for the condition, would provide the insured with an ability to notify the insurer of circumstances which may give rise to a claim and to thereafter contend that any claim thereafter made would fall within the ambit of the policy.

I do not see that cl 4 in the endorsement, even arguably, can somehow affect the nature of the policy as being a “claims made” policy.

For that reason alone, the application for leave under the Civil Liability (Third Party Claims Against Insurers) Act must be refused.

Alternatively, the Stromer parties seek leave to proceed against the certifier in liquidation.

Mr O'Sullivan informs me that the liquidator is aware that that application might be made and neither opposes nor consents to it. I invite Mr O'Sullivan to provide my Associate with a Short Minute of the orders which he seeks under section 471B of the Corporations Act 2001 (Cth). That Short Minute of Order should include a provision that leave is granted subject to the condition that any judgment obtained against the company in liquidation may be enforced only by way of lodgement on that proof of debt in the winding up.

The Notice of Motion is otherwise dismissed with costs.