Williamson v Sydney Olympic Park Authority

By a notice of motion filed on 10 November 2021, the applicant on the motion, WSP Structures Pty Limited (WSP), relevantly sought an order that Icon Co (NSW) Pty Ltd (Icon), which is the second defendant in these proceedings and which has brought a cross-claim against WSP, give discovery of the following documents:

On 26 November 2021, I made that order and said that I would publish my reasons for doing so later. These are those reasons.

Icon was the design and construct contractor of the Opal Tower high rise residential strata development at Sydney Olympic Park. It is sued in these proceedings by the plaintiffs as representatives of unitholders in the strata development for alleged defects in the building. Icon has filed a cross-claim against WSP, which was the structural engineer engaged by Icon in connection with the construction of the building.

Icon is an insured under the Liability Policy. On 20 July 2021, the Full Court of the Federal Court of Australia handed down its decision in Liberty Mutual Insurance Company Australia Branch trading as Liberty Speciality Markets v Icon Co (NSW) Pty Ltd [2021] FCAFC 126. Relevantly, the Full Court held that any liability that Icon may have to third parties in respect of property damage to the Opal Tower fell within the insuring clause of the Liability Policy.

WSP also claims to be an insured under the Liability Policy. By its list response to Icon’s cross-claim statement, WSP relevantly pleads:

Icon maintained that the discovery it sought is relevant to the issues raised by paragraphs 264 to 266.

Icon’s point in opposition to the motion was simple. The claim it brought was not a subrogated action. The claim was brought by Icon for its own benefit, not for the benefit of Liberty. Consequently, the principle that an insured cannot be subrogated to an action by one co-insured against another had no application in this case. Consequently, the question whether and on what terms Liberty had agreed to indemnify Icon was irrelevant. Accordingly, Icon submitted the documents sought by WSP were irrelevant.

In answer to that submission, WSP submitted that, consistently with its pleading, it was open to it to argue that (1) Icon was not entitled to recover more than its loss; (2) consequently, any amount that Icon has recovered or is entitled to recover from Liberty should be taken into account in assessing damages payable by WSP because otherwise Icon would recover more than its loss or Icon would have to account to Liberty for the over recovery. According to WSP, such an account would not be permitted because effectively it would involve Liberty recovering money from one of its insureds in respect of an insured loss.

WSP’s claim raises a legal issue of whether the principles governing an insurer’s right to be subrogated to a claim by one insured against another extends to a case where an insured may be required to account to an insurer for a payment received from a co-insured. However, in my opinion, it was not appropriate to resolve that issue on a discovery application.

WSP’s claim also raises a factual question of whether Liberty has indemnified Icon (Icon denies that it has except in relation to legal fees) or would be liable to indemnify Icon even if Icon was successful in recovering its whole loss from WSP. In my opinion, the discovery sought by WSP was relevant to that factual question. In my view, it was not an answer to that application that such an arrangement was unlikely. Having regard to the way in which WSP pleaded its case, WSP was entitled to investigate the precise circumstances under which Liberty had indemnified or was liable to indemnify Icon.

It was for those reasons I made the orders I did.