Federal Court of Australia

Allianz Australia Insurance Limited v AIG Australia Limited [2026] FCA 1357

ORDERS

THE COURT ORDERS THAT:

1. Question 1(a)(i) is:

Does Condition 17 of the AIG Policy (the Difference in Conditions clause) apply in the circumstances of this case, to the effect that AIG was not obliged to indemnify Built Tech for any part of the Claimant’s Claim or the VWA Claim?

Answer: Yes.

2. Question 1(a)(ii) is:

Does Condition 17 of the AIG Policy (the Difference in Conditions clause) apply in the circumstances of this case, to the effect that there is no double insurance entitling Allianz to any equitable contribution from AIG to the indemnity payments made by Allianz to Built Tech?

Answer: Yes.

3. It is unnecessary to answer the remaining questions.

4. The application is otherwise dismissed.

5. The applicant is to pay the respondent’s costs of and incidental to the application to be taxed or as agreed.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

DERRINGTON J:

Introduction

1 In these proceedings, the applicant, Allianz Australia Insurance Limited (Allianz), seeks equitable contribution from the respondent, AIG Australia Limited (AIG), in respect of indemnity payments made by Allianz to Built Tech Hoardings Pty Ltd (Built Tech).  The contribution is sought on the basis that Built Tech allegedly held “double insurance” pursuant to policies issued by both Allianz and AIG.

2 The central issue concerns the construction and operation of a “Difference in Conditions” clause (often referred to as an “Other Insurance” clause) in a policy of annual public liability insurance issued by AIG (the “AIG Policy”).  If it applies, the indemnity provided by that policy to Built Tech is reduced to excess cover only in respect of any loss which is not covered by another policy.  On that basis, there would be no double insurance of the loss which Allianz has indemnified and, in turn, no obligation upon AIG to pay any equitable contribution.  Conversely, if the clause does not apply, AIG will be co-ordinately liable to indemnify Built Tech in respect of the loss and, therefore, required to contribute to the indemnity previously provided by Allianz.

3 The prima facie and natural meaning of the Difference in Conditions clause is that it operates in relation to those who fall within the defined scope of the term “Named Insured”.  An ordinary reading of that term suggests that Built Tech would be so characterised, such that the Difference in Conditions clause applies to limit the AIG Policy to cover excess liability only, thereby excluding the possibility of double insurance.

4 However, in the first instance, both parties submit that the natural and ordinary meaning of the AIG Policy’s terms should not be accepted.  Allianz asserts that, properly construed, Built Tech is not a Named Insured, such that the Difference in Conditions clause does not apply.  Conversely, AIG submits that the term “Named Insured” should be read as “Insured” for the purposes of the Difference in Conditions clause, such that it applies to Built Tech even if it cannot be characterised as a Named Insured.  That construction is also preferable for AIG because it substantially narrows the scope of the indemnity generally provided under its policy, given it would operate only as an excess policy in the event that any insured is covered by other insurance.  Alternatively, AIG contends that, even if the Difference in Conditions clause operates only in relation to the Named Insureds, Built Tech nonetheless falls within the meaning of that term.

5 Both parties recognise that the AIG Policy, which appears to be a broker’s policy, is poorly drafted and contains several infelicitous expressions.  Those criticisms are not without foundation. Indeed, there are many deficiencies in, and misuses of, the defined terms throughout the AIG Policy which give rise to several constructional difficulties.  However, whilst the Court must take account of the imprecise manner in which the policy was prepared, that does not permit it to disregard the contractual intention objectively derived from its terms.

Background

6 The underlying factual matrix in these proceedings is not in dispute.  In broad terms, the parties have appropriately reached agreement as to the facts which give rise to the question of construction.

The D&C Contract and Insurance Obligations

7 On 24 May 2021, Icon SI (Aust) Pty Ltd (Icon SI) entered into a Design and Construct Contract (D&C Contract) with Building Communities (Vic) Limited, for the construction of a building project in Brighton, Victoria (Project).

8 Relevantly, the D&C Contract imposed a number of insurance obligations on Icon SI, in its capacity as the D&C Contractor.  By cl 44.1, it was obliged to procure and maintain “Development Phase Insurances” and any additional insurance which a prudent D&C Contractor would obtain. The Insurance Schedule to the D&C Contract identified that the “Development Phase Insurances” relevantly included “Contract Works Insurance (Public Liability)”, which was to extend cover to, inter alia, subcontractors engaged in respect of the “Development Activities” and each other party which had an insurable interest or was required to be insured under any “Project Document”.

9 By cl 44.4, Icon SI was required to ensure that each insurance included, as named insureds, all persons to whom the benefit of its cover was required to extend under the D&C Contract.

Subcontract between Icon SI and Built Tech

10 On 16 August 2021, Icon SI entered into a Subcontract with Built Tech in relation to the Project.

11 Pursuant to cl 4 of the “Operative Provisions” of the Subcontract, Built Tech agreed to carry out and complete the “Subcontract Works” and perform all obligations thereunder.  Clause 9 of the “Minor Works Subcontract Conditions” required Built Tech to effect and maintain public liability insurance for an amount not less than $20,000,000 per occurrence.

The Allianz Policy

12 Allianz issued a public and products liability policy to Built Tech, covering the period from 4 July 2021 to 4 July 2022 (Allianz Policy).  It indemnified Built Tech for, inter alia, all amounts for which it became legally liable to pay as compensation for personal injury as a result of an “Occurrence” in connection with Built Tech’s business, which it described as “erection & building of Hoardings”.

The AIG Policy

13 The AIG Policy is an annual public liability policy (Policy No. AU000028CE) covering the entities comprising the Icon group, on a turnover basis, for the period 31 March 2022 to 31 March 2023.

14 The schedule to the AIG Policy relevantly contains the following:

NAMED INSURED         Kajima Australia Pty Ltd

Kajima Construction Australia Pty Ltd

Kajima Icon Holdings Pty Ltd

Icon Corporate Services Pty Ltd

Icon Co Holdings Pty Ltd

Icon SI (Aust) Pty Ltd

Icon Co (NSW) Pty Ltd

Icon Co (Aust) Pty Ltd

Minicon Construction (Qld) Pty Ltd

Icon Co (Qld) Pty Ltd

Icon Co Pty (NZ) Limited

Minicon Construction (Aust) Pty Ltd

Barpa Pty Ltd

Barpa (Qld) Pty Ltd

Interface Cladding and Facades Pty Ltd

and/or affiliated and / or subsidiary companies and/or controlled companies as defined in the Corporations Law of Australia and / or Companies Act 1993 of New Zealand (a reference to these legislations include any amendment, re-enactment, replacement, or successor legislation) now or previously existing or hereafter formed or acquired

The Owner and Principal and all contractors and sub-contractors and other parties as required by contract or agreement.

OTHER INSUREDS    All others as defined herein, all for their respective rights and interests.

DESCRIPTION OF

THE BUSINESS    Principally Residential, Commercial, Industrial, Civil and Mechanical construction contractors including but not limited to building contractors, water & waste water treatment construction, early contractor involvement, collaborative contracting, design management, design and construct contractors, project management, construct only contractors, providers of specialist systems and controls, cladding and facades; Property Owners and or Occupiers, and all other occupations and activities incidental thereto.

INTEREST INSURED     All Contracts and/or Work of every kind and description whatsoever undertaken by or for the Insured during the Policy Period in connection with the Business.

15 The section headed “Insuring Clause” contains the following:

1.    EXTENT OF COVER

The Insurer agrees to indemnify the Insured in respect of all sums for which the Insured shall become legally obligated to pay as damages and/or compensation in respect of:

(a)     Personal Injury;

…

in connection with the Business of the Insured as a result of an Occurrence or series of Occurrences happening anywhere in the Territorial Limits during the Policy Period.

16 The following appears in the “Definitions” section:

1.     INSURED

In addition to the Named Insured nominated in the Schedule, the “Insured” shall automatically include:

(a)     all subcontractors of any tier. In respect of operations performed by subcontractors and/or sub-contractors for the Insured, such contractors shall be deemed to be included in the name of the Insured, but only as regards the subcontract and/or property of the aforesaid subcontractors;

(b)     any director, partner, executive officer, employee or shareholder of the Insured nominated in the Schedule, but only whilst acting within the scope of their duties in such capacities in connection with the Interest Insured;

(c)     architects, consultants, engineers, surveyors, suppliers and/or consultants whilst on site, but only whilst acting within the scope of their duties in connection with any Contract in respect of their physical on-site activities only;

(d)     bankers, financiers, mortgagors and other similar lending and/or credit institutions, where an obligation exists under Contract or Agreement to include their name as an Insured party in relation to any Contract;

(e)     any other party or person where the Insured nominated in the Schedule assumes an obligation under Contract or Agreement to include their name as an Insured in relation to any Contract.

…

9.        PRINCIPAL

“Principal” shall mean the Principal as defined in any Contract or Agreement insured under this Policy.

…

16.     CONTRACT(S) OR AGREEMENT(S)

“Contract(s) or Agreement(s)” shall mean the contracts or agreements executed between the Insured parties in respect of the Interest Insured.

17 The “Conditions” section of the policy contains the following clauses, which are particularly relevant to the issues for determination:

CONDITIONS

…

2.     ADJUSTMENT OF PREMIUM

At the expiry date of the Policy Period, the Named Insured will provide a declaration of actual turnover insured by this Policy to facilitate adjustment of the Premium at the terms and conditions so agreed, and subject to a minimum retained premium of 90% of the full provisional premium.

…

4.     UNIFORM MEANING

This Policy and the Schedule shall be read together as one contract and any word or expression to which a specific meaning has been given in any part of this Policy or of the Schedule shall bear such meaning wherever it may appear unless such meaning is clearly inapplicable in the context that the word or expression appears.

…

7.     WAIVER OF SUBROGATION

Notwithstanding Condition 1 of this Policy, in the event of the Insurer making payment to any Insured(s), the Insurer shall not exercise any rights of subrogation against any other Insured(s) except in relation to any claim for loss or damage resulting from any breach of a duty owned in a professional capacity by any Insured, other than the Named Insured. Such breach will include but not be limited to a fault, error or omission in design or specification.

---

16.     NON CONTRIBUTION

At the request of the Named Insured, the Insurer agrees that the Insurer will not, under any circumstances, seek contribution for any Occurrence indemnified under the terms of this insurance from the policies held by any of the Insureds under this Policy.

17.     DIFFERENCE IN CONDITIONS

In respect of any indemnity:

(a)     where any other party arranges a separate insurance policy which includes coverage for the Named Insured; or

(b)     where, due to insurance regulations or Contract conditions, any other party is required to arrange a separate insurance policy;

this Policy shall apply (subject to its terms, Conditions and Exclusions) to losses of the Named Insured:

(i)     not recoverable under the separate policy (except as regards any excess applied under that separate insurance policy), and the Excess shall apply to losses recoverable under this Policy;

(ii)     in excess of amounts recovered by the Named Insured under the separate insurance policy, and the Excess shall not apply to losses recoverable under this Policy.

It is further understood and agreed that in respect of any such coverage afforded by this Policy, it extends to include security cover in the event of non-payment of otherwise indemnifiable claims under any such policy to the extent that the claim(s) would be indemnifiable under the terms and Conditions of this Policy, subject to the following additional Conditions:

(a)     This Policy is also to indemnify the Insured for any claims (considered valid by the Insurers on reasonable grounds) not paid under the separate insurance policy within six months of the date of final submission of a fully documented claim on such separate policy. In the event of such a claim the Insured will, as far as is reasonable, pursue settlement under the separate insurance policy as if this Policy did not exist and all monies thereby recovered from the separate policy shall be paid to the Insurers.

(b)     In the event of any lapse and/or cancellation of the separate insurance policy, coverage hereunder shall remain in full force and effect from the date of lapse and/or cancellation until expiry of the Period of Insurance under this Policy (or any earlier date so required by the Insured) providing the works are in accordance with the Business of the Insured described in the Policy. The Referral Projects trigger still applies and cover may be subject to an additional premium.

(c)     Where, due to foreign insurance regulations or Contract conditions, the Named Insured is required to arrange a separate insurance policy, this Policy shall apply (subject to this Policy’s terms and Conditions) only to claims not recoverable by the Insured under the separate insurance policy.

…

19.     PRIMARY CLAUSE

Where required by Contract the Insurer agrees that this Policy will act as primary insurance with respect to the interest of the Named Insured and any other insurance or self-insurance arrangements maintained by the Named Insured is excess to and not contributory with this Policy.

The incident giving rise to the claims

18 The circumstances which gave rise to the claim made upon the Allianz Policy are not disputed.

19 On 28 June 2022, Built Tech, in the course of fulfilling its obligations to Icon SI, modified a gate at the entrance to the construction site where the subcontract was being performed.

20 On 1 July 2022, a traffic controller in the employ of MC Labour Services Pty Ltd was injured when the gate fell on her.  As a consequence, she suffered serious physical and psychiatric injuries.

21 The incident gave rise to two legal proceedings against Built Tech.  The first was a direct claim by the injured worker, commenced in the Victorian County Court (Claimant’s Claim).  The second was brought by the Victorian WorkCover Authority, also in the Victorian County Court (VWA Claim).

22 On or about 23 September 2024, Allianz agreed to indemnify Built Tech in respect of both actions.

23 Ultimately, both proceedings were resolved by agreement.  The Claimant’s Claim was resolved by a Deed of Release dated 19 September 2025, pursuant to which Built Tech agreed to pay $1,000,000 and party and party costs to be assessed.  The VWA Claim was also resolved by a Deed of Release, by which Built Tech agreed to pay $650,000 inclusive of all costs.

24 Allianz indemnified Built Tech for both amounts, as well as Built Tech’s reasonable defence costs which amounted to $36,959.77.  That comprised $18,226.08 for the costs of the Claimant’s Claim and $18,733.69 for the costs of the VWA Claim.

The issues for determination

25 The parties have agreed that the following issues arise for determination:

Issue 1 – The Difference in Conditions Clause

(a) Does Condition 17 of the AIG Policy apply in the circumstances of this case, to the effect that:

(i) AIG was not obliged to indemnify Built Tech for any part of the Claimant’s Claim or the VWA Claim; and

(ii) there is no double insurance entitling Allianz to any equitable contribution from AIG to the indemnity payments made by Allianz to Built Tech?

Issue 2 – Quantum of Indemnity Payments (if the answer to Issue 1 is “No”)

(a) What is the precise quantum of the indemnity payments made by Allianz to Built Tech, comprising:

(i) the full amount of Built Tech’s settlements of the Claimant’s Claim and the VWA Claim (including the quantum of Built Tech’s liability for payment of the Claimant’s costs of the Claimant’s Claim, which remains to be determined); and

(ii) Built Tech’s reasonable defence costs incurred in defending the Claimant’s Claim and the VWA Claim?

Issue 3 – Entitlement to Equitable Contribution

(a) Is Allianz entitled to equitable contribution from AIG in respect of those indemnity payments?

Issue 4 – Quantum of Contribution and Interest

(a) Is 50% of the quantum identified in answer to Issue 2(a) a just and equitable contribution by AIG (and if not, what is a just and equitable contribution); and

(b) Is interest on equitable contribution calculable pursuant to s 57 of the Insurance Contracts Act 1984 (Cth)?

Relevant Principles

Construction of policies of insurance

26 There was no dispute as to the principles applicable to the construction of policies of insurance.  They have been stated and restated on numerous occasions, and there is no need to repeat them here:  see, for example, Onley v Catlin Syndicate Ltd (2018) 360 ALR 92, 100 – 101 [33]; Sayers Property Holdings Pty Ltd v AIG Australia Ltd [2025] VSCA 294 [35] – [36]; Nuix Ltd v Berkshire Hathaway Specialty Insurance Co [2025] FCA 1002 [49].

27 Nevertheless, a significant matter upon which AIG relies is the possibility of absurd or uncommercial results if the term, “Named Insured”, is given its prima facie meaning in the Difference in Conditions clause.  The occasions on which it is appropriate for a court to depart from the ordinary meaning of words used when construing a contract were discussed in Chubb Insurance Australia Ltd v WSP Structures Pty Ltd [2024] FCAFC 123 (Chubb v WSP Structures), where it was held that such a departure is appropriate where the ordinary meaning of the words used would produce an absurd or uncommercial result.  However, in this case, cl 4 of the Conditions in the AIG Policy contains an inbuilt mechanism which provides for departure from the meaning given to a defined term where it is “clearly inapplicable” in the context in which it appears.  Arguably, that provision permits departure from the ordinary meaning in broader circumstances than those recognised under the general law.

The principles of double insurance

28 There is also no dispute as to the principles concerning the right of contribution consequent upon double insurance.  In general terms, it arises when two or more insurers each insure against the same risk, creating a co-ordinate liability to the insured.  It is not necessary that the terms of the respective insurances be the same, or even of the same kind, provided they cover the same risk: QBE Insurance (Australia) Ltd v Allianz Australia Ltd (2020) 377 ALR 338, 348 [60] (QBE Insurance), quoting Albion Insurance Company Limited v Government Insurance Office of New South Wales (1969) 121 CLR 342, 346.

29 Where double insurance exists, an insurer who has paid more than its rateable proportion is entitled in equity to contribution from all co-ordinate insurers of the same liability.  This right reflects the fundamental principle that the burden of satisfying the insured’s liability is to be borne equally between those who have assumed an obligation to indemnify in respect of it.  That includes any costs incurred in defending the underlying claim: QBE Insurance 350 [72].

30 In contribution proceedings, where one insurer was involved in settling a claim against the insured, the other insurer may not seek to reopen the liability of the insured, provided the settlement represents a reasonable compromise of the proceedings:  Zurich Australian Insurance Ltd v GIO General Ltd [2011] NSWCA 47 [57].

The proper construction of the Difference in Conditions clause

31 As mentioned, AIG principally asserts that the term, “Named Insured”, in the Difference in Conditions clause should be read instead as “Insured”.  Alternatively, it contends that, in any event, Built Tech is appropriately characterised as a “Named Insured”.  If either is correct, the AIG Policy will operate in relation to Built Tech as an excess policy only and will not cover the losses which Allianz has indemnified.  There will, accordingly, be no double insurance, and AIG will be under no liability to contribute.

32 Conversely, Allianz contends that the term “Named Insured”, properly construed, does not extend to Built Tech, such that the Difference in Conditions clause does not apply to it, and thus AIG is liable to contribute.

33 To resolve this question, it is appropriate to identify the ordinary meaning of the words used in the Difference in Conditions clause, and then consider whether any contextual considerations require a departure from that ordinary meaning.

The prima facie meaning of “Named Insured”

34 On its face, the Difference in Conditions clause operates to render the AIG Policy an excess policy in circumstances where a Named Insured has the benefit of other insurance in respect of the same risk. Such other insurance may arise because it is acquired by another party or by the Named Insured itself.

35 It appears that, prima facie, Built Tech is a Named Insured within the meaning given to that term in the Schedule to the AIG Policy.  As set out above, within the Schedule appears a heading, “Named Insured”, and, adjacent to it, the names of 15 companies, a description of affiliated and subsidiary companies, and then the following words:

The Owner and Principal and all contractors and sub-contractors and other parties as required by contract or agreement.

36 For ease of reference, this will be referred to as the “OP&C Wording”.

37 The concluding words of that clause, “as required by contract or agreement”, apply to each of the identified subjects, such that the entities for which it provides cover must both fall within one of the identified groups (“Owner and Principal and all contractors and sub-contractors and other parties”) and be an entity for whom another insured is required, by contract or agreement, to obtain insurance coverage.

38 In context, “Owner” is likely to be a reference to the owner of any site where any relevant works are conducted.  Though the word is not defined, it is noted that the Endorsements in the AIG Policy include the following:

1.     PROTECTION WORKS ENDORSEMENT

It is noted and agreed that this policy is amended as follows:

1.     The Principal, the owner of the project site is included as an insured for its rights and interests;

39 The differences between “Owner” and “Principal” need not be dwelt upon in the present circumstances.  It is sufficient to note the policy’s intention to extend cover to owners of sites upon which relevant construction work is undertaken by an insured.

40 The word “Principal” in the OP&C Wording seems to include any principal contractor in relation to work undertaken by any of the companies in the Icon group.  So much appears from cl 9 of the AIG Policy Definitions:

9.     PRINCIPAL

“Principal” shall mean the Principal as defined in any Contract or Agreement insured under this Policy.

41 The expression “all contractors and subcontractors” in the OP&C Wording appears to be a reference to those other entities who are relevantly engaged by agreement or contract to perform work in relation to, or in connection with, work undertaken by the other Named Insureds.  The OP&C Wording also extends to “other parties” for whom insurance is required to be obtained, even if they are not contractors or sub-contractors.

42 It is not unfair to describe the OP&C Wording as lacking in specificity in a number of respects.  In particular, it lacks clarity as to (1) the nature of the relevant contractual obligation to obtain insurance, and (2) the party on whom that obligation might fall.

43 As to the first issue, a business-like and commercial construction would be to read the expression “as required by contract or agreement” as meaning “as required by contract or agreement to be included in a policy of insurance as a named insured”. Though that is not expressly stated, it is the preferable construction given the location of the OP&C Wording under the heading “Named Insured” and its omission to refer to any specific type of cover.  In this area of discourse, it is well known that many building or construction contracts require one party to obtain cover for the others as named insureds. So much is exemplified by cl 44.4 of the D&C Contract in this case.

44 As to the second issue, though the OP&C Wording provides little indication, it is likely that the relevant obligation to acquire insurance would fall on any of the 15 companies which are specifically identified as Named Insureds.  It is not likely to extend to the entities falling within the descriptions thereafter, including in the OP&C Wording, because the ability to extend cover to other parties is not a benefit likely to be bestowed upon a third party to the policy.  It follows that the OP&C Wording could not extend cover to entities for whom those within its description have an obligation to obtain insurance.

45 Against that background, Built Tech is a contractor of Icon SI and thus a “contractor” or “sub-contractor” for the purposes of the OP&C Wording.  Further, it is apparent that cl 44.4 of the D&C Contract required Icon SI to obtain insurance covering its subcontractors engaged in respect of the Development Activities as named insureds.  That being so, Built Tech falls within the OP&C Wording and is a Named Insured within the meaning given to that term in the Schedule.  As a result, and because Built Tech holds cover with Allianz, the Difference in Conditions clause applies to limit the AIG Policy’s operation to cover excess liability only.  The same result would follow if the OP&C Wording referred to a contractual obligation to acquire insurance cover simpliciter and not as a named insured.

Do contextual considerations necessitate a different meaning?

46 It is now appropriate to consider whether the prima facie operation of the Difference in Conditions clause provides for absurd or uncommercial results, so as to justify a departure from the ordinary meaning of its terms.

47 In short, the contextual considerations in relation to this task of construction are equivocal, though they generally support the construction articulated above.  In particular, as will become clear, one difficulty in the contextual analysis is that the AIG Policy uses a range of descriptions of the entities which may benefit under it, such as “Insured”, “Named Insured”, “Named Insured nominated in the Schedule”, “Insured nominated in the Schedule”, and “Other Insureds”, but the manner of their use is not universally consistent or coherent.  This is particularly so in relation to the use of the term “Named Insured”.

Does the ordinary meaning of the words used in cl 17 give rise to absurdity?

48 Ordinarily, the purpose of a Difference in Conditions clause (as with similar “Other Insurance” clauses) is to limit the policy in which it appears to an excess policy in circumstances where the insured (or a specifically identified insured) is covered for the same liability or loss by another policy. Such clauses narrow the scope of the insurer’s risk by denying primary cover for affected insureds.  When they apply, the insured is required to seek indemnity or recovery from the other insurer unless that liability or loss, or any part of it, is found not to be covered. Necessarily, the existence of the other insurance clause renders the policy less advantageous for affected insureds, with the immediate and obvious detriment being the possibility of having to pursue claims against two insurers:  see Zurich Australian Insurance Ltd v Metals & Minerals Insurance Pte Ltd (2007) 209 FLR 247, 259 [41]. Moreover, they may be required to pursue the other insurer through to litigation before being able to identify whether any excess claim can be made.

49 In that context, it is immediately apparent that, on its face, the Difference in Conditions clause operates in an unusual manner, in that it renders a Named Insured’s cover as excess cover only (where double insurance exists) but does not do so for other insureds.  This places the Named Insureds in a significantly less favourable position than those who fall within the more broadly defined term, “Insured”.

50 That operation is commercially unsound for several reasons.  Firstly, the Named Insureds include the Icon entities, which are, or appear to be, the relevant contracting parties.  One would expect that they would be treated more advantageously by the policy than unknown third parties who are Insureds, of which there could be many, given the breadth of paragraphs (a) and (c) to (e) of the definition of an “Insured”.  Yet, on this construction, those third parties would obtain primary cover even if they are otherwise insured for the same liability or loss.  Second, this construction renders AIG exposed to significant risk in relation to an unknown number of Insureds, in respect of whom it has not had the advantage of identifying or assessing any relevant risk. In those circumstances, it is odd, to say the least, that the Difference in Conditions clause would apply not to that broad class, but instead to those whose business circumstances and claims history AIG can generally be assumed to have assessed through the duty of disclosure.

51 These considerations strongly indicate that the policy intention has been misrepresented in the Difference in Conditions clause by the use of the term “Named Insured” rather than “Insured”.  A logical and commercially sensible construction of the policy would be that the clause applies to all within its cover.  If some were to be excluded from its operation, they would appropriately be the Named Insureds.

52 The foregoing is supported by the proviso in the second part of the Difference in Conditions clause.  Paragraph (a) of the proviso expressly notes that, notwithstanding the Difference in Conditions clause, the policy will cover an “Insured” for any claims that are not paid under the other policy within six months of their submission.  The reference to an “Insured”, rather than a “Named Insured”, is not consistent with the use of the latter earlier in the clause.  That inconsistency is not reconcilable:  the majority of “Insureds” are not affected by the Difference in Conditions clause (at least on its face), and as such, there is no reason for the reference to them in its exceptions.

53 A similar observation can be made in relation to the corresponding use of “Insured” in paragraph (b) of the proviso.  Moreover, the intention of paragraph (c) is unclear, as it appears to use both terms interchangeably.

54 The ineluctable conclusion is that a mistake has occurred in expressing the parties’ intention in relation to the operation of the Difference in Conditions clause.  Allianz did not advance, nor is it possible to identify, any reason or rational basis for drawing the clause such that it applies to Named Insureds as opposed to Insureds generally. Therefore, the nonsensical operation of the ordinary meaning of the words can aptly be described as an absurdity:  Seymour Whyte Constructions Pty Ltd v Ostwald Bros Pty Ltd (in liq) (2019) 99 NSWLR 317, 322 [8] (Seymour Whyte).

55 For the above reasons, it is also sufficiently clear that the parties intended the Difference in Conditions clause to apply to all Insureds.  In particular, the references throughout the proviso to “Insured”, simpliciter, reinforce that conclusion:  Seymour Whyte 322 [8].

56 There is, therefore, more than sufficient justification for reading “Named Insured” as “Insured” in the Difference in Conditions clause. Notwithstanding that courts are generally slow to accept that commercial entities have made mistakes in formal documents: Chartbrook Ltd v Persimmon Homes Ltd [2009] AC 1101, 1114 [23]:  the nature of the AIG Policy, and the several instances of infelicitous drafting therein, suggest that its preparation involved less care than might ordinarily be expected.  In this respect, the use of the term “Named Insured” in the Difference in Conditions clause cannot be attributed to the give and take of negotiations.  On the contrary, the application of the clause only to that class of entities is not in the interests of any contracting party.  That being so, the mistake is clear on the face of the policy, and it is clear that the parties intended that the clause apply to Insureds.

57 Alternatively, it may also be confidently concluded that the defined meaning of “Named Insured” was “clearly inapplicable” in the Difference in Conditions clause, for the purpose of cl 4 of the Conditions (see supra [27]).

58 It follows that, properly construed, the Difference in Conditions clause should be read as applying to all Insureds, with the consequence being that it applies to Built Tech, irrespective of whether it is characterised as a Named Insured or an Insured.  Accordingly, the AIG Policy operates as an excess policy in relation to Built Tech’s claims which have been indemnified by Allianz and no double insurance arises.

Do contextual considerations necessitate a different meaning of “Named Insured”?

59 Having regard to the foregoing, it is not necessary to consider whether the term “Named Insured” ought to be given the prima facie meaning ascribed to it in the Schedule.  However, as the parties advanced full submissions on this question, it may be briefly addressed.

60 Allianz contends that Built Tech does not fall within the scope of the term “Named Insured”, as properly construed, because that term should be read as only encompassing the 15 named entities, together with the affiliated and subsidiary companies which are generally described.  In other words, on its preferred construction, the OP&C Wording should be elided.  It advances that submission on the basis that a literal interpretation and application of the expression, “Named Insured”, would lead to an unbusinesslike construction, in conflict with the AIG Policy’s purpose.

61 For the following reasons, that submission should not be accepted.  The Schedule identifies, with some specificity, the entities categorised as Named Insureds for the purposes of the policy. Taking that into account, though it may be that the term “Named Insured” is not used consistently or coherently throughout the policy – as exemplified by the previous discussion – it does not follow that the term should be read down for all purposes.

The definition of “Named Insured” in the Schedule

62 At the outset, it is important to appreciate that the scope of the term “Named Insured” is described in the Schedule, the contents of which are assumed to have greater intentionality than terms which might appear in other parts of the policy, such as in any standard terms and conditions:  Derrington & Ashton, The Law of Liability Insurance (LexisNexis, 4th ed, 2025) 391 [3-72].  There is little difficulty in applying that interpretive approach in this case, where the Schedule deliberately and specifically sets out those who are to be Named Insureds.  The 15 named entities are part of a corporate group, and it might be assumed that they are Named Insureds by reason of their assumed direct contractual relationship with the insurer.  Those within the second group are companies affiliated with, subsidiaries of, or controlled by, any of the 15 named entities and, again, they have a somewhat close relationship with the insurer.  The third group, which is defined by the OP&C Wording, consists of those for whom another Named Insured is contractually required to obtain insurance.

63 As discussed earlier (see supra [42] – [44]), the OP&C Wording should be read as referring to those for whom another Named Insured is contractually required to obtain insurance as a named insured.  That conclusion is buttressed by the definition of “Insured”.  Relevantly, the chapeau of that definition refers to entities “[i]n addition to the Named Insured nominated in the Schedule”, which indicates that the entities described in the five subsequent paragraphs are different from those comprising the Named Insureds.  Of those paragraphs, paragraph (e) is relevant, as it refers to:

(e)     any other party or person where the Insured nominated in the Schedule assumes an obligation under Contract or Agreement to include their name as an Insured in relation to any Contract;

64 If the OP&C Wording is not limited to parties for whom a Named Insured is contractually required to obtain insurance as a named insured, it would cover substantially the same class of entities as paragraph (e).  That is an unlikely construction, as it effectively renders redundant the words “in addition to” in the chapeau.

65 That is supported by the reference in the Schedule to “Other Insureds”, which immediately follows the description of the Named Insureds.  That term is defined as referring to “[a]ll others as defined herein, all for their respective rights and interests”, and it emphasises the differentiation between the Named Insureds and the Insureds.  It also buttresses the conclusion that there was a clear intention in the policy to delineate between those who were to be Named Insureds and those who were not.

66 It is also noteworthy that the OP&C Wording, properly construed, is a not uncommon feature in policies of insurance relating to building and construction projects.  It is notorious that many agreements in the industry require parties to obtain insurance covering themselves, the counterparty to the agreement and perhaps others as “named insureds”.  That is evidenced by the D&C Contract in the present case, which imposed such an obligation on Icon SI.  The notoriety of this type of obligation was identified in Zurich Australian Insurance Ltd v Metals & Minerals Insurance Pte Ltd (2009) 240 CLR 391, where the insurer acknowledged that it was customary practice in the building industry for one party to obtain insurance for others involved in the same project.  There, the obligation under the relevant building contract was to obtain insurance for the other party “as a named insured”.  See also, for example, Allstate Explorations NL v Blake Dawson Waldron (2010) 16 ANZ Ins Cas 61-847.  Though such matters are not directly relevant to the construction of the AIG Policy, they illustrate the common practice in the industry in which AIG provides insurance, and reinforce the conclusion that those within the OP&C Wording must be those for whom the obligation is to obtain cover as named insureds.

67 It follows that the terms of the Schedule and its structure provide no reason for reading down the term “Named Insured”.

References to “Named Insured” throughout the AIG Policy

68 Notwithstanding the foregoing, the term “Named Insured” is applied inconsistently and, at times, incoherently throughout the AIG Policy.  For Allianz, the infelicitous use of the term justifies reading it down to include only the 15 named Icon entities and their affiliates and subsidiaries, while AIG contends that cl 4 of the Conditions should be applied to give the term its correct meaning in the particular contexts in which it is used.

69 The first example of the incoherent use of “Named Insured” is the Difference in Conditions clause, which, as discussed at supra [48] to [58], produces a commercially absurd outcome if read in accordance with its prima facie meaning.

70 Similarly, the unrestricted use of the term in cl 2 of the Conditions also produces an illogical result.  By that clause, the premium payable for the policy is adjusted by reference to the amount of actual turnover of the “Named Insured”.  However, contrary to the meaning given to that term in the Schedule, its use in cl 2 must be understood as referring only to the 15 Icon entities specifically identified.  If it were construed as including the Named Insureds falling within the two descriptions following the identified entities, the relevant turnover would extend to the revenue of companies that are largely unconnected to the contracting parties comprising the Icon group.

71 In the first instance, this would encompass the revenues of former affiliates and subsidiaries of the Icon group.  In this regard, the definition of “Named Insured” in the Schedule includes:

… and/or affiliated and / or subsidiary companies and/or controlled companies as defined in the Corporations Law of Australia and / or Companies Act 1993 of New Zealand … now or previously existing or hereafter formed or acquired

72 Therefore, on its face, cl 2 would require account to be taken of the revenues of companies that were previously affiliated with, subsidiaries of, or controlled by any of the 15 named entities.  Importantly, those companies are insured only in respect of liabilities arising during the period in which they were relevantly connected to an entity in the Icon group.  Once that connection has ceased, their revenues are irrelevant to AIG’s assessment of risk.  Similar difficulties arise in relation to the companies which might in the future fall within that broad description.

73 Second, a literal application of the defined meaning of “Named Insured” would mean that cl 2 would include the revenues of those falling within the OP&C Wording.  That cannot sensibly be its intended operation.  It is difficult to discern any logical or rational justification for AIG taking into account the revenues of all entities within the broadly formulated OP&C Wording, when adjusting the premium payable by the Icon group.  Such an operation would encounter an immediate and obvious difficulty, in that the Icon entities are unlikely to have access to the confidential financial documents of third parties.

74 In broad terms, the variation of premiums by reference to the insured’s turnover provides a mechanism by which the premium may be modified to reflect the risk actually assumed by the insurer.  Turnover is used as a general proxy for business activity, such that where an insured’s turnover has increased during the period of insurance, so has the insurer’s risk and, in this way, the modulation of the premium based on variations in revenue more accurately remunerates the insurer for the level of risk assumed. In any event, the insurer’s assessment of risk is primarily concerned with the business of specific insureds, such as the contracting party and related entities.  For that reason, only changes in the revenue of those businesses are relevant to the premium adjustment.  It follows that the only sensible operation of cl 2 is that the revenues relevant to the calculation of the premium are those of the 15 named Icon entities.  Although the term “Named Insured” is used in the clause, the application of its defined meaning in that context would be “clearly inapplicable”, such that it may be accorded a different meaning pursuant to cl 4 of the Conditions.

75 AIG also suggests that cl 4 might have a similar operation in relation to cl 16 of the Conditions, entitled “Non Contribution”, which provides that a Named Insured can prevent the Insurer from seeking contribution, in respect of any Occurrence indemnified under the policy, from the policies held by any of the Insureds.  That clause exists to afford Named Insureds the commercial benefit of preventing recovery from those with whom they are likely to be in a commercial relationship.  This might ordinarily be regarded as a benefit generally reserved for the contracting parties to the policy and, perhaps, others closely associated with it, though that is not necessarily so.  In relation to entities falling within the OP&C Wording, it can reasonably be supposed that, as the contractual obligation is that they be covered by a policy of insurance “as a named insured”, they should receive the full benefit of the cover provided by the policy.  Similarly, there is no obvious reason why associated and affiliated companies of the Icon entities should not receive those benefits as well. On that basis, it is far from clear that only specific Named Insureds ought to have the benefit of the Non Contribution clause.  At the very least, it cannot be said that the defined meaning of “Named Insured” is “clearly inapplicable” in cl 16.

76 Likewise, there is no difficulty in according “Named Insured” its defined meaning in cl 7 of the Conditions.  That clause imposes a limitation on AIG exercising rights of subrogation against any Insured, save in relation to loss or damage arising from a breach of duty in a professional capacity by an Insured other than a Named Insured.  Both Allianz and AIG submit that the use of “Named Insured” in the carve-out exception is anomalous, as it should only sensibly apply to the Icon group companies.  However, it is not immediately apparent why that might be so.  On the contrary, it is appropriate that the exception extends to entities described by the OP&C Wording.  That flows from the fact that the other Named Insureds have undertaken to obtain insurance cover for those entities as named insureds.  It would not make commercial sense for the Named Insureds to obtain such insurance but leave open the possibility of liability to AIG for breach of duty in a professional capacity.  Indeed, that is likely to be a substantial failure to comply with the contractual obligation to obtain appropriate insurance.  Ultimately, those who contract with the companies in the Icon group, on terms that those companies procure cover for them as named insureds, might reasonably expect to be covered for loss flowing from a breach of professional duty if that cover was available to others.

77 It was also suggested that the exception would be meaningless if it applied to all subcontractors providing services in a professional capacity.  Whilst that might be so, as discussed earlier in these reasons, the OP&C Wording does not cover “all subcontractors”.  It covers only those who have the benefit of a contractual obligation which requires that (a) insurance cover be taken out for them as an insured simpliciter or (b) insurance cover be taken out for them as a named insured, the latter being the preferable construction.

78 The same result applies to cl 19 of the Conditions, which provides that, where required by contract, the AIG Policy operates as primary insurance with respect to the Named Insured, and any co-extensive insurance arrangements are regarded as being excess to, and not contributory with, the policy.  There is nothing in the operation of this clause which suggests that the definition of “Named Insured” in the Schedule would be “clearly inapplicable”.  In particular, there is no incongruence in the policy operating as primary insurance, where required by contract, in relation to those entities described by the OP&C Wording.  Again, if those entities are to have the benefit of being a Named Insured, there is no commercial reason why the policy should not operate as primary insurance for them where that is required by a contractual obligation.  That tends to promote the benefit of policies of this nature, namely that they reduce or limit internecine disputes in building and construction projects and prevent those involved from being distracted by litigation:  WSP Structures Pty Ltd v Liberty Mutual Insurance Company t/as Liberty Specialty Markets [2023] FCA 1157 [98]; Chubb v WSP Structures [74].

It is not appropriate to abandon the definition in the Schedule

79 The foregoing analysis does not support reading down the definition of “Named Insured” in the Schedule to elide the OP&C Wording.  Though its use in some clauses is clearly inappropriate, in others it accords with the apparent contractual intention and produces logical and coherent results.  In those circumstances, it is preferable, where necessary, to attribute a context-specific meaning to the term pursuant to cl 4, rather than to qualify its definition generally.  It follows that Allianz’s submissions in this respect should be rejected.

“Insured nominated in the Schedule”

80 Allianz also submitted that “Named Insured” should be read in the same manner as another expression used in the policy, namely, “Insured nominated in the Schedule”.

81 That latter expression is used twice in the definition of “Insured”.  Firstly, in paragraph (b), cover is extended to persons directly associated with the “Insured nominated in the Schedule”, such as a director, partner, executive officer, employee or shareholder.  Second, paragraph (e) extends cover to any other party or person to whom “the Insured nominated in the Schedule assumes an obligation under Contract or Agreement to include as an Insured in relation to any Contract”.  The use of that expression in those paragraphs serves to limit the additional cover accorded by them.  Without it, the definition of “Insured” would be far broader, and the policy would provide cover beyond that which might be commercially anticipated.  The scope of the expression should be construed in that context.

82 The word “nominated” might generally be taken to mean those specifically identified by name.  So much appears to accord with the relevant dictionary definitions of that word.  For instance, the Oxford English Dictionary (2nd ed) relevantly defines “nominate” as “[t]o mention or specify by name”.  Similarly, the Macquarie Dictionary indicates that the meaning includes “to name” and “to specify”. Applying those definitions here, the expression “Insured nominated in the Schedule” likely refers only to the entities specifically identified by name in the Schedule, being the 15 Icon entities.  Such a construction is preferable given that it is not a common feature of policies of this nature to extend cover to corporate officers of third-party companies, as might occur under paragraph (b) of the definition of “Insured” if a wider construction is adopted.  For not dissimilar reasons, paragraph (e) is also appropriately limited to providing cover only where one of the 15 named entities has assumed a contractual obligation to include a third party as an insured.  As has been mentioned, this extension of cover is usually for the benefit of the contracting parties to the policy of insurance, and no logical basis exists for extending it to those third parties who may fall within the OP&C Wording, even though those parties are intended to obtain the most comprehensive cover the policy can provide.

83 For present purposes, it is not necessary to address any further the precise meaning of the expression “Insured nominated in the Schedule”.  Ultimately, the key point is that the phrase was intended to have a meaning different from “Named Insured”.  This somewhat disposes of the suggestion that “Named Insured” must refer only to the entities specifically named in the Schedule.  Were that to be accepted, “Named Insured” would have the same meaning as “Insured nominated in the Schedule”, which is an unlikely construction.

“Insured”

84 The policy also uses the term “Insured” in contradistinction to “Named Insured”.  For instance, cl 14 of the Conditions requires the Insured to cooperate with the Insurer, and cl 15 recognises that the insolvency of an Insured does not affect the insurer’s obligations under the policy. There is nothing in those clauses which suggests any inappropriate use of the term “Insured”, as there would be no utility in limiting their operation to Named Insureds only.

85 The term “Insured” is defined in broad terms in the Definitions section of the policy.  Relevantly, the chapeau of the definition refers to the identified classes of entity as being covered “[i]n addition to the Named Insured nominated in the Schedule”.  In that context, the words “nominated in the Schedule” do not materially affect the scope of the term “Named Insured”.  In this respect, the phrase “Named Insured nominated in the Schedule” is to be contrasted with “Insured nominated in the Schedule”, which bears the more confined meaning identified above.  Read in context, the reference to “the Named Insured nominated in the Schedule” is directed to identifying the entities generally afforded cover under the policy, rather than limiting the class of Named Insureds.  There is no apparent intention to exclude from the definition of “Insured” those Named Insureds not specifically identified by name in the Schedule.  Indeed, such a construction would produce an absurd result.  Therefore, the expression “Named Insured nominated in the Schedule” merely refers to those mentioned or described under the heading, “Named Insured”.  In this context, the word “nominated” may be synonymous with “as defined in”.

86 It is also not to the point that the definition of “Insured” may overlap in part with the scope of some of the paragraphs of the definition of “Named Insured”.  For instance, the reference to “all subcontractors of any tier” in the definition of “Insured” will include subcontractors within the scope of the OP&C Wording. Similarly, it may be that entities within the OP&C Wording would also fall within paragraphs (d) and (e) of the definition of Insured, which extend cover to certain entities required by contract or agreement to be covered by the insurance provided by the policy.  As is common in policies of insurance, categories are often described to ensure cover without lacuna, rather than with precision as to the boundaries of each.  In Chubb v WSP Structures, it was observed at [56]:

56      The other important question of insurance policy construction is the choice between the adoption of a literal meaning of the words used and an approach that accepts that modern policies are to be accorded a not insignificant degree of business-like operation. That latter approach sometimes necessitates jettisoning the view that policy terms are analogous to pieces of a mosaic that fit precisely together, and acceptance that the consequence of the operation of a policy’s terms results in more of a pastiche or collage, with the commerciality of the competing outcomes often being the determining factor in construction.

87 So, in this case, the definition of “Insured” has some overlap with “Named Insured”, and some entities characterised as Named Insureds may fall within the classes of Insureds identified in the definition of that term.

Conclusion in relation to Allianz’s preferred construction

88 It follows that the submissions advanced by Allianz as to the construction of “Named Insured” should be rejected.  Nothing in the terms of the AIG Policy, when read in context, suggests that the term ought to be read down for all purposes.  However, where the use of the full definition is clearly inapplicable, cl 4 of the Conditions dictates that an alternative construction may be adopted.  Apart from that, the use of the expression, “Named Insured”, in the Difference in Conditions clause is erroneous.  As best as can be ascertained, the intention was that the clause applies to all within the definition of “Insured”.

Conclusion

89 It necessarily follows that the AIG Policy does not respond in the current circumstances, and there is no double insurance in respect of the liability which Allianz has indemnified.  The answers to the questions posed are as follows:

Question 1(a)(i) is:

Does Condition 17 of the AIG Policy apply in the circumstances of this case, to the effect that AIG was not obliged to indemnify Built Tech for any part of the Claimant’s Claim or the VWA Claim?

Answer: Yes

Question 1(a)(ii) is:

Does Condition 17 of the AIG Policy apply in the circumstances of this case, to the effect that there is no double insurance entitling Allianz to any equitable contribution from AIG to the indemnity payments made by Allianz to Built Tech?

Answer: Yes

90 In light of these answers, it is not necessary to address the remaining questions.

Costs

91 Costs should follow the event, such that the applicant should pay the respondent’s costs of and incidental to the application to be taxed or as agreed.

Associate:

Dated:    17 September 2026