Federal Court of Australia

Rosenlund Constructions Pty Ltd v Certain Underwriters at Lloyd’s of London Subscribing to Policy Number 08070017 [2026] FCA 1442

ORDERS

THE COURT ORDERS THAT:

1.    The amended originating application be dismissed.

2.    The respondents file and serve any affidavits and written submissions on costs by 23 October 2026.

3.    The applicant file and serve any affidavits and written submissions on costs by 13 November 2026.

4.    The respondents file and serve any affidavits and written submissions in reply by 27 November 2026.

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

REASONS FOR JUDGMENT

Delivered ex tempore

JACKMAN J:

Introduction

1    The applicant (Rosenlund) seeks to recover amounts owed to it by H Hassarati & Co Pty Ltd (Hassarati) from the respondents (Insurers) pursuant to s 601AG of the Corporations Act 2001 (Cth). Hassarati was de-registered on 4 August 2024.

2    Section 601AG provides as follows:

A person may recover from the insurer of a company that is deregistered an amount that was payable to the company under the insurance contract if:

(a)     the company had a liability to the person; and

(b)    the insurance contract covered that liability immediately before deregistration.

3    The liability of Hassarati was established by a default judgment as to liability entered in the District Court of New South Wales (District Court) on 12 March 2024, a subsequent judgment of Abadee DCJ assessing damages and interest under the default judgment in the amount of $1,007,881.45 entered on 16 April 2024, together with an order that Hassarati pay Rosenlund’s costs of the District Court proceedings as agreed or assessed.

4    Hassarati held an insurance policy identified by policy number 08070017 comprising the Combined Public & Products Liability Policy (Policy) (CB133) and the Schedule to the Policy (Schedule) (CB123) issued on behalf of the Insurers.

5    The District Court judgments were given on claims made in the Third Amended Statement of Claim filed in the District Court (TASOC): CB629. The claims made concerned Rosenlund’s claim for damages caused by the uncontrolled collapse of the roof of the Qantas Credit Union Arena, previously known as the Sydney Entertainment Centre (Arena), during demolition works on 19 March 2016. Rosenlund’s 1996 Hitachi Ex 700 excavator (Excavator) and a four-section demolition boom that was fitted to the Excavator (Demolition Boom) were damaged beyond economic repair in the collapse, and Rosenlund lost their use until replacements were obtained.

6    On 25 November 2014, Hassarati was contracted by Lend Lease Building Pty Ltd (Lendlease) to demolish the Arena (Hassarati Subcontract). Hassarati in turn engaged Grasso Consulting Engineers Pty Ltd (Grasso) to provide consultant structural engineering services in relation to the demolition of the roof of the Arena, as the Hassarati Subcontract expressly contemplated.

7    Although the Insurers pleaded a substantial number of defences, in their opening written submissions the Insurers accepted that the insuring clause in the Policy is triggered, and the sole ground on which the case is defended is the exclusion contained in exclusion cl 7.13 relating to liability caused by or arising out of professional advice or services by Hassarati (PAS Exclusion).

Salient terms of the insurance contract

8    The insuring clause (cl 1) in the Policy relevantly provides (CB134):

Subject to the terms of this Policy, Underwriters will pay to or on behalf of the Insured all sums which the Insured shall become legally liable to pay by way of compensation in respect of:

1.1    Injury

1.2    Damage

…

happening during the Period of Insurance as a result of an Occurrence in connection with the Insured’s Business.

9    The “Period of Insurance” stated in the Schedule is 30 June 2015 to 30 June 2016 at 4pm.

10    The Limit of Indemnity for Public Liability in the Schedule is $20,000,000 for any one Occurrence during the Period of Insurance (CB123).

11    The “Insured’s Business” stated in the Schedule includes relevantly “Demolition, Excavation, Waste Bins, Recycling, Incidental Asbestos Removal … and Associated activities” (CB123).

12    The Policy defines “Damage” at cl 2.3.1 (CB134) relevantly to mean:

Physical loss, destruction of or damage to tangible property, (other than Product) including all resulting loss of use of that property …

13    “Occurrence” is defined by the Policy at cl 2.12 (CB136) to mean:

an event, including continuous or repeated exposure to substantially the same general conditions, which results in Injury and/or Damage … neither expected nor intended from the standpoint of the Insured.

14    Clause 7.13 of the Policy (CB141) contains the relevant exclusion in relation to professional advice or services, which I refer to as the PAS Exclusion, and which relevantly provides as follows:

This Policy does not cover liability:

…

7.13    Caused by or arising out of the rendering of or failing to render professional advice or service by the Insured or any related error or omission but this Exclusion 7.13 does not apply to:

…

7.13.2    Injury or Damage arising therefrom providing such professional advice or service is not given for a fee.

Legal principles

Principles of construction

15    An insurance policy is a kind of commercial contract which should be construed according to the principles of businesslike interpretation: CGU Insurance Ltd v Porthouse [2008] HCA 30; (2008) 235 CLR 103 at [43] (Gummow, Kirby, Heydon, Crennan and Kiefel JJ). Those principles were relevantly set out by French CJ, Nettle and Gordon JJ in Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd [2015] HCA 37; (2015) 256 CLR 104 at [46], [47] and [51] to the following effect:

(a)    the rights and liabilities of parties under a provision of a contract are determined objectively, by reference to its text, context (being the entire text of the contract as well as any contract, document or statutory provision referred to in the text of the contract) and purpose;

(b)    in determining the meaning of the terms of a commercial contract, it is necessary to ask what a reasonable businessperson would have understood those terms to mean; that enquiry will require consideration of the language used by the parties in the contract, the circumstances addressed by the contract and the commercial purpose or objects to be secured by the contract; and

(c)    unless a contrary intention is indicated in the contract, a court is entitled to approach the task of giving a commercial contract an interpretation on the assumption that the parties intended to produce a commercial result; a commercial contract should be construed so as to avoid it making commercial nonsense or working commercial inconvenience.

16    The insuring clause and any exclusion clause must be read together in a harmonious way so that due effect is given to both, and the right conferred by the former is not negated or rendered nugatory by the construction adopted for the latter: Weir Services Australia Pty Ltd v AXA Corporate Solutions Assurance [2018] NSWCA 100; (2018) 359 ALR 314 (Weir) at [54] (Barrett AJA, with whom Meagher and White JJA agreed); Woodlawn Capital Pty Ltd v Motor Vehicles Insurance Ltd [2016] NSWCA 28; (2016) 111 ACSR 377 at [133] (Ward JA, with whom Macfarlan and Gleeson JJA agreed); Impact Funding Solutions Ltd v AIG Europe Insurance Ltd [2016] UKSC 57; [2017] AC 73 at [7] (Lord Hodge, with whom Lords Mance, Sumption and Toulson agreed); LCA Marrickville Pty Ltd v Swiss Re International SE [2022] FCAFC 17; (2022) 290 FCR 435 (LCA Marrickville Pty Ltd) at [56]–[57] (Derrington and Colvin JJ, with whom Moshinsky J agreed); Allianz Australia Insurance Ltd v Uniting Church in Australia Property Trust (NSW) [2025] FCAFC 8; (2025) 308 FCR 308 at [400] (Derrington J). The principle has sometimes been expressed in terms that the exclusion clause must be construed in such a way that the cover would not be “inappropriately circumscribed”: Chubb Insurance Company of Australia Ltd v Robinson [2016] FCAFC 17; (2016) 239 FCR 300 (Chubb) at [149] (Foster, Robertson and Davies JJ); Weir at [125]. It must be borne in mind, however, that that is not a principle that permits rejection of the plain meaning of an unambiguous exclusion clause simply because another meaning might appear more reasonable in light of other terms in the policy: SunWater Ltd v Liberty Mutual Insurance Company [2022] NSWCA 273 (SunWater) at [56] (Macfarlan JA, with whom Bell CJ and Meagher JA agreed).

17    In relation to the construction of exclusion clauses, such a clause is to be construed according to its natural and ordinary meaning, read in the light of the contract as a whole, thereby giving weight to the context in which the clause appears including the nature and object of the contract, and, where appropriate, construing the clause contra proferentem in case of ambiguity: Darlington Futures Ltd v Delco Australia Pty Ltd [1986] HCA 82; (1986) 161 CLR 500 at 510 (Mason, Wilson, Brennan, Deane and Dawson JJ). That approach was held to be applicable to the construction of an exclusion clause in a contract of insurance in Selected Seeds Pty Ltd v QBEMM Pty Ltd [2010] HCA 37; (2010) 242 CLR 336 at [29] (French CJ, Hayne, Crennan, Kiefel and Bell JJ).

18    As to the contra proferentem rule, the rule is to be applied only as a last resort after the orthodox process of construction has failed to resolve an ambiguity; it is not a rule which may be applied to resolve “any ambiguity”: LCA Marrickville Pty Ltd at [83]–[102], in which Derrington and Colvin JJ thoroughly reviewed the authorities on the point.

19    A contract of insurance has the object or purpose of sharing the risk of, or spreading loss from, a contingency: Todd v Alterra at Lloyds Ltd [2016] FCAFC 15; (2016) 239 FCR 12 at [38] (Allsop CJ and Gleeson J).

Onus of proof

20    Under the general law, the insured bears the onus of proving the fulfilment of a condition precedent necessary to the accrual of liability of an insurer, but the insurer bears the onus of proving that a loss falls within an exception to the insurer’s obligation: Wallaby Grip Ltd v QBE Insurance (Australia) Ltd [2010] HCA 9; (2010) 240 CLR 444 at [25] (French CJ, Gummow, Hayne, Heydon and Kiefel JJ). That principle applies also in the context of a claim pursuant to s 601AG, such that the insurer bears the onus of establishing the relevant facts necessary to bring a claim within the scope of an exclusion to the insurance: Young Investment Group Pty Ltd v QBE Insurance (Australia) Ltd [2019] WASC 74 at [47]–[51] (Quinlan CJ); Helicopter Aerial Surveys Pty Ltd v Insurance Australia Ltd [2025] FCA 1360 at [35]–[38] (Jackman J).

21    In relation to a proviso in an exclusion clause which has the effect of writing back the cover under the insuring clause, the insured bears the onus of bringing the case within the proviso: Australian Paper Manufacturers Ltd v American International Underwriters (Australia) Pty Ltd [1994] 1 VR 685 at 694 (Fullagar, Smith and JD Phillips JJ), and see the cases referred to in that passage stemming from The Glendarroch [1894] P 226. In my view, that principle applies equally to claims made pursuant to s 601AG, there being no intention evinced by that provision of varying the general law of insurance, including those aspects of the general law pertaining to the onus of proof. In the present case, that has the consequence that Rosenlund bears the onus of establishing that the professional advice or service was not given for a fee.

Professional advice or service exclusions

22    There is a considerable body of case-law concerning the construction of exclusion clauses similar to the PAS Exclusion. While each case must depend on the particular circumstances, the following general propositions emerge from the authorities:

(a)    in the case of a professional indemnity policy, the “professional” concept is likely to have a narrower connotation in an exclusion clause than in the insuring clause, and a professional service exclusion in a professional indemnity policy may be confined to claims arising out of breaches of duty owed to persons who have retained the insured to perform such service in the course of its business: Weir at [125];

(b)    by contrast, in the case of a combined policy for general and products liability insurance and professional indemnity insurance, a professional advice or service exclusion was held not to be confined to liabilities to persons to whom the insured had provided advice or service, having regard to: (i) the fact that a substantial part of the insured’s activities were non-professional in character, (ii) the existence of the professional indemnity component of the policy, and (iii) the unambiguous natural and ordinary meaning of the exclusion: SunWater at [63]–[76];

(c)    the insuring clause in a professional indemnity policy was held (by majority) not to respond to a town clerk’s communication of information from the council’s records because the mere provision of information as to what may (or may not) be ascertained from the council’s records is not a professional service, even if the person providing the information has professional qualifications: Government Insurance Office of New South Wales v Council of the City of Penrith [1999] NSWCA 42; (1999) 102 LGERA 102 (Penrith) at [19] and [24] (Powell JA, with whom Mason P agreed);

(d)    in the case of a directors and officers insurance policy for executives of a construction company which had entered into a design and construct contract, the expression “professional services” in the relevant exclusion clause meant services of a professional nature involving the application of skill and judgment which fall within the scope of a vocational discipline which is generally regarded as a profession (such as architectural design, engineering, surveying and quantity surveying activities), not the routine activities of the company or its executives (such as providing progress claims under the design and construct contract): Chubb at [150]–[152];

(e)    in a combined products and products liability policy issued to a builder of residential homes, design services rendered by the insured through two sub-contractors (one of which prepared the defective engineer’s design for the slab and associated drainage, and the other defectively designed the roof trusses) pursuant to the insured’s contractual obligation to design and build the house, constituted professional services within the meaning of the relevant exclusion: Metricon Homes Pty Ltd v Great Lakes Insurance SE [2017] VSC 749 (Metricon) at [111]–[112] (Hargrave J); cited with approval in Weir at [135] footnote 30; and

(f)    the first step in assessing the applicability of a professional advice or services exclusion is to understand precisely what the insured was retained to do: Weir at [126], being the approach also taken in Chubb at [20]–[40], Metricon at [98], and SunWater at [8]–[19].

23    I note in passing in relation to Chubb, that the primary judge (Kenny J) reserved judgment for about 8 months after a two-day hearing (see 470 St Kilda Road Pty Ltd v Robinson [2013] FCA 1420; (2013) 308 ALR 411) and the Full Court (comprising Foster, Robertson and Davies JJ) reserved judgment for 21½ months after a one-day hearing. The Full Court’s reasons were substantially the same as those of Kenny J. None of the judges gave any reason, nor offered any apology, for their delay. I have referred to the lamentable delay in Chubb because:

(a)    the standards one walks past are the standards one accepts;

(b)    public exposure and scrutiny are the most effective spurs to judicial exertion, and judges are well placed to keep other judges up to the mark, acknowledging that the media also have an important role to play, and acknowledging also that the legal profession is in an impossible position in criticising the judges before whom they appear;

(c)    the duties of judges to serve the public in the proper administration of justice should rank ahead of the desirability of cordial internal relations within the judiciary;

(d)    the delivery of judgments within a reasonable time is an important aspect of access to justice and of respecting the human dignity of litigants;

(e)    there is no threat to judicial authority by judges making such criticisms, but only a threat to judicial comfort and complacency; and

(f)    the accountability of the powerful is fundamental to the rule of law, and reflects the reciprocity which exists in a healthy legal system between the rulers and the ruled, rather than a one-way projection of authority.

Causal link

24    The PAS Exclusion uses the causal expression “caused by or arising out of”. It is well-established that the words “arising out of” are wider than “caused by” and do not require a direct or proximate relationship, although they do require some causal or consequential relationship: Dickinson v The Motor Vehicle Insurance Trust [1987] HCA 49; (1987) 163 CLR 500 at 505 (Mason CJ, Wilson, Brennan, Dawson and Toohey JJ).

The Hassarati Subcontract

25    The Hassarati Subcontract (CB223–404) comprised a formal instrument of agreement, including subcontract conditions, an appendix, and the following schedules:

A – subcontractor warranty

B – supplier warranty

C – facilities

D – design requirements including annexure A – deed of adherence and warranty by Grasso (unexecuted)

E – information management

F – programming requirements

G – expert determination

H – environment, health and safety (EH&S) requirements

I – industrial requirements

J – form of moral rights consent

L – greenhouse and energy reporting monthly report

M – statutory declaration

N – deed of release

O – deed of novation

P – New South Wales Code of Practice Requirements

The Hassarati Subcontract also included the following annexures:

A – subcontract sum (being a total of $5,502,800, of which $2,678,900 was for demolition of the Arena)

C – variation rates

D – drawings

E – scope of work entitled “Southern Precinct, Infrastructure and Public Realm Scope of Works – Demolition” Revision C dated 24 November 2014 (comprising pages 1–31).

26    The Hassarati Subcontract contained the following express written terms:

(a)    Hassarati’s demolition scope of works comprised the demolition and removal of existing building elements (including the Arena) to enable new construction works to commence (scope of works, cl 3.1: CB377);

(b)    Hassarati had to prepare, and submit for Lendlease approval, the demolition methodology and detailed and engineered staging plans on how demolition, loading, carting, stockpiling, disposing etc was to be undertaken before works commenced (scope of works, cl 3.3: CB381);

(c)    Hassarati had to prepare the design, engineering, supply, installation, and certification of any temporary shoring/propping required in order to complete the demolition works, including temporary supports, shoring, strutting, planking and bracing to stabilise the works area and adjacent structures during demolition works (scope of works, cl 3.3: CB383);

(d)    Hassarati had to allow for an appropriately qualified Structural Engineer to provide written certification of the work method statement prior to the commencement of works, and as a minimum, the statement had to cover items such as the loading of floor slabs with plant, materials and the like (scope of works, cl 3.3: CB383);

(e)    Mr Michael Khoury was Hassarati’s supervisor (Appendix, clause 2.2(a): CB288);

(f)    the contract sum for the demolition of the Arena was $2,678,900 excluding GST (Annexure A: CB352);

(g)    Hassarati must comply with Schedule D: Design Requirements, unless stated otherwise in the Appendix (subcontract conditions, cl 5.1: CB246);

(h)    the Appendix stated that Schedule D: Design Requirements applied (Appendix, cl 5.1: CB289);

(i)    Hassarati must design and document the Works (being the whole of the work to be executed in accordance with the Hassarati Subcontract by Hassarati: subcontract conditions, cl 1.1: CB240) in accordance with the requirements of the Hassarati Subcontract (which is defined as “the Design”) (Sch D, cl 1(a): CB305);

(j)    Hassarati must ensure that the Design complied with annexures D, E and F (Sch D, cl 1(b): CB305; the clause also referred to any of the documents referred to in the Appendix (cl 1(b)(iv)), but the Appendix stated that that was not applicable: CB293);

(k)    Hassarati must ensure that all designs proposed or specified by Hassarati’s personnel (or stated in the Appendix) were suitable in all respects for their intended purposes (subcontract conditions, cl 5.2: CB247);

(l)    Hassarati warranted the third party designs of Grasso as a subcontractor (Appendix, cl 5.2: CB289);

(m)    Hassarati must not subcontract all or part of the Works without Lendlease’s prior written approval, and notwithstanding the engagement of any subcontractor, Hassarati remained wholly responsible for the carrying out of the Works and was liable for all acts or omissions of any such subcontractor as if they were the acts or omissions of Hassarati (subcontract conditions, cl 7(a): CB250);

(n)    Hassarati must, without limitation, design and document the Works in accordance with the requirements of the Hassarati Subcontract (Sch D, cl 1(a): CB305);

(o)    Hassarati must carry out the Design with a degree of professional skill, care and diligence expected of a subcontractor experienced in providing the same or similar services (Sch D, cl 3(b): CB305);

(p)    Hassarati warranted that the Design would be undertaken by, or under the direction and direct control of, a suitably qualified architect, engineer, surveyor or designer (as appropriate), and satisfy the requirements of the Hassarati Subcontract and all statutory requirements (Sch D, cl 4(a): CB306);

(q)    all drawings, specifications and other documents relating to the Design must be submitted to Lendlease for review, in accordance with Sch D, and any documents incorporated by reference, and in any event, at a time and in a manner which will allow Lendlease a reasonable time for review and comment; and the drawings, specifications and other documents must be revised and resubmitted promptly, if required, to the satisfaction of Lendlease (Sch D, cl 5(a): CB306);

(r)    without limitation to cl 7(a) of the subcontract conditions, if Hassarati entered into an agreement with a consultant for the performance of any services in relation to the Design, Hassarati must ensure that the Deed of Adherence and Warranty (Annexure A) was executed prior to commencement of the services (Sch D, cl 6(a): CB307);

(s)    Hassarati must not terminate or amend an agreement with a subcontractor without Lendlease’s prior written consent (Sch D, cl 6(c): CB307); and

(t)    Lendlease assumed no duty to give advice to Hassarati, or to supervise Hassarati to ensure the performance of its obligations under the Hassarati Subcontract; and any approval or instruction by Lendlease of construction methods or designs did not relieve Hassarati of its obligations, or prejudice any of Lendlease’s rights against Hassarati (subcontract conditions, cl 2.3: CB244).

27    The Deed of Adherence and Warranty (being Annexure A to Sch D) is in the form of a deed poll by Grasso in favour of Lendlease with the handwritten date 24 November 2014, and is initialled at the foot of the first page (CB308) but is not executed (CB309). It is missing the second page. Recital C states that Hassarati has engaged Grasso to provide the services of demolition methodology design, and any services necessarily incidental thereto, in accordance with the Consultancy Agreement (which is wrongly said to be attached) in relation to the Design (as defined in the Hassarati Subcontract). The operative provisions include that:

(a)    Grasso warrants to Lendlease that the Design will be fit for the intended purpose of the Works and satisfy the requirements of the Hassarati Subcontract (cl 1);

(b)    Grasso must perform its obligations in accordance with the Consultancy Agreement for the benefit of Hassarati and Lendlease (cl 2);

(c)    Lendlease relies upon the performance by Grasso of its obligations under the Consultancy Agreement to enable Lendlease to perform its obligations under the agreement with the “Client” [sic: defined as Lendlease itself] (cl 3); and

(d)    Grasso must enter into and maintain a policy of professional indemnity insurance on specified terms (cl 4).

28    It is clear from the Hassarati Subcontract that Hassarati and Lendlease expressly contemplated that Hassarati would engage Grasso as an appropriately qualified structural engineer to provide the demolition methodology design and any services necessarily incidental thereto, and that Grasso would owe obligations directly to Lendlease as well as to Hassarati. However, it is also clear from the Hassarati Subcontract that: (a) Hassarati warranted Grasso’s designs; (b) Hassarati had to carry out the Design with the degree of professional skill, care and diligence expected of such a subcontractor; (c) Hassarati remained wholly responsible for carrying out the Works and was liable for all acts or omissions of Grasso as if they were Hassarati’s; (d) Hassarati had to ensure that all designs by Grasso were suitable in all respects for their intended purposes; and (e) any approval or instruction by Lendlease of methods or designs did not relieve Hassarati of its obligations.

29    There is an issue as to whether Grasso executed the Deed of Adherence and Warranty (Sch D, Annex A: CB308–9). I have referred above to the copy which is in evidence and located within the Hassarati Subcontract. No executed copy has been found, nor has the missing second page. The fact that the first page bears the handwritten date 24 November 2014 (being the day before the Hassarati Subcontract was entered into) is relied on by Rosenlund (among other matters) as providing some evidence that Grasso did execute the deed, but I do not regard that as sufficient to establish on the balance of probabilities that the deed was in fact executed. The draft deed has been initialled by two people at the foot of each page, but the initials appear to be by the same two people who initialled every page of the Hassarati Subcontract, from which I infer that the initials are by those who executed the Hassarati Subcontract on behalf of Lendlease and Hassarati (as Rosenlund accepts), and not on behalf of Grasso. In any event, I do not think that the issue whether the deed was executed by Grasso has a material bearing on the present case. Hassarati and Lendlease contemplated that Grasso would execute the deed (including whatever the missing second page may have contained), and that Grasso would provide the demolition methodology design to Hassarati, which Hassarati would follow if Hassarati regarded the design as appropriate after exercising its own professional skill, care and diligence as a subcontractor. If the deed had been executed, it would have provided an additional avenue of recourse for Lendlease by giving it a direct cause of action against Grasso, without negating or diminishing Hassarati’s liability in relation to demolition methodology services.

Salient facts

30    As indicated above, on 25 November 2014, Hassarati and Lendlease entered into the Hassarati Subcontract. In about March 2015, Hassarati retained Grasso to provide consultant structural engineering services in relation to the demolition of the roof of the Arena (affidavit of Mr Grasso of 3.11.23 at [34]: CB50). Grasso issued invoices to Hassarati for Grasso’s services in relation to the roof demolition on 31 March 2015, 31 July 2015, 19 December 2015, 29 December 2015, and 29 February 2016 (CB406, 411, 488–9, 491 and 585–6). On 18 November 2015, Rosenlund Contractors Pty Ltd (Rosenlund Contractors) (a company related to Rosenlund) provided a quote to Hassarati to demolish the roof structure of the Arena (affidavit of Mr Ryan Rosenlund of 3.11.26 at [14]: CB94, 414–5).

31    By letter dated 14 December 2015, Grasso sent Hassarati the first engineer’s report, being a preliminary roof demolition sequencing layout which included a “colour coordinated scheme outlining the demolition process for the bottom chord members of the roof” (CB152–4). The coloured scheme was drawn on top of an existing structural drawing of the roof (CB154). On 16 December 2015, Grasso provided a second engineer’s report, relating to the demolition of the box girder on which the roof rested and which was intended as a later step in the demolition after the roof was demolished (CB424A). According to a note by Mr Arnold of Lendlease dated 15 December 2015, Mr Grasso (the sole director and principal structural engineer of Grasso) also approved the use and position of the Excavator in the demolition of the Arena, and provision was made for him to visit the Arena every two weeks to inspect the roof and box girder demolition (CB424).

32    On or about 17 December 2015, Mr Michael Khoury of Hassarati prepared a document for Lendlease in relation to the demolition methodology at the Arena (affidavit of Mr Arnold of 18.12.23 at [11]: CB68). By email dated 17 December 2015, Mr Khoury sent Mr Arnold (Lendlease’s site engineer responsible for managing subcontractors involved in the Arena demolition) the Demolition Methodology Presentation, a draft safe work method statement, a sample site briefing document, and an engineering report dated 16 December 2015 by Mr Jim Grasso of Grasso (affidavit of Mr Arnold of 18.12.23 at [11]: CB68, 425–87). The Demolition Methodology Presentation contained a drawing which was based on the demolition sequence for the roof contained in Mr Grasso’s engineer’s report of 14 December 2015, marked with the notation “Demolition sequence as per Grasso Consulting report” (CB451). One difference between the sequence described in the 17 December 2015 drawing and the drawing on 14 December 2015 (CB154) was that a four-step process for cutting and removing the roof beams was reduced to three steps. The Demolition Methodology Presentation also referred to Mr Khoury as holding a Bachelor of Engineering (Civil) degree and referred to his responsibilities as including “Demolition methodology and sequencing” (CB434).

33    On 21 December 2015, Rosenlund Contractors and Hassarati entered into an agreement to demolish the roof of the Arena (affidavit of Mr Ryan Rosenlund of 3.2.26 at [15]: CB94, 490).

34    Grasso provided engineer’s certificates relating to the mezzanine level slab on 21 December 2015 (CB490A) and 1 February 2016 (CB517A).

35    In early to mid-February 2016, Mr Khoury rang Mr Grasso to discuss the sequencing methodology and reducing the number of “cuts” from four to three (affidavit of Mr Grasso 3.11.23 at [99]: CB59). By email dated 11 February 2016 at 9:56am, Mr Khoury sent Mr Grasso a colour roof demolition sequencing sketch (CB157–8), being the drawing sent by Mr Khoury to Mr Arnold on 17 December 2015 (CB451) but without the notations (including the notation “Demolition sequencing as per Grasso Consulting report”). On the same day at 10:06am, Mr Khoury sent Mr Grasso a further email in the following terms (CB159–60):

For the sequence of the roof demolition (the coloured plan I just sent, we want to confirm that that sequence for each bay is ok for the structural integrity of the roof and that it doesn’t matter in what order each bay is demolished.

36    By email dated 11 February 2016 at 11:03am, Mr Grasso sent Mr Khoury an “Engineer’s Certificate” dated 11 February 2016 attaching Mr Khoury’s colour roof demolition sequencing sketch, marked as No 01360-SK 1 (CB520–2). Mr Grasso’s certificate stated that any bay of the roof structure can be demolished in any order in the sequence shown on the attached sketch and still maintain the integrity of the roof. On the same day at 11:36am, Mr Khoury sent Mr Arnold a copy of those documents (CB523–5). Mr Grasso explained in his affidavit in the District Court proceedings that he approved the change because, in his opinion, the ring structure would remain intact to provide lateral restraint (affidavit of Mr Grasso of 3.11.23 at [103]: CB60).

37    On about 18 February 2016, Mr Arnold prepared Revision P of the demolition methodology, which included (on page 18) a digital sketch prepared by Mr Arnold under the heading “Demolition – Proposed Roof Demolition Sequence”, next to which was Mr Grasso’s Engineer’s Certificate dated 11 February 2016, despite the fact that Grasso did not prepare the digital sketch included in Revision P (CB535 at 552; CB162). Mr Arnold’s sketch erroneously coloured in an additional row of the roof structure that was left uncoloured in Grasso’s Sketch No. 01340-SK 1, indicating the cutting and removal of an additional row of roof beams. As Rosenlund submits, that mistake led to the collapse of the roof, as the additional row of roof beams was the ring structure to which Mr Grasso referred in his District Court affidavit as providing lateral restraint.

38    Pursuant to a notice to admit dated 10 February 2026 (Notice to Admit) (CB1031), and the affirmative response by Rosenlund of 2 March 2026 (CB1033), Rosenlund admits that Revision P of the demolition methodology was defective, because it:

(a)    permitted the removal of all of the structural members within a bay except for the primary and secondary trusses of the roof structure, rather than requiring the retention of a portion of primary and secondary beams;

(b)    did not provide temporary support to trusses during the demolition process of a similar kind to those used during the original erection of the roof; and

(c)    permitted the use of the Excavator to remove roof elements by pulling them below rather than using a crane to remove them from above.

39    On 4 March 2016, Mr Hayward and Mr McClutchie (both employees of Rosenlund Contractors) attended an induction at the Arena provided by Mr Ghabache (an employee of Hassarati) (affidavit of Mr Hayward of 3.2.26 at [12] and [17]: CB101). Mr Ghabache was named in the Hassarati Subcontract as Hassarati’s EH&S Supervisor (CB293). During the induction, Mr Ghabache showed Mr Hayward and Mr McClutchie a colour copy of the drawing at page 18 of Revision P of the demolition methodology to be followed in the demolition (affidavit of Mr Hayward of 3.2.26 at [19], and affidavit of Mr McClutchie of 3.2.26 at [28]: CB102, 110). In response to the Notice to Admit, Rosenlund admits that Hassarati provided Revision P of the demolition methodology to Mr Hayward and Mr McClutchie as instructions for the demolition of the roof of the Arena (CB1031, 1033, and see Mr Hayward’s affidavit of 3.2.26 at [29]: CB103).

40    During the induction on 4 March 2016, Mr Ghabache said to Mr Hayward that the first cut is the roof sheets and the purlins, the second cut is the secondary beams, and the third cut is the primary beams. Mr Hayward asked in what order he should do the bays, and Mr Ghabache responded that he could do the bays in any order he wanted and it will not make any difference (affidavit of Mr Hayward of 15.6.23 at [13]: CB38).

41    Following the induction, Mr Hayward had a conversation with Mr Arnold about his concern with the demolition methodology, in which Mr Hayward said that the proposed method was not the way to do the demolition and the roof needs to come off first, but Mr Arnold disagreed and said that it had all been engineered. Mr Hayward explained that materials would be coming down on top of the Excavator in the area where Mr McClutchie and he would be working, and that the roof should be taken off the building and then taken out on bundles and craned off before demolishing the concrete area. Mr Arnold again disagreed and said that a structural engineer had reviewed it all and that he should follow the documented methodology (affidavit of Mr Hayward of 15.6.23 at [15]: CB39). According to Mr Arnold’s version of the conversation, Mr Arnold told Mr Hayward that Mr Hayward needed to express his concerns to Mr Ghabache and Hassarati because it was not Lendlease’s responsibility to tell him what to do here (affidavit of Mr Arnold of 18.12.23 at [35]: CB72).

42    Following his conversation with Mr Arnold, Mr Hayward had a conversation with Mr Ghabache in which Mr Hayward said that the roof should be craned off, and that there was plenty of room on the outside for a crane. Mr Ghabache responded that Lendlease would not allow the roof to come off. Mr Hayward then responded that he was concerned that the roof would collapse, and asked whether Mr Ghabache had any experience with high reach excavators. Mr Ghabache said that he had not, but that this had been engineered and would be fine (affidavit of Mr Hayward of 15.6.23 at [16]: CB39).

43    Grasso prepared a further engineer’s report dated 9 March 2016 concerning the demolition of the box girder structure of the Arena, which was issued to Mr Khoury by email on that day (CB589–91).

44    On 19 March 2016, the roof of the Arena collapsed onto the cabin of the Excavator while Mr McClutchie was operating the Excavator and while Mr Hayward was acting as “spotter” (affidavit of Mr Hayward of 3.2.26 at [27] and [30]: CB103).

45    In response to the Notice to Admit, Rosenlund admits that the defective demolition methodology in Revision P caused the collapse and damage to the Excavator (CB1032, 1033).

46    On 20 March 2016, Mr Arnold sent an email to Mr Khoury and others concerning a review of the demolition methodology (CB593).

Consideration

47    As indicated above, the first step in assessing the applicability of the PAS Exclusion is to understand precisely what Hassarati was retained to do. Hassarati was engaged pursuant to a contract which included engineering design obligations, including demolition methodology. Engineering design is a matter of professional advice or service. When Hassarati provided the demolition methodology to Rosenlund Contractors on 4 March 2016, and subsequently when Mr Ghabache of Hassarati told Mr Hayward of Rosenlund Contractors that it was to be followed despite Mr Hayward’s objections, Hassarati was providing professional advice or services as required by the Hassarati Subcontract.

48    Although Hassarati engaged Grasso as consulting engineers to advise on the demolition methodology for the roof of the Arena, under the Hassarati Subcontract Hassarati expressly warranted Grasso’s designs, Hassarati was required to carry out the Design with the degree of professional skill, care and diligence expected of such a subcontractor, Hassarati was wholly responsible and liable to Lendlease for those designs as though the designs were Hassarati’s, Hassarati had to ensure that the designs by Grasso were suitable in all respects for their intended purposes, and any instructions from Lendlease as to design did not relieve Hassarati of its obligations under the Hassarati Subcontract. Contrary to Rosenlund’s submission, Hassarati’s role in relation to the demolition methodology was not merely an administrative or clerical function of passing on Grasso’s advice to Rosenlund Contractors. Rather, Hassarati’s role was to apply its own skill in ensuring not merely that what was conveyed to Rosenlund Contractors reflected Grasso’s advice as to methodology, but also that what was conveyed to Rosenlund Contractors was suitable for the intended purpose.

49    Rosenlund submits, and I accept, that it should be inferred that Hassarati probably failed to appreciate that Revision P contained a different sketch from that certified by Grasso on 11 February 2016. Rosenlund further submits, and I accept on the balance of probabilities, that Mr Khoury carelessly allowed Revision P to be passed on to Rosenlund Contractors without checking that it truly reproduced Grasso’s approved methodology. Rosenlund submits, and I also accept, that Mr Arnold’s sketch in Revision P is superficially similar to Mr Grasso’s approved sketch, at least in my view to the untrained eye. However, contrary to Rosenlund’s submission, the tasks of Hassarati considering and deciding whether to provide Revision P to Rosenlund Contractors as instructions for the demolition of the roof, and to give oral instructions consistently with that design against Rosenlund Contractors’ employees’ objections, fell within the matters of specialised skill and judgment which Hassarati undertook pursuant to the Hassarati Subcontract. Hassarati’s conduct thus fell within the professional advice or services which the Hassarati Subcontract required. An alternative characterisation of Hassarati’s conduct is that it failed to render professional advice or service within the meaning of the PAS Exclusion by merely passing on Revision P to Rosenlund Contractors without carefully checking whether it corresponded to Grasso’s approved design and carefully considering whether it was suitable for the intended purposes. That alternative characterisation also falls within the PAS Exclusion.

50    The case is closely analogous (albeit not identical) to Metricon, in which a professional advice or service exclusion was held to apply. Both Metricon and the present case concern public and product liability insurance expressed in substantially similar terms (except that the sub-contractors in Metricon were also insureds). Both cases concern contracts for work on building sites which included design obligations. And both cases concern professional work which the insured sub-contracted to be undertaken by third parties, but for which the insured remained contractually responsible. Although the sub-contractors in Metricon fell within the definition of “the Insured”, the reasoning of Hargrave J at [111] treats the issue as one concerned with the head contractor rendering (or failing to render) professional advice or services through the sub-contractors, not merely the sub-contractors alone rendering (or failing to render) those services. In my view, the same result should follow in the present case as in Metricon. The present case, involving engineering and design obligations, is to be distinguished from the kind of routine or administrative tasks considered in Chubb and Penrith.

51    Rosenlund submits that the present case is analogous to the case of Chemetics International Ltd v Commercial Union Assurance Co of Canada (1984) 11 DLR (4th) 754, in which the British Columbia Court of Appeal held that the task of training operators in the operation of a plant was not the provision of professional services but was properly characterised as the work of a technician. The Court in Chemetics (at 757) expressly distinguished the service of design of the plant as a matter falling within professional services. Rosenlund accepts that the design and methodology for demolition of the roof in the present case are services of a professional kind. As I have found, the services of Hassarati in the present case included those services and thus went beyond the administrative task of passing on information from Grasso. I therefore do not regard the Chemetics case as analogous.

52    Rosenlund seeks to avoid that outcome on the basis of four further submissions.

53    First, Rosenlund contends that Hassarati’s liability was not caused by and did not arise out of the rendering of any professional advice or service by Hassarati, and that the relevant advice or service was rendered by Grasso. Although Hassarati provided the Demolition Methodology Presentation to Lendlease on 17 December 2015 and provided the sketch to Grasso on 11 February 2016 at 9:56am, Rosenlund submits that that was simply the provision of material to Grasso for Grasso’s consideration and approval as part of the seeking of advice and the procurement of a service from Grasso. Rosenlund contends that Grasso rendered the requested advice when Grasso endorsed and adopted Hassarati’s demolition methodology plan on 11 February 2016.

54    There are several flaws in that contention. Most fundamentally, the Hassarati Subcontract does not permit one to draw a mutually exclusive dichotomy between advice or services by Hassarati, on the one hand, and professional advice or services by Grasso, on the other hand. As indicated above, Hassarati warranted Grasso’s designs, including their suitability for the intended purposes, undertook to carry out the Design with a degree of professional skill, care and diligence expected of such a subcontractor, and remained wholly responsible for the designs as if they were Hassarati’s own designs. In any event, putting the terms of the Hassarati Subcontract to one side, the Insurers’ case is not limited to Hassarati’s provision of documents on 17 December 2015 and 11 February 2016, and extends to the provision of Revision P to Rosenlund Contractors on 4 March 2016 together with oral instructions to follow Revision P despite Mr Hayward’s warning that it was defective. Hassarati thereby adopted Revision P as part of its own professional advice or service, irrespective of whether Hassarati knew that the wrong drawing had been included in Revision P.

55    Second, Rosenlund submits that the PAS Exclusion applies only to liability the proximate cause of which was the provision of professional services or advice by Hassarati. Rosenlund submits that Revision P did not include the sketch which Hassarati had previously provided on 17 December 2015 and 11 February 2016, but instead included a sketch prepared by Mr Arnold of Lendlease, and it was the provision of Revision P which was the proximate cause of the liability.

56    I reject that submission. In the first place, as indicated above, the expression “arising out of” does not require a proximate causal relationship. In any event, under the Hassarati Subcontract, any instructions from Lendlease as to design did not relieve Hassarati of its obligations. Further, Rosenlund’s case is not confined to the sketch provided by Hassarati on 17 December 2015 and 11 February 2016, but extends to the provision of Revision P by Hassarati to Rosenlund Contractors on 4 March 2016 and the oral advice by Mr Ghabache to Mr Hayward to follow that demolition methodology over Mr Hayward’s objection.

57    Third, Rosenlund submits that there was no professional advice or service rendered by Hassarati when it provided the sketch on 11 February 2016, and the “professional” concept must be construed so as not to capture the core activities of Hassarati’s business because such a construction would render the Policy of no effect. Rosenlund submits that providing the sketch on 11 February 2016 was nothing more than ordinary work which Hassarati would do in seeking advice or procuring services from a professional engineer.

58    However, as stated above, the Insurers’ case is not confined to Hassarati’s provision of a sketch on 11 February 2016, and Hassarati’s role in relation to the design and methodology of demolition under the Hassarati Subcontract cannot properly be characterised merely as an administrative one of passing on information. Further, there were many demolition and other activities undertaken by Hassarati in its business operations of a manual and non-professional nature which fell outside the scope of the PAS Exclusion, and which therefore left ample scope for the operation of the Policy.

59    Fourth, Rosenlund submits that nothing in the Hassarati Subcontract suggests that Hassarati’s actions should be characterised as professional advice or services. In particular, Rosenlund submits that the Hassarati Subcontract contemplated that Grasso would provide the design for the demolition, and Grasso was in fact engaged to do so.

60    I reject that submission for the reasons already given. In short, the Hassarati Subcontract obliged Hassarati to provide substantial work of an engineering design nature, and that work falls within the central meaning of “professional advice or service”. The Hassarati Subcontract expressly contemplated that Grasso would be engaged to provide the services of demolition methodology design, but Hassarati owed independent obligations to warrant, and ensure the suitability of, that design as if it were Hassarati’s own design, using an appropriate degree of what was aptly described as “professional skill, care and diligence”.

61    The final question concerns whether the relevant professional advice or service was given for a fee, within the meaning of the writeback in sub-cl 7.13.2 of the PAS Exclusion. As indicated above, Rosenlund bears the onus of establishing that the professional advice or service was not given for a fee, but I do not regard the resolution of the issue as turning on which party bears the onus. As Rosenlund submits, the price breakdown in Annexure A to the Hassarati Subcontract identifies no separate fee for professional services (CB352–3). However, it is not necessary for the Insurers’ case that there be a separate and identifiable payment as consideration for the professional advice services: Weir at [145]. Hassarati was to be paid for the tasks set out in the Hassarati Subcontract as a whole, including the exercise of professional skill and judgment which was required by the Hassarati Subcontract. The position is analogous to that considered in Weir at [147]. Accordingly, Hassarati’s professional advice or service was given for a fee and the PAS Exclusion applies.

Conclusion

62    Accordingly, the proceedings should be dismissed.

63    The parties seek an opportunity to address the question of costs after delivery of these reasons. I anticipate that the issues concerning costs will include whether (and to what extent) a discount should be applied to the Insurers’ claims for costs in view of the late abandonment of many of the issues pleaded by way of defence. There may also conceivably be an application for a special order for costs by the Insurers, such as an application for indemnity costs (if there were an operative offer of compromise), or by way of lump sum order, or both. I will therefore set a timetable for the filing and service of affidavits and written submissions on costs, which I anticipate deciding on the papers. If a lump sum order is sought, the affidavits and written submissions should deal with the quantum of the lump sum so as to avoid the need to refer the matter to a Registrar.

Associate:

Dated:    30 September 2026