Queensland water service provider SunWater has lost a NSW Court of Appeal ruling in January 2011 over insurance coverage for liabilities related to the operations of the Somerset and Wivenhoe dams and the Queensland floods.
A class action against Seawater, Sunwater and the state of Queensland over flooding and property damage was partially settled last year. The class action alleges that insufficient water was released for flood mitigation purposes before heavy rains hit the region.
Court documents state that SunWater’s problems stemmed from a contract with Seqwater to provide flood management services, in which the company was held liable for violations by its employee, who was a senior flood operations engineer.
Sunwater appealed two judgments in the class action before it entered judgment based on its acceptance of liability for the agreed money.
It was later claimed under insurance policies, but coverage was rejected because of the exclusion for “liability arising from or failure to render professional advice or service at the insured’s expense.”
NSW Supreme Court Justice James Stevenson ruled in favor of the insurers last year, ruling that the exclusion clause applied.
Justice Stevenson accepted that one of Sunwater’s services was the provision of “suitably qualified and experienced personnel” to Checkwater, but said that “the reality is that Sunwater provides its staff, professional engineering services”.
Today, Chief Justice Andrew Bell and Justices Robert Macfarlan and Anthony Meagher dismissed Sunwater’s appeal. The case of Sunwater Ltd v Liberty Mutual Insurance involved 15 insurer defendants.
The primary judge argued that the claims against him in the class action arose out of professional advice or services provided by Sunwater, within the meaning of General Exemption 8.
It also argued that the judge erred in ruling that the exception could apply to claims made against Sunwater by persons receiving or purporting to receive professional advice or services.
Judge Macfarlan says the engineer was “acting on behalf of Sunwater in the provision of flood management services”, and nothing in the wording suggested that Sunwater should be exempted only from the liability of persons who provided professional advice or services. The loss was incurred as a result of the provision of that advice or service.
“There is no merit in any ground of appeal. Consequently, the appeal must be dismissed with costs,” he says.
Get the result Here.