Plaintiffs v Defendants

1 A plaintiff makes a claim on a defendant for damages arising from a legal wrong. The defendant has liability insurance which extends to that wrong and makes a claim for indemnity on the insurer under the relevant insurance policy. The insurer accepts that the claim falls within the scope of the indemnity and assumes the conduct of the defence of the claim by the defendant. In the ordinary course, it would not be necessary for the plaintiff to join the insurer as an added defendant. The plaintiffs contend that this case is not so simple.

2 The plaintiffs are the owners of the Pacific Werribee Shopping Centre. By a generally endorsed writ filed 14 March 2023, they commenced proceedings ('the Primary Proceeding') against various defendants including Probuild Constructions (Aust) Pty Ltd ('Probuild'). The claim against Probuild seeks substantial damages for, inter alia, breaches by Probuild of a design and construction contract dated 21 March 2014, the terms of which, in broad terms, impose on Probuild an obligation to design and construct a three-storey extension to the southern and eastern sides of the Pacific Werribee Shopping Centre ('the Centre'). There are a number of other defendants including the second defendant, Egis Consulting Pty Ltd, and the fifth defendant, Anthony Gerard Cesarello ('the engineers'). Subsequently, pleadings have been filed including a defence filed by the engineers which alleges that the damage which flowed from the design defects was 'caused, wholly or in part, by Probuild's failure to construct the stage 7 buildings in accordance with the design documents'.

3 Probuild appointed administrators on 23 February 2022 and is now subject to a deed of company arrangement ('DOCA'). The DOCA is binding on all creditors of Probuild. The parties to the DOCA include Probuild (as a 'deed' company), the DOCA administrators, and WBHO Construction (Pty) Ltd as the proponent.

4 At the relevant times, Probuild was insured pursuant to a design and construction professional indemnity policy ('the primary policy') issued by AIG Australia Limited, Star Underwriting Agents Limited and HCC International Insurance Company PLC (collectively 'the primary insurers'). In broad terms, the primary policy provides cover of up to $20 million to Probuild with respect to design defects but not construction or workmanship defects.

5 Chubb Insurance Australia Limited, CGU Australia Pty Ltd, Allianz Australia Insurance Limited, XL Insurance Company SE, HDI Global Specialty SE, Allied World Assurance Company Ltd and Liberty Mutual Insurance Company ('the excess layer insurers') provide excess layer insurance totalling up to $80 million. [1] The excess layer insurance is available to the insured once the primary cover has been exhausted.

6 The plaintiffs seek an order pursuant to r 9.06(b)(ii) of the Supreme Court (General Civil Procedure) Rules 2015 (Vic) ('the Rules') joining the primary insurers and the excess layer insurers as defendants. The primary insurers oppose the application and submit that the joinder is unnecessary and inapt.

7 Contrastingly, the excess layer insurers consent to joinder on the basis, accepted by the plaintiffs, that any order for joinder will be accompanied by a further order that unless the excess layer insurers elect, the obligations to take any step in the proceeding, including pleading or responding to a pleading, are suspended until the conclusion of the stage 1 hearing or further order of the Court. The plaintiffs submit that any order for joinder of the primary insurers should be on the same basis.

8 The existing defendants did not advance any position and were excused from the hearing.

9 The primary policy is a 'claims made' policy. The insuring clause reads as follows:

All cover under this Policy is afforded solely with respect to Claims first made against an Insured during the Policy Period and notified to the Insurer as required by this Policy.

Professional Liability

The Insurer will indemnify the Insured against civil liability resulting from any Claim arising from the performance of Professional Services.

... the performance in a professional capacity of any of the following services, duties or activities:

(i) professional design, including advice in relation to design;

(ii) technical specifications;

(iii) technical information;

(iv) technical calculations;

(v) any feasibility study;

(vi) programming and time flow management;

(vii) survey;

(viii) quantity surveying;

(ix) project management;

(x) construction management;

(xi) drafting;

(xii) inspection;

(xiii) training in respect of (i) to (xii) above.

11 The other relevant term defined in the primary policy is 'uncovered services' which comprise the 'performance or supervision of construction, manufacture, assembly, installation, erection, maintenance or physical alterations of buildings ... or property'.

12 On 16 June 2023, the then solicitors acting for the primary insurers, wrote to the solicitors for Probuild's administrators ('the coverage letter') acknowledging that the allegations made against Probuild in the proceeding constitute a Claim within the meaning of the primary policy.

13 The letter then stated, inter alia, the following:

...

3.9 The definition of 'Professional Services' does not include building/construction work. Accordingly, the insuring clause does not provide cover for any liability that Probuild may have that arises from defective construction work. The Proceeding does not currently make any allegation of defective construction works.

3.10 The primary allegation in the Proceeding is that Probuild breached its obligations under the D&C contract to undertake the preliminary structural engineering design and, through its novated design consultant Calibre, to complete that design so it complied with good industry practice and with applicable codes and standards. Subject to paragraphs 3.11 (checking the tender design) and 4.1 (Workmanship) below, Primary Insurers accept that all the claims made against Probuild in the endorsed writ arise from the performance of the 'Professional Services' of the design, technical specification and technical calculation and are therefore covered by the insuring clause of the Primary Policy

...

4. Uncovered Services Exclusion

4.1 The Primary Policy excludes from cover 'uncovered services' being the performance or supervision of construction, manufacture, assembly, installation, erection, maintenance or physical alterations of buildings or property. Primary Insurers note that the MPN Group report dated 25 September 2019 suggests that poor workmanship may have caused or contributed to at least some of the loss alleged by the claimant. The Primary Insurers reserve their right to rely on this exclusion as a basis for denying liability under the Primary Policy. In that regard, and for that purpose, we refer to paragraphs 10.3(a)-(c) below.

14 In the copy of the coverage letter later provided to the solicitors for the plaintiff, paragraphs 10.3(a)-(c) have been redacted.

15 The coverage letter confirmed that indemnity is available for defence costs and that they erode the primary policy limit.[2] The payment of defence costs constitutes an advance under the primary policy.

Based on the currently known facts and circumstances, Primary Insurers confirm indemnity to Probuild in relation to the Proceeding on the basis set out above. If Primary Insurers learn of new facts or information relevant to indemnity, they reserve the right to re-visit the grant of cover.

17 The solicitors also expressly noted that the decision by primary insurers did not limit their rights to rely on any other policy term, condition and exclusion and their rights at law which are otherwise fully reserved.

18 The coverage letter asserted that one set of allegations made in the generally endorsed writ, to the effect that Probuild failed to properly check the preliminary design and represented that it was suitable for the plaintiffs' purposes did not constitute Professional Services and hence did not fall within the scope of cover. After the filing of submissions by the plaintiffs in this application, the primary insurers resiled from this contention and confirmed cover.

19 The Primary Proceeding has been managed in the Court's Technology, Engineering and Construction ('TEC') List. A statement of claim has been served and various contribution notices have been filed between the defendants.

20 As part of the case management orders, the judge made orders, inter alia, for various expert conclaves with different conclaves scheduled depending on the particular subject matter expertise. Thus, there is a structural engineering expert evidence conclave, a building surveyors conclave and so on.

21 Counsel for the plaintiffs described the case management process as expert-led in the sense that the expert evidence is front ended and conclaves are held prior to the finalisation of any pleadings. The inevitability of pleading amendments is recognised in the existing directions which gives leave to amend after the expert evidence.

22 By orders made 1 August 2025, the judge listed the proceeding for trial commencing on a date not before 3 May 2027 on an estimate of 35 hearing days. This order is subject to any other orders made on the hearing of the staging application summons. This is a reference to a summons issued by the plaintiffs dated 20 August 2024 ('the staging application summons'), which has been part-heard and is presently set down for further hearing on 27 March and 2 April 2026. The staging summons, in broad terms, seeks orders for the determination of certain preliminary questions which, if ordered, will be heard at a hearing described in the summons and subsequent orders as the stage 1 hearing.

23 There is no dispute between the parties as to the applicable principles. The primary insurers accept that a 'justiciable controversy' exists between the plaintiffs and the primary insurers that arises out of or relates to or is connected with a claim in the proceeding,[3] viz, whether the plaintiffs are entitled to a priority payment in respect of moneys payable under the contract of insurance to Probuild pursuant to s 562 of the Corporations Act 2001 (Cth) ('the Corporations Act').

24 Section 562 relevantly provides:

Application of proceeds of contracts of insurance

(1) Where a company is, under a contract of insurance (not being a contract of reinsurance) entered into before the relevant date, insured against liability to third parties, then, if such liability is incurred by the company (whether before or after the relevant date) and an amount in respect of that liability has been or is received by the company or the liquidator from the insurer, the amount must, after deducting any expenses of or incidental to getting in that amount, be paid by the liquidator to the third party in respect of whom the liability was incurred to the extent necessary to discharge that liability, or any part of that liability remaining undischarged, in priority to all payments in respect of the debts mentioned in s 556.

25 That being so, the primary insurers accept that the relevant question is whether the Court ought exercise its discretion to order joinder of the primary insurers. They accept that the question of joinder turns on whether the joinder would be 'just and convenient'.[4]

26 Likewise, the parties accept that the relevant analysis as to when the Court ought exercise its discretion to join an insurer to a proceeding was comprehensively summarised in Owners-Strata Plan 62658 v Mestrez Pty Ltd.[5] The approach followed in that case has been followed in numerous cases including by the Court of Appeal in CGU.[6]

(a) When an insurer has denied indemnity, the insured can, uncontroversially, file a cross claim against it for the purpose of enforcing their contract.

(b) It would be an abuse of the processes of the court if a third-party Plaintiff, without a cause of action against the insurer, simply sought to join the insurer as a co-defendant with an insured defendant against which the Plaintiff had a cause of action.

(c) However, the interests of justice, and the convenient administration of justice, may authorise an order that an insurer be joined as a co-defendant with its insured, whether on the application of the third-party Plaintiff or otherwise, if:

(i) the insurer has denied liability to indemnify the insured against the Plaintiff's claim.

(ii) there is a bona fide dispute as to the entitlement of the insurer to deny liability.

(iii) there is a substantial impediment (including insolvency on the part of the insured) standing in the way of the proceedings being conducted simply by the Plaintiff against the insured defendant, with a cross claim filed by the defendant against the insurer.

(vi) the dispute as to the liability or otherwise of the insurer to indemnify the insured defendant can properly be made the subject of a grant of declaratory relief ...

(v) there is, in particular, a true legal controversy between the Plaintiff and the insurer such as would ensure that each of those parties might reasonably be relied upon by the court to serve as a contradictor for the other.

(vi) joinder of the insurer as a co-defendant with its insured might reasonably be relied upon to avoid a multiplicity of proceedings, and to enable all matters in controversy between the parties (namely, the Plaintiff, the insured and the insurer) to be completely and finally determined.

(d) A true legal controversy between the Plaintiff and the insurer may be taken to exist where, on the facts of the particular case, there is a realistic prospect of s. 562 of the Corporations Act having scope for operation.

28 The plaintiffs raise a number of matters which they submit favour joinder of the primary insurers. First, they contend that the matters raised by the primary insurers in the coverage letter will be at least partially answered by the determinations of fact and law made in the proceeding. In particular, the plaintiffs submit that the question of whether Probuild's liability arises from design defects rather than construction defects is a matter that will be required to be determined in the proceeding, including because of the plea advanced by the engineer defendants. The plaintiffs submit that absent joinder, there is a risk that the plaintiffs and the Court will be vexed with determining such matters on two separate occasions, first in the Primary Proceeding, and then in a subsequent action against the primary insurers. This will entail unnecessary costs and the risk of inconsistent findings. Further, the plaintiffs are concerned that the terms and effect of the DOCA will prevent them from bringing any later claim against the primary insurers.

29 Secondly, the plaintiffs submit that it is foreseeable that absent joinder, there is a risk that not all the issues that will need to be decided to determine the scope of 'Professional Services' as opposed to 'uncovered services' will be determined in the Primary Proceeding. Those issues include the application of the primary policy's allocation and multiple causes of loss policy terms.

30 Thirdly, the plaintiffs are concerned about the reservation of rights advised by the primary insurers in their coverage letter. They are concerned that this leaves open the possibility that the primary insurers will retreat from the position expressed in the coverage letter that the plaintiffs' claims arise from the performance of 'Professional Services', including after judgment is delivered in the proceeding.

31 Finally, whilst noting that the primary insurers consider themselves 'bound, and agree to be bound, by any findings of fact and law made by the Court in any final judgment in this proceeding on the case as currently pleaded against Probuild', the plaintiffs consider that such a concession is illusory because it is unclear whether the primary insurers consider themselves to be bound by the findings in the proceeding in the event that they cease conduct of Probuild's defence. Further, they consider that there is a real question as to whether the assurance provided will have a preclusionary effect for the purposes of any res judicata, issue estoppel or Anshun estoppel and, in any case, the concession is qualified by the limitation that it is confined to the case currently pleaded against Probuild.

32 Finally, the plaintiffs point to the prejudice to Probuild's other creditors arising from any delayed resolution of the claims in the Primary Proceeding and any consequential insurance dispute.

33 Before dealing with the plaintiffs' specific concerns it is important to note that by the terms of the primary policy, the primary insurers have agreed to indemnify Probuild against a 'civil liability resulting from ... the performance of Professional Services'. The primary insurers accept that the claims presently framed by the plaintiffs result from the performance of Professional Services. If those claims succeed, the primary insurers will be subject to a contractual liability to Probuild to indemnify it in relation to that liability up to the indemnity limit.

34 If the Court hearing the Primary Proceeding determines that any part of the claimed loss results from 'construction defects' as the engineers contend, that part of the pleaded claim will fail. There will be no resultant civil liability within the meaning of the primary policy and hence there will be no occasion to call on the indemnity. There is a possibility, conceded by the primary insurers, that the plaintiffs may still succeed against Probuild despite the strictures of the pleading, even if part of the loss results from 'construction defects'. In this scenario, there will be a civil liability of Probuild to the plaintiffs but it will not be a civil liability that falls within the scope of the indemnity because construction defects are 'uncovered services' for the purposes of the primary policy.

35 I do not accept that the plaintiffs' concerns with respect to the DOCA are sufficiently well-founded as to justify joinder. They are concerned that if the plaintiffs succeed in the proceeding, but the insurers nevertheless refused to indemnify Probuild the plaintiffs would be left without a remedy. The argument seems to be that only the DOCA administrators would be able to pursue any claim but they would have to obtain consent from WHBO Construction, the DOCA proponent, who would be unlikely to provide it. The plaintiffs otherwise would not be able to bring any direct claim because the effect of subclause 15.3(d) of the DOCA is that the plaintiffs' claims against Probuild will be released and extinguished, which means that even if Probuild is deregistered, no claim under s601AG of the Corporations Act will be open because of the extinguishment of the debt.

36 As a starting point, by the terms of the coverage letter, the primary insurers have agreed to indemnify Probuild with respect to the claims made by the plaintiffs in the proceeding as they are currently framed. It is difficult to see what more the primary insurers could do. A claim has been made by the plaintiffs against Probuild based on defective design. Probuild has made a claim for indemnity upon the primary insurers who have reviewed the claim as more fully articulated in the generally endorsed writ (and thereafter consistently with the generally endorsed writ as formulated in the statement of claim) and have confirmed that that claim falls within the scope of the indemnity. By the terms of the primary policy, the obligation to indemnify will arise once a legal liability to the plaintiffs is established upon judgment in the Primary Proceeding. The 'qualification' that coverage applies in relation to the claims as pleaded, more naturally and logically ought be read as reflecting the undisputed fact that only a legal liability resulting from the provision of Professional Services falls within the scope of the indemnity in contrast to a legal liability which arises from 'uncovered services'. It should not be regarded as a nefarious or tactical qualification that might be withdrawn or resiled from if the claims are later amended in some minor respect. In any case, and regardless of the assurances to coverage provided in the coverage letter, the primary insurers are stuck with the obligation to indemnify that results from a legal liability as determined, provided it results from Professional Services. There is no basis at the moment to apprehend that the primary insurers will walk away from that liability.

37 Putting that to one side, and moving to the terms of the DOCA, the DOCA is binding on all creditors including the plaintiffs.

38 Clause 15.3 headed 'Release and Discharge of Claims' includes subclause (d) which reads:

Immediately upon and with effect from Effectuation of this Deed in respect of a Deed Company, the Claims of all Creditors against or in respect of that Deed Company will be fully released and extinguished.

the date upon which Effectuation of this Deed is to occur:

(a) as regards each Deed Company other than the Released Entities, being the day that is one month after the latest of the date on which:

(i) the final distribution is made from the Deed Fund (or the Deed Administrators notify all Creditors there are insufficient funds in the Deed Fund for any distributions to be made);

(ii) all claims to which clause 8.5 Applies in respect of the relevant Deed Company have been Finally Determined and all amounts in respect of those claims have been paid in accordance with clause 8.5; and

(iii) the Deed Administrators have attended to all matters necessary to certify that the Deed has been effectuated in respect of the relevant Deed Company.

That the Claim has been finally determined by way of a binding settlement of the whole of the Claim or by a judgment of a court of competent jurisdiction (at first instance or on appeal) in respect of which no appeal or application for leave to appeal has been made, filed or served by any party to the original proceedings within 30 days of the end of the relevant appeal period in respect of the judgment.

41 Clause 8.5 is headed 'Insured Claims' and specifies that s 562 of the Corporations Act 'is to be incorporated into this Deed as if references to a liquidator were references to the Deed Administrators and with any other amendments as necessary in the context of this Deed'. Schedule 2 to the Deed includes reference to the claim made in this proceeding.

42 If the plaintiffs succeed against Probuild and the claim has been Finally Determined within the meaning of that term but payment has not been made, Effectuation for the purposes of subparagraph (ii) of the definition of the DOCA will not have taken place. The claim will not be released or extinguished. There is no reason to suppose, on the present state of the evidence, that the primary insurers will not pay or in the unlikely universe in which this occurs, that the Deed Administrators will not do something about it.[7] If they don't, they will be amenable to replacement on the application of the unpaid plaintiffs.

43 The plaintiffs' concern lacks sufficient foundation to justify joinder.

44 The related concern that in some way these matters will delay the termination of the DOCA[8] and prejudice other creditors is in turn dependent on the same set of contingencies, the likelihood of which finds no sufficient present evidentiary footing.

45 I accept that there is a likelihood that the Court will have to determine whether parts of Probuild's liability arise from construction defects as opposed to design defects. Even on the current state of the pleadings, and in particular by the terms of the engineers' pleading, one of the issues that will need to be determined is whether the damage that occurred was due to design defects or instead, as the engineers allege, was 'caused wholly or in part by Probuild's failure to construct the Stage 7 buildings in accordance with the design documents'.

46 What I do not accept is that the Court will have to determine this question on two separate occasions. As noted earlier the plaintiffs' current pleaded case is that all defects are design rather than construction defects. Taking a strict view of the pleading, if the contention of the engineering defendants is accepted, part of the plaintiffs' case will fail. But even if one was to take a broader view of the pleaded case or accept that it may be amenable to amendment and that the plaintiffs could still succeed against Probuild even where the damage results from construction defects as opposed to design defects, it does not follow that the same question will have to be determined in a subsequent proceeding against the primary insurers.

47 The terms of the primary policy are clear. If civil liability arises from design defects the obligation to indemnify arises but it does not arise if it results from construction defects. The fact that the Primary Proceeding will determine whether the alleged defects are design defects or construction defects does not of itself give rise to an issue affecting the insurance cover as long as both the plaintiff and the primary insurers accept, as they do, that the liability from the former is covered and the latter is not.

48 There are some areas of potential complication. The first is that the plaintiffs succeed in their claim against Probuild and obtain findings of fact which would support a conclusion that the liability results from the performance of Professional Services but the primary insurers do not accept such findings. There are a number of matters which sufficiently mitigate that risk. The primary insurers have stated that they consider themselves bound and agree to be bound by any findings of fact and law made by the Court in any final judgment in this proceeding on the case as currently pleaded against Probuild. Whilst I doubt whether such a statement made by the solicitor on instructions would, as a matter of doctrine, preclude the primary insurers from subsequently taking such a point, such an approach would be a rather remarkable one including in circumstances where the insurer, as party to an insurance contract with Probuild, obliges it to act in good faith.[9] Not only would it be a bold step, it has not yet happened and there is nothing in the evidence which suggests that the insurer is likely to act in that way. In any case, following the oral submissions, each of the primary insurers confirmed their undertaking to the Court '... to be bound by final findings of fact and law made in this proceeding as finally determined either at any trial or as a result of any appeal'. An undertaking in those terms removes the difficulties which attached to the statement by the solicitors. It cannot be resiled from absent the Court's leave. It is not fettered by the constraint that it is limited to the current form of pleading and it is likely to capture findings made at the stage 1 hearing (if that proceeds). The stage 1 hearing is a separate trial of certain questions[10] and in the ordinary course would make the findings necessary to finally determine those questions. The possible ambiguity present in the solicitors' statement arising from the agreement being limited to those in a final judgment is not present.

49 There is also a risk that the findings necessary to vindicate the plaintiffs' claim against Probuild might not be sufficiently coterminous with the facts necessary to establish whether the acts or omissions which lead to the liability fall within the scope of Professional Services.

50 To state the issue another way, the plaintiffs are concerned that unless the Court is required, as part of a proceeding involving the plaintiffs and the primary insurer, to determine whether the civil liability the subject of the Primary Proceeding, results from the performance of Professional Services, there is a risk that the findings made in the Primary Proceeding will not determine the insurance issues. Nor will the primary insurers' undertaking to be bound by the findings help much if the necessary findings are not made.

51 In addition to the important fact that this problem is hypothetical, two factors in particular militate against joinder.

52 First, the primary policy contains a number of provisions which anticipate such issues. As noted briefly earlier,[11] the policy includes multiple cause liability and allocation provisions. The 'Multiple Cause Liability' extension confirms that where multiple causes contribute to the loss the subject of a claim, including causes not covered, the insurer must indemnify the insured for the proportion of the loss which is attributable to the performance of Professional Services. The 'Allocation' provision provides that the insurer's liability is limited to fair and equitable allocation in respect of covered and uncovered matters and that if the parties are unable to agree, the fair and equitable allocation is determined by a Senior Lawyer.[12] In relation to 'Multiple Causation Allocation' in the event of disagreement between the insurer and insured as to the proportion of loss attributable to Professional Services as opposed to uncovered services, the determination is made by an independent engineering expert with the parties entitled to make submissions with the costs of the process borne by the insurer. Importantly in relation to both the Senior Lawyer and the independent engineering expert, the primary policy provides that the determination is 'final and binding'. The parties to the insurance contract have therefore bound themselves to a dispute resolution process which leaves no role for judicial determination in the exigencies apprehended by the plaintiffs, save in limited circumstances.[13]

53 In any case, such problem as remains is sufficiently resolved by the joinder of the excess layer insurers. Unlike the primary insurers who have conveyed their position in the coverage letter, the excess layer insurers did not respond to any request to confirm indemnity. This gives rise to an implied denial of indemnity[14] sufficient to warrant joinder. In any event, the excess layer insurers have consented to joinder.

54 The declaration sought by the plaintiffs in the prayer for relief with respect to the liability of the excess layer insurers is to the effect that the relevant excess layer insurer is liable to indemnify Probuild under the first excess layer policy in respect of any judgment obtained by the plaintiffs against Probuild up to the excess layer policy limit of liability, to the extent to which the judgment sum exceeds the primary policy layer limit.

55 The terms of the excess policies[15] provide that the policy is subject to the same terms, conditions and limitations as are contained in or as may be added to the primary policy and that in no event will the excess policies grant broader coverage than that would be provided by any of the underlying policies.

56 It is a necessary incident, therefore, of the declaratory relief sought by the plaintiffs against the excess layer insurers, that the Court will be obliged to consider whether the liability as found by the Court on the part of Probuild to the plaintiffs falls within the ambit of the indemnity the subject of the excess policies which are in the same terms as the primary policy.

57 Accordingly, the questions of fact and law that the Court will be obliged to decide in the Primary Proceeding will necessarily extend to the insurance issues as they affect the excess policies which are in the same terms as the primary policy.

58 Further, having regard to, among other things, the undertaking now provided by the primary insurers, those determinations of fact and law bind the primary insurers.

59 Of course, by the terms of the primary policy, the primary insurers had agreed in any event to be bound by a civil liability resulting from any claim arising from the performance of Professional Services in any case.

60 Accordingly, the concerns advanced by the plaintiffs as to the necessity for common findings of fact and/or an incomplete series of factual findings are misplaced, at least on the present material.

61 It is useful to return to the six matters referred to in the Owners-Strata Plan 62658.[16] In relation to the matter in (i), the primary insurers have not denied liability to indemnify the insured against the plaintiffs' claim. I do not accept the plaintiffs' characterisation that there has been an implied denial of indemnity. The opposite has occurred. The insurer has agreed that it is liable to indemnify in relation to any civil liability arising from the claims currently made. It has assumed conduct on behalf of Probuild. The only qualification of relevance is to confirm that the coverage does not extend to civil liability which arises from matters that are not the subject of cover, ie, the uncovered services.

62 There is presently no dispute, bona fide or otherwise, as to the entitlement of the insurer to deny liability given the position taken by the insurer. Hence, the matter in subparagraph (ii) does not apply.

63 Whilst I accept that Probuild's insolvency arguably involves an added complication, it is of no moment here given the coverage letter and the payment of defence costs. Hence (iii) has no application.

64 Whilst I accept that the liability of the primary insurers to indemnify the insured defendant could be the subject of the grant of declaratory relief, there is no reason here to think that as a matter of discretion, the Court would order such a declaration given that there is no present dispute with the primary insurers. Hence (iv) has no application.

65 The same conclusion applies with respect to (v). The absence of any present dispute between the plaintiff and the primary insurers as to the scope of the obligation to indemnify is such that there would be no contradictor with respect to the claims made by the plaintiffs against the primary insurers. This was made clear when senior counsel for the insurer went through the terms of the proposed statement of claim as against the primary insurers. The material facts pleaded in relation to that proposed claim are either accepted by the primary insurers or otherwise pleaded in terms of such generality that they cannot be presently be the subject of any appropriate response. Hence the matter in (v) has no application.

66 Given that the issues as between the plaintiffs and the excess layer insurers will have to be determined in any case, and having regard to the primary insurers' undertaking to be bound by the finding of fact and law, I do not consider it can be reasonably considered that at the present stage, joinder of the primary insurers as a co-defendant is necessary to avoid a multiplicity of proceedings. In short there is no present dispute between the plaintiffs and the primary insurers.

67 The only matter that gives pause for thought is that the orders sought by the plaintiffs do not require the added defendants, including the primary insurers if added, to take any step in the proceeding unless ordered by the Court or unless they choose to do so. On that basis, at least in the first instance, joinder of the primary insurers is unlikely to cause much inconvenience or result in the incurring of significant costs.

68 This notwithstanding, I do not accept that such a factor alone constitutes a proper exercise of the discretion to order the joinder of an added defendant. I do not accept that it is just and convenient to order that the primary insurers be added to the current proceeding in case an issue emerges in due course, simply because the joinder is unlikely to cause them undue inconvenience. It will necessarily entail some inconvenience and the incurring of some costs, however slight they may be in comparison to the costs that the primary insurers are also currently meeting on behalf of Probuild by way of the advance of defence costs. In any case, and even having regard to modern case management principles and the primacy of the overarching purpose emphasised in the Civil Procedure Act 2010 (Vic), more is required to warrant the joinder of a party to the proceeding than that advanced in the present case.

69 Senior counsel for the plaintiffs submitted that if I was disposed not to allow the joinder at this stage, I should adjourn the application so as to await the further amendments to the statement of claim that are likely to follow following the engineering conclave.

70 I do not propose to follow that course. If new facts emerge which result in a dispute between the plaintiffs and the primary insurers, then this may constitute a changed circumstance such that the plaintiffs could make fresh application.

71 The application for joinder of the primary insurers will be dismissed. The undertaking by the primary insurers will be noted in the order. Otherwise, I will make the consent orders sought in relation to the joinder of the excess layer insurers and hear the parties as to costs.

WADREN PTY LTD (CAN 005 537 235) IN ITS CAPACITY AS TRUSTEE FOR THE HOPPERS CROSSING UNIT TRUST (ABN 83 405 769 465)

QIC WERRIBEE PTY LTD (ACN 624 121 204) AS TRUSTEE FOR THE QIC WERRIBEE TRUST

PROBUILD CONSTRUCTIONS (AUST) PTY LTD (SUBJECT TO A DEED OF COMPANY ARRANGEMENT) (ACN 095 250 945)

PACIFIC SHOPPING CENTRES AUSTRALIA PTY LTD (ACN 005 537 244)

KPMG PROPERTY & ENVIRONMENTAL SERVICES PTY LTD (ACN 103 479 992)

[1] There are four separate layers each of $20 million.

[3] CGU Insurance Limited v Blakeley [2016] HCA 2; (2016) 259 CLR 339, 363 [64] ('CGU').

[4] S Pirrie Equities Pty Ltd & Ors v Venetian Media Group Pty Ltd & Ors ('S Pirrie') [2023] VSC 253, [84].

[5] (2012) NSWSC 1259, [54] ('Mestrez').

[6] [2015] VSCA 153, [17].

[7] Including seeking a variation to the DOCA, if somehow the proponent stands in the way of Probuild seeking indemnity under the primary policy.

[8] There is something of a tension between the submission as to prolongation of the DOCA and the submission that the debt is released and extinguished.

[9] See s 13(1) of the Insurance Contracts Act 1984 (Cth).

[12] This is defined in the policy. The details do not matter for present purposes.

[13] Legal and General Life of Australia v A Hudson Pty Ltd (1985) 1 NSWLR 314, 395; Adnow Pty Ltd (as trustee for the Adnow Pension Fund) v Greenwells Wollert Pty Ltd [2016] VSCA 282.

[14] Anjin No 13 Pty Ltd v Allianz Australia Insurance Ltd [2009] VSC 371.

[15] See, eg, the WBHO Australia Pty Ltd - Chubb excess layer PI wording, Exhibit CM-30 to the first Morcombe affidavit at 651; see the plaintiffs' submissions in support of the application to join insurers at [51].