Written by The Supreme Court’s decision in 374, 376 New South Head Road Pty Ltd v SMLXL Projects (NSW) Pty Ltd [2025] NSWSC 886 highlights the challenges for claims made against third-party insurers under the Civil Liability (Third Party Claims Against Insurers) Act 2017 (NSW).
In this case, New South Head Road Pty Ltd (the Developer) sought leave to recover damages and loss directly from the insurer of SMLXL Projects (the Contractor), after the Contractor went into liquidation. To obtain leave, under the Act, proof of three elements is required: first, there is an “arguable case” that the Contractor was liable, second, there is a “reasonable possibility” that the Contractor would be unable to fully pay any judgment that may be made against them, and finally, that the Contractor is entitled to indemnity under their insurance policy if found liable to the Developer.
While the first two elements were established, the Court found that there was no arguable case that any of the alleged defects or delay claims were indemnifiable. William J confirmed that under “claims made” policies, only a clear and timely written demand that meets the policy definition of a “Claim” can activate an insurer’s obligation to provide indemnity. The court held that correspondence including complaints or requests for rectification, such as those made in this case, are unlikely to be considered a written demand that amounts to a “Claim”.
The case provides an important reminder that the availability of insurance recovery depends as much on policy wording as it does on underlying liability.