In Owners Corporation 1 Plan No. PS 640567Y v Shangri‑La Construction Pty Ltd [2026] VSC 117, Delany J dismissed a third party claim by the managing director of Shangri-La on the basis that no claim was made or notified during the insurance period, and any liability did not arise from the performance of professional services.
Mr Naqebullah was the managing director of Shangri-La. Shangri-La obtained Professional Indemnity Design & Construction Insurance policies from the Underwriters. The State of Victoria commenced proceedings against Mr Naqebullah under s 137F of the Building Act. The State obtained summary judgement against Mr Naqebullah for breach of the statutory warranties under the Domestic Building Contracts Act in installing cladding that was not fit for purpose and did not comply with the codes. Mr Naqebullah sought indemnity under the Policies for the $3.2m (plus interest) ordered against him. Underwriters declined indemnity and Mr Naqebullah brought a third party claim against Underwriters.
His Honour found that Mr Naqebullah was an "insured" under the Policies. Viewed objectively, the parties intended for directors of Shangri-La to be an insured without their names appearing on the Certificate of Insurance. That was also the proper construction of "Insured". Even if that was wrong, Mr Naqebullah was a third party beneficiary entitled to indemnity.
However, his Honour found that the Mr Naqebullah did not make or notify a claim during the insurance period. While there were demands made against Shangri-La during the period, and the broker notified one to the Underwriters, they were claims against Shangri-La, not Mr Naqebullah. Proceedings were not commenced until after the period. There was no "single claim". Also, the legislation did not exist at the time.
His Honour also found that Mr Naqebullah's liability was not incurred in the conduct of Shangri-La's professional business. Liability under the legislation was strict and no element or part required consideration of services performed by Mr Naqebullah. Further, the policies excluded construction related activities which Mr Naqebullah's liability arose from.