This case confirms that the giving of a statutory declaration about the payment of workers and subcontractors is not the provision of a professional service and is not caught by a professional services exclusion in a directors and officers insurance policy.
470 St Kilda Road Pty Ltd (developer) engaged Reed Constructions Australia Pty Ltd (contractor) under a design and construction contract (contract). The contract allowed the contractor to claim progressive payments. The developer could also request the contractor to provide evidence that the contractor's workers and subcontractors had been paid for the work included in payment claims, which the contractor complied with by procuring its Chief Operating Officer–Mr Robinson–to swear statutory declarations.
The contractor was subsequently placed into liquidation. The developer commenced proceedings against Mr Robinson and claimed that he had not made all reasonable attempts to verify the truth of his statutory declaration before the liquidation and that the statutory declaration was false.
The contractor's parent company held a directors and officers liability insurance policy (policy) with Chubb Insurance (insurer) and Mr Robinson claimed under the policy. The insurer claimed that, by giving statutory declarations in relation to claimed payment, Mr Robinson was performing 'professional services' which was an exclusion under and therefore not covered by the policy.
The Federal Court decided that Mr Robinson's act of giving statutory declarations was not a 'professional service'. The insurer appealed to the Full Court of the Federal Court.
The Full Court of the Federal Court dismissed the appeal and upheld the Federal Court's finding that the insurer could not rely on the exclusion clause in the policy.
The Full Court made the following comments about the giving of statutory declarations:
- 'professional service' (as that term was used in the policy) meant services of a professional nature involving the application of skill and judgment and which were services in a vocational discipline generally regarded as a profession;
- the professional services exclusion in the policy was not intended to relieve the insurer from liability for loss suffered as the result of the contractor's routine activities;
- the provision of the statutory declarations did not involve any professional assessment or preparation by a professional person and were part of the payment claims process that involved a routine compilation of factual information done on the contractor's behalf as well as part of the contractor properly performing its contractual obligations.