A company leased commercial premises in which it conducted a printing business. Rainwater entered the premises in February 2008 (causing $400,000 damage), in June 2008 ($650,000) and in December 2008 ($380,000). It was admitted that on each occasion the water entry was due to the landlord being in breach of its obligations under the lease.

The tenant was insured in respect of the first and third incidents, but not the second. It received payment from its insurer (Allianz) in respect of the first and third incidents.

The landlord had liability cover with GIO. A claim by the tenant against the landlord was paid out on behalf of the landlord by GIO in respect of the second incident only.

Allianz continued (in the name of the tenant) the claim against the landlord in respect of the first and third incidents. GIO cross-claimed that it was entitled to a double insurance contribution from Allianz in respect of the amount which GIO had paid for the second incident.

The lease required the tenant to maintain with insurers in the name of the tenant and the landlord public liability insurance for at least $20,000,000.

The Allianz policy included liability cover. That cover defined Insured as including every party to whom the named insured was obligated by virtue of any agreement to provide insurance of the kind afforded by the Allianz policy, to the extent required by such agreement.

The Allianz policy included a general condition which stated that Allianz waived any subrogation rights against any co-insured.

The Supreme Court of New South Wales decided:

  1. on the proper construction of the lease, the tenant was obliged to maintain liability insurance cover in the name of the landlord in respect of the landlord’s liability for the type of incidents which eventuated;
  2. the waiver of subrogation clause in the Allianz policy prevented Allianz from pursuing recovery against the landlord because the landlord was a co-insured;
  3. Allianz was liable to contribute to the amount paid by GIO to the tenant, on the basis of double insurance.

Standard Publishing House v Chen.

The Court adopted a broad view of the term Co-insured. The Court took that expression to include anyone who was afforded cover by the policy, and not just the named insured and its subsidiaries, directors and employees.