Seymour Whyte Constructions Pty Limited v Liberty Mutual Insurance Company t/as Liberty Specialty Markets [2026] NSWCA 154

The New South Wales Court of Appeal dismissed an appeal by Seymour Whyte Constructions Pty Limited (SWC) seeking indemnity under a Contractor’s Pollution Legal Liability Policy (Policy) issued by Liberty Mutual Insurance Company t/as Liberty Specialty Markets (LIU) for costs incurred in managing and removing asbestos-contaminated soil during an upgrade of a section of the Chandler Highway in Melbourne.

The case is significant because it addresses the causal nexus required between a defined “Pollution Condition” and an insured “Loss” under environmental liability insurance.

Factual Background

SWC was engaged by VicRoads to undertake upgrade works on the Chandler Highway. During excavation works in 2017, asbestos-contaminated soil was discovered at the Pier 1 and Northern Abutment site. Some excavated material had also been transported to a neighbouring site owned by Glenvill, where asbestos was subsequently identified.

Following discovery of the contamination, WorkSafe Victoria issued an Improvement Notice requiring SWC to establish and implement a ‘safe system of work’ for the management and removal of asbestos-contaminated soil across the construction site (in accordance with Section 21(2)(a) of the Occupational Health and Safety Act 2004). SWC incurred millions of dollars in remediation, management, monitoring and associated costs and sought coverage under the Policy. LIU denied indemnity.

The Policy

The Policy promised to indemnify SWC for “Loss arising from Pollution Conditions caused by Covered Operations”. “Pollution Conditions” were defined as the “emission, discharge, dispersal, migration, release or escape of Pollutants”, and asbestos was accepted to be a pollutant. SWC argued that its excavation activities had released asbestos fibres into the air and that the remediation expenses required by the Improvement Notice and occupational health and safety legislation arose from that release.

Relevant Issues

Pollutant ‘Release’

The Court considered whether the claimed costs were sufficiently connected to a covered Pollution Condition under the Policy. The Court held they were not.

While it was accepted that excavation activities probably caused asbestos fibres to be released into the air, the Court found that neither the Improvement Notice nor the statutory obligations arose because of that release. Rather, they arose because asbestos was present in the soil and because SWC had obligations under workplace safety legislation to manage that risk.

The Court found that costs would have been incurred regardless of whether any asbestos fibres had actually been dispersed. Accordingly, the losses arose from the existence or discovery of asbestos contamination, not from a covered Pollution Condition as defined in the Policy.

A key aspect of the judgment is the Court’s distinction between the presence of contamination and the release of contamination. The Policy responded only to losses arising from the release, discharge or dispersal of pollutants. The Court held that the insured’s remediation obligations were triggered by the presence of asbestos in the worksite, making the actual release of fibres legally irrelevant to the claimed losses.

Policy as a Protection

The Court also rejected SWC’s submission that the Policy functioned as protection against increased project costs caused by latent contamination conditions. Construing the Policy commercially, the Court characterised it as pollution liability insurance principally directed to liabilities arising from pollution events and third-party claims, filling a gap commonly left by contract works policies that exclude pollution-related liabilities. It was not intended to operate as a form of latent-condition or project-cost overrun cover.

Reimbursement from Glenvill

SWC’s claim for reimbursement of amounts paid to Glenvill was similarly unsuccessful. The Court held that neither the Improvement Notice nor the relevant legislation required SWC to compensate Glenvill for its remediation expenditure. Any liability to Glenvill was potentially founded in tort or contract, but SWC had not adequately pleaded or established a covered basis for recovery under the Policy.

Key Considerations

This decision by the NSW Supreme Court underscores the importance of carefully analysing causation language such as “arising from” in environmental liability policies. Even though that phrase is generally interpreted broadly, there must still be a meaningful causal connection between the insured loss and the insured peril.

Where remediation costs arise because contamination is discovered and must be managed under statutory or contractual obligations, rather than because pollutants have been released or dispersed, coverage may be unavailable despite the existence of environmental contamination and substantial clean-up expenses.

Danielle Snell, Managing Partner & Co-Founder | [email protected] | 0401 812 885

Robert McGirr, Partner & Co-Founder | [email protected] | 0413 944 023

Article co-authored by Kieran Bull, Law Graduate at Elit Lawyers