The recent Supreme Court of Victoria decision of UDP
Holdings Pty Ltd (subject to a deed of company arrangement) (rec
and mgr apptd) v Ironshore Corporate Capital (No 2) [2019] VSC
645 is the first judgment of its type handed down in Australia
and provides essential insights into the interpretation of a
Warranty & Indemnity insurance policy wording. It includes
guidance on how, and when, loss can be established. The case also
raised a novel claim for compensation for a breach of the duty of
utmost good faith by an Insurer.
The Facts
In 2012 Esposito Holdings decided to sell 5 Star Foods (the
"business"), a milk trading and cheese manufacturing
company for an asking price of $84 million. It entered negotiations
with UDP Holdings, and a price of $70 million was agreed. After due
diligence, the sale agreement required $62.5 million to be paid
upfront and with the balance to be paid the following year. UDP
entered into a buyer's Warranty and Indemnity insurance
