The High Court’s decision in Hunt Leather Pty Ltd v Transport for NSW [2025] HCA 53 (Hunt Leather) has turned a familiar construction problem into a significantly more complex liability and insurance exposure.
Major construction projects inevitably create disruption. Roads close, hoardings appear, pedestrian routes change and neighbouring businesses experience noise, vibration, dust and reduced foot traffic. Historically, much of that disruption has been treated as an unavoidable consequence of development.
Hunt Leather demonstrates that this assumption is unsafe.
The High Court confirmed that substantial and prolonged interference with a neighbouring occupier’s ordinary use and enjoyment of land may constitute private nuisance. That exposure can arise even where a project is socially beneficial, properly authorised and not negligent in the conventional sense. The focus of nuisance is ultimately on the reasonableness of the interference, not simply whether reasonable care was exercised while performing the work.
The legal risk has become clearer. The insurance coverage position: not so much!
What happened in Hunt Leather?
The claims arose from the planning and construction of the Sydney Light Rail project. Businesses operating along the construction corridor alleged that prolonged works caused noise, dust, restricted pedestrian and vehicular access, and substantial interference with the use of their premises.
The High Court reinstated findings of liability against Transport for NSW in private nuisance for part of the construction period. The relevant interference was connected to the plaintiffs’ rights in land and their ordinary enjoyment of their premises. The associated financial loss was not simply a free-standing claim for reduced profits; it followed from the interference with those proprietary interests.
The distinction is important in tort law but does not however automatically establish that the loss is “property damage” for the purposes of a third-party liability insurance policy.
Legal liability does not necessarily mean insured liability
Public and products liability policies ordinarily provide indemnity for compensation arising from personal injury or property damage.
Most policies define property damage by reference to physical injury to, destruction of or loss of tangible property. Some wordings only extend to the loss of use of property that has not been physically damaged where that loss of use has itself been caused by physical damage to other tangible property.
For example, a standard Australian general liability wording defines property damage as physical injury to, destruction of or loss of tangible property, including the resulting loss of use. Loss of use of property that has not been physically damaged is covered only where it was caused by physical damage to other tangible property. That formulation creates an obvious problem for a Hunt Leather-type claim.
A retailer may remain physically capable of occupying its premises, but customers cannot conveniently reach it. A restaurant may remain structurally intact, but noise, dust and hoardings make trading commercially unviable. A hotel may lose bookings because access and amenity have deteriorated.
There may be a viable nuisance claim and substantial consequential financial loss, but no physical damage capable of activating the conventional liability “property damage” policy definition.
It follows, and it has been commonly quoted by the insurance market, that these exposures are covered by public and products liability policies, or contract works, delay in start up insurance; and principal-controlled insurance programmes.
These are the relevant insurance categories, but they do not, without satisfactory endorsement, “respond” to Hunt Leather type exposures, particularly for financial loss where there is indeed no “property damage.” This issue is a common gap in coverage which Bellrock has identified and traversed in our previous article landmark cladding decisions.
What coverage is required?
Coverage under third party liability policies should be carefully drafted to include (or not exclude) legal liability arising from private nuisance and trespass; obstruction or restriction of pedestrian or vehicular access; interference with the use or enjoyment of real property; noise, dust, vibration, hoardings and construction staging; loss of amenity and non-physical loss of use; and consequential loss of rent, revenue or profits arising from that interference.
Bellrock considers that an affirmative endorsement to third party liability policies covering legal liability to pay damages arising from nuisance, trespass, obstruction or restriction of access, or interference with the use or enjoyment of real property, including consequential financial loss, whether or not accompanied by physical loss of or damage to tangible property.
Importantly the wording of the endorsement must be drafted carefully so it is not unintentionally defeated by exclusions relating to pollution, dust, vibration, professional services, contractual liability, expected or intended interference or loss of use. Otherwise, another common way for the matter to be dealt with is under a stand-alone professional indemnity policy or a complementary civil liability professional indemnity extension to the general liability policy. We traverse these arrangements in our article: Why Errors and Omissions or Professional Indemnity insurance is a must for designers, manufacturers, distributors & suppliers.
Consider the broader programme
For large infrastructure and urban development projects, policyholders should address:
- Whether the principal, project vehicle, head contractor and subcontractors are appropriately insured.
- Cross-liability and severability between project participants.
- Whether continuing disruption is treated as one occurrence or multiple occurrences.
- Whether the deductible applies once to the event or separately to every affected claimant.
- How the policy responds to project delays extending across multiple periods of insurance.
- Known circumstances and the disclosure of anticipated disruption.
- The interaction between liability, professional indemnity and excess-layer policies.
- Whether the liability limit is adequate for multiple businesses across an entire construction corridor.
How about those affected by major projects?
Neighbouring businesses to large projects should also test their own property and business-interruption policies.
Where business-interruption cover depends on insured physical damage, separate cover may be required in the form of non-damage denial-of-access, prevention-of-access or loss-of-attraction cover.
Bellrock’s view
Hunt Leather is not simply another construction-law development. It is a warning about the difference between identifying an exposure and actually insuring it. A project may hold substantial limits of insurance and still have no effective cover for the very interference that produces the nuisance claim.
The correct response is not merely to buy more limit. It is to examine the policy architecture before works commence, identify the non-physical exposure and negotiate an affirmative coverage position that reflects the project’s actual effect on its neighbours.
Insurance product labels are not a substitute for nuanced wording that appropriately covers risk exposure. It is important to understand the risk exposure and then develop “product”. Off the shelf, cheap products are not satisfactory for complex risk.
For principals, developers and contractors delivering complex projects in populated areas, the time to determine whether nuisance and non-damage financial loss are covered is before access disappears, not after the claims arrive.
