Reflecting on DTZ v AIG: Key considerations for W&I policyholders on evidence, disclosure and damages

In February 2025, the New South Wales Supreme Court handed down its decision in DTZ Worldwide Limited v AIG Australia Limited [2025] NSWSC 12. DTZ’s claims against its excess Warranty and Indemnity (W&I) insurers were dismissed, but the judgment offers valuable insights into how damages are assessed and highlights the critical role of well-supported evidence in breach of warranty claims under W&I policies.

Jurisprudence in W&I claims remains relatively rare. While recent English decisions such as Finsbury Food  and Angel Bidco have begun to shape the legal landscape, each new judgment — particularly for common law jurisdictions — adds valuable insight into how courts will approach claims under W&I policies.

Background

On 14 June 2014, DTZ acquired a global property services and management group from United Group (the “Seller”) for AU$1.215 billion under a Share Sale Agreement (“SSA”). As part of the transaction, the SSA required DTZ to obtain W&I insurance.

One of the target group companies, Premas, managed a Singaporean sports and leisure facility (the Singapore Sports Hub) under a Facilities Management Agreement (“FMA”). DTZ alleged that the FMA was loss-making and that financial and accounting warranties in the SSA relating to Premas’ operations under the FMA had been breached. DTZ claimed the FMA should have been properly disclosed and accounted for by the Seller, and sought damages of approximately AU$234 million, plus costs and interest.

The Court found the following:

• No Breach of Accounting Warranties - The Seller did not breach the accounting warranties. The side letters, which were supplementary to the main SSA, were considered part of the broader contractual framework in assessing the warranties and associated insurance claims. The side letter payments made by Premas were found not to be sham transactions used to artificially inflate Premas’ financial performance; rather, they were legitimate compensatory payments that had been correctly accounted for. The Court held that the payments were made transparently, were properly accounted for, and were consistent with standard industry practice.
• Breach of Disclosure Warranty - The Seller failed to disclose that cleaning costs under the FMA were significantly higher than expected, which impacted Premas’ ability to meet performance benchmarks and contributed to early losses.  This constituted a limited breach of the disclosure warranty.  However, the Court assessed that any damages arising from this breach would fall below the first excess layer’s attachment point and were therefore unrecoverable.
• Rejection of allegations of improper capitalisation - The Court rejected DTZ’s allegations of improper capitalisation, noting that Premas’ internal and external advisers, including KPMG, had approved the accounting treatment of mobilisation costs at the time. The treatment was consistent with applicable accounting principles, and DTZ did not provide sufficient evidence to show that the estimates were unreliable or that the accounts were misleading.
• No classification of the FMA as an Onerous Contract - The Court held that the relevant financial statements were correctly prepared based on the circumstances at the time. Had the FMA been classified as onerous, Premas would have needed to recognise a provision for foreseeable losses, which could have impacted reported profits and asset values. DTZ would then have had grounds to allege a breach of warranty that the accounts did not give a true and fair view. However, the Court held that no such breach occurred.
• Interest under section 57 Insurance Contracts Act 1984 (ICA) - DTZ sought interest from six months after submitting its claim in November 2017.  However, the Court held that interest would only accrue from the date DTZ properly quantified its claim — the earliest being November 2022.  Regarding the excess policies, the Court noted that excess insurers cannot always rely on delays by underlying insurers to withhold payment.  If liability is clear from the material provided to them, excess insurers may be expected to pay, even if issues remain lower down the coverage tower.  In England, excess insurers typically indemnify only once the underlying policies are exhausted, but English courts could reach a similar outcome to the Australian DTZ case if the policy wording allows liability to attach independently.  Each layer’s wording must be analysed carefully.

Assessment of damages 

The judgment reinforces established principles for assessing damages in warranty claims. The primary method involves comparing the “true” value of the target business (assuming no breach) with its actual value at the time of the breach. While this case was decided in Australia, the underlying principles — particularly around valuation methodology and evidentiary standards — are equally applicable in England and other common law jurisdictions.

The Court emphasised the following points:

• The price paid for shares is not necessarily a direct measure of the true value.
• Damages must be assessed objectively, considering what a willing buyer and seller would agree upon.
• Expert valuation evidence must be precise and relevant. The insured’s valuation approach was found to be flawed, particularly because it assumed fraud or gross accounting errors, which were unsubstantiated.
• The lack of expert evidence or financial analysis on consequential damages for the breach of the disclosure warranty meant the Court could not quantify any compensation. 

Key takeaways for W&I policyholders and stakeholders

• Importance of evidence - Policyholders must provide detailed and credible evidence to support their claims. The Court emphasised the need for compelling, well-documented evidence to substantiate alleged financial and accounting breaches.
• Accuracy of claims - The judgment highlights the difficulty of proving damages where alleged breaches do not materially affect the value of the target business. Policyholders should be prepared to demonstrate a direct and quantifiable impact on value arising from the breach.
• Disclosure risks – Sellers must ensure that pre-completion disclosures are full and transparent. As the Court found, omissions — particularly where they mislead by omission or commission — can result in breach of disclosure warranties.
• Buy-Side policy challenges - Policyholders should have a clear understanding of coverage limits, exclusions, and procedural requirements under W&I insurance. The DTZ case illustrates the practical challenges of obtaining necessary documentation post-completion. Brokers can play a pivotal role in anticipating these challenges, advising insureds to retain key financial, accounting and operational records, and coordinating with insurers and advisers on potential claims.
• Excess insurer considerations - Policyholders should understand how excess layers operate and when payments are triggered across the tower. The judgment confirms that excess insurers cannot always rely on delays by underlying insurers to withhold payment where liability is otherwise clear. Brokers can help coordinate layered cover, align primary and excess policies, and support the defence of the policyholder’s position if claims arise.

Final thought

The DTZ decision serves as a timely reminder to W&I policyholders of the importance of maintaining expert evidence, well-supported valuation methods, and a clear understanding of disclosure obligations. To maximise coverage, policyholders should ensure claims are properly quantified, supported by contemporaneous documentation, and framed within the legal measure of damages.

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