Carter v Chubb Insurance Australia Ltd [2024] FCA 1312

Carter v Chubb Insurance Australia Ltd [2024] FCA 1312

Given Mr Carter’s actual knowledge or reckless indifference to arrangements (including the creation and use of the slush fund, sham or fictitious invoicing, and payment of bribes or secret commissions to procurement managers of Orix customers), and his failure to disclose those matters or misrepresentations in the proposal, Chubb was entitled to deny indemnity under the Directors & Officers policy and require repayment of sums advanced. The Court found Carter’s awareness (or wilful blindness) as to the potential for claims to arise from these arrangements, combined with dishonesty in representations and omissions, constituted fraud for insurance law purposes and triggered the relevant...

Parties
Plaintiff/cross Claimant: John Joseph Carter; Second Defendant/second Cross Defendant: Chubb Insurance Australia Ltd
Jurisdiction
Australia
Judgment Date
14 November 2024
Procedural Posture
Commercial Insurance Coverage Dispute / Final Judgment After Trial
Outcome
Judgment for insurer (Chubb); indemnity denied to Mr Carter; recovery of sums advanced ordered; cross-claim dismissed with costs.
Legal Topics
Directors and Officers Liability Policies, Fraudulent Misrepresentation, Fraudulent Non Disclosure, Directors’ Statutory Duties, Bribery and Inducements, Civil and Criminal Liability Insurance, Duty of Disclosure Under Insurance Contracts Act 1984 (cth), Application of S 28 Insurance Contracts Act
Insurance Law Commercial Law Corporations Law Evidence Directors and Officers Liability Policies Fraudulent Misrepresentation Fraudulent Non Disclosure Directors’ Statutory Duties +4 more

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Parties

John Joseph Carter

Plaintiff/cross Claimant

Chubb Insurance Australia Ltd

Second Defendant/second Cross Defendant

Procedural Posture

Commercial Insurance Coverage Dispute / Final Judgment After Trial

Legal Issues

  1. 1 Whether Mr Carter fraudulently misrepresented and/or failed to disclose material facts when signing the insurance proposal for D&O cover
  2. 2 Whether Mr Carter had actual knowledge of arrangements that could give rise to a claim under the policy
  3. 3 Whether insurer Chubb is entitled to deny indemnity for defense costs and recover sums advanced to Mr Carter for defense costs

Ratio Decidendi

Given Mr Carter’s actual knowledge or reckless indifference to arrangements (including the creation and use of the slush fund, sham or fictitious invoicing, and payment of bribes or secret commissions to procurement managers of Orix customers), and his failure to disclose those matters or misrepresentations in the proposal, Chubb was entitled to deny indemnity under the Directors & Officers policy and require repayment of sums advanced. The Court found Carter’s awareness (or wilful blindness) as to the potential for claims to arise from these arrangements, combined with dishonesty in representations and omissions, constituted fraud for insurance law purposes and triggered the relevant...

Court Disposition

Judgment for insurer (Chubb); indemnity denied to Mr Carter; recovery of sums advanced ordered; cross-claim dismissed with costs.

Orders

  • Parties to confer and submit draft orders to give effect to reasons for judgment by 28 November 2024 (NSD 437 of 2022).
  • The second cross claim by Mr Carter against Chubb (filed 28 September 2020) dismissed (NSD 448 of 2022).