Switzerland Insurance Australia Limited & Ors v McCann & Ors [1999] NSWCA 310

Switzerland Insurance Australia Limited & Ors v McCann & Ors [1999] NSWCA 310

The Court held that the exclusion clause barring indemnity where liability is 'brought about by' dishonest or fraudulent acts applied on the facts because Powles' dishonest and fraudulent breach of fiduciary duty was a cause of Allens' liability to the Nauru Trust. The policy did not require a proximate cause standard, but any causal link sufficed. Thus, indemnity was excluded and the prior orders granting coverage were set aside.

Jurisdiction
Australia
Judgment Date
27 August 1999
Procedural Posture
Appeal / Decision on Appeal
Outcome
Appeal allowed; judgment for appellants; judgment below set aside; claim for indemnity dismissed.
Legal Topics
['dishonest and Fraudulent Conduct by Partner' 'professional Indemnity Insurance Exclusions' 'causation in Insurance Contracts' 'breach of Fiduciary Duty' 'partnership Liability for Acts of Partner' 'policy Exclusions for Prior Known Circumstances']
['insurance Law' 'professional Negligence' 'partnership Law' 'equity and Trusts'] ['dishonest and Fraudulent Conduct by Partner' 'professional Indemnity Insurance Exclusions' 'causation in Insurance Contracts' 'breach of Fiduciary Duty' 'partnership Liability for Acts of Partner' 'policy Exclusions for Prior Known Circumstances']

Case Brief

Summary, issues, holding and outcome

More case intelligence is available

Unlock the full research layer for this judgment.

Full judgment text Downloadable case file Legal principles 1 Authorities cited 2 Party arguments 2 Amounts and remedies 1
Sign in to unlock

Procedural Posture

Appeal / Decision on Appeal

Legal Issues

  1. 1 ["Whether the professional indemnity policy exclusion for liability 'brought about by' dishonest or fraudulent acts of a partner applied to exclude cover for losses caused by a partner's breach of fiduciary duty" "Whether the policy's causation standard required a proximate cause inquiry" 'Whether knowledge of the fraudulent conduct by the individual partner could be imputed to all partners for the purpose of policy exclusions' "Whether liability was incurred in connection with the 'practice' within the meaning of the policy" 'Whether exclusion for liability arising from contracts not within the practice applied']

Ratio Decidendi

The Court held that the exclusion clause barring indemnity where liability is 'brought about by' dishonest or fraudulent acts applied on the facts because Powles' dishonest and fraudulent breach of fiduciary duty was a cause of Allens' liability to the Nauru Trust. The policy did not require a proximate cause standard, but any causal link sufficed. Thus, indemnity was excluded and the prior orders granting coverage were set aside.

Court Disposition

Appeal allowed; judgment for appellants; judgment below set aside; claim for indemnity dismissed.

Orders

  • ['Orders made by Hunter J on 12 November 1998 and entered on 25 November 1998 set aside.' 'Summons before Commercial Division dismissed.' 'Judgment for first appellant on the cross-claim in the sum of $2,067,819.82 plus $353.43 interest for each day after 20 May 1999 unpaid.' 'Judgment for second appellant for...