CGU Insurance Limited v Corrections Corporation of Australia Staff Superannuation Pty Ltd [2008] FCAFC 173

CGU Insurance Limited v Corrections Corporation of Australia Staff Superannuation Pty Ltd [2008] FCAFC 173

Clause 4.9 of the CGU policy does not require insureds to be subjectively aware that specific facts or circumstances may give rise to the particular claim eventually made; notification of such facts within the indemnity period is sufficient to trigger cover. The appeal fails because the insured’s awareness and notification requirements were satisfied, and s 54(1) of the Insurance Contracts Act prevents CGU from refusing the claim solely due to omission to notify. Cross-appeal succeeds in part, confirming effectiveness of the apportionment agreement for allocating Chubb settlement funds to defence costs.

Jurisdiction
Australia
Judgment Date
21 October 2008
Procedural Posture
Appeal and Cross Appeal / Full Court Judgment After Appeal From Single Judge
Outcome
Appeal dismissed with costs; cross-appeal dismissed in part and allowed in part.
Legal Topics
['professional Risks Policy' 'claims Made Policy' 'indemnity for Defence Costs' 'settlement Reasonableness' 'costs Orders' 'insurance Contracts Act']
['insurance Law' 'superannuation Law'] ['professional Risks Policy' 'claims Made Policy' 'indemnity for Defence Costs' 'settlement Reasonableness' 'costs Orders' 'insurance Contracts Act']

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Procedural Posture

Appeal and Cross Appeal / Full Court Judgment After Appeal From Single Judge

Legal Issues

  1. 1 ['Construction of Clause 4.9 of CGU policy and awareness requirements' 'Whether applicants’ claims arose out of facts known during policy period' 'Effect of non-notification under Insurance Contracts Act 1984 s 54(1)' 'Reasonableness of settlement including costs attributable to claims against non-insured' 'Entitlement to indemnity for defence costs under insurance policies' 'Allocation/apportionment of Chubb settlement funds' 'Criterion for award of indemnity costs after Calderbank offer']

Ratio Decidendi

Clause 4.9 of the CGU policy does not require insureds to be subjectively aware that specific facts or circumstances may give rise to the particular claim eventually made; notification of such facts within the indemnity period is sufficient to trigger cover. The appeal fails because the insured’s awareness and notification requirements were satisfied, and s 54(1) of the Insurance Contracts Act prevents CGU from refusing the claim solely due to omission to notify. Cross-appeal succeeds in part, confirming effectiveness of the apportionment agreement for allocating Chubb settlement funds to defence costs.

Court Disposition

Appeal dismissed with costs; cross-appeal dismissed in part and allowed in part.

Orders

  • ['Appeal dismissed with costs.' 'Cross-respondent to indemnify first, second and third cross-appellants for defence costs after allocation of Chubb settlement funds as per apportionment agreement.' 'Cross-appeal otherwise dismissed.' "Cross-appellants to pay cross-respondent's costs of indemnity costs application."...