Casey v AIG Australia Limited [2021] FCA 553

Casey v AIG Australia Limited [2021] FCA 553

On the proper construction of the insurance policy, and in light of the claims pleaded and the absence of any allegation of dishonesty or improper conduct, the respondent is required to advance all defence costs incurred by the applicants in the Supreme Court proceedings, including those for breach of fiduciary duty, and the allocation clause is not engaged at this stage. Any withholding of a proportion of costs is not warranted until there is an adjudication or formal admission of improper, dishonest or excluded conduct.

Jurisdiction
Australia
Judgment Date
24 May 2021
Procedural Posture
Insurance Indemnity Proceedings / Interlocutory Decision Regarding Advancing Defence Costs
Outcome
Respondent ordered to advance all defence costs to applicants until further order and to reimburse withheld costs with interest; proceedings otherwise adjourned.
Legal Topics
["directors' Duties" 'fiduciary Duties' 'allocation of Defence Costs' 'contract Interpretation' 'indemnity Insurance' 'exclusions for Improper Conduct']
['insurance Law' 'corporations Law' 'equity'] ["directors' Duties" 'fiduciary Duties' 'allocation of Defence Costs' 'contract Interpretation' 'indemnity Insurance' 'exclusions for Improper Conduct']

Case Brief

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Procedural Posture

Insurance Indemnity Proceedings / Interlocutory Decision Regarding Advancing Defence Costs

Legal Issues

  1. 1 ['Whether the insurance policy requires the respondent to advance all defence costs incurred by the applicants in defending both breach of duty of care and fiduciary duty claims' 'Whether the allocation clause is engaged where no uncovered matters are established' 'Whether the conduct exclusion for improper, dishonest or fraudulent acts applies in the absence of such allegations']

Ratio Decidendi

On the proper construction of the insurance policy, and in light of the claims pleaded and the absence of any allegation of dishonesty or improper conduct, the respondent is required to advance all defence costs incurred by the applicants in the Supreme Court proceedings, including those for breach of fiduciary duty, and the allocation clause is not engaged at this stage. Any withholding of a proportion of costs is not warranted until there is an adjudication or formal admission of improper, dishonest or excluded conduct.

Court Disposition

Respondent ordered to advance all defence costs to applicants until further order and to reimburse withheld costs with interest; proceedings otherwise adjourned.

Orders

  • ['Until further order, the respondent is to advance to the applicants all defence costs in relation to Supreme Court proceedings 2019/00287075, including reimbursement of the 30% previously withheld and interest under s 57 of the Insurance Contracts Act 1984 (Cth).' 'The balance of the proceedings is adjourned...