Global Constructions Australia Pty Ltd (in liq) v AIG Australia Limited [2018] FCA 98

Global Constructions Australia Pty Ltd (in liq) v AIG Australia Limited [2018] FCA 98

The deduction for loan accounts and the financial value of shares held by the fraudulent shareholder must be applied to the Direct Financial Loss suffered by the insured, prior to the calculation and application of the insurer's stated policy limit and retention. The insurer's argument to deduct after policy limit...

Source-derived case information.

Jurisdiction
Australia
Judgment Date
08 February 2018
Procedural Posture
Insurance Claim / Final Judgment on Construction of Insurance Policy
Outcome
Judgment for the applicant on construction of the policy. Quantification and final orders reserved.
Legal Topics
['construction of Policy Clauses' 'limit of Liability' 'set Off Provisions' 'shareholder Fraud']
['insurance Law' 'commercial Law'] ['construction of Policy Clauses' 'limit of Liability' 'set Off Provisions' 'shareholder Fraud']

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Procedural Posture

Insurance Claim / Final Judgment on Construction of Insurance Policy

Legal Issues

  1. 1 ["Whether set-off for shareholder's loan account and shares applies before or after policy limit in crime protection cover" 'Proper construction of Section 4, clauses 1 and 6, of the insurance policy' 'Calculation of Direct Financial Loss under the policy']

Ratio Decidendi

The deduction for loan accounts and the financial value of shares held by the fraudulent shareholder must be applied to the Direct Financial Loss suffered by the insured, prior to the calculation and application of the insurer's stated policy limit and retention. The insurer's argument to deduct after policy limit is rejected so as not to render coverage illusory in cases of substantial shareholder fraud.

Court Disposition

Judgment for the applicant on construction of the policy. Quantification and final orders reserved.

Orders

  • ['The parties provide by close of business on 9 February 2018 short minutes or competing short minutes to encompass the views in this judgment.' 'Order for lump-sum costs of $25,000 to the applicant.']