Markel Syndicate Management Limited v Taylor as Liquidator of Heading Contractors Pty Ltd (In Liquidation) [2021] FCAFC 198

Markel Syndicate Management Limited v Taylor as Liquidator of Heading Contractors Pty Ltd (In Liquidation) [2021] FCAFC 198

Extension 2(g) must be construed to extend cover for Loss to the estate, heirs, legal representatives or assigns of the director where, at the time of death, incompetency or bankruptcy, no liability has yet been established against the director, so long as the liability is one the director would have been covered for under the policy had they not died, become incompetent or bankrupt. In such cases, cover applies to liabilities subsequently established against the estate or its representative, not only those incurred before bankruptcy, so the insurer’s argument unduly limited the extension’s work and commercial purpose.

Jurisdiction
Australia
Judgment Date
15 November 2021
Procedural Posture
Appeal / Final Judgment on Appeal From Answer to Separate Question
Outcome
Appeal dismissed with costs
Legal Topics
['directors and Officers Liability' 'insolvent Trading' 'bankruptcy and Discharge' 'construction of Insurance Policies']
['insurance Law' 'insolvency Law' 'corporations Law'] ['directors and Officers Liability' 'insolvent Trading' 'bankruptcy and Discharge' 'construction of Insurance Policies']

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Procedural Posture

Appeal / Final Judgment on Appeal From Answer to Separate Question

Legal Issues

  1. 1 ['Whether insurance policy extension 2(g) operates to indemnify the trustee in bankruptcy with respect to liability for insolvent trading following discharge of the director from bankruptcy' 'Proper construction of extension 2(g) in the context of bankruptcy, death, or incompetency of an insured director']

Ratio Decidendi

Extension 2(g) must be construed to extend cover for Loss to the estate, heirs, legal representatives or assigns of the director where, at the time of death, incompetency or bankruptcy, no liability has yet been established against the director, so long as the liability is one the director would have been covered for under the policy had they not died, become incompetent or bankrupt. In such cases, cover applies to liabilities subsequently established against the estate or its representative, not only those incurred before bankruptcy, so the insurer’s argument unduly limited the extension’s work and commercial purpose.

Court Disposition

Appeal dismissed with costs

Orders

  • ['The appeal is dismissed with costs.' 'Within 14 days the parties are to file written submissions (maximum two pages) as to any further orders that should be made.']