Vero Insurance v Baycorp Advantage [2004] NSWCA 390

Vero Insurance v Baycorp Advantage [2004] NSWCA 390

The Deed of Settlement did not render the insured officers legally liable for the $10 million settlement sum within the meaning of the policy, so there was no 'Loss' triggering indemnity for that sum. The insurer is not obliged to indemnify for amounts not legally owed by the officers. However, all reasonable defence costs incurred with the insurer's prior written consent, including those benefiting both insured and uninsured parties, are claimable under the policy, as the definition of 'Defence Costs' does not limit cover only to costs exclusively benefiting insured persons. The allocation clause (Claims Condition 6) is void for uncertainty and does not require apportionment of common...

Parties
Appellant: Vero Insurance Limited; Respondent: Baycorp Advantage Limited
Jurisdiction
Australia
Judgment Date
06 December 2004
Procedural Posture
Appeal / Court of Appeal Judgment Following Appeal From Supreme Court (equity Division), After Questions Determined in Advance of Full Hearing
Outcome
Appeal allowed in part.
Legal Topics
Directors' and Officers' Insurance, Indemnity, Legal Liability Under Settlement, Defence Costs, Policy Interpretation
Insurance Law Directors' and Officers' Insurance Indemnity Legal Liability Under Settlement Defence Costs Policy Interpretation

Case Brief

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Parties

Vero Insurance Limited

Appellant

Baycorp Advantage Limited

Respondent

Procedural Posture

Appeal / Court of Appeal Judgment Following Appeal From Supreme Court (equity Division), After Questions Determined in Advance of Full Hearing

Legal Issues

  1. 1 Whether the Deed of Settlement made the officers legally liable for the $10 million settlement sum within the meaning of the policy's definition of 'Loss'.
  2. 2 Whether the insurer was thereby liable to indemnify the respondent for the $10 million under the policy.
  3. 3 Whether it was unconscionable for the respondent to rely on the Deed of Settlement to establish 'Loss'.

Ratio Decidendi

The Deed of Settlement did not render the insured officers legally liable for the $10 million settlement sum within the meaning of the policy, so there was no 'Loss' triggering indemnity for that sum. The insurer is not obliged to indemnify for amounts not legally owed by the officers. However, all reasonable defence costs incurred with the insurer's prior written consent, including those benefiting both insured and uninsured parties, are claimable under the policy, as the definition of 'Defence Costs' does not limit cover only to costs exclusively benefiting insured persons. The allocation clause (Claims Condition 6) is void for uncertainty and does not require apportionment of common...

Court Disposition

Appeal allowed in part.

Orders

  • Set aside the answers to separate Questions 1, 2 and 3 in Order 1 made by Einstein J on 28 October 2003 and substitute as follows: Separate Question 1 -- No; Separate Question 2 -- Does not arise; Separate Question 3 -- Does not arise.
  • Order that each party pay its own costs of the appeal.