INSURANCE – third party claims by investors pursuant to the Civil Liability (Third Party Claims against Insurers) Act 2017 (NSW) against insurer that provided directors and officers liability insurance to a now insolvent company – proceeding brought by applicant on its own behalf and on behalf of group members – where partial settlement of proceeding approved and applicant granted leave to discontinue proceeding against corporate defendants, but individual directors to remain as respondents in proceeding – where directors excused from participating in proceeding and each filed submitting appearances – where principal claim remaining to be determined is applicant’s third party claim against insurer for indemnity under policy
CORPORATIONS – where necessary to address claims advanced against companies and directors to establish foundation for third party claims brought against insurer – where companies operated registered and unregistered managed investment schemes – where companies made improvident and inadequately secured loans to related entities, directors and financial advisors – where applicant and group members purchased units in schemes – where investments in schemes promoted in information memorandum and product disclosure statements – whether directors involved in contravention of s 601FC by companies and contravened s 601FD(1)(b) and s 601FD(1)(c) of the Corporations Act 2001 (Cth) (Corporations Act) by not acting with care and diligence and failing to act in best interests of members of schemes – whether information memorandum and product disclosure statements contained misleading and deceptive representations – whether applicant relied on misleading and deceptive representations – whether product disclosure statements were defective within the meaning of s 1022A of the Corporations Act – whether directors were involved in contraventions – contraventions established – where directors involved in contraventions – whether applicant and group members entitled to damages against directors –where applicant and group members entitled to damages against directors in an aggregate amount for s 601FC(5), 601FD(1)(b) and s 601FD(1)(c) contraventions – predicate liability established – common questions answered
INSURANCE – defences – non-disclosure – whether insurer entitled to reduce liability for claims under policy to nil – where satisfied relevant matters not disclosed – where satisfied that director who completed proposal form knew of relevance of matters not disclosed and such knowledge attributed to the company – where both limbs of s 21(1) of the Insurance Contracts Act 1984 (Cth) (Insurance Contracts Act) engaged – where satisfied insurer would not have accepted risk if it were made aware of matters not disclosed – whether insurer waived duty of disclosure pursuant to s 21(2)(d) or s 21(3) of the Insurance Contracts Act – where question in proposal form as to whether applicant was aware of facts or circumstances which might afford valid grounds for any future investigations, inquiries, regulatory proceedings or other claims which may be covered by the policy was answered in the affirmative – where insurer did not seek particulars of affirmative answer – whether there was a fair presentation of risk to the insurer or answers were obviously incomplete or irrelevant within the meaning of s 21(3) of the Insurance Contracts Act – where satisfied duty of disclosure waived by the insurer
INSURANCE – whether insurer entitled to rely on professional services exclusion in policy – whether impugned conduct constitutes the provision of third party professional services – consideration of Beach J’s decision in Murray Goulburn Co-Operative Co Ltd v AIG Australia Ltd (2021) 389 ALR 453; [2021] FCA 288 – impugned conduct does not constitute professional services falling within professional services exclusion –whether insurer is entitled to benefit of conditional release granted to directors under settlement orders made pursuant to s 7 of the Civil Liability (Third Party Claims against Insurers) Act 2017 (NSW) – where settlement orders do not preclude applicant from claiming indemnity against insurer
Michael Collins appeared for the applicant, led by D Lloyd SC and R Pietriche.
Reasons for the judgment can be found here.