Abstract

Article

Exclusion of Claim by Other Insured

If an exclusion in a Professional Liability policy excludes cover for civil proceedings brought by, on behalf of or for the benefit of any insured or any subsidiary or family member of an insured, and a director and shareholder of the insured is also the sole director and a shareholder of the trustee of a unit trust and his family members also hold shares in the corporate unitholders of the trust, which commenced civil proceedings against the insured the claim would be excluded because it is brought by a subsidiary of the director-shareholder, an insured within the extended definitionof that term. But the ownership of shares in corporate unitholders of the trust and the possibility of benefit flowing to the director-shareholder and his family members would be insufficient to characterise the claim as brought for the benefit of those persons. Charles v Federal Commissioner of Taxation [1954] HCA 16; (1954) 90 CLR 598; Macaura v Northern Assurance Co Ltd [1925] AC 619 applied. Malamit Pty Ltd v WFI Insurance Ltd [2017] NSWCA 162.

 

Claim to be Brought by a Third Party

 

If a claim is defined to be brought by a third party, it is so brought within the insuring clause though it is brought by a party related to the insured which triggers an exclusion for that reason: Wilkie v Gordian Runoff Limited Ltd (2005) 221 CLR 522; [2005] HCA 17; Lake v Simmons [1927] AC 487; Malamit Pty Ltd v WFI Insurance Ltd [2017] NSWCA 162.. Chubb Insurance Company of Australia Ltd v Robinson (2016) 239 FCR 300; [2016] FCAFC 17 distinguished. When used between parties to an arrangement and with reference to that arrangement, the description “third party” generally refers to someone who is not a party to the arrangement or who has no interest in the subject matter. If under a contract of insurance, one party agrees to indemnify other persons against loss or liability, they need not be parties to it: Trident General Insurance Co Ltd v McNiece Bros Pty Ltd (1988) 165 CLR 107; Insurance Contracts Act 1984 (Cth), s 48;.

If an insurer promises to indemnify multiple insureds with respect to their distinct interests in the subject matter, a composite contract, the insuring clause is usually to be read distributively for his, her or its respective interests and will not necessarily be affected by circumstances specifically pertaining to another insured: General Accident Fire & Life Assurance Corporation Ltd v Midland Bank Ltd [1940] 2 KB 388 at 404–405, 408; Federation Insurance Ltd v Wasson (1987) 163 CLR 303. This also applies to Professional Indemnity insurance, where the relevant subject matter involves a form of liability to another person:  Arab Bank Plc v Zurich Insurance Co [1999] 1 Lloyd’s Rep 262 at 27; Malamit Pty Ltd v WFI Insurance Ltd [2017] NSWCA 162.

Joinder of Interested Party on Appeal

If a determination that the insurer was not liable to indemnify the insured was an essential element of an insured’s claims against his brokers, their interest in overturning that determination made them directly affected by the relief sought in the insured’s appeal against a finding in favour of the insurer, and accordingly they should be joined as respondents to the appeal: Fidelitas Shipping Co Ltd v V/O Exportchleb [1966] 1 QB 630; Malamit Pty Ltd v WFI Insurance Ltd [2017] NSWCA 162