ACN 010 087 573 & Anor v FAI Insce

The High Court of Australia considered an appeal by ACN 010 087 573 and another party (the appellants) against FAI Insce (the respondent). The dispute concerned the interpretation of a directors and officers liability insurance policy and whether it covered certain claims made against the appellants.

The central legal issue before the High Court was whether the policy's "prior notice" exclusion clause operated to deny indemnity to the appellants for claims that arose from circumstances of which the appellants had given notice to the insurer prior to the policy period commencing. The court was required to determine the scope and effect of this exclusion in the context of the policy's wording and the factual circumstances of the claims.

The High Court held that the prior notice exclusion clause was clear and unambiguous. It reasoned that the clause was designed to prevent an insured from obtaining cover for circumstances that were already known to them and had been notified to the insurer, thereby avoiding the situation where an insurer might be exposed to claims arising from known risks without having had the opportunity to assess and price that risk appropriately. The court applied principles of contractual interpretation, emphasising the importance of giving effect to the plain meaning of the words used in the policy. The appeal was dismissed.