Antico v Heath Fielding Australia Pty Ltd

HIGH COURT OF AUSTRALIA

BRENNAN CJ, DAWSON, TOOHEY, GAUDRON AND GUMMOW JJ

SIR TRISTAN ANTICO v HEATH FIELDING AUSTRALIA PTY LIMITED
Insurance

(1997) 146 ALR 385

7 August 1997
Insurance

Insurance—Claims made insurance policy providing indemnity for legal expenses—Condition in policy requiring insurer's consent prior to incurring or payment of legal expenses—Effect of failure to obtain consent—Operation of s 54 of Insurance Contracts Act 1984 (Cth)—Whether failure to obtain consent an act or omission to which s 54 applies. Insurance Contracts Act 1984 (Cth), s 54.

Orders

Order:
1. Appeal allowed.

2. The respondent pay the costs of the appellant in this Court and so much of the costs of the appellant of the proceedings in the New South Wales Court of Appeal and before the primary judge as are referable to the issues taken on appeal to this Court.

3. The parties have liberty to file within 21 days a minute of the orders o be made by this Court to give further effect to the joint reasons for judgment.

Decision

BRENNAN CJ.

A Directors and Officers Legal Expenses policy of insurance was issued to the appellant, Sir Tristan Antico ("the insured"), by C E Heath Casualty & General Insurance Ltd ("the insurer") providing an indemnity for legal expenses incurred as a result of proceedings that might be brought against the insured during the period of 12 months from 22 December 1989. Proceedings were brought against the insured as a director of a company during that period. The proceedings were compromised. The insured incurred legal expenses which were said to be well in excess of $1,000,000 in dealing with the claims. The insurer declined to pay and the insured sued to enforce his alleged right to indemnity under the policy but his claim was dismissed.

The respondent Heath Fielding Australia Pty Limited was the insured's broker. The insured joined the broker as a defendant in the proceedings in which he sued the insurer. He obtained a finding that was upheld on appeal that the broker had breached its retainer and its duty to the insured. Although the trial judge had left for later determination the question whether the conduct of the broker caused loss and damage to the insured, two issues of law relevant to the assessment of any such loss and damage were determined in the proceedings. The first question was whether the insured's failure to obtain the insurer's consent under condition 1 of the policy is an omission to which s 54 of the Insurance Contracts Act 1984 (Cth) ("the Act") applies. The second question was whether the insured's failure to comply with the conditions of the policy contained in cll 9.2, 9.6 and 9.7 is an omission to which s 54 of the Act applies.

The relevant terms of the policy are set out below:

"EXTENT OF COVER

... If you incur Legal Expenses as a result directly of an Insured Event occurring during the Period of Insurance we will indemnify you for those Legal Expenses…