Calliden Insurance Limited v Chisholm

Calliden Insurance Limited (the appellant) appealed to the High Court of Australia against a decision of the Full Federal Court which had affirmed a judgment in favour of Mr. Chisholm (the respondent). The dispute concerned the interpretation of a professional indemnity insurance policy and whether it covered a claim made against Mr. Chisholm by his former employer, a company called Calliden Group Limited. Mr. Chisholm had been employed as a senior executive and had been involved in a dispute with his employer regarding his conduct.

The High Court was required to determine whether the professional indemnity insurance policy issued by Calliden Insurance Limited to Mr. Chisholm provided cover for the claim made against him by Calliden Group Limited. Specifically, the court had to consider whether the claim fell within the definition of "civil liability" under the policy and whether any exclusions within the policy operated to deny cover. The central question was whether the policy covered claims arising from an employee's conduct towards their employer, particularly where that conduct might be characterised as a breach of duty or fiduciary obligation.

The High Court, in allowing the appeal, reasoned that the policy's wording, particularly the definition of "civil liability" and the exclusions, did not extend to cover claims brought by an employer against an employee for breaches of their employment contract or fiduciary duties. Their Honours applied principles of contractual interpretation, emphasising that insurance policies are to be read as a whole and that the plain meaning of the words used should be given effect. The court found that the claim by Calliden Group Limited was fundamentally a claim for breach of employment obligations, which was not the type of liability the professional indemnity policy was intended to cover.

Consequently, the High Court ordered that the appeal be allowed and the judgment of the Full Federal Court be set aside. The court declared that Calliden Insurance Limited was not liable to indemnify Mr. Chisholm in respect of the claim made against him by Calliden Group Limited.