CGU Insurance Limited v Porthouse

CGU Insurance Limited (CGU) appealed to the High Court of Australia against a decision of the Full Federal Court concerning the interpretation of a professional indemnity insurance policy. The dispute arose from a claim made by Porthouse against CGU under a policy issued to Porthouse, a firm of solicitors. The claim related to alleged professional negligence by Porthouse in advising a client in relation to a property development transaction. CGU denied liability under the policy, asserting that the claim was excluded by certain policy conditions.

The High Court was required to determine whether the professional indemnity insurance policy issued by CGU to Porthouse covered the claim made against the firm. Specifically, the court had to consider the proper construction of the policy wording, particularly in relation to exclusions and conditions precedent to liability, and whether Porthouse had complied with its obligations under the policy. The central issue was whether CGU was entitled to deny indemnity to Porthouse.

The High Court analysed the policy wording, applying established principles of contractual interpretation. Their Honours considered the meaning of the terms used in the policy, including the scope of the indemnity and the effect of the exclusions relied upon by CGU. The court found that CGU's interpretation of the policy was not sustainable and that the claim made by Porthouse fell within the cover provided by the policy. The reasoning focused on the ordinary meaning of the words used in the policy and the commercial purpose of such insurance.

The appeal was dismissed, and CGU was ordered to indemnify Porthouse in respect of the claim.