CGU Insurance Ltd v AMP Financial Planning Pty Ltd

CGU Insurance Ltd (CGU) and AMP Financial Planning Pty Ltd (AMP) were the parties involved in this dispute before the High Court of Australia. The core of the disagreement concerned the interpretation of a professional indemnity insurance policy issued by CGU to AMP. Specifically, the dispute revolved around whether certain claims made against AMP were covered by the policy, particularly in light of exclusions relating to prior knowledge of circumstances that might give rise to a claim.

The High Court was required to determine the proper construction of the insurance policy, focusing on the meaning and effect of the "prior knowledge" exclusion clause. This involved considering whether AMP had knowledge of circumstances that could reasonably have been expected to give rise to a claim before the policy commenced, thereby vitiating coverage for subsequent claims arising from those circumstances. The court also had to assess the scope of AMP's duty to disclose information to CGU.

In its reasoning, the High Court, led by Hayne J, emphasised the importance of the plain language of the insurance contract. The court analysed the wording of the exclusion clause, considering the objective test for what a reasonable person in AMP's position would have known or ought to have known regarding potential claims. The principles of contractual interpretation, including the consideration of the policy as a whole and the commercial context, were applied. The court found that the exclusion clause was operative in the circumstances of the case, meaning that certain claims were not covered by the policy.