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 proceedings before the High Court of Australia. The dispute concerned the interpretation of a professional indemnity insurance policy issued by CGU to AMP. Specifically, the issue revolved around whether certain claims made against AMP by its financial planners 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, including the meaning of "circumstances" and "knowledge" as used in the policy's notification and exclusion clauses. The central question was whether AMP had knowledge of circumstances that might give rise to a claim before the policy commenced, thereby vitiating coverage for subsequent claims arising from those circumstances. This involved an analysis of AMP's internal communications and its awareness of potential issues with its financial planners' conduct.

Crennan J, delivering the judgment, focused on the objective meaning of the policy wording. His Honour held that the relevant "circumstances" were not limited to specific, identified claims but could encompass a broader range of facts or events that indicated a potential for future claims. Furthermore, "knowledge" was to be assessed objectively, considering what AMP, through its responsible officers, knew or ought to have known about those circumstances. The court applied principles of contractual interpretation, emphasising the need to give effect to the plain meaning of the words used in the policy, read in their commercial context. The court found that AMP had indeed become aware of circumstances that might give rise to claims prior to the policy period, and therefore, the claims were excluded from coverage.