Kyriackou v Ace Insurance Ltd

Kyriackou v Ace Insurance Ltd concerned a claim for professional indemnity insurance by a defendant in civil proceedings brought by the Australian Securities and Investments Commission (ASIC) regarding an alleged unregistered managed investment scheme. The insured sought to recover the costs of defending the ASIC proceedings under a policy with Ace Insurance Ltd. The Federal Court of Australia had to determine whether these costs were covered by the insurance policy, particularly in the context of proceedings discontinued without a determination on their merits.

The key legal issues were whether the claim for costs of defending the ASIC proceedings constituted civil compensation or damages as defined by the policy, and if the claim arose out of a breach of duty in the professional capacity of the insured. Additionally, the court examined whether any exclusion clauses in the policy applied to prevent coverage for these costs. The case hinged on the interpretation of the insuring clause and the relevant exclusions, drawing on precedents such as Kantfield Pty Ltd v Lockwood, Toomey v Scolaro’s Concrete Constructions & Ors, Suncorp Metway Insurance Pty Ltd v Landridge Pty Ltd, and Solicitors’ Liability Fund v Gray & Anor.

The court held that the claim for costs did not constitute civil compensation or damages because ASIC had not sought such relief in their proceedings. The court reasoned that the insured had not suffered a loss in the form of civil compensation or damages, as the proceedings were discontinued without a determination on their merits. Consequently, the claim did not arise out of a breach of duty in the insured’s professional capacity. The court also found that none of the exclusion clauses applied to exclude coverage for the costs incurred in defending the ASIC proceedings. Therefore, the appeal was dismissed.

No further orders were made by the court, affirming the dismissal of the insured's appeal.