Littlewood v Resource Underwriting Pty Ltd

The dispute in *Littlewood v Resource Underwriting Pty Ltd* concerned a claim under a professional indemnity insurance policy. The insured, an investment adviser, sought cover for a breach of duty claim arising from advice given to a client to invest in a third-party development. The insurer denied liability, relying on an exclusion clause in the policy. The matter came before the New South Wales Court of Appeal.

The central legal issue for the Court of Appeal was whether the investment adviser had an "entitlement or other financial interest" in the "fund scheme arrangement or entity" in which he advised his client to invest, thereby triggering the exclusion clause. The purpose of this exclusion, as understood by the Court, was to deny cover where the adviser was in a position of conflict of interest when providing advice.

The Court reasoned that the adviser did indeed possess an entitlement or financial interest in the development project. This interest arose from his own investment in the development and his entitlement to a significant fee and interest upon its successful completion. These circumstances created a clear conflict of interest, as his personal financial gain was directly linked to the success of the investment he recommended to his client. The Court found that this situation fell squarely within the scope of the policy exclusion.

Leave to appeal was granted, and the appeal was dismissed with costs. The Court ordered that the notice of appeal filed as of right should stand as the formal notice of appeal, and the requirement to pay any further filing fee was dispensed with.