McCullough Robertson & ABW Nominees P L

McCullough Robertson and ABW Nominees Pty Ltd sought a declaration that FAI General Insurance Company Ltd was liable to pay their costs of acting for ABW in its defence, regardless of whether FAI had avoided the policy. The dispute arose from a professional indemnity insurance policy held by ABW with FAI. ABW was sued for allegedly negligent quantity surveying services, and FAI appointed solicitors to defend ABW. However, the solicitors experienced a conflict of interest and were replaced by McCullough Robertson. FAI agreed to pay McCullough Robertson's costs, but later avoided the policy, claiming ABW had made fraudulent misrepresentations. McCullough Robertson sought a declaration that FAI was liable to pay their costs.

The legal issues centered on whether FAI had agreed to pay McCullough Robertson's costs, and if so, whether this obligation survived the avoidance of the policy by FAI. The court had to determine the terms of any agreement between FAI and McCullough Robertson, and interpret the effect of the 6 August 1993 letter from FAI to ABW on this agreement.

The court found that FAI had indeed agreed to pay McCullough Robertson's costs, based on the negotiations and correspondence between FAI and McCullough Robertson. McCullough Robertson's insistence that they would only act if assured of payment by FAI was central to the agreement. Although the 6 August 1993 letter to ABW was not part of the negotiations with McCullough Robertson, it did not negate the agreement reached. The court concluded that the 6 August letter did not limit FAI's liability to McCullough Robertson, and that FAI's obligations under the separate contract with McCullough Robertson were not affected by the avoidance of the policy.

The court granted McCullough Robertson the declaratory relief they sought, holding that FAI was liable to pay their costs of acting for ABW in its defence. The court did not address the issue of FAI's potential recovery of costs from ABW.