Muriniti; Newell v Lawcover Insurance Pty Ltd (No 2)

The appellants, Muriniti and Newell, appealed to the Court of Appeal of New South Wales against a decision of the primary judge concerning a professional indemnity insurance policy issued by Lawcover Insurance Pty Ltd. The dispute arose from Lawcover's decision not to appeal a previous court decision in *Young v King (No 11)*, which had significant implications for the appellants. The appellants contended that they were entitled to bring their own appeal against the *Young v King (No 11)* decision and that Lawcover had acted in bad faith by refusing to appeal and by its defence of the underlying proceeding.

The Court of Appeal was required to determine several legal issues. These included whether, on the proper construction of the insurance policy, the appellants were deemed to have consented to Lawcover's decision not to appeal the *Young v King (No 11)* decision, and conversely, whether the appellants were entitled to bring an appeal in their own names. Furthermore, the court had to consider whether Lawcover had acted in bad faith in its defence of the proceeding that was the subject of *Young v King (No 11)*, and in its refusal to appeal that decision. The court also considered whether certain clauses in the policy contravened the duty of good faith imposed by section 52 of the *Insurance Contracts Act 1984* (Cth), and whether the primary judge had failed to give adequate reasons for his conclusions regarding good faith and whether his reasons supported a reasonable apprehension of bias.

The Court of Appeal dismissed the appeal. The court found that the policy, properly construed, did not deem the appellants to have consented to Lawcover's decision not to appeal, nor did it entitle the appellants to bring an appeal in their own names. The court also held that Lawcover had not acted in bad faith in its defence of the underlying proceeding or in its refusal to appeal. The court found no contravention of the *Insurance Contracts Act 1984* (Cth) and concluded that the primary judge's reasons were adequate and did not give rise to an apprehension of bias. Consequently, the appeal was dismissed with costs.