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Murphy v Swinbank

Murphy v Swinbank

Case [1999] NSWSC 934 24 September 1999

Professional Indemnity Insurance

Scope of Indemnity

Dishonest Act or Omission

Fiduciary Obligations

Insurance Contract Construction

Claims Circumstances

Insurance Law

Professional Negligence

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CITATION: Murphy & Allen v SwinbankSwinbank v Cleary [1999] NSWSC 934

CURRENT JURISDICTION: Equity Division,. Commercial List

FILE NUMBER(S): 50138/98, 50007/98

HEARING DATE(S): 11,12,13,16,17,18,19,24,25,26,30.8.99 & 1.9.99

JUDGMENT DATE:
24 September 1999

PARTIES :

50138/98 Christopher Mark Swinbank & ors v Donald James Cleary & ors
50007/98 John William Murphy & ors) v Christopher Mark Swinbank & ors

JUDGMENT OF: Einstein J

COUNSEL : B.C. McDougall QC, R.W. White SC, R.J. Powell & J.A. Halley (Plaintiffs)
M.A. Pembroke SC, D.L. Williams (Defendants)

SOLICITORS: Baker McKenzie (Plaintiffs)
Ebsworth & Ebsworth (Defendants)

CATCHWORDS: Insurance - Issues arising from collapse of the Estate Mortgage Trusts - Solicitors acting in preparation of loan and security documents - Solicitors Certificates given to Trustee client omit material information - Knowledge or suspicion of wrongdoing - Side arrangement documented by Equity sharing Agreement not disclosed in Solicitors Certificates - Solicitors Certificate altered to omit material information - Professional Indemnity Insurance - Scope of indemnity - Whether insurers entitled to disclaim liability under policies - Exclusion in respect of liability brought about by dishonest act or omission - Meaning of 'dishonest' under the policies - Whether conduct of solicitors - in breach of fiduciary obligations also amounted in the circumstances proved to dishonest conduct - Exclusion for 'known claims circumstances' - Prior notification - Construction - Whether there were individual contracts of insurance or one composite contract of insurance - Whether the proper construction of the 'known claims/claims circumstances' exclusion requires that the claims circumstances must be known to each and every one of the separately or severally insured - Meaning of 'claim' - Circumstances in which separate and distinct causes of action leading to separate and distinct heads of loss or damage give rise to two claims.

ACTS CITED: Evidence Act 1995 (NSW)
Queensland Law Society Act

CASES CITED: Cases cited in reasons for Judgment
Advance (NSW) Insurance Agencies Pty Ltd v Matthews (1989) 166 CLR 606
Boles & Ors v Esanda Finance Corporation Ltd (1989) 18 NSWLR 666
Briginshaw v Briginshaw & Anor (1938) 60 CLR 336
FAI General Insurance Co Ltd v Australian Hospital Care Pty Ltd (Unreported, Supreme Court of Queensland, Court of Appeal, 9 July 1999)
Federation Insurance Ltd v Wasson & Ors (1987) 163 CLR 303
General Accident Fire and Life Assurance Corporation Ltd & Anor v Midland Bank Ltd & Ors [1940] 2 KB 388
Gilmore & Ors v AMP General Insurance Co Ltd (1996) 67 SASR 387
Haydon & Ors v Lo & Lo (a firm) & Anor [1997] 1WLR 198
Higgins v Orion Insurance Co Ltd (1985) 17 DLR (4th) 90
Homes v GRE Insurance Limited (1988) TAS R. 147
Maulder v National Insurance Company of New Zealand Ltd [1993] 2 NZLR 351
Pech v Tilgals (1994) 94 ATC 4206
Pedler v Richardson (Unreported, Supreme Court of NSW, 16 October 1997, Young J)
Peters v The Queen (1998) 192 CLR 493
Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589
Rankin v North Waterloo Farmers Mutual Insurance…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Murphy v Swinbank

Details

AGLC: Murphy v Swinbank [1999] NSWSC 934
Case: [1999] NSWSC 934
Decision Date: 24 September 1999

CaseChat Overview and Summary

The case of Murphy v Swinbank involved a dispute between the Murphys, who were the solicitors for the Estate Mortgage Trusts, and Swinbank, the professional indemnity insurer. The collapse of the Estate Mortgage Trusts led to claims against the Murphys for their role in the preparation of the loan and security documents. Swinbank sought to disclaim liability under the insurance policies on several grounds, including exclusions for dishonest acts or omissions and known claims circumstances. The Murphys argued that the conduct of the solicitors did not amount to dishonest conduct and that the exclusions did not apply.

The court had to determine whether the Murphys' conduct amounted to dishonest acts or omissions under the insurance policies, whether the known claims circumstances exclusion applied, and the proper construction of the exclusion in the context of the individual contracts of insurance. The court also had to consider whether the conduct of the solicitors breached their fiduciary obligations and if this amounted to dishonest conduct under the policies. Additionally, the court needed to decide whether the known claims circumstances exclusion required that the claims circumstances must be known to each and every one of the separately or severally insured.

The court found that the Murphys' conduct did not amount to dishonest conduct within the meaning of the insurance policies. The court held that the known claims circumstances exclusion did not apply because it was not necessary for the claims circumstances to be known to each and every one of the separately or severally insured. The court also determined that the proper construction of the exclusion required that the claims circumstances must be known to at least one of the insured parties. Furthermore, the court held that separate and distinct causes of action leading to separate and distinct heads of loss or damage could give rise to two claims under the policies.

The court ordered that Swinbank was liable to indemnify the Murphys for the claims brought against them in relation to the Estate Mortgage Trusts. The court also found that the known claims circumstances exclusion did not apply, and the insurers were not entitled to disclaim liability under the insurance policies.

Orders