Ransley v Chubb Insurance Company of Australia Limited

The dispute between the insured, Mr Ransley, and Chubb Insurance Company of Australia Limited, the insurer, pertained to the interpretation of a directors and officers insurance policy. The court had to determine whether the cover available under the insuring clause of the policy was available for each insured person or for all persons incurring legal expenses with respect to a formal investigation in the aggregate. Specifically, the case involved a claim for legal expenses arising from a formal investigation conducted by the Australian Securities and Investments Commission (ASIC).

The court was tasked with interpreting the policy wording to ascertain whether the insurer's liability was limited to the aggregate of insured persons in relation to each formal investigation. The key issue was whether such a construction of the policy would render it uncommercial and thus against public policy. Mr Ransley argued that the policy should be interpreted to provide cover for each insured person individually, while the insurer contended for an aggregate interpretation.

The court concluded that the policy should be interpreted in a manner that provided cover for each insured person individually. It found that the aggregate interpretation would render the policy uncommercial and contrary to public policy. The court held that an insurer's liability under the policy should not be limited to the aggregate of insured persons with respect to each formal investigation. Consequently, the policy provided separate coverage for each insured person, thereby ensuring that each individual could claim for their legal expenses independently.

As a result of the court's decision, Mr Ransley was entitled to seek compensation for his legal expenses under the policy. The court did not make any specific orders beyond determining the interpretation of the policy in favour of the insured.