Ross Blakeley, Michael Ryan & Quentin Olde (As Joint and Several Liquidators of Akron Roads Pty Ltd (in Liquidation) (ACN 004 769 895) & Another (according to the attached Schedule) v Insurance Australia Ltd ABN 11...

The case involves the liquidators of Akron Roads Pty Ltd, acting as joint and several liquidators, who have brought a claim against Insurance Australia Ltd for professional indemnity insurance coverage. The dispute arises from the liquidators' contention that the insured, a management consultant, is liable for insolvent trading incurred as a director of Akron Roads Pty Ltd. The liquidators argue that the insured's professional services to Akron Roads Pty Ltd led to the insolvency, and they seek coverage under the professional indemnity policy. The matter was heard in the Supreme Court of New South Wales.

The primary legal issues before the court included the construction of the terms of the professional indemnity policy, specifically whether the liability for insolvent trading fell within the definition of professional services provided by the insured. The court also needed to address whether the failure to disclose the insured's appointment as a director constituted a breach of the insured's disclosure obligations under the Insurance Contracts Act 1984. Another significant issue was the impact of a deed of settlement between the insured and the liquidators of Akron Roads Pty Ltd on the recovery of losses under the policy. The court had to determine whether this deed effectively limited the recoverable losses.

The court found that the insured's liability for insolvent trading did not arise from the provision of professional services, thus falling outside the coverage of the policy. The court emphasised that the liability was incurred in the insured's capacity as a director, not as a professional service provider. The failure to disclose the appointment as a director constituted a breach of the insured's disclosure obligations, but the court ruled that the policy exclusion for director's liability was not applicable in this case. The deed of settlement did not limit the recoverable losses under the policy, as the court interpreted it as an agreement to manage claims rather than a limitation on insurance coverage. Finally, the court confirmed that the liquidators had standing to seek a declaration against the insured's insurer.

The court ruled in favour of Insurance Australia Ltd, denying the liquidators' claim for coverage under the professional indemnity policy. The court held that the insured's liability for insolvent trading was not covered by the policy, and the failure to disclose the appointment as a director did not affect the outcome. The liquidators were not entitled to recover any losses under the policy.