INSURANCE – insurance policy – interpretation and construction – whether, by reason of the doctrine of strictissimi juris, any doubt as to the proper construction of the policy should be resolved in favour of the insurers – whether statements of the High Court relating to contracts of guarantee and indemnity apply to insurance policies – contracts of insurance distinguishable from contracts of guarantee and indemnity and possess a different purpose
INSURANCE – financial services errors and omissions policy – interpretation and construction – whether insurers liable for errors or omissions of the insureds in the performance of professional services, defined relevantly to mean financial planning encompassing advice on approved investment products and life insurance products – meaning of terms “approved investment products” and “encompassing” – whether liability restricted to financial advice given on investment products contained in an “Approved Product List” –primary judge erred in giving the terms a narrow construction – the insurance clause covered all aspects of financial planning, as long as the financial planning contained advice on approved investment products, being products that were approved by the licensee from time to time
[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.
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AGLC
Todd v Alterra at Lloyds Ltd [2016] FCAFC 15
Case
[2016] FCAFC 15
Decision Date
CaseChat Overview and Summary
In the case of Todd v Alterra at Lloyds Ltd, the dispute involved the interpretation of a financial services errors and omissions insurance policy. The primary issue before the court was whether the policy, issued by Alterra at Lloyds Ltd, provided coverage for errors or omissions made by Todd in the performance of his professional services, which included financial planning advice on approved investment products and life insurance products. The court also had to determine the meaning of the terms “approved investment products” and “encompassing” in the context of the policy, and whether liability was restricted to financial advice given on investment products listed in an “Approved Product List.”
The court found that the primary judge had erred in giving the terms a narrow construction. It held that the insurance clause covered all aspects of financial planning as long as the planning contained advice on approved investment products, which were products that were approved by the licensee from time to time. The court further held that the doctrine of strictissimi juris, which requires any doubt in the construction of an insurance policy to be resolved in favour of the insured, did not apply in the same way to insurance policies as it does to contracts of guarantee and indemnity. Insurance policies have a different purpose and possess different characteristics that distinguish them from such contracts.
The appeal was allowed, and the orders included setting aside the dismissal of the cross-claim, declaring that the insurance policy responded to the claim against Todd, and ordering the respondents to indemnify Todd for the liabilities identified. Additionally, the court ordered that the respondents pay Todd's costs of the proceedings on the cross-claim. The court also referred certain questions for further hearing, and invited submissions on the form of order from the parties if desired.
Orders
Orders of the court
1. The appeal be allowed with costs.
2. Order 1 of the Court made on 6 March 2015 dismissing the Appellant’s cross-claim be set aside and in lieu thereof:
(a) declare that the Financial Services Errors and Omissions Insurance Policy B 0309 WP 120250b (the “Policy”) issued by the Fourth to Seventh Respondents and Cross-Respondents, responds to the claim made by the Applicants below against the Second Respondent (Mr Todd) and that the Second Respondent (Mr Todd) is entitled to indemnity with respect to the liabilities identified at [3] of the Court’s Reasons for Judgment published on 6 March 2015;
(b) declare that pursuant to the Policy, the Fourth to Seventh Respondents and Cross-Respondents are obliged to indemnify the Second Respondent (Mr Todd) for his liability to the Applicants below for the liabilities identified at [3] of the Court’s Reasons for Judgment published on 6 March 2015 and for the Second Respondent’s (Mr Todd’s) defence costs with respect to the claims of the Applicants below, subject to any applicable excess;
(c) order that the Fourth to Seventh Respondents and Cross-Respondents pay the Applicants the amount they are liable to pay the Applicants pursuant to paragraph (b) above, excluding defence costs, in reduction of any judgment in favour of the Applicants against the Second Respondent (Mr Todd);
(d) order that the Fourth to Seventh Respondents and Cross-Respondents pay the Second Respondent’s (Mr Todd’s) costs of the proceedings on the cross‑claim; and
(e) order that the separate questions described at [7] of the Court’s Reasons for Judgment published on 6 March 2015 be referred for further hearing.
3. Should either party wish to make submissions on the form of order, submissions of no more than three pages are to be filed within seven days and the Court will consider the need for further argument.