AMP General Insurance Limited v MacAlister Todd Phillips Bodkins CA108/05

In AMP General Insurance Limited v MacAlister Todd Phillips Bodkins CA108/05, the Court of Appeal of New Zealand considered an appeal by AMP General Insurance Limited (AMP) against a decision of the High Court that awarded damages to the respondents, MacAlister Todd Phillips Bodkins (MTPB) and Graeme Morris Todd. MTPB, a law firm, and Mr Todd, a partner at the firm, had sued AMP, their professional indemnity insurer, for failing to cover the costs of settling a tax debt owed by the Walker Family Trust. The High Court held that AMP was liable to indemnify MTPB and Mr Todd under their insurance policy for the $72,000 paid to settle the tax debt, along with interest and costs. AMP appealed, arguing that the judgment should be set aside.

The court examined the professional negligence claim against AMP, focusing on whether MTPB and Mr Todd were entitled to indemnity under their insurance policy. The key issue was whether the failure to account for GST liabilities on the sale of property by the trustees of the Walker Family Trust constituted a "loss" covered by the policy. The Court found that MTPB and Mr Todd were liable to the trustees for their failure to advise the trustees of the GST liability and to deduct the amount from the payment to the bank, rather than paying the full amount to the bank. This failure resulted in the trustees becoming personally liable for the GST debt when the trust was later found to be insolvent. The Court held that the failure to provide such advice meant MTPB and Mr Todd were liable to the trustees and were entitled to indemnity under the policy.

The Court of Appeal allowed AMP's appeal in part, reducing the amount for which judgment was entered in favour of the respondents from $70,000 to $50,486.10, reflecting the actual GST liability incurred by the trust. The interest to which the respondents were entitled was also reduced proportionately. The appeal was dismissed in all other respects, and there was no order as to costs.