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

The case of AMP General Insurance Limited v MacAlister Todd Phillips Bodkins CA108/05 involved a legal dispute between the appellant, AMP General Insurance Limited, and the respondents, MacAlister Todd Phillips Bodkins and Graeme Morris Todd. The respondents, a law firm and one of its partners, had previously succeeded in a claim in the High Court against their professional indemnifier, AMP, for a sum of $72,000 paid to settle a tax debt to the Commissioner of Inland Revenue, together with interest and costs incurred by the firm in negotiating settlement. The policy of insurance provided by AMP was argued to cover the claim, and AMP appealed against the decision of the High Court. The central legal issues in the case were whether the firm and Mr Todd, as solicitors, had a duty to pay or make provision for the GST liabilities of the trustees of the Trust, and if so, whether the loss resulted from the firm's failure to advise the trustees of their GST obligation and to deduct the amount of the GST from the payment to the BNZ. The Court of Appeal held that the firm and Mr Todd did have such a duty, and that the trustees did sustain loss by reason of the breach of duty. The Court further found that the trustees' liability to pay GST arose not from the sale of the properties but from the firm's and Mr Todd's failure to advise the trustees of the need to pay GST and the further failure to pay its amount to the Commissioner rather than to the BNZ. Consequently, the appeal was allowed, and the decision of the High Court was set aside, with the primary judgment for the respondents limited to the figure of $50,486.10, and the interest award reduced proportionately.