All Class Insurance Brokers Pty Ltd (in liquidation) v Chubb Insurance Australia Limited (No 2) [2021] FCA 782

Federal Court of Australia

All Class Insurance Brokers Pty Ltd (in liquidation) v Chubb Insurance Australia Limited (No 2) [2021] FCA 782 File number: NSD 714 of 2019

Judgment of: ALLSOP CJ

Date of judgment: 9 July 2021

Catchwords: INSURANCE – non-disclosure – claim made under group insurance policy taken out by head of network of independent insurance brokers for benefit of individual brokers – whether insured company had duty to disclose pursuant to s 21 of the Insurance Contracts Act 1984 (Cth) – whether insured a third party beneficiary pursuant to s 48 of the Insurance Contracts Act 1984 (Cth) – whether company a party to the contract – whether head of network acting as agent of individual brokers – whether insured company made non-disclosure – where managing director of insured company fraudulently misappropriated moneys from client trust account – where misappropriated funds applied in part for benefit of company – whether knowledge of managing director attributable to company – whether managing director directing mind and will of company – whether non-disclosure fraudulent – whether insurer entitled to reduce its liability to nil where insured failed to comply with duty of disclosure – insurer entitled to avoid policy for fraudulent non-disclosure or, in the alternative, to reduce its liability to nil INSURANCE – construction of employee theft provision of Forefront Portfolio policy – meaning of "Employee" – whether managing director an "Employee" under insuring clause – where managing director fraudulently misappropriated moneys from client trust account and used moneys in part for benefit of company – whether insured company suffered direct loss

Legislation: Australian Securities and Investments Commission Act 2001 (Cth) s 33 Corporations Act 2001 (Cth) Ch 7, Pt 7.8, Div 2, ss 184, 912A, 912B, 981H, 993C, 1041G Evidence Act 1995 (Cth) s 191 Federal Court of Australia Act 1976 (Cth) Pt VB Insurance Contracts Act 1984 (Cth) ss 21, 21A, 22, 28, 48, 57, 71 Corporations Regulations 2001 (Cth) regs 7.6.02AA, 7.6.02AAA, 7.8.02, 7.8.05, 7.8.08 Insurance Contracts Regulations 1985 (Cth) regs 2B, 3(1), Sch 1