Carter v Chubb Insurance Australia Ltd [2024] FCA 1312

FEDERAL COURT OF AUSTRALIA Carter v Chubb Insurance Australia Ltd [2024] FCA 1312 File number(s): NSD 437 of 2022 NSD 448 of 2022

Judgment of: HALLEY J

Date of judgment: 14 November 2024

INSURANCE – claims for indemnity by a chief executive officer and managing director (Director) under a directors and officers liability policy for defence costs incurred in defending criminal charges and civil proceedings – where insurer denied liability on the basis of fraudulent misrepresentations and fraudulent non-disclosures – where insurer also seeks recovery of sums previously advanced – where insurer alleges Director was aware of a course of conduct, that involved payment of bribes and illegal inducements to procurement managers of customers of company – consideration of the nature of the arrangements which allegedly constituted the payment of bribes and illegal inducements – where Director signed proposal for renewal of directors and officers liability policy, made declaration and allegedly failed to disclose payment of bribes and illegal inducements – whether procurement managers had apparent authority to give instructions for distribution of funds for personal benefits – consideration of extent of knowledge of insured – whether Director was aware of potential claims at the time of policy renewal – whether insurer was entitled to deny indemnity – consideration of 28(3) of the Insurance Contracts Act 1984 (Cth) (ICA) and duty of disclosure under s 21(1) of the ICA – where satisfied Director knew, or was recklessly indifferent as to, whether bribes and illegal inducements could give rise to potential claims – Director failed to disclose bribes and illegal inducements to the insurer and thereby engaged in fraud – insurer entitled to deny indemnity – insurer entitled to repayment of sums already advanced Catchwords: EVIDENCE – Briginshaw considerations and s 140(2) of the Evidence Act 1995 (Cth) – knowledge of the insured – drawing of inferences – whether an inference is more probable than not – where Director gives evidence of absence of knowledge – knowledge can be readily inferred from objective evidence – denials of knowledge unreliable EVIDENCE – where insurer did not adduce evidence from witnesses to establish absence of knowledge by principal of alleged payment of bribes and provision of illegal inducements to its agent – Jones v Dunkel inferences – whether absence of knowledge can be inferred – whether Jones v Dunkel inferences should be drawn for failure to call on subpoena PRACTICE AND PROCEDURE – pleadings – whether various contentions of insurer are open on pleadings