McCann v Switzerland Insurance Australia Limited [2000] HCA 65

HIGH COURT OF AUSTRALIA

GLEESON CJ,

GAUDRON, KIRBY, HAYNE AND CALLINAN JJ

HARRY KEVIN McCANN (for himself and

representing each of the persons identified in

Schedule 1 to the notice of appeal) APPELLANT

AND

SWITZERLAND INSURANCE

AUSTRALIA LIMITED & ORS RESPONDENTS

McCann v Switzerland Insurance Australia Limited

[2000] HCA 65

14 December 2000

S229/1999

ORDER

Appeal dismissed with costs

On appeal from the Supreme Court of New South Wales

Representation:

A J Meagher SC with I McN Jackman for the appellant (instructed by Allen Allen & Hemsley)

N J Young QC with J T Gleeson for the respondents (instructed by Phillips Fox)

Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports.

CATCHWORDS

McCann v Switzerland Insurance Australia Limited

Insurance – Professional indemnity insurance – Exclusion for liability brought about by dishonest or fraudulent act or omission of the assured – Loss to client of the appellant – Claim against professional indemnity policy – Whether respondents entitled to rely on the exclusion.

Words and phrases – "brought about by", "dishonest or fraudulent act or omission".

1. GLEESON CJ. The issue in this appeal concerns the meaning and effect of an exclusion clause in each of three policies of professional indemnity insurance. 2. The appellants, partners in the legal firm of Allen Allen & Hemsley ("Allens"), incurred civil liability to a client, Nauru Phosphate Royalties Trust, ("the Nauru Trust" or "the Trust"), in an amount which included the sum of $US8.7 million. The dispute concerns part of that sum, $US8.55 million. For reasons that will appear, there is no dispute as to the balance of $US150,000. The respondents, the insurers under the policies, are liable to indemnify the appellants against loss arising from any claims made against them during the relevant period in respect of any description of civil liability incurred in connection with their practice. The Nauru Trust made such a claim. It was settled on terms which gave Allens an entitlement to indemnity, subject to what follows. 3. Each policy contained an exclusion clause in the following terms: