Switzerland Insurance Australia Limited & Ors v McCann & Ors [1999] NSWCA 310

New South Wales Court of Appeal CITATION : Switzerland Insurance Australia Limited & Ors v McCann & Ors [1999] NSWCA 310 FILE NUMBER(S) : CA 40957/98 HEARING DATE(S) : 17 - 19 May 1999 JUDGMENT DATE : 27 August 1999

Switzerland Insurance Australia Limited (1st Appellant) PARTIES : AMP General Insurance Ltd (2nd Appellant) GIO Australia Ltd (3rd Appellant) Harry Kevin McCann & Ors (Respondents) JUDGMENT OF : Mason P at 1; Stein JA at 1; Giles JA at 1

LOWER COURT JURISDICTION : Supreme Court LOWER COURT FILE NUMBER(S) : SC 50227/95 LOWER COURT JUDICIAL OFFICER : Hunter J

COUNSEL : J.T. Gleeson/ A.S. Bell (1st, 2nd and 3rd Appellants) D.F. Jackson QC/A.J. Meagher SC/I. Jackman (Respondents) SOLICITORS : Phillips Fox (1st, 2nd and 3rd Appellants) Allen Allen & Hemsley (Respondents) CATCHWORDS : PARTNER'S MISAPPROPRIATION OF CLIENT FUNDS - partner obtaining secret profits and commissions from dealings in the prime bank instrument market - breach of fiduciary duty owed to client - dishonest and fraudulent conduct of partner - account opened by partner without authority of other partners - partner's operation of account in fraud of other partners; PROFESSIONAL INDEMNITY POLICIES - assured indemnified by insurers for civil liability incurred in connection with the practice - policy exclusion that assured would not be indemnified for liability arising from a contract other than a contract to provide services within the definition of the practice - policy exclusion that assured would not be indemnified in respect of liability 'brought about' by a dishonest or fraudulent act or omission of the assured including any partner of the assured - whether the words 'brought about' require a proximate cause inquiry - policy exclusion that assured would not be indemnified for knowledge of prior known circumstances ACTS CITED : Insurance Contracts Act 1984 (Cth) s 54 Partnership Act 1892 s 16 Wayne Tank & Pump Co Ltd v Employers' Liability Assurance Corp Ltd [1974] 1 QB 57 Abalos v Australian Postal Commission (1990) 171 CLR 167 SRA v Earthline Constructions Pty Ltd (1999) 73 ALJR 306 Comino v Manettas (1993) 7 ANZ Ins Cas 61-162 Barnes v Hay (1988) 12 NSWLR 337 Underwriters at Lloyds v Ellis (unreported, Court of Appeal, 25 February 1998) O'Halloran v R.T. Thomas & Family Pty Limited (1998) 45 NSWLR 262 CASES CITED: Target Holdings Ltd v Redferns [1996] 1 AC 421 Canson Enterprises Ltd v Boughton & Co (1991) 85 DLR (4th) 129 Maguire v Makaronis (1996) 188 CLR 449 Re Dawson (deceased) [1966] 2 NSWLR 211 Bennett v Minister of Community Welfare (1992) 176 CLR 408 Maxwell v Chittick (unreported, Court of Appeal, 23 August 1994) HIH Casualty and General Insurance Ltd v Waterwell Shipping Inc (1998) 43 NSWLR 601 JJ Lloyd Instrument Ltd v Northern Star Insurance Co Ltd (the Miss Jay Jay) [1987] 1 Lloyds Rep 32 DECISION : Orders made by Hunter J on 12 November 1998 and entered on 25 November 1998 set aside and summons before Commercial Division dismissed; Judgment for the first appellant on the cross-claim in the sum of $2,067,819.92 plus $353.43 interest for each day after 20 May 1999 that the above amount remains unpaid; Judgment for the second appellant in the amount of $2,104,611.18 plus $360.78 interest for each day after 20 May 1999 that the above amount remains unpaid; Respondents to pay the appellants costs of proceedings in the Commercial Division and in the Court of Appeal; Parties to bring in Short Minutes of Order to give effect to the judgment.