Porter v GIO Australia Ltd & Anor [2003] NSWSC 668

Reported Decision : (2003) 12 ANZ Insurance Cases 61-573

New South Wales Supreme Court

CITATION : Porter v GIO Australia Ltd & Anor [2003] NSWSC 668 HEARING DATE(S) : 6-7 May 2002,16-17 October 2002, 21 October 2002, 17-20 March 2003, 24 March-22 May 2003, 26 May-5 June 2003, 16 June-27 June 2003 JUDGMENT DATE : 21 August 2003

JURISDICTION: Equity Divison Commercial List JUDGMENT OF : McClellan J DECISION : Summons dismissed

CATCHWORDS : INSURANCE - DIRECTORS AND OFFICERS INSURANCE - Plaintiff sought indemnity under policy for costs of civil proceedings brought by former employer and criminal proceedings in which nolle prosequi granted - whether insurer entitled to rectification of policy - period of cover - date of entry into policy - construction of insuring clauses and exclusion clauses - whether dishonest, fraudulent or criminal conduct - whether plaintiff involved in contravention of s 205 Corporations Law by provision of financial assistance for purchase of company's own shares - whether claim notified during policy period - whether official 'Inquiry' commenced prior to policy period - whether non-disclosure or fraudulent misrepresentation by plaintiff - whether plaintiff entitled to indemnity under professional indemnity policy - whether insurer estopped from relying on matters not previously relied upon - whether insurer acted in bad faith by obtaining documents through misrepresentation - CORPORATIONS LAW - DIRECTORS INDEMNITY - whether plaintiff entitled to indemnity under company's Articles of Association or common law - whether plaintiff's costs arose out of conduct involving lack of good faith - whether nolle prosequi amounts to acquittal or judgment in favour - whether obligation of good faith owed to plaintiff, implied from board resolution - whether former employer breached such obligation by cancelling policy - DEEDS AND INSTRUMENTS - CONSTRUCTION - Deed of Release - whether general release contained in Deed extended to bar claim for criminal defence costs - limitation of general words of release to matters in contemplation of parties at time deed entered - whether unconscionable for former employer to rely on deed - whether inequality of knowledge Australian Securities & Investments Commission Act 1989 (Cth) Contracts Review Act 1980 (NSW) Corporate Law Economic Reform Act 1999 Corporate Law Reform Act 1994 (Cth) LEGISLATION CITED : Corporations Act 2001 Corporations Law Insurance Agents and Brokers Act 1984 Insurance Acquisition and Takeovers Act Insurance Contracts Act 1984 Trade Practices Act 1989 (Cth) Alcatel Australia Ltd v Scarcella (1998) 44 NSWLR 349 Alexander Ward & Co Ltd Samyang Navigation Co Ltd [1975] 1 WLR 673 Aleyn v Belchier (1758) 28 ER 634 Atkins v National Australia Bank (1994) 34 NSWLR 155 Australian Competition & Consumer Commissioner v C G Belatis Holdings Pty Ltd (2003) 197 ALR 153 Australian Growth Resources Corp Pty Limited v Van Reesema (1988) 13 ACLR 261 Bahr v Nicolay (No 2) (1988) 64 CLR 604 Bank of Credit and Commerce International SA (in liquidation) v Ali [2001] 1 All ER 961 Barrett v State of South Australia (1994) 63 SASR 208 Bonelli's Telegraph Company, in re (1871) LR 12 Eq. 246 Bradshaw v McEwans Pty Ltd (unreported, High Court of Australia, 27 April 1951) Brambles Holdings v Bathurst City Council (2001) 53 NSWLR 153 Burger King Corp v Hungry Jack's Pty Ltd [2001] NSWCA 187 Burton v Palmer [1980] 2 NSWLR 878 Bush v National Australia Bank Limited (1992) 35 NSWLR 390 Charterhouse Investment Trust Ltd v Tempest Diesels Ltd [1986] BCLC 1 Chequepoint Securities Ltd v Claremont Petroleum NL (1986) 11 ACLR 94 Chew v R (1991) 107 ALR 171 Comino v Manettas (1993) 7 ANZ Ins Cas 61-162 Commercial Bank of Australia Ltd v Armadio (1983) 151 CLR 447 Commonwealth Life Assurance Ltd v Smith (1938) 59 CLR 527 Corporate Affairs Commission v Papoulias (1990) 20 NSWLR 503 Danish Mercantile Co Ltd v Beaumont [1951] Ch 680 Darvall v North Sydney Brick & Tile Co Ltd (1989) 16 NSWLR 260 Davis v Gell (1924) 35 CLR 275 Dempster v National Companies & Securities Commission (1993) 10 ACSR 215, Devine v Sun Alliance Australia Ltd (unreported, Supreme Court of New South Wales, 18 June 1992, Giles J). Dwyer v Long (1992) 7 ANZ Ins Cas 61 - 120 East End Real Estate Pty Limited t/as City Living v C E Heath Casualty & General Insurance Ltd (1992) 7 ANZ Ins Cas 61-151 Edwards v R (1992) 173 CLR 653 Emanuel Management Pty Ltd (in liq) v Emanuele (2002) 83 SASR 501 Fitzsimmons v R (1997) 23 ACSR 355. Giorgianni v R (1985) 156 CLR 473 Goodwin v State Government Insurance Office (Queensland) (1991) 6 ANZ Ins Cas 61-064 Grant v John Grant & Sons (1954) 91 CLR 112 HG & R Nominees Pty Ltd v Fara [1997] 2 VR 368 H L Bolton (Engineering) Co Limited v T J Graham & Sons Limited [1957] 1 QB 159 Howard Smith v Ampol Petroleum Ltd [1974] AC 821 Hughes Aircraft Systems International v Airservices Australia (1997) 76 FCR 151 Independent Steels Pty Ltd v Ryan [1990] VR 247 Karger v Paul [1984] VR 161 CASES CITED : London & South Western Railway Co v Blackmore (1870) 4 HR 610 Luxton v Vines (1952) 85 CLR 352 Magnacrete Limited v Douglas-Hill (1988) 15 ACLR 325 Marchesi v Barnes [1970] VR 434 McCann v Switzerland Insurance Australia Limited (2000) 203 CLR 579 Meinhard v Salmon 249 NY 458 1928 Mid-Density Developments Pty Ltd v Rockdale Municipal Council (1993) 44 FCR 290 Milburn v Pivot Ltd (1997) 78 FCR 472 Mills v Mills (1938) 60 CLR 150 Moore; in re Faithfull, ex parte (1885) 14 QBD 627 Myer Retail Investments Pty Ltd, re (1983) 68 FLR 15 Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd (1992) 110 ALR 449 New Zealand Forest Products Limited v New Zealand Insurance Co Limited [1997] 1 WLR 1237 Noye v Robbins [2000] WASC 81 Onslow v Commissioners of Inland Revenue (1890) 25 QBD 465 Overlook v Foxtel (2002) ATPR (Digest) 46-219, (2002) Aust Contracts Rep 90-143 Permanent Trustee Australia Ltd v FAI General Insurance Co Ltd (in liq) [2003] HCA 25 Plasteel Windows Australia Pty Limited v C E Heath Underwriting Agencies Pty Limited (1989) 5 ANZ Ins Cas 60-926 Poliwka v Heven Holdings Pty Ltd (No 2) (1992) 8 ACSR 747 Presentaciones Musicales SA v Secunda [1994] Ch 271 Prime Forme Cutting Pty Limited v Baltica General Insurance Co Limited (1991) 6 ANZ Ins Cas 61-028 Questions of Law Reserved on Acquittal (3 of 1995) Michael Charles Baenisct (1996) A Crim R 1 Rankin v North Waterloo Farmers Mutual Insurance Co (1979) 25 OR (2d) 102 Rejfek v McElroy (1965) 112 CLR 517 Royal Botanic Gardens & Domain Trust v South Sydney City Council (2002) 186 ALR 289 Royal Brunei Airlines Sdn Bhd v Tan [1995] 2 AC 378 Silbermann Greaves and Rich v CGU Insurance Limited [2002] NSWSC 1195. Smith v New South Wales Bar Association (1992) 176 CLR 256 State of South Australia v Clark (1996) 66 SASR 199 Sterileair Pty Ltd v Papallo (1998) 29 ASCR 461 Studdert v Grosvenor (1886) 33 Ch D 528 Talbot v NRMA Ltd (2000) 50 NSWLR 300 Tallglen Pty Ltd v Optus Communications Pty Ltd (1998) 16 ACLC 1526 Tomlinson v Liquidators of Scottish Amalgamated Silks Limited (1935) SC(HL) 1 Transport Industries Insurance Co Ltd v Longmuir [1997] 1 VR 125 Trident General Insurance Co Ltd v McNiece Bros Pty Ltd (1988) 165 CLR 107 United Dominions Corporation Ltd v Brian Pty Ltd (1985) 157 CLR 1 Victorian Teachers Credit Union v KPMG (a firm) (2000) 1 VR 654 Wallersteiner v Moir [1974] 1 WLR 991 [1974] 3 All ER 217 Wambo Mining Corporation Pty td v Wall Street (Holding) Pty Ltd (1998) 28 ACSR 654 Whitehouse v Carlton Hotel Pty Ltd (1987) 162 CLR 285 Woolworths Ltd v Kelly (1991) 22 NSWLR 189 ZBB (Australia) Ltd v Allen (1991) 4 ACSR 495 Robert Arthur Porter (Pltf) PARTIES : GIO Australia Ltd (1D) OAMPS Limited (2D) FILE NUMBER(S) : SC 50072/01 P R Hayes QC/A Paterson/Chettle (Pltf) COUNSEL : J T Gleeson SC/C Moore (1D) P M Biscoe QC/A M Gruzman (2D) Withnell Hetherington (Pltf) SOLICITORS : Ebsworth & Ebsworth (1D) Bamford Associates (2D