Professional Liability Guide

PROFESSIONAL LIABILITY GUIDE

Accordingly, Jackson J concluded:

‘Once that point is reached, it seems to me that the proper construction of cl 3.9 and cl 6.6 are resolved in a consistent or harmonious manner, and the insurer will be entitled in a proper case to deny indemnity for a Claim including liability for Defence Costs in reliance on cl 3.9 of the policy. In those circumstances, the insurer is not obliged to advance Defence Costs under cl 6.6, or to pay Defence Costs under cl 1, until the insurer’s denial of indemnity is determined to be wrong as between the insurer and insured.’ 557 The Court of Appeal agreed with the primary judge’s conclusions, emphasising the principles to be applied when construing insurance policies. 558 The Court of Appeal was prepared to stray from a literal interpretation of the relevant exclusion clause to give it a commercial and businesslike meaning by construing the policy as a whole, and agreed that an entitlement to have the costs of defending an excluded claim indemnified would have been the unintended outcome of creating two policies from one policy document.

557 Ibid [75]. 558 Bank of Queensland Ltd v Chartis Australia Insurance Ltd [2013] QCA 183.

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