Professional Liability Guide

CHAPTER 5 – WHAT IS A PROFESSIONAL/PROFESSIONAL DUTY?

‘Naturally, as Chubb submitted, in construing an exclusion clause, it must also be borne in mind that such a clause will, of its nature, circumscribe the cover to some extent. Whether or not a particular construction can be said to circumscribe the cover under an insurance policy unduly or inappropriately will depend on the ordinary meaning of the exclusion clause, read in the light of the whole policy, including its nature and purpose. The construction that Chubb would place upon “professional services” in the exclusion clause in this case would have the practical effect of making the exclusion apply whenever officers or employees undertake a great many acts in aid or support of Reed’s business activities, including services in connection with the routine administration of a building contract such as the D&C contract. As a result, on Chubb’s construction, a great many activities undertaken by employees, officers and directors would necessarily be excluded from cover. Given the nature and purpose of the D&O policy, such an interpretation would have the effect of circumscribing inappropriately the cover provided by the policy. The obvious purpose of the professional services exclusion … is to exclude activities that are truly professional in nature, such as architectural design, engineering, surveying and quantity surveying. The clause was not intended to apply to the routine activities of Reed or its officers or employees, including in the provision of information in support of its payment claims under the D&C contract.’ 383 Chubb appealed, 384 asking the Full Court to revisit the question of whether the professional services exclusion applied to Mr Robinson’s claim for indemnity under the D&O policy. Chubb argued Kenny J had erred in: ƒ focusing on the specific conduct of Mr Robinson (i.e. the provision of information) rather than the overall activity of Reed in the context of which Mr Robinson’s conduct occurred; and ƒ failing to conclude that Reed’s provision of project management services under the D&C contract was the provision of ‘professional services’ for the purposes of the exclusion. The Full Court dismissed Chubb’s appeal, rejecting the submission that the professional services exclusion clause should be construed by reference to the scope of cover usually provided by professional indemnity policies, and that Kenny J had therefore construed the exclusion too narrowly. 385 In the Full Court’s view, this ignored the importance of the principles explained by the High Court for the construction of exclusion clauses, such as in Selected Seeds, 386 where it was stated: ‘According to the general rules of construction, whilst regard must be had to the language used in an exclusion clause, such a clause must be read in light of the contract of insurance as a whole, “thereby giving due weight to the context in which the clause appears”.’ 387 Her Honour held that the exclusion did not apply and confirmed that the terms ‘ profession ’ or ‘ professional ’ would be construed narrowly in exclusion clauses.

383 470 St Kilda Road Pty Ltd v Robinson (2013) 308 ALR 411, 436. 384 Chubb Insurance Company of Australia Limited v Robinson (2016) 239 FCR 300. Distinguished in Malamit Pty Ltd v WFI Insurance Ltd [2017] NSWCA 162. 385 Ibid [121]–[124]. 386 Selected Seeds Pty Ltd v QBEMM Pty Ltd (2010) 242 CLR 336. 387 Ibid 344.

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