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Australia – High Court To Consider Issue Of Advancing Defence Costs Under D&O Policies.

4 December, 2013

 

Legal News & Analysis – Asia Pacific – Australia – Dispute Resolution

 

The High Court is to consider an application for special leave to appeal the July 2013 decision of the NSW Court of Appeal in the Chubb Insurance Company of Australia Limited v Moore [2013] NSWCA 212 proceeding concerning the ability of D&O insurers to advance monies to fund defence costs in the face of claimants alleging a statutory charge over the policy.


In July 2013, a five-member bench of the Court of Appeal ruled that insurers can advance payments for defence costs because any charge would not extend to monies payable before any judgment in favour of claimants and because, in the circumstances, the NSW legislation did not have territorial operation. The Court of Appeal found that section 6 of the Law Reform (Miscellaneous Provisions) Act 1946 (NSW) (section 6) is directed at claims instituted in New South Wales courts and that this is the territorial connection with New South Wales that is required for section 6 to operate. Given that, here, the claims were in Western Australia and Victoria, this requirement was not satisfied.


The Court of Appeal also observed however that this question is not without its difficulties and the answer is certainly not without doubt. It is likely that this, as well as the question whether a charge can “bite” before a judgment award or settlement in favour of claimants, will be tested on the application for special leave to appeal.


It is possible that the special leave application will be heard on 13 December 2013. Otherwise, it will be heard in February or March 2014.


If special leave is granted, it is likely that the appeal will be heard in mid-2014.

 

herbert smith Freehills

 

For further information, please contact:

 

Peter Holloway, Partner, Herbert Smith Freehills
peter.holloway@hsf.com

 

Ruth Overington, Herbert Smith Freehills
ruth.overington@hsf.com, 

 

Mark Darwin, Partner, Herbert Smith Freehills
mark.darwin@hsf.com

 

Guy Narburgh, Herbert Smith Freehills
guy.narburgh@hsf.com

 

Herbert Smith Freehills Dispute Resolution Practice Profile in Australia

 

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