HCA: Insurers can be joined by third parties when denying indemnity

CGU Insurance Ltd v Blakeley & Ors [2016] HCA 2

I refer you to the judgment summary.

The issue in dispute before the High Court was whether the exercise of the Supreme Court of Victoria’s federal jurisdiction extended to joining the insurer, CGU under section 562 of the Corporations Act (and s.117 of the Bankruptcy Act – equivalent). It was not concerned with the exercise of the discretion in making the declaration, which had been considered by the trial judge and Court of Appeal.

The joining of the insurer stemmed from their denial of indemnity under a policy of professional indemnity. A liquidator had since been appointed and sought to join CGU, who opposed the joinder on the basis that the liquidator was a stranger to the contract.

In issue was whether there was a justiciable controversy between the liquidator and CGU. The joint judgment found the operation of the legislation, the denial of indemnity and the insured’s non-acceptance of that denial provided the liquidator with a “sufficient interest” to constitute a justiciable controversy. Justice Nettle found it to be a “real interest”.

David Cormack – Brisbane Barrister & Mediator

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