Vol 17 (2020) - Issue 1

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AIG Australia Limited v Kaboko Mining Limited [2019] FCAFC 96

Synopsis

In AIG Australia Limited v Kaboko Mining Limited [2019] FCAFC 96 the Full Federal Court of Australia was required to consider whether an insolvency exclusion clause in a directors’ and officers’ ('D&O') policy precluded a claim for indemnity by former directors and officers. Upon construing the exclusion clause by reference to the D&O policy definitions, the Court held that their indemnification under the policy was not excluded on the basis that the alleged breaches of duties by the former directors and officers were not founded upon any allegation of insolvency. The decision is a timely reminder of the importance of considering the appropriate formulation of claims against directors or officers of insolvent companies, particularly where an insolvency exclusion may apply.