In Issue
- An insurer successfully resisted being joined directly to proceedings in reliance upon an exclusion clause.
The background
Count Financial Limited (the Plaintiff) is a corporation that was responsible for the conduct of the defendant, Mr Inderasan Pillay (the Defendant) during his provision of financial services to certain clients (the Clients). The Defendant is an accountant and his services included providing “accounting services and taxation advice” to the Clients with respect to “strategies for reduction of tax liabilities” including accounting and tax aspects of certain agribusiness products (the Products). In reliance on this advice, the Clients entered into the Products and suffered loss. The Clients made a claim against the Plaintiff.
The Plaintiff sought to join the Defendant’s insurer to the proceedings pursuant to section 4 of the Civil Liability (Third Party Claims Against Insurers) Act 2017 (the Act).
The decision at trial
The Court observed that in order to join the Insurer to the proceedings, it was necessary for the Plaintiff to demonstrate three things. Firstly, an arguable case against the Defendant. Secondly, a real possibility that if judgment were to be obtained against the Defendant, it would not be satisfied. Lastly, an arguable case that the Policy responds to the claim.
The Court refused to grant leave to the Plaintiff to join the Insurer to the proceedings on the basis that the Plaintiff did not have an arguable case that the Policy responded to the claim. The Policy included an exclusion clause that entitled the insurer to disclaim liability arising from a circumstance where “the insured has given advice in respect of any investment”. In circumstances where the Plaintiff’s case was that the Defendant gave the Clients advice with respect to accounting and tax aspects of the Products, the Court concluded that if the Plaintiff made out its pleaded case, the exclusion would operate.
Implications for you
The Court had little difficulty concluding that the clearly expressed exclusion clause operated to exclude the entire claim from cover. The decision emphasises the long-held position that insurance policies are to be construed with regard to their commercial intent. Therefore, in circumstances where an exclusion clause is clearly expressed (even in broad terms), it will be given its natural and ordinary meaning and will not be read down.
