MURINITI AND ANOTHER V LAWCOVER INSURANCE PTY LTD (NO 2)

[2018] NSWCA 311, New South Wales Court of Appeal, Chief Justice Bathurst, President Beazley and Justice of Appeal White, 14 December 2018

Insurance (professional indemnity) - Refusal of insurers to allow assured to appeal - Construction of policy- Duty of utmost good faith

The assured lawyers were found personally liable to pay indemnity costs by reason of their conduct of legal proceedings. They were insured by Lawcover under a policy providing that: "21. We will seek the insured's consent before deciding whether or not to pursue an appeal"; "22. If the insured do not consent to our decision as to whether or not to pursue an appeal the insured have 14 days within which to notify us that they require an opinion from a lawyer. However, in case of urgency, we may require the insured to notify us within a shorter period specified by us in writing"; "23. If the insured do not notify us under clause 22 they will be deemed to have consented"; and by clause 33: "in the case of an opinion as to whether an appeal should be pursued the lawyer must take into account the legal issues in the claim and the costs of an appeal". The lawyer's opinion was binding. Lawcover refused to permit an appeal, but the assured did not seek to appoint a lawyer but instead stated that there would be an appeal.