Australia: Interpreting Conflicting Policy Provisions In A Professional Indemnity Policy

Last Updated: 6 July 2018
Article by John Moran and Emma Carolan

In a recent decision of the New South Wales Court of Appeal, the Court refused to allow an insurer to rely on a 'Personal Injury' exclusion clause in the Professional Indemnity wording of a combined Professional Indemnity and Public & General Liability Policy to deny indemnity to its insured.

The decision emphasises the need to apply a 'common sense' and commercial approach when interpreting insurance policies and provides some helpful guidance on the interaction between endorsements and general conditions.


Complete Building Inspections Services Pty Ltd (CBIS) was engaged by Ms Doosey to provide a pre-purchase inspection report on a family home. Mr Walsh provided a report which stated that the overall condition of the building was "considered structurally sound and in a fair condition", the "incidence of major defects" was "low" and the "incidence of minor defects" was "typical". In relation to the building's balcony, the report found that the timber frame, posts and decking appeared to be "secure, structurally adequate and in a fair/good condition".

Ms Doosey relied upon the report and purchased the building. Shortly after moving in to the home, Ms Doosey's child was playing on the balcony when it gave way, causing the child to fall over two metres onto the concrete pavement. Ms Doosey commenced two separate proceedings, on her own behalf and on behalf of her daughter, against CBIS and Mr Walsh alleging negligence in the provision of the pre-purchase inspection report. The Court accepted that Ms Doosey had suffered mental harm as a result of the accident, and found that both her and her daughter's injuries had been caused by the negligence of CBIS and Mr Walsh.

Walsh and CBIS's insurer, Pacific International Insurance Co Ltd (Pacific), declined to indemnify Walsh and CBIS. Walsh and CBIS successfully cross-claimed against Pacific with the District Court finding that the Public & General Liability Policy responded to this claim.

Pacific appealed this decision.


On appeal, Pacific argued that no cover was available to Walsh and CBIS under the Policy because:

  • the Professional Indemnity Policy provided cover for claims arising out of an actual or alleged breach of an insured's professional duty in connection with the insured's Business Activities however, the Policy contained an exclusion for claims arising out of, or in any way connected to personal injury and property damage; and
  • the Public & General Liability Policy provided cover for "personal injury or property damage occurring in connection with Business Activities" but excluded claims arising out of an insured's negligent provision of professional advice or service.

An endorsement to the Policy defined 'Business Activities' to include the provision of pre-purchase inspection reports. The endorsement also required the pre-purchase reports to contain certain information and advice.

The New South Wales Court of Appeal dismissed Pacific's appeal finding that if the policies were considered as a whole, and the exclusions in each policy were applied, it would defeat the commercial purpose of the policies.

Further, the Court noted that it would be a troubling conclusion if an endorsement which expressly defined an insured's Business Activities as providing pre-purchase reports, required an insured to include in those reports particular advice, but then refused to cover personal injury arising from that advice.

The Court also held that regard must be had to the language of the policy. In this instance, the insuring clause of the Public and General Liability Policy commenced with the words "Subject to the terms of this Policy..." and "Policy" was defined to include the schedule and any endorsements. The Court noted that the phrase "subject to" establishes a hierarchy of provisions and where there is a conflict between provisions, the dominant provision will apply. In this case, the endorsement prevailed to provide cover.

Key Takeaways

The Court of Appeal's decision is a good reminder that the Courts will consider the overall commercial intent of the particular insurance policy and attempt to interpret the policy in a way that ensures that the cover purchased by the insured is not illusory.

The Court's decision also serves to illustrate that when provisions of a policy conflict with each other, reference must be had to the policy wording, in particular the use of phrasing which creates a "hierarchy of provisions".

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions