A dishonesty and fraud exclusion clause in a D&O liability insurance policy that excludes 'indemnity against any Claim' extends to Defence Costs, not merely to third-party liability. The insurer may plead and seek to establish the dishonesty exclusion in the indemnity proceedings without first obtaining an adverse judgment in other proceedings. Where the policy gives the insurer a discretion to advance Defence Costs where indemnity has not been confirmed, that discretion applies regardless of the ground on which indemnity is denied, including dishonesty. The insurer's reliance on any defence must be based on reasonable grounds, consistent with the duty of utmost good faith.
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