The Court refused leave under s 5 of the Civil Liability (Third Party Claims Against Insurers) Act 2017 (NSW) to proceed against underwriters, holding that both insolvent trading claims under s 588G of the Corporations Act and breach of directors' duty claims under ss 180-182 were excluded by a broad insolvency exclusion clause (cl 4.11) in a management liability policy. Applying AIG v Kaboko Mining, the Court held that where the loss claimed is the amount of debts incurred while insolvent, and the claims depend on establishing that breaches of duty caused the company's insolvency, those claims are 'arising from or in any way whatsoever connected with' the insolvency even though the breaches predated the insolvency. The Court also held that a notification referring solely to insolvent trading claims did not constitute notification of breach of duty claims for the purposes of s 40(3) of the Insurance Contracts Act 1984 (Cth), and that the broader breach of duty claims identified only after the policy and discovery periods had expired were not covered.
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