In Count Financial Limited v Pillay [2021] NSWSC 99, the Court considered an application for leave to proceed against a professional indemnity insurer under the Civil Liability (Third Party Claims Against Insurers) Act 2017 (NSW) (‘the Act’).


Facts

Mr Inderasan Pillay provided accounting services and taxation advice to clients of Count Financial Limited. In reliance on Mr Pillay’s advice, those clients acquired financial products which resulted in them suffering financial losses. Count Financial Limited were found responsible for their clients’ losses pursuant to ss 917A and 917B of the Corporations Act 2002 (Cth) and paid the clients a total of $15.3 million.

Count Financial Limited commenced proceedings to to recover its losses from Mr Pillay and sought to join Mr Pillay’s professional indemnity insurer to the proceedings pursuant to s 5(1) of the Act.


Issue

Should Count Financial Limited be granted leave to join Mr Pillay’s insurers to the proceedings?


Judgment

In order to join the professional indemnity insurer to the proceedings, Count Financial Limited was required to satisfy the Court that:

  1. It had an arguable case against Mr Pillay;
  2. If it obtained judgment against Mr Pillay, there is a real possibility that he will not be able to pay the judgment amount; and
  3. It had an arguable case that the professional indemnity policy responded to the claims being pursued against Mr Pillay.

The professional indemnity insurer did not dispute that Count Financial Limited had an arguable case against Mr Pillay and that Mr Pillay would likely be unable to pay a judgment entered against him.

However, the insurer argued that the policy would not respond to Count Financial Limited’s claim against Mr Pillay because it contained an exclusion clause stating that the it would not be liable to indemnify Mr Pillay “where [Mr Pillay] has given advice in respect of any investment”.

The Court held that Mr Pillay had given advice to clients to investment in products for the purpose of tax minimisation and, therefore, that the exclusion clause applied such that the insurer was not required to indemnity Mr Pillay under the policy. Accordingly, the Court refused to grant leave to join the insurers to the proceedings.