TSG was a company that provided financial services, and W was its authorised representative. A trustee of a discretionary (family) trust that had received advice from W brought proceedings against W and TSG. The insurer for TSG and W declined indemnity because W was a beneficiary of the trust. The insurer applied to the court for declarations that the litigation was not the subject of indemnity because the policy excluded cover for claims made ’on behalf’ of one insured (W) against another insured (TSG), and claims made on behalf of an entity in which an insured (W) had a ‘financial interest’.
Liberty’s application was unsuccessful. As the trust was discretionary, with the trustee having absolute discretion as to which of the beneficiaries would receive a distribution, W could not be said to have a ‘financial interest’ in the trust. Nor could it be said that the trustee was bringing proceedings ‘on behalf of’ W. While trustees are generally viewed as bringing proceedings on behalf of trusts, this did not mean that the trustee was making a claim ‘on behalf of’ W.
You can access the reasons for judgment here.