In this case a D&O insurer denied liability, arguing that an exclusion clause for “professional services” operated to exclude cover for the act of the insured construction project manager. The relevant act was the making of a statutory declaration justifying claims for progress payments by the construction company.
The Federal Court rejected the insurer’s argument and held that the compilation of records for the purposes of justifying progress payments claims was essentially a routine task necessary for the conduct of the company’s business. There was no requirement that the making of the statutory declaration be the outcome of professional assessment or prepared by a professional person. The Court observed that whether or not project management falls within the meaning of “profession” or involves “professional services” will depend upon the commercial context in which the policy is made, its objects and its terms. The meaning of the term “professional services” may also differ depending on whether it is used in an insuring or exclusion clause.
The case is a useful reminder to insureds to ensure that their policies of insurance reflect their activities. Insurers should also be conscious of the considerable scope for argument over whether an activity would fall within a professional services exclusion clause.
The decision can be accessed here.