This case involved litigation against three of Invion’s directors, and the directors’ claim for indemnity under a D&O policy. Two of the directors were also executives of Invion, while the third was a director of a company (SGB) that provided consulting services to Invion. Without the approval of Invion’s board, the directors amended Invion’s contracts with the executives and SGB so that each executive and SGB could terminate their relevant contract with Invion for any cause and receive a termination payment equivalent to 12 months’ salary or 12 months’ retainer, respectively. The executives and SGB then terminated their contracts with Invion and received these termination payments.
When Invion claimed against the directors for breaches of Corporations Act 2001 (Cth) ss 180, 181 and 182, seeking compensation under s 1317H and other remedies, the directors claimed indemnity under Invion’s D&O policy. However, the Court held that there was no right to indemnity because the policy excluded liability for loss connected with ‘the committing of any deliberately dishonest or deliberately fraudulent act’, and the directors’ conduct had been deliberately dishonest. In the case of the executive directors, indemnity was also excluded because the policy definition of ‘loss’ excluded ‘employment related benefits’. The Court doubted that the claim made against the non-executive director concerned ‘employment related benefits’, as the termination payment was made to SGB, rather than the director personally.
You can access the reasons for judgment here.