Bank of Queensland Limited v AIG Australia Limited  NSWCA 190
6 August 2019, Supreme Court of New South Wales, Court of Appeal – Bathurst CJ, Macfarlan and White JJA
The Bank of Queensland Ltd (BOQ) and BOQ’s agent, DDH Graham Ltd (DDH), had representative proceedings brought against them by Petersen Superannuation Fund Pty Ltd (Petersen) on behalf of itself and other investors, who were behalf of former clients of Sherwin Financial Planners Pty Ltd (SFP). The investors unwittingly invested in a fraudulent Ponzi scheme which was conducted by SFP utilizing BOQ bank accounts, and alleged that they suffered loss as a result of BOQ’s failure to protect the investors’ interests when BOQ became aware of SFP’s fraud. The claims were based on BOQ’s vicarious liability for the acts of DDH, and were attributable to a wrongful act by DDH in paying money out of each claimant’s individual Money Market Deposit Account (MMDA) to SFP, with knowledge that SFP was using the funds received in a fraudulent Ponzi scheme.
BOQ was insured under a Civil Liability Insurance Policy with three insurers, including AIG Australia Limited and Catlin Australia Pty Ltd (collectively, the insurers). The policy had a limit of liability of $40m for all claims and a retention of $2m for each claim.
CLAUSE 2.2 OF THE POLICY DEFINED A “CLAIM”:
“(i) any suit of proceeding, including any civil proceeding, third party proceeding, counter claim… brought by any person against an insured for monetary damages or other relief…
(ii) any verbal or written demand from any person that it is the intention of the person to hold an insured responsible for the results of any specified wrongful act…”
Clause 2.2 also provided that “all claims arising out of, based upon or attributable to one or a series of related wrongful acts shall be considered to be a single claim” and “conversely where a claim involves more than one unrelated wrongful act, each unrelated wrongful act shall constitute a separate claim”.
BOQ commenced proceedings
BOQ sought declarations and other relief as to its entitlement to indemnity against the insured, claiming it was entitled to indemnity, subject to a single retention of $2m, in respect of the sum of $6m which it had paid to settle the representative proceeding and in respect of BOQ’s costs of defending that proceeding.
Denial of indemnity
Insurers denied indemnity on the grounds that BOQ’s loss arose of multiple claims in relation to each of which a retention of $2m was payable, and not out of a single claim by the investors in which case a single retention of $2m would have been payable.
Primary judge found in favour of the insurers – concluded that there was only one “claim” within the meaning of that paragraph and the class member registration forms completed by each group member constituted a separate “written demand” and therefore “claims” under cl 2.2(ii). The relevant “wrongful acts” were BOQ’s actions.
What was appealed?
BOQ’s contention on appeal
Contended that there was only a single claim against it within the meaning of cl 2.2(i) because there was only a single suit or proceeding. If cl 2.2(i) and (ii) led to the conclusion that there were multiple claims, the claims were, by reason of the aggregation clause, to be treated as a single claim because they arose “out of, [or were] based upon or attributable to one or a series of related wrongful acts” and therefore gave rise to only a single claim pursuant to the terms of the aggregation/disaggregation clause.
Insurer’s contention on appeal
Contended that the effect of the representative proceeding was that each group member brought a “suit or proceeding” for the purposes of cl 2.2(i), or, in the alternative, that each group member who opted to participate in the distribution made a written demand within cl 2.2(ii) by lodging a class member registration form. Thus, it was submitted that both subclauses had the effect that there were multiple claims.
Findings on appeal: per Macfarlan JA (with whom Bathurst CJ agreed)
For the purposes of cl 2.2(i) and (ii), multiple claims were made against BOQ, however, because the claims arose out of related wrongful acts, the policy required them to be aggregated and only one retention of $2m was applicable. – 
The representative proceeding was only one suit or proceeding. – 
A reasonable businessperson would, taking each group member separately, consider that the representative proceeding was a suit or proceeding brought by that group member, at least from the time that the group member lodged its class member registration form. – 
Multiple wrongful acts?
BOQ’s acts in allowing withdrawals of funds from the MMDAs, notwithstanding BOQ’s knowledge of the fraudulent scheme, allegedly resulted in the loss to the group members and, on the basis of these allegations, a separate wrongful act occurred each time a request for a withdrawal was acted upon. Therefore, there were multiple wrongful acts. – 
Related multiple wrongful acts?
A reasonable businessperson, having knowledge of the matters alleged in the representative proceeding, would have concluded that the wrongful acts referred to in the Further Amended Statement of Claim were “related” in the manner contemplated by the aggregation clause in the policy. – 
Appeal findings per Bathurst CJ
- There were multiple claims, and the completion of the class member registration forms constituted a “written demand” by each of the persons who completed those forms for the purpose of cl 2.2(ii) of the policy – unless the claims could be aggregated, each individual claim was subject to a retention of $2m. – , , 
- Payments were attributable to “a series of related wrongful acts” – the series of payments out of the funds of the MMDAs were made with knowledge of the fraudulent activities of the payee. Although the payments were made out of the funds of different claimants, the similarity in the circumstances in which the payments were made was sufficient to give rise to the conclusion that there was “a series of related wrongful acts”. – , 
Appeal findings per White JA
- There was only one claim. – 
- The wrongful acts were related. – 
- Construction of the aggregation and disaggregation provisions provides that if there was a series of related wrongful acts and there were multiple claims that arose out of the related wrongful acts that formed that series then the claims would be considered to be a single. That did not require that all claims were caused by every wrongful act that formed part of the series. –