Construing exclusions in an insurance contract

The policy should be read on the assumption that the exclusions removed claims that would otherwise be within cover. Accordingly, the claim by the trustee against one of the named insured was brought by a “third party” within the insuring clause

Malamit Pty Ltd v WFI Insurance Ltd [2017] NSWCA 162



22 In this way, the exclusions narrow the scope of the cover described by the insuring clause. It follows, as Viscount Sumner observed in Lake v Simmons[1927] AC 487 at 507, that exclusions are to be construed on the basis that they “cut out something already included by the general recitals and provisions”. See also Wilkie at [32] where the focus was on what was “removed” by the relevant exclusion.
23 Clause 7.15(a) excludes from the subject matter of cover “a CLAIM by, on behalf of or for the benefit of any INSURED” (emphasis added). Its premise, as a provision intended to remove particular claims from cover, is that a proceeding brought by one insured against another (whether either is a party to the contract of insurance or not) is a CLAIM that would otherwise be within “cover”. The expression “third party” should be construed in accordance with that premise. That is only achieved if it describes any person other than the insured against whom the proceeding has been brought, which is the third of the meanings referred to above.