Company Indemnity Read Strictly In NRMA-Whitlam Case

In an important decision for companies and their directors, the Court of Appeal has held that Mr Nicholas Whitlam, former NRMA President, was not entitled to an indemnity for his costs in defending the defamation proceedings he commenced against 2GB and Channel Nine in 2002.

The decision found that Mr Whitlam was not entitled to an indemnity under general law or under the terms of the deeds between himself and NRMA.

Reining in the breadth of indemnities

In 2006 Bergin J handed down a decision which held that the indemnity in NRMA's D&O insurance policy covered Mr Whitlam, for the cost of commencing defamation actions against 2GB and Channel Nine.

The decision was a potential watershed, creating as it did the possibility of companies and insurers becoming responsible for the legal costs of any directors and officers who commenced proceedings in defamation forpersonal loss of reputation. It was a result that was unexpected and not within the contemplation of companies