By David Slatyer, Partner and Tyra Zacka, Paralegal
Nuix Limited (Nuix) sought indemnity under two insurance policies, being their Public Offering of Securities Insurance (POSI) and Directors & Officers Liability Insurance (D&O). The indemnity sought was in relation to ASIC investigations and class actions following Nuix’s 2020 Initial Public Offering.
This dispute before the Federal Court of Australia concerned the retention amount applicable to multiple related claims which are aggregated under clause 5.5 of the policies.
To reach a decision, Derrington J considered these two key issues:
Where a Side B Claim (e.g. regulatory investigation) is followed by a related Side C claim (e.g. securities class action), and both are aggregated under clause 5.5, is the applicable retention $2.5 or $10 million?
Where the same aggregation occurs under the D&O policy, does the higher $10 million retention apply despite the Side B Claim arising first?
Schedule to the Policies is as follows:
| Insuring Agreements | Retention | Coverage |
| Side A Coverage: Covers non-indemnified loss of Insured Persons. | Nil | Included |
| Side B Coverage: Covers reimbursement to the Company for indemnifying Insured Persons. | $2,500,000 | Included |
| Side C Coverage: Covers the Company for Securities Claims made directly against it. | $10,000,000 | Included |
The task of the Court was to find the objective meaning of the contractual provisions, and its ability to give them a businesslike or commercially acceptable meaning was constrained by the language the parties chose to use.
Clause 5.5 – Related Claims is as follows:
“More than one Claim involving the same or Related Wrongful Acts…shall be considered a single Claim, and only one Retention shall be applicable to such single Claim.”
Clause 6.2 – Retention is as follows:
“The Retention shall apply to Loss resulting from each and every Claim…The Insurer’s liability…shall be excess of the applicable Retention.”
The Court acknowledged the importance of this clause and that the Insurer is to be put into the same position that it would have been if the Company had paid in respect of the Insured Person’s Loss, and then made a Side B Claim on the Insurer.
On 25 August 2025, the Court held that in both policies, where a Securities Claim is aggregated with other claims, the $10 million retention applies, regardless of the order in which the claims are made. Any other non-related claim will, necessarily, have its own applicable retention.
The Court held that the policies clearly assign a $10 million retention to Securities Claim (Side C), and this applies even when such claims are aggregated with lower-retention claims (Side B) under clause 5.5.
Clause 5.5 does not alter the nature or risk profile of the claims, nor justify applying the lower retention. Applying the lower retention based on the order of claims would undermine the structure and purpose of the retention framework.
This interpretation preserves the commercial logic of the parties, reflects the higher risk associated with Securities Claims (Side C) and ensures contractual certainty. The Court also relied on the reasoning in CIMIC Group Limited v AIG Group Limited[1], where a similar decision was made.
[1] [2022] NSWSC 999.
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