The NSW Court of Appeal has overturned a decision by a Supreme Court judge who had ruled the Bank of Queensland (BOQ) was not entitled to seek indemnity for $6 million it paid to settle a class action filed by 192 investors.

The appeal court directed AIG – the lead insurer in the civil liability policy issued to the bank – and Catlin Australia to agree on a settlement amount with BOQ, including interest.

If an agreement cannot be reached, the parties must lodge by Friday written submissions for the amounts they believe should be entered into judgement.

Last November Justice James Stevenson found in favour of the insurers, which maintained BOQ had no grounds to be indemnified because the liability policy came with a $2 million deductible that applied individually to each of the 192 investors.

This being the case, the insurers argued they were not liable for the losses BOQ incurred since no one single claim exceeded the deductible amount.

Zurich, which was also a defendant in the lawsuit filed by BOQ, had opted to settle with the bank during the court proceedings.

But the appeal court has ruled the insurers are liable for the losses and must indemnify BOQ.

The court says while there were multiple claims, they must be assessed as a single claim within the meaning of the insurance policy, which has a limit of liability of $40 million for all claims and a retention of $2 million for each claim.

“The multiple claims arose out of, or were based upon or attributable to, one or a series of related wrongful acts and should therefore be aggregated, with the result that only one retention was applicable in respect of all of the claims,” the appeal court judges say in their ruling.