In Whitlam v National Roads
and Motorists’ Association Limited [2006] NSWSC 766, Nicholas Whitlam, a former president of the NRMA was granted an indemnity for his legal costs in
bringing 2 defamation actions arising out of events when he was president.

NRMA appealed and the NSW Court of Appeal allowed the appeal: NATIONAL ROADS AND MOTORISTS’ ASSOCIATION v WHITLAM [2007] NSWCA 81 (11 April 2007).

Both defamation actions settled but the total
amount of costs claimed by Mr Whitlam against NRMA exceeded $100,000.

At issue was whether the director’s Deed of Indemnity extended to a claim for loss of reputation or for costs relating to that claim. The Court decided that it did not. The Court of Appeal distinguished commencing an action from defending an action:

When Mr Whitlam incurred the costs of the defamation actions,
he was seeking to redress consequences of actions he had taken as an officer,
but in incurring those costs, he was not, then and there, acting as an officer.
In these circumstances, when Mr Whitlam incurred legal costs in connection with
the defamation action, his commencement of those defamation actions was not part
of his duties as an officer of NRMA. Nor, when he had specifically asked
whether NRMA would meet any costs he incurred concerning the defamation action,
and was told that NRMA would not meet those costs, could he have been of the
impression that NRMA regarded itself as liable to pay for the costs of that
litigation. In those circumstances, the incurring of the costs was not in his
role as an officer of NRMA.

The Court of Appeal also rejected a claim for indemnity under general law.