The Federal Court has dismissed software company Nuix’s action against insurers concerning how retentions are applied when there are claims on two types of cover.

Nuix faces legal action over its listing in 2020, with a shareholder class action going to trial in Victoria later this month. The Federal Court dismissed action against the company by the Australian Securities and Investments Commission, but ASIC has appealed.

Nuix sued its insurers over a side B directors and officers cover with a $2.5 million retention and a side C public offering of securities insurance with a $10 million retention.

The policies provided that if related claims were made, they should be considered as one claim and only one retention would apply. Nuix argued for the $2.5 million level, so insurers would pay its costs once it exhausted that amount; the insurers said the $10 million level should apply.

In September 2025 the Federal Court ruled in favour of the insurers: Berkshire Hathaway Specialty Insurance, AIG, Liberty Mutual and a group of 13 other insurers and Lloyd’s syndicates.

The court said where there were multiple related claims, and several retentions applied, “it is more a natural conclusion that the larger will absorb the smaller”.

In dismissing an appeal by Nuix this month, the full Federal Court says it heard the case because the company raised an important issue about the construction of the policies.

One of the insurers’ lawyers had admitted there was a “gap in the policy” as to which retention applied.

Nuix said the D&O claim was made first so the $2.5 million retention should apply, but the court rejects this.

It says it is more natural for the larger amount to apply when there are related claims.

Read the judgment here.