Professional Liability Guide

PROFESSIONAL LIABILITY GUIDE

The English Court of Appeal found for an insured in the matter of Kidsons 409 on the basis that even where the insured’s (a firm of accountants) notification ‘did not say that any claim had been made, indeed it said that no claim had been made’ , but raised the insured’s view that ‘the Inland Revenue, if minded, could be critical of some procedures [by which certain tax products had been implemented] followed in certain cases’ , this was sufficient to constitute a notification of ‘ facts which may give rise to a loss or claim’ . 410 Lord Justice Rix was of the view that he ‘would be unhappy to accept any suggestion that a purported notification of circumstances to an insurer becomes ineffective whenever there might be a real point of argument as to its property width.’ 411 The notification in Kidsons was held to be valid in relation to a later claim even though the notification had not referred to the transaction fromwhich the later claim arose, let alone identified a defect in relation to the handling of a particular client as likely to give rise to a claim by that client. This position was subsequently summarised by the English High Court in McManus & Ors v European Risk Insurance Company as follows: ‘… provided circumstances exist which may give rise to a claim, and provided those circumstances are notified, then any future claimarising out of those circumstancesmust be paid out by the insurer at risk at the time of notification whether or not the particular transaction or possible claimant has been identified at the time of notification …’ 412 While the more recent UK legal authorities have taken a broad approach to notifications, it appears to be common ground between the UK and Australian courts that for the notification to be valid, the insured must be aware of the circumstances during the policy period. It is ultimately a question of fact and impression as to whether a subsequent claim/investigation arises out of any notified circumstance. 413 The New South Wales Court of Appeal in American Home Insurance Company v Kirby 414 considered that a court should have regard to the surrounding facts and circumstances when considering whether the later claim was relevantly the result of the earlier notified matters. It will depend on whether the ultimate claim ‘… travel[s] well beyond …’ or could ‘… never even be remotely suggested’ or is ‘wholly different from the …’ matters notified. Adequacy of the notification Antico v CE Heath Casualty and General Insurance Ltd & Anor 415 considered the adequacy of how facts or circumstances were notified to an insurer.

409 HLB Kidsons v Lloyd’s Underwriters Subscribing To Lloyd’s Policy No 621/PK1D00101 & Ors [2008] EWCA Civ 1206, per Rix and Toulson LJJ. 410 Ibid [84]–[86]. 411 Ibid [87], rejecting an earlier test posed in a UK matter of Delta Vale , which had required a notification of facts ‘sufficiently clear and unambiguous to leave a reasonable recipient in no reasonable doubt as to who and when they are intended to operate . ’ 412 [2013] EWHC 18 [43]. 413 Thorman v New Hampshire Insurance Co (UK) Ltd & Anor [1988] 1 Lloyds Rep 7, 11–12; John Connell Holdings Pty Ltd v Mercantile Mutual Holdings Limited [1998] QSC 116; affirmed in John Connell Holdings Pty Ltd v Mercantile Mutual Holdings [1999] QCA 429; Kajima UK Engineering Limited v The Underwriter Insurance Co Ltd [2008] 1 All ER 855; American Home Assurance Company v Kirby [2003] NSWCA 395. 414 [2003] NSWCA 395. 415 (1995) 8 ANZ Ins Cas 61–268.

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