Professional Liability Guide

PROFESSIONAL LIABILITY GUIDE

The competing interpretation was that the phrase ‘ same defences ’ meant that the insurer’s defences against the insured were equally applicable to the third-party beneficiary’s claim, and the insurer would be entitled to rely on any act or omission by the insured in defending the third party beneficiary’s claim. 671 The 2013 Amendments have now made it clear that all defences the insurer has available against the insured can be relied on against a third-party beneficiary, regardless of when the conduct of the insured occurred. It follows that all third-party beneficiaries wishing to bring a section 48 claim under a contract of general insurance entered into or renewed after 28 July 2014 672 may have their claim defeated by the conduct of the insured, including a breach of the insured’s disclosure obligations, fraud or a breach of the policy. By the same token, however, section 54 of the ICA can be invoked by a third party to cure acts or omissions of the insured that might otherwise entitle an insurer to decline cover for the claim, in seeking to claim directly against an insurer under section 6 of the Law Reform (Miscellaneous Provisions) Act 1946 (NSW). 673 Other provisions relating to third-party beneficiaries The recognition of third-party beneficiaries as stakeholders in insurance contracts is evident from their express inclusion in other provisions of the ICA, including those relating to the duty of utmost good faith, 674 the requirement to obtain an insurer’s consent before settling a claim, 675 and claims against a third-party beneficiary who cannot be found. 676

671 Commonwealth Bank of Australia v Baltica Insurance Co Ltd (1992) 28 NSWLR 579. 672 A year after the 2013 Amendments received royal assent. 673 Gorczynski v W & FT Osmo Pty Ltd (2009) 258 ALR 189; affirmed on appeal in Gorczynski v W & FT Osmo Pty Ltd (2010) 77 NSWLR 62.

674 ICA s 13. 675 ICA s 41. 676 ICA s 51.

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