Professional Liability Guide

PROFESSIONAL LIABILITY GUIDE

A leading case on the issue in Australia is Junemill Ltd (in liq) v FAI General Insurance Co Ltd, 391 where the Queensland Court of Appeal determined that the word demand (in a definition of ‘ claim ’ encompassing ‘a demand for compensation made by a third party against the insured’ ) referred to the subject matter of the claim rather than the act of demanding in respect of it. In so finding, the Court considered the determining factor is not that a specific ‘ demand ’ be made (in the ordinary sense of demanding something) but that it involves only an ‘ assertion of liability ’ .

‘ Claim ’ has also variously been held to be something akin to:

a demand for compensation against an insured;

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ƒ the intimation of being held liable or responsible in some part or whole for some measure of loss; 392 ƒ something that brings home to an insured the substance of the claim that the claimant might bring; 393 or ƒ an assertion of a possible future claim or right. 394 In Cassidy v Leslie, 395 the New South Wales Supreme Court considered the contents of an email to a valuer asserting the possibility of a substantial shortfall in the value of a property upon future sale constituted ‘a written assertion of a right to compensation’. The Court was not persuaded by the argument that the right had to be existing, saying it could be conditional and still arise even though its existence was contingent on something else happening (in that case, the sale of the property at a loss). ƒ a proceeding by ASIC for various breaches of the Corporations Act 2001 (Cth), which did not satisfy the policy requirement of a claim for ‘civil compensation or civil damages’ or alternatively a ‘written intimation of an intention to seek’ such damages. The Court cited with approval an earlier decision of the Victorian Supreme Court, which found that each of the two expressions ‘civil compensation’ and ‘civil damages’ requires ‘ a claim for pecuniary redress for some actionable wrong ’. 396 ƒ a defence filed in litigated proceedings that made allegations against the plaintiff in order to resist the claim (and which prompted subsequent litigation). The Federal Court in Amlin Corporate Member Ltd v Austcorp Project No 20 Pty Ltd, 397 considered whether it was a ‘claim for civil liability’, which could include a counterclaim. It was argued the defence was a counterclaim because it ‘ was designed to counter the demands ’ of the insured. The Court considered that the reference to counterclaim ‘ was directed to the possibility that the insured may suffer a liability to a third party by reason of the counter-claim ’ and that as the defence only raised certain defences to the insured’s action and did not claim any relief against, or damages from, the insured, it fell short of a ‘ claim’ for policy purposes. Some instances that have, however, been held to fall short of a ‘ claim ’ (in the context of particular definitions in those cases) include:

So, within the context of ‘ claims made and notified ’ cover, an insured must receive something akin to ‘ assertion of liability ’ within the policy period and notify it to the insurer.

391 [1999] 2 Qd R 136. 392 Dwyer v Long (1992) 58 SASR 102, which held that a letter threatening legal proceedings for alleged professional negligence to be a notifiable ‘claim’ . 393 Drayton v Martin (1996) 67 FCR 1. 394 Junemill Ltd (in Liq) v FAI General Insurance Co Ltd [1999] 2 Qd R 136. 395 [2010] NSWSC 742. 396 Kantfield Pty Ltd v Lockwood [2003] VSC 420. 397 (2014) 311 ALR 222.

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