Are Expert Opinions Facts?
In broad terms, Section 40(3) of the Insurance Contracts Act 1984 (Cth) provides that if notice of facts that might give rise to a claim is given to an insurer during the policy period, that insurer cannot reject a claim arising out of those facts just because the claim is made after the policy has expired.
There is a debate within the Federal Court of Australia about whether expert opinions can constitute a notice of facts for the purposes of Section 40(3).
In 2014/ 2015 an insured gave the insurer an expert opinion which was critical about the cladding which the insured had installed in apartment blocks in Melbourne.
Contrary to an earlier decision of Lee J in Uniting Church in Australia Property Trust (NSW) v Allianz Australia Insurance Ltd [2023] FCA 190 at [242] to [243], Jackman J considered such an opinion whose author was an expert in the relevant field and whose foundations were reasoned explanations and substantial evidence might constitute notice of facts for the purposes of Section 40(3).
If there is an appeal against Jackman J’s judgment, it will be interesting to see how a Full Court resolves this debate. Bearing in mind the remedial nature of Section 40(3) and its broad language, Jackman J’s view is preferable.
Liability for the Conduct of Subcontractors
An interesting question has arisen about an insured’s liability for the conduct of its subcontractors and the extent to which that liability is covered by a professional indemnity policy.
The question before the Federal Court of Australia was whether the provisions in a professional indemnity policy protecting an insured against any liability for the conduct of its subcontractors, required the insured’s professional service to be the cause of the relevant loss.
The Court determined that the policy protected the insured against liability for the conduct of its subcontractors even if the insured’s professional service did not cause the loss. A liability for its subcontractors’ conduct was enough. No additional layer that the insured’s service be causative of the loss was required.
Proper Disclosure
Although it is unlikely to be cited as an authority on the principles of non-disclosure or misrepresentation, the NSW Court of Appeal recently handed down a judgment which represents a good working example of the operation of the non-disclosure and misrepresentation provisions within the Insurance Contracts Act 1984 (Cth).
The Insured owned equipment which had been damaged by accident on two occasions before the inception of the relevant policy. Yet while completing the proposal form for insurance, the insured’s broker expressly declared that the property had not been damaged. The insurers underwrote the policy accordingly.
As often happens, the property was damaged during the policy period. The insured made a claim under the policy to be reimbursed for the damage.
The insurers discovered that the property had been damaged on two earlier occasions and, in accordance with Section 28(3) of the Insurance Contracts Act 1984 (Cth), denied indemnity on the basis that had proper disclosure been given, they would have excluded the risk the policy’s scope of cover.
At first instance, the trial judge sided with the insurers. The New South Court of Appeal unanimously agreed with the trial judge. The insured had a duty to disclose the previous damage to the property and, in failing to do so, had breached that duty entitling the insurer to the relief which it claimed.
Mark Sheller
Principal | Sheller
SHELLER | Clarence Chambers | Level 13 | 111 Elizabeth Street | Sydney NSW 2000 | Australia
Insurance & Commercial Law contact@shellerlegal.com | www:shellerlegal.com
DISCLAIMER This newsletter is intended to provide a general summary only and does not purport to be comprehensive. It is not, and not intended to be, legal advice.
© Sans Limitations Services Pty Limited
Edition 6 - June 2023