Doctors, Lawyers, Golf And Insurance - News Article 4/09/08
The following update is an overview of a couple of recent court decisions relating to insurance and related claims. The first one about the lawyer is a reminder to all of us who may have the need for professional indemnity insurance in their business and the problems associated with proper disclosure in their proposals, while the second one involves perhaps some common sense from the Courts.
Notification Of Cirumstances Known At The Time Of Renewal In Insurance
Do you have professional indemnity insurance or any other ‘claims made’ policies? You will all be generally aware of your duty of disclosure and that at every renewal, your insurance company will ask you whether any circumstances are known that may lead to a claim. What amounts to ‘known circumstances’ can be a difficult concept, but the failure to notify of these may lead to any claim later being made being rejected by the insurance company. The consequences of a rejected claim can have a significant impact on your business and finances and also attempts to obtain insurance in the future.
The issue was recently addressed again by the High Court in a matter involving a barrister. He was aware before the relevant policy was put in place that there were difficulties with his client’s case for compensation although he had ta ken all reasonable steps to prepare the case and the client had not made a complaint about the conduct of the barrister. The client had obtained a favourable verdict from an arbitrator, the barrister thought there were good prospects of his maintaining that finding if the matter went to a trial, but he had not thought that the late filing of the Court documents or his failure to appreciate the effects of certain relevant legislation were matters that might give rise to a claim against him. The client lost his case on the grounds that the claim was brought out of time which was after the policy had incepted, and he then sued the solicitors and the barrister. CGU denied the barrister’s claim on the basis that a reasonable person would have disclosed these and the failure to disclose attracted an exclusion under the policy, being the failure to disclose known circumstances.
The High Court held in favour of the insurance company. They found that whether or not an individual insured held a particular subjective belief will not operate to overturn the policy exclusion. The Court said it is correct to have objective regard to the insured’s professional experience, while an actual knowledge of known circumstances must now be considered with reference to a reasonable person in the insured’s professional position. They said that it is permissible to take into account the insured’s subjective belief as evidence which may have some relevance, but the standard to be applied is an objective standard and a question of fact to be determined independently of the insured’s actual state of mind.
What is important from the case for all insureds under claims made policies, is that it is no longer sufficient for a prospective insured to assert a subjective belief (genuine or not) that he/she did not believe a claim would be brought. Rather, the test to be applied requires objective consideration of whether a reasonable person in that position would have held the same view. A good result for insurance companies but making life more difficult for insureds and will require all insureds to consider in more detail circumstances that could lead to a claim and perhaps at policy renewal time, look for advice if particular circumstances should be disclosed.
Doctors And Golf
A Brisbane doctor who sued his golfing partner claiming substantial damages in the Supreme Court has lost his case. The doctor lost partial sight of an eye after being hit by his golfing partner’s wayward shot.
Both players were experienced, had low handicaps and were participating in a competition at the Indooroopilly Golf Club where they were both members. The doctor had played his shot into the rough and he went off to find his ball. After finding it he waited for the green to clear ahead. He was about 80 meters ahead of his partner and to the left when Mr Trude played his shot. He hooked the ball, it glanced off one of the trees and struck the doctor in the head. The doctor alleged Mr Trude was negligent by taking his shot while he was in front and in range of him, and failing to give an adequate warning.
The rules of golf ordinarily require that shots not be ta ken while players were ahead and in range. The tournament rules had been altered so that:
“... Players should without delay, play all shots when they are ready and it is safe to do so irrespective of which player is furthest from the hole.”
The Court found it was not negligent for Mr Trude to take his shot and also not to call ‘fore’ to warn the doctor. Dr Pollard knew the risk he was taking by standing on a golf course fairway and should have sought cover behind a tree. He could have moved further away from the fairway or back to a position in line with Mr Trude. He stood his ground knowing the risk. The Court also considered that even if Mr Trude had called out a warning, the incident could still have occurred.
The decision has been appealed.
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