key takeaways
Facts
Issue
Law
The Two Notifications Given by Broker to insurers
First notification
The first notification dated 5th May 2015 (within the policy period) stated the following:
“Attached is a notification of circumstances that may result in a claim under LU Simons Policy. We have prepared this statement on facts known to date on the Insured’s behalf.
Really most of the noise is around the press really.
We bring this to your attention in terms of policy. No formal claim has been made against LUS at this point in time.”
-Two attached documents
A) Attached was a Newspaper Article – noting the investigation into LU Simons (builders of the Lacrosse Building) using external cladding which contributed to the spreading of the fire.
B) Attached was a MFB Opinion (may be an article, not specified)
second notification
The second notification dated 14 May 2015 stated:
“Attached please find a copy of the design and construct contract which is an Australian standard (AS3400) which was the basis of Lacosse and sets out our insured’s obligations.
Also attached for your interest is a copy of the MFB report which may also be of interest for insurers. Page 24 is of particular interest and generally the report is critical of many contributing factors in regards to this incident”
Principles for s.40(3) to be Engaged (per P&S Kauter Investments Pty Ltd v Arch Underwriting at Lloyd’s Ltd [2021] NSWCA 136)
- 1There must be a sufficient correspondence between the facts notified as facts “that might give rise to a claim” and a claim subsequently made for the latter to be identified as “the” or a claim arising or resulting from those facts;
- 2It is not necessary that the notified facts identify the likely claimant or claimants;
- 3The notification may be of a problem which of itself may give rise to a claim or claims by persons or entities having particular characteristics, although the quantum of such claims and the identity of the claimants may not be known at the date of notification;
- 4The requirement that the notification be of “facts” indicates that s 40(3) is concerned with the notification of objective matters that bear on the possibility of a claim being made, rather than matters of belief or opinion as to that possibility;
- 5A fact will be one which “might give rise to a claim” if, alone or taken with other notified facts, it is reasonably to be regarded as having that character; and
- 6The reference to the possibility of a “claim”, rather than of a liability, encompasses claims which may not have significant prospects of success, and thus the notified facts could include an event which, in common experience, is followed by the making of claims notwithstanding that those claims may have modest or limited prospects of success.
All except principle 4 was accepted.
conclusion
This case provides critical insights into the interpretation and application of S.40(3) of the Insurance Contracts Act 1984 (Cth), particularly regarding the sufficiency of notifications and the scope of "facts" that might lead to a claim. Importantly, the court validated that the opinions of experts or those in positions of public authority could be regarded as "facts," altering the previously held view. These findings may have significant implications for future insurance cases, especially those involving potential claims and the sufficient disclosure of facts.
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