Directors and officers insurance – Recent critical issues in Australia and New Zealand

Directors and Officers Liability Insurance (“D&O insurance”) has grown and evolved rapidly over the past 80 years to assume an important position in most corporations’ corporate governance and risk management strategies. This article focuses upon certain topical matters of particular concern to directors and officers including the availability of defence costs where a D&O policy is subject to a statutory charge; the commercial desirability of stand-alone “A-side” coverage, being the cover provided directly to directors and officers for loss resulting from claims made against them for wrongful acts; the impact of fraud and/or dishonesty upon D&O cover; and disclosure of the nature and extent of D&O cover to the directors and officers themselves and to third parties – in the latter case such access frequently being necessary to determine the economic viability of pursuing a proposed action against a company and its directors and officers.

Volunteers 'piggy-backing' on their private insurance : an uncertain protection against liability

Volunteering is a very important part of life in Australia with an estimated 36% of the adult population volunteering in 2010. Voluntary work generates economic benefits, addresses community needs and develops the social networks that form the backbone of civil society. Without volunteers, many essential services would either cease to exist or become too expensive for many people to afford. These volunteers, who by definition are not in receipt of any remuneration for their work and services, are exposed to personal injury and to legal liability in the discharge of their functions. It is therefore appropriate that statutory protection is extended to volunteers and that volunteer organisations procure public liability and personal accident cover where possible. However, given the patchwork quilt of circumstances where statutory or institutional cover is available to volunteers and the existence of many and diverse exclusions, it is important to have regard also to what scope a volunteer may have to avail themselves of protection against liability for volunteering activity by relying upon their own personal insurance cover. This article considers the extent of private insurance cover and its availability to volunteers under home and contents insurance and under comprehensive motor vehicle insurance. The most common policies in the Australian market are examined and the uncertain nature of protection against liability afforded by these policies is discussed. This uncertainty could be reduced should the Federal Government through amendments to the Insurance Contracts Regulations standardise the circumstances and extent to which liability protection was afforded to an insured holding home and contents insurance and comprehensive motor vehicle insurance cover.

Valuers, liability and insurance obligations revisited

- Overview of negligence from the valuer’s perspective - Consideration of defences - Impact of lender conduct - Insurance obligations and impact for the valuer

Vulnerability, insurance and policy: The learner driver's standard of care

In Cook v Cook the Australian High Court held that the standard of reasonable care owed by a learner driver to an instructor, conscious of the driver’s lack of experience, was lower than that owed to other passengers and road users. Recently, in Imbree v McNeilly, the High Court declined to follow this principle, concluding that the driver’s status or relationship with the claimant should no longer influence or alter the standard of care owed. The decision therefore provides an opportunity to re-examine the rationale and policy behind current jurisprudence governing the standard of care owed by learner drivers. In doing so, this article considers the principles relevant to determining the standard and Imbree’s implications for other areas of tort law and claimant v defendant relationships. It argues that Imbree was influenced by changing judicial perceptions concerning the vulnerability of driving instructors and the relevance of insurance to tortious liability.

Defences in medical negligence : to what extent has tort law reform in Australia limited the liability of health professionals?

Tort law reform has resulted in legislation being passed by all Australian jurisdictions in the past decade implementing the recommendations contained in the Ipp Report. The report was in response to a perceived crisis in medical indemnity insurance. The objective was to restrict and limit liability in negligence actions. This paper will consider to what extent the reforms have impacted on the liability of health professionals in medical negligence actions. The reversal of the onus of proof through the obvious risk sections has attempted to extend the scope of the defence of voluntary assumption of risk. There is no liability for the materialisation of an inherent risk. Presumptions and mandatory reductions for contributory negligence have attempted to reduce the liability of defendants. It is now possible for reductions of 100% for contributory negligence. Apologies can be made with no admission of legal liability to encourage them being made and thereby reduce the number of actions being commenced. The peer acceptance defence has been introduced and enacted by legislation. There is protection for good samaritans even though the Ipp Report recommended against such protection. Limitation periods have been amended. Provisions relating to mental harm have been introduced re-instating the requirement of normal fortitude and direct perception. After an analysis of the legislation, it will be argued in this paper that while there has been some limitation and restriction, courts have generally interpreted the civil liability reforms in compliance with the common law. It has been the impact of statutory limits on the assessment of damages which has limited the liability of health professionals in medical negligence actions.

Insurance and the law of negligence : an influential or irrelevant persuader?

This article examines, from both within and outside the context of compulsory third party motor vehicle insurance, the different academic and judicial perspectives regarding the relevance of insurance to the imposition of negligence liability via the formulation of legal principle. In particular, the utility of insurance in setting the standard of care held owing by a learner driver to an instructor in Imbree v McNeilly is analysed and the implications of this High Court decision, in light of current jurisprudential argument and for other principles of negligence liability, namely claimant vulnerability, are considered. It concludes that ultimately one’s stance as to the relevance, or otherwise, of insurance to the development of the common law of negligence will be predominately influenced by normative views of torts’ function as an instrument of corrective or distributive justice.

Defences in medical negligence : to what extent has tort law reform in Australia limited the liability of health professionals?

Tort law reform has resulted in legislation being passed by all Australian jurisdictions in the past decade implementing the recommendations contained in the Ipp Report. The report was in response to a perceived crisis in medical indemnity insurance. The objective was to restrict and limit liability in negligence actions. This paper will consider to what extent the reforms have impacted on the liability of health professionals in medical negligence actions. After an analysis of the legislation, it will be argued in this paper that while there has been some limitation and restriction, courts have generally interpreted the civil liability reforms in compliance with the common law. It has been the impact of statutory limits on the assessment of damages through thresholds and caps which has limited the liability of health professionals in medical negligence actions.

Civil and Criminal Liability of Players

The liability of players in their particular sporting fields has increasingly become prevalent in the minds of government, sport administrators, the medical and legal professions and the parents and players themselves. This awareness has arisen for numerous reasons. Due to the enormous volume of sport to which the community is being exposed through the varied levels of the media together with our aspirations towards a healthier lifestyle and longevity, participation in sports has increased. Accordingly, sports injury litigation has increased. A number of other factors may be advanced to explain the increase. Sport has become big business all over the world. A talent for sport may bring the lucky player fame and fortune. It is not surprising therefore, where such ambitions are frustrated by deliberately or carelessly inflicted injury to the player, thought will be given to seeking compensation for that injury in the courts of law. Other factors are that litigation is on the increase as a means of dispute resolution and lawyers see sporting organisations better able to afford compensation to their players because they are more likely to carry insurance.

Nonprofit Directors' and Officers' Insurance

In the present economic climate it is easy to get carried away by the negative aspects of the rationalisation and review process which has taken place. As a person considering an offer to take up office with a non-profit organisation or as a person already holding such a position, one way of dealing with the increased exposure to liability may be to refuse the offer or resign from your position. Although this is a legitimate risk management tool (and appropriate in some circumstances), it is essential to the recovery of the economy that the "close up shop mentality" does not prevail. Although regulation of the business community and the community in general and enforcement of those regulations is increasing, the legal framework in which directors, officers and committee members of non-profit organisations operate has not substantially changed in recent times. It is necessary to face up to liability exposures (many of which have existed for centuries) and take steps to manage those exposures in order to carry out the objects of the organisation you serve and which in turn serves the community.

Motor Accident Insurance Act 1994 s45 - whether obligation to co-operate may authorise order requiring commencement of proceedings by minor prior to expiration of limitation period

In Australian Associated Motor Insurers Ltd v McPaul; Council of the City of Gold Coast v McPaul [2005] QSC 278 the applicant insurer sought an order requiring a claimant who had been injured in a motor vehicle accident some years earlier when he was five years old to commence a proceeding to determine the question of the applicant's liability to him. The applicant's interest in seeking the order was to avoid the prejudice which could follow from further delay, particularly delay until the respondent became obliged to commence proceedings to avoid a limitations bar.

Limitation of Actions - effect of admission of liability

The decision in Simpson v Lenton [2002] QDC 214 applied the decisions of the Court of Appeal in Lindsay v Smith [2002] 1 Qd R 610 and Morris v FAI General Insurance Co Ltd [1996] 1 QDR 495 in finding the second defendant, having admitted liability, was estopped from relying on the expiration of the limitation period.

Insurance and transport law : controlling insurance contract terms : Section 54 of the Insurance Contracts Act – compliance, recovery and accountability

Commonwealth legislation covering insurance contracts contains numerous provisions designed to control the operation and effect of terms in life and general insurance contracts. For example, the Life Insurance Act 1995 (Cth) contains provisions regulating the consequences attendant upon incorrect statements in proposals [1] and non-payment of premiums, [2] provides that an insurer may only exclude liability in the case of suicide if it has made express provision for such contingency in its policy, [3] and severely restricts the efficacy of conditions as to war risks. [4] The Insurance Contracts Act 1984 (Cth) is even more intrusive and has a major impact upon contractual provisions in the general insurance field. It is beyond the scope of this note to explore all of these provisions in any detail but examples of controls and constraints imposed upon the operation and effect of contractual provisions include the following. A party is precluded from relying upon a provision in a contract of insurance if such reliance would amount to a failure to act with the utmost good faith. [5] Similarly, a policy provision which requires differences or disputes arising out of the insurance to be submitted to arbitration is void, [6] unless the insurance is a genuine cover for excess of loss over and above another specified insurance. [7] Similarly clause such as conciliation clauses, [8] average clauses, [9] and unusual terms [10] are given qualified operation. [11] However the provision in the Insurance Contracts Act that has the greatest impact upon, and application to, a wide range of insurance clauses and claims is s 54. This section has already generated a significant volume of case law and is the focus of this note. In particular this note examines two recent cases. The first, Johnson v Triple C Furniture and Electrical Pty Ltd [2012] 2 Qd R 337, (hereafter the Triple C case), is a decision of the Queensland Court of Appeal; and the second, Matthew Maxwell v Highway Hauliers Pty Ltd [2013] WASCA 115, (hereafter the Highway Hauliers case), is a decision of the Court of Appeal in Western Australia. This latter decision is on appeal to the High Court of Australia. The note considers too the decision of the New South Wales Court of Appeal in Prepaid Services Pty Ltd v Atradius Credit Insurance NV [2013] NSWCA 252 (hereafter the Prepaid Services case).These cases serve to highlight the complex nature of s 54 and its application, as well as the difficulty in achieving a balance between an insurer and an insured's reasonable expectations.

Insurance contract disclosure – an uncertain balance

This article canvasses recent case law adjudicating the uneasy disclosure balance between the interests of the insurer and the insured in the process of transacting an insurance contract. It examines also the consequences of non-disclosure and misrepresentation and whether the avowed legislative intent — that the liability of the insurer in respect of a claim is to be reduced to the amount that would place the insurer in the position it would have been had the non-disclosure or misrepresentation not occurred — is being achieved in practice. As there is no doubt as to who bears the onus of proof as to non-disclosure or misrepresentation it is surprising that insurers continue to flounder in this regard in relation to underwriting guidelines and adherence to them. The article reviews recent case law in this context and stresses that an insurer wishing to preserve its capacity to avoid liability on the basis that it would not have entered into a contract at all had the true situation been known to it must maintain detailed underwriting guidelines supported by consistent adherence to those guidelines. Recent case law also emphasises that the insurer must provide clear and cogent admissible evidence from appropriate personnel and officers of the company to discharge its onus.

Spontaneous and episodic volunteers: The legislative, insurance and risk management framework

Baby Boomers are a generation of life long association joiners, but following generations prefer spontaneous and episodic volunteering. This trend is apparent not only during natural disasters, but in most other spheres of volunteering. Legal liability for such volunteers is a growing concern, which unresolved, may dampen civic participation. We critically examine the current treatment of these liabilities through legislation, insurance and risk management.