A respondent to a claim made pursuant to the Personal Injuries Proceedings Act 2002 (Qld) (PIPA) proposed to join a professional indemnity insurer (who had declined indemnity) as a contributor to the claim. The claimant consented to the out of time contribution notice but understandably, the insurer did not.
The respondent made an application to the court for leave to issue the contribution notice to the insurer out of time.
Section 16 of the PIPA allows a respondent to add a contributor by giving that person a contribution notice claiming an indemnity from, or contribution towards, the respondent’s liability.
In considering the meaning of the word ‘indemnity’ in s 16, the court was referred to a 2003 decision1 in which it was held:
- The ground of liability sought to be established against the respondent as a contributor is irrelevant to the right of the respondent to add a contributor under the PIPA;
- While the primary action must relate to an injury to which the PIPA applies, s 16 of the PIPA does not confine the ability to add a contributor to circumstances where the grounds on which the proposed contributor is said to be liable must be in relation to a claim for personal injury (because if the legislature had intended the opposite, it would have expressly said so).
Acknowledging that this was a question about which reasonable minds can differ, Dorney J concluded that the reference in s 16(1) to ‘indemnity’ can include an indemnity under an insurance policy because:
- An insurer can be a respondent (in that regard he noted that s 27(1)(b)(ii) refers to a respondent that is an insurer of a person for the claim);
- A respondent can join a contributor, which can be an entity or person from whom an indemnity can be claimed;
- Having all the relevant entities that may have a liability participate in the PIPA process supports the main purpose of the PIPA (which includes the speedy resolution of claims but also, incongruously, to assist in the ongoing affordability of insurance);2 and
- The meaning of ‘indemnity’ in other parts of the PIPA is consistent with insurance indemnity.
Dorney J concluded that the text of s 16 supports a wider meaning than indemnity as a joint or concurrent tortfeasor or as a purely contractual indemnifier (outside the context of insurance).
In considering whether to grant leave to issue the contribution notice, Dorney J thought there was utility in enabling all relevant parties to become apprised of all relevant information concerning the PIPA claim and enabling at least some negotiation to take place in which the PIPA claimant is also apprised of all likely arguments presented by the insurer in its denial of a liability to indemnify the respondent.
Leave to issue contribution notice to the insurer out of time was granted.
This decision makes clear that a contribution notice can be given not only to those against whom a claim can be made, but also those who have an arguable ‘liability’ to contribute to the claim. Accordingly, an insured to whom indemnity has been declined may seek to join its insurer to a PIPA claim as a contributor in its own right.
Insurers who are declining indemnity to a PIPA respondent should therefore be aware that, despite their view that the policy in question does not respond and therefore they ought not be liable to indemnify the insured respondent for its liability in respect of the claim, there is a possibility they may be joined to and be required to investigate and participate in (to some extent) the claim despite any declinature.