The decision in Livesay v Hawkins & Ors  QSC 122 arose from the consideration of a number of preliminary questions.
The initial question was whether a letter constituted a demand which satisfied the definition of a “claim” under a professional indemnity policy. The letter raised a number of matters apart from the alleged demand. Insurers unsuccessfully argued that it was a complaint, not a demand.
The plaintiff was a tenant of a rented property in Queensland.
The first and second defendants were the landlords. The third defendant (Newman) operated the real estate agency which was retained by the landlords to manage the rental property. Newman held a professional indemnity policy with American Home Assurance Company (AHAC), which was joined to the proceeding after denying indemnity to Newman.
The separate questions that are the subject of this decision relate to whether AHAC was liable to indemnify Newman.
The policy period was from July 2004 to July 2005.
The plaintiff alleged that she suffered personal injuries on 25 April 2005 when a pelmet above a door in the property fell and struck her. On 26 April 2005 the plaintiff delivered to Newman a letter complaining about the state of the property. A Form 1 - Notice of Claim under the Personal Injuries Proceeding Act 2002 (Qld) was served by the plaintiff on Newman in September 2005 – after Newman’s policy period had expired.
It was alleged that the defendants were negligent by failing to take reasonable care to keep and maintain the property in a safe condition for tenants.
The preliminary issue for determination was whether the 26 April letter was a “claim” triggering Newman’s policy. (AHAC accepted that if the letter was found to be a “claim” as defined in the policy wording, then the failure to notify the insurer within the period of insurance was “saved” by s 54 of the Insurance Contracts Act 1984 (Cth).)
Relevantly, the 26 April letter:
- commenced “… we are informing you in writing of the current breaches to our lease agreement and hope for a resolve”;
- referred to the plaintiff contacting Newman’s office on 22 April complaining about a problem with the doors on the property, particularly the toilet door which was stuck;
- detailed the plaintiff’s alleged injury on 25 April and stated “ We are current(ly) seeking medical advice and will advise you of our intentions on this matter”;
- set out some 17 repairs which were urgently required to the property and said “As per the Tenancy Act and advice from Rental Tribunal, Ray White Real Estate and the owners of a rental property will be held liable for any personal claims arising from damage caused to the tenants due to poor living conditions”;
- included the tenant’s expression of disappointment at the state of the home and a request that it be rectified as soon as possible by saying “If the owners of this property disagree to having the premises repaired and brought to a good standard for the rent they are asking, we will have to vacate the premises and will legal advice from the Rental Tribunal for compensation of any costs involved to do so, due to the breach of our lease. This does not include a personal claim that we are currently entitled to due to injury caused by dangerous fixture”.
Under the policy, a claim was defined to mean “any written demand…for compensation made against the Insured but only in respect of the performance of Professional Services by the Insured”.
Newman submitted that the 26 April letter was written notification which set out the facts establishing liability, identified the injury that had been suffered, asserted that Newman was liable to the plaintiff for damages for personal injuries, and was therefore a “Claim” under the policy.
AHAC argued that it was a letter of complaint that did not demand compensation, but merely advised of an intention to seek medical advice. It was further argued that it contained an “enigmatic reference” to “not including personal injury claim that we are currently entitled to due to injury caused by dangerous fixtures” which was not a demand for compensation.
Daubney J considered it an established principle that a contract of insurance is to be construed objectively. His Honour stated that the question of what amounts to a claim against an insured, within the meaning of that term in the relevant policy, is one of substance and not form.
The importance of looking at the precise wording of policy terms was highlighted when Daubney J distinguished the Court of Appeal decision in Junemill Ltd (in liq) v FAI  2 Qd R 136 from the present case on the basis that the definition of claim was “quite different”. Junemill referred to “…the demand for compensation …”, rather than “…any written demand…” (emphasis added).
It was found that the 26 April 2005 letter expressly asserted an entitlement on the part of the plaintiff to recover for her personal injury claim “due to injury caused by dangerous fixture”. The statement was found to not be enigmatic but made in the context of the letter in which the plaintiff was seeking a resolution of the complaints about the property defects. Although other matters had been mentioned in the letter, it was found to be “sufficiently clear” that the plaintiff was making an assertion of liability on the part of Newman for the letter to constitute a written demand for compensation within the definition of the term “Claim” in the policy.
Newman tried to argue that a reference to a retention in relation to bodily injury in the insurance quotation meant that the AHAC policy provided cover. However Daubney J disagreed with this construction since the quotation expressly referred to the policy wording which contained a bodily injury exclusion and which therefore excluded cover.