Insurance Companies beware of being joined to PIPA Proceedings29 June 2015 | Public & Product Liability
This case highlights that PIPA proceedings are not limited to those parties against whom a claim for personal injury is made and insurers should be aware that when indemnity is denied a respondent could join them as a contributor.
In Shapcott v W.R. Berkley Insurance (Europe) Limited & Anor  QDC 102 the Queensland District Court granted leave to a respondent in a personal injury claim to issue a contribution notice to the purported professional indemnity insurer of the respondent.
This matter involved a Personal Injury Proceedings Act 2002 (“the Act”) claim relating to personal injury resulting from massage and Atlas Profilax treatment (a particular neuromuscular massage technique).
The Second Respondent [Mr Carmac] performed traditional massage therapy on the Claimant and held himself out to provide “Atlas Profilax” treatment. Mr Camac then referred the Claimant to the Applicant [Mr Shapcott] for that treatment, which took place at Mr Carmac’s premises.
Mr Shapcott had no relevant policy of insurance for which he was the “named” insured.
It was not disputed that Mr Carmac held a professional indemnity policy of insurance underwritten by the First Respondent [Berkley] and indemnity was extended to Mr Camac in relation to the claim.
There was a dispute about the relationship between Mr Shapcott and Mr Carmac, particularly with respect to the insurance cover.
Mr Shapcott bought to issue a Contribution notice to Berkley, to which Berkley did not consent.
The Relevant Legislation
Mr Shapcott brought an application seeking an order pursuant to section 16(1) of the Act, by which a respondent to a claim may add another party as a contributor. This section states that a respondent who receives a complying Part 1 notice of claim may, within the time prescribed under a regulation, add “someone else” as “a contributor” for the purpose of the pre-court procedures by giving that person a “contribution notice” “claiming an indemnity from” the respondent’s “liability”.
As Berkley had refused to consent to the Contribution notice and the prescribed time had elapsed the leave of the Court was required.
Could the Insurer be a Contributor under the Act?
The pivotal question for the Court was whether the relevant circumstances engaged s 16(1) of the Act so as to make Berkley a contributor.
Focusing on the meaning of “indemnity” in s 16(1)(a), Mr Shapcott relied on Ridley Agriproducts Pty Ltd v CMAS Consulting Pty Ltd  QDC 284 in which Shanahan DCJ relevantly held that:
- The ground of liability sought to be established by the applicant against the potential contributor was “irrelevant to the right of the applicant to add a contributor” under the Personal Injuries Proceedings Act 2002 scheme;
- Section 16 of the Act did not confine the ability to add a contributor to circumstances where the ground on which the proposed contributor is said to be liable is in relation to a claim for personal injury; and
- While the primary action under the Act must relate to personal injury, s 16 of the Act did not “confine potential contributors to only those against whom a claim in relation to personal injury can be made” at .
Mr Carmac contended that the absence of relevant references to insurance in the Act meant that the context in which “indemnity” was used in s 16(1)(a) was one which did not include a claim for indemnity under an insurance policy.
The Court held, acknowledging that it was a “question about which reasonable minds can differ”, that the reference to “indemnity” in s 16(1)(a) of the Act could include indemnity under an insurance policy for the following reasons:
- An insurer could be a “respondent” under the Act. In this respect the Court observed that s 27(1)(b)(ii) of the Act (pertaining to disclosure obligations) referred to a “respondent” that “is an insurer of a person for the claim”. The Court also noted that “respondent” was defined in the Schedule to the Act with reference to s 12(1) (concerning the original respondent/s) and s 14 (providing for the addition of further respondents) of the Act.
- A respondent can join a contributor who, or that, can be an entity from whom, or which, an indemnity from liability can be claimed.
- Having all relevant entities that may have “liability” being made part of the pre-court proceedings was supportive of the main purpose of the Act, to assist the ongoing affordability of insurance. In particular, it was observed that s 4(2) states that the “main purpose” is to be achieved by providing “appropriate, speedy and early resolution” of claims for damages.
- The meaning of “indemnity” in other parts of the Act was consonant with insurance indemnity. The Court referred to s 11(3) of the Act (regarding the acknowledgement that a person is a proper respondent to a claim) in which it is explicitly acknowledged that an insurer who has a “relevant insurance policy” can “indemnify” a person under such a policy. The Court also noted s 11(2) which states that the person does not “breach” a term or condition of “any relevant insurance policy” only because the person gives notice that it is a proper respondent to the claim. The Court considered that a respondent/insurer in the context of s 27(1)(b)(ii) of the Act (noted above) may be limited to an insurer that had admitted liability, however, concluded that this of itself did not give rise to a “clear presumption” that all indemnity references ought to be limited to those where indemnity “had been granted”. The Court looked to the Schedule definitions and found support for this conclusion in the definitions of “insured”, “insured person” in relation to a claim, and “insurer” of a person in relation to a claim.
The Court held that the text of s 16(1)(a), in context, and upon understanding its purpose, supported a wider meaning than indemnity as a joint or concurrent tortfeasor or as a purely contractual indemnifier (outside insurance) and granted leave to issue a contribution notice to Berkley.
- Joinder to Personal Injury Proceedings Act 2002 proceedings is not limited to those parties against whom a claim for personal injury can be made and those who have a purely contractual liability. Any person or entity that may arguably have “liability” to contribute to the claim could be made a party to the pre-court proceedings.
- Insurers should be aware that when indemnity is denied, it is possible that a respondent insured could join them as a contributor to a personal injury claim pursuant to section 16(1)(a) of the Act.