For practitioners, knowing what is classified as an adverse
event, which must be notified to their professional indemnity
insurer, is often difficult. Failing to notify of an adverse event
could mean that the practitioner is not covered by their insurer
for any claim arising out of the adverse event.
Following the decision reached by the New South Wales Court of
Appeal in Guild Insurance Ltd v Hepburn  NSWCA 400,
a patient's complaint of "excruciating pain" is
sufficient to alert a practitioner that a claim may be made in the
By statement of claim filed in the NSW District Court on 22
April 2013 Ms Mary Hepburn, the respondent, claimed damages for
trespass, assault and negligence from Dr Jasmin White, formerly a
practising dentist. Ms Hepburn alleged that she suffered injury as
a result of wrongful dental advice and treatment given to her by Dr
White between March 2008 and about September 2009. Dr White sought
leave to join Guild insurance (Guild) as a party
to the proceedings.
The Court considered whether cover should have been provided by
Guild under the "claims made and notified" policy held by
the practitioner. Under "claims made and notified"
policies, practitioners are entitled to insurance cover under the
policy if a claim is made by a patient against the insured
practitioner during the policy period and the practitioner notifies
the insurer during the policy period. Most medical
malpractice/professional indemnity insurance policies are
"claims based". This is to be distinguished from
"occurrence based" insurance policies during which the
insurance policy period covers the date of the
In this instance, the adverse event occurred during the policy
period but the practitioner did not notify Guild. Furthermore, the
claim by the patient was only made after the policy period had
expired. Section 54 of the Insurance Contracts Act 1984
(Cth) precludes insurers from refusing to pay claims in certain
circumstances. In particular, s. 54 prevents an insurer from
refusing to pay a claim by reason of certain acts of the insured
occurring after the date that the contract of insurance was entered
into. In such a case, the insurer is not relieved of liability
altogether. Rather, its liability is reduced by the amount that
fairly represents the extent to which its interests were
There being no evidence to suggest that the insurer was
prejudiced by Dr White's failure to notify the potential
liability of which she was arguably aware, the Court concluded that
it is at least arguable that Ms Hepburn can rely upon s. 54 to
avoid the consequences, in whole or in part, of the absence of
This decision is currently the subject of a leave application in
the High Court of Australia. A good rule for practitioners to
follow is to always notify their insurer where they believe an
outcome could give rise to a claim. The finding in this decision
was highly unusual and in circumstances such as these it would be
common place for an insurer to deny indemnity in the absence of a
notification during the policy period.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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The failure of a party to call a witness does not necessarily give rise to an adverse inference being drawn in accordance with Jones v Dunkel (1959) 101 CLR 298. An unfavourable inference is drawn only if evidence otherwise provides a basis on which that unfavourable inference can be drawn.
This article examines common coverage issues and considerations for granting indemnity for criminal fines and penalties.
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