ARTICLE
24 August 2017

Meaning Of "Third Party Claim" In A "Claims Made" Policy

HF
Holman Fenwick Willan

Contributor

HFW's origins trace back to the early 19th century with the Holman family's maritime ventures in Topsham, England. They established key marine insurance and protection associations from 1832 to 1870. In 1883, Frank Holman began practicing law in London, founding what would become HFW.

The firm evolved through several partnerships and relocations, adopting the name Holman Fenwick & Willan in 1916. HFW expanded to meet clients' needs, diversifying into aerospace, commodities, construction, energy, insurance, and shipping. Today, it operates 21 offices across the Americas, Europe, the Middle East, and Asia Pacific, making it a leading global law firm.

HFW was among the first UK firms to internationalize, opening offices in Paris (1977) and Hong Kong (1978). Subsequent expansions included Singapore, Piraeus, Shanghai, Dubai, Melbourne, Brussels, Sydney, Geneva, Perth, Houston, Abu Dhabi, Monaco, the BVI, and Shenzhen. HFW also collaborates with Brazil’s top insurance and aviation law firm, CAR.

However, the third party's claim was excluded because it was brought "by" a subsidiary of the director-shareholder.
Australia Insurance

Malamit (a project manager) and its directors were insured under a claims-made professional indemnity policy, and was sued in negligence by a related company. The policy defined "claim" as particular proceedings brought by a "third party against the Insured", and excluded claims "by, on behalf of, or for the benefit of any insured, subsidiary, or family member of the insured."

A director and shareholder of Malamit was also sole director and a shareholder of the trustee of the claimant, Treetops, a unit trust. That director-shareholder and his family also held shares in the corporate unit-holders of the trust.

The insurer successfully argued at first instance that the claimant was not a "third party", as defined, and so the claim was not covered, and that the claimant was a subsidiary of the insured, and so any claim by it would be excluded.

In partially reversing this, the New South Wales Court of Appeal held1 that the policy should be read on the basis that exclusions removed existing cover, namely if a claim is not covered, there is no need to exclude it, and so the trustee's claim against a named insured was brought by a "third party", as required. However, the third party's claim was excluded because it was brought "by" a subsidiary of the director-shareholder.

Footnote

1 Malamit Pty Ltd v WFI Insurance Ltd [2017] NSWCA 162

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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