High Court confirms third party claimants can join insurers to proceedingsAuthor : Allison Hunt and Yen Seah

Financial Lines General Insurance Professional Indemnity

Yesterday the High Court handed down its decision in CGU Insurance v Blakeley [2016] HCA 2, a case which considers a third party claimant’s right to join an insurer to Court proceedings against an insured for the purpose of challenging the insurer’s decision to decline cover to the insured.

After reviewing conflicting authorities on the issue, the Court held that by virtue of provisions contained in the Corporations Act 2001 (Cth) and Bankruptcy Act 1966 (Cth), a third party claimant has a sufficient interest in an insurer’s liability to indemnify an insolvent or potentially insolvent insured to enable that claimant to join the insurer to the Court proceedings.  The third party claimant can thereby challenge the indemnity decision by seeking declaratory relief against the insurer.

In this update, Allison Hunt (Senior Associate) and Yen Seah (Associate) discuss the decision and its implications.