Solicitors of the insured do not owe a duty of care to the insurer of their client

• Published date: 06 July 2022
• Subject Matter: Insurance, Insurance Laws and Products
• Law Firm: Kennedys
• Author: Ms Emily Schneider and Katie Kyung

Guild Insurance Limited t/as Acerta v DH BI Pty Ltd [2022] NSWSC 524

In Guild Insurance Limited t/as Acerta v DH BI Pty Ltd [2022] NSWSC 524, Ball J found in favour of the plaintiff and struck out the proportionate liability defence raised by the defendant. In granting the strike out, his Honour held that the defendant's proportionate liability defence, which pleaded that its own lawyers owed a duty of care to both it and to its insurer, was bound to fail as a lawyers' duty of care does not extend to its client's insurer.

Background

On 1 September 2018, the defendant's historical property known as "Briar's Inn", was damaged by a fire caused by the tenants. The defendant's insurer, Guild Insurance Limited, indemnified the defendant for loss and damage suffered by the fire.

On 19 November 2020, the insurer commenced subrogated proceedings against the tenants only to discover that, unbeknown to it, the defendant...