Professional Indemnity Implications of the Pafburn Case
Snapshot
- The recent Pafburn decision changes the way in which constructions claims will need to be managed by developers, builders, and head contractors, suggesting that statutory Proportionate Liability defences in NSW will not be available in some circumstances.
- From a Professional Indemnity perspective, the Pafburn decision requires a two-step approach to claims management for developers, builders, and head contractors, as there is no longer any benefit to joining downstream parties to proceedings to apportion liability.
- The current breadth of Professional Indemnity insurance coverage for construction industry professionals does broadly support insureds who do not have the benefit of Proportionate Liability defences, provided cover has been appropriately tailored to each insured’s individual risk profile.
The recent judgment in the Pafburn Case has significant implications for the construction industry, particularly for developers, builders, and design and construct contractors in NSW. This whitepaper delves into the professional indemnity implications of the case, providing valuable insights for risk leaders and C-suite executives.
Key Points:
- Impact on Risk Management: The judgement suggests that the statutory proportionate liability regime in NSW may not operate in some circumstances to limit parties’ liability to their own proportion. This means developers, builders, and head contractors in NSW may find themselves liable for the actions of concurrent wrongdoers.
- Claims Management and Costs: The case changes the way professional indemnity construction claims will need to be managed, placing the onus on developers, builders, and D&C contractors to first make recompense to the property owner and then seek subrogation against downstream contractors and sub-contractors.
- Professional Indemnity Insurance Coverage: The whitepaper discusses how professional indemnity insurance can support insureds where proportionate liability defences are unavailable, highlighting the importance of working closely with insurers and brokers.
Explore the full whitepaper to understand the detailed implications of the Pafburn Case and how it affects your risk management and insurance coverage. Stay informed and proactive in navigating these changes to protect your business.
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If you’d like to speak to an Aon specialist about what these recent changes could mean for your business, email Mary-Catherine Hamill at mary-catherine.hamill@aon.com, or Puneet Sharma at puneet.sharma@aon.com.
