New South Wales Medical Defence Union Ltd v Crawford [No.2]; Bailey v Crawford [No.2]

The New South Wales Court of Appeal considered appeals by the New South Wales Medical Defence Union Ltd and Dr. Bailey against orders made by a judge of the Supreme Court of New South Wales. The dispute concerned the liability of Dr. Bailey for alleged medical negligence and the extent to which the Medical Defence Union was obliged to indemnify Dr. Bailey under a professional indemnity insurance policy.

The primary legal issues before the Court of Appeal were whether the primary judge erred in finding Dr. Bailey negligent, whether the Medical Defence Union was entitled to deny indemnity to Dr. Bailey, and if so, on what grounds. Specifically, the court had to determine if Dr. Bailey's actions fell within the exclusions of the policy and whether the Medical Defence Union had acted properly in its handling of the claim.

The Court of Appeal analysed the evidence relating to Dr. Bailey's treatment of the patient and the terms of the Medical Defence Union's policy. It was held that the primary judge had correctly found Dr. Bailey negligent. However, the Court of Appeal overturned the primary judge's decision regarding the Medical Defence Union's liability to indemnify. The court found that the Medical Defence Union was entitled to deny indemnity because Dr. Bailey's conduct constituted a deliberate or reckless disregard for the patient's well-being, which fell within an exclusion clause of the policy. The court emphasised that indemnity is not available for actions taken with such a state of mind, even if the ultimate outcome was not intended.

Consequently, the appeals by the New South Wales Medical Defence Union Ltd and Dr. Bailey were allowed in part. The finding of negligence against Dr. Bailey was upheld, but the Medical Defence Union was relieved of its obligation to indemnify Dr. Bailey.