Sergienko v AXL Financial Pty Ltd

The case of Sergienko v AXL Financial Pty Ltd was heard in the Supreme Court of New South Wales. The applicants, Sergienko and others, sought to join Lawcover, the insurer of a law firm, as a cross-defendant in their proceedings against the original defendant, AXL Financial Pty Ltd. The applicants alleged that the law firm, which was under a “run-off” professional indemnity insurance policy with Lawcover, had failed to give them certain legal advice regarding the drafting of a trust deed and the conveyance of property. Specifically, the applicants claimed that the law firm did not advise them to lodge a copy of the trust deed with the Land Titles Office or to lodge a caveat over the property.

The legal issue before the court was whether the applicants' proposed third cross-claim against Lawcover adequately established a reasonably arguable cause of action. The court had to determine whether the discretion under section 5 of the Civil Liability (Third Party Claims Against Insurers) Act 2017 (NSW) was enlivened to permit the joinder of Lawcover as a cross-defendant. The applicants argued that Lawcover should be joined as it was the insurer of the law firm which allegedly failed to provide the necessary legal advice.

The court dismissed the applicants' notice of motion to join Lawcover as a cross-defendant. It found that the proposed third cross-claim did not adequately establish the existence of a reasonably arguable cause of action against Lawcover. The court reasoned that the applicants had not provided sufficient evidence to show that the law firm's alleged failures amounted to a breach of duty that would give rise to a claim against Lawcover under the professional indemnity insurance policy. Consequently, the application to join Lawcover was dismissed.