Zurich Australia Insurance Limited v GIO General Limited [2011] NSWCA 47
Facts
The worker suffered injuries in a motor vehicle accident in the course of his employment. His employer, Tiger Tours, operated the vehicle while Caringbah Bus, an associated company of Tiger Tours, was the registered owner of the vehicle.
The worker sued Caringbah Bus for damages in the District Court under the Motor Accident Compensation Act 1999 ('MACA'). He did not sue Tiger Tours, and Caringbah Bus did not join Tiger Tours as a cross defendant. Caringbah Bus admitted liability.
An issue between the worker and Caringbah Bus in the District Court proceeding was whether s151Z(2) of the Workers Compensation Act 1987 ('WCA') operated to reduce the damages recoverable by the worker from Caringbah Bus.
The Court held that s151Z(2) did not apply on the basis that both Tiger Tours and Caringbah Bus were owners of the vehicle within the definition in MACA, which had the effect that s151Z(2) did not apply as its operation was made irrelevant pursuant to s151E(2) of WCA.
Zurich (the CTP insurer of Caringbah Bus and Tiger Tours) sought a declaration in the Supreme Court that dual insurance applied as between Zurich and GIO (the workers compensation insurer of Tiger Tours) such that it was entitled to contribution from GIO.
Trial
Adopting the approach of Handley JA in Mercantile Mutual Insurance (Aust) Limited v QBE Workers Compensation (NSW) Limited [2004] NSWCA 409, the trial judge held that dual insurance did not apply as liability in Tiger Tours had not 'actually crystallised.' The liability that had to be proved was not a liability that might have come into existence had the worker taken some course other than that in fact taken.
Appeal
The Court of Appeal confirmed the basic proposition that dual insurance shall apply where one insured is entitled to indemnity from two insurers in respect of the same liability. It also affirmed the principle that it can be extended to where there are two different insureds which could each be liable for the same injury as determined by the Court in AMP Workers Compensation (NSW) Limited v QBE Insurance Limited (2001) NSWCA 267.
It was further held that the transcript of the District Court proceedings which Zurich tendered as part of the evidence in support of their case established:
- Caringbah Bus and Tiger Tours were both held in the District Court proceedings to be owners of the vehicle
- Zurich indemnified Caringbah Bus in respect of its liability under the MACA whilst Zurich and GIO indemnified Tiger Tours in respect of its liability to the worker
- During the District Court proceedings GIO accepted Zurich's concession of liability and the settlement amount whilst Tiger Tours was not a party to the proceedings
- Zurich's payment to the worker relieved both Caringbah Bus and Tiger Tours of their liabilities. This also relieved GIO from its liability to indemnify Tiger Tours
- The risk covered by Zurich was the same substantive risk covered by GIO.
The Court of Appeal allowed the appeal and rejected the trial judge's reading of Mercantile Mutual. Giles JA held, that the liability had crystallised by way of judgment or settlement and whilst it placed the whole burden on one of the insurers it did not defeat that insurer's right to contribution. It found the trial judge was in error in deciding there was no evidence to establish a liability in Tiger Tours.
In accepting there was evidence to establish a liability in Tiger Tours, the Court of Appeal rejected the argument from GIO that the circumstances of the claim, which involved two corporate entities as opposed to a negligent employee and an employer who was vicariously liable, as was the case in AMP v QBE, was sufficient to distinguish this case from AMP v QBE.
The Court of Appeal found the choice of the plaintiff in deciding who to sue should not result in the burden of liability falling upon one insurer.
Accordingly dual insurance applied and Zurich was therefore entitled to contribution.
Comment
This decision confirms the extension of the dual insurance principle as determined in AMP v QBE. The choice of the plaintiff to sue one of the insureds as opposed to another may not result in one insurer shouldering the burden of a liability and relieving the other insurer from any liability. Insurers need to be vigilant as to the prospects of establishing dual insurance. Of course, it 'works' both ways.
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