Recent cases (discussed below) have underlined the need for insurance companies to be prepared to prove issues raised at trial and to avoid being too selective in assessing claims or suffer the consequences.
Recovering more than 100% of damages
GEJ & MA Geldard Pty Ltd v Mobbs & Ors
On 15 March the Queensland Supreme Court ruled that if a plaintiff or defendant fails to prove an issue raised at trial, a plaintiff may recover more than 100% of their damages.
The plaintiff in this case, a cotton grower in Condamine, sought damages against eight defendants alleging negligence following the aerial spraying of various chemicals on his properties on 15 December 2005.
The company that was contracted to perform the aerial spraying, and a pilot who flew one of the planes, were found by Justice Lyons to have breached their duty of care to the plaintiff by spraying the herbicides in inappropriate conditions and using herbicides not mixed to the correct ratio and rates. Justice Lyons found that the plaintiff established that the two defendants caused the injury and the judgment was entered for the plaintiff in the amount of $467,187.45.
The decision serves a useful reminder that if the plaintiff or defendant seek to raise an issue at trial, they must prove their defence by admissible evidence, particularly where there are ‘settled’ defendants and the proportionate liability scheme potentially applies. If they fail to prove their defence it is possible, despite seemingly offending the rules of ‘double recovery’, that a plaintiff may recover more than 100% of their damages.
Increased litigation risk for insurers
CGU Insurance Ltd v Bazem Pty Ltd
On 2 May, in a case that is good news for plaintiffs and bad news for insurers, the NSW Court of Appeal upheld a decision in which a plaintiff was granted leave to join the defendant's insurer as an additional party to proceedings. This case is a partof a continuing trend by courts to make it easier for insurers to be joined to proceedings between a third-party claimant and a defendant that is insured.
Property developer Bazem Pty Ltd sued an architect for breach of contract and negligence. The architect was insured under a civil liability professional indemnity insurance policy, which allowed the insurer to run the architect’s defence. The insurer then learned that the architect had not disclosed that its director had entered into a personal insolvency agreement under the Bankruptcy Act 1966 (Cth). As a result, the insurer denied indemnity, on the grounds of non-disclosure, and stopped running the architect’s defence.
Bazem then sought leave to join the insurer as a party to the proceedings it had begun against the architect. Initially, the primary judge granted the claimant leave to join the insurer. The insurer sought leave to appeal that decision, which was denied.
Double insurance claim fails
QBE Insurance (Australia) Ltd v Insurance Australia Ltd
On 11 March, the ACT Supreme Court found that QBE Insurance had failed to show that a bus driver's injuries were attributable to a risk of double insurance. QBE had made a claim for double insurance against Insurance Australia. The defendant resisted the claim on several bases, including that the injuries suffered by Mr Rice were not a result of any negligence of Murrays and did not arise out of, or were not caused by, the use of the bus.QBE had paid $379,400.34 to a Murrays Coaches bus driver Nicholas Rice who was injured while unloading the bus in November 2000.
Murrays also had taken out a compulsory third-party insurance policy, which indemnified Murrays for any damages it was liable to pay arising out of the use of the bus. The plaintiff claimed the money it had paid to Mr Rice was in respect of a loss for which Murrays was also indemnified by the defendant. Murrays had double insurance and so it is entitled to a contribution of one half of the sum it has paid, together with pre-judgment interest under r 1616 of the Court Procedures Rules 2006 (ACT).
Payout for injured Gold Coast truckie
Goodin v Colonial Mutual Superannuation Pty Ltd
On 25 March, a Gold Coast truck driver won a seven-year battle against an insurance company that refused to recognise his back injury. Brett Goodin, now 47, was awarded a substantial disability insurance benefit that CommInsure had denied him since 2005. The court found that the insurance company had considered only the evidence that it relied upon in rejecting Goodin’s claim, and not all the available evidence.
On 24 December 2001, the plaintiff became a member of the Colonial Super Retirement Fund that provided benefit in various circumstances, including upon total and permanent disablement. On 25 May 2004 he suffered an injury to his lower back, which prevented him from continuing to work as a delivery driver. He was dismissed from that employment on 18 April 2005. He has not worked since.
On 22 April 2005 the plaintiff made a claim for the benefit payable on total and permanent disablement. Various doctors’ reports said that he had a pre-existing condition with a 5% permanent impairment and what had occurred was an aggravation of a pre-existing condition. Expert opinion was divided and the court concluded that the assessments were flawed and Goodin was unable to do the work for which he was skilled, and was unemployable.
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