Sagacious Legal Pty Limited v Wesfarmers General Insurance Limited (No.4)  FCA 482
A win for the insurer. The Federal Court of Australia has confirmed in this case that blood analysis certificates used in criminal drink-driving cases are also admissible in civil insurance cases as evidence of a person's blood alcohol level. They cannot however, be used as evidence that a person was 'under the influence' of alcohol or affected by it in any way merely because a blood alcohol analysis can be taken up to two hours after an accident. That must be determined independently on the basis of other evidence, such as observations of a person's demeanor at the time of the accident.
On 16 January 2008, Lana O'Shanassy drove off the road and "wrote off" the insured's Mercedes Benz which hit two trees before landing on its roof. There was evidence to suggest that she was drunk at the time and probably speeding.
The insured was an incorporated legal practice owned by Mrs O'Shanassy's husband. Mrs O'Shanassy was a nominated driver on the policy which excluded liability for loss if:
- She was driving under the influence of alcohol
- Her blood contained a percentage of alcohol above the prescribed legal limit, as indicated by an analysis of her breath or blood taken within two hours of the accident.
The insurer refused the claim for $173,000 being the indemnity value of the car, relying on the above grounds and also on the basis that the insured had made a misrepresentation and breached its duty of disclosures, when obtaining insurance.
Ground 1 – driving under the influence
In line with previous authorities, Justice Rares confirmed that for a person to be 'under the influence' of alcohol "the liquor must exercise a disturbing influence on the quiet, calm, intelligent exercise of faculties". His Honour considered that observations of others who saw the person close to the critical time were particularly relevant. He rejected Mrs O'Shanassy's version of events as quite frankly, unbelievable, instead accepting evidence from various witnesses that:
- Alcohol could be smelt coming from the car
- Two empty beer bottles were found inside the car
- Mrs O'Shanassy was acting bizarrely toward her rescuers and hospital staff. For instance, she repeatedly resisted help from police officers and ambulance officers despite being trapped in the car with her foot pinned down backwards, and later asked to be cut from the car so she could walk home
- She was rude, obstructive, aggressive, demanding, used "very colourful" language and was at times hysterical toward those who tried to assist her
- She later suggested to her treating psychiatrists that she had been driving under the influence.
In addition to the two empty beer bottles consumed that afternoon, His Honour found that Mrs O'Shanassy had also drunk at least six double whiskies whilst gambling at Mittagong RSL club over the two hours before the accident.
Taking into account all of the above, it was concluded that Mrs O'Shanassy was indeed drunk at the time of the accident and the insurer was entitled to rely on the first policy exclusion.
Ground 2 – blood analysis certificate
In respect of the second policy exclusion, the court considered whether a certificate of analysis of Mrs O'Shanassy's blood prepared pursuant to section 33 of the Road Transport (Safety and Traffic Management) Act 1999 ('the Act') was admissible in this case given the prohibition in section 37(2) of the Act.
His Honour examined the wording of section 37(2) and considered previous cases dealing with similar provisions. He found the certificate was admissible as evidence of Mrs O'Shanassy's blood alcohol level and that section 37(2) only prohibited the certificate's admissibility as evidence that she was under the influence of or affected by alcohol. Despite this her blood alcohol analysis could still be relevant as to the likely affect of the alcohol on her.
The certificate which recorded Mrs O'Shanassy's blood alcohol reading as 0.124, which exceeded the prescribed legal limit, was admitted and accordingly the relevant policy exclusion applied. The analysis was also suggestive that Mrs O'Shanassy was driving under the influence.
Ground 3 – misrepresentation and breach of duty of disclosure
Lastly, it was also established that the insured had made a misrepresentation and breached its duty of disclosure when obtaining insurance for the car.
His Honour looked at the answers given on the proposal form as well as a driver's declaration and a different proposal form completed in respect of other car insurance policies, taken out by Mr O'Shanassy and one of his other companies. He found that Mr O'Shanassy had been careful not to accurately answer questions in those documents which would have revealed that his wife had not one, but two prior drinkdriving convictions and licence cancellations, whilst giving the incorrect impression that all questions relevant to his wife's driving record had been fully answered.
Were it not for the insured's actions, the insurer would have been aware of Mrs O'Shanassy's second drink-driving conviction and licence cancellation and, would have rejected her as a nominated driver on the policy. The insurer was thus entitled to reduce its liability to nil under section 28(3) Insurance Contracts Act.
This is a favourable case for insurers seeking to rely upon exclusions for intoxication or blood alcohol levels. Whilst it was open to argue that on the wording of section 37(2) blood analysis certificates could not be admissible in insurance cases, this case supports that such certificates can be admitted and relied upon for blood alcohol exclusions and can even have some weight for intoxication exclusions.
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