Zurich Australian Insurance Ltd v GIO General
Ltd  NSWCA 47
NSW Court of Appeal1
The principles of double insurance apply, even where there are
no "actually crystallised liabilities".
A commercial settlement with a claimant does not prevent an
insurer seeking contribution from another insurer.
Insurers should seek agreement regarding quantum of a
settlement from potential contributors prior to finalising a
settlement with a claimant.
The claimant was employed as a bus driver. He was injured on 13
October 2002 while lifting a heavy luggage compartment door of a
trailer to a bus. He brought proceedings in the District Court
against the registered owner of the bus, which was a separate but
related legal entity to his employer. The CTP insurer for the owner
admitted indemnity and breach of duty of care and ultimately paid a
settlement to the claimant in relation to his injury.
The CTP insurer argued that the claimant's employer was
equally an 'owner' of the bus and the employer's
workers compensation insurer was equally liable to pay damages in
accordance with the principles of double insurance. The workers
compensation insurer declined to contribute to the damages so the
CTP insurer commenced proceedings in the Supreme Court seeking a
declaration that the principles of double insurance applied.
The Supreme Court concluded that there was no basis for finding
that the liability the subject of the CTP insurance policy was also
a liability the subject of the workers compensation policy. The
basis of this decision was that the claimant did not join his
employer as a party to the original proceedings and questions of
double insurance can only be determined in relation to
"actually crystallised liabilities", not
liabilities that might have come into existence if the claimant
took a different course of action. The CTP insurer appealed the
Court of Appeal
The Court of Appeal found that the District Court judge erred in
determining that double insurance applied only to
"actually crystallised liabilities". It stated
that double insurance may apply where a liability had not
crystallised due to a claimant's choice to not pursue a
particular tortfeasor or due to the matter resolving by way of
settlement. The court noted that the CTP insurer had sought and
obtained the workers compensation insurer's agreement that it
admit breach of duty of care and settle for a particular sum of
damages. The Court found that the fact there was a settlement of
the claimant's claim did not preclude the principles of double
insurance from applying, stating:
"57. Since contribution involves sharing a common
burden, the first insurer must establish the liability for which it
must provide indemnity under its policy. However, if the liability
of the first insurer's insured has been judicially determined
or has been the subject of a reasonable compromise, that suffices
for contribution, and the second insurer cannot put in issue in
contribution proceedings the liability of the common
The workers compensation insurer also argued that there was no
evidence before the Supreme Court to lead to a finding of
negligence against the employer. However, the court held that the
transcript from the District Court proceedings (which was admitted
as evidence in the Supreme Court proceedings) provided sufficient
evidence for a finding of breach of duty of care.
The Court of Appeal ultimately allowed the appeal and ordered
that the workers compensation insurer contribute half of the
damages paid to the claimant.
This case demonstrates that a claim for contribution can be made
even if there is no "actually crystallised
liabilities" arising from the compensation proceedings by
either a finding of negligence against a party not involved in the
proceedings or due to a commercial settlement. Insurers should be
mindful to seek, as the present CTP insurer had, the in principle
agreement of any other insurers to a proposed settlement with the
claimant so that no dispute regarding the excessiveness of damages
may arise in contribution proceedings.
1 Justices Allsop, Giles and Young
Ranked No 1 - Australia's fastest growing law firm'
(Legal Partnership Survey, The Australian July 2010)
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The failure of a party to call a witness does not necessarily give rise to an adverse inference being drawn in accordance with Jones v Dunkel (1959) 101 CLR 298. An unfavourable inference is drawn only if evidence otherwise provides a basis on which that unfavourable inference can be drawn.
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