Judgment date: 20 April 2012
QBE Insurance (Australia) Ltd v CGU Workers Compensation (NSW) Ltd  NSWSC 377
Supreme Court of New South Wales1
- The elements of ownership and liability are paramount to a determination that double insurance applies to a claim when one insurer seeks contribution from another in respect of damages paid pursuant to the Motor Accidents Compensation Act 1999(NSW) (the MAC Act).
- An insurer seeking contribution is not required to strictly prove the elements, rather that any compromise reached with a claimant was reasonable.
Peter Horwood (Mr Horwood) was employed by Megbuy Pty Limited (Megbuy) working in a transport/courier business in Broken Hill. On 7 November 2005, Mr Horwood sustained serious injury when the forklift he was driving overturned on a public street. At the time of the accident, the forklift was registered in the name of a related company, Levira Pty Ltd. There was no other vehicle involved in the accident.
Mr Horwood made a claim for damages under the MAC Act and a claim for workers compensation benefits. Mr Horwood commenced proceedings in the District Court against Megbuy. In his Statement of Claim he alleged that Megbuy was the owner of the forklift, that Megbuy was responsible for the maintenance of the forklift, the forklift was defective causing him injury, and that Megbuy was, accordingly, negligent.
QBE, the plaintiff in these proceedings, was the licensed statutory insurer in respect of the forklift. CGU, the defendant in these proceedings, was the licensed statutory employer's liability insurer. The fact that the respective insureds were different constituted the primary reason why QBE's claim for contribution under the principles of double insurance was disputed.
In accordance with its statutory obligations, QBE investigated the claim. Statements were obtained from witnesses and information was obtained assessing its liability. Specifically, information provided by the principal of Megbuy indicated that:
- Megbuy operated a business, employed staff, serviced and maintained vehicles, including the subject forklift, supervised and controlled all works, and conducted all aspects of the business;
- When the principal of Megbuy purchased the business formerly known as Robertson Carriers some years earlier, the forklift had been registered in the name of another company of which he was a shareholder, Levira Pty Limited, and remained registered in the name of Levira Pty Limited as at the date of the accident; but
- Levira had long since ceased to trade prior to the accident; it did not purport to employ any staff; it did not own or occupy any premises; it did not purport to operate any business; and the principal had never transferred the ownership of the forklift from Levira to Megbuy as it was not considered necessary.
On the basis of this information, QBE elected not to dispute Mr Horwood's allegation that Megbuy owned the forklift having regard to s 4 of the MAC Act which extends the concept of ownership beyond the registered owner.
QBE also obtained evidence as to age of the forklift, the extent of any maintenance or service occurring, the lack of qualifications of the employee employed by Megbuy to service or maintain the forklift, witness accounts of the state of the forklift, the known defects of the forklift including its steering and braking.
In accordance with its statutory obligations as set out in MAC Act and on the basis of the information it received as part of its investigations, QBE admitted liability and negotiated a settlement of Mr Horwood's claim in the sum of $1.5 million inclusive of costs. QBE's claim for 50% contribution under the principles of dual insurance was subsequently denied by CGU.
Supreme Court Proceedings
QBE sought a declaration that Megbuy was entitled to indemnity from both QBE and CGU in respect of the liability of Megbuy, notwithstanding that the QBE policy insured Levira Pty Ltd.
CGU filed a Defence in the proceedings admitting that the quantum of the settlement in favour of Mr Horwood was reasonable, however, denying that QBE was liable to indemnify Megbuy as it was not the "owner" of the forklift within the meaning of MAC Act at the time of the accident and the accident did not fall within the statutory definition of "injury" as at the date of the accident as it was not caused by the fault of the owner or driver in the use or operation of the vehicle.
QBE relied upon the decision of Giles JA in Zurich Australian Insurance Limited v GIO General Limited 2 submitting that if the liability of the first insurer's insured had been judicially determined or had 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 insured 3 .
In reply, CGU submitted that:
- QBE was never obliged to indemnify Megbuy in respect of the damages claimed by Mr Horwood as Megbuy was neither the legal nor statutorily defined owner of the forklift;
- The injury sustained by Mr Horwood was not an injury defined under the MAC Act because it was not caused by the fault of the owner in the use or operation of the vehicle nor was it as a result of or caused during such use or operation by a defect in the vehicle.
His Honour held:
- As at 7 November 2005, Megbuy was the owner of the forklift pursuant to s 4(1)(a) of the MAC Act and thus entitled to indemnity from QBE.
- Subject to considering the definition of "injury", the settlement of Mr Horwood's claim against Megbuy represented a reasonable compromise of the liability alleged against Megbuy. Applying Zurich v GIO it was not necessary to determine the issues de novo.
- The combination of the ownership of the forklift by Megbuy and the liability of Megbuy meant that the definition of "injury" in s 3 of the MAC Act was satisfied.
- QBE established an entitlement to recover contribution from CGU. Each contract of insurance was a contract of indemnity. It covered the identical loss (ie liability to Mr Horwood) that the identical insured (ie Megbuy) sustained.
The decision reinforces the availability of contribution pursuant to the principles of double insurance in circumstances where the registered owner differs from the other insured. The question to be asked is whether the CTP policy responds to the claim. The extended meaning of "owner" in s 4 of the MAC Act will often overcome this threshold issue.
It is unnecessary for an insurer seeking contribution under the principles of double insurance to strictly prove all the ingredients which give rise to liability in the common insured. All that is necessary is that a reasonable compromise of the claim was brought about.Footnotes
1 Beech-Jones J
2  NSWCA 47 at 
3 Ibid at 
Ranked No 1 - Australia's fastest growing law firm' (Legal Partnership Survey, The Australian July 2010)
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.