Article by Ashley Jones and Marcela Kamada

The Northern Territory Court of Appeal recently reviewed the Wayne Tank principle in a case where the loss resulted from more than one cause. Under the Wayne Tank principle, where there are two or more concurrent causes of the loss, one of which is an insured event and one which is an excluded event, the insurer is not liable to indemnify under the policy.

The Central Australian Aboriginal Congress (Congress), is an incorporated association that provided a wide range of medical and related services to its patient group. The Congress was one of the defendants in an action brought by the spouse of the late Clive Henry Impu for damages in negligence. The Congress suffered judgment for $236,972. The trial judge found the Congress had breached its duty of care to the deceased by reason of a number of "administrative" errors or failures, some by administrative staff, others by two medical practitioners employed by the appellant. The Congress sought indemnity from its insurer, CGU Insurance Limited (CGU), for the judgment sum by way of third party proceedings.

The trial judge found that under the terms of the Professional Risks policy between Congress and CGU, claims against medical practitioners were excluded, and that the failures of two doctors employed by Congress contributed to the failures which led to the deceased's death. Accordingly, her Honour applied the Wayne Tank principle under which Congress would be indemnified under its policy for the administrative errors by administrative staff but would not be indemnified for the breaches by its employed medical practitioners. Congress then appealed against the dismissal of its third party claim against CGU.

The Court of Appeal considered the medical malpractice exclusions in the policy. Angel J held that the relevant provisions of the policy were exceptions or limits, instead of exclusions and in the circumstances, the Wayne Tank principle did not apply.

In contrast, Mildren J (with Martin CJ in agreement) held that the provisions were exclusions However, they did not have any operation on the facts of the case and as such his Honour came to the same conclusion as Angel J, that the Wayne Tank principle did not apply. Mildren J held that the proceeding against Congress did not include a claim against the two medical practitioners alleged to have been involved in the failures which caused the deceased's death. The claim was against Congress for providing negligent professional services to the deceased and in the circumstances, the exclusion provisions in the policy did not apply. His Honour also noted that there had been no finding of negligence against the two medical practitioners in relation to their treatment of the deceased. His Honour concluded that in his view, the real cause of loss was the failure by Congress to put proper systems in place to ensure that administrative errors of the kind found by the trial judge were eliminated.

The Court of Appeal unanimously allowed the Appeal.

This decision shows the importance of carefully considering whether exclusions apply to the allegations and findings of fact made. The need to determine whether as a matter of construction a limitation on cover is an "exclusion" to which the Wayne Tank principle applies is also demonstrated.

Central Australian Aboriginal Congress Inc v CGU Insurance Ltd [2009] NTCA 1

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