In our August 2009 edition of the Deacons Insurance
Update, we reported on the Western Australian Court of
Appeal's decision in Speno Rail Maintenance Australia Pty
Ltd v Metals & Minerals Insurance Pte Ltd.
The Court considered the issue of subrogation and the
interpretation of section 45 of the Insurance Contracts
Act 1984 (Cth) (Act) in the context
of two insurance policies which could respond to a particular claim
for personal injuries suffered by employees of Speno Rail
Maintenance Australia Pty Ltd (Speno) while they
were working for Hamersley Iron Pty Ltd
(Hamersley). The first relevant insurance policy
was between Speno and Zurich Australian Insurance Ltd
(Zurich), under which Speno agreed, by way of
contract, to indemnify Hamersley in relation to any injuries
suffered by the relevant workers and added Hamersley as an insured
under the Zurich policy. The second relevant insurance policy was
between Hamersley and Metals & Minerals Insurance Pte Ltd
Upon Hamersley being found liable for the workers' injuries,
Speno and Zurich were ordered to indemnify Hamersley. Zurich met
the claim but subsequently sought contribution from MMI based on
the principles of dual insurance. MMI contended that it held the
subrogated rights of Hamersley as an insured under its public
liability policy with Hamersley, and that its policy was an excess
policy as defined within the 'underlying insurance clause'.
In relation to MMI's second argument, Zurich argued that
section 45 of the Act voided the 'underlying insurance
In relation to the issue of subrogation, the Court confirmed
that an insurer cannot be subrogated as to the rights of its
insured without first indemnifying the insured for the loss. In
relation to section 45 of the Act, the Court held that given the
specific wording in this case (where the relevant provision in the
MMI policy referred to insurance taken out 'on behalf of'
as opposed to 'by' the insured), it was possible to sever a
part of the 'underlying insurance clause' such that the
balance of the policy survived, even if the severed part offended
section 45. Therefore, MMI's policy responded like an excess
policy and would only be triggered once Zurich's policy limit
On 21 April 2009, applications for special leave to appeal were
filed by Hamersley, MMI and Zurich. The issues raised by the
applications concerned the correct interpretation of the term
"provision" in section 45 of the Act and more generally
the breadth of the doctrine of subrogation.
The applications for special leave were heard on 31 July 2009,
and the matter was set down for hearing on 13 and 14 October 2009.
We will report on the appeal following the handing down of the High
Speno Rail Maintenance Australia Pty Ltd v Metals &
Minerals Insurance Pte Ltd (CACV 101 of 2007); Speno Rail
Maintenance Australia Pty Ltd v Metals & Minerals Insurance Pte
Ltd (CACV 102 of 2007); Speno Rail Maintenance Australia Pty Ltd v
Hamersley Iron Pty Ltd (CACV 103 of 2007) (2009) 253 ALR
364Hamersley Iron Pty Ltd v Speno Rail Maintenance Australia
Pty Ltd & Ors  HCATrans 269 (13 October 2009)
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.
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
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.
Some comments from our readers… “The articles are extremely timely and highly applicable” “I often find critical information not available elsewhere” “As in-house counsel, Mondaq’s service is of great value”
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).