Australia: Insurance Case Note: Zurich Australian Insurance Limited v Metals and Minerals Insurance Pty Limited [2009] HCA 50

The scope and operation of the "Other Insurance" provisions in section 45 of the Insurance Contracts Act 1984 ("the Act") has been considered by the High Court of Australia in the recent decision of Zurich Australian Insurance Limited v Metals & Minerals Insurance Pty Limited [2009] HCA 50.

For a detailed account of the complex history of this litigation, refer to the Hunt & Hunt Insurance Case Note of 13 February 2009 relating to the Western Australian Court of Appeal proceedings which preceded this appeal.

The Western Australian Court of Appeal Proceedings

The basis of this appeal to the High Court related to a portion of the Court of Appeal proceedings referred to as the "Zurich contribution action". This was a claim by Zurich for contribution from MMI pursuant to the equitable principles of dual insurance, for moneys paid to an iron ore manufacturer, Hammersley. Hammersley was entitled to cover under each of 2 policies issued by Zurich and MMI respectively.

In defending the claim, MMI relied upon an "underlying insurance" clause, which was drafted so it purported to apply in each of two circumstances:

  • A. Where the insured was an actual party to another contract of insurance; and alternatively
  • B. Where the insured was a third party beneficiary to another contract of insurance (that is, entitled to cover without being an actual party to that other contract).

Section 45 of the Act, which seeks to void such underlying insurance clauses, reads:

Where a provision included in a contract of general insurance has the effect of limiting or excluding the liability of the insurer under the contract by reason that the insured has entered into some other contract of insurance, not being a contract required to be effected by or under a law, including a law of a State or Territory, the provision is void." (our emphasis added) Although it was held in the Court of Appeal that the underlying insurance clause relied upon by MMI was indeed of the type which was declared void by section 45 of the Act, a distinction was made by the Court of Appeal in this case because Hammersley, although entitled to cover under the contract of insurance issued by Zurich, was not a party to that contract.

Because section 45(1) was held to only be triggered to void the underlying insurance clause by the first of the circumstances in which the underlying insurance clause operated ("A" above), the Court of Appeal found that the underlying insurance clause could continue to operate in the second circumstance ("B" above). Namely, in the case of an insured such as Hammersley who was entitled to cover under a second policy of insurance, but who was not necessarily an actual party to that contract.

As such, the Zurich contribution action was set aside in the Court of Appeal.

The High Court of Australia proceedings

Zurich brought the appeal to the High Court of Australia on 2 main bases:

  1. That the Court of Appeal erred in failing to find that the term "provision" in section 45(1) of the Act means the whole of the relevant provision of the contract of insurance, and not just the offending element of it; or,
  2. In the alternative, that, read with section 48 of the Act (which gives beneficiaries of policies the same rights as actual insureds), section 45(1) should be construed to include a person entitled to cover under a second contract of insurance, but who may not be a party to that contract. (Namely, the type of cover afforded to Hammersley under the Zurich policy.)

These submissions by Zurich were not accepted, and the following points of insurance law were confirmed in dismissing the appeal:

  1. When referring to a contract of insurance, the words "entered into" refer only to the actual parties to that contract, and the inclusion of persons not parties to the relevant contract would be inconsistent with the ordinary, or any plausible extended, meaning of "entered into" in relation to contracts.1

    Therefore, section 45 of the Act operates to void "other insurance" provisions affecting double insurance only where the insured is a party to both the relevant contracts of insurance, and MMI did not have to contribute in circumstances where their insured (Hammersley) was also covered by other insurance effected merely on the insured's behalf.

    Comment: Insurers should take note that the numerous provisions in the Act which refer to parties who have "entered into" a contract of insurance, will now be read to refer only to the parties to that contract, and not to beneficial third parties.

  2. The term "provision" is to be defined as providing "for some particular matter"2, notwithstanding any "accidents of drafting"3 which cause provisions for more than one particular matter to be included in a single numbered clause.

    In the underlying insurance clause in question, this means that the whole provision which relates to insurance affected "by or on behalf of the insured" can be read disjunctively to apply to insurance effected "by the insured", and again to insurance effected "on behalf of the insured". In circumstances where section 45(1) of the Act only catches the former of those alternative provisions, the latter continues to operate.

    Therefore the underlying insurance clause in the policy issued by MMI prevented Zurich from claiming contribution pursuant to the equitable principle of dual insurance, in circumstances where the insured was not an actual party to the contract of insurance issued by them.

    Comment: Although this was referred to by the Court as an "accident of drafting", we consider that clauses which make provision for more than one eventuality are quite common. This is an authority that would support that method of drafting as quite effective (although possibly not ideal). It was simply on the construction of the legislation that the section did not apply to both eventualities in this case.

Further, it would seem perverse that section 48 of the Act, which extends the same rights to beneficial third parties as provided to actual insureds, does not extend corresponding rights to contribution to the insurers of beneficial third parties. This leads thereby to inequity in that the insurer of the beneficial third party, though having to indemnify that insured, is precluded from the protection of section 45 which is afforded to the actual insurer.

1 at [26]

2 at [31]

3 Ibid

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

Click to Login as an existing user or Register so you can print this article.

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”

Mondaq Advice Centre (MACs)
Up-coming Events Search
Font Size:
Mondaq on Twitter
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).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.