Australia: No basis for operation of double insurance between employer and owner of vehicle where liability of employer not crystallised

Curwoods Case Note
Last Updated: 4 March 2010
Article by Ian Jones

Judgment date: 19 February 2010

Zurich Australia Insurance Ltd v GIO General Ltd [2010] NSWSC 85

Supreme Court of NSW 1

In Brief

  • A joint owner of a vehicle within the meaning of s 4(1) of the Motor Accidents Compensation Act 1999 may have no liability for the negligence of another joint owner where the policy of compulsory third party insurance covers both owners.
  • A workers compensation insurer will have no co-ordinate liability for the negligence of a related entity to its insured employer where that related entity owns a motor vehicle and is sued in negligence for damages under the Motor Accidents Compensation Act, unless the liability of the employer is crystallised by findings of the court in the injured party's claim.


Mr McLellan was employed as a bus driver by Tiger Tours (Management) Pty Ltd (Tiger Tours). On the day of the accident, he was driving a motor vehicle owned by Caringbah Bus Services Pty Limited (Caringbah Bus). Mr McLellan suffered injury when lifting or moving a heavy luggage compartment door on the vehicle.

Mr McLellan sued Caringbah Bus for damages under the Motor Accidents Compensation Act. He did not sue his employer, Tiger Tours. Caringbah Bus admitted breach of duty of care in that it failed to provide mechanical aid to lift or move the compartment door and the risk of injury to persons such as Mr McLellan had previously been brought to the attention of Caringbah Bus.

During the course of the District Court proceedings, an issue arose as to whether s 151Z(2) of the Workers Compensation Act 1987 and the entitlement of Mr McLellan to statutory compensation under that Act operated to reduce the damages recoverable by Mr McLellan from Caringbah Bus.

It was found in the District Court that both Tiger Tours and Caringbah Bus were an "owner" of the vehicle within s 4(1) of the Motor Accidents Compensation Act. Accordingly, modified common law damages under the Workers Compensation Act were not available to Mr McLellan due to s 151E(2) excluding the application of modified common law damages where there was an entitlement to recover damages under the provisions of the Motor Accidents Compensation Act from Tiger Tours.

Mr McLellan recovered an award of damages against Caringbah Bus with no reduction for the damages that may have been recoverable by Mr McLellan against Tiger Tours had he chosen to take proceedings against his employer independently of the Workers Compensation Act.

Supreme Court Proceedings

At the time of the accident, Caringbah Bus held a compulsory third party policy of insurance with Zurich Australian Insurance Limited (Zurich). In light of the findings of the District Court in Mr McLellan's claim for damages, Zurich sought a determination of the question of equitable contribution between it and the workers compensation insurer of Tiger Tours, GIO General Limited (GIO). The proceedings came on for Hearing before Justice Barrett on 15 February 2010.

Justice Barrett cited the judgment of Justice Handley in the Court of Appeal decision of Mercantile Mutual Insurance (Aust) Ltd v QBE Workers Compensation (NSW) Ltd [2004] NSWCA 409, namely:

"The question of double insurance must be approached by reference to actually crystallised liabilities Regard is to be had to burdens actually borne, not to what would or might have been the position if the victim of the casualty or his or her legal advisors had made choices other than those they in fact made and pursued to finality".

Based on the District Court finding that Tiger Tours was one of two owners of the vehicle, Justice Barrett confirmed that the Zurich compulsory third party policy of insurance issued in the name of Caringbah Bus provided protection to Tiger Tours in relation to tortous liability arising under the Motor Accidents Compensation Act. Justice Barrett acknowledged that the GIO workers compensation policy may cover Tiger Tours for the same liability and on that basis, the principles of double insurance would operate between Zurich and GIO.

However, the mere fact that Tiger Tours exercised possession of the vehicle at the time of Mr McLellan's injury was not in itself relevant to any question of negligence or other tortous liability of Tiger Tours to Mr McLellan. Further, Tiger Tours was not a party to the District Court proceedings and Mr McLellan did not seek to establish any liability in his employer.

Tiger Tours was found to have no liability for damages in negligence or other tortous conduct towards Mr McLellan and on that basis, Justice Barrett confirmed no basis for a finding of liability in Tiger Tours to which the Zurich compulsory third party policy of insurance would respond. That is, at no stage did Mr McLellan or Caringbah Bus seek to crystallise the liability of Tiger Tours in the District Court proceedings. The principles of double insurance did not apply to liabilities that might have come into existence had Tiger Tours been joined as a party to the District Court proceedings.

Given Justice Barrett's findings in relation to there being no liability in Tiger Tours having crystallised, the Court was not required to consider the correctness of the proposition that under the Motor Accidents Compensation Act there can be more than one owner of a vehicle at any given time.


This decision affects the approach that has been adopted by compulsory third party and workers compensation insurers in dealing with issues of double insurance where two separate insureds are associated companies, owned and controlled by the same person(s).

In Portlock v Baulderstone Hornibrook Engineering Pty Ltd (2005) NSWSC 775 Justice Hoeben found that the provisions of s 4(1) of the Motor Accidents Compensation Act make it clear that the concept of "owner" has an extended meaning ....and goes well beyond ordinary legal concepts of ownership. The fundamental concept seems to be lawful possession of the vehicle and not registration of legal title to it.

The findings by Justice Hoeben in Portlock have generally been accepted by compulsory third party and workers compensation insurers as stating that employers in the position in which Tiger Tours found itself are a joint owner of the vehicle and covered by the compulsory third party policy of insurance. On that basis, double insurance has been conceded by workers compensation insurers in claims brought solely against a registered owner of a vehicle, without the liability of the employer being crystallised in the claim for damages by the injured party.

It will now be incumbent upon compulsory third party insurers to join to proceedings any related entity that employs the injured party (where the insureds are not one and the same) to ensure that the liability in the employer is crystallised by findings of a court.

1 Justice Barrett

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.

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