The High Court's decision in Wallaby Grip Limited v QBE
Insurance (Australia) Limited; Stewart v QBE Insurance (Australia)
Limited  HCA 9 (30 March 2010)
Last week the High Court of Australia (HCA)
reconsidered the NSW Court of Appeal's decision in QBE
Insurance (Australia) Ltd v Stewart  NSWCA 66
(NSWCA) (see gadens lawyers'
previous update here). Allowing the appeal, the HCA determined
that in the absence of a policy in evidence, the insurer bears the
onus of proving any limitations on cover.
Mr Angus Stewart (Stewart) held a policy of
insurance with the predecessor of QBE. The policy was held some 40
years before the trial, so the policy itself was not produced by
either party. One of the preliminary issues was whether the policy
was unlimited, as Stewart argued, or whether it was limited to the
statutory minimum level of cover ($40,000) under the Workers
Compensation Act 1926, which was applicable at the time.
At first instance, the NSW Dust Diseases Tribunal held that the
onus of proving the limit of liability rested with the party
asserting the limit on the policy. No evidence was put forward by
the insurer and it was therefore held that there was no limit of
Court of Appeal
The Court of Appeal set aside the decision and allowed the
appeal by QBE in a majority decision (Ipp JA and Gyles AJA;
Brereton J dissenting). The majority held that the evidentiary onus
of proof rests with the plaintiff according to ordinary contractual
principles. The trial judge had erred in imposing an onus of proof
on the insurer in respect of an essential part of the obligation to
insure, as opposed to a condition or exclusion.
Consequently, the majority held that the cover was limited to
$40,000. Gyles AJA stated:
Principles as to the construction
and operation of conditions, exclusions and limitations have no
application where the question is whether a term is included in a
policy. That question is governed by ordinary contractual
principles. The party asserting the agreement must prove it. The
amount and subject of the cover are essential terms in proof of an
insurance contract. ...Where the extent of cover is defined by a
maximum amount it may be said that cover is limited to that amount
but that is not to categorise that amount as an exception to,
condition of or limitation to cover. It is an essential part of the
primary obligation to insure.
The High Court
On appeal, QBE contended that as the plaintiffs were claiming
that the policy of insurance had been altered from the prescribed
form to a coverage level greater than the statutory minimum, it
should be the plaintiffs' responsibility to prove this higher
level of cover had been agreed upon. Further, QBE maintained its
argument before the NSWCA whereby it asserted that the policy limit
was a core aspect of the policy and should be viewed in its own
right as a fundamental term of the contract.
The HCA unanimously held that policy limits in indemnity
policies are correctly characterised as limitations on insurance
cover and accordingly fall within the onus of proof borne by the
The HCA also explained the inconsistency between Clause 18 of
the Workers Compensation Regulation 1926 and the statutory
prescribed form of policy wording. The HCA stated that the
'$40,000' written into the prescribed form of wording was a
mere example of what the policy would look like at the minimum
required level of cover. The court held that the fact that those
words were included in the statutory prescribed form of policy was
not evidence establishing a prima facie level of
The HCA thus limited the insured's role to simply
establishing that a policy existed and was responsive to a claim.
Any limitations placed on the policy were of a separate nature and
QBE bore the onus of proof in that regard.
This case provides little comfort for insurers and highlights
the importance of keeping copies of issued policies. Where the
policy is lost, the insured may have scope to assert unlimited
indemnity and broad coverage.
For insureds, the essential terms of the policy must still be
established by the insured. If this case was not a workers
compensation case, section 74 of the Insurance Contracts
Act 1984 (Cth) may also have been relevant. Section 74 of the
Insurance Contracts Act provides that an insurer is to
provide the provisions of the contract to the insured on
Contractors and principals should ensure they have appropriate insurance coverage instead of relying on indemnity clauses.
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