Vero Insurance Limited v Power Technologies Pty Limited  NSWCA 226
- This case involved a consideration of whether a public liability policy responded to a claim for indemnity, arising out of exposure to asbestos between 1968 and 1973.
- Mr Barlow (the Plaintiff in the primary proceedings) was employed by various transport companies and was exposed to asbestos between 1968 and 1973 whilst working at various power stations owned and occupied by Delta Electricity. Delta Electricity paid damages to Mr Barlow and then issued contribution proceedings against Power Technologies (the respondent to the appeal).
- Power Technologies instituted a claim against Vero Insurance and in the indemnity proceedings, Curtis J found that Vero was liable to indemnify Power Technologies under the policy. Vero filed an appeal on the basis that Curtis J made an error of law only.
- The issues argued by Vero were that Power Technologies had failed to discharge its onus of proving that it had complied with a condition of the policy relating to reasonable care to be taken by the insured to prevent bodily injury, that an exception in the policy relating to a breach of duty owed in a professional capacity should apply, that Mr Barlow did not sustain a bodily injury during the period of insurance and the policy therefore did not respond and finally, that Curtis J erred in his interpretation of the evidence.
Decision at Trial
- In relation to condition 4 of the policy which provided that the insured was to take reasonable care that only competent employees were employed and reasonable precautions to prevent bodily injury, Curtis J made no finding that Power Technologies had actual knowledge of the dangers of asbestos and that upon the proper construction of condition 4 of the policy, Vero was liable to indemnify the insured.
- Curtis J found that Power Technologies owed a common law duty of care to Mr Barlow, as opposed to a professional duty and therefore, the provision of the policy excluding liability in respect to claims arising out of a breach of duty owed in a professional capacity by the insured did not apply.
- His Honour found that the bodily injury suffered by Mr Barlow occurred during each of the several periods of insurance between 1 October 1967 and 1 October 1974; essentially, that bodily injury occurred upon Mr Barlow's exposure to asbestos fibres.
- In determining which policy year responded to the claim, Curtis J found that notwithstanding bodily injury occurring during each period of insurance, the liability of Power Technology was brought about by the final year of exposure. Accordingly, the last period of insurance and level of cover responded to the claim.
Decision of the Court of Appeal
- The primary judgment was delivered by Beazley JA with Campbell JA and Harrison J both agreeing.
- Beazley JA found that for Condition 4 to relieve Vero of its liability to Power Technologies, there must be a finding of actual knowledge on the part of Power Technologies. Given that Curtis J made no finding of actual knowledge, it was open for him to find that Power Technologies had not deliberately courted the risk and condition 4 therefore did not apply. However, Curtis J failed to address whether Power Technologies employed competent employees as required by condition 4 of the policy, resulting in an error of law.
- Beazley JA agreed with the findings of Curtis J in respect to the nature of the duty owed to Mr Barlow by Power Technologies. Power Technologies owed Mr Barlow a duty of care as a third party as opposed to a professional duty. The exclusion relied upon by Vero therefore did not apply.
- Turning to the third issue of the appeal, Beazley JA then considered whether bodily injury occurred during the period of risk. An examination of the comments made in Orica Ltd & Anor v CGU Insurance Ltd (2003) 59 NSWLR 14 followed before her Honour found that in the case of mesothelioma, bodily injury occurs at the time of inhalation and penetration of asbestos fibre as opposed to the point at which there is manifestation of symptoms. Accordingly, the Court of Appeal found that bodily injury occurred during the period of insurance.
- The fourth issue on appeal and which will probably have the greatest influence on current and future litigation was the issue of which policy responds to the claim. The Court of Appeal was asked to determine which policy of insurance and in turn, which level of cover responded to the claim if Vero was found liable to indemnify Power Technologies.
- Beazley JA found that given the finding that injury occurred at the time of initial exposure, together with the dicta in Orica, the likelihood is that it was the initial exposure which caused the mesothelioma in circumstances where the initial exposure was significantly heavier than the later exposure. Accordingly, the level of cover available as at the time of the initial exposure, was the relevant level of cover.
- Appeal allowed in part, the matter be remitted to the Dust Diseases Tribunal to determine whether Power Technologies had complied with its obligation to exercise reasonable care that only competent employees are employed.
- The Court of Appeal distinguished the decision in Orica Limited v CGU Insurance on the basis that the terms and the wording of the policy were different. In Orica Limited the policy required that the liability should occur within the period of the cover provided by the policy. In the instant case the policy required that the injury should occur during the period of insurance.
- The significance of the decision that it confirms that in the context of a particular public liability policy wording bodily injury occurs at the time of inhalation of the asbestos fibres. This can be contrasted with the United Kingdom approach as exemplified in the case of Bolton Municipal Borough Council v The Municipal Mutual Insurance Limited & Commercial Union Assurance Company Limited .
- The decision has further significance in that it is held in the particular circumstances of this case that the earliest policy of insurance with a lower level of cover responded to the claim as opposed to a later policy with a much higher level of cover.
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