General Insurance Insights – Key Judgements – January & February 2024

08 March 2024

Welcome to my General Insurance Insights newsletter, bringing you the latest case notes on key judgements from January and February 2024 affecting general insurers in Australia.

Fairbank Haven Pty Ltd v Merkon Constructions Pty Ltd [2024] VSC 32

The plaintiff owned a building that was alleged to have a range of defects. The plaintiff sought to make a claim against the architect company involved in the project, however it later become deregistered. Accordingly, the plaintiff made an application, pursuant to s601AG of the Corporations Act 2001 and Rule 36.01 of the Supreme Court (General Civil Procedure) Rules 2015, to substitute the professional indemnity insurer of the architect as a defendant to the proceeding.

The Court dismissed the application on the basis that:

  1. There was no “Claim“, as defined under the policy, to trigger coverage. Specifically, no writ or originating process was issued against or served on the architect. Further, whilst the plaintiff had sent an email to the architect outlining its concerns about the building’s defects and requesting information, in particular the type of cladding material used, that did not constitute a “positive assertion… of a legal entitlement to damages or other compensatory relief…“, nor did it evince “an intention to pursue such legal entitlement“. Rather, the email was deemed to be a mere request for information.
  2. As there was no “Claim“, the architect could not have received “notice of any Claim” during the policy period, (which was also a trigger of coverage).
  3. In line with established authorities, s54 of the Insurance Contracts Act 1984 could not cure a failure by the architect to make a notification of circumstances pursuant to s40(3).

Click here to view the full case.

Mie Force Pty Ltd v Allianz Australia Insurance Ltd [2024] NSWCA 23

The appellant was a labour-hire company. It supplied labour to a demolition sub-contractor in relation to the construction of a hotel in Sydenham, NSW. Employees of the appellant were undertaking works when there was a fire that caused damage to the hotel and neighbouring properties. The respondent was the construction risks general liability insurer of the principal contractor.

Subsequent proceedings were commenced in relation to the fire. The respondent accepted liability to indemnify the principal contractor and the demolition sub-contractor, but not the appellant. It denied indemnity on the basis that the appellant did not fall within the definition of “Insured“. Specifically, it rejected the argument that the appellant was an agent of the demolition sub-contractor or, alternatively, a sub-contractor of the principal contractor within the meaning of the policy.

The primary judge upheld the respondent’s decision on the basis that the term agent should be construed more strictly to refer to a person who can legally bind a principal, as opposed to its use in a more colloquial sense as a type of intermediary. It also determined that the term subcontractor did not include sub-subcontractors.

The Court of Appeal, having regard to the way in which the policy had been drafted and its objective intention of the relevant terms, upheld the primary judge’s ruling on both issues. The appeal was, therefore, dismissed.

Click here to view the full case.

Macari v Snack Brands Foods Pty Ltd [2024] NSWSC 139

The defendant operated a potato chip factory in Blacktown, NSW. The plaintiff, a labour hire employee, was working at the factory in June 2018 when he slipped and fell down some metal steps in a pedestrian area.

The plaintiff alleged negligence against the defendant on the basis that it failed to prevent starchy water and potato debris from splashing onto the staircase and to remove the same, and failed to install adequate handrails that extended the entire length of the staircase.

The main issue for determination was how the incident occurred.

The defendant presented evidence that the steps were frequently transversed by workers without issue, there had no prior accidents or complaints and that water that splashed onto the steps was neither hot nor starchy. Conversely, there were inconsistencies in the plaintiff’s evidence and the allegations in his pleadings, including in relation to the presence of potato debris (he later admitted he had guessed about that), whether the steps were slippery and the mechanism of the fall. The plaintiff also accepted that the steps were designed to be non-slip when wet and that he hadn’t found them slippery when wet during the time he’d been working at the factory.

The Court ultimately found that the plaintiff failed to discharge his onus of establishing the cause of the incident. It also found that there was no evidence that the steps were defective, inherently unsafe or poorly maintained, or that there was any potato debris on them at the time the incident occurred. Accordingly, the plaintiff failed to establish what reasonable precautions the defendant should have taken to prevent the incident. Judgment was, therefore, entered for the defendant.

Click here to view the full case.

Allianz Australia Insurance Limited v Yu [2024] NSWSC 31

The defendant was involved in a motor vehicle accident in 2013 and alleged that he suffered psychiatric injury as a result. The plaintiff subsequently lodged a personal injury claim under the Motor Accidents Compensation Act 1999 (MACA). The defendant was the CTP insurer. It accepted and subsequently settled the claim based upon evidence regarding the plaintiff’s whole person impairment. After that settlement, the defendant’s wife made a claim for a nervous shock injury arising from the same motor vehicle accident. In the course of assessing that claim, the defendant discovered inconsistencies in the evidence the defendant had previously given in relation to his claim.

The plaintiff issued proceedings against the defendant to claim damages in the tort of deceit or, alternatively, recovery pursuant to s118 of the MACA based on false or misleading statements made by the defendant to the plaintiff, his treating doctors and the plaintiff’s medico-legal doctors. The defendant admitted, in his defence, that he made representations about his psychiatric injury, but denied that any of them were false and/or misleading. In doing so, he argued that he did not understand the purpose of the medico-legal examinations he took part in, did not know that the plaintiff would rely upon representations made to the doctors and that there were communication issues associated with his use of an interpreter.

The Court rejected those arguments and found that the plaintiff had made false and misleading representations for his own financial benefit. It also found that the plaintiff had relied on those representations in assessing the defendant’s claim and, therefore, it was entitled to recover the difference between the settlement amount and the amount it would have paid the plaintiff but for his conduct. Accordingly, it was held both that the defendant was fraudulent (for the purpose of s118 of the MACA) and that the elements of the tort of deceit were made out.

Click here to view the full case.

Pirrone v Bostik Australia [2024] VCC 11

The plaintiff was employed by the defendant as Warehouse Despatch Officer. She alleged that she suffered a mental injury, and resulting workplace stress, as a result of 14 incidents of direct and indirect bullying between 2017 and 2018. The allegations of bullying included humiliating and indecent exchanges with co-workers, silent treatment, threats about the plaintiff’s employment and lack of job security, lack of assistance or redistribution of workload and attempts to transfer the plaintiff to a new work position. The defendant had a Bullying and Violence in the Workplace policy in operation at the time. However, the plaintiff had never sighted that policy.

The defendant accepted that the plaintiff suffered a mental injury (by way of recurrence or exacerbation of an existing condition). However, it alleged that injury was caused by a combination of factors, including the toll of caring for the plaintiff’s schizophrenic daughter, her mental health vulnerability and her unforeseen response to the defendant’s offer to accommodate her to deal with those challenges by exploring possible changes to her work hours and duties.

The Court held that there was insufficient evidence to support the plaintiff’s specific allegations of bullying. On that basis, there was no need for the Court to consider the questions of breach, causation and damages, and the proceeding was dismissed.

Click here to view the full case.

This newsletter was written by Ashley Harding, Partner, Theodore Heretakis, Associate, and Madeleine Dashiell, Law Graduate.

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