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Insurance & Reinsurance
Australia
Overview
Including: Insurance Law; Insurance Contracts Act; Recent Significant Cases.
Position of Insolvent Insurers Cleared Up
A judge at the Supreme Court of New South Wales has provided guidance on the winding-up of failed insurers and reinsurers, particularly in regard to the relative priority of sections of the Insurance Act and the Corporations Act. The judge noted that there is an urgent need for law reform in this area to make the legislative intention plain.
The High Court recently held that an insured's duty of disclosure under the Insurance Contracts Act 1984 does not extend to all matters relevant to the decision of an insurer to enter into a contract of insurance, but only to matters relevant to the insurer's decision to accept the risk (ie, the particular hazard being insured against).
Failure to Notify Precludes Indemnity
The New South Wales Court of Appeal recently held that an insured holding a claims-made policy which had failed to notify its insurer of a potential claim before the policy expired was not entitled to indemnity. The decision affirms previous cases in this area which have limited the combined operation of Sections 40(3) and 54(1) of the Insurance Contracts Act 1984.
Product Liability
Australia
Insurers often play an important role in product liability litigation as manufacturers often effect liability policies over claims in relation to their products. Although the application ultimately failed on evidentiary issues, a recent case demonstrates that a third party may be able to bring a claim against the insurer directly as if it were recovering damages and compensation against the manufacturer.
In an April 2012 New South Wales Supreme Court decision, KFC was held liable to pay A$8 million in compensation for brain damage suffered by a plaintiff as a result of food poisoning. However, KFC recently lodged its appeal against the first instance decision, arguing there had been a failure to consider evidence and errors in the judge's factual findings and the weight given to certain evidence.
A recent decision of the Queensland Supreme Court has held the manufacturer of Winnebago motorhomes liable for the damage to property caused by a fire that originated from one of its motorhomes. The case confirms that liability under the consumer protection and product liability provisions of the legislation is strict and has significant implications for manufacturers.
In a high-profile decision the New South Wales Supreme Court decided that KFC was liable for a plaintiff's severe brain damage caused by salmonella food poisoning from a 'Twister'. Two matters of potential significance may be noted for other product liability proceedings. Together, they suggest that stringent product safety procedures may be less useful to defendants in avoiding product liability than might be expected.
The High Court of Australia has refused special leave to appeal from the full court of the Federal Court of Australia in the VIOXX class action. The decision confirmed the traditional approach to issues of causation - the defendant's act or omission must be a necessary condition of the plaintiff's injury. It also illustrated that causation is no less difficult to prove in large-scale class actions than in individual proceedings.
The full court of the Federal Court of Australia recently overturned a damages award in the VIOXX class action, confirming once again that issues of causation are no less difficult to prove in large-scale class actions than in individual proceedings. The full court's decision also demonstrates that product liability class actions can be expensive to run and face difficult questions of both medicine and law.
