JUDGE:	ALMOND J
WHERE HELD:	Melbourne
DATES OF HEARING:	29 and 30 July 2013
DATE OF JUDGMENT:	26 September 2013
CASE MAY BE CITED AS:	Bupa Australia Pty Ltd v Shaw (as Joint Executor of the Estate of Norman Shaw) & Anor
MEDIUM NEUTRAL CITATION:	[2013] VSC 507

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INSURANCE – Subrogation – Interpretation of insurance policy – Policy to be viewed as a whole – Whether the insurer’s right of subrogation was excluded, modified or expanded by terms of the policy – Whether payments by insurer were made by way of indemnification under policy – Construction of ‘benefits are not payable’ – Whether payments by insurer were made in error – Benefits prima facie payable – Payments made by way of indemnification but not strictly within terms of policy – King v Victorian Insurance Company [1986] AC 250 applied – Whether right of subrogation prejudiced by terms upon which negligence claim settled – Whether insurer is prevented from exercising right of subrogation due to its own conduct – Insured liable to repay payments made by insurer.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr G. Dalton	Arnold Bloch Leibler
For the Defendant	Mr M. Scott SC	Holman Webb Lawyers

HIS HONOUR:

In September 2005, Mr Norman Shaw underwent surgery to remove a tumour from the lining of his oesophagus. During the surgery, the surgeon performed a full gastrectomy, as a result of which Mr Shaw required hospital and general treatment. Mr Shaw made claims under his health insurance policy with his insurer, Bupa Australia Health Pty Ltd (‘Bupa’) to recover hospital and general treatment expenses which he incurred from 11 September 2005 to 2 May 2010.[1] As a consequence, Bupa paid in total $338,953.56 for the benefit of Mr Shaw.[2] On about 31 May 2010, Bupa assigned all of its rights in respect of the policy to the plaintiff, Bupa Australia Pty Ltd.[3]
[1]Further Amended Statement of Claim, 2 May 2013 (as amended on 29 July 2013), [8] (‘Further Amended Statement of Claim’); Amended Defence to Further Amended Statement of Claim, 29 July 2013, [8] (‘Amended Defence’). Mr Shaw took out a health insurance policy with Bupa (which formerly traded as HBA) in around October 1977.
[2]Plaintiff’s Outline of Submissions, 29 July 2013 (‘Plaintiff’s Submissions’), [2].
[3]As nothing turns on the difference between the two companies, it is convenient to refer to both entities as ’Bupa’.

In September 2008, Mr Shaw commenced court proceedings seeking damages for medical negligence against the surgeon (’the negligence proceeding’).[4] He alleged that the surgeon had breached his duty of care by performing a full gastrectomy instead of an oesophagectomy, and by failing to warn Mr Shaw that he would perform a gastrectomy and the…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Bupa Australia Pty Ltd v Shaw

Details

AGLC: Bupa Australia Pty Ltd v Shaw [2013] VSC 507
Case: [2013] VSC 507
Decision Date: 26 September 2013

CaseChat Overview and Summary

Bupa Australia Pty Ltd sought to recover payments made to its insured, Mr. Shaw, after he settled a negligence claim with the defendant. The dispute centred on the interpretation of the insurance policy, specifically whether the insurer’s right of subrogation was excluded, modified or expanded by the policy terms, and whether the payments made by the insurer constituted indemnification under the policy. The Federal Court was tasked with resolving these issues.

The court examined the policy as a whole to determine the insurer’s rights. It considered whether the insurer’s payments to Mr. Shaw were made in error or as indemnification. The phrase ‘benefits are not payable’ was critically assessed to understand the scope of the insurer’s obligations. The court applied the principles from King v Victorian Insurance Company, determining that the payments were made by way of indemnification but did not strictly adhere to the policy terms. The court concluded that the insurer’s right of subrogation was not prejudiced by the terms upon which the negligence claim was settled, and the insurer was not precluded from exercising its right of subrogation due to its own conduct.

As a result, the court found that Mr. Shaw was liable to repay the amounts received from the insurer. The insurer’s right of subrogation remained intact, and it could pursue recovery from the insured for the payments made. The court's decision ensured that the insurance policy was interpreted in a manner consistent with its overall terms and obligations. The final orders required Mr. Shaw to repay the amounts to Bupa Australia Pty Ltd, upholding the insurer’s right to subrogation.

Orders