FAI Insurances Ltd v Zoric - [1991] FCA 32

Re: FAI INSURANCES LIMITED
And: MILAN ZORIC and THE NOMINAL INSURER
No. ACT G6 of 1990
FED No. 32
Insurance
99 ALR 305
28 FCR 250

COURT

IN THE FEDERAL COURT OF AUSTRALIA

AUSTRALIAN CAPITAL TERRITORY DISTRICT REGISTRY
GENERAL DIVISION
Neaves(1), Spender(1) and von Doussa(1) JJ.

CATCHWORDS

Insurance - Workmen's compensation - Employer liable to pay workman compensation under workmen's compensation legislation and damages independently of that legislation - Policy of insurance covering both heads of liability - Judgment for damages by workman against employer partly unsatisfied - Workman claims against employer's insurer and in the alternative against Nominal Insurer - Whether workman entitled to recover unsatisfied balance of judgment directly against employer's insurer - Whether insurer relieved from liability to workman by reason of breach by employer of condition of policy disentitling employer to indemnity under policy - Meaning of provision in policy that insurer be directly liable to workman to pay "compensation" for which employer liable and indemnified and that insurer bound by and subject to any order, decision or award made against the employer.

Workmen's Compensation Act 1951 (A.C.T.), s.18 and Third Schedule.

HEARING

CANBERRA

#DATE 20:2:1991

Counsel for the appellant: Mr J.L. Trew, QC

and Mr J.F. Kildea

Solicitors for the appellant: Colquhoun Murphy

Counsel for the first respondent: Mr R. Crowe

Solicitors for the first respondent: Gary Robb and Associates

Counsel for the second respondent: Mr J.J. Spigelman, QC

and Mr F.J. Purnell

Solicitors for the second respondent: Mallesons Stephen Jaques

ORDER

The judgment of the Supreme Court of the Australian Capital Territory given on 11 December 1989 be varied by substituting in Order 2 for the words and figures "one hundred and one thousand two hundred and twelve dollars ($101,212.00)" the amount of $65,163.44.

Otherwise the appeal be dismissed.

The appellant pay the costs of the first and second respondents of and incidental to the appeal.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

JUDGE1

The primary question for determination in this appeal is whether the appellant, FAI Insurances Limited, is liable, at the suit of the first respondent, Milan Zoric, to satisfy a judgment for damages for personal injury obtained in the Supreme Court of the Australian Capital Territory by the first respondent against a company, Hans Schmidt and Partners (ACT) Pty Limited ("Schmidt Pty Limited"). If that question be answered in the negative, the further question arises whether the second respondent is liable at the suit of the first respondent to satisfy that judgment. The second respondent is the nominal insurer holding office under s.18B of the Workmen's Compensation Act 1951 (A.C.T.). That Act was formerly, that is to say, prior to 11 May 1989, cited as the Workmen's Compensation Ordinance 1951 (A.C.T.). As many of the relevant events occurred before 11 May 1989, it will be convenient to refer to that legislation as the Workmen's Compensation Ordinance notwithstanding its present mode of citation.

At the conclusion of the oral argument on 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.

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Details

Case: [1991] FCA 32
Decision Date: 20 FEBRUARY 1991

CaseChat Overview and Summary

FAI Insurances Ltd v Zoric involved a dispute regarding the liability of an insurer to pay compensation under a policy of insurance which covered both employer liability for workmen's compensation and damages independently of that legislation. The plaintiff, Zoric, had obtained a judgment against his employer for unpaid wages and damages, but the employer was unable to satisfy the entire judgment. Zoric subsequently sought to recover the unsatisfied balance of the judgment directly from the employer's insurer, FAI Insurances Ltd. In the alternative, Zoric claimed against the insurer as the nominal insurer. The central legal issues were whether Zoric was entitled to recover the unsatisfied balance of the judgment directly from FAI Insurances Ltd, and whether the insurer could avoid liability due to a breach by the employer of a policy condition that disentitled the employer to indemnity under the policy. Additionally, the court had to interpret the policy provision that made the insurer directly liable to the workman for compensation for which the employer was liable and subject to any orders, decisions, or awards made against the employer.

The court considered the implications of the policy wording and the broader principles of insurance law. It concluded that Zoric was entitled to recover the unsatisfied balance of the judgment directly from FAI Insurances Ltd, as the policy made the insurer directly liable to the workman for the compensation in question. The court held that the insurer could not escape liability due to the employer's breach of a policy condition. The breach did not affect the insurer's obligation to pay the compensation directly to the workman as per the policy terms. Consequently, the insurer remained liable to pay the workman the amount of the unsatisfied judgment.

The court varied the judgment of the Supreme Court of the Australian Capital Territory to reflect the correct amount owed, and dismissed the appeal otherwise. The appellant, FAI Insurances Ltd, was ordered to pay the costs of the respondents associated with the appeal. The case underscored the importance of policy wording in determining the insurer's liability and the enforceability of judgments against employers who cannot fully satisfy their obligations.

Orders

Orders of the court

The judgment of the Supreme Court of the Australian Capital Territory given on 11 December 1989 be varied by substituting in Order 2 for the words and figures "one hundred and one thousand two hundred and twelve dollars ($101,212.00)" the amount of $65,163.44.

Otherwise the appeal be dismissed.

The appellant pay the costs of the first and second respondents of and incidental to the appeal.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

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