FAI Insurances Ltd v Zoric

FAI Insurances Ltd, the appellant, brought an appeal against a decision of the Supreme Court of the Australian Capital Territory, where the insured, Mr. Zoric, was the respondent. The dispute centred around the interpretation of an insurance policy that covered both the employer's liability for workmen's compensation and damages independently of that legislation. Mr. Zoric had obtained a judgment against his employer for damages, but the employer's insurer, FAI Insurances Ltd, did not cover the full amount. Consequently, Mr. Zoric sought to recover the unsatisfied balance directly from the insurer and alternatively from a nominal insurer.

The central legal issues before the court were whether Mr. Zoric was entitled to recover the unsatisfied balance of his judgment directly from FAI Insurances Ltd and whether the insurer could be relieved from liability due to the employer's breach of a policy condition that disentitled them to indemnity under the policy. Additionally, the court had to interpret a policy provision that stated the insurer would be directly liable to pay "compensation" for which the employer was liable and would be bound by any orders or awards made against the employer.

The court ruled that Mr. Zoric was entitled to recover the unsatisfied balance from FAI Insurances Ltd. The insurer's argument that they were relieved from liability due to the employer's breach of policy conditions was rejected. The court found that the policy provision meant the insurer was directly liable to pay the compensation for which the employer was liable and that this liability was not affected by any orders or awards made against the employer. Therefore, the insurer could not escape their obligation by virtue of the employer's breach of policy conditions.

The appeal was partially allowed, with the amount to be paid by the appellant adjusted to $65,163.44, and the appellant was ordered to pay the costs of the respondents associated with the appeal. The final orders were to be settled and entered in accordance with Order 36 of the Federal Court Rules.