Lekkas & Anor v VACC Insurance Co Ltd

The applicants, Lekkas and another, appealed to the High Court of Australia against a decision of the Victorian Civil and Administrative Tribunal (VCAT) which had dismissed their claim for indemnity under a motor vehicle insurance policy issued by the respondent, VACC Insurance Co Ltd. The dispute concerned whether the damage to the applicants' vehicle was covered by the policy, specifically in circumstances where the vehicle was being driven by a person who was not the insured owner and who had allegedly been drinking alcohol.

The High Court was required to determine whether VCAT had erred in law in its interpretation and application of the relevant provisions of the *Transport Accident Act 1986* (Vic) and the terms of the insurance policy. Key issues included whether the driver's alleged intoxication vitiated the policy's coverage and whether VCAT had correctly applied the principles of statutory interpretation in relation to the policy's exclusions.

The Court held that VCAT had erred in its construction of the policy and the governing legislation. McHugh and Kirby JJ found that the policy's exclusion clause, which purported to exclude cover where the driver was under the influence of alcohol, was rendered ineffective by the operation of section 98 of the *Transport Accident Act 1986* (Vic). This section mandates that an insurer cannot avoid liability under a policy by reason of the driver's intoxication. The Court emphasised that the purpose of the Act was to provide a statutory scheme of compulsory third-party insurance, and that insurers could not contract out of their statutory obligations in this regard.

Consequently, the High Court allowed the appeal, set aside the decision of VCAT, and remitted the matter to VCAT for redetermination in accordance with the reasons of the High Court.