Morrison v Morrison No. DCCIV-01-302

[2002] SADC 52

MORRISON -v- MORRISON
[2002] SADC 52

JUDGE ROBERTSON
CIVIL

This is an appeal against a decision of a Master refusing an application to strike out the defendant’s Third Party Notice. The original proceedings were brought by the plaintiff seeking damages for personal injuries which she suffered whilst in the care of the defendant at the defendant’s home on 10 March 1984. It is alleged that as a result of the negligence of the defendant the plaintiff’s nightdress came in contact with a radiator causing the dress to ignite which resulted in the plaintiff suffering burns to her body.

At the time of the alleged injuries the defendant held two contracts of insurance indemnifying her against personal liability, one being with SGIC General Insurance Ltd (“SGIC”) and the other with Australian Eagle Insurance. SGIC has agreed to indemnify the defendant under its contract of insurance. Australian Eagle has refused to indemnify the defendant claiming that its insurance policy does not cover the risk for which she seeks indemnity. Since the time when Australian Eagle Insurance issued the policy that company has been apparently taken over or its liabilities under its policies taken over by the third party, QBE Mercantile Mutual.

By the Third Party Notice the defendant alleges that pursuant to the contract of insurance she held with Australian Eagle Insurance it is liable to indemnify her for personal liability which may arise from the claim made against her by the plaintiff. Furthermore, the defendant pleads that the third party in breach of its contract of insurance, has refused to indemnify her.

It is the third party’s contention that the claim against the third party cannot succeed because of the principal identified in the High Court decision in The Sydney Turf Company v Crowley(1972) 126 CLR 420. The passage upon which the third party relies is contained in the judgment of Barwick CJ (at p.424):

“In other words the respondent relied on the well established principle that in a case where there are two promises of indemnity in respect of the same liability the promisee can only recover once and not twice. Being paid pursuant to one such promise, he cannot recover on the other.”

The third party submits that as SGIC has agreed to indemnify the defendant under its policy of insurance the plaintiff cannot seek indemnity under the third party’s policy of insurance. The third party submits that the principle identified in The Australian Turf Club case is a bar to the defendant succeeding in its third party proceedings.

The strike out application is brought pursuant to Rule 3.01 and Rule 46.18 of the District Court Rules 1992. It is not disputed that the learned Master correctly identified the test to be applied in an application of this nature. The learned Master  in his Reasons cited the decision  of  General Industries Inc v Commissioner of Railways(1964) 112 CLR 125 for the principle that for the claim to be struck out it must be obviously unsustainable and so manifestly faulty that it does not admit of argument. He also cited the decision of National Mutual Life Association v Coffey & Partners(1991) 2 QdR 401 for the proposition that an action should not be struck out if there is a real question of fact or law to be determined. I also refer to the decision of  Dey v Victorian Railways Commissioners(1949) 78 CLR 62 (at p.91) in support of that proposition.

In my view there is a real question of fact and law to be determined here. It  is at least arguable that the principle identified in The Australian Turf Club applies only where the party required to indemnify has in fact discharged the liability of the party who was entitled to the indemnity. Expressed another way, that, in terms of insurance law, it only applies where the insurance company has paid the amount of the insured’s liability which was the subject of the indemnity. Here, SGIC have not paid any amount the subject of its indemnity under the insurance policy. All SGIC has done to this point is to promise that it will indemnify the defendant under its policy.

I favour the view that The Australian Turf Club principle only applies where the amount of the indemnity has been paid. However, it is not necessary to finally decide that issue. I only need to be satisfied that there is a real question of fact and law to be determined. I am satisfied that there is in this case. The question to be determined is whether the third party is in breach of its policy of insurance in refusing to indemnify the defendant under that policy. In that context it is important to understand that as SGIC has not made payment in full under its policy the defendant remains dominus litis, that is, in control of the litigation. (Santos Ltd v American Home Insurance Company(1987) 4 ANZ Insurance Cases 60-795). Furthermore, as I have said, it is at least arguable that the defendant is not prevented from bringing such an action as a result of the principle laid out in The Australian Turf Club decision.

I am therefore of the opinion that the learned Master was correct in refusing to strike out the third party proceedings. Accordingly, I dismiss the appeal.