Sydney Turf Club v Crowley

[1972] HCA 25

HIGH COURT OF AUSTRALIA

Barwick C.J., McTiernan, Owen, Walsh and Stephen JJ. (THE RIGHT HONOURABLE MR JUSTICE OWEN died before the delivery of judgment in this case.)

SYDNEY TURF CLUB v. CROWLEY

(1972) 126 CLR 420

10 April 1972

Insurance

Insurance—Double insurance—Payment by first insurer with denial of liability—Action by first insurer in name of insured to recover indemnity on second policy—Subrogation or contribution—Sydney Turf Club Act, 1943-1955 (N.S.W.), s. 11 (1) (c)—Workers' Compensation Act, 1926 (N.S.W.), as amended, s. 6 (10).

Decisions

April 10.
The following written judgments were delivered:-
BARWICK C.J. The appellant, the Sydney Turf Club, was incorporated by the Sydney Turf Club Act, 1943-1955 (N.S.W.). By s. 11 (1) (c) of that Act it was required, amongst other things, to insure with the Government Insurance Office:

". . . against claims for compensation against it under any Workers' Compensation Act for the time being in force by any employee of the Club other than an employee who is a worker of the nature referred to in subsection ten of section six of the Workers' Compensation Act, 1926-1942."

At all material times the appellant was a racing club within the operation of s. 6 (10) of the Workers' Compensation Act, 1926 (N.S.W.), as amended. (at p422)

2. On 2nd August 1945 the Government Insurance Office of New South Wales (the Insurance Office) issued to the appellant a policy of indemnity styled a public liability insurance policy, by which the Insurance Office undertook to indemnify the appellant against certain specified legal liabilities. The policy was varied from time to time by mutual consent of the parties to it and at the time relevant to this appeal provided that the Insurance Office should pay to or on behalf of the appellant "all sums for which" it should "become legally liable by way of damages in respect of accidental death of or accidental bodily injury to any person . . .", where during the continuance of the policy, such death or bodily injury is caused - "(a) In the course of carrying on the Insured's business" of a racing club ". . . upon . . . Canterbury Park Racecourse . . . by the negligence of the Insured or of any person for whose negligence the Insured is responsible", except that the Insurance Office should not be liable for, amongst other things, claims "in respect of death of or bodily injury to any person arising out of or in the course of the employment of such person in the service of the Insured". (at p423)

3. Section 6 (10) of the Workers' Compensation Act provides, in part:

"6. (10) A person engaged to ride or drive for fee or reward in any horse or pony race run under the management of any racing club or association or engaged, whether for fee or reward or gratuitously, in riding work on the racecourse or other premises of any such body, shall for the purposes of this Act be deemed to be a worker employed by such club or association." (at p423)

4. The respondent, the Australian Jockey Club, is licensed as an insurer under the Workers' Compensation Act. On 17th January 1944, it issued to the appellant a policy of insurance styled an employer's indemnity policy by which the respondent indemnified the appellant in respect of its liability to pay "compensation under the Act (and/or at Common Law up to (a stated maximum) to or in respect of any person of the classes set out below who is or is deemed by the Act to be a worker of" the appellant. The note sub-joined to this clause of the policy was, "Class of worker insured against: namely Jockeys, Apprentices and Stablehands". The Act referred to in this clause is the Workers' Compensation Act. (at p423)

5. On 5th June 1965, Reginald Stretton, a stablehand employed by a horse trainer, was "riding work" at Canterbury racecourse. He was injured, as the Supreme Court found, by the negligence of the appellant. He sued the appellant in the Supreme Court as an invite and succeeded as such, recovering a verdict for $41,225. (at p423)

6. Neither the Insurance Office nor the respondent admitted any liability in respect of this verdict, but the Insurance Office in fact paid the amount of the judgment therein. The trial judge found that the Insurance Office in making this payment "honestly satisfied a claim made under a policy issued by them to" the appellant. "In doing so they did not admit liability but acted in a manner which was perfectly proper because of the dispute between the two insurers." (at p423)

7. The action was an action by the appellant against the respondent on the policy of indemnity issued by the respondent. The respondent denied that its policy covered the claim of the stablehand because it was a claim at common law not made by an actual employee of the appellant. There was a further defence which, though perhaps obscured rather than illuminated by the pleadings, was simply that the liability of the appellant had been paid by the Insurance Office pursuant to its obligation under its policy to do so. 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. See e.g., McGillivray on Insurance Law, 5th ed. (1961), par. 1839, p. 889. The respondent alleged that the Insurance Office by its policy had covered the risk out of which the claim by the stablehand had arisen and that the Insurance Office had paid out the liability of the appellant to the stablehand pursuant to its obligation to do so. If the Insurance Office was under an obligation to indemnify the appellant in respect of the stablehand's claim, it was a case of double insurance, the respondent's indemnity covering precisely the same claim. The payment in fact made to the appellant, or to the stablehand, by the Insurance Office, whether as the result of a contest or voluntarily without a contest and whether with or without an admission of liability was then a fact upon which the respondent could rely to defeat the appellant's claim on the policy issued by it. (at p424)

8. The trial judge (1970) 91 WN (NSW) 769 , however, found that the liability of the appellant to the stablehand was not within the risk covered by the policy issued by the Insurance Office and consequently found that this defence was not made out. (at p424)

9. The respondent appealed to the Court of Appeal Division which allowed the appeal and set aside the judgment (1971) 1 NSWLR 724 . It held that it was a case of double insurance and that the payment by the Insurance Office founded a defence by the respondent to the action. The question before this Court will be answered primarily by a decision as to the extent of the exception to which I have referred in the policy issued by the Insurance Office. The opposing contentions are on the one hand that the exception included claims against the appellant by those who were deemed by the Workers' Compensation Act to be workers for its purposes, and on the other hand that the exception was limited to claims by workers in the actual employment of the appellant. The appellant proposes the first and the respondent the second of those contentions. (at p424)

10. The extension of the definition of a worker to include a stablehand riding work on a racecourse operated by a racing club is made by the Workers' Compensation Act "for the purposes of the Act". Such a person is deemed for the purposes of the Act to be a worker employed by the racing club. But the stablehand is not required to be treated as a worker in the employ of the racing club for any other purpose. Thus s. 6 (10) of the Workers' Compensation Act will not itself make the stablehand riding work for a horse trainer, a worker in the employ of the racing club within the meaning of the policy. Nor will his claim for injuries received in so riding work be, by virtue of the Workers' Compensation Act, a claim in respect of bodily injury to a person arising in the course of the employment of that person in the service of the racing club. (at p425)

11. However, it is submitted by the appellant that the language of the policy issued by the Insurance Office ought to be construed as including persons in the deemed, as well as those in the actual, employment of the appellant. Support was sought for this construction in the circumstances in which the policy with the Insurance Office was obtained. It was claimed that the policy with that Office was evidently taken out in compliance with the requirements of s. 11 (1) (c) of the Sydney Turf Club Act to which I have referred and that the exception in s. 11 (1) (c) of the Act of the persons deemed by s. 6 (10) to be workers for the purposes of the Workers' Compensation Act pointed to the conclusion that the policy in fact issued was intended to and did exclude claims by such persons. But in the first place, I do not think that in this connexion the terms of the policy are controlled by, or that they should be construed by, reference to the terms of the Sydney Turf Club Act. That Act merely required that a policy covering certain claims be effected with the Insurance Office. It did not dictate the actual terms of the policy upon which the parties agreed, nor preclude the appellant from obtaining a policy covering a wider field of claim. (at p425)

12. Further, the exception in the sub-section did not include liability to actual employees, though the exception in the policy clearly did except such liabilities. This consideration alone to my mind destroys any significance of s. 11 (1) (c) in the construction of the words of exception in the policy. (at p425)

13. The appellant submitted a further argument in support of its construction of the exception claimed. It was said that the expression "in the service of the Insured" was wider than the expression "under a contract of service with the Insured"; and that the efforts of the stablehand in the employ of the horse trainer were so much for the benefit of the business of racing at the racecourse where the stablehand worked, that it could properly be said that the stablehand in riding work on the day in question was doing so in the service of the appellant. I cannot accept this wide and loose interpretation. For one thing, the full expression of the relevant part of the exception clause is "in the course of the employment . . . in the service of the Insured". This leaves no doubt in my mind that the claim excepted is a claim by an employee of the appellant. This the stablehand clearly was not. Further, however beneficial to the appellant's business the training of horses on its racecourse may be, the training by the stablehand was not performed in any sense in the service of the appellant. (at p426)

14. In my opinion, the exception or exclusion, so far as relevant, is no more than an exception or exclusion of claims by actual employees for damages or compensation for injury received in the course of their employment by the appellant and does not extend to claims by persons, who for the purposes of the Workers' Compensation Act, would be deemed to be workers in the employ of the appellant. The liability of the appellant to pay the verdict of the stablehand against the club, in my opinion, was clearly within the indemnity promised by the Insurance Office. (at p426)

15. It was conceded by counsel for the appellant - and rightly conceded - that if the Insurance Company was liable to indemnify the appellant in respect of the stablehand's claim, the appellant's action must fail. The conclusion, therefore, that the Insurance Office had an obligation to indemnify the appellant is sufficient to dispose of this appeal. (at p426)

16. However, the respondent claimed that in any case it was not liable to the appellant under the policy issued by the respondent because its promise of indemnity in respect of "common law claims" did not extend beyond claims made by actual employees of the appellant. The respondent pointed in this connexion to the terms of s. 18 of the Workers' Compensation Act claiming that that section did not require a policy covering common law liability to persons deemed to be workers, e.g., by s. 6 (10). But, whatever difficulties there may be in the language and in the application of s. 18, the extent of the respondent's promise to indemnify the appellant will be found in the words of the policy it issued, properly construed, and not in s. 18. I have referred to these terms of the policy. The stablehand's claim at common law and the liability which resulted therefrom was, in my opinion, within the description of the claim against which the respondent, by its policy, promised to indemnify the appellant. The claimant was a stablehand who was deemed by the Workers' Compensation Act to be a worker of the appellant. The claims against which the indemnity was given were not limited to claims made by a stablehand in the character of a worker deemed to be in the appellant's employ. The indemnity, so far as presently relevant, was against a claim at common law for bodily injury received in the course of the carriage of the appellant's business resulting from the negligence of the appellant or of some person for whose negligence it was responsible brought by a person within the description in the footnote in the policy. (at p427)

17. In my opinion the conclusion reached by the Supreme Court, Court of Appeal Division, was right and this appeal should be dismissed. (at p427)

McTIERNAN J. This is an appeal from a decision of the Court of Appeal Division of the Supreme Court of New South Wales (1971) 1 NSWLR 724 . The facts were that the appellant, the Sydney Turf Club, had taken out an insurance policy against public liability with the Government Insurance Office of New South Wales. A Mr. Stretton, who suffered injury in an accident on the Canterbury racecourse in June 1965, brought an action against the Sydney Turf Club in respect of his injury and recovered damages. Although the Government Insurance Office was of the opinion that the indemnity under their policy with the Sydney Turf Club did not extend to the circumstances of the accident, it paid the damages for which the Sydney Turf Club had been found liable. The Sydney Turf Club had also taken out an insurance policy with the Australian Jockey Club which was a licensed insurer under the Workers' Compensation Act, 1926 (N.S.W.), as amended. The Court of Appeal was of the opinion that both the policy taken out with the Australian Jockey Club and that taken out with the Government Insurance Office extended to the accident in question. In my judgment this conclusion was correct. The Sydney Turf Club has brought this claim against the defendant, the chairman for the time being of the Australian Jockey Club, for indemnity under its policy with the Australian Jockey Club in respect of its liability arising out of the accident (see par. 8 of the amended statement of claim). Since it has already, however, been indemnified by the Government Insurance Office in respect of that same liability the claim must fail. The claim appears to have been based on the misconception that the doctrine of subrogation operated in this case. That doctrine operates when the insurer is subrogated to the right of the insured against a third party. The insured, the Sydney Turf Club, has here no right against the third party, the Australian Jockey Club. There is therefore no question of the doctrine being invoked. (at p428)

2. In my opinion the appeal should be dismissed. (at p428)

WALSH J. I agree with the reasons for judgment of the Chief Justice and do not wish to add anything to them. In my opinion the appeal should be dismissed. (at p428)

STEPHEN J. I agree with the reasons for judgment of the Chief Justice and do not wish to add anything to them. In my opinion the appeal should be dismissed. (at p428)

Orders

Appeal dismissed with costs.