Zurich Australian Insurance Ltd v GIO General Ltd

Zurich Australian Insurance Ltd (Zurich) appealed to the New South Wales Court of Appeal against an order dismissing its claim for contribution against GIO General Ltd (GIO). The dispute concerned the principle of double insurance and the entitlement of one insurer to seek contribution from another where both insurers provided indemnity in respect of separate liabilities arising from the same injury.

The Court was required to determine whether an uncrystallised liability of an insured under a policy issued by GIO was sufficient to engage the principle of double insurance, thereby entitling Zurich, which had indemnified its own insured, to seek contribution from GIO. The Court also had to consider whether GIO's concurrence in Zurich indemnifying its insured, coupled with the proof of liability of GIO's insured, meant that GIO was required to share the burden of that indemnity.

The Court applied the extended contribution principle established in *AMP Workers Compensation Services (NSW) Ltd v QBE Insurance Ltd* [2001] NSWCA 267; (2001) 53 NSWLR 35, holding that an uncrystallised liability was sufficient for the purposes of double insurance. The Court reasoned that GIO’s concurrence in Zurich’s indemnification of its insured, which discharged the liability of GIO’s insured, meant that GIO was required to share the burden of that indemnity. The Court found that proof of the liability of GIO's insured was sufficient to establish GIO's obligation to contribute.

The Court allowed the appeal, setting aside the previous orders dismissing the proceedings and ordering Zurich to pay GIO's costs. The Court declared that Zurich was entitled to contribution from GIO for half the amount of $429,360, representing the indemnity provided to Caringbah in respect of the injury to Mr McLellan. GIO was ordered to pay Zurich's costs of the proceedings in the Equity Division and on appeal, with liberty to apply for further relief within 14 days.