The Full Court of the Tasmanian Supreme Court has placed an interesting interpretation on section 601AG of the Corporations Act.  That is the section which enables a third party to make a claim directly against an insurer where the insured is a company which has been de-registered and, but for that de-registration, the third party could have made their claim against the insured.

The plaintiff was injured in the course of his employment with the insured company in March 2008.  The relevant limitation period for issuing legal proceedings was three years.

The employer company was de-registered on 26 November 2011.  The plaintiff commenced a legal proceeding against the employer’s liability insurer (under section 601AG) on 21 February 2012, which was after the limitation period (as against the employer) had expired.  There was no provision in the Tasmanian legislation for extension of the limitation period.

The insurer argued that the claim against it was statute-barred.  The plaintiff argued that the claim against the insurer under section 601AG was a different cause of action to the one against the employer, and that it had its own limitation period which did not commence until the employer was de-registered.  The proceeding against the insurer had been commenced only three months after de-registration, and so the claim under section 601AG was not statute-barred.

The Court said that the purpose of section 601AG was that the insurer stood in the shoes of the de-registered insured, in terms of the insured’s liability (and also in terms of its rights of recovery).  The purpose was also for the plaintiff to be subrogated to the insured’s rights against the insurer. 

Applying that interpretation, the Court said that the plaintiff’s cause of action against the insured, and the limitation period applicable to it, were ‘assimilated’ within section 601AG.  As a result the plaintiff’s cause of action against the insurer was really the same cause of action which he had against the employer, which was statute-barred.

Accordingly (subject to a side issue about the date of discoverability of the plaintiff’s claim against his employer) the plaintiff’s claim against the insurer under section 601AG was statute-barred.

Allianz Australia v Mercer [2014] TASFC 3

This is an interesting decision which, perhaps surprisingly, was not taken to the High Court.  It seems a curious result that the plaintiff could not sue the insurer until after the employer was de‑registered, but by the time the de‑registration happened the potential claim against the insurer was already statute‑barred.