This was a judgment of the District Court of Western Australia on a preliminary question of law in a personal injury case.
The issue to be determined was whether an Allianz Sure Cover Plus home insurance policy (Allianz Policy) required Allianz to indemnify its insureds for their liability to the Defendants.
The Plaintiff, Ms Georgia Inglis (Georgia) (aged 10) alleges that she was run over by a ride-on lawnmower operated by the First Defendant, Mr Stephen Sweeney (Stephen) (aged 11).
Georgia is the daughter of Mr Stuart Inglis and Mrs Linda Inglis (Georgia’s parents). Mr Stuart Inglis owned the ride-on lawnmower. Georgia lived with her parents. Georgia’s parents were were named insureds under the Allianz Policy.
It is alleged that on 17 October 2004, Mr James Inglis (James) (aged 12), Georgia’s brother, rode the lawnmower from Georgia’s parents’ house, to the Second and Third Defendants’ house. The Second and Third Defendants are the parents of Stephen.
Stephen ran over Georgia in a game that involved Georgia being towing behind Stephen on the ride-on lawnmower. Georgia brought claims against the Defendants. The Defendants brought claims against Mr Stuart Inglis and Georgia’s brother, James (the Third Parties). The Third Parties brought a claim against Allianz, seeking indemnity under the Allianz Policy. Allianz refused indemnity on the basis that the claim by the Third Parties fell within the exclusion under the Allianz Policy because Georgia was a person who normally lived with the insureds.
The Allianz Policy contained the following clause relating to cover for injury to other people:
‘… We will cover your legal liability for payment of compensation in respect of:
- death, bodily injury or illness…’
The Allianz Policy contained an exclusion clause which read:
‘What you are not covered for:
1. We will not cover your legal liability for: …
b. injury to any person who normally lives with you, or damage to their property;’
The Court found:
- The Defendants’ claim against the Third Parties was a claim ‘in respect of’ bodily injury. Because of this, the Defendants' claim against the Third Parties fell within the scope of the Allianz Policy.
- Georgia was a person who normally lived with the insureds, for the purposes of the exclusion clause.
- The relevant act for the purposes of section 54 of the Insurance Contracts Act 1984(Cth) (ICA) was that at the time the accident occurred, Georgia was living with her parents. This act could not be regarded as being capable of causing or contributing to a loss.
- The exclusion clause did not operate to exclude the Defendants’ claim. The Defendants’ claim was not a claim for the Third Parties legal liability ‘for… injury to any person who normally lives with you. Rather, it was for a legal liability to contribute towards the Defendants’ liability to Georgia.
- Section 54(1) of the ICA applies in respect of the claim.
Managing indemnity disputes
Parties involved in indemnity disputes like this, may consider making application to the Court for determination of whether section 54(1) of the ICA applies to a claim.
If an indemnity dispute can be decided as a preliminary issue, then one party’s trial costs may be avoided altogether, leaving the remaining parties to the claim to focus on settlement negotiations or, the main issues in dispute.
However, the decision to make application to the Court will depend upon a number of factors, including whether a set of facts can be agreed between the parties.