Crown Equipment Pty Ltd v. ACN 098 568 702 Pty Ltd & Anor [2013] QSC 24

Was there one or two deductibles at $50,000.00?

Her Honour Justice Ann Lyons in Crown Equipment above was asked to make a decision pursuant to Rule 483 of the Uniform Civil Procedures Rules 1999 (Qld) (“UCPR”) as to a policy construction. Was the Insurer entitled to impose two deductibles as per the endorsement at $50,000.00 for each and every occurrence?

The circumstances of the claim

An employee, Talbot, was employed by the Plaintiff, Crown. On 10 October 2005 he slipped on a piece of cardboard covering an oil spill. The cardboard had been placed there by an employee, Towner. Towner was employed with the First Defendant which was a labour hire business. The Second Defendant, QBE Underwriting Ltd, was by agreement pursuant to Rule 76 of the UCPR appointed the representative Managing Agent for the relevant Lloyds Syndicate.

The First Defendant had been placed in liquidation and deregistered but reinstated for the purpose of the claim by Crown.

Crown had compromised Talbot’s claim for injuries sustained by way of an out of Court settlement for some $546,295.46.

Crown brought an action against the First Defendant for damages for negligence, breach of statutory duty and breach of contract pursuant to Section 6(c) of the Law Reform Act 1995 (Qld).

Those proceedings were defended and the question to be determined pursuant to Rule 483 of the UCPR was the Insurer entitled to deductible $50,000.00 in respect of:-

  1. Injury to the employee of Crown; and
  2. A recovery payment under the Queensland Workers’ Compensation and Rehabilitation Act under the Contract of Insurance.

The policy

The endorsements on the policy between the First Defendant and the Lloyds Syndicate said:-  

“7. DEDUCTIBLE $5,000 each and every Occurrence (costs inclusive) Except $50,000 each and every Occurrence (costs inclusive) in respect of injury to worker claims.  

9.ENDORSEMENTS Additional to Standard Wording

  • Endorsement 2 – Care, Custody, Control $100,000
  • Endorsement 18 – Injury to Worker Deductible $50,000

Endorsement 18: Injury to Worker Deductible Clause  

Endorsement attaching to and forming part of the Policy Number: XO024180T/4153.  

INSURED: RPM Contracting Pty Limited

ENDORSEMENT EFFECTIVE FROM: 18 February 2005

It is hereby noted and agreed that in respect of any:

  1. Injury to any employee of a principal, contractor, subcontractor, or contract labour hire personnel for which the Insured is held legally liable to pay compensation; and/or
  2. Claims for the recovery of payments made under the relevant Workers’ Compensation legislation of any State or Territory of Australia. The following Exclusion is added to this Policy:

The deductible is amended to AUD$50,000 each and every Occurrence.

Other than as amended, above, the terms of this Policy shall continue to apply.”

Construction of the policy

The Court confirmed the relevant Principles were:-

  1. The Insured bears the onus of invoking the primary cover afforded by the Policy together with any proviso to any exclusion, whilst the Insurer bears the onus of invoking the exclusion;1
  2. Contracts of insurance are construed in accordance with the same principles that apply to any commercial contract;2
  3. Where special conditions are added to a standard form contract, then, unless agreed otherwise, the special conditions are given greater weight. Similarly, a specific provision is usually given greater weight than a general provision; 3
  4. Clauses in dispute should be interpreted according to their natural meaning. A deductible clause should be given its ordinary and natural he contract as a whole ct;4
  5. The Policy should be construed in such a way that the deductible clause is not rendered otiose;5
  6. A Court is entitled to consider headings and marginal notes when interpreting a clause, unless there is a contractual prohibition on the use of the headings or marginal notes. However, the wording of the clause must prevail;6
  7. The policy is to be read in its commercial setting so as to fulfill and not restrain the commercial purpose;7
  8. The contra preferentum rules is to be invoked as a maxim of last resort to remove ambiguities where other approaches have failed.8

The first deductible

The Court confirmed that the endorsement at paragraph 18(a) is to limit the liability of the Insurer for injuries caused to an employee (Talbot) of the principal (Crown) by RPM’s staff (Towner). The Court confirmed that this endorsement clearly covered the situation where Talbot was injured by the actions of Towner. It was said the principal is ordinarily the party that hires or employs someone else. That was Crown in these circumstances and therefore, the Insurer was entitled to impose a deductible of $50,000.00.

The second deductible

The question next to be considered was the payment to Talbot of $546,295.46 was that solely damages or damages plus Workers’ Compensation payments and statutory costs. That is, was it a recovery of payments under the relevant Workers’ Compensation legislation so that a second deductible was able to be imposed.

The Court held that the action by Crown against RPM was for damages and not the solely the Claimant recovery of payments paid by the workers’ compensation benefits. It was said that this deductible provision in the Endorsement 18(b) referred to a claim for recovery of payments under the relevant Workers’ Compensation legislation. It made no reference to claim for damages but focuses specifically on the nature of the liability being recovery of payments. It was said that this was different in that it did not focus on the claim for damages.

The second deductible was not the likely business construction by the parties given the nature of the claim made by Crown against the First Defendant.

Conclusion

For Crown, the reinstatement of the deregistered company was of a significant benefit to them in their recovery action for the monies paid to its employee, Talbot. Although a deductible would be imposed, something is better than nothing and the exercise on the face of it, was a worthy policy interpretation application pursuant to Rule 483 of the UCPR.

The decision clearly identifies in the policy terms what is contemplated by the word “principal”. It clearly identifies what interpretation should be applied concerning recovery of payments made under the relevant WCRA is a narrow definition as defined, compared to a claim for damages which may include payments made under the WCRA.

A copy of the decision maybe accessed here.