Nicol v Whiteoak [2011] NSWSC 168

Supreme Court New South Wales

Medium Neutral Citation: Nicol v Whiteoak [2011] NSWSC 168 Hearing dates: 16 March 2011 Decision date: 17 March 2011 Before: Harrison J Decision: Plaintiff's notice of motion filed 14 December 2010 dismissed with costs Catchwords: Insurance contracts - Insurance Contracts Act 1984 s 48 - whether section extends to a plaintiff suing an insured - whether plaintiff is a person to whom the insurance cover provided by the contract extends Legislation Cited: Insurance Contracts Act 1984 Law Reform (Miscellaneous Provisions) Act 1946 Cases Cited: Trident General Insurance Co Ltd v McNiece Bros Pty Ltd [1988] HCA 44; (1988) 165 CLR 107 Zurich Australia Insurance Limited v Metals & Minerals Pte Ltd [2009] HCA 50; (2009) 240 CLR 391 Category: Procedural and other rulings Parties: Linda Nicol (Plaintiff) Scott Murray Whiteoak (Executor of the estate of the late Steven Whiteoak) (First Defendant) Mohamed Mogharbel (Second Defendant) Club Marine Limited (Proposed Fourth Defendant) Representation: Counsel: R Goodridge (Plaintiff) I Newbrun with L Robison (First Defendant) G Parker (proposed Fourth Defendant) Solicitors: Firths (Plaintiff) Chris Lee Lawyers (First Defendant) HBL Ebsworth Lawyers (Proposed Fourth Defendant) File Number(s): 2009/287817

Judgment 1HIS HONOUR : The plaintiff was seriously injured in a boating accident on 16 September 2006 when she was a passenger in a boat then being driven by Steven Whiteoak. Mr Whiteoak was killed in the accident. The owner of the boat was Scott Murray Whiteoak who was insured to cover a legal liability to pay compensation to the plaintiff for her personal injury pursuant to a policy of insurance issued by Club Marine Ltd. The second defendant was the driver of a boat that collided with Mr Whiteoak's boat. 2By notice of motion filed on 14 December 2010, the plaintiff sought a grant of leave to join Club Marine Ltd as a defendant pursuant to s 6(4) of the Law Reform (Miscellaneous Provisions) Act 1946 . She also sought leave to file an amended statement of claim. When the matter came before me on 16 March 2011, Mr Goodridge of counsel for the plaintiff informed the Court that the application for leave to join Club Marine Ltd pursuant to s 6(4) was no longer pressed. That appeared to be uncontroversial having regard to evidence that had been filed suggesting that Club Marine Ltd may have had a defence to the claim arising from one of the general exclusions dealing with circumstances where the insured's boat was being driven by a person under the influence of alcohol or drugs. Club Marine Ltd is already a defendant named in the third cross-claim. 3Instead, Mr Goodridge sought leave to file an amended statement of claim, in which Club Marine Ltd was named as a fourth defendant, upon the basis that the plaintiff was entitled to some form of relief against the company by virtue of the operation s 48 of the Insurance Contracts Act 1984 . That section is as follows: " 48 (1) Where a person who is not a party to a contract of general insurance is specified or referred to in the contract, whether by name or otherwise, as a person to whom the insurance cover provided by the contract extends, that person has a right to recover the amount of the person's loss from the insurer in accordance with the contract notwithstanding that the person is not a party to the contract. (2) Subject to the contract, a person who has such a right: (a) has, in relation to the person's claim, the same obligations to the insurer as the person would have if the person were the insured; and (b) may discharge the insured's obligations in relation to the loss. (3) The insurer has the same defences to an action under this section as the insurer would have in an action by the insured." 4Despite this late change to the nature of the plaintiff's application, neither Mr Parker of counsel who appeared for Club Marine Ltd nor Mr Robison of counsel who appeared for the first defendant opposed the matter proceeding before me in the way indicated. 5Paragraphs 7, 8 and 22 of the proposed amended statement of claim are in the following terms: "7. By a policy of insurance numbered N 188295 ("the policy of insurance") dated 20 January 2006, and made between the fourth defendant and Scott Murray Whiteoak, the fourth defendant in consideration of a premium then paid to it agreed for the period between 20 January 2006 and 20 January 2007 to indemnify Scott Murray Whiteoak or any person driving boat registration number UX318N with his permission for any liability to pay compensation for loss or damage, for death or bodily injury arising out of the use of the said boat. 8. The fourth defendant has failed and refused to indemnify Steven Whiteoak and/or his estate. The first defendant was entitled to indemnity under the policy of insurance in respect of the injuries and loss suffered by the plaintiff sustained in the collision. ***** 22. By reason of the matters pleaded in paragraphs 7 and 8 hereinabove, the plaintiff is entitled to damages pursuant to section 48 of the Insurance Contracts Act 1984 and/or pursuant to the principles of Trident General Insurance v McNiece Bros. Ltd [1984] HCA 44." 6Mr Goodridge referred me to some of the terms of the policy. "You" and "Your" are equated with "The named insured" and "Means the person named on the Schedule". Section 2 of the policy is headed "Liability to Other People" and provides relevantly as follows: "We will cover legal liability to pay compensation for loss or damage ... to another person (not being a Named Insured) incurred by: 1. Use of Your Boat You or any person in charge or control of Your Boat ... for death or bodily Injury ... caused by or arising out of the use of Your Boat ... during the Period of Insurance." 7The following exclusion clause appears at page 20 of the policy: "GENERAL EXCLUSIONS ... Persons in Control Any claim arising from an incident involving Your Boat or any boat covered by this Policy, when that boat is under the control of: ... + A person under the influence of alcohol or drugs. ... This exclusion does not apply if you can prove that: + You did not know or had no reason to suspect that the person with control of that boat was such a person." 8It is not in dispute that the plaintiff's loss and damage arises from an incident involving a boat, being an incident to which the Club Marine Ltd policy might, subject to its terms and conditions and general exclusions, ordinarily be expected to respond. 9Mr Goodridge referred me to Zurich Australia Insurance Limited v Metals & Minerals Pte Ltd [2009] HCA 50; (2009) 240 CLR 391 at [24] in support of his application. That paragraph is as follows: "[24] Section 48 confers a statutory right of recovery upon a non-party referred to or specified in a general contract of insurance as a person insured or to whom cover extends. It does so directly. Its enactment predated the extension, by the decision of this Court in Trident General Insurance Co Ltd v McNiece Bros Pty Ltd , of common law rights of recovery for non-party insured persons under an insurance policy. Section 48 does not deem such a person to be a party to the insurance contract thus attracting the rights conferred on a party. It does not purport to confer contractual or equitable rights upon such a person. There is therefore no basis in s 48 for assimilating the position of a non-party insured to that of a person who has "entered into" a contract of insurance within the meaning of s 45(1)." 10Mr Goodridge's written submissions then proceeded in these terms: "15. In the Zurich case, it was argued that a plaintiff who made a claim against the insurer pursuant to a 48 in effect became the insured for all purposes including issues of double insurance under s 45 of the Insurance Contracts Act . 16. The majority further said at paragraph 26: '[26] Zurich submitted that s 45(1) should be construed as if the text read: 'Where a provision ... has the effect of limiting or excluding the liability of the insurer under the contract by reason that the insured [ including a person entitled under s 48 ] has entered into [ an arrangement giving it cover under ] some other contract of insurance ... the provision is void.' That submission should not be accepted.' 17. The majority made it clear that there is a distinction between 't he insured' and a person entitled to claim under s 48 who 'has a right to recover the amount of the person's loss from the insurer...notwithstanding that the person is not a party to the c ontract '." 11With respect to Mr Goodridge, to the extent that I properly understand his argument, it seems to me that he has misconstrued the meaning, effect and operation of s 48. The clear and unambiguous words of the section are that it operates in favour of a person who is not a party to a general contract of insurance, but who is specified or referred to in it, whether by name or otherwise, in the same way in which it applies in favour of a person to whom the insurance cover provided by the contract extends. It gives that person who is not a party to the contract a right to recover the amount of that person's loss from the insurer in accordance with the contract notwithstanding that the person is not a party to it. 12It seems reasonably apparent that the person's loss to which the section refers is, for example, the loss suffered or the liability incurred at the suit of someone such as the plaintiff in the present case. The section operates in practical terms to extend cover and to provide indemnity under the policy to a person if they are specified or referred to in the contract. It does so as if the person were someone to whom the insurance cover provided by the contract would extend when confronted by a claim for damages such as the claim that is made by the plaintiff. 13Mr Goodridge seeks, in his words, to take the Trident principle "one step further" and extend the operation of s 48 to the plaintiff. According to his submission, the plaintiff is to be treated as a person to whom the insurance cover provided by the Club Marine Ltd contract of insurance extends so that she thereby has a right to recover the amount of her loss from Club Marine Ltd in accordance with the contract notwithstanding that she is not a party to it. 14This argument is, however, wholly misconceived. Section 48 is concerned with the extension of cover to a person or persons who are entitled to indemnity under a contract of insurance as if they were a named insured. The qualifying words are that they are a person specified or referred to in the contract of insurance. The section deals with persons who are or may become entitled to the cover which the policy provides to an insured as someone who is to be treated as an insured although not named as such in the policy. It has nothing to say about, and nothing to do with, the rights or entitlements of someone such as the plaintiff, who has suffered loss or damage either at the hands of a person such as a named insured or a person to whom the cover offered by the contract of insurance may extend through the operation of the section. 15The right that is created by the section is a right "to recover the amount of the person's loss from the insurer in accordance with the contract ". The plaintiff in these proceedings is given no such right and s 48 does not extend the Club Marine Ltd policy to cover her. When the majority of the High Court in Zurich spoke at [24] of the statutory right of recovery that is conferred by the section upon a non-party referred to or specified in a general contract of insurance, as a person insured or to whom cover extends, it was not referring to a non-party in the position of the present plaintiff. It was certainly not referring to an extension of the policy to the plaintiff in the way for which she presently contends. The plaintiff cannot in my opinion qualify, or be described as, a person who is anywhere specified or referred to in the Club Marine Ltd policy. She is not therefore a person to whom the insurance cover provided by that policy extends. 16I consider that the plaintiff's notice of motion filed 14 December 2010 should be dismissed with costs.