Supreme Court New South Wales Medium Neutral Citation: QBE Insurance (Australia) Ltd v Suncorp Metway Insurance Ltd [2012] NSWSC 835 Hearing dates: 12/07/2012 Decision date: 26 July 2012 Before: Fullerton J Decision: 1. Summons dismissed. 2. Plaintiff to pay defendant's costs. Catchwords: INSURANCE - motor vehicle accident - application for sharing - construction of Sharing Agreement - jurisdiction of Sharing Disputes Panel - whether claim finally determined in curial proceedings Legislation Cited: Law Reform (Miscellaneous Provisions) Act 1946 Motor Accidents Compensation Act 1999 Category: Principal judgment Parties: QBE Insurance (Australia) Limited (Plaintiff) Suncorp Metway Insurance Limited (Defendant) Representation: BMJ Toomey QC/EG Romaniuk (Plaintiff) JE Sexton SC (Defendant) Solicitors: Moray & Agnew (Plaintiff) Curwoods Lawyers (Defendant) File Number(s): 2011/393966 Judgment 1HER HONOUR: QBE Insurance (Australia) Ltd (QBE) seeks an order restraining Suncorp Metway Insurance Ltd (Suncorp) from making or pursuing any application for a determination by the Sharing Disputes Panel (the Panel) for what Suncorp claims is a sharing dispute with QBE relating to a motor vehicle accident in Bega in February 2001. QBE also seeks a declaration that the Panel has no jurisdiction to hear Suncorp's application that QBE share the costs of the claim arising from the accident because the claim has been finally determined in curial proceedings and it has been not found to bear any liability for the damages the subject of the claim in those proceedings. 2QBE's claim for injunctive or declaratory relief involves the construction of certain clauses of the Sharing Agreement constituted under a Deed between New South Wales and Queensland compulsory third party insurers and the Motor Accidents Authority of New South Wales entered into in November 1990 (the Sharing Agreement) and its intended operation in the given circumstances. The Sharing Agreement (so far as is relevant for present purposes) is fairly characterised as an agreement between insurers to provide for and regulate the sharing of the costs of claims involving two or more motor vehicles, where at least one or more of those vehicles is a Queensland insurer and the insurer of one or more of the vehicles is a New South Wales insurer, in proportion to the number of vehicles which caused or contributed to the claim. 3The following terms are defined in the Sharing Agreement: A "claim" is defined (relevantly) as: a claim for damages in respect of which: (a) an insurer...is liable to indemnify the person against whom the claim is made under a third party policy ... A "claim cost" is defined as: the amount paid by an insurer to or on behalf of a claimant [the person entitled to make the claim] in relation to a claim or the legal costs (including disbursements) of the claimant relating to the claim or both as a result of the final settlement or verdict in relation to a claim. 4Clauses 3 and 4 provide as follows: 3. SCOPE OF THIS DEED ... 3.2 Claim by Driver This Deed only applies to a claim by a driver of a motor vehicle if, after excluding the motor vehicle driven by that driver. (a) the owner or driver of more than one motor vehicle has caused or contributed to the claim; and (b) the insurer or one or more of those motor vehicles is a Queensland insurer and the insurer of one or more of those other motor vehicles is a NSW insurer. 4. SHARING AGREEMENT 4.1 Sharing Subject to sub-clause 4.4, in respect of a claim to which this Deed applies under Clause 3 each insurer of any motor vehicle that has caused or contributed to the claim shall share the claim cost in accordance with this Clause. 4.2 Deemed Sharing if Motor Vehicle Involved in a Collision A motor vehicle shall be deemed to have caused or contributed to a claim if that motor vehicle is involved in the collision out of which the claim arises. 4.3 Deemed Sharing if so Determined by Referee If a motor vehicle is not involved in the collision out of which the claim arises, then that motor vehicle shall be deemed to have caused or contributed to the claim if the insurer of that motor vehicle agrees, or on application by any other insurer the referee determines that the owner or driver of that motor vehicle caused or contributed to the claim. ... 4.7 Disputes If there is any dispute or difference as to any matter arising under this Clause, that dispute or difference shall be referred to the referee and after considering the dispute or difference the referee may give a direction to the Parties to the dispute or difference and that direction shall be final and binding upon all Parties to the dispute or difference. 4.8 Referee The referee under this Clause shall be a person or one of a panel of persons approved by the insurers for that purpose and in determining a dispute or difference under this Clause the referee shall act as the referee sees fit with a view to expeditiously and with as little formality as possible resolving the dispute or difference. ... 4.10 Insurer to Co-operate Each of the insurers shall co-operate in the handling and settlement of all claims to which this Clause applies and shall provide to any other insurer who is or is likely to share the claim cost information in respect of the claim or to the referee all information required by the referee in relation to a matter referred to the referee. 4.11 Conduct of Claim Unless otherwise agreed by the insurers sharing a claim the insurer of the motor vehicle sharing the claim cost of a claim which principally caused or contributed to the claim or series of claims shall handle that claim or series of claims for and on behalf of each other insurer and the insurer handling the claim shall be authorised to settle and compromise that claim or series of claims and otherwise deal with the claim or series of claims as it sees fit. ... 4.13 Determination of Principal Responsibility As between the insurers liable to share a claim under this clause, the determination of which insurer is principally responsible shall be made as early as possible by reference to the police reports relating to the event giving rise to the claim and statements of witnesses which may be available but if there is any dispute or difference, that dispute or difference shall be resolved by the referee approved pursuant to sub-clause 4.8. 5The parties relied upon a common body of evidence annexed to the affidavit of Lesley Moon, the solicitor who has carriage of the matter on behalf of QBE, in which she sets out a chronology of the dealings between the parties and which has prompted QBE to seek injunctive or declaratory relief. That chronology is as follows: (a) In February 2001 Mr Veigel was seriously injured when a vehicle driven by Mrs Broughton crossed over the centre line of a road and collided with his vehicle which was travelling in the opposite direction. Mr Veigel made a claim for damages under the Motor Accidents Compensation Act 1999 against Mrs Broughton, and QBE as her insurer. Mrs Broughton's defence to the claim was that she was forced onto the incorrect side of the road by a third vehicle which was described as a "circus vehicle". Mr Veigel also claimed against the owner of that vehicle and Mr Dee, the person thought at that time to be the driver of the circus vehicle. (b) Mr Bell denied liability and in 2004 proceedings were commenced in the District Court (the first District Court hearing) to determine which vehicle or vehicles were involved in the accident and liable to pay damages which were agreed at $4.5 M. During the course of that hearing Mr Davis was identified as the driver of the circus vehicle. The proceedings were adjourned to permit a claim under the Motor Accidents Compensation Act to be lodged against him, and Suncorp as his insurer. That claim was lodged in August 2004. Mr Davis was joined as defendant to the District Court proceedings on 7 December 2004. (c) On 8 December 2004 Suncorp filed a defence denying liability for Mr Veigel's claim and cross claiming against Mrs Broughton seeking contribution and indemnity under the Law Reform (Miscellaneous Provisions) Act 1946 on the stated basis that its insured, Mr Davis, denied being in Bega on the date and time of the accident or, in the alternative, if he were found to have been involved he was not at fault and Mrs Broughton was entirely responsible for the loss and damage suffered by Mr Veigel. (d) Under cover of a letter dated 17 December 2004 Suncorp served on QBE a Sharing Application Notice. The notice nominated Mr Veigel as the claimant and Suncorp's insured Mr Davis as the driver of one of the vehicles involved in the accident. No proportion or percentage of the claim was nominated. Suncorp sought QBE's confirmation that they were a sharing insurer to the claim (by Mr Veigel) and that "sharing" may apply on the basis outlined in the covering letter. The letter stated: Our insured denies that he was in the Bega area at the date and time of the accident which is the subject of these court proceedings. This is our insured's position and his defence to the Plaintiff's claim. However, and very much in the alternative, in the event that the Court finds our insured was in the area at the date and time of the accident, and caused or contributed to the accident, Suncorp will rely on the Sharing Agreement in place with QBE. We stress that our Application for sharing is effective only if the Court finds, for whatever reason, that Mr Davis was responsible or partly responsible for the accident. (e) By letter dated 14 January 2005, QBE rejected the application for sharing for a number of reasons relevantly, so far as the proceedings before me are concerned, the assertion that the claim for sharing ought to have been made prior to Suncorp issuing the cross claim against their insured driver in the District Court proceedings and further, by asserting the right to have the liability of their insured driver determined in those proceedings (including by the filing of a cross claim) they had effectively forfeited the right to share the claim costs that otherwise obtained under the Sharing Agreement. (f) On 15 May 2005 Coorey DCJ found that Mr Dee was driving the circus vehicle and that both he and Mrs Broughton were jointly liable for the loss and damage suffered by Mr Veigel. (g) On 26 August 2008 the Court of Appeal reversed that finding in so far as it involved Mrs Broughton. In the result, Suncorp's cross claim against her was also dismissed. Suncorp sought to uphold the finding of the primary judge in so far as it exonerated Mr Davis. A new trial was ordered limited to the identification of the driver and owner of the circus vehicle which the Court was satisfied caused the collision. An application for special leave to appeal to the High Court was refused with costs. (h) At the second District Court hearing before Walmsley DCJ Suncorp maintained the claim that Mr Davis was not at the scene of the accident and did not cause or contribute to the accident in any way. This was rejected by his Honour who determined that Mr Davis was the owner/driver of the circus vehicle and was the sole cause of the accident. (i) On 1 July 2009 (after verdict was entered) Suncorp served a further Sharing Application Notice on QBE. Since Mr Bell's insurers were not party to the Sharing Agreement, the apportioning of the shares of the claim costs were fixed at 50 per cent. The notice invited QBE's confirmation of the sharing of the claim in that amount. (j) On 27 August 2009, QBE notified Suncorp of their rejection of the application for sharing. They asserted that Suncorp's failure to attempt to have the matter referred to a referee for determination after QBE had signalled its rejection of the application for sharing in 2004, and their election thereafter to litigate to determine the issue of liability was inconsistent with the intended operation of the Sharing Agreement. They also relied upon the lengthy and litigious course of proceedings in both the District Court and the Court of Appeal as providing further support for their contention that the Sharing Agreement had no application. The letter went on to say: ...The purpose of the Sharing Agreement is to avoid litigation between the insurers and cannot be used as a last resort, if having exhausted the court process, your insured is still found liable. The dismissal of the cross claims against our insured has crystallised the legal rights between us by judgment. Had you accepted at the outset that your insured caused or contributed to the accident, then it would have been appropriate for you to apply for sharing, because there would have been some accepted liability to which you would have been entitled to seek contribution. However, you have consistently maintained that your insured was either not present, or if present, was blameless in the scheme of the accident. Your intention to appeal Walmsley DCJ's finding that your insured was the sole cause of the accident is clearly inconsistent with reliance by you on the Sharing Agreement. (k) By letter dated 13 October 2009 Suncorp notified QBE that it remained of the view that the Sharing Agreement applied and that election to contest issues of liability in a fault-based curial process does not bind the parties in relation to the question whether the Sharing Agreement applies in a dispute between the parties' insurers. Suncorp advised that in the event that QBE did not confirm that their agreement to 50 per cent of the sharing of the claim costs as proposed in the Sharing Application Notice they proposed to refer the matter to the Panel for determination. (l) Suncorp appealed Walmsley DCJ's findings. On 29 June 2011 the Court of Appeal dismissed the appeal with costs. (Suncorp had earlier indicated they intended to await the outcome of the decision of the Court of Appeal before referring the application for sharing of the costs of the claim to the Panel for determination.) 6It is that reference that is the subject of the relief sought in the proceedings before me. Mr Sexton SC, counsel for Suncorp, made clear in submissions that it was the second notice served in July 2009 that is the matter to be referred to the Panel and that the matter for determination is whether QBE's insured, Mrs Broughton, was "involved" in the collision out of which the claim arises. 7His primary submission was that by its terms the Sharing Agreement (which he characterised as a private risk sharing agreement between insurers as commercial entities) applies irrespective of the outcome of court proceedings and irrespective of any alternate dispute resolution regime where the question of fault is, or might be, agitated. He submitted that there is no impediment to an insurer whose insured is found to have caused or contributed to a claim for damages (or who agrees that its insured caused or contributed to the claim as is the case here) invoking the Sharing Agreement against another insurer whose vehicle was involved in the accident (as that concept is employed for contractual purposes) even if that driver was found by a court to bear no fault. As no basis for injunctive relief has been made out in the circumstances, and no question of jurisdiction arises, he submitted that the relief sought by QBE should be refused and the summons dismissed. 8Whether or not the Sharing Agreement is a private contractual arrangement, Mr Toomey QC, counsel for QBE, submitted that because it contemplates that a claim for damages in curial proceedings might have been commenced by an injured party to which the operation of the sharing arrangement in Clause 4 applies and not simply a claim under the statutory scheme, the application for sharing must be made before the court proceedings resolve to verdict, by either a finding of fault and an apportionment of liability or a finding of no fault, as was the case with its insured driver. He submitted that for this reason neither Suncorp's Sharing Application Notice served in December 2004, expressed to be conditional upon a finding of involvement by Suncorp's insured driver, or the second notice in July 2009 served after verdict were valid applications - the first because it was conditional and the Agreement does not make provision for a contingent claim and the second because it was out of time. 9He submitted that I would find that the application for sharing is out of time because a "claim" is defined in the Agreement to mean a claim for damages for which an insurer is liable and, that "claim cost" (that which is to be shared by the insurers of those motor vehicles that caused or contributed to the claim under clause 4.1) is defined as the amount paid by an insurer as a result of the "final settlement or verdict" in relation to a claim. I am not persuaded that analysis is determinative of the question that arises in these proceedings. 10Mr Toomey also submitted that I would be satisfied that it is necessarily implicit in terms of the Sharing Agreement that notice of an application for sharing should be made before court proceedings have been determined by a verdict or otherwise settled. He submitted that the obligation of parties to the Agreement under Clauses 4.10 and 4.11 to cooperate in the handling and settlement of claims, and the appointment of the insurer of the motor vehicle which principally caused or contributed to the claim to handle that claim with a view to settling or compromising would claim under Clause 4.13, is eloquent of that fact. While the operation of those clauses is doubtless designed to facilitate the cost efficient disposition of a multi-party claim it does not in my view carry with it the implication that where there is a court determination as to fault a claim for sharing cannot be made. 11Mr Toomey also submitted that Suncorp has no contractual right to press the application for sharing before the Panel because it has waived its right to make a claim for sharing the costs of the claim under Clause 4.1 by asserting that its insured was not involved in the collision and maintaining that denial from the time he was joined as a defendant in the District Court proceedings in December 2004 through to and including the decision of the Court of Appeal in 2011. I am not persuaded that because of a position taken by a party to litigation that it follows that contractual rights under the Sharing Agreement are waived. 12As Mr Sexton emphasised, save for Clause 6 of the Agreement which requires the service of notices and other communications to be in writing, and Clause 4.10 which obligates insurers to cooperate in the handling of claims, the Agreement does not provide any procedure for making a claim for sharing nor any time frame within which a claim must be made. He also submitted that there is nothing in the Agreement which could be construed as operating as a waiver of the right of a party to apply for a sharing of the claim costs in the event that court proceedings are commenced, or at any time after they have commenced including after verdict, and that no basis had been made out for any term to this effect to be implied such as might support the claim for injunctive relief in contract. 13He also submitted that given the reach of Clause 4.7 of the Agreement I should refuse injunctive relief in any event since it is open to the Panel upon a reference from the parties to determine whether or not any delay on the part of Suncorp should operate to preclude it invoking the Agreement for the purposes of requiring QBE to share the claim costs - a determination which the parties have agreed will be final and binding. 14In the absence of any express term requiring Suncorp to make application for a sharing of the claim costs within an agreed time frame, and no proper basis to imply a term that it be commenced within a reasonable time, Suncorp submitted that since it was Mr Davis' instructed position that he was nowhere near the scene of the collision it was entirely open to them to invoke the Sharing Agreement after the court proceedings resolved the question of his involvement in the collision within the meaning of Clause 4.2 (and therefore for the purposes of invoking the Sharing Agreement that he caused or contributed to the claim) despite the fact that court proceedings resolved the question of fault adverse to him as part of the curial process. There can be no question that QBE was aware of Suncorp's intentions in that regard as early as December 2004 and that they took no steps under Clause 4.3 (as the other insurer) to have the question of Mr Davis' involvement referred to the Panel for determination, or to invoke Clause 4.7 for that purpose. 15Mr Sexton emphasised that the sharing of claim costs under Clause 4.1 of the Agreement is predicated upon a determination that an insured's motor vehicle "caused or contributed" to the claim for damages by an injured person, with the concept of the "involvement" of a vehicle in the collision out of which the claim arises (an expression of wide application not requiring fault or even physical contact between motor vehicles) operating as a deeming provision in Clause 4.2 such as to invoke Clause 4.1 where appropriate. In circumstances where Mr Davis claimed not to be at the scene of the accident (and where Suncorp must be taken not to have otherwise had any basis for agreeing that he caused or contributed to the claim by Mr Veigel under 4.3) it was not open to his insurers to have the question of his involvement referred to the Panel for determination. QBE (as "the other insurer") could have had the matter referred for determination but, as I have observed, they did not exercise that right. Mr Sexton submitted that since the issue of Mr Davis' involvement has now been determined, such as to obligate it to contribute to the shared costs of the claim under Clause 4.1, the only remaining question is whether QBE's insured driver was "involved" in the collision in the contractual sense such as to obligate it to share the claim cost as defined, that is the amount paid by an insurer as a result of the "final verdict" in relation to a claim (for damages). 16That matter is in dispute and is properly a matter for determination by the Panel. 17Accordingly the orders are as follows: 1.The summons is dismissed. 2.The plaintiff to pay the defendant's costs. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 30 July 2012