QBE has lost a bid to have the NSW Treasury Managed Fund (TMF) pay half the $1.175 million in damages it paid to an injured police officer.

Jason Mannall sustained injuries when a police motor vehicle in which he was a passenger was involved in an accident. QBE insured the vehicle under a policy issued in the form prescribed by the Motor Accidents Compensation Act 1999 (NSW). Another police officer was driving and his negligence caused the June 11, 2007, crash.

Mr Mannall lodged a damages claim against the Police Force and the driver. QBE granted indemnity to the Police Force and, on August 3, 2010, Mr Mannall and QBE entered into a written settlement agreement under which QBE paid $1.175 million. It was not in dispute that the settlement sum was reasonable.

QBE took action in the NSW Supreme Court arguing TMF, as the Police Force’s workers’ compensation self insurer, had an obligation to pay half the sum. QBE said one of TMF’s functions was to act for the state, or an authority of the state, and it was therefore required to ensure Police Force liabilities were met.

QBE argued TMF’s liability was co-ordinate with its own. But Justice David Hammerschlag said: “There is no (or no sufficient) community of interest between QBE and [TMF] so as to engage the principles of contribution. As disturbing as it may be for those who might think otherwise, [TMF] provides no risk cover in the nature of insurance to anyone. It might aptly be described as an insurance phantasm.

“[TMF's] obligation is to manage the fund by meeting claims made against government agencies. This obligation is in no way co-ordinate with that of QBE under its motor vehicle policy which rendered it liable [for] Mr Mannall.

“QBE and the State have no more a community of interest than an insured has with its insurer. [TMF] is even one step further removed from such community,” Justice Hammerschlag he said.

“While the TMF is replete with insurance terms such as ‘coverage’ and ‘premiums’ and is undoubtedly intended to mimic insurance, it is no such thing. There is no contract between a relevant agency (or for that matter any individual) and [TMF]. So much was conceded on behalf of QBE. A contention that QBE and TMF were co-insurers of the same risk was correctly abandoned.”

Justice Hammerschlag said the fund underlying TMF had no separate legal existence. Money in it belonged to the State of NSW and was managed by TMF on its behalf. TMF was a government-managed fund scheme in accordance with the NSW Self Insurance Corporation Act.

“The funding mechanism for TMF is achieved by a budget for claims being allocated to a particular agency and premiums paid by the agency being set which will enable that budget to be met.”

QBE Insurance (Australia) Ltd v NSW Self Insurance Corporation, NSWSC 1841, 11/12/13

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