Injury covered by agreement: judge
by John Reynolds, KT Journalism
Allianz must pay a higher contribution towards a power station worker's compensation claim after failing to convince a Victorian Supreme Court judge the man's injury fell outside a joint-venture (JV) alliance agreement to operate the station.
On 27 November 2018, Justice Peter Riordan ordered Allianz to pay Lloyd's underwriter Aegis $418,149, plus interest, towards the claim settlements.
Justice Riordan heard Hazelwood Power Station, at Morwell, Victoria, and maintenance and personnel supplier Alstom Ltd had formed a JV alliance agreement on 30 October 2001 in which each agreed to buy certain insurances.
Hazelwood would arrange property and business interruption policies; and Alstom would arrange construction risk, marine transit, plant and equipment, third-party liability, and motor vehicle covers. Hazelwood sourced cover through Aegis and Alstom from Allianz.
On 9 April 2011, an Alstom worker was injured when he tripped while leaving work. Hazelwood and Alstom settled his $575,000 claim on 3 August 2016 and a Victorian WorkCover Authority $625,000 recovery claim on 10 August 2016.
Aegis argued Allianz should indemnify Hazelwood under its third-party liability cover because the injured man was working for Hazelwood under the JV agreement. Aegis sought to recover 50% of Hazelwood's contribution to the two settlements.
Allianz argued the JV agreement specified workers had to be physically working on the power station for Hazelwood to claim indemnity. The worker was injured leaving the premises, which was not "performing" for Hazelwood under the JV agreement.
Justice Riordan rejected Allianz's argument Hazelwood could only claim indemnity if the injury occurred when the worker was "on the tools and not ... finished work and leaving the premises".
He said it was unreasonable to include indemnity distinctions for workers physically working "on the tools" and those leaving or arriving for the day. It was enough that workers were on the premises to work, had conducted work or were about to start work.
He rejected Allianz's argument there was a distinction between employees on the premises and still involved in activities associated with their duties and those who had finished but not yet left.
"It would be artificial in the extreme to distinguish [between] a worker who had finished his shift and was walking to where he would provide his work report before finally leaving the premises … and a worker walking to check-off before finally leaving the premises," he said.
Justice Riordan also rejected Allianz's secondary argument the worker was an Alstom employee and therefore not included in the policy's third-party cover.
It said Alstom employees working on Hazelwood's premises were covered only by workers' compensation.
But Justice Riordan said third-party insurance had a well-established meaning and third-party definitions included the term "any person".
"As would be expected, third-party policies provide indemnity to insureds without restriction on the person who might bring the claim," he said.
"The fact each policy contains an exclusion [for] liability required to be covered under workers' compensation legislation, only confirms the fact insureds' employees are third parties for the purpose of the policy."
He said interpreting third-party insurance to create "a lacuna [for] claims by Alstom's employees would fly in the face of the commercial purpose of insurance".
"Reasonable businesses in the positions of Hazelwood and Alstom would recognise one of the principal risks, for which Hazelwood required insurance, would be claims made by [Alstom] employees who were on the premises" to work under the JV agreement."
(Certain Underwriters at Lloyd's of London v Allianz Australia Insurance Ltd , VSC 735, 27/11/2018)