Crystal clear: double insurance may apply even if liability of contributor has not crystallised – Zurich Australian Insurance Ltd v GIO General Ltd [2011] NSWCA 47

Author: Gerry Tzortzatos

Judgement Date: 10th March, 2011

Citation: Zurich Australian Insurance Ltd v GIO General Ltd [2011] NSWCA 47

Jurisdiction: NSW Court of Appeal[1]

In Brief

  • The principles of double insurance apply, even where there are no “actually crystallised liabilities”.
  • A commercial settlement with a claimant does not prevent an insurer seeking contribution from another insurer.
  • Insurers should seek agreement regarding quantum of a settlement from potential contributors prior to finalising a settlement with a claimant.


The claimant was employed as a bus driver.  He was injured on 13 October 2002 while lifting a heavy luggage compartment door of a trailer to a bus.  He brought proceedings in the District Court against the registered owner of the bus, which was a separate but related legal entity to his employer.  The CTP insurer for the owner admitted indemnity and breach of duty of care and ultimately paid a settlement to the claimant in relation to his injury. 

The CTP insurer argued that the claimant’s employer was equally an ‘owner’ of the bus and the employer’s workers compensation insurer was equally liable to pay damages in accordance with the principles of double insurance.  The workers compensation insurer declined to contribute to the damages so the CTP insurer commenced proceedings in the Supreme Court seeking a declaration that the principles of double insurance applied.

The Supreme Court concluded that there was no basis for finding that the liability the subject of the CTP insurance policy was also a liability the subject of the workers compensation policy.  The basis of this decision was that the claimant did not join his employer as a party to the original proceedings and questions of double insurance can only be determined in relation to “actually crystallised liabilities”, not liabilities that might have come into existence if the claimant took a different course of action.  The CTP insurer appealed the decision.

Court of Appeal

The Court of Appeal found that the District Court judge erred in determining that double insurance applied only to “actually crystallised liabilities”.  It stated that double insurance may apply where a liability had not crystallised due to a claimant’s choice to not pursue a particular tortfeasor or due to the matter resolving by way of settlement.  The court noted that the CTP insurer had sought and obtained the workers compensation insurer’s agreement that it admit breach of duty of care and settle for a particular sum of damages.  The Court found that the fact there was a settlement of the claimant’s claim did not preclude the principles of double insurance from applying, stating:

“57.      Since contribution involves sharing a common burden, the first insurer must establish the liability for which it must provide indemnity under its policy.  However, if the liability of the first insurer’s insured has been judicially determined or has been the subject of a reasonable compromise, that suffices for contribution, and the second insurer cannot put in issue in contribution proceedings the liability of the common insured.”

The workers compensation insurer also argued that there was no evidence before the Supreme Court to lead to a finding of negligence against the employer.  However, the court held that the transcript from the District Court proceedings (which was admitted as evidence in the Supreme Court proceedings) provided sufficient evidence for a finding of breach of duty of care.

The Court of Appeal ultimately allowed the appeal and ordered that the workers compensation insurer contribute half of the damages paid to the claimant.


This case demonstrates that a claim for contribution can be made even if there is no “actually crystallised liabilities” arising from the compensation proceedings by either a finding of negligence against a party not involved in the proceedings or due to a commercial settlement.  Insurers should be mindful to seek, as the present CTP insurer had, the in principle agreement of any other insurers to a proposed settlement with the claimant so that no dispute regarding the excessiveness of damages may arise in contribution proceedings.

[1]   Justices Allsop, Giles and Young