The judgement backs claimants but leaves insurers searching for an exclusions solution
Highway Hauliers has made a clean sweep of the courts to nail down a crucial insurance point.
More than a year after the Western Australian Court of Appeal ruled in the trucking company’s favour, the High Court, in Highway Hauliers v Maxwell, has affirmed that insurers are unable to deny a claim on a technicality rather than the facts of the claim.
The policy from insurance syndicates in the Lloyd’s insurance market in London, represented by Maxwell, had stated that drivers must have People & Quality Solutions (PAQS) rating of at least 35 points.
The rejected claim related to two B-doubles that were damaged in separate accidents 2004 and 2005, costing $12,335 and $287,472.
Each was driven at the time of the accident by a driver who had not undertaken a PAQS test or an equivalent program approved by the insurers.
But as the High Court states: “The Insurers conceded at trial that the fact that each vehicle was being operated by an untested driver could not reasonably be regarded as being capable of causing or contributing to any loss incurred by the Insured as a result of each accident.”
Legal observers note that a High Court judgement was needed to resolve a conflict in insurance law between WA and New South Wales appeal courts and a Queensland Court of Appeal judgement, Johnson v Triple C Furniture & Electrical Pty Ltd.
It pivots on section 54 of the Commonwealth Insurance Contracts Act 1984, the effect of which the Queensland ruling had narrowed but which the High Court has now broadened again.
“The decision will be welcomed by insureds as it confirms the ongoing relevance of section 54 as an important weapon in resisting an insurer’s rejection of a claim,” lawyers Ray Giblett and Nick Wiesener of law firm Norton Rose Fulbright say.
“Insurers on the other hand may be left wondering what must be done to effectively exclude certain claims.”