Insurance Contracts CP - Law Reform Commission

ii)
(i)
Where the insured and the wrongdoer are parties to an employment contract with each other
so as to trigger vicarious liability.
Subrogation – Intra Family Claims
10.71 In the first situation, the 1982 Australian ALRC Report made the following observation:
―It is not appropriate that subrogation be available in circumstances where double indemnity is,
as a practical matter, not in issue and where the liability to be relied upon. The most obvious
cases concern domestic insurance. In the field of householder‘s insurance, for example, cover
is offer extended to members of the insured‘s family living with him in the household. But it is
not extended to members of his family living apart, nor to other close relatives or friends who
might visit him. Suppose an insured makes a claim for damage to furniture caused by a fire
started when a relative of the insured carelessly dropped a lighted match into a wastepaper
basket. Unless the relative carries liability cover, there would normally be no question of the
insured himself seeking to recover damages for his relative‘s negligence. Yet the insurer is
entitled to bring an action against the relative in the insured‘s name‖ 75
10.72 This situation has arisen for consideration in Ireland. In Moynihan v Moynihan 76 the plaintiff, a
two year old child, injured herself whilst visiting the home of her grandmother as a result of what Henchy J
called ―an unforeseeable sequence of fortuities‖. The injuries occurred due to the alleged negligence of
the grandmother and Marie, one of the plaintiff‘s aunts in relation to voluntary acts of supervision. As
such, the plaintiff‘s case tested the boundaries or vicarious liability for it was clear that no employment
relationship existed of any kind. Nevertheless, Walsh J, O‘Higgins CJ concurring, found that the trial
judge was wrong to withdraw the issue of liability from the jury on the basis that the grandmother could
not be vicariously liable, in law, for the gratuitous acts of Marie. Henchy J dissented saying that the
absence of any employment relationship between the defendant and her daughter Marie, ―the
circumstances of the accident do not fit into any of the exceptions to the rule that a principal is not liable
for the negligence of an independent contractor or a gratuitous helper or a delegate who is not a
servant.‖ 77
10.73 One can only speculate on the possibility that the defendant was selected because some
policy of domestic insurance was in place in her name; Marie may have been put in the supervisory role
but possibly was not insured against such an event. Henchy J was clearly aware of such a scenario:
―Much as one might wish that the law would allow this plaintiff to recover damages from some
quarter for the consequences of the unfortunate accident that befell her, the inescapable fact is
that there is a complete absence of authority for the proposition that liability should fall on the
defendant (who was innocent of any causative fault) rather than on Marie whose conduct is
alleged to have been primarily responsible for the accident. I see no justification for stretching
the law so as to make it cover the present claim when, by doing so, the effect would be that
liability in negligence would attach to persons for casual and gratuitous acts of others, as to the
performance of which they would be personally blameless and against the risks of which they
could not reasonably have been expected to be insured. To transfer or extend liability in these
circumstances from the blameworthy person to a blameless person would involve the redress
of one wrong by the creation of another. It would be unfair and oppressive to exact
compensatory damages from a person for an act done on his behalf, especially in the case of
an intrinsically harmless act, if it was done in a negligent manner which he could not
reasonably have foreseen and if—unlike an employer, or a person with a primarily personal
duty of care, or a motor-car owner, or the like—he could not reasonably have been expected to
be insured against the risk of that negligence.‖ 78
75
76
77
78
ALRC Report No 20, paragraph 305.
[1975] IR 192.
[1975] IR 192 at 202.
[1975] IR 192 at 202-3
212