Insurance Contracts CP - Law Reform Commission

Employee‟s Liability (Indemnification of Employer) Act 1982 a broad interpretation so as to allow the
employee to avoid liability in respect of both an indemnity and a contribution as joint tortfeasor (see
section 21(1) of the Irish Civil Liability Act 1961), a unanimous Court observing that:
―It is scarcely to be supposed that the legislature intended to exclude the employer‘s right to
recover in contract but to leave on foot his right to recover contribution from his employer as a
concurrent tortfeasor...[t]he 1982 amendment sprang from a deeply rooted and general
concern with the substance of the problem as it was thought to exist under the law as
expounded in Lister v Romford Ice, namely, the perceived injustice in the employer‘s
entitlement to recoupment whether under s.5(1)(c) or under the contract from an employee
whose fault resulted in the employer becoming liable to a plaintiff.‖ 88
10.83 The critical point of course is the legislative purpose the 1982 NSW legislation. In contrast, the
Supreme Court, in Sinnott v Quinnsworth applied the majority decision in Lister v Romford Ice to a case
where one employee injured another employee in a motor accident that occurred during the course of
employment. The Supreme Court indicated that section 21(1) of the Civil Liability Act 1961 afforded no
right to an indemnity, especially in the case at bar where the driver of a motor vehicle can scarcely be
described as ―innocent‖ when driving negligently. McCarthy J indicated that he saw no merit in awarding
an indemnity in favour of an employee against an employer when the employer ―presumably, employed
him to drive safely‖. 89
10.84 While section 6(1)(c) of the Law Reform (Married Women and Tortfeasors) Act 1935 was the
legislative template for section 21(1) of the Civil Liability Act 1961, and its predecessor, section 5 of the
Tortfeasors Act 1951, the drafters of the 1961 Act clearly had in mind the desirability of seeking to do
justice in each individual case. Section 21(2) requires a court to award, by way of an amount, what is
―just and equitable having regard to the degree of the contributor‘s fault.‖ Unlike the 1951 Act, the court is
to consider comparative blameworthiness rather than causation: see Connolly v Dundalk UDC 90 and
Keane J in Iarnród Éireann v Ireland. 91 Glanville Williams 92 was extremely critical of the majority decision
in Lister v Romford Ice.
10.85 In the United Kingdom the policy issues raised by the decision in Lister v Romford Ice lead to
the appointment of an Inter Departmental Committee 93 by the Minister for Labour ―to study the
implications of the payments in the case of Lister v Romford Ice and Cold Storage Co Ltd as they might
affect the relations between employers and workers.‖ The Committee noted that numbers of the British
Insurance Association had entered into ―a gentleman‘s agreement‖ stating that:
―Employers Liability Insurers agree that they will not institute a claim against the employee of
an insured employer in respect of the death or injury to a fellow employee unless the weight of
evidence clearly indicates (i) collusion, or (ii) wilful misconduct on the part of the employee
against whom a claim is made.‖
10.86 The ALRC indicated that no similar agreement existed in Australia and the ALRC cited judicial
opinion 94 which indicated that the law was in an unsatisfactory state. The Insurance Contracts Act 1984
contains three related provisions. Section 65 relates to insurers who are liable in respect of an insured
loss where an insured has not or is not reasonably likely to exercise rights of action because of a family or
other personal relationship between the insured and the third party. The section also relates to injuries
caused by a third party who has used a motor vehicle with the express or implied consent of the insured.
Section 66 applies in situations where an insured becomes liable because of conduct by an employee
88
89
90
91
92
93
94
Ibid
[1984] IR 523 at 538.
Supreme Court unreported, November 18 1992.
[1995] 2 ILRM 161 at 197.
Williams, ―Vicarious Liability and Masters Indemnity‖ (1957) 20 MLR 20.
See Gardner (1959) 22 MLR 652.
Marrapodi v Smith-Roberts (1970) 44 ALJ4.
215