Insurance Contracts CP - Law Reform Commission

occasioning in the course of, or arose out of, his/her employment. Sections 65 and 66 do not displace
subrogation rights if the loss was caused by conduct that was ―serious or wilful misconduct‖.
10.87 In his review of the Australian experience, Professor Rob Menkin did not really comment on
sections 65 and 66 of the 1984 Act, suggesting that these reforms have not proved controversial. 95 .
10.88 Apart from the Federal Insurance Statute, there has been some analysis of the issue of
vicarious liability, particularly in relation to the extension of liability in respect of teachers and voluntary
child supervisors. Because this is of relevance to Irish law after Moynihan v Moynihan, the Commission
will briefly examine the Queensland Report on Vicarious Liability.
(3) The Queensland Report on Vicarious Liability
(a)
Employee Liability
10.89 While the 1984 Legislation addresses the question of Lister v Romford Ice within the context of
insurance contract law, the residual question of how vicarious liability should take account of the potential
conflict of indemnity and contractual principles is a matter of state jurisdiction in Australia. The
Queensland Law Reform Commission in a 1995 Discussion Paper, 96 and a Report, 97 published in 2001,
considered the Lister decision within the context of vicarious liability and a joint tortfeasor‘s exposure to
indemnity or contributions. The Queensland Law Reform Commission saw the Rule in Lister v Romford
Ice as a mechanism whereby an employer who is vicariously liable for the tort of an employee is ―able to
shift the responsibility for paying compensation for the loss or injury resulting from the commission of the
tort to the employee‖. 98 The main objections to retention of Lister v Romford Ice were summarised thus:
―the Commission is concerned that the right of an employer to an indemnity from an employee
defeats the effect of vicarious liability in that it results in an employee becoming personally
liable for the amount awarded in damages caused by the employee‘s tortuous conduct during
the course of the employment relationship.
The continuation of the common law principle that an employer who is found to be vicariously
liable can seek an indemnity from a negligent employee is objectionable on other grounds.
These are:
that if the employee only were sued by the plaintiff, he or she might be able to benefit
from any insurance policy held by the employer on behalf of the employee; but if sued
jointly with the employer, the employee could become liable if the insurer exercises its
right of subrogation;
that the existing law is contrary to the promotion of good industrial relations and
harmony by virtue of the fact that employees are exposed to potential litigation by
employers‖
10.90 The Queensland Law Reform Commission rejected the UK ―Gentleman‘s agreement‖ solution
on the ground that it:
―could lead to uncertainty, since it relies on the good faith of insurers. It is also unsatisfactory,
and potentially unfair, in that the agreement relates only to actions brought by insurers (in the
name of an insured employer) against an employee for personal injury caused to a fellow
employee, and does not affect the question of indemnity of an employer by an employee where
an employer is uninsured or where the damage is outside the scope of the employment.‖
10.91 The Queensland Law Reform Commission recommended the statutory abrogation of Lister v
Romford Ice and that:
95
96
97
98
Reforming Insurance Law: is there a case for reverse transportation? Paragraphs 8.19 to 9.19.
Vicarious Liability (QLRC WP, July 1995).
Vicarious Liability (Report No. 56 December 2001).
Ibid at Chapter 5.2 (a)
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