On 27 February 2020, the Supreme Court of New South Wales handed down its decision in Wigge v Allianz Australia Insurance Ltd [2020] NSWSC 150, in which leave was granted for the plaintiff to continue proceedings against a public liability insurer. The case highlights the difficulty for insurers to strike out such proceedings unless it can clearly show that the policy does not respond to the claim.
Briefly, the plaintiff had attended a yoga teacher training course at Kangaroo Valley ran by KMYOGA (Holdings) Pty Ltd (‘KMY’). During the course, the plaintiff took part in an exercise entitled the “Circle of Trust” that required participants to stand in a circle and “catch” a designated participant who had allowed themselves to “fall”. When the plaintiff fell, the other participants did not catch her and she fell to the floor suffering a fracture to her thoracic spine.
Proceedings were commenced against KMY on 13 June 2017 however on 16 March 2018, KMY deregistered. The plaintiff then joined the insurer, Allianz Australia Insurance Limited (“Allianz”), in place of KMY as the first defendant under section 4 of the Civil Liability (Third Party Claims against Insurers) Act 2017 (NSW) (“the Act”). Allianz objected to its joinder and filed a Notice of Motion to strike out the Amended Statement of Claim. In response, the plaintiff filed a Notice of Motion for leave under section 5 of the Act to continue the proceedings. It was common ground that Allianz had to prove that the policy did not respond to the claim.
In refusing the strike out application, her Honour quoted from Murphy, McCarthy & Associates Pty Ltd v Zurich Australian Insurance Ltd [2018] NSWSC 627, in which Hammerschlag J had said that the purpose of section 5(4) of the Act was to “insulate insurers from exposure to untenable claims. The discretion to give leave to bring such a claim is to be exercised with this in mind”.
Her Honour also outlined why the Allianz policy responded in principle to the claim before considering whether clause 13 excluded the claim from cover. That clause excluded “sport exercise or activity” and Allianz argued that “yoga” fell within that definition and was thereby not covered by the policy. The plaintiff argued that whilst some aspects of “yoga” involved physical activity, other forms may be purely meditative and fall outside the clause 13 definition. The plaintiff also submitted that a decision should not be made without relevant evidence and that such evidence would be available to the trial judge.
The Court found that Allianz’s right to disclaim liability under the policy was not unarguable but that it had not shown that the claim on the policy was untenable.
This case shows that the Court is unlikely to strike out proceedings against an insurer where it is arguable that the policy responds to the particular claim. That said, this decision and the comments by Hammerschlag J in Murphy appear to indicate that insurers would be able to strike out proceedings, where an entitlement to deny or disclaim liability under the policy, was sufficiently clear.
