Where there are a number of reasons of why an insured is responsible for a particular loss and that insured’s policy covers some reasons but excludes others, the policy does not respond at all. 
In the recent decision of Central Australian Aboriginal Congress Inc v CGU Insurance, the Northern Territory Court of Appeal considered the application of that principle in the context of the tragic death of a young man.
The Central Australian Aboriginal Congress Inc provided a wide range of health and medical services to its members.
In March 2000, one of its members, Mr Impu, presented himself to one of the visiting medical physicians employed by the Congress. After a thorough examination, the medical practitioner diagnosed Mr Impu with a potentially serious heart problem and recommended that a particular course of action be followed. Mr Impu, for one reason or another, failed to follow that recommendation.
Mr Impu attended the Congress a number of times over the next few months in relation to other complaints unrelated to his heart. Throughout that period, administrative errors prevented the Congress from following up the initial diagnosis and recommended treatment or otherwise speaking to Mr Impu about those matters.
In the following January, Mr Impu attended the Congress complaining about pain in his heart. He was given some tablets and turned away. No reference was made to the diagnosis.
Later that day he died of heart failure.
His widow brought proceedings against the Congress and two of its visiting medical physicians who had seen Mr Impu. The proceedings against the medical physicians were either settled or determined in their favour. The trial judge however found that the Congress had breached its non-delegable duty of care to Mr Impu and awarded nearly $500,000 in damages in the widow’s favour. That claim was then reduced on account of Mr Impu’s contributory negligence.
The Congress sought indemnity in relation to those damages from its professional indemnity insurer. Its policy covered breaches arising out of the provision of professional services by the Congress but not breaches by any medical practitioners.
The trial judge rejected the Congress’ claim for indemnity because it flowed from various allegations including allegations that doctors employed by the Congress had contributed to Mr Impu’s death and, as the policy specifically excluded claims against medical practitioners, the principle applied to exclude the entire claim.
The Congress appealed against that decision.
The Decision of the Court of Appeal
The majority of the Court of Appeal accepted that however they might be expressed, those provisions concerning claims against medical practitioners were exclusions.
Even so, the claim which had been brought against the Congress was not nor did it involve a claim against the medical practitioners. It was a claim against the Congress that it failed to administer properly the services provided to Mr Impu. In fact it was noted that the trial judge had not made a finding of any negligence by the medical practitioners in terms of the advice which they had given to Mr Impu in the course of his visits to the Congress. The problem was that suitable administrative guidelines had not been set up or observed to ensure that a proper service was provided to Mr Impu.
The outcome therefore was that none of the exclusions came into play in this matter therefore the principle, as applied at first instance, was not applicable.
The Court of Appeal unanimously held that the appeal should be allowed and judgment in the appellant’s favour against the insurer entered.
The principle remains firmly the law both overseas and here in Australia. However it does require careful application particularly bearing in mind the consequences that can flow from its application.
The Court of Appeal’s point is that the structure of the claim made in this particular matter did not trigger the relevant provisions of the policy to warrant the application of that principle in a way that was contrary to the interests of the insured.
Phone: + 61 2 9228 9332
Click here to view a PDF version of this CaseFlash.
 See Wayne Tank and Pump Co Ltd v Employers Liability Assurance Corporation Ltd  QB 57
To see the contact details of the entire TressCox Insurance Services Team please click here.