In Wigge v Allianz Australia Insurance Ltd [2020] NSWSC 150, the NSW Supreme Court granted leave to a plaintiff to pursue proceedings against a public liability insurer, Allianz. The key issue was whether Allianz could disclaim liability for its insured pursuant to section 5 of the Civil Liability (Third Party Claims Against Insurers) Act 2017 (NSW) (“Act“).

Background

On 13 June 2017, Dr Susanne Wigge commenced proceedings in the District Court of NSW relating to an injury she had sustained during a yoga class in or around 2014. The proceedings were commenced against KMYOGA (Holdings) Pty Ltd (“First Defendant”) and Kathryn McCusker (“Second Defendant”).

In March 2018, the First Defendant was deregistered and Dr Wigge was unable to pursue her claim against it. Consequently, Dr Wigge filed an Amended Statement of Claim substituting the First Defendant with Allianz Australia Insurance Limited (“Allianz”), being the insurer of the First Defendant.

Allianz objected to being added as a defendant to the proceedings on the basis that, amongst other things, it wasn’t required to indemnify the First Defendant against Dr Wigge’s claim.

Decision

The main question before the Court was whether the contract for insurance between the First Defendant and Allianz would cover the First Defendant for the loss suffered by Dr Wigge.

The Court said that leave to proceed against an insurer pursuant to section 5(4) of the Act would not be granted if the insurer can establish that it is entitled to disclaim liability under the contract for insurance. The Court commented that the section was designed 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.”

In its attempt to disclaim liability, Allianz relied on an exclusion clause in its policy which provided that cover would not extend to damages arising from at ‘sport exercise or activity’.

Dr Wigge argued that although yoga involved physical activity, it was not a sport, exercise or activity but was ‘meditative’ and, therefore, not subject to the exclusion clause.

The Court determined that, based on Dr Wigge’s argument, Allianz was not able establish that it could disclaim liability under the First Defendant’s insurance contract.

The Court granted Dr Wigge leave to proceed against Allianz.

Implications

This decision illustrates that the Court may allow a plaintiff to proceed against a defendant’s insurer in a wide range of circumstances, and that it may not be straightforward for insurers to disclaim liability .