Edition 07/2001
Do
Trends in Litigation Justify The Liability Insurance Premium Increases
Being Experienced?
As
specialist sports risk managers and insurance brokers we readily
identify that many in the sport and recreation industry are feeling
the pain of increases in the cost of insurance, particularly liability
insurance. In some cases difficulty has been experienced in even
obtaining cover. This has been particularly evident since the
collapse of HIH Insurance (who wrote a considerable amount of
liability insurance), and stories of increases in liability premium as
high as 200, 300 and 400% have been mentioned. The ACCC has been
reported as calling on the insurance industry to justify such
increases.
Any such
justification will be received with interest, however a recent decision
handed down by the NSW Supreme Court does provide some insight as to
the reasons behind some insurers responding as they do to liability
risks. This is the case of Cole v Lawrence [2001] NSWSC 92
(28 February 2001).
The
facts of the case are that on 26th June 1994 at about 6.20pm. the
Plaintiff (Cole) was walking along the road when she came into
collision with a four wheel drive vehicle driven by the First
Defendant (Lawrence) and suffered injury. At the time the
Plaintiff was grossly intoxicated, her blood alcohol test carried out
after the accident resulted in a reading of .238%.
At about
9.00am. to 9.30am. on that day the Plaintiff had attended the premises
of the Second Defendant (South Tweed Heads Rugby League Football Club
Ltd) to participate in a champagne breakfast. For a time the
alcoholic beverage Spumante was freely available at no cost on a table
to which the patrons could take their glasses and replenish
them. The supply of free champagne ceased somewhere between
10.00am. and 11.00am.
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Whilst
the Plaintiff's recollection of the day was incomplete, she did
remember buying three bottles of Spumante later in the day from
the bar. It is not certain at what time the club sold the last
bottle of Spumante to the Plaintiff, but it was possibly around
12.30pm. There is no direct evidence that the club served
the Plaintiff again that day, and a bar attendant did refuse to
serve the Plaintiff sometime between 2.00pm and 3.00pm.
A
witness said that by around midday the Plaintiff was drunk, carrying
on and arguing, and her speech was a bit funny. The
Plaintiffs actions after that time included drinking from the neck
of a Spumante bottle in the vicinity of the poker machines,
dancing out in the football area with two handbags round her
chest, two cardigans in one hand and swinging a bottle around in
the other. At about 5.30pm a bar attendant described the
Plaintiff as being "very, very drunk" and told her she
would have to leave. He offered her the use of the club's
courtesy bus and driver, or alternatively a taxi. The
Plaintiff's response was verbal abuse. A member of the group
accompanying the Plaintiff told the attendant that he and others would
look after her. Within a matter of minutes the group had
gone.
Approximately
an hour later the Plaintiff was hit by the four-wheel drive. The
item of particular interest in this case is what duty of care the
South Tweed Heads Rugby League Football Club Ltd owed with regard
to the serving of alcohol to the plaintiff. Trial Judge,
Hulme, J., stated the club had a degree of control over what was
occurring at the club. Not only could it refuse to supply
alcohol to the plaintiff once she was intoxicated within the meaning
of s44 of the Registered Clubs Act, that provision placed its
employees under a duty to refuse. Furthermore, physical
damage to someone who becomes intoxicated, whether through simply
falling over, or from a complicated chain of events was certainly
foreseeable.
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