Being young and care free sometimes has its consequences, as a young 18 year old found out in this case. Nathan Whittington was water skiing with his friends Todd and Scott Smeaton at the Ross River reserve, near Townsville QLD. The three headed out on Todd’s jet-ski, with Ross driving and Nathan spotting. Ross didn’t have a QLD marine license but did have a NSW boating licence. He also held marine insurance with Allianz for the use of the ski. Nathan had been out on a boat two times prior to this day. Apart from this, Nathan had very little boating experience and had never been on a Jet Ski or water skiing. With such limited experience Ross gave Nathan some instructions including to let the driver know if the skier fell off and if the towrope was not in use to pull it so it didn’t get caught in the Jet Ski’s propeller. Off the three went, with Todd skiing behind.
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The brothers initially argued that it was a dangerous recreational activity (a recreational activity where one may be injured) and that injury was an obvious risk. The Court did not accept this as the Judge found that a person in Nathan’s position, riding the Jet Ski was not an activity with a significant risk of harm. The insurer argued they were not liable under the policy because the driver did not have a QLD licence to drive the ski. The policy did have an exclusion clause stating that the policy did not cover accidents where the ski was being used by an unlicensed person. Despite this, the Court found that the Insurance Contracts Act meant that the Insurer could not refuse to pay the insurance claim. This was because it was able to be proven that him being unlicensed was not related to the loss suffered by the Plaintiff. He had previously obtained a NSW boating licence and had ridden the ski hundreds of times. The Insurer argued that had he taken the training course required when obtaining a QLD licence the accident was unlikely to have occurred. The Judge disagreed and said that obtaining a QLD licence would have made no difference given his experience and NSW boating licence. The Insurer was ordered to pay damages of $800,000 with the majority of this being for economic loss and his impairment to his ability to work.
MCW Legal's Opinion
We agree with the Judge’s interpretation of the legislation in this case. This legislation is in place for these circumstances where an insurer denies paying settlement on technical grounds and was correctly used in this case. Had he not held a NSW boating licence or had experience on a jet ski then the result would have been very different.
There are a number of consequences arising from this case. It highlights that serious accidents on water are more common than people think and it is important to have appropriate insurance. It also highlights that insurers can’t just deny liability on a technicality, which is a win for policy holders. It’s also a reminder that people should be aware of their policies of insurance and know exactly what they are covered for.
Written by Mitch Herlihy | Associate