Derrington – The Law of Liability Insurance, 3rd Edition – heavy but worthwhile reading
(This book was reviewed by Steve Keall, Consultant, McElroys)
A contract of liability insurance is a promise to the insured to provide cover by way of indemnity to the insured against the insured’s own loss because of his or her liability to a third party. If you keep double-clicking this basic proposition, you end up with a textbook, specifically the new third edition of The Law of Liability Insurance, a two volume work that apparently weighs more than some bicycles. It is a “must have” for any practitioner serious about practising in the area of liability insurance. Despite ostensibly being a specialist text, it also provides a useful general resource on the principles of insurance law.
The Law of Liability Insurance, or “Derrington” as it is more affectionately known, is the trusted handbook for any New Zealand practitioner delving into the subject of liability insurance. Emphasis is properly placed on the word “delve” when used in connection with the recently published third edition, because the act of physically diving into the work, or crouching behind it to avoid a colleague, is not completely beyond the realms of imagination. If size truly does make one great, then it should be noted that its 3437 pages trump McElroys’ copy of the authorised King James Version of the Holy Bible (both testaments, 1400 pages) and Leo Tolstoy’s epic novel of Napoleonic Russia, War and Peace (New American Library version, 1440 pages) put together. Asked to guess the weight of the two volumes*, a colleague volunteered “more than my bicycle” (a fancy carbon frame number, granted) and another, perhaps less familiar than others with weights and measures, volunteered “thirty kilograms”. All of this is intended to raise a serious point about how information is best presented, and how technology can lend a hand. More about this later.
The Law of Liability Insurance, first published in 1990 and then again in 2005, was officially launched as a third edition in Brisbane on 20 November this year. The publishing information states that the recommended retail price for the hard copy book alone is AU$395, which if you think about in terms of a per word basis may make it one of the best value legal works ever produced.
The authors remind us that until about 1880, with the exception of marine insurance, liability insurance was considered to be against public policy and therefore legally of no effect. It was believed to remove the perceived deterrent to being negligent created by the possibility of loss through liability to a claimant. Thinking about this topic evolved. Ever since, the growth of liability insurance seems to have tracked the growth of the law of common law negligence. The authors note that after a rash of poisoning from cockroach poison in England, poison insurance for piemakers gained currency in the 1890s. Cover of this general kind gained increasing popularity “when snails were alleged to have a propensity to find their way into stone bottles of ginger beer, for which the manufacturer would be liable to any ultimate customer who might become shocked on this discovery”.
The Law of Liability Insurance is an Australian text produced by two Australian authors. It therefore has, without any embarrassment, a dominant Australian flavour, constructed within a framework of historic and modern English cases. This approach should not cause any difficulty for the New Zealand practitioner, who, fresh from reading the newly minted Trans-Tasman Proceedings Act 2010, will appreciate that a “blended” understanding towards many of the legal principles is helpful and in any event inescapable. The authors deliver a text that will no doubt happily sit on the shelves of Australian, New Zealand and indeed English law firms as a comprehensive survey of the legal principles in this area.
The authors also promise, and deliver, material from America, regarding which they say with characteristic flourish: “it is a crop too rich to be ignored, even though it be necessary to sort the grain out from the weeds”. The abundant use of American authorities complements and enhances the usual suspects of English, Australian and New Zealand cases. An example is the reference in the United States to the principle that “the proper focus regarding issues of coverage under insurance contracts is the reasonable expectation of the insured”. This is an approach which has been disavowed in English cases: see Smith Tak Offshore Services v Youell & Ors  1 Lloyd’s Law Reports 154.
The Law of Liability Insurance is not just about liability insurance. It contains a detailed and useful survey of basic insurance principles in chapters two, three and four: The Contract of Insurance, Construction (i.e., interpretation) and Utmost Good Faith and Disclosure which finishes on page 686. If you make it this far and read no further, you will have achieved a very good grounding in a lot of the basics. In this section, we are reminded of the nature of insurance. It is a contract where the insurer contracts to indemnify the insured upon determinable contingencies. It is a loss distribution mechanism where the parties wager against the occurrence of a particular event (including a claim). The insurer insures risks, not certainties. It is a commercial contract, but “with its own special baggage that often defies the application of pedestrian commercial law principles.”
A text book of three and half thousand pages raises the question of whether it is useful for it to have a “physical” form at all. On initial publication, the publisher made available to firms a garden-variety PDF of the text, which, due to its length, was just as unmanageable, because it took an age for anything to happen. It has since been subject to the rigours of conventional e-publishing, and will be available to firms as an e-book (or “Practitioner’s Book Online” (PBO)) within the publisher’s conventional on-line offering early next year. The PBO made available for this review was as ergonomic as any other and also presented a welcome respite to clinging to the physical volumes on the number 274 bus down
Mt Eden Road.
More generally, the publisher, along with others no doubt, is looking at forms of “e-lending.” This is an intriguing idea, according to which a firm would have a licence to the e-book, and “lend” virtual copies of the book out to staff in accordance with its licence, who may each record their own individual annotations, which are then stored in the cloud. So, it seems that the future is – almost – here. In five years’ time all legal reading and research will be conducted from tablets, which, one should think, may be carried out comfortably on the bus- and even on a bicycle, with an appropriate level of care, and with suitable insurance in place.
* Weight: approximately 4.9 kilograms, both volumes, measured unscientifically on the uncalibrated Keall family bathroom scales.
The Law of Liability Insurance, 3rd Edition - Volumes 1 and 2
Authors: D Derrington, R Ashton
Published: October, 2013
- Comprehensive two volume set
- Detailed reference to authorities on subjects discussed, with commentary on their relevance and validity
- References to articles by learned authors on specific issues