Distillers Co Bio-Chemicals (Aust) Pty Ltd v Ajax Insurance Co Ltd [1974] HCA 3

High Court of Australia Menzies, Gibbs and Stephen JJ. Distillers Co Bio-Chemicals (Aust) Pty Ltd v Ajax Insurance Co Ltd [1974] HCA 3

ORDER Order of the Supreme Court of New South Wales varied by omitting the second declaration therein contained and substituting therefor a declaration that:Upon the true construction of the said policy the making by the plaintiff of any admission, offer, promise or payment in the actions referred to in the summons filed herein would constitute a breach of condition 2 (a) of the said policy notwithstanding that the defendant has elected not to take over and conduct the defence or settlement thereof. Otherwise appeal dismissed with costs.

Cur. adv. vult.

The following written judgments were delivered:—

1974, Feb. 13 Menzies J.

Upon this appeal from the declaratory orders made by Helsham J. in the Supreme Court of New South Wales, the appellant challenges in two respects his Honour's construction of an insurance policy issued by the respondent to the appellant. In the policy the insured's business is described as "Chemists and Druggists (Wholesale)". The sum insured is stated to be £50,000 ($100,000). The policy is called a "Public Risk Policy". It contains a number of exclusions from liability including (j) as follows:

Claims arising directly or indirectly out of or caused by or in connection with goods sold, supplied or delivered or goods upon which repairs adjustments or work has been carried out or directed to be carried out, after such goods have passed from the actual physical custody of the Insured or of any person in the direct service of the Insured. There is, however, an indorsement forming part of the policy which, so far as is relevant, is as follows: Notwithstanding Exclusion (j) of the within Policy it is hereby expressly declared and agreed that this Policy shall extend to indemnify the Insured in respect of all sums for which he shall become legally liable arising out of death, illness or bodily injury to any person occasioned during the continuance of this Policy by negligence or by breach of any condition or warranty as to absence of vice implied by law or which would in the absence of express agreement be implied by law in connection with goods sold, supplied or delivered by the Insured, his servants or agents during any period of insurance hereunder whether such goods were manufactured by the Insured or not and whether such condition or warranty is also expressed or not This indemnity, however, is subject to a number of limitations, including the following proviso: Provided further that the total liability of the Company under this endorsement for all compensation payable