CE Heath Underwriting & Insurance (Aust) Pty Ltd v Edwards Dunlop & Co Ltd [1993] HCA 21

High Court of Australia Deane, Dawson, Toohey, Gaudron and McHugh JJ. CE Heath Underwriting & Insurance (Aust) Pty Ltd v Edwards Dunlop & Co Ltd [1993] HCA 21

ORDER Appeal allowed. Set aside the judgment of the Court of Appeal of New South Wales and in lieu thereof order that the appeal to that Court be dismissed and that each party bear its own costs of that appeal. Order that the appellant pay the respondent's costs of and incidental to the appeal to this Court.

Cur. adv. vult.

The following written judgments were delivered:—

1993, March 30 Deane J.

The appellant ("the Insurer") carries on the business of an insurer. It issued a "Blanket Fidelity Policy" ("the Policy") to the respondent ("the Insured") under which it agreed to indemnify the Insured against "loss of money or other property which the Insured shall sustain through any fraudulent or dishonest act or acts committed" by employees. The first sentence of Section 1 of the Policy provided: "Loss is covered under this Policy only if discovered not later than one year from the end of the Policy Period."

The critical question on the appeal is whether, in circumstances where the policy was for an initial period of twelve months and was subsequently renewed for successive annual periods, the phrase "the Policy Period" in Section 1 should be construed as referring to the particular annual period of insurance in which a loss occurred or to the overall period in which "the Policy" remained in operation, that is to say, the total of the original annual term and of the subsequent terms for which "the Policy" was renewed. The learned trial judge (Brownie J.) and Meagher J.A., who dissented in the New South Wales Court of Appeal, preferred the construction for which the Insurer contends, namely, that the phrase "the Policy Period" refers only to the particular annual term of insurance in which a loss occurs. The majority of the Court of Appeal (Clarke J.A. and Hope A.J.A.) preferred the construction for which the Insured contends, namely, that the phrase refers to the overall period in which "the Policy" remained in operation. It can be said at once that I agree with the majority of the Court of Appeal. Accordingly, I would dismiss the appeal.