Carling v CGU Insurance [1999] NSWSC 1043

Reported Decision : (2000) 11 ANZ Insurance Cases 61-463

New South Wales Supreme Court CITATION : Carling v CGU Insurance [1999] NSWSC 1043 CURRENT JURISDICTION : Equity Division Commercial List FILE NUMBER(S) : 50042/99 HEARING DATE(S) : 14.10.99, 15.10.99 JUDGMENT DATE : 22 October 1999

PARTIES : Andrew McGregor Carling v CGU Insurance JUDGMENT OF : Hunter J

COUNSEL : Plaintiff: Mr D Higgs SC Mr W P Kearns Defendant: Mr D Davies SC Ms M Painter SOLICITORS : Plaintiff: Connery & Partners Defendant: Phillips Fox CATCHWORDS : Insurance - Boat Policy - material non-disclosure - extended dryland slipping of pleasure vessel for repair & renovation - knowledge of insurer - Insurance Contracts Act 1984 (Cth), s.21(2)(c). ACTS CITED : Insurance Contracts Act 1984 (Cth) DECISION : The material matters had been disclosed to the insurer. Alternatively they were matters known or in the ordinary course of the insurer's business ought to have been known by the insurer. Declaration that insurer obliged to indemnify insured under public liability section of policy.

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION COMMERCIAL LIST

HUNTER J

FRIDAY 22 October 1999

50042/99 ANDREW MCGREGOR CARLING v CGU INSURANCE

REASONS FOR JUDGMENT 1 The plaintiff is an architectural draftsman and landscape draftsman who at the age of 31 years purchased a paddlesteamer called the "Lady of Barmah". That was in September 1993. The steamer was purchased for approximately $25,000. Prior to purchase it was inspected by a local shipwright, found to be sound, and, according to the plaintiff, it was seaworthy and in fair condition. Although by design a paddlesteamer, it was in fact powered by a diesel engine. The vessel was purchased by the plaintiff for family recreation. At the time of purchase it was located at Barmah on the Murray River, some 60 kms downstream from Moama, a twin city of Echuca, which is situated across the Murray from Moama. Shortly after purchase the vessel was taken under its own power to Moama in the vicinity of the residence of the plaintiff's parents. 2 From the outset of the plaintiff's ownership of the vessel it was insured under a "Boat Insurance Policy" (the policy) with the defendant (the insurer). The policy was effected through the agency of a broker, Wayne Hildebrand (Hildebrand), a principal of Insurance House Pty Limited (the broker) of Echuca. The plaintiff's father had signed the insurance proposal on behalf of the plaintiff, the period of insurance being 21 September 1993 to 30 September 1994, the policy issuing on 8 December 1993. 3 The vessel sank at its mooring on 12 December 1993 as a result of the hull "becoming snagged" on a submerged tree causing it to take on water. Photographs (Exhibit 2) depict the sorry state of the vessel prior to its refloating and graphically depict the entanglement of the vessel with the submerged tree. It was the evidence of Hildebrand that the sinking of the vessel received wide publicity in the print media circulating in the district. At the time the plaintiff encountered considerable difficulty in refloating the vessel without further damaging it in the process as there was a real risk of the vessel breaking up if the salvage was not carried out correctly. 4 As a result of this experience the plaintiff, installed two pumps with float switches aimed at preventing a re-occurrence. The vessel was not refloated until 31 January 1994. It sank again on 28 April 1994 when the pumps that the plaintiff had installed failed. It was refloated on 30 April 1994. Although the insurer has raised an issue of the unseaworthiness of the vessel, no reliance is placed upon the sinkings of the vessel in support of that allegation. 5 Following the second sinking the vessel was towed and slipped on the banks of the Murray at a point across the river where it is surrounded by the township of Echuca. The plaintiff made a claim under the policy for the damage sustained to the vessel as a result of the sinkings and that claim was eventually satisfied by a payment by the insurer to the plaintiff of $9,500 on 21 March 1995. 6 In the meantime, the policy had been renewed for a period of twelve months from 30 September 1994 pursuant to a renewal invitation and renewal schedule submitted to the plaintiff by the insurer on 29 August 1994. However the total sum insured in respect of the vessel was reduced from $30,000 to $20,000. The renewal did not issue until 23 February 1995. I infer from the evidence of Hildebrand that he had to press the plaintiff to effect a renewal to which the plaintiff agreed but at the reduced cover of $20,000. There was a further renewal of the policy issued pursuant to a renewal invitation of the insurer issued on 21 August 1995: the renewal issuing on 20 October 1995 for the period of twelve months from 30 September 1995. On 4 March 1996 Brendon John Loftus (Loftus) suffered serious injuries when he fell to the ground from the vessel whilst engaged in restoration work on the vessel for the plaintiff (the Loftus accident). Loftus has brought proceedings against the plaintiff claiming substantial damages for personal injuries suffered in the accident. The plaintiff has sought indemnification from the insurer in respect of that claim under the public liability cover of the policy. The insurer has declined to indemnify the plaintiff on the following grounds: "8A. Further, the Defendant says: