Max Hams & 1 Ors v CGU Insurance Limited [2002] NSWSC 273

Reported Decision : (2002) 12 ANZ Insurance Cases 61-525

New South Wales Supreme Court

CITATION : Max Hams & 1 Ors v CGU Insurance Limited [2002] NSWSC 273 FILE NUMBER(S) : SC 50022/01 HEARING DATE(S) : 18/03/02, 19/03/02, 20/03/02, 21/02/03, 22/03/02, 25/03/02, 26/03/02, 27/03/02, JUDGMENT DATE : 12 April 2002

Max Hams (Plaintiff) PARTIES : Judith Hams (Plaintiff) CGU Insurance Limited (Defendant) JUDGMENT OF : Einstein J

Mr M Cashion SC, Mr RG Forster SC, Mr J Lawrence (Plaintiffs) COUNSEL : Mr PW Taylor SC, Mr RA Cavanagh (Defendant) Mr SD Rares SC, Mr J Stoljar, Ms T Catanzariti (Australian Security and Investments Commission as amicus curiae) Maurice Blackburn Cashman (Plaintiffs) SOLICITORS : Deacons (Defendant) Australian Security and Investments Commission (as amicus curiae) CATCHWORDS : Insurance - Policies - Contract of Insurance - Indemnity under insurance policy - Damage caused by inundation of water - Whether inundation constituted a 'flood' within the terms of the policy - Policy excluded cover for 'flood' where: "Flood means inundation following the escape of water from the normal confines of any lake, reservoir, dam, river, creek or navigable canal, as the result of a natural phenomenon which has some element of violence, suddenness or largeness about it but does not mean inundation by water from fixed apparatus, fixed tanks, fixed pipes or run-off of surface water from surrounding areas" - Expert hydrological evidence - Meaning of the word 'lake' - Proximate cause - Wayne Tank principle: If a loss has two or more proximate or effective causes and at least one cause is excluded from cover, the insurer is not liable - Insurance Contracts Act 1984 (Cth) [ICA] - Proper construction of the words "clearly informed the insured in writing (whether by providing the insured with a document containing the provisions, or the relevant provisions, of the proposed contract or otherwise)" - What must an insurer do to clearly inform the insured in writing of the provisions of the insurance contract within the meaning of s 35(2) of the ICA - Whether the test is whether in all the circumstances the insurer has clearly informed the insured of the relevant provision, such that the mere provision of a document containing the relevant provisions is insufficient to discharge the insurer's obligation if the supply of that document did not of itself clearly inform the insured of his or her obligations - Whether the requirement on the insurer under s35(2) is satisfied in every case by the supply to the insured of a document containing the relevant provisions, as may be suggested by the words in parentheses immediately following the words "clearly informed the insured in writing" in s35(2) - What is the operation and effect of s 35 of the ICA in circumstances in which the damage was caused by a number of proximate causes, one of which was excluded from cover - Holding that: (1) The words in parentheses in section 35 (2) "whether by providing the insured with a document containing the provisions, or the relevant provisions, of the proposed contract or otherwise" are likely in most circumstances to result in the provision of such a document in and of itself satisfying the requirement to clearly inform - (2) There may however be special circumstances in which the complexity of or confusions within the document containing the relevant provisions (which one would expect would usually be the Insurance Policy itself) could be such that the mere provision of the Policy did not establish that the insurer had effectively informed the insured of relevant limitations Crown Lands Act 1989 (NSW) Insurance Contracts Act 1984 Insurance Contracts Regulations 1985 Native Vegetation Conservation Act 1997 (NSW) LEGISLATION CITED : Soil Conservation Act 1938 (NSW) South Eastern Water Conservation and Drainage Act 1992 (SA) Statute Law (Miscellaneous Provisions) Act (No.1) 1985 No.65 (Cth) Statute Law (Miscellaneous Provisions) Act (No. 2) 1985 No. 193 (Cth) Water Conservation Act 1936 (SA) Water Resources Act 1989 (Qld) City Centre Cold Store Pty Limited & Anor v Preservatrice Scandia Insurance Limited (1985) 3 NSWLR 739 Dodson v Grew (1767) Wilm 272 Re Bolton; ex parte Beane (1987) 162 CLR 514 Fell v Fell (1922) 31 CLR 268 GIO General Limited v Wallace [2001] NSWCA 299 Guardian Assurance Co Ltd v Underwood Constructions Pty Ltd (1974) 48 ALJR 307 HIH Casualty & General Insurance Ltd v Waterwell Shipping Inc (1998) 43 NSWLR 601 House of Peace Pty Ltd v Bankstown City Council (2000) 48 NSWLR 498 Jordan v De George 341 US 223 (1951) Keener v Sharp 95 S.W. (2d) 648 CASES CITED : K Sika Plastics Limited v Cornhill Insurance Co Limited [1982] 2 NZLR 50 Leyland Shipping Co Ltd v Norwich Union Fire Insurance Society Ltd [1918] AC 350 Life Insurance Company of Australia Ltd v Phillips (1925) 36 CLR 60 Lumley General Insurance Limited v Delphin (1990) 6 ANZ Ins Cases 60-986 National & General Insurance Co Limited v Chick [1984] 2 NSWLR 86 Oakleaf v Home Insurance Ltd (1958) 14 DLR (2d) 535 Petersen v Union des Assurances de Paris IARD (1995) 8 ANZ Ins Cases 61-244, Petersen v Union des Assurances de Paris IARD (1997) 9 ANZ Ins Cases 61-366 Provincial Assurance Australia Pty Limited v Consolidated Wood Products Pty Limited (1991) 25 NSWLR 541 State Chamber of Commerce and Industry v Commonwealth (1987) 163 CLR 329 Suncorp General Insurance Limited v Cheihk [1999] NSWCA 238 Wayne Tank and Pump Co Ltd v Employers Liability Assurance Corporation Ltd [1974] QB 57 DECISION : The claim to indemnity with respect to the Homestead is made out. The claim to indemnity with respect to the hangar is not made out. The proper construction of section 35 of the Insurance Contracts Act 1984 (Cth) is dealt with. The parties are granted leave to address further submissions on any claim or matter arising from the above findings which may not have been dealt with. Subject to that, short minutes are to be brought in by the plaintiffs.