Hammer Waste Pty Ltd v QBE Mercantile Mutual Ltd & Anor [2002] NSWSC 1006

Reported Decision : (2003) 12 ANZ Insurance Cases 61-553

New South Wales Supreme Court

CITATION : Hammer Waste Pty Ltd v QBE Mercantile Mutual Ltd & Anor [2002] NSWSC 1006 CURRENT JURISDICTION: Equity FILE NUMBER(S) : SC 2810/02 HEARING DATE(S) : 9 to 11 October, 2002 JUDGMENT DATE : 29 October 2002

Hammer Waste Pty Ltd - Plaintiff PARTIES : QBE Mercantile Mutual Limited - First Defendant OAMPS Insurance Brokers Limited - Second Defendant JUDGMENT OF : Palmer J

A.F. Fernon - Plaintiff COUNSEL : T.D. Castle - First Defendant M.S.M. White - Second Defendant Ron Kramer Associates - Plaintiff SOLICITORS : PricewaterhouseCoopers Legal - First Defendant Phillips Fox - Second Defendant CATCHWORDS : INSURANCE - CONSTRUCTION - AMBIGUITY - IMPLIED TERM - Whether liability under insurance policy excluded upon true construction of ambiguous words in excess clause - whether liability excluded by implication of term. HELD: Liability not excluded except by clear express terms - contra proferentem rule to be strongly applied against insurers who take advantage of ambiguous words and implied terms to deny liability - principles discussed - no implied term because contrary to express term. INSURANCE - GOOD FAITH - whether insurer acting in good faith in taking such points - INSURANCE - DUTY OF DISCLOSURE - "MATTER KNOWN" - Insured does not know matter requiring disclosure because insured's agent forgets to inform insured of relevant fact - agent not conscious that it has forgotten to inform insured - whether agent "knows" matter relevant to insurer's decision - what is meant by "matter known" for purposes of s.21(1) Insurance Contracts Act (Cth). SUBROGATION - Whether insurer entitled to declarations as to enforcement of rights of subrogation before insurer has paid out in full its liability under the insurance policy. EQUITY MAXIMS - Maxim "equity regards as done that which ought to be done" explained. INDEMNITY COSTS - Whether insurer who relies upon ambiguous words and implied terms in its insurance policy in order to deny liability is acting in good faith - whether indemnity costs against unsuccessful insurer in such circumstances is appropriate. LEGISLATION CITED : Insurance Contracts Act 1984 (Cth) - s.13, s.21, s.28 Marine Insurance Act 1909 (Cth) - s.24 - Anderson v Fitzgerald (1853) 4 HL Cas 484; 10 ER 551 - Australian Casualty & Life Ltd v Hall (1999) 151 FLR 360 - Ayoub v Lombard Insurance Co (Aust) Pty Ltd (1989) 5 ANZ Ins Cas 60-933, 97 FLR 284 - Burke v LFOT Pty Ltd (2002) 187 ALR 612 - Commercial Union Assurance Co of Australia Ltd v Beard (1999) 47 NSWLR 735 - Etherington & Lancashire & Yorkshire Accident Insurance Co, In re [1909] 1 KB 591 - Fowkes v Manchester & London Assurance Association (1863) 3 B&S 917; 122 ER 343 CASES CITED : - Halford v Price (1960) 105 CLR 23 - Lindsay and Ors v CIC Insurance Ltd (1989) 16 NSWLR 673 - Maye v Colonial Mutual Life Assurance Society Ltd (1924) 35 CLR 14 - Permanent Trustee Australia v FAI General Insurance Co Ltd (1998) 44 NSWLR 186; (2001) 50 NSWLR 679 - Provincial Insurance Co Ltd v Morgan [1933] AC 240 - Santos Ltd v American Home Assurance Co (1986) 4 ANZ Ins Cas 60-795 - State Government Insurance Office (Qld) v Brisbane Stevedoring Pty Ltd (1969) 123 CLR 228 - Woolfall & Rimmer Ltd v Moyle [1942] 1 KB 66 - Meagher, Gummow & Lehane "Equity: Doctrines and Remedies" (3rd Ed) DECISION : Plaintiff entitled to declarations against First Defendant as sought; First Defendant's Cross Claim against Second Defendant dismissed.