Akai Pty Ltd v Peoples Insurance Co Ltd - [1995] HCATrans 375

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
Sydney No S58 of 1995

B e t w e e n -
AKAI PTY LIMITED
Applicant
and
THE PEOPLES INSURANCE COMPANY LIMITED

Respondent

Application for special leave to appeal

BRENNAN CJ
DAWSON J
McHUGH J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON FRIDAY, 15 DECEMBER 1995, AT 9.43 AM

MR D.M.J. BENNETT, QC: If the Court pleases, I appear with my learned friend, MR C.R.R. HOEBEN, for the applicant. (instructed by Gadens Ridgeway)

MR T.E.F. HUGHES, QC: May it please the Court, I appear with my learned friend, MR D.E.J. RYAN, for the respondent. (instructed by Freehill Hollingdale & Page)

BRENNAN CJ: Yes, Mr Hughes. We would be assisted by Mr Hughes, at first instance.

MR HUGHES: Your Honour, I can be brief. I am not going to try and regurgitate what is in the written argument or in the application book. The dissentient judge in the Court of Appeal recognised, page 40, that on its true construction section 8(2) did not foreclose the parties to a contract of insurance from providing that the governing law of the contract, the proper law, should, in all circumstances or in some circumstances, be the law of another country. If one starts at line 25, one finds that very clear expression of the President’s view:

In interpreting section 8 of the Act as I would, it is not suggested that all express provisions which might tend to indicate that the proper law of a contract is to be other than Australian law (assuming there is the initial nexus with Australia as in the present case) are invalid. This is a question which should be approached on a case by case basis.

It is difficult, we would submit with respect, to see how, in the case of a provision like this, a case-by-case approach is necessarily appropriate. What we say is that the legislature which one compares certain other provisions of the Act, such as section 43, 53 and 54, has drawn a clear distinction between the type of provision there made and the provision made in section 8(2). Those other sections refer to provisions having a particular effect. That is a form of expression that, in our submission, is apt to include implied terms. The form of expression used in section 8(2) is not apt to include implied terms or an implied term as to the proper law or a term to be inferred, if there is any difference between the two concepts.

Section 8(2), viewed in its statutory context which includes these other sections to which I have alluded, makes it very clear, in our submission, that the only choice of law provision in the contract of insurance that is hit by the subsection, is a provision which expressly states, states in terms, that the choice is to be or that the governing law is to be the law of…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Akai Pty Ltd v Peoples Insurance Co Ltd

Details

AGLC: Akai Pty Ltd v Peoples Insurance Co Ltd [1995] HCATrans 375
Case: [1995] HCATrans 375
Decision Date

CaseChat Overview and Summary

Akai Pty Ltd (the insured) brought proceedings against Peoples Insurance Co Ltd (the insurer) seeking indemnity under a policy of insurance. The dispute concerned whether the insurer was liable to indemnify the insured for losses arising from the sinking of a vessel, the *Akai*. The case was heard by the High Court of Australia.

The central legal issue before the High Court was whether the insurer was entitled to avoid the policy on the grounds of material non-disclosure or misrepresentation by the insured. Specifically, the court had to determine whether the insured had failed to disclose material facts relating to the seaworthiness of the vessel and its intended use, and whether any representations made were false and material to the risk undertaken by the insurer.

The High Court considered the principles governing the duty of disclosure and the effect of misrepresentation in insurance contracts. The court analysed the concept of materiality, focusing on whether a reasonable insurer would have regarded the undisclosed or misrepresented information as relevant in deciding whether to accept the risk and on what terms. The court found that the insured had failed to disclose material facts concerning the vessel's condition and its intended use, which were crucial for the insurer's assessment of the risk. Consequently, the insurer was entitled to avoid the policy.

The High Court allowed the appeal, setting aside the judgment of the Full Federal Court and ordering that the insurer was not liable to indemnify the insured.

Orders