Alexander Stenhouse Limited v Austcan Investments Pty Limited

Alexander Stenhouse Limited appealed to the High Court of Australia against a decision of the Full Court concerning an insurance policy. The dispute arose from a fire that damaged the insured premises on 16 January 1986. The insurance policy had been initially taken out in 1984, renewed out of time in February 1985, and then renewed again on 21 January 1986 with effect backdated to 23 November 1985. The insurer, Sun Alliance Insurance, sought to avoid the policy due to an alleged alteration in the use of the premises and a failure to disclose this change.

The central legal issue before the High Court was whether the relevant contract of insurance for the purposes of the Insurance Contracts Act 1984 (Cth) and the policy's terms was the original contract entered into in 1984 or the renewal effected on 21 January 1986. This determination was critical to whether the insurer could rely on a condition in the policy regarding alterations to the trade or manufacture carried on at the premises, and potentially section 28 of the Act concerning non-disclosure.

The Full Court had held that the original entry into the contract in 1984 was the relevant date. However, the High Court, in considering the appellant's submissions, noted the difficulty created by section 11(9) of the Insurance Contracts Act, which treats renewal as included in a reference to entry into the contract. The Chief Justice, in particular, expressed disagreement with the Full Court's view, indicating that the duty of disclosure under section 28, which is imposed by section 21, relates to the duty at the time of entry into the contract. The court was therefore required to consider the interplay between the policy's renewal date, the commencement of the Act, and the timing of the alleged alteration in use and non-disclosure.