BCC Trade Credit Pty Ltd v Thera Agri Capital No 2 Pty Ltd

BCC Trade Credit Pty Ltd appealed to the Court of Appeal of New South Wales against a decision of the primary judge who found that Thera Agri Capital No 2 Pty Ltd was entitled to an indemnity under a trade credit insurance policy issued by BCC Trade Credit. The dispute concerned whether a failure by a third party and its guarantor to honour a "Debt Obligation" under a Murabaha finance agreement constituted an "insured risk" under the policy.

The Court of Appeal was required to determine whether the primary judge had erred in construing the insurance policy and in finding that the non-compliance with the Murabaha finance agreement triggered coverage under the policy. Specifically, the court had to consider whether the event that occurred fell within the definition of an "insured risk" as contemplated by the policy.

The Court of Appeal upheld the primary judge's decision, finding that the policy did indeed cover the non-honouring of the Debt Obligation by the third party and its guarantor. The court reasoned that the policy was intended to insure against the risk of such defaults occurring within the context of the specified finance agreement. The appeal was therefore dismissed with costs.