Carling v CGU Insurance

[1999] NSWSC 1043

Reported Decision: (2000) 11 ANZ Insurance Cases 61-463

New South Wales

Supreme Court

CITATION:	Carling v CGU Insurance [1999] NSWSC 1043
CURRENT JURISDICTION:	Equity Division Commercial List
FILE NUMBER(S):	50042/99
HEARING DATE(S):	14.10.99, 15.10.99
JUDGMENT DATE:	22 October 1999
PARTIES :	Andrew McGregor Carling v CGU Insurance
JUDGMENT OF:	Hunter J

COUNSEL :	Plaintiff: Mr D Higgs SC Mr W P Kearns Defendant: Mr D Davies SC Ms M Painter
SOLICITORS:	Plaintiff: Connery & Partners Defendant: Phillips Fox
CATCHWORDS:	Insurance - Boat Policy - material non-disclosure - extended dryland slipping of pleasure vessel for repair & renovation - knowledge of insurer - Insurance Contracts Act 1984 (Cth), s.21(2)(c).
ACTS CITED:	Insurance Contracts Act 1984 (Cth)
DECISION:	The material matters had been disclosed to the insurer. Alternatively they were matters known or in the ordinary course of the insurer's business ought to have been known by the insurer. Declaration that insurer obliged to indemnify insured under public liability section of policy.

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
COMMERCIAL LIST

HUNTER J

FRIDAY 22 October 1999

50042/99 ANDREW MCGREGOR CARLING v CGU INSURANCE

REASONS FOR JUDGMENT

1    The plaintiff is an architectural draftsman and landscape draftsman who at the age of 31 years purchased a paddlesteamer called the “Lady of Barmah”. That was in September 1993. The steamer was purchased for approximately $25,000. Prior to purchase it was inspected by a local shipwright, found to be sound, and, according to the plaintiff, it was seaworthy and in fair condition. Although by design a paddlesteamer, it was in fact powered by a diesel engine. The vessel was purchased by the plaintiff for family recreation. At the time of purchase it was located at Barmah on the Murray River, some 60 kms downstream from Moama, a twin city of Echuca, which is situated across the Murray from Moama. Shortly after purchase the vessel was taken under its own power to Moama in the vicinity of the residence of the plaintiff’s parents. 2    From the outset of the plaintiff’s ownership of the vessel it was insured under a “Boat Insurance Policy” (the policy) with the defendant (the insurer). The policy was effected through the agency of a broker, Wayne Hildebrand (Hildebrand), a principal of Insurance House Pty Limited (the broker) of Echuca. The plaintiff’s father had signed the insurance proposal on behalf of the plaintiff, the period of insurance being 21 September 1993 to 30 September 1994, the policy issuing on 8 December 1993. 3    The vessel sank at its mooring on 12 December 1993 as a result of the hull “becoming snagged” on a submerged tree causing it to take on water. Photographs (Exhibit 2) depict the sorry state of the vessel prior to its refloating and graphically depict the entanglement of the vessel with the submerged tree. It was the evidence of Hildebrand that the sinking of the vessel received wide publicity in the print media circulating in the district. At the time the plaintiff encountered considerable difficulty in refloating the vessel without further damaging it in the process as there was a real risk of the vessel breaking up if the salvage was not carried out correctly. 4    As a result of this experience the plaintiff, installed two pumps with float switches aimed at preventing a re-occurrence. The vessel was not refloated until 31 January 1994. It sank again on 28 April 1994 when the pumps that the plaintiff had installed failed. It was refloated on 30 April 1994. Although the insurer has raised an issue of the unseaworthiness of the vessel, no reliance is placed upon the sinkings of the vessel in support of that allegation. 5    Following the second sinking the vessel was towed and slipped on the banks of the Murray at a point across the river where it is surrounded by the township of Echuca. The plaintiff made a claim under the policy for the damage sustained to the vessel as a result of the sinkings and that claim was eventually satisfied by a payment by the insurer to the plaintiff of $9,500 on 21 March 1995. 6    In the meantime, the policy had been renewed for a period of twelve months from 30 September 1994 pursuant to a renewal invitation and renewal schedule submitted to the plaintiff by the insurer on 29 August 1994. However the total sum insured in respect of the vessel was reduced from $30,000 to $20,000. The renewal did not issue until 23 February 1995. I infer from the evidence of Hildebrand that he had to press the plaintiff to effect a renewal to which the plaintiff agreed but at the reduced cover of $20,000. There was a further renewal of the policy issued pursuant to a renewal invitation of the insurer issued on 21 August 1995: the renewal issuing on 20 October 1995 for the period of twelve months from 30 September 1995. On 4 March 1996 Brendon John Loftus (Loftus) suffered serious injuries when he fell to the ground from the vessel whilst engaged in restoration work on the vessel for the plaintiff (the Loftus accident). Loftus has brought proceedings against the plaintiff claiming substantial damages for personal injuries suffered in the accident. The plaintiff has sought indemnification from the insurer in respect of that claim under the public liability cover of the policy. The insurer has declined to indemnify the plaintiff on the following grounds:

“8A. Further, the Defendant says:

a) The Plaintiff has failed to disclosed material matters facts relevant to the decision of the Defendant whether to accept the risk proffered by the application to renew the insurance and if so on what terms.

b) The Plaintiff in breach of the Insurance Contracts Act, section 21, failed to disclose to the Defendant or to its servants or agents the fact that the boat was for an extended period of time on a slipway, nor the fact that the boat was undergoing major renovations and rebuilding whilst there.

c) If the facts set out in paragraph 8A(b) above had been disclosed to the Defendant, the Defendant would have declined to renew the Plaintiff’s insurance in respect of the boat.
9. In respect of paragraph 11 of the Plaintiff’s contentions the Defendant says that the injuries to Loftus were sustained as a result of the boat being in an unsafe or unseaworthy condition. Further the Defendant says that claims of such nature were expressly excluded by Exclusion 1(B) under the heading “General Exclusions” in the policy wording.”

7    Any liability of the insurer is under part B of the policy under which the insurer agreed to indemnify the plaintiff against all claims that he may become liable to pay as compensation or damages for bodily injury to any person arising out of an accident in connection with the use or ownership of the vessel. Exclusions under part B of the policy are notable more for what they did not exclude when compared with the exclusions under part A, which was the property damage section of the policy. For example, under part A exclusions there were the following:

“(g) loss or damage caused by or directly attributable to any repair, adjustment, service or maintenance.

(h) loss of or damage to property occasioned by its undergoing any process necessarily involving the application of heat.

(i) theft of equipment, accessories or motors unless fixed to the Vessel or locked in a secure area.”

8    There has been no reply filed in the proceedings on behalf of the plaintiff. However, the case has been conducted on behalf of the plaintiff on the basis that the matters said to be relevant to the decision of the insurer were either in fact disclosed to the insurer by the plaintiff, or were matters that the insurer in the ordinary course of its business ought to have known, alternatively, in the circumstances a reasonable person could not be expected to know that the subject matters were so relevant. 9    In brief, the vessel remained on the slips from May 1994 until March 1996 and beyond, with the plaintiff spasmodically carrying out repair work necessitated by the sinking of the vessel and carrying out substantial renovation of the vessel. In this respect he was assisted from time to time by Loftus. Progress on this work was dependent upon the availability of the plaintiff and Loftus to perform the work and of the availability of money to meet that cost. The work performed in renovating the vessel was extensive involving the removal of the walls and ceiling of the superstructure and the replacement of the superstructure with new materials and the replacement of the diesel engine with a steam engine, presumably more in keeping with the design of a paddle steamer. 10    It was the evidence in chief of the plaintiff that it was a matter of common practice along the Murray for boats to be slipped and for repair and maintenance work to be performed on them and that he did not know that the vessel “being out of the water on the slips or work being done on it when out of the water on the slip could be matters that could be relevant to the decision of the [insurer] as to whether or not to accept the [subject] risk”. However, I think that the case of the insurer is different from that, having regard to the extended time over which the vessel remained on the slips, the physical features of the surrounding area, and the performance by the plaintiff of extensive remodelling work on the vessel during that time. 11    The photographs in evidence leave no room for doubting the extensive nature of the renovation of the vessel which involved reducing the vessel to a bare hull and then rebuilding the superstructure. 12    As a result of my giving leave to the plaintiff to adduce evidence by statement served out of time, I gave leave to the insurer to call the oral evidence of Edward Talbot Aldridge (Aldridge). He was the loss assessor appointed by the insurer to investigate the plaintiff’s claim under part A of the policy arising out of the sinking of the vessel. It was the plaintiff’s evidence that between December 1993 and mid 1994 the plaintiff informed Aldridge on more than one occasion of his intention to take advantage of the need to slip the vessel to carry out remodelling of its superstructure. 13    There was an issue about the authority of Aldridge to receive such information so that his knowledge could be treated as knowledge of the insurer. The insurer’s case was that Aldridge’s authority was limited to written instructions in standard form simply requiring his assessment of the claim. Clearly, the authority of Aldridge went beyond that, as was evidenced by communications orally and in writing between him and the plaintiff, with the knowledge, for the most part, of the insurer, that covered the period until settlement of the claim in early 1995 and in which Aldridge was seen to be negotiating settlement of the claim on behalf of the insurer. 14    However, I am satisfied that the authority of Aldridge to assess the claim and to negotiate the settlement on behalf of the insurer did not entail a level of authority to fix the insurer with knowledge of any statements made to Aldridge concerning the plaintiff’s intention to remodel the vessel. However the evidence of the plaintiff, which I accept, and the evidence of Aldridge takes the matter of disclosure beyond one of mere statements by the plaintiff to Aldridge as loss assessor. 15    Under the insurer’s guidelines it was provided as follows:

“6. Claims

To ensure that the effort of both claims and underwriting staff are not wasted, there should be regular and constant liaison between them. It is the responsibility of claims staff to advise underwriters of any unsatisfactory underwriting feature which emerges from the handling of a claim or any problems with interpretation of policy wordings. If urgent action is needed, immediate notice should be given to underwriting staff.

It is the responsibility of underwriting staff to:-

(i) check on any new or unknown underwriting features revealed by a claim.

(ii) take the necessary action either immediately or before renewal, to correct the problem.”

16    The evidence is clear that the claims section of the insurer was informed of the fact that the vessel was and would be on the slips for a prolonged period and that the plaintiff intended to carry out repair and renovation work largely in his own time. 17    The Murray River where the vessel was slipped is a boating area, comprised mainly of modest marine possessions whose owners are want to carry out repairs and improvements in their own time, much, I would infer, in the way the plaintiff carried out work on the vessel. This feature of the area and the general physical features of the location where the vessel was slipped were well known to the insurer’s claim staff and, I think, at least one member of its underwriting staff. 18    It was fairly obvious that the insurer knew through its claims staff that the plaintiff was in no hurry to carry out the repairs to the vessel, nor, for that matter, to settle his claim under the policy. During this period of extended slipping of the vessel the insurer invited renewal of the policy on two occasions. 19    The evidence of Aldridge was not entirely satisfactory. That was partly due to a poor recollection of events, but also, I think, due to a lack of impartiality. I have not the slightest doubt that Aldridge was informed by the plaintiff on several occasions that the plaintiff intended to carry out extensive renovations of the vessel. Indeed, following upon the accident to Loftus, Aldridge informed the insurer that the plaintiff had told him in 1994 that he would “completely renovate” the vessel while it was “out of the water”. 20    That was a report to the insurer’s agent by Aldridge in respect of which I had previously accepted the insurer’s claim for client legal privilege. That privilege was lost when it became clear that the report had been used by Aldridge to revive his memory for the purpose of giving evidence in these proceedings. When cross examined on the report he agreed he could recall speaking to the plaintiff “at least twice” about the plaintiff’s intention to carry out additional work on the boat, although he could not remember the details of the discussion. 21    Whatever the precise words were is of little moment, in my view. It is plain from Aldridge’s report and the evidence of the plaintiff that Aldridge was informed by the plaintiff of the latter’s intention to carry out extensive renovation work on the vessel while it was slipped. I think it is also clear that Aldridge was told by the plaintiff that he intended to carry out repair work and additional work, for the most part, by himself. The evidence of Aldridge was reasonably clear to that effect that he had informed the claims staff of the insurer, at the time of the negotiations for settlement of the property damage claim in the last quarter of 1994, that there was a reasonable prospect for settling the claim for as little as $2,000 as the plaintiff was carrying out the repair work himself and intended carrying out the renovation of the vessel at his own cost. 22    In relation to the correspondence passing between Aldridge, the insurer and the plaintiff concerning settlement of the property damage claim, Aldridge gave the following evidence:

“Q. And in the same context you may have communicated with the insurer that the matter could be settled for that amount because of the intention of Mr Carling to do the work himself and carry out some renovations himself?

A. Yes, by himself I meant him arranging. I am not sure whether he was physically going to do it. That is the matter.

Q. But (in) indicating to the insurer that the matter might be settled for 2,000 you think you did?

A. I think so.”

(T 45.7 - 45.17: the word in parenthesis I have added by way of correction of the transcript which does not accurately record the question.)

23    When one looks at the photographs that Aldridge took of the vessel in mid 1994 it is, I think, obvious that the plaintiff had already commenced removal of the superstructure of the vessel at the time he had informed Aldridge of his intention to renovate the vessel and that this would have been apparent on inspection. 24    On the evidence of Aldridge and that of the plaintiff, having regard to the insurer’s guidelines, if there was substance in the insurer’s present denial of liability, the features of prolonged slipping of the vessel and of the intention of the plaintiff to carry out spasmodic repair and renovation work on it while slipped would have been matters that in the ordinary course would have been reported to the underwriting staff of the insurer. 25    Phillip James Sholl (Sholl) was called in the insurer’s case. His evidence in chief was very brief and for convenience is set out, so far as relevant, as follows:

“In May 1994 I took over the position of Area Manager for Commercial Union Insurance at Bendigo. This position had been previously held by Martin Corrigan. This position included amongst other things, quoting insurance business within my authority and referring insurance outside my authority or experience to others within Commercial Union Insurance. In this position I dealt with Wayne Hildebrand, of Insurance House, on a regular basis.

Shortly after taking up the position of Area Manager at Bendigo, I became aware that a boat owned by Mr Andrew Carling had sunk and that a claim under the Commercial Union Boat Insurance policy for the damage suffered to the boat was made. I recall Wayne Hildebrand discussing the matter with me as it was a claim which stood out as the boat had sunk twice and there had been difficulties in refloating it.

From my discussions with Mr Hildebrand it was my understanding that the boat was to be repaired. I was not aware that renovations were intended.

If I had been informed that the boat would be on the slipway for an extended period of time, or that the boat was to be extensively renovated, I would have referred the matter to Martin Corrigan, who at the time was the Northern Regional Underwriter. I would have referred the matter to Mr Corrigan as the standard Commercial Union Insurance Boat Insurance policy would no longer have been appropriate.”

26    It was Hildebrand’s evidence that Sholl visited him in his Echuca premises weekly, that there was telephone communication more frequently between them and that he had a recollection of conversations with Sholl in January 1995, and in September that year when the policy was being renewed, in which he confirmed that the vessel was still on the slipway and that work was still being performed on it. 27    Sholl gave his evidence in cross-examination frankly, in my view. However I think that evidence is difficult to reconcile with a portion of his evidence in chief in which he says that had he been “informed that the boat would be on the slipway for an extended period of time, or that the boat was to be extensively renovated, [he] would have referred the matter to Martin Corrigan, who at the time was the Northern Regional Underwriter…as the standard…Boat Insurance policy would no longer have been appropriate.” The fact is, as Sholl freely acknowledged, he was fully aware from mid 1994 through to March 1996 that the vessel remained on the slipway and that work was being performed, on his understanding, by the plaintiff, spasmodically, from time to time. 28    Indeed in a facsimile from the broker to the insurer of 19 January 1995 marked for Sholl’s attention, Hildebrand informed the insurer, in seeking a quote on “the new premium payable”, that the vessel was still on the slipway “being gradually repaired”. In the same facsimile the insurer was informed that the plaintiff wished “to insure [the vessel] for $20,000 whilst its(sic) being repaired (at present its (sic) $28,500).” As earlier noted in these reasons, the insured amount was reduced in the 1994/1995 policy year to $20,000 and maintained at that level in the following policy year. 29    I think that the only reasonable inference from that evidence was that the insurer knew that the vessel remained on the slipway until the Loftus accident and that work was being carried out on it during that time without any identification of the precise nature or extent of that “repair work”. In fact I think that, from the evidence of Aldridge, the claims staff had been informed during 1994 that the work included extensive renovation. 30    I have great difficulty in distinguishing that situation from the situation which the insurer said was not revealed to it and that, had it been so revealed, would have resulted in the cover being declined. 31    Some emphasis to that difficulty is given by the fact that the officer responsible for the underwriting of the cover in the subject region after April 1994, Martin David Corrigan (Corrigan), had until April 1994 been the Regional Area Manager, preceding Sholl in that position. As Area Manager Corrigan had visited the broker’s office in Echuca weekly and thereafter, as underwriter, visited the broker on an average of approximately two or three times a year. So far as is relevant the evidence in chief of Corrigan was as follows:

“After the boat sank I would not have been surprised if it was placed on a slipway for a short period to undergo repairs to its hull as this may have been necessary to ensure that it did not sink again.

I did not know that the boat was going to be on a slipway for an extended period, and I did not know that the boat was to be substantially rebuilt. However, if I had known that the boat was to be on a slipway for an extended period of time for a major rebuild, I would have referred the matter to Mr Don Callahan to determine whether insurance coverage could be continued.

If I was told that the boat was to be renovated then I would have reported it to Mr Don Callahan. I did not have authority to:

1. insure a paddle boat;

2. insure a boat which was being renovated;

3. to agree to continue to insure under an existing policy a boat which was being renovated; or

4. to renew an existing policy over a boat that was being renovated.”

32    It was Hildebrand’s evidence that in the period from April 1994, when Corrigan assumed the underwriting role in the area, Corrigan visited the broker’s Echuca office two or three times a year and on those occasions the subject of the plaintiff’s vessel was raised and on those occasions Hildebrand informed Corrigan that the vessel was still being repaired and on the slipway. Cross-examined about those conversations, Corrigan said that he had no recollection of them. I accept Hildebrand’s evidence on this matter to the extent that I am satisfied that on a number of occasions between April 1994 and March 1996 conversations took place between Hildebrand and Corrigan in the broker’s Echuca office in which the information was conveyed to the insurer that the plaintiff’s vessel was undergoing a prolonged stay on the slipway during which time work was being carried out on it, undefined in precise nature and extent. 33    Donald Peter Callahan (Callahan) gave underwriting evidence in the insurer’s case. So far as is relevant he stated in his evidence in chief as follows:

“I was not aware that the boat was put on a slipway for an extended period of time. Generally, if a boat was damaged and a claim was made for the damage, insurance cover under the Boat policy would initially be allowed to continue while repairs were performed on the boat while it was in a slipway. However, if a boat was to be on a slipway for quite some time or it was undergoing major renovations, then I would have had to consider whether the boat policy should be renewed.

The risk involved with a boat laid up on a slipway is a different risk to a boat on the water. A boat laid up on a slipway is viewed as a commercial risk and alternative insurance to that of the Boat policy must be sought. Alternative insurance would be Fire Insurance and rated according to the risk of boat building or boat construction. Commercial Union’s rating classification for boat building is “Decline” for fibreglass boat builders and “Decline” for wood boat builders.

If I had been informed at the expiration of the Plaintiff’s boat policy in September 1995 that the boat had been on a slipway for some time and was expected to continue to be on a slipway, I would have required a survey of the slipway and boat to be conducted, to determine whether the risk for Fire Insurance and Public Liability insurance was acceptable.

If I was told at anytime that the boat was undergoing major renovations, then I would have required a survey of the slipway and the boat to be conducted.

A survey involves the assessment of the general condition of the slipway and boat. A survey of this nature would include photographs.

Attached to this statement is a number of photographs of the boat and the slipway. I have reviewed the photographs.

I have concluded from my review of the photographs the following:

* Access to the boat was unrestricted.

* The possibility of fire was high because wooden boat building is a high hazard occupation, due to flammable materials used and due to tools and equipment used, and location of the slipway.

* The general condition of the slipway was relatively poor.

I would not have accepted this risk.

On the assumption that a survey I had requested would have revealed the matters shown in the photographs attached to this statement and referred to above, I would have declined to renew the plaintiff’s boat policy.”

34    The fact is that the insurer had been informed at claims and underwriting level that the vessel had been subjected to a prolonged stay on the slipway and that during that period repair work was being carried out on it. 35    As to matters which would have resulted in Callahan’s non-acceptance of the risk, I make the following observations. Access was something well known to the claims and underwriting staff from their general knowledge of the area, from frequent and regular visits to the Echuca area and from the photographs provided by Aldridge. The possibility of damage by fire must have been present from mere presence of the vessel on the slipway whether the work could be described as repair or renovation. The bushland nature of the location of the slipway was clearly shown in the photographs supplied by Aldridge to the insurer as was the general condition of the slipway: a condition which Callahan acknowledged fell into the category of housekeeping things that could be addressed specifically in underwriting the risk, and would not involve a non-acceptance of the cover. I regard it as not without significance that Callahan had never had occasion to cancel or refuse renewal of a boat insurance policy on the basis that repair work was being undertaken in respect of the subject vessel. 36    The statement of Eduard John Kuyper (Kuyper) admitted into evidence in the insurer’s case confirmed my strong view that by its own guidelines the underwriters should have been aware of the circumstances of which the insurer is now claiming non-disclosure. It was Kuyper’s evidence that had he “been aware that the boat would be renovated or would remain on the slipway for an extended period, [he] would have reported this fact to the underwriting department at Commercial Union Insurance as it was something unusual.” I have no doubt that the insurer had been informed of both of those facts prior to and subsequent to the renewal of the policy for the 1994/1995 year and prior to the writing of the renewal for the 1995/1996 year. In cross-examination, Kuyper’s evidence was that he had no recollection of having being informed of the prolonged slipping of the vessel. He understood that the plaintiff was going to undertake the repairs to the vessel himself and that he was taking his time to carry out that work as at the time of settlement of the claim in 1995. 37    Brett Kingsley Watson (Watson) took over the position of underwriting for the Victorian Rural Insurance division of the Insurer from Callahan. His evidence in chief in relevant respects was identical with that of Callahan and my observations in relation to Callahan’s evidence have equal application to Watson’s evidence. 38    In cross-examination Watson elaborated upon his evidence in chief by alluding to the location of surrounding bush at the site where the vessel was slipped, to the absence of any fencing and the presence of building materials lying around in the vicinity of the vessel. He was shown the photographs forwarded by Aldridge to the insurer in mid 1994 and as to those photographs he gave the following evidence:

“Q. Don’t those photographs show all the things in respect to which you express concern in your statement?

A. Pretty much, yes.

RE -EXAMINATION.
DAVIES: Q. It is just the first six of these photographs that show the position that you have been discussing, is that right?

A. Yes, I realise the others are of no relevance.”
(T 82.54 - 83.4)

The first six photographs to which Watson referred in that evidence were Aldridge’s photographs taken in 1994.

39    I am firmly of the view that the insurer, at claims and at underwriting level, was well aware of the following:

1. that the vessel between May 1994 and March 1996 remained on the slipway on the bank of the Murray in the vicinity of Echuca,
2. the slipway on which the vessel had been slipped was situated in a typical riverbank bushland area,
3. material associated with the work on the vessel lay within the vicinity of the slipway,
4. during that period spasmodic work of an undefined nature, additional to repair work, probably described as extensive renovation work, was being carried out by the plaintiff in his own time.
5. while the vessel was on the slipway undergoing work the plaintiff required a cover for $20,000 for the purposes of part A of the policy and the policy was renewed between 1994 and 1996 on that basis.

40    Upon those findings it is my view that there has been no material non-disclosure by the plaintiff. I would add that I am not entirely satisfied that the plaintiff knew that the matters of which non-disclosure is alleged were matters “relevant to the decision of the insurer whether to accept the risk.” In cross-examination the plaintiff gave the following evidence:

“Q. You did consider that CGU would wanted to know that you were completely rebuilding the boat from the hull up?

A. I didn’t necessarily consider it along those lines. I considered that they were aware of what was going on. If I can add to that. So, well, I suppose in answer to your question, I would say yes, because I made a specific point of bringing it to their attention.”
(T 9.43 - 9.49)

41 When that evidence was given I had the clear impression that the additional material offered by the plaintiff was more a matter of reconstruction and that the reality was that the plaintiff did not turn his mind to the question at the time of the renewals of the policy that his intention to carry out renovation work in his own time over an extended slipping of the vessel was a matter relevant to the decision of the insurer whether to accept the risk. 42 Whether I am correct in my view that the insurer knew of the circumstances affecting the risk on the vessel at the times of renewals of the policy, I am satisfied that the statements made to the claims, management and underwriting staff of the insurer by the plaintiff or his broker, or through Aldridge, were such that, on the insurer’s own case were matters which, in the ordinary course ought to have been known by the insurer, and so falling within the provisions of s.21(2)(c) of the Insurance Contracts Act 1984 (Cth). 43 As earlier noted in these reasons there was a defence based on general exclusion 1(b) which excluded:

…
“liability incurred:
…
(b) as a result of the Vessel being in an unsafe or unseaworthy condition…”

44    It is not clear to me upon what evidence the insurer relied in the contention that the vessel was unsafe or unseaworthy or what was the “direct causal link between the unseaworthy condition of the boat and the injuries suffered by Mr Loftus.” It is clear that the insurer was not relying on the sinking of the vessel. I did not understand that submission on behalf of the insurer to be pressed. 45 The case has been conducted before me on the basis that in the event that there has been no material non-disclosure within the meaning of s.21 of the Insurance Contracts Act, the insurer is liable to indemnify the plaintiff in respect of any liability he may have to pay as compensation or damages for bodily injury suffered by Loftus arising out of his accident in connection with the plaintiff’s use or ownership of the vessel, within the meaning of clause 1 of part B of the policy. 46 Accordingly I make the following declaration. The defendant is liable to indemnify the plaintiff under clause 1 of part B of the Boat Insurance Policy, number 39P5389740, in respect of any liability of the plaintiff to pay compensation or damages to Brendon John Loftus for any bodily injury suffered by Brendon John Loftus on or about 4 March 1996, arising out of an accident in connection with the plaintiff’s use or ownership of the vessel, known as the “Lady of Barmah”. The defendant is to pay the plaintiff’s costs of these proceedings.

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Last Modified: 10/26/1999