F.A.I. Insurances Ltd v Custom Credit Corp Ltd

F.A.I. Insurances Ltd (the insurer) brought an appeal against Custom Credit Corp Ltd (the mortgagee) in the Supreme Court of Queensland. The dispute revolves around the insurable interest of the mortgagee in a fire insurance policy taken out by the insurer on a property that changed hands during the insurance period. The mortgagee argued that it had an insurable interest throughout the entire insurance period, while the insurer contended that the change in ownership of the property during the policy period affected the continuity of the mortgagee's insurable interest.

The central legal issues before the court were whether the continuity of insurable interest throughout the period of insurance is necessary, the effect of a change in ownership of the subject property on the insurable interest of the mortgagee, and whether a resultant interest is a distinct new interest. The court had to determine if the mortgagee's insurable interest was affected by the change in ownership of the property and if the mortgagee was entitled to a claim under the policy.

The court held that the mortgagee's insurable interest was not affected by the change in ownership of the property and that the resultant interest was a distinct new interest. The court dismissed the insurer's appeal and ordered that the appellant pay the respondents' costs of the appeal to be taxed. The court's reasoning was based on the fact that the mortgagee had an insurable interest in the property from the time of the mortgage until the mortgage was discharged, regardless of any change in ownership during the insurance period. The court found that the mortgagee's interest was distinct and separate from the interest of the property owner, and therefore, the change in ownership did not affect the mortgagee's insurable interest.