FAI General Insurance v Australian Hospital Care

FAI General Insurance Company Limited (FAI) and Australian Hospital Care Pty Ltd (AHC) were the parties in this matter before the High Court of Australia. The dispute concerned the interpretation of a contract of indemnity, specifically whether AHC was entitled to indemnity from FAI for certain retrospective workers' compensation claims. AHC operated a number of private hospitals and had entered into an agreement with FAI for insurance coverage.

The central legal issue before the High Court was whether the indemnity provided by FAI to AHC extended to cover claims made by employees of AHC for injuries sustained prior to the commencement of the insurance policy, but where the claims themselves were lodged during the policy period. This involved an examination of the policy wording and the nature of the indemnity offered.

The High Court considered the principles of contractual interpretation, focusing on the plain meaning of the words used in the indemnity clause. Their Honours determined that the policy provided indemnity for claims made during the period of insurance, regardless of when the injury occurred. The court reasoned that the indemnity was triggered by the making of a claim, not by the occurrence of the injury itself. This interpretation was based on the specific language of the policy, which did not contain any express exclusion for pre-policy injuries.

The High Court dismissed the appeal, upholding the decision of the Full Federal Court.