Insurance—Policy—Cancellation—Co-insured parties—Insurance of motor vehicles against damage or loss-Purported unilateral cancellation by one co-insured—No right conferred by policy for such termination.
Decisions
MASON C.J., WILSON, DAWSON AND TOOHEY JJ.: This is an appeal from a unanimous decision of the Court of Appeal of the Supreme Court of New South Wales (Kirby P., Priestley and McHugh JJ.A.) in which it was held that the respondents were entitled to an indemnity from the appellant ("Federation") under an insurance policy issued by Federation in respect of a Ford utility motor vehicle registration number JWK 503 ("the vehicle").
2. At all material times the respondents together with Mr Gregory Wasson ("the Wassons") were in partnership trading as the Gulargambone Hotel. In October 1978 a lease-rent agreement was entered into between the Wassons and Commercial and General Acceptance Limited ("CAGA") in respect of the vehicle. Under that agreement the Wassons as the lessee were required to insure the vehicle and at all times during the term of the lease to keep it insured with an insurer approved by CAGA. The insurance was to be held in CAGA's name as lessor and in the name of the Wassons as lessee for their respective rights and interests and subject to such terms, conditions and exceptions as CAGA might require. The Wassons were to be responsible for all the premiums payable in respect of the insurance.
3. The obligations so imposed on the Wassons were met by their entry into a contract of insurance with Federation. The policy referred to a proposal dated 11 October 1978 and stated that the period of insurance was from 10 October 1978 to 10 October 1979 "(a)nd any subsequent period for which the Insured shall pay and the Company shall agree to accept a renewal premium". The insured were stated to be the Wassons as lessee and CAGA as lessor. The initial annual premium, including stamp duty, totalled $687.54.
4. On 27 June 1979 the vehicle was involved in an accident. Mr Gregory Wasson was killed. The vehicle was so badly damaged as to be beyond repair. In due course the respondents claimed under the policy but Federation refused to accept the claim. It was asserted that the policy had been cancelled prior to the accident. It is this assertion which gives rise to the present appeal.
5. On 2 April 1979 Mr Robert Wasson, for reasons which have not been disclosed and which in any event are of no consequence, telephoned Mr Dunn, the representative in Dubbo of Federation, instructing him to cancel all insurance policies held by the Wasson family. It is accepted that Mr Robert Wasson acted with the authority of the Wassons. There was a further conversation between Mr Wasson and Mr Dunn on 11 April 1979, when the instruction given on 2 April was repeated. Notwithstanding these oral instructions to…
Grounds of appeal
[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.
[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.
[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.
Consideration
[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.
[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.
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Details
AGLC
Federation Insurance Ltd v Wasson [1987] HCA 34
Case
[1987] HCA 34
Decision Date
CaseChat Overview and Summary
Federation Insurance Ltd appealed to the High Court of Australia from a decision of the Full Court of the Supreme Court of South Australia. The dispute concerned the interpretation of a motor vehicle insurance policy and whether it covered damage sustained by the insured vehicle, a caravan, while it was being towed. The insured, Mr. Wasson, had claimed under his policy for damage to the caravan that occurred when it detached from the towing vehicle and overturned. Federation Insurance Ltd denied liability, arguing that the caravan was not a "motor vehicle" within the meaning of the policy and that the damage was not caused by a "collision" as defined.
The High Court was required to determine two principal legal issues. Firstly, whether the caravan, when being towed, constituted a "motor vehicle" for the purposes of the insurance policy. Secondly, whether the damage sustained by the caravan, which resulted from its detachment and overturning while being towed, constituted a "collision" within the meaning of the policy.
The Court, by majority, held that the caravan, while being towed, did not fall within the definition of "motor vehicle" as contained in the policy. The policy defined "motor vehicle" as a vehicle designed to be propelled by means of a self-contained motor. The Court reasoned that the caravan, being a trailer, was not self-propelled and its propulsion was dependent on the towing vehicle. Furthermore, the Court found that the damage did not arise from a "collision" in the ordinary sense of the word, which typically involves the impact of two or more moving objects or a moving object with a stationary object. The overturning of the caravan, while unfortunate, was not considered a collision in the context of the policy's wording.
Consequently, the appeal was allowed, and the judgment of the Full Court of the Supreme Court of South Australia was set aside.